Document:

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                                                                   EXHIBIT 10.17

PentaStar Communications, Inc. has applied for Confidential treatment for
portions of this exhibit 10.17. An asterisk (*) indicates those portions that
have been omitted pursuant to the request for confidential treatment. A complete
copy of this exhibit has been filed separately with the Securities and Exchange
Commission. A "#" indicates term omitted because it is not part of contracts as
amended.

                        AUTHORIZED DISTRIBUTOR AGREEMENT

                               BETWEEN AMERITECH

                                      AND

                           Telecomm Industries, Inc.

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                               TABLE OF CONTENTS
<TABLE>
<S>                                                                                           <C>
Business Purpose...............................................................................1
Recitals.......................................................................................1
ARTICLE 1......................................................................................1
     APPOINTMENT OF DISTRIBUTORSHIP and AD REPRESENTATION......................................1
ARTICLE 2......................................................................................3
     TERRITORY.................................................................................3
ARTICLE 3......................................................................................4
     EXCLUSIVITY...............................................................................4
ARTICLE 4......................................................................................4
     TERM AND TERMINATION......................................................................4
ARTICLE 5......................................................................................6
     AUTHORIZED DISTRIBUTOR DUTIES.............................................................6
ARTICLE 6......................................................................................8
     AMERITECH'S DUTIES........................................................................8
ARTICLE 7......................................................................................9
     SALES AND COMMISSION......................................................................9
ARTICLE 8.....................................................................................11
     THE PARTIES' RELATIONSHIP................................................................11
ARTICLE 9.....................................................................................11
     FACILITIES AND MATERIALS.................................................................11
ARTICLE 10....................................................................................12
     TRADEMARKS AND TRADE NAMES...............................................................12
ARTICLE 11....................................................................................13
     OWNERSHIP OF INFORMATION AND CONFIDENTIALITY.............................................13
ARTICLE 12....................................................................................15
     RIGHT TO SET-OFF.........................................................................15
ARTICLE 13....................................................................................15
     RIGHT TO AUDIT AND INSPECT DISTRIBUTOR'S RECORDS.........................................15
ARTICLE 14....................................................................................15
     AGREEMENT NOT TO COMPETE.................................................................15
ARTICLE 15....................................................................................16
     NOTICE...................................................................................16
ARTICLE 16....................................................................................17
     ASSIGNMENT...............................................................................17
ARTICLE 17....................................................................................17
     GENERAL TERMS............................................................................17
Exhibit A      TERRITORY......................................................................19
Exhibit B      PRODUCTS.......................................................................20
     ATTACHMENT 1:  VOICE NETWORK PRODUCTS AND SERVICES.......................................21
     ATTACHMENT 2:  STANDARD DATA PRODUCTS AND SERVICES.......................................22
     ATTACHMENT 3:  USAGE PRODUCTS AND SERVICES...............................................23
     ATTACHMENT 4:  OBJECTIVE RETIREMENT PRODUCT LIST (BY PRODUCT FAMILY).....................24
          ANNEX 1: VOICE NETWORK PRODUCTS AND SERVICES........................................25
          ANNEX 2: STANDARD DATA PRODUCTS AND SERVICES........................................26
          ANNEX 3: USAGE PRODUCTS AND SERVICES................................................27
Exhibit C      COMMISSION.....................................................................28
     1.0  General.............................................................................28
     2.0  Commission Set Off..................................................................31
     3.0  Upon Termination....................................................................31
     4.0  Commission Calculation Methodology..................................................32
     5.0  Sales Outside of Territory and Sales Outside
               of "Objective Territory".......................................................33
     6.0  Partnering..........................................................................33
     7.0  Centrex Product Family..............................................................33
     8.0  Ameritech FeatureLink...............................................................37
     9.0  Other Voice Products................................................................37
     10.0      Ameritech SmartFax Connections.................................................38
     11.0      Ameritech 9-1-1 Locator ID.....................................................39
     12.0      Eligible Standard Data Products................................................39
     13.0      ValueLink Products.............................................................42
     14.0      1-800-CONFERENCE...............................................................54
     15.0      Ameritech Prepaid Products.....................................................55
Exhibit D    CO-OP AND 5-STAR PROGRAM.........................................................56
Exhibit E    CODE OF BUSINESS CONDUCT.........................................................57
Exhibit F    HOUSE ACCOUNTS...................................................................58
</TABLE>
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                        AUTHORIZED DISTRIBUTOR AGREEMENT
                               BETWEEN AMERITECH
                                      AND
                           Telecomm Industries, Inc.

         This Authorized Distributor Agreement ("Agreement") effective January
1, 1999 by and between Ameritech Information Systems, Inc. a Delaware
corporation with offices at 225 West Randolph, Chicago, IL 60606 (hereinafter
"Ameritech") and Telecomm Industries, Inc., with offices at 1743 Quincy Street,
Suite 143, Naperville, IL 60540 (hereinafter "Authorized Distributor" or "AD").

                                Business Purpose

         Ameritech and AD have entered into this Distribution Agreement for the
purpose of facilitating the marketing and sale of Ameritech retail products, the
servicing of Ameritech retail business customers in the Territory, and to
provide market coverage and market penetration of Ameritech retail products to
retail, business customers in the Territory. The sales made by AD hereunder
shall always be at prices and rates Ameritech sets as retail prices for its
business customers. It is the intent of the parties hereto that both parties
will benefit from this Agreement and the relationship established herein.

                                    Recitals

WHEREAS, Ameritech is engaged in providing telecommunications products and
services and desires to appoint distributors to market and sell its Products (as
hereafter defined);

WHEREAS, AD represents and warrants that it is qualified to market and sell
Ameritech's Products and has sufficient knowledge of Ameritech's products to
do so;

         NOW, THEREFORE, in consideration of the covenants set forth herein, the
parties agree as follows:

                                   ARTICLE 1
              APPOINTMENT OF DISTRIBUTORSHIP and AD REPRESENTATION

         Section 1.1  Grant. Subject to the terms and conditions of this
Agreement, AD is hereby appointed as an authorized distributor of Ameritech
Products (as hereinafter defined) in the geographic Territory (as hereinafter
defined). For purposes of this Agreement, the activities of marketing, promoting
and selling Products, and the servicing of customer accounts pursuant to the
terms of this Agreement shall collectively be referred to herein as "Distribute"
or "Distribution". AD's right to Distribute is limited to the Distribution of
Products which are expressly defined as "Products" under Exhibit B, and in the
"Territory" under Exhibit A, both Exhibits hereby incorporated by reference
herein as modified from time-to-time. "Territory" for purposes of this
Agreement means collectively the geographic area, area codes and Ameritech
business units which are specified on Exhibit A.

         Section 1.2 Non-exclusive. Nothing contained herein shall be construed
to prohibit Ameritech from selling or servicing any of Ameritech's Products or
other products and services in the Territory. In addition, Ameritech reserves
the right to appoint others to Distribute its products and services in the
Territory, and to send its own or third party technical or sales personnel to
any place inside or outside the Territory to assist its distributors or

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independent sales representatives in contacting customers (potential or
otherwise), servicing accounts, soliciting business, or promoting the sale of
its products and services.

         Section 1.3 Parties' Relationship. The parties' relationship is set
forth under Article S of this Agreement. AD shall not use any sales person to
perform on its behalf hereunder unless said sales person has been registered by
Ameritech as qualified to Distribute its Product. Ameritech reserves the right
to set minimum qualification levels for sales personnel at its sole discretion
and Ameritech will notify AD in writing of all such qualifications.

         Section 1.4 No Authority to Bind. AD shall have no authority to bind
Ameritech by contract or otherwise, or make representations as to policies or
procedures of Ameritech other than as specifically and expressly authorized by
this Agreement.

         Section 1.5 Third Parties and Sub-Distributors. The AD hereby
acknowledges and agrees that Ameritech has the sole and exclusive right to
appoint and authorize others to function and represent themselves as Ameritech
Authorized Distributors or Authorized Sales Representatives. The AD shall not
delegate its appointment or in any way authorize anyone to distribute or
represent themselves as an agent of Ameritech or as an Ameritech Authorized
Distributor or as an Ameritech Authorized Sales Representative. In the event AD
utilizes independent sales representatives to perform on AD's behalf hereunder,
such sales representatives must at all times represent themselves as sales
representatives of AD and not as Authorized Distributors of Ameritech. Ameritech
shall not be liable to pay any fees or compensation to any independent sales
representative acting on behalf of AD, or to pay any other party, including, but
not limited to the AD, for sales generated by any unauthorized representative.

         In addition, processing orders for unauthorized or unregistered
individuals shall be deemed a material breach of this Agreement, and in such a
case Ameritech may terminate this Agreement immediately for cause, and pursue
all other rights or remedies it may have in law or equity.

         Section 1.6 AD Responsibility. AD shall be held responsible for the
actions or omissions of each sales representative acting on its behalf, whether
the sales representative is an employee, agent or independent sales
representative of AD. The AD shall require that its employees, agents,
contractors and representatives comply with the requirements of this Agreement
to the same extent as the AD has agreed to comply, including without limitation,
the obligations hereunder regarding Ameritechs logo and other marks (See Article
10), and the ownership and confidentiality of information (See Article 11)

         Section 1.7 House Accounts. Ameritech reserves the right to identify
certain accounts as "House Accounts, and AD is not authorized to, and shall not
Distribute Products to such accounts. A list of House Accounts is set forth
under Exhibit F of this Agreement, incorporated by reference herein, and
Ameritech, at its sole discretion, may modify Exhibit F from time-to-time via
the "         *" web site and bulletin board, and each modification
will be deemed incorporated herein as if originally set forth herein, and the
modification shall be effective on the date the modification is posted on the
web site and bulletin board

         a) In the event Ameritech newly designates an account as a House
Account, AD will have ninety (90) days from the date of such designation to
close all pending sales activity, and AD will be paid commission for sales made
to that account within said ninety (90) day period. To be eligible for this
exception to the House Account rule, AD must notify Ameritech in writing within
three (3) business days of the new designation by Ameritech that AD has pending

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sales activity on that account. The writing must include the account name,
telephone number, the Product(s) being marketed, and the current stage of the
sale AD will not be awarded commission under this subsection on any sale made to
a House Account after ninety (90) days from the date the account is so
designated.

         Section 1.8 Retail Business Customers; Retail Business Prices - The
parties hereto acknowledge and agree that this Agreement is for the purpose of
Distribution of Products to Ameritech's retail business customers at prices and
rates Ameritech deems as its retail prices or rate for sales to business
customers. For purposes of this Agreement "retail customer" shall be determined
by Ameritech in its sole discretion. Unless an exception applies, if an account
is "marked" by Ameritech according to its practices and procedures as assigned
to Ameritech's general business services or custom business services divisions,
the account is deemed to be a retail business customer by Ameritech.

         Section 1.9 End User of Product In no event is AD granted the right or
authority under this Agreement to distribute Products to anyone whom the AD
knows, or should have known, at the time of sale or within two (2) years
thereafter, is: a) not the end user of the Product; b) subscribing to the
Product for the purpose of reselling it to retail customers; or, c) is not
designated by Ameritech CBS as a "retail" customer of Ameritech

         Section 1.10 Reseller of Ameritech Products AD is prohibited from
acting as a reseller of Ameritech products and services as that term is defined
under applicable law or as it is used in the telecommunications industry, or
acting on behalf of a reseller of Ameritech products and services.

         Section 1.11 Sole Agreement Ameritech utilizes various channels to
Distribute Product to its retail business customers, and Ameritech's strategy
prohibits cross-over appointments between its channels. Therefore, AD is
prohibited from acting as an Ameritech Enhanced Service Provider, an Authorized
Video Sales Representative or to enter into any other Distribution agreement
with Ameritech under which an appointment to market or sell landline Products to
Ameritech's retail customers is granted.

         Section 1.12 Accepts Appointment. AD hereby accepts the appointment
granted above and agrees to comply with the terms and conditions of the
appointment as set forth in this Agreement.

                                    ARTICLE 2
                                    TERRITORY

         Section 2.1 Geographic Territory. The AD'S non-exclusive geographic
Territory is set forth in Exhibit A, which is incorporated by reference herein.
During the term of this Agreement, Territory may be expanded or contracted
provided the change is in writing and signed and dated by both parties. In some
cases, expansion of Territory will be deemed by Ameritech to constitute an
addition of a Branch Location, and the conditions set forth in Section 2.3 below
will apply.

         Section 2.2 Out-of-Territory Sale. Ameritech and AD may, in certain
cases, agree that AD will have the right to Distribute Product to an individual
customer outside the Territory Such arrangement must be in writing, and signed
and dated by Ameritech prior to any sale, and the writing must include, at a
minimum, where and to whom the sale will he made, and the commission payment, if
any, which will apply to any sale made pursuant to that agreement. No commission
will be paid without such a writing.

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         Section 2.3 Branch Locations. At all times during this Agreement, AD
must maintain in the Territory a physical presence and a formal place of
business from which it carries out its Distribution activities. If AD desires to
Distribute Products outside the Territory or if AD desires to add an additional
business location within the Territory, AD must receive prior written approval
from Ameritech, and said location(s) may be considered "Branch Locations" for
purposes of this Agreement.

         Ameritech's approval of any Branch Location may be conditioned, at its
sole discretion, on one or more of the following:

         (a) AD enters into a separate Distribution Agreement with Ameritech
whereby Ameritech makes a separate grant of appointment in the new Territory;

         (b) AD's annual sales objective level under this Agreement is modified
by Ameritech to recognize the opportunities in the new Territory(ies);

         (c) AD establishing a physical presence in the new geographic area;

         (d) AD submits to Ameritech satisfactory written documentation
regarding the AD's proposed activities and objectives for the marketing and
sales of the Products as a result of the Branch Location. Said documentation
will be deemed satisfactory at Ameritech's sole discretion. This factor is to
ensure that expansion by the AD will not adversely affect the market coverage
Ameritech expects in the Territory then assigned to AD; and,

         (e) Ameritech reserves the right to base its approval on other relevant
business factors which are particular to the AD's request for a branch location.

         Section 2.4 Material Breach. Any violation by AD of the provisions and
conditions of this Article 2 will constitute a material breach, and Ameritech
may terminate this Agreement immediately for cause.

                                    ARTICLE 3
                                   EXCLUSIVITY

         Ameritech values its customer relationships, and, as provided elsewhere
in this Agreement, intends to share with AD Ameritech Confidential Information
regarding its customers and customer relationships, including, but not limited
to, business and product plans, customer relationship information and other
sensitive customer data. In the event Ameritech knows or has a reasonable belief
that the AD is marketing, selling or in some way promoting the sale and customer
use of intraLATA telecommunications services, or Prepaid Phone Card, or audio
conferencing and bridging services, or any product or service which is
competitive with a Product, and unless such activity is expressly provided for
elsewhere in this Agreement, Ameritech may terminate this Agreement for cause
immediately. Ameritech's right to terminate under this Article is in addition to
any other right or remedy it may have at law or equity.

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                                    ARTICLE 4
                              TERM and TERMINATION

         Section 4.1 Term. This agreement commences on January 1, 1999 or upon
full execution by both parties, whichever is later. This Agreement will expire
on January 1, 2002 ("Initial Term") unless terminated earlier pursuant to terms
of this Agreement. This Agreement will automatically renew for a subsequent one
(1) year term ("Renewal Term") unless one of the parties elects not to renew,
and provides written notice to the other party no later than ninety (90) days
prior to the expiration of the Initial Term.

         If a party exercises this right not to renew, the Agreement will expire
naturally at the end of the Initial Term, and all rights and obligations of the
parties cease on the expiration date.

         Section 4.2 Termination.

         a) This Agreement may be terminated by Ameritech in whole or in part
without cause and for convenience upon thirty (30) days written Notice to the
AD;

         b) This Agreement may be terminated by AD for any reason upon thirty
(30) days written Notice to Ameritech;

         c) This Agreement may be terminated immediately where expressly
provided for elsewhere in this Agreement. In such cases, Ameritech will notify
the AD in writing, and the termination shall be for cause, and the effective
date of the termination shall be the date of notice;

         d) This Agreement may be terminated by Ameritech for cause in the event
of unsatisfactory performance including, but not limited to, unsatisfactory
sales performance or violation of Section 5.4 of this agreement on the part of
the AD. Ameritech will provide written notice to AD of unsatisfactory
performance, and such notice will provide the period of time available to the AD
to cure the unsatisfactory performance. If AD does not cure in the specified
time, the AD will be given written notice of its termination for cause; and,

         e) Notwithstanding the foregoing Sections in this Article, it is agreed
that Ameritech may terminate this Agreement immediately without Notice in the
event of:

                  (i) an assignment by the AD for the benefit of creditors;

                  (ii) the institution of voluntary or involuntary proceedings
         against the Authorized Distributor in bankruptcy, or under any other
         insolvency or similar law which is not dismissed within sixty (60 days;

                  (iii) the dissolution of the Authorized Distributor;

                  (iv) an attempted assignment of this Agreement by the
         Authorized Distributor without Ameritech's prior written consent as
         required under Article 16 of this Agreement;

                  (v) Ameritech becomes aware of a sale, transfer or
         relinquishment of a substantial interest in the ownership of AD, or a
         substantial change in management of the AD;

                  (vi) a Seriously Delinquent status on any AD landline or
         PrePaid Product account with Ameritech which is not cured by AD upon
         notice of the Seriously Delinquent, and which cannot be cured through
         set-off provided for under this Agreement "Seriously Delinquent" is
         determined solely by Ameritech at its discretion but in no event will a
         delinquency of less than ninety (90) days be considered a "Seriously
         Delinquent";

                  (vii) submission to Ameritech by the AD, its employee,
         representative, agent or contractor of any false or fraudulent reports
         or statements including, but not limited to, any false or fraudulent
         claims for credits or reimbursements under the "Co-Op', "5 Star" or
         other similar Ameritech incentive programs; or,

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                  (viii) submission by AD, its representative, contractor or
         agent of a sales agreement or sales order or any other document which
         is subsequently found to contain forged customer signatures or the
         customer denies any knowledge of placing an order with AD.

                  (ix) AD violates in any way the terms or limitations of its
         appointments as set forth under Article 1, or violates in any way AD's
         obligations and duties under Article 5.

         Section 4.3 Upon Termination.

         (a) Upon expiration or termination of this Agreement, AD shall no
longer be an Authorized Distributor of Ameritech's Products and AD must not
represent itself as such to others;

         (b) Upon expiration or termination of this Agreement, AD agrees to
provide to Ameritech a detailed report of all work in progress under this
Agreement within three (3) business days from the termination or expiration of
this Agreement, including, without limitation, pending sales and installations;

         (c) Upon expiration or termination of this Agreement, AD shall remove
and return to Ameritech any material, including, without limitation, manuals,
catalogues, brochures, advertising copy, and training materials, or destroy such
materials at Ameritech's sole option;

         (d) Upon expiration or termination of this Agreement, the AD shall
remove and discontinue the use of any sign or any other designation containing
any of Ameritech's logos, trademarks or trade names, including, without
limitation, the designation of Ameritech Authorized Distributor" or "Ameritech
Authorized 5-Star Distributor". Should such trademarks or trade names be printed
on any of the AD's business cards, letterhead or other written documents, the
written documents shall promptly be destroyed, and AD must reprint the materials
so as to remove any such trademarks or trade names of Ameritech;

         (e) Upon expiration or termination of this Agreement, AD hereby has the
duty to notify all publishers and others who may identify, list or publish AD's
identity or name as a marketer, promoter or supporter of Ameritech Products that
such identification or publication is prohibited as of the date this Agreement
is terminated. For purposes of this Agreement, Publishers means, but is not
limited to, the publisher of telephone directories, yellow pages, association
directories, or membership rolls; and,

         (f) Certain Exhibits and Attachments set forth terms which apply upon
termination of this Agreement, and AD and Ameritech hereby acknowledge their
agreement to those terms.

         Section 4.4 Account Transfer. Upon termination of this Agreement,
Ameritech, at its sole discretion, will designate itself or another AD to act as
successor to AD in providing Ameritech Products to customers "in progress" at
the time of termination, and to service those customers who subscribed to
Products through AD when this Agreement was in effect.

         Section 4.5 Commissions Upon Termination. Upon termination of this
Agreement, Exhibit C governs the treatment of commissions, including, without
limitation, residuals which may apply to AD sales made during the term of this
Agreement.

                                    ARTICLE 5
                          AUTHORIZED DISTRIBUTOR DUTIES

         Section 5.1 Standard of Conduct. The AD agrees to promote, encourage
and increase the sales to, and acceptance by customers of the Products within
the Territory. AD will fulfill this duty in a professional and diligent manner.
AD agrees that Ameritech's business reputation is one of its most

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valuable assets. In performing its duties under this Agreement, AD shall observe
the highest standard of integrity and fair dealing with members of the public.
AD shall do nothing which would tend to discredit, dishonor, reflect adversely
upon or in any manner injure the reputation of Ameritech.

         Section 5.2 Application. AD must complete and sign an application form
and return it to Ameritech for acceptance. Ameritech hereby acknowledges that an
application may have already been submitted by AD, and the parties agree that
any prior applications are hereby superceded and replaced by the one which is
submitted pursuant to this Section. Ameritech will review and accept the
application according to its standard practice, and Ameritech will not
countersign this Agreement unless and until an application is accepted by
Ameritech.

         Section 5.3 Sales Achievement. The AD shall satisfy minimum monthly,
quarterly and annual sales performance requirements as set forth on the document
titled "AD Annual Objective Sheet and Tier Multiplier" effective January 1,
1999, which has been signed by each party and which is incorporated by reference
herein and which may be modified or amended during the term of this Agreement
upon thirty (30) days written notice by Ameritech to AD, and each such
modification or amendment shall be deemed to have been included as if originally
set forth under Attachment 1.

         Section 5.4 Compliance. The Distributor shall comply with all Ameritech
policies, procedures and practices. This includes, but is not limited to:
practices and procedures regarding order and subscriber agreement processing;
accuracy of submitted orders and agreements; Product methods and procedures;
advertising placement and quality rules; commission submission, payment and
inquiry guidelines; Ameritech Identity Guidelines; and, Ameritech Authorized
Distributor Policies and Practices. Notwithstanding the foregoing, AD, its
employees, agents and representatives must comply with all rules, limitations,
procedures and policies related to Ameritech's sales incentive programs such as
5-Star and Co-Op.

         Section 5.5 Code of Business Conduct. AD understands and agrees that
any violation of the Ameritech Code of Business Conduct by AD'S employees,
representatives, contractors or agents will be considered by Ameritech a
violation of this duty by the AD.

         Section 5.6 Inquiries, Quotations and Customer Relations. AD shall
promptly transmit any customer inquiries regarding any matter related to
Ameritech or its Products to Ameritech in a manner prescribed by Ameritech.

         Section 5.7 Customer Information. AD agrees to make available to
Ameritech the names and addresses of all purchasers of Ameritech Products
through AD, and AD agrees that such information is Confidential Information of
Ameritech. The use and disclosure of Ameritech Confidential Information is
governed by the restrictions set forth under Article 11 of this Agreement.

         Section 5.8 Financial Statements. AD shall furnish to Ameritech such
financial statements as may be reasonably requested by Ameritech's credit
manager for Ameritech's confidential use in evaluating the AD's ongoing
participation in the AD Program.

         Section 5.9 Indemnity. AD agrees to indemnify and hold Ameritech
harmless from any claims or losses, including attorneys' fees and expenses,
which arise out of any act or omission of the AD, its employees, agents,
representatives, or contractors, in connection with or related to the AD's

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marketing, promotion, or demonstration of Ameritech's products or services. In
addition, and not in derogation of the foregoing, AD agrees to indemnify and
hold Ameritech harmless from any claim or loss (including attorneys' fees and
expenses) which arise or is in connection with any statements (whether oral or
written) made with respect to the Ameritech's products or services, and from any
claim or loss which arises from or in connection with any representation or
warranty given, or allegedly given, by AD regarding Ameritech's products or
services, or regarding AD's right to market and sell Ameritech's products and
services, whether such representation or warranty is oral or written, express or
implied.

         In addition to, and not in derogation of the above, AD agrees to
indemnify, defend and hold Ameritech free and harmless from any loss, damage,
liability, cost or expense, including legal fees and expenses, for which
Ameritech becomes liable by reason of acts or omissions of AD, its employees,
agents, representatives and contractors during the course of their performance
hereunder, except to the extent that such act or omission was the result of
Ameritech's gross negligence.

         Section 5.10 C.P.N.I. AD must comply at all times with Ameritech's
policies on the use of information deemed by Ameritech to be Customer
Proprietary Network Information ("CPNI") under the Telecommunications Act of
1996.

         Section 5.11 Duty. AD assumes full responsibility and liability for the
acts of its employees, agents, contractors and representatives, and for their
supervision, daily direction and control. AD shall require compliance with the
duties and obligations of this Agreement to the extent those duties or
obligations apply to the acts of the employee, agent, contractor or
representative.

         Section 5.12 Insurance. AD will at all time during the term of this
Agreement, at AD's sole expense, maintain insurance which is appropriate in type
and amount for its performance hereunder, including, but not limited to,
automobile insurance and comprehensive liability insurance against claims for
bodily and personal injury, death, property damage and all other harm caused by
or occurring in connection with AD's, its employees', representatives' and
agents' actions, omissions or misrepresentations. Upon request of Ameritech, AD
will furnish proof which is satisfactory to Ameritech that insurance coverage
required under this Agreement is in effect. Ameritech reserves the right to deem
in its sole discretion whether or not the insurance is "appropriate in type and
amount".

                                    ARTICLE 6
                               AMERITECH'S DUTIES

         Section 6.1 Sales Materials. Ameritech shall from time-to-time furnish
catalogues, brochures, pamphlets, promotional and other materials pertaining
Products to assist AD in promoting and developing the sale and acceptance of the
products and services in the Territory. AD may request additional sales
materials, Ameritech will furnish them, and a charge may sometimes apply.

         Section 6.2 Duty to Promote. Ameritech agrees to use reasonable efforts
to promote, encourage and increase the marketing efforts of its Products through
advertising and other marketing initiatives.

         Section 6.3 Payment of Commissions. Ameritech shall pay commissions to
AD pursuant to the terms, conditions and schedule set forth under Exhibit C.

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         Section 6.4 AD Incentive Programs.

         (a) Ameritech will provide Co-Operative advertising funds under its
"Ameritech Authorized Distributor Co-Op Program" ("Co-Op"). The terms,
conditions, limitations and obligations of the parties under the Co-Op program
are set forth in the document titled, "The Co-Op and 5-Star Program" dated
January, 1999 set forth under Exhibit D hereto, which is incorporated by
reference herein. Notice of any modification to the Co-Op program will be made
via the "         *" web site and bulletin board, and each modification
will be deemed incorporated herein under Exhibit D as if originally set forth
therein in its entirety. The modification will he effective the date it is
posted by Ameritech on the web site bulletin board. Modification means any
change to the Co-Op program, up to and including discontinuing all or part of
the program.

         (b) Partners in Excellence. Ameritech will make available to AD an
incentive program which will allow the AD, at its election and discretion, to
qualify as an "Ameritech 5-Star Distributor", and become eligible for the
benefits associated with that status. On an annual basis Ameritech will provide
AD with the criteria for the "Partner's in Excellence" program ("PIE"), which is
the criteria which will be used to determine if the AD qualifies as an
"Ameritech 5-Star Authorized Distributor" ("5-Star"). If qualified under PIE, AD
may indicate to others its status as a "5-Star" AD, and will receive benefits
associated with the 5-Star status.

                                    ARTICLE 7
                              SALES AND COMMISSION

         Section 7.1 Exhibit C - Commissions. Ameritech agrees to pay AD
commission pursuant to Exhibit C hereto, incorporated by reference herein, as
may be amended from time-to-time. Commissions are earned by AD at the time of
payment by Ameritech. Ameritech's commission payment procedures and practices
are governed by Ameritech AD commission practices and procedures which are
established by Ameritech in its sole discretion, and may be modified by
Ameritech at any time for any reason, including, but not limited to, more
efficient handling of payment inquiries and tracking.

         Section 7.2. Sales Within Territory. Ameritech shall pay commission to
AD on sales within the Territory for all Products and will pay commission for
sales out of Territory only if AD has received prior written consent from
Ameritech for such treatment. Sales outside of the Objective Territory
(hereinafter defined) are treated differently from those within the Objective
Territory for purposes of commission, as further described under Exhibit C.

         Section 7.3 End Users. As provided elsewhere in this Agreement, AD is
prohibited from selling Product to a purchaser the AD knows or should know is
not, or will not be in the future, the end user of the Product, there fore,
Ameritech will not pay commission on such a sale. Nonpayment of commission is in
addition to any right or remedy Ameritech may have available in law or in equity
for violation of this Section.

         Section 7.4 Retail Business Customers. As provided elsewhere in this
Agreement, the purpose of this Agreement is to benefit each party from the sale
of Product to the retail business customers of Ameritech at retail business
prices. Therefore, Ameritech will not pay commission on any product sold to a

                                       9
<PAGE>   14

customer who is not designated as a retail business customer by Ameritech, or
which is sold at a rate or price which is not deemed by Ameritech to be a retail
price. Nonpayment of commission under this subsection is in addition to any
right or remedy Ameritech may have available in law or in equity for a violation
of this Section.

         Section 7.5 Special Arrangements. Ameritech acknowledges that the
dynamics of the telecommunications industry and the retail business customer
market may result in specialized sales. AD may request unique commission
handling for a specialized sale, and Ameritech reserves the right in its sole
discretion to accept or reject the AD's request, to set the commission payment
the AD will receive if the sale is finalized, and establish the payment
schedule which will apply to such a payment. The decision by Ameritech on a
specialized arrangement is final and not appealable. To be eligible for unique
commission handling, Ameritech must consent in writing to the special
arrangement prior to the close of the sale. No exceptions will apply to this
condition.

         Section 7.6 Commission Values. Ameritech is solely responsible for the
determination and calculation of the commission to be paid on an individual
sale, and Ameritech's commission award to AD, absent arithmetic errors, is final
and not appealable. Ameritech reserves the right to pay a commission amount
different from that which is set forth under Exhibit C, provided that
modification is reasonable, and Ameritech reserves the right to establish a
payment schedule for such a commission award.

         Section 7.7 Partnering. Ameritech does not discourage its ADs from
working together or with other Ameritech direct sales representatives on a
specific sale if it is in the best interest of Ameritech, provided Ameritech is
notified and approves of such partnering prior to any customer sales proposal.
In the event of such approved partnering arrangements, Ameritech reserves the
right to establish a commission payment value and payment schedule for such a
sale without invalidating any part of this Agreement, and such arrangement shall
not be considered as establishing a precedent. Ameritech in its sole discretion
shall establish the value and commission payment percentages due to each of the
sale partners.

         Section 7.8 No Authority to Bind. AD has no authority to bind
Ameritech, and all orders, subscriber agreements and customer contracts are
subject to acceptance by Ameritech in the manner prescribed by Ameritech.
Therefore, AD shall not be paid commission on any sale or order until the
subscriber agreement or order is accepted by Ameritech under the then-in-effect
acceptance procedures. Ameritech's acceptance will not be unreasonably withheld
or delayed. Ameritech as the Product supplier has the right to refuse any
customer order for any reason Ameritech deems sufficient, and AD shall not be
entitled to any commission on any order so refused.

         Section 7.9 Discrepancy of Commission Due and Audit. In the event of a
discrepancy between the sales reflected on the Ameritech generated AD commission
report and the sales which AD claims were approved and processed by Ameritech,
AD may request an audit of Ameritech's commission records. The AD may employ
such assistance as it deems desirable to conduct the audit, but may not use the
assistance of: (i) a person or an entity that competes or whose employer
competes with Ameritech; (ii) that is the principal outside auditor of a
competitor of Ameritech (unless such auditor is also the AD's principal outside
auditor); or, (iii) is someone to whom Ameritech reasonably objects to
performing any such audit. AD shall cause any person or firm retained for this
purpose to execute a non-disclosure agreement in favor of Ameritech.

                                       10
<PAGE>   15

         If the audit reveals that Ameritech made an error in its favor which
totals twenty-five percent (25%) or more of the AD's year to date commissions,
as determined by the most current Ameritech commission report, Ameritech will
bear the expense of the audit, provided that AD submits evidence of actual
expense.

                                    ARTICLE 8
                            THE PARTIES' RELATIONSHIP

         Section 8.1 Independent Representative. The parties agree that the
relationship arising from this Agreement is that of Product supplier and
independent sales representative, and the relationship arising from this
Agreement does not constitute or create an agency, joint venture, partnership,
an employee relationship or franchise between them. AD has no authority to bind
Ameritech in contract or otherwise, or to make representations as to the
policies or procedures of Ameritech other than as expressly authorized by
Ameritech. AD acknowledges and agrees that it is an independent business with
respect to its performance under this Agreement.

         Section 8.2 Identification. The AD is and must at all times hold itself
out to be an independent business authorized to act as an authorized distributor
with respect to the Products. Unless expressly and specifically authorized by
Ameritech in writing, AD shall not make any promise, warranty or representation
on Ameritech's behalf with respect to the Products, or any other matter.

         Section 8.3 No Fee. AD acknowledges that it has awarded no fee to
Ameritech in connection with the appointment made by Ameritech under this
Agreement.

         Section 8.4 Employees. AD, its employees, agents, representatives and
contractors are not and will not be, and shall not be deemed to be, employees or
joint employees of Ameritech, its parent or its affiliates, and shall at no time
be eligible for or apply for eligibility for any insurance or other benefit
available to an employee of Ameritech Corporation, its subsidiaries or
affiliates. Ameritech is not and will not be responsible for worker's
compensation, disability benefits, unemployment insurance, withholding taxes,
social security or any other taxes or benefits for AD, its employees, agents,
representatives and contractors. AD is and shall be responsible for all federal,
state, and local taxes applicable to it, and hereby agrees to indemnify and hold
Ameritech harmless from any claim or liability therefrom.

                                    ARTICLE 9
                            FACILITIES AND MATERIALS

            AD hereby represents and warrants that it has adequate facilities,
equipment, means of transportation, sales force, distribution capabilities, and
business office and clerical staff necessary to perform the services and
activities required by this Agreement. Ameritech reserves the right to obtain
access to AD's facilities for the purpose of examining the adequacy of the
facilities and materials. Such access will be granted by AD provided it is
during AD's regular business hours. AD also represents that none of the above
items have been specifically acquired or obtained for the performance of this
Agreement.

                                       11
<PAGE>   16
                                   ARTICLE 10
                           TRADEMARKS AND TRADE NAMES

         Section 10.1 Limited, Non-exclusive License. Ameritech hereby grants
to AD a limited, non-exclusive non-transferable, nonsublicenseable,
royalty-free right to use the AMERITECH trade names, trademarks, and service
marks, (hereinafter, "the Marks") in the Territory in accordance with AD
performance hereunder. This license is conditioned on AD'S complete
compliance with Ameritech's policies, practices and procedures for use of the
Marks, and Ameritech's Identity Guidelines, both which are provided to AD by
Ameritech. In addition, the AD must comply with all applicable governmental
regulations with respect to the Marks. Ameritech reserves the right to inspect,
observe, review and in any way audit the AD'S use of the Marks at any time
during the term of this Agreement, and, if requested by Ameritech, such review
or audit shall take place on AD's premises, and AD grants Ameritech access to
conduct such review during AD's normal business hours.

         AD shall not use, and is prohibited from adopting any of the Marks, or
any part of any of the Marks as an Internee domain name, and shall not register,
or seek to register any name or mark anywhere in the world which is identical or
confusingly similar to any Mark, or so similar thereto as to constitute a
colorable imitation thereof or to suggest some association, sponsorship, or
endorsement by Ameritech.

         Section 10.2 Ameritech's Rights in Marks. AD will not alter, modify,
dilute or misuse the Marks, bring them into disrepute or challenge Ameritech's
rights in them. AD shall cooperate with Ameritech as may be reasonably
necessary for Ameritech to protect, prosecute or defend its rights with respect
to the Marks.

         Section 10.3 Layout Limitations. AD's right to use the designation of
"Ameritech Authorized Distributor" or "Ameritech Authorized 5-Star Distributor"
is limited to the layout and design guidelines which are set forth in
Ameritech's Identity Guidelines. Any use of that designation which is not in
complete compliance with the use requirements and guidelines under Exhibit D
will be considered a material breach of this Agreement, and Ameritech may
terminate this Agreement upon Notice if AD does not cure the breach immediately
and to the satisfaction of Ameritech. Such termination is in addition to any
other right or remedy Ameritech may have available to it at law or equity.

         Section 10.4 Ameritech Consent Required. AD will not combine the Marks
with any other marks, names, or symbols without Ameritech's prior written
consent. The AD shall refrain from using any name, trademark, trade name, logo,
slogan, label, title or insignia, or one confusingly similar thereto, now or
hereafter owned adopted or used by Ameritech (whether registered or
unregistered) in any manner, or any medium, or for any other reason than that
approved by Ameritech, and shall refrain from any use in any geographic area
outside of the Territory.

         Section 10.5 Substantial Value. AD hereby acknowledges the substantial
value of the Marks and the goodwill associated therewith, and acknowledges that
such goodwill is a property right belonging to Ameritech. AD recognises that
Ameritech is the owner of the Marks, and that nothing contained in this
Agreement is intended as an assignment or grant to the AD of any right, title,
or interest in or to the Marks. AD shall not do anything which is inconsistent
with Ameritech's ownership of the Marks, and all use of the Harks by AD shall
inure to the benefit of and be on behalf of Ameritech. AD hereby

                                      12
<PAGE>   17

acknowledges and agrees that its use of the Marks is limited to purposes which
are necessary for its performance hereunder.

         Section 10.6 Reproduction. AD agrees that accurate reproduction of the
Marks is uppermost. prior to use, AD must provide Ameritech with approval
samples of all advertising, business cards, letterhead and any other materials
which bear Marks. Ameritech will attempt to answer promptly; if Ameritech does
not respond within sixty (60) days of receipt of such materials (except
advertising), they will be deemed not approved. With respect to advertising, if
Ameritech does not respond within thirty (30) days, the advertising will be
considered approved. AD is prohibited from modifying or changing any such
approved material without first obtaining written approval.

         Section 10.7 Discontinue Use. Upon expiration or termination of this
Agreement, AD shall immediately discontinue use of any trademark, trade name,
logo, slogan, label, title or insignia now or hereafter owned, adopted or used
by Ameritech (whether registered or unregistered), and destroy all printed
materials (including but not limited to business cards, letterhead, promotional
and advertising materials, store signage, vehicle signage, and customer premises
stickers and signage) bearing any of the Marks.

         Section 10.8 Indemnification. Ameritech shall indemnify and hold AD
harmless from any and all damage or expense resulting from valid trademark
infringement claims with respect to any of the Marks used by the AD pursuant to
this Agreement, provided, however, that; (a) Ameritech is given notice within
ten (10) days after the AD received notice of such claim or suit for
infringement, together with full information with respect thereto, and complete
control of the defense and any settlement thereof; and, (b) AD's use of the
Mark(s) which gives rise to the claim is a permitted use in accordance with this
Agreement.

         Section 10.9 No Other Rights. No other rights are granted to AD to use
any trademarks, trade names, service marks or service names of Ameritech or its
affiliates. Further, no licenses, warranties, or indemnifications, express
or implied, under any patents, copyrights, or any trade secrets are granted to
AD.

         Section 10.10 Survival. This Article 10 and all its sections shall
survive any termination or expiration of this Agreement.

                                   ARTICLE 11
                  OWNERSHIP OF INFORMATION AND CONFIDENTIALITY

         Section 11.1 Ameritech Confidential Information. Any business and
management information of Ameritech, its parent or its affiliates, including,
but not limited to, reports, product specifications, pricing, product design,
business plans, strategies and practices, marketing or technical information and
data, and information regarding or related to customers, including. without
limitation, customer segmentation strategies and placement, existing customer
account information and history and potential targeted customers, and any
material marked "confidential" or "proprietary" which is furnished or disclosed
by Ameritech or its representative is collectively deemed "Ameritech
Confidential Information". Ameritech Confidential Information of Ameritech is
acknowledged herein by the parties to be a significant asset of Ameritech, and
Ameritech will disclose its Confidential Information for AD to assist AD in its

                                       13

<PAGE>   18

performance hereunder. Any Ameritech confidential information which is disclosed
to AD or otherwise learned by AD during the term of this Agreement is deemed the
exclusive property of Ameritech.

         In addition, sales information including, but not limited to, the terms
and conditions of standard contracts, sales and operational methods, business
acquisition plans; new personnel acquisition plans; and, other business affairs
of Ameritech and any of its affiliates, are Ameritech "Confidential Information"
and trade secrets.

         Section 11.2 Ten Years. During the term of this Agreement and for a
period of ten (10) years thereafter Ameritech Confidential Information shall
not be disclosed by AD to any person except officers and employees of the AD
requiring the information to perform under this Agreement. In no event shall
Ameritech Confidential Information or trade secrets be used for the benefit of
the AD except in connection with performing under this Agreement.

         Section 11.3 Bound to the Same Extent as AD. The AD shall require all
officers, employees, agents and representatives to whom that information is
available or disclosed to by AD to agree to protect against disclosure to others
of Ameritech Confidential Information to the same extent as the AD has agreed.

         Section 11.4 Liability. The AD shall be liable to Ameritech for damages
caused by any breach of this provision or by any unauthorized disclosure of that
Confidential Information and those materials by its of officers, employees,
representatives and agents.

         Section 11.5 AD Confidential Information. Ameritech agrees that it
will protect the disclosure of AD Confidential Information to the same extent it
protects its own Confidential Information. In no event is Ameritech authorized
to disclose AD Confidential Information outside of Ameritech without prior
written approval of AD.

         Section 11.6 Limitations. The obligations of this Article 11 shall not
apply to Ameritech Confidential Information which is; (i) available to the
public through no breach of this Agreement; (ii) is required by law or
regulation to be disclosed, but only to the extent and for the purposes of such
required disclosure; or, (iii) is disclosed in response to a valid order of a
court or other governmental body of the United States with proper jurisdiction,
but only to the extent of and for the purposes of such order and only if the AD
first notifies Ameritech of the order and permits Ameritech to seek an
appropriate protective order.

         Section 11.7 Ownership of Subscriber Information. To the extent allowed
under law, all subscriber and customer information, which includes, but is not
limited to: subscriber and customer lists' customer's use of products and
services; subscriber billing and related information; and, subscriber and
customer satisfaction information, all of which is collectively referred to
herein as "Subscriber Information" is the exclusive property of Ameritech and is
to be used by the AD only for purposes of this Agreement, and promptly returned
to Ameritech upon termination or expiration of this Agreement. Subscriber
Information is always Ameritech Confidential Information.

         Section 11.8 Terms of this Agreement. The terms and conditions of
this Agreement are Confidential Information of Ameritech and AD,

                                       14

<PAGE>   19
         Section 11.9 Survival. This Article 11 and all its Sections shall
survive the termination or expiration of this Agreement.

                                   ARTICLE 12
                                RIGHT TO SET-OFF

         Ameritech reserves the right to set-off commissions due to AD if any AD
account with Ameritech is deemed by Ameritech to be "Seriously Delinquent"
(defined hereinafter). Ameritech's set-off right is governed by Exhibit C,
Section 2.0. In the event set-off is not adequate for an AD's Seriously
Delinquent accounts, Ameritech's right to terminate is governed by Section
4.2(c).

                                   ARTICLE 13
                RIGHT TO AUDIT AND INSPECT DISTRIBUTOR'S RECORDS

         During the term of this Agreement and for one (1) year after
termination or expiration of this Agreement, Ameritech reserves the right to
obtain access to and examine fully the books, records and accounts of all
transactions and activities covered by this Agreement upon reasonable notice to
AD and during AD's regular business hours.

                                   ARTICLE 14
                            AGREEMENT NOT TO COMPETE

         Section 14.1 Protection of Ameritech's Customer Relationship. The
parties agree with the Business Purpose of this Agreement which is stated above,
and agree that the commitments of this Article 14 are necessary to maintain this
mutual benefit. The parties agree that this Article 14 serves to protect
Ameritech's legitimate business interest in protecting Ameritech's customer
relationships and Ameritech's customer/subscriber information which is disclosed
to AD solely for successful performance hereunder.

         Section 14.2 Term of Non-Compete. During the term of this Agreement
and for a period of one (1) year thereafter, AD and individuals associated with
AD will be privileged to a significant amount of Ameritech Confidential
Information, therefore, AD and its principal(s), director(s), officer(s) and
shareholder(s) (except those holding stock in the AD corporation whose stock is
publicly traded and which is subject to the reporting requirements of the
Securities Exchange Act of 1934 and then only to the extent of owning not more
than ten percent (10%) of the issued and outstanding shares of such
corporation), collectively and individually are bound by the terms of this
Section.

         AD and any individual subject to this Section shall not assist or
facilitate the sale or use by a customer of a product or service which is
"competitive" to the Products. For purposes of this Section, "competitive to"
shall mean that the product or service is of a similar type or serves the same
purpose as the Product(s), or performs the same function as the Products, or
provides the customer the same benefit as the Products covered by this
Agreement. This shall mean that an individual subject to this Section shall not

                                       15

<PAGE>   20

be employed by, serve as an agent for, or act as a representative or contractor
for a company which sells, promotes or distributes the competitive products or
services in the Territory.

         Section 14.3 Equitable Relief. The AL, its shareholders and officers,
jointly and severally acknowledge and agree that the remedy at law for any
breach, or threatened breach, of any of the provisions of Article 14 will be
inadequate, and the AD and its shareholders jointly and severally agree that
Ameritech shall be entitled to such equitable relief as may be available from
any court of competent jurisdiction, and this right shall be in addition to any
other rights or remedies it may have for any violation of these provisions.

         Section 14.4 Severability. In the event any of the provisions of this
Article 14 is determined by a court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such provision
or part of a provision shall be deemed to be automatically amended so as to
comply with applicable law, and not deemed void.

         Section 14.5 Survival. This Article 14 and all its Sections shall
survive the termination or expiration of this Agreement.

                                   ARTICLE 15
                                     NOTICE

         Section 15.1 Notice. Unless Notice via "         *" is
expressly identified as proper communication elsewhere in this Agreement, Notice
or other communication given by one party to the other under this Agreement
shall be deemed sufficient and proper if the Notice is in writing and is
delivered personally, or is sent postage prepaid, first class U.S. Mail, or by
overnight courier, and such Notice shall be deemed received by the other party:
a) three (3) days after the Notice is deposited with the U.S. Postal Service;
or, b) the following business day if sent by overnight courier. Notice will also
be deemed sufficient and proper if sent by facsimile provided the original
notice is sent via postage prepaid, first class U.S. Mail the same day as the
facsimile; if sent by facsimile Notice will be deemed received by the other
party on the date and time shown on the original transmission confirmation sheet
which is electronically generated by the facsimile machine at the time the
transmission is completed. Notice must be directed as set forth below; each
party reserves the right to change the direction of the Notice, and will do so
through proper Notice to the other party.

         If to Ameritech                     If to AD
         Ameritech                           James Lowery
         225 W. Randolph, Floor              Telecomm Industries
         Chicago, Illinois 60606             1743 Quincy Street, Suite 143
         Attn:     Alternate Channels        Naperville, IL 60540
         Facsimile Number: 3l2-251-0633      Facsimile Number:
                                                              ------------------

                                       16

<PAGE>   21

                                   ARTICLE 16
                                   ASSIGNMENT

         Section 16.1 AD Assignment. This Agreement may not be assigned by AD
without the prior written consent of Ameritech, and such consent will not be
unreasonably denied or withheld. Any attempted assignment in violation of this
Section shall be deemed void. In the event the proposed assignee is an existing
Ameritech AD, Ameritech reserves the right to consent with conditions, including
but not limited to, conditioning consent on acceptance by AD of Territory
modifications or sales objective restructure.

         section 16.2 Complying Assignment. In the event of a complying
assignment, this Agreement shall be binding upon and shall inure to the benefit
of the party's respective assigns and successors.

                                   ARTICLE 17
                                  GENERAL TERMS

         Section 17.1 Governing Law. This Agreement shall be governed and
construed by the laws of the State of Illinois, as those laws apply to contracts
which are executed and fully performed within that State.

         Section 17.2 Counterparts. This Agreement shall be executed in
counterparts and shall not be binding upon Ameritech until each counterpart is
executed by Ameritech and AD. Each party will retain a document with original
signature, and each fully executed counterpart will be considered an original
Agreement.

         Section 17.3 Non-Waiver. All rights, remedies and relief available to
Ameritech shall be exercised at Ameritech's sole option. The failure of
Ameritech to enforce at any time any provision of this Agreement, or to exercise
any option which is provided for herein, or the failure of Ameritech to require
performance by the AD of any provision herein, shall in no way affect the
validity of, or act as a waiver of this Agreement, or any part thereof or any
right of Ameritech thereafter to enforce it.

         Section 17.4 Incorporation. All Recitals, Exhibits and Attachments and
Annexes are fully incorporated herein, and each modification or amendment
thereto shall be deemed incorporated as if set forth originally therein.
Ameritech reserves the right to modify, add to and amend this Agreement,
including the Exhibits and Attachments hereto upon thirty (30) days written
notice to AD, and the modification, addition or amendment will be effective on
the thirtieth (30th) calendar day after the date the Notice is received by the
AD without the requirement of acknowledgement or any other act by AD.

         Section 17.5 Entire Agreement. This Agreement contains the entire
agreement of the parties related to Ameritech's grant of rights as an Ameritech
Authorized Distributor and AD's acceptance thereof, and cancels all prior
agreements, understandings and representations, whether written or oral, express
or implied, and all such prior agreements are hereby deemed terminated by mutual
consent of the parties and all obligations under any such prior agreement are
agreed by each party to be inoperable and unenforceable.

                                       17

<PAGE>   22

         Section 17.6 Section Headings. All article and section headings and
captions used in this Agreement are for convenience or reference only and are no
intended to define or limit the scope of any provisions in this Agreement.

         IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
authorized parties have duly executed this Agreement effective on the date.

Ameritech Information Systems, Inc.       Telecomm Industries, Inc.

By:                                       By:
   -------------------------------           ----------------------------------
Signature: /s/ Steve Mitchell             Signature: /s/ James Lowery

Name Typed or Printed: Steve Mitchell     Name Typed or Printed: James Lowery

Title:     Director                       Title:  CEO

Date:      January 22, 1999               Date:  December 30, 1998

(The Balance of this Page Intentionally Left Blank)

                                       18

<PAGE>   23
                                                             EXHIBIT A TERRITORY

         This is Exhibit A to the Authorized Distributor Agreement Between
Ameritech and Telecomm Industries, Inc. ("AD") dated January 1, 1999.

         AD is hereby granted the right to distribute in the Territory specified
under this Exhibit. AD's right under the Agreement and this Exhibit is
conditioned on full execution of the Agreement and the signature of both parties
at the end of each Exhibit.

         Ameritech and AD agree that sales outside of the Territory are not
encouraged and AD's authority to market, promote or sell Ameritech products to
customers outside of the Territory requires prior written approval by Ameritech.

          STATE:

          AREA CODES*:

         If a business unit is not specifically listed below, sales by AD to
customers classified by Ameritech as served by that business unit are considered
"out of Territory" sales for purpose of this Agreement.**

* Any area code split will result in automatic inclusion of the new area codes
unless AD is otherwise notified in writing by Ameritech.

         **Key -         CBS means customers of the Custom Business Services
                         business unit

                         GBS means customers of the General Business Services
                         unit

(The Balance of this Page Intentionally Left Blank)

                                       19

<PAGE>   24

                                                              EXHIBIT B PRODUCTS

         This is Exhibit B to the Authorized Distributor Agreement between
Ameritech and Telecomm Industries, Inc. ("AD") dated January 1, 1999.

         AD is authorized to Distribute the Products specified under the
Attachments only if the following conditions are satisfied: i) the
above-referenced Agreement is fully executed by the parties; and, ii) all
three product family Attachment pages of this Exhibit are fully executed by each
party.

         Attachment 4 to this Exhibit specifies which Products retire AD's sales
objective in a Product family. Sales of Products which do not retire the AD's
objective are treated differently for purpose of commission, and such treatment
is specified in Exhibit C.

         For convenience purposes only, each product family category is set
forth under its own Attachment to this Exhibit, and each product or service in
that product family category is itemized. AD and Ameritech will appropriately
indicate which Products AD is authorized to Distribute, and will sign and date
each product family Attachment.

         The products and services which are identified under the fully executed
Exhibits herein together and collectively constitute the "Product" for purposes
of the above referenced Agreement between Ameritech and AD.

The Attachments are:

    Attachment 1      Voice Network Products and Services
    Attachment 2      Standard Data Products and Services
    Attachment 3      Usage Products and Services
    Attachment 4      Objective Retirement Product List (by Product Family)

(The Balance of this Page Intentionally Left Blank)

                                       20

<PAGE>   25
                                                        EXHIBIT B, Attachment 1
                                                         Voice Network Products

               ATTACHMENT 1: VOICE NETWORK PRODUCTS AND SERVICES

             This is incorporated as Attachment 1 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and Telecomm Industries, Inc. ("AD")
dated January 1, 1999.

                   Ameritech 1-800-CONFERENCE
                   Ameritech 9-1-1 Locator ID
                   Ameritech Caller ID
                   Ameritech Centrex Service (Includes ISDN Centrex)
                   Ameritech Custom Calling Services
                   Ameritech Digital Transport Service-Enhanced (ADTS-E)
                   Ameritech DSO (except Total Access Service)
                   Ameritech DS1 (except Total Access Service)
                   Ameritech FeatureLink
                   Ameritech ISDN Direct Service
                   Ameritech ISDN Prime Service
                   Ameritech Linebacker
                   Ameritech Local Access Lines
                   Ameritech PBX Trunks
                   Ameritech Remote Call Forwarding
                   Ameritech SmartFax Connections
                   Ameritech Voice Mail

-------------------------------          ------------------------------
Ameritech Signature                      AD Signature

-------------------------------          ------------------------------
Date                                     Date

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                                       21
<PAGE>   26

                                                         EXHIBIT B, Attachment 2

                                                          Standard Data Products

               ATTACHMENT 2: STANDARD DATA PRODUCTS AND SERVICES

         This is incorporated as Attachment 2 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and Telecomm Industries, Inc. ("AD")
dated January 1, 1999.

                Ameritech Analog Video Service
                Ameritech Asynchronous Transfer Mode Service (ATM)
                Ameritech Broadcast Video Service
                Ameritech Connectionless Broadband Data Service (CBDS)
                Ameritech Digital Transport Service-Enhanced (ADTS-E)
                Ameritech DSO (except Total Access Service)
                Ameritech DS1 (except Total Access Service)
                Ameritech DS3 (except Total Access Service)
                Ameritech Fiber Distributed Data Interface Service (FDDI)
                Ameritech Fractional DS1 (384) (except Total Access Service)
                Ameritech Frame Relay Service (FRS)
                Ameritech Host Interconnection Service (AHIS)
                Ameritech Internet Access (Dedicated Access over Frame Relay
                           or CBDS)
                Ameritech ISDN Direct Service
                Ameritech ISDN Prime Service
                Ameritech LAN Interconnect Service (ALIS)
                Ameritech Packet Switched Data Service
                Ameritech Reconfiguration Service (ARS)
                Ameritech Remote Office Access Manager (ROAM)
                Ameritech Synchronized Optical Network Service (SONET)

-------------------------------          ------------------------------
Ameritech Signature                      AD Signature

-------------------------------          ------------------------------
Date                                     Date

(The Balance of this Page Intentionally Left Blank)

                                       22

<PAGE>   27
                                                         EXHIBIT B, Attachment 3

                                                                  Usage Products

                    ATTACHMENT 3: USAGE PRODUCTS AND SERVICES

         This is incorporated as Attachment 3 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and Telecomm Industries, Inc. ("AD")
dated January 1, 1999.

             Ameritech 1-800-CONFERENCE
             Ameritech 9-1-1 Locator ID
             Ameritech Caller ID
             Ameritech Custom Calling Services
             Ameritech Digital Transport Service-Enhanced (ADTS-E)
             Ameritech Linebacker
             Ameritech Local Access Lines
             Ameritech PrePaid Products
             Ameritech PEX Trunks
             Ameritech Remote Call Forwarding
             Ameritech SmartFax Connections
             Ameritech ValueLink Product Family
             Ameritech Voice Mail

-------------------------------          ------------------------------
Ameritech Signature                      AD Signature

-------------------------------          ------------------------------
Date                                     Date

(The Balance of this Page Intentionally Left Blank)

                                       23
<PAGE>   28
                                                          EXHIBIT B Attachment 4

             Objective Retirement Product List (by Product family)

      ATTACHMENT 4: OBJECTIVE RETIREMENT PRODUCT LIST (BY PRODUCT FAMILY)

         This is incorporated as Attachment 4 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and Telecomm Industries, Inc. ("AD")
dated January 1, 1999.

         The products and services identified in each Annex to this Attachment
will or will not retire an AD's objective fox the product family specified on
the Annex as indicated in the column titled "Objective Retirement".

(The Balance of this Page Intentionally Left Blank)

                                       24

<PAGE>   29

                  ANNEX 1: VOICE NETWORK PRODUCTS AND SERVICES
                              OBJECTIVE RETIREMENT

         This is incorporated as Annex 1 to Attachment 4 of Exhibit B to the
Authorized Distributor Agreement between Ameritech and Telecomm Industries, Inc.
("AD") dated January 1, 1999.

------------------------------------------------------         -------
                                                              Objective
                     Eligible Products and Services          Retirement

------------------------------------------------------         -------
Ameritech 1-800-CONFERENCE                                       Yes
------------------------------------------------------         -------
Ameritech 9-1-1 Locator ID                                       Yes
------------------------------------------------------         -------
Ameritech Caller ID                                              Yes
------------------------------------------------------         -------
Ameritech Centrex Service (Includes ISDN Centrex)                Yes
------------------------------------------------------         -------
Ameritech Custom Calling Services                                Yes
------------------------------------------------------         -------
Ameritech Digital Transport Service-Enhanced (ADTS-E)            Yes
------------------------------------------------------         -------
Ameritech DSO (except Total Access Service)                      No
------------------------------------------------------         -------
Ameritech DS1 (except Total Access Service)                      No
------------------------------------------------------         -------
Ameritech FeatureLink                                            Yes
------------------------------------------------------         -------
Ameritech ISDN Direct Service                                    Yes
------------------------------------------------------         -------
Ameritech ISDN Prime Service                                     Yes
------------------------------------------------------         -------
Ameritech Linebacker                                             Yes
------------------------------------------------------         -------
Ameritech Local Access Lines                                     Yes
------------------------------------------------------         -------
Ameritech PBX Trunks                                             Yes
------------------------------------------------------         -------
Ameritech Remote Call Forwarding                                 Yes
------------------------------------------------------         -------
Ameritech SmartFax Connections                                   Yes
------------------------------------------------------         -------
Ameritech Voice Mail                                             Yes
------------------------------------------------------         -------

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                                       25

<PAGE>   30

                                                         Exhibit B, Attachment 4

                                                                         Annex 2

                                                          Standard Data Products

                  ANNEX 2: STANDARD DATA PRODUCTS AND SERVICES
                              OBJECTIVE RETIREMENT

         This is incorporated as Annex 2 to Attachment 4 of Exhibit B to the
Authorized Distributor Agreement between Ameritech and Telecomm Industries, Inc.
("AD") dated January 1, 1999.

------------------------------------------------------------   ----------
                                                               Objective
                     Eligible Products and Services            Retirement

------------------------------------------------------------   ----------
Ameritech Analog Video Service                                     Yes
------------------------------------------------------------   ----------
Ameritech Asynchronous Transfer Mode Service (ATM)                 Yes
------------------------------------------------------------   ----------
Ameritech Broadcast Video Service                                  Yes
------------------------------------------------------------   ----------
Ameritech Connectionless Broadband Data Service (CBDS)             Yes
------------------------------------------------------------   ----------
Ameritech Digital Transport Service-Enhanced (ADTS-E)              Yes
------------------------------------------------------------   ----------
Ameritech DSO (except Total Access Service)                        Yes
------------------------------------------------------------   ----------
Ameritech DS1 (except Total Access Service)                        Yes
------------------------------------------------------------   ----------
Ameritech DS3 (except Total Access Service)                        Yes
------------------------------------------------------------   ----------
Ameritech Fiber Distributed Data Interface Service (FDDI)          Yes
------------------------------------------------------------   ----------
Ameritech Fractional DS1 (384) (except Total Access Service)       Yes
------------------------------------------------------------   ----------
Ameritech Frame Relay Service (FRS)                                Yes
------------------------------------------------------------   ----------
Ameritech Host Interconnection Service (AHIS)                      Yes
------------------------------------------------------------   ----------
Ameritech Internet Access
   (Dedicated Access over Frame Relay or CBDS)                     Yes
------------------------------------------------------------   ----------
Ameritech ISDN Direct Service                                      Yes
------------------------------------------------------------   ----------
Ameritech ISDN Prime Service                                       Yes
------------------------------------------------------------   ----------
Ameritech LAN Interconnect Service (ALIS)                          Yes
------------------------------------------------------------   ----------
Ameritech Packet Switched Data Service                             Yes
------------------------------------------------------------   ----------
Ameritech Reconfiguration Service (ARS)                            Yes
------------------------------------------------------------   ----------
Ameritech Remote Office Access Manager (ROAM)                      Yes
------------------------------------------------------------   ----------
Ameritech Synchronized Optical Network Service (SONET)             Yes
------------------------------------------------------------   ----------

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                                       26
<PAGE>   31

                                                         Exhibit B, Attachment 4

                                                                         Annex 3

                                                                  Usage Products

                      ANNEX 3: USAGE PRODUCTS AND SERVICES
                              OBJECTIVE RETIREMENT

         This is incorporated as Annex 3 to Attachment 4 of Exhibit B to the
Authorized Distributor Agreement between Ameritech and Telecomm Industries, Inc.
("AD") dated January 1, 1999.

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

Eligible Products and Services                             Objective Retirement

-------------------------------------------------------    --------------------
Ameritech 1-800-CONFERENCE                                          Yes
-------------------------------------------------------    --------------------
Ameritech 9-1-1 Locator ID                                          No
-------------------------------------------------------    --------------------
Ameritech Caller ID                                                 No
-------------------------------------------------------    --------------------
Ameritech Custom Calling Services                                   No
-------------------------------------------------------    --------------------
Ameritech Digital Transport Service-Enhanced (ADTS-E)               No
-------------------------------------------------------    --------------------
Ameritech Linebacker                                                No
-------------------------------------------------------    --------------------
Ameritech Local Access Lines                                        No
-------------------------------------------------------    --------------------
Ameritech Prepaid Products                                          Yes
-------------------------------------------------------    --------------------
Ameritech PBX Trunks                                                No
-------------------------------------------------------    --------------------
Ameritech Remote Call Forwarding                                    No
-------------------------------------------------------    --------------------
Ameritech SmartFax Connections                                      Yes
-------------------------------------------------------    --------------------
Ameritech Valuelink Product Family                                  Yes
-------------------------------------------------------    --------------------
Ameritech Voice Mail                                                No
-------------------------------------------------------    --------------------

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                                       27
<PAGE>   32

Commission

                                                            Exhibit C COMMISSION

         This is incorporated as Exhibit C to the Authorized Distributor
Agreement Between Ameritech and Telecomm Industries, Inc. ("AD") dated January
1, 1999 (hereinafter the "Agreement").

1.0  General

     1.1 Definitions

         As used in this Agreement, the following definitions apply:

          "AD of Record" shall mean the Authorized Distributor firm credited
          with the sale of a new or renewed Centrex System or Prepaid Products.

          "Base Commission" shall mean the amount paid upfront to an AD for
          sales of Ameritech Products. The base commission may increase as an
          AD's objective increases relative to other ADs.

          "Billable Revenue" shall mean those Recurring and Non-Recurring
          charges which result from the customer service order(s) which result
          from the sale submitted by the AD.

          "Completed Orders" shall mean a "completed" Status in an Ameritech
          service ordering or billing systems.

          "Contract Value" or "CV" shall mean the value of the Recurring and
          Non-Recurring revenue charges for each product which is used by
          Ameritech for purposes of establishing the value of a sale for
          commission purposes.

          "Eligible Product" or "Product Eligibility" shall mean those Products
          the AD is authorized to promote, market and sell under this Agreement
          and which are identified fully under Exhibit B of the Agreement. AD is
          authorized to sell all the Products, but only sales of those Products
          for which AD has an annual sales objective will retire the AD's sales
          objective for that product family.

          "Migration" occurs when a customer with an existing Ameritech Usage
          contract signs a new contract for a different Ameritech Usage product,
          and that product is deemed solely by Ameritech to be within the same
          product family as the replaced product.

          "Netting" is applied to the sale of certain ValueLink products when
          existing products such as, but not limited to, Centrex are already
          existing at that location of the customer.

                                       28
<PAGE>   33

          "New" shall mean the sale of a Product to a Customer who does not
          currently have that specific Product and Ameritech in its sole
          discretion will determine if customer currently has the Product. To
          retire an AD's objective in the applicable product family, the sale
          must be made in the AD's Objective Territory and must be an Eligible
          Product. In no event will a sale which is classified by Ameritech in
          its sole discretion as a Recast, a Renewal, a Renegotiation, a
          Migration or an Upgrade be considered a "New" sale for purposes of the
          Agreement.

          "Non-Recurring Revenue" shall mean those one-time billed charges which
          are a result of a sale by AD.

          "Objective Bonus" shall mean the amount paid as the Upfront Payment
          once an AD exceeds the sales volume thresholds, as those sales volumes
          are stated in dollars, and which are related to the AD's annual
          product family sales objective in each State. The amount of the
          Objective Bonus payment may increase over the term of this Agreement
          based upon the AD's objective relative to other ADs' objectives. The
          Objective Bonus payment shall apply only to New sales of Products
          which retire the objective for its product family in the Objective
          Territory.

          "Objective Retirement" shall mean the process whereby New sales of
          Ameritech Products retire the objectives for the product family. In
          the event a Product retires AD's Objective as specified under Exhibit
          B, Attachment 4 in more than one product family, New sales of those
          products will retire the AD's objective in one, and only one, product
          family in the following order (i) Data; (ii) Voice; and (iii) Usage.
          Sales of Products which do not retire objective (see Attachments to
          Exhibit B) are considered "Sales Without Objective Retirement" for
          purposes of this Agreement.

          "Objective Revenue" shall mean that dollar amount which is considered
          the unit of measure to retire an AD's sales objective in a product
          family. Objective Retirement shall equal one month of the Recurring
          Revenue associated with the New sale of a Product.

          "Objective Territory" shall mean a sales area or region which is a
          sub-set of AD's authorized Territory. Objective Retirement is
          satisfied only by sales in AD's Objective Territory, and Ameritech in
          its sole discretion will establish and assign AD an "Objective
          Territory".

          "Objective Tier ("Tier")" means that the AD has been assigned to Tier
          I, Tier II or Tier III for purposes of commission value calculation
          and Objective Retirement. Determining the Tier the AD is assigned is
          at the sole discretion of Ameritech.

          "Partnering" means that the AD is not the sole sales entity in the
          sales effort with a particular customer, and AD markets Product(s) to
          a particular customer with another AD or Ameritech sales
          representative. AD must receive prior written approval by Ameritech
          for each Partnering effort, and commission will not be paid on sales
          which result from such efforts without the prior written consent of
          Ameritech. Ameritech reserves the right to set commission values for
          each partnering arrangement.

                                       29

<PAGE>   34

          "Recast/Renewal/Renegotiation" collectively shall mean a sale of Data
          or Voice, or a sales which includes data and voice, and such sale is
          not classified as a New sale for purposes of Objective Retirement or
          Commission Payment purposes. For purposes of the Agreement, a sale
          will be deemed a Recast or a Renewal (whichever is appropriate) when a
          customer signs new a contract for a Product, and the customer already
          subscribes to the same Ameritech product or to an Ameritech product
          which is deemed solely by Ameritech to be similar to the Product
          covered under the new contract, and the new contract extends the
          customer's term commitment for the Product. A sale will he deemed a
          Renegotiation when a customer enters into a new contract with
          Ameritech for a Product they already subscribe to, and the terms of
          the contract are substantially changed from the contract
          then-in-effect for that Product, and Ameritech determines, in its sole
          discretion that the sale is eligible for commission payment to the AD
          at the Renegotiation rate.

          "Recurring Revenue" shall mean those monthly charges billed to the
          customer for Products as a result of a sale by AD.

          "Residual Payment" shall mean the commission payment which is paid by
          Ameritech over time, and the time period for payment is established by
          Ameritech based on contract term or other factors relevant to the
          sale. Ameritech determines the amount and payment schedule in its sole
          discretion.

          "Takeback" shall mean commission amounts which are forfeited or
          returned by the AD as a result of a customer discontinuing its
          subscription to the Product(s). In the event the Takeback is
          accomplished by the AD returning commissions already paid, Ameritech
          will debit the AD's future commission payments by the amount to be
          returned. If such a debit does not satisfy the Takeback amount,
          Ameritech may demand full payment from the AD immediately.

          "Territory" is defined under Exhibit B of the Agreement and the rules
          governing payment of commission for sales made to customers outside
          the Territory are set forth in the Agreement.

          "Upfront commission Payment" shall mean that portion of the total
          commission paid to the AD upon Ameritech's verification that the
          order(s) associated with the sale are Completed Orders.

          "Upgrade" means that a customer signs a contract for an Ameritech
          Product to which the customer already subscribes, or for a Product
          which Ameritech deems is similar to the Product the customer already
          subscribes to, and the new contract is for a term that extends the
          customer's contract term beyond the existing contract's expiration
          date, and the new contract includes a product commitment which is
          larger than that which is in effect at the time of the new contract.

                                       30

<PAGE>   35
          "Winback Bonus" shall mean the incremental commission amount paid to
          AD because the sale of an Eligible Product is deemed solely by
          Ameritech to satisfy Ameritech's criteria to be classified as a
          "winback" sale as that term is understood in the telecommunications
          industry.

         1.2 Earned Date. AD earns the commission on any sale at the time the
commission is paid by Ameritech.

         1.3 Commission Amount and Payment Schedules. The commission value and
the time of payment for each sale is based upon a number of factors, first and
foremost is the Product sold and the terms and conditions of this Agreement. To
be eligible for commission on a specific sale, the AD must comply with all
Ameritech practices and procedures, including, but not limited to, those
related to the processing of sales and subscriber agreements by AD, and the
accuracy of each submission by AD. Ameritech reserves the sole right to modify
or change any or all of its practices and procedures related to the AD program,
and will provide AD with a minimum of thirty (30) days prior written notice of
any modification which will affect the AD's own practices or procedures.
Ameritech may elect to serve this Notice via the "         #         " web site
and bulletin board, and the Notice will be considered given on the date the
Notice is posted by Ameritech on the web site.

         1.4 Acceptance by Ameritech. Ameritech reserves the right to accept or
reject any sale submitted by AD, and, accept or deny, in whole or in part, any
request for commission for a specific sale. Ameritech in its sole discretion has
the right to establish the reasonable commission value of any sale.

2.0 Commission Set Off

In the event of a "Seriously Delinquent" on any AD Ameritech account, including,
but not limited to, Ameritech monthly billing statements for service and
Ameritech invoices for CPE, Ameritech may at its sole election, set off the
amount of the delinquency by the amount owed to AD in future commissions,
including, without limitations, Residual Payments. Ameritech's decision to
set-off is final and not subject to appeal. In the event such set-off is
necessary, Ameritech will notify AD in writing of its intent to set off, and
AD'S commission statement will reflect the set-off. In no event will Ameritech
define "Seriously Delinquent" if the delinquency is less than ninety (90) days.

3.0 Upon Termination

         3.1   Ameritech Terminates. The parties agree that in the event
Ameritech exercises its right to terminate for convenience as is provided for
under Section 4.2.a of the Agreement Ameritech will, at its sole election, pay
the Authorized Distributor either:

               a)   Liquidated damages equal to a sum of the following formula;
                    (The amount of residual commission the AD would be awarded
                    if all contracts remained in effect through the end of the
                    contract term then in effect provided the AD remained
                    eligible for residual

                                       31

<PAGE>   36
                    payments for those customers contracts for the entire term)
                    x (times) (the Ameritech net present value discount rate on
                    the date of termination) x (times) (seventy five percent
                    (75%), or,

               b)   Pay on a monthly basis Residual Payment for customer sales
                    which are in effect and approved for commission on the date
                    Ameritech terminates the Agreement. Residual Payments will
                    continue through the expiration date of the customer
                    contract in effect at the time Ameritech terminates this
                    Agreement, or until the original expiration date of this
                    Agreement, whichever is sooner.

         3.2   AD Terminates. In the event AD exercises its right to terminate
the Agreement pursuant to the terms of the Agreement, AD is not entitled to any
commission payment after the date of termination. Ameritech agrees that in
extraordinary situations a commission payment after the termination date may be
reasonable, and under such situations Ameritech will deem at its sole discretion
that the AD will receive payment. If such a situation occurs, Ameritech will
provide to the AD in writing the amount and timing of the payment, and the
conditions or limitations on such payment(s).

         3.3   Upfront Commission Payment. AD will be eligible for the Upfront
Commission Payment for any sale which is accepted by Ameritech prior to the date
this Agreement is terminated.

4.0  Commission Calculation Methodology

         4.1   Calculation Basis. Ameritech will pay commissions on a sale
submitted by AD based upon;

               a)   The Product sold.

               b)   Whether the sale is deemed by Ameritech to be: (i) a New
                    sale or an addition to an existing service; (ii) a Recast,
                    Renewal or Renegotiation; (iii) a Migration or Upgrade;

               c)   Whether the AD is the sole sales entity or if sale is the
                    result of an approved Partnering sale as provided for
                    elsewhere in this Exhibit; and,

               dl   The order(s) which are associated with the sale are
                    Completed Orders.

         4.2   Commission Eligibility. In no event will an AD be paid commission
on a sale: (i) outside the Territory unless such a sale is provided for
elsewhere in this Agreement and AD receives prior written consent for such a
sale pursuant to the requirements set forth elsewhere in the Agreement; (ii) of
a product AD is not authorized to sell under the Agreement (i.e., product or
service is not specified in Exhibit B of the Agreement); (iii) made to a
customer the AD is not authorized to sell to, including, but not limited to, an
Ameritech house account, a customer who is not deemed to be a retail business
customer, or a customer who has expressly granted agency to another AD unless
that customer has expressly, in writing revoked such agency; and (iv) to
Ameritech or to an AD or other independent Authorized Ameritech representative.

                                       32

<PAGE>   37

         4.3   Commission Award Final. Ameritech reserves the right to establish
               the commission value for any sale, and that value may, with
               reasonable justification, be less than, more than or equal to the
               values set forth herein for such sale, or the value previously
               paid for similar sales. Ameritech is solely responsible for the
               determination and calculation of commission to be paid on any
               single sale, and Ameritech's commission determination, absent
               arithmetic errors, is final and not appealable.

     5.0         Sales Outside of Territory and Sales Outside of "Objective
                 Territory"

         In the event the AD sells Product outside of the Territory and such
sale has received Ameritech's prior written consent, the commission payment for
such sale will be established by Ameritech at its sole discretion.

         In the event that AD sells Product for which the AD does not have a
sales objective, (which is deemed a sale outside of Objective Territory), the
sale is subject to a twenty-five percent (25%) reduction in the Upfront
Commission Payment.

     6.0         Partnering

         Provided a Partnering arrangement complies with the requirements under
Article 7, Section 7.7 of the Agreement, Ameritech will pay commission on such
sales. The general commission payment treatment for a Partnering sale is that AD
will be paid an Upfront Commission Payment equal to fifty percent (50%) of the
Upfront Commission Payment which would be paid for the same sale if no
Partnering took place. If two ADs partner, each will receive this reduction. An
exception to the general commission payment treatment for a Partnering sale when
the Partnering efforts are with an Ameritech GBS Territory Manager, and the
result of the effort is a Data Product sale, the Upfront Commission Payment for
all resulting sales will be twenty-five percent (25%) less than the Upfront
Commission payment for the same sale if no Partnering took place.

     7.0         Centrex Product Family

         For purposes of the Agreement, Products classified by Ameritech as part
of the Centrex product family will be paid commission pursuant to this Section
7.0.

         7.1   Centrex Product Family. The Centrex product family is the
               collective term for the following Ameritech Centrex products:
               Ameritech Centrex Service (ACS); Indiana Advanced Centrex
               Service; ISDN Centrex; and, Individual Case Basis (ICB) Centrex.

         7.2   Grandfather and Sunset Offerings. Commission will not be paid on
               New sales of an Ameritech Centrex offering which has been
               grandfathered or sunset as those terms relate to
               telecommunications offerings. Commission will be paid for sales
               which are additions to an existing, installed system of a
               grandfathered or sunset Centrex offering.

                                       33

<PAGE>   38

         7.3   New Centrex Sales. Commission on New Centrex system sales will be
               paid provided the sale results in a net increase in Centrex
               station lines of at least fifteen percent (15%) of the existing
               installed system. In Indiana, the Centrex station line net
               increase must be at least one hundred percent (100%) of the
               existing installed system.

         7.4   The Upfront Commission Payment schedule set forth below applies
               to New Centrex system sales. The Commission Payments are stated
               in terms of one Centrex station line; the actual Commission
               Payment for a particular sale will be based on the number of
               lines sold, and, the Commission Payment amount will be calculated
               by multiplying the rate set forth below for a single Centrex
               station line by the total number of station lines sold.

<TABLE>
<CAPTION>
                                               ACS and Indiana Advanced Centrex
                                               --------------------------------

<S>                                         <C>                          <C>                      <C>
            Month-to-Month                  36 Months                    60 Months                84 Months
            --------------                  ---------                    ---------                ---------
                 *                             *                            *                        *

                                                      ISDN Centrex
                                                      ------------
            Month-to-Month                  36 Months                    60 Months                84 Months
            --------------                  ---------                    ---------                ---------
                 *                             *                            *                        *

                                                       ICB Centrex
                                                       -----------
            Month-to-Month                  26 Months                    60 Months                84 Months
            --------------                  ---------                    ---------                ---------
                 *                             *                            *                        *
</TABLE>

         Note: ICB Centrex sales for contract lengths greater than 84 months
         will be awarded commission based on the 84 month commission award.

         7.5   Centrex Station Line Additions

               a)    Commission for Centrex station line additions to an
                     existing installed system will be awarded only to the AD of
                     Record unless Ameritech has approved in writing alternative
                     treatment of commission payments. Ameritech will determine
                     at its sole discretion when there is a deviation in this
                     payment policy.

               b)    The Upfront Commission Payment for Centrex station line
                     additions will be 50% of the commission values in the above
                     schedules. The Upfront Commission Payment for Centrex
                     station line additions to a system which is grandfathered
                     or sunset offering will be $20 regardless of type of system
                     or contract length.

                                       34

<PAGE>   39

         7.6   Winback Bonus

         If the AD makes a Centrex sale which is designated by Ameritech as a
         "winback" sale, a Winback Bonus will be paid which will increase the
         Base Commission by            *              .

         7.7 Commitment Bonus

         If a new Centrex sale results in a contract which commits the customer
         to a number of Centrex station lines which Ameritech identifies in the
         chart that follows here as the appropriate number of lines based upon
         the number of lines sold, the AD will be eligible to receive the
         commitment bonus. The commitment bonus increases the Upfront Commission
         Payment by fifteen percent (15%). Ameritech, in its sole discretion,
         will determine if a sale is eligible for the Commitment Bonus. The
         following schedule will be used to determine the applicability of the
         commitment bonus for ACS and ISDN Centrex.

<TABLE>
<CAPTION>
Number of Lines Sold                        Number of Lines Committed
--------------------                        -------------------------
<S>                                                 <C>
    2 - 7                                             2
    8 - 25                                            7
   26 - 50                                            25
   51 - 100                                           50
  101 - 200                                          100
  over 200                                           200
</TABLE>

The following schedule will be used to determine the applicablity of the
Commitment Bonus for Indiana Advanced Centrex:

<TABLE>
<CAPTION>
Number of Lines Sold                        Number of Lines Committed
--------------------                        -------------------------
<S>                                                 <C>
    11 - 21                                           11
    22 - 101                                          22
   102 - 251                                         101
  252 - 1,001                                        251
  over 1,001                                        1,001
</TABLE>

         The Commitment Bonus for ICB Centrex will be awarded if, and only if,
         the number of lines committed to by the customer equals at least eighty
         percent (80%) of the number of lines sold to the customer.

         7.8   Objective Retirement and Objective Attainment For Objective
               Retirement purposes, the monthly contract values used for New
               Centrex sales and additions to existing Centrex systems are as
               follows:

                                       35

<PAGE>   40

<TABLE>
<CAPTION>
Centrex Service                           CV Per Month
---------------                           ------------
<S>                                           <C>
ACS and Indiana Advanced Centrex              $20
ISDN Centrex                                  $30
ICB Centrex                                   $16
</TABLE>

         The following factors will be applied to the Base Upfront Commission
         Payment for purposes of Objective Attainment:

<TABLE>
<CAPTION>
        Objective Attainment                                Factor
        --------------------                                ------
<S>                                                          <C>
             0-69.9%                                         1.00
             70-99.9%                                        1.15
          100% and over                                      1.30
</TABLE>

         7.9   Residual Commission Payment Schedule

               A Residual Commission Payment will be paid at a rate of
                               *                 , and will continue for so long
               as the customer's contract is in effect. In no event will
               Residual Payments be paid on a month-to-month Centrex sale.

         7.10  Recasts, Renewals, Renegotiations of existing Centrex Contracts

               a)    The AD of Record or other Ameritech representative of
                     Record has the exclusive right to Renew, Recast or
                     Renegotiate the contract during the contract term through
                     sixty (60) days prior to the contract expiration date.

               b)    If the customer's contract term in effect at the time of
                     the Recast or Renewal is more than one hundred and eighty
                     (180) days from the date the contract expires, commission
                     will not be paid to AD for a Centrex Recast or Renewal,
                     unless Ameritech has provided prior written approval for
                     such a payment. Commission will not be paid on Centrex
                     Renegotiations unless Ameritech has provided written
                     approval for such payment prior to the date the contract
                     was signed by the customer.

               c)    After a customer contract has expired, and the customer is
                     under a month-to-month term for that Product, any sale of
                     that Product which is submitted by AD will be considered a
                     Recast or Renewal for purposes of commission. If the
                     customer contract expired six (6) or more months prior to
                     the AD's submission, and the customer has been on a
                     month-to-month subscription for that period, Ameritech will
                     pay commission at the New sale rate.

               d)    Commission for Centrex Recasts, Renewals and Renegotiations
                     will be paid as follows:

                     (i) The Base Commission will equal 75% of the amount paid
                     for an identical New sale.

                     (ii) The Residual Commission Payment will be paid at the
                     same rate as an identical New Centrex sale.

                                       36

<PAGE>   41

         7.11  Month-to-Month centrex. For purposes of calculating the CV, a
               month-to-month Centrex sale will be considered equal to nine (9)
               months Recurring Revenue. In no event will Residual Payments be
               paid on a month-to-month Centrex sale.

         7.12  Takeback. The Upfront Commission Payment is subject to Takeback
               in the event the customer discontinues a service (for any or no
               reason) for which AD received commission in the past. The
               Takeback amount will be based upon the length of time the
               customer retained the service and whether the sale was under a
               term contract:

               a)    If the sale is a term contract, and the service is
                     discontinued within the first fifty percent (50%) of the
                     contract term, the amount of Takeback will be prorated to
                     the length of time remaining on the customer's contract.

               b)    If the sale was a month-to-month subscription, and the
                     customer discontinues the service within sixty (60) days of
                     the Completed Order date, the Takeback amount will equal
                     one hundred percent (100%) of the commission paid. Residual
                     Commission Payments cease when a service is discontinued.

     8.0          Ameritech FeatureLink.

                     Commission payment and conditions for payment for Ameritech
                     FeatureLink service are the same as those set forth above
                     for ACS Centrex, except that no Commitment Bonus is
                     available for the sale of Ameritech FeatureLink.

     9.0          Other Voice Products

         9.1   The commission payment schedule set forth below applies to New
               sales of the following Products:

                                    Caller ID
                                    Custom Calling Services
                                    Linebacker
                                    Local Access Lines
                                    PBX Trunks
                                    Remote Call Forwarding
                                    Voice Mail Service

<TABLE>
<CAPTION>
   Objective                          Winback Bonus
   Attainment           Upfront          (See Note)            Residual
 -------------        -----------     -------------   -------------------------
<S>                   <C>              <C>            <C>

      *                    *                *                   *

</TABLE>

Note: The winback bonus applies only to the sale of Local Access Lines.

         9.2   CV. The CV for the above Products will be determined by the
               following formula:

               (Nonrecurring Revenue) + (Recurring Revenue X 24 Months) = CV

                                       37

<PAGE>   42
         9.3 Residual Commission Payments. Residual Commission Payments will be
paid for a period of twenty four (24) months, and in no event will AD be
eligible for Residual Commission Payment on the above Products after twenty four
(24) monthly commission payments have been made.

         9.4 Conversion from Centrex Service. In no event will AD be paid
commission on a sale which converts the customer from Centrex service (of any
type) to Local Access Lines.

         9.5 Takeback. If the AD received commission for a Product subject to
this Section 9.0, and the customer discontinues the Product for any reason
within one hundred and eighty (180) days after the Completed Order date,
takeback applies, and the amount of takeback equals one hundred percent (100%)
of the commission paid to AD.

10.0 Ameritech SmartFax Connections

         10.1 Upfront Commission Payment. The following Upfront Commission
Payment schedule applies to New sales of, and "Sales of Additions" to, Ameritech
SmartFax Connections.

<TABLE>
<CAPTION>
                  Contract Description                     Commission Award
                  --------------------                     ----------------
<S>                                                        <C>
                No Contract (Month-to-Month)
                One year Contract                                  *
                Contract Renewal
</TABLE>

         10.2 CV. CV is determined by the following formula: (Nonrecurring
Revenue) + (Recurring Revenue x Contract Length) = CV

         10.3 Residual Commission Payment. Residual Commission Payment will
equal        *          of the monthly Recurring Revenue and the monthly usage
revenue which appears on the customer's Ameritech local service bill.

         10.4 Renewal Upfront Commission Payment. In the event AD submits a sale
which is deemed by Ameritech to be a Renewal for the Ameritech SmartFax
Product, and the Renewal is submitted within sixty (60) days from the expiration
date of the customer's then-in-effect contract for that service, the AD will
receive a Renewal Upfront commission Payment. If the AD converts a customer's
subscription to the service from a month-to-month to a term contract, the AD
will receive commission at the Renewal rate. After a customer's contract has
expired, and the customer is under a month-to-month term for at least six (5)
months following the expiration, any sale submitted by AD will be considered a
New sale for purposes of commission.

                                       38

<PAGE>   43

11.0 Ameritech 9-1-1 Locator ID

         11.1 Commission Schedule. Commission for this Product will be awarded
according to the following schedule:

<TABLE>
<CAPTION>
                        Sale Description                 Commission Award
                        ----------------                 ----------------
<S>                                                      <C>
      Non-Centrex
              Software Only
              Software and Hardware
      Centrex                                                    *
             Software Only
             Software and Technical Support

</TABLE>

<TABLE>

<S>                                      <C>
            Record Loading               $0.01 per record, not to exceed $250.00
            --------------               ---------------------------------------
</TABLE>

         11.2 CV. The CV is determined by the following formula: (Nonrecurring
Revenue) + (Recurring Revenue x Contract Length)=CV

         11.3 Residual Commission Payment. No Residual Commission Payment will
be paid.

12.0 Eligible Standard Data Products

         12.1 Common Provisions. The following applies to all Eligible Standard
Data Products.

                    a) Sales to Retail Business Customers Only. The conditions
and limitations set forth elsewhere in the Agreement apply to the sale of Data
Products. In addition, Ameritech will not pay commission on any network sale
which is configured as terminating only service, as that term is understood in
the telecommunications industry.

                    b) Eligible Standard Data Products. Eligible Standard Data
Products are specified under Exhibit B of the Agreement, and AD's right to
earn commission for sales of Data Products as set forth below are governed by
the terms, conditions and limitations of the Agreement and Exhibit B.

                    c) Recasts, Renewals, Renegotiations.

                         (i) If the customer's contract term-in-effect at the
          time of the Recast or Renewal is more than one hundred and eighty
          (180) days from the date the contract expires, commission will not be
          paid to AD for a Data Product Recast or Renewal, unless Ameritech has
          provided prior written approval for such a payment. Commission will
          not be paid on Data Product Renegotiations unless AD has received from
          Ameritech written approval for such payment prior to the date the
          contract was signed by the customer.

                                       39

<PAGE>   44
                         (ii) After a customer contract has expired, and the
          customer is under a month-to-month term for that Product, any sale for
          that Product which is submitted by AD will be considered a Recast or
          Renewal for purposes of commission. If the customer contract expired
          six (6) or more months prior to the AD's submission, and the customer
          has been on a month to month subscription for that period Ameritech
          will be pay commission at the New sale rate.

                         (iii) Commission for Data contract Recast, Renewals and
          Renegotiations will be awarded as follows:

                         (a) The Base Commission will equal 50% of the amount
                    paid for an identical New sale (New sale commission payment
                    schedule set forth below)

                         (b) The Residual Payment will be paid at the same rate
                    as an identical New sale of the same Data Product

                d) Month-to-Month Subscription. For purposes of commission
payment calculation, a month-to-month Data sale will be considered equal to
nine (9) months Recurring Revenue. In no event will Residual Payments be paid on
a month-to-month Data sale.

                e) Takeback. If the AD received commission for a Product subject
to this Section 12.0, and the customer discontinues the Product for any reason,
Takeback applies. The amount of Takeback is based upon the length of time the
customer retained the service and if the sale was a term contract: a) if the
customer discontinues the Product during the first fifty percent (50%) of the
contract term, the Takeback amount will be prorated to the length of time
remaining on the customer's contract; b) if the customer discontinues a
month-to-month subscription of the Product within sixty (60) days of
installation, the Takeback will equal one-hundred percent (100%) of the Upfront
Commission Payment. Residual Commission Payments cease when a contract is
discontinued.

         12.2 Basic Data Products

               a) Commission Payment Schedule. The following commission
payment schedule applies to New sales and additions to existing, installed
services for the following Products:

                         Ameritech Base Rate (BR or DSO)
                         Ameritech DS1
                         Ameritech Fractional DS1 (384)
                         Ameritech DS3
                         Ameritech ISDN Prime
                         Ameritech Reconfiguration Service
                         Ameritech Digital Transport Service-Enhanced (ADTS-E)

                                       40

<PAGE>   45

<TABLE>
<CAPTION>
Objective                                   Winback
Attainment             Upfront               Bonus                     Residual
----------             -------              ------                     --------
<S>                 <C>                  <C>               <C>

    *                     *                    *                       *

</TABLE>

               b) CV. The CV for the above schedule is determined by the
following formula: (Nonrecurring Revenue) + (Recurring Revenue x Contract
Length) = CV

         12.3 Ameritech Analog and Broadcast Video Services

               a) Ameritech Analog and Broadcast Video. The following commission
payment schedule applies to New sales and Additions to existing installations of
Ameritech Analog and Broadcast Video services:

<TABLE>
<CAPTION>
Objective                                   Winback
Attainment             Upfront               Bonus                     Residual
----------             -------              ------                     --------
<S>                 <C>                  <C>               <C>

    *                     *                    *                       *

</TABLE>

               b) CV. The CV for the above schedule is determined by the
following formula: (Nonrecurring Revenue) + (Recurring Revenue x Contract
Length) = CV

         12.4 Complex Data Products

               a) Commission Payment Schedule. The following commission payment
schedule applies to New sales and additions to existing installations of the
following Data products:

                Ameritech Synchronized Optical Network Service (SONET)
                Ameritech Frame Relay Service (FRS)
                Ameritech Connectionless Broadband Data Service (CBDS)
                Ameritech Internet Access (Dedicated Access over FRS or CBDS)
                Ameritech Remote Office Access Manager (ROAM)
                Ameritech LAN Interconnection Service (ALIS)
                Ameritech Host Interconnection Service (AHIS)
                Ameritech Fiber Distributed Data Interface Service (FDDI)
                Ameritech Asynchronous Transfer Mode Service (ATM)

<TABLE>
<CAPTION>
Objective                                   Winback
Attainment             Upfront               Bonus                     Residual
----------             -------              ------                     --------
<S>                 <C>                  <C>               <C>

    *                     *                    *                       *

</TABLE>

                                       41

<PAGE>   46

               b) CV. The CV for the above schedule is determined by the
following formula: (Nonrecurring Revenue) + (Recurring Revenue x Contract
Length) = CV

         12.5 Ameritech ISDN Direct Service

               a) The following commission payment schedule applies to New sales
and additions to existing installations of Ameritech 1SDM Direct Service:

<TABLE>
<CAPTION>
Objective
Attainment             Upfront                     Residual
----------             -------                     --------
<S>                 <C>                <C>

    *                      *                         *

</TABLE>

               b) CV. The CV for the above schedule is determined by the
following formula: (Nonrecurring Revenue) + (Recurring Revenue x Contract
Length) = CV

         12.6 Ameritech Packet Switched Network Service

               a) The following commission payment schedule applies to New sales
and additions to existing installations of Ameritech Packet Switched Network
Service. For purposes of the Agreement, Ameritech Packet Switched Network
Service includes x.25 direct line, and ISDN B Channel which serves an x.25
application computer.

<TABLE>
<CAPTION>
Objective
Attainment             Upfront                     Residual
----------             -------                     --------
<S>                 <C>                <C>

    *                      *                         *

</TABLE>

               b) CV. The CV for the above schedule is determined by the
following formula: (Nonrecurring Revenue) + (Recurring Revenue x Contract
Length) = CV

13.0 ValueLink Products

         13.1 For purposes of the Agreement, the Products referenced in this
Section 13.0 are collectively classified by Ameritech as the Ameritech ValueLink
product family. The conditions and limitations regarding the sale of Products
apply to the ValueLink product family, including, without limitation, that the
AD shall not sell the Products, and is not entitled to commission on sales to
customers who are not designated by Ameritech as retail business customers.

         13.2 Month-to-month subscriptions. In no event will AD be awarded
commission for month-to-month ValueLink product sale.

                                       42

<PAGE>   47
         13.3 Enhanced ValueLink Plus. The commission payment schedule provided
below applies to New sales of Enhanced ValueLink Plus.

                  a) Commission Payment Schedule

<TABLE>
<CAPTION>
                     ---------------------------------------------------------------------------------
                                                     12 Month Contract
                                                    Objective Attainment
                     ---------------------------------------------------------------------------------
  Minimum Annual           Upfront                                  Upfront              Upfront
Revenue Commitment            *                Residual                *                    *
------------------   ------------------   ------------------   ------------------   ------------------
<S>                  <C>                  <C>                  <C>                  <C>

        *                     *                   *                    *                    *

------------------   ------------------   ------------------   ------------------   ------------------
</TABLE>

<TABLE>
<CAPTION>
                     ---------------------------------------------------------------------------------
                                                     24 Month Contract
                                                    Objective Attainment
                     ---------------------------------------------------------------------------------
  Minimum Annual           Upfront                                  Upfront              Upfront
Revenue Commitment            *                Residual                *                    *
------------------   ------------------   ------------------   ------------------   ------------------
<S>                  <C>                  <C>                  <C>                  <C>

        *                     *                   *                    *                    *

------------------   ------------------   ------------------   ------------------   ------------------
</TABLE>

<TABLE>
<CAPTION>
                     ---------------------------------------------------------------------------------
                                                     36 Month Contract
                                                    Objective Attainment
                     ---------------------------------------------------------------------------------
  Minimum Annual           Upfront                                  Upfront              Upfront
Revenue Commitment            *                Residual                *                     *
------------------   ------------------   ------------------   ------------------   ------------------
<S>                  <C>                  <C>                  <C>                  <C>

        *                     *                   *                    *                    *

------------------   ------------------   ------------------   ------------------   ------------------
</TABLE>

                  b) CV. The CV for the above schedule determined by the
following formula:

                  (MARC) x (Contract Length in Years) = CV

                                       43
<PAGE>   48

         13.4 ValueLink Extra. The commission payment schedule below applies to
New sales of ValueLink Extra.

                  a) Commission Payment Schedules Without Netting

<TABLE>
<CAPTION>
                   -------------------------------------------------------------------------
                                       24 Month Contract - Without Netting
                                              Objective Attainment
                   -------------------------------------------------------------------------
 Minimum Annual
    Revenue             Upfront                              Upfront             Upfront
   Commitment              *              Residual              *                   *
----------------   ----------------   ----------------   ----------------   ----------------
<S>                <C>                <C>                <C>                <C>

        *                  *                  *                 *                   *

----------------   ----------------   ----------------   ----------------   ----------------
</TABLE>

<TABLE>
<CAPTION>
                   -------------------------------------------------------------------------
                                       36 Month Contract - Without Netting
                                              Objective Attainment
                   -------------------------------------------------------------------------
 Minimum Annual
    Revenue             Upfront                              Upfront             Upfront
   Commitment              *              Residual              *                   *
----------------   ----------------   ----------------   ----------------   ----------------
<S>                <C>                <C>                <C>                <C>

        *                  *                  *                 *                   *

----------------   ----------------   ----------------   ----------------   ----------------
</TABLE>

                                       44
<PAGE>   49

                  b) Commission Payment Schedule With Netting

<TABLE>
<CAPTION>
                   -------------------------------------------------------------------------
                                        24 Month Contract - With Netting
                                              Objective Attainment
                   -------------------------------------------------------------------------
 Minimum Annual
    Revenue             Upfront                              Upfront             Upfront
   Commitment              *              Residual              *                   *
----------------   ----------------   ----------------   ----------------   ----------------
<S>                <C>                <C>                <C>                <C>

        *                  *                  *                 *                   *

----------------   ----------------   ----------------   ----------------   ----------------
</TABLE>

<TABLE>
<CAPTION>
                   -------------------------------------------------------------------------
                                        36 Month Contract - With Netting
                                              Objective Attainment
                   -------------------------------------------------------------------------
 Minimum Annual
    Revenue             Upfront                              Upfront             Upfront
   Commitment              *              Residual              *                   *
----------------   ----------------   ----------------   ----------------   ----------------
<S>                <C>                <C>                <C>                <C>

        *                  *                  *                 *                   *

----------------   ----------------   ----------------   ----------------   ----------------
</TABLE>

                  c) CV. The CV for a contract without Netting determined by the
                  following formula:

                  (MARC) x (Contract Length in Years) = CV

                  The CV for a contract with Netting is determined by the
                  following formula:

                  (Net MARC) x (Contract Length in Years) = CV

         13.5 ValueLink Extra - Local. The commission payment schedule below
applies to New sales of ValueLink Extra - Local.

                                       45
<PAGE>   50

                  a)       Commission Payment Schedule Without Netting

                                             24 Month Contract - Without Netting
                                                      Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residua1           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                            36 Month Contract - Without Netting
                                                   Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residua1           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                  b)       Commission Payment Schedule With Netting

                                               24 Month Contract - With Netting
                                                     Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residua1           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                       46
<PAGE>   51

                                              36 Month Contract - With Netting
                                                     Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                         Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residua1           *               *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                  c)       CV. The CV for a contract without Netting is
                           determined by the following formula: (MARC) x

                           (Contract Length in Years) = CV.

                           The CV for a contract with Netting is determined by
                           the following formula:
                           (Net MARC) X (Contract Length in Years) = CV

         13.6     ValueLink Extra-Select. The commission award and payment
                  schedules provided below apply to New sales of Extra-Select.

                  a)       Commission Payment Schedules Without Netting

                                            12 Month Contract - Without Netting
                                                    Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront
       Commitment           *           Residua1           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                             24 Month Contract - Without Netting
                                                   Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront
       Commitment           *           Residua1           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                       47

<PAGE>   52

                                             36 Month Contract - Without Netting
                                                   Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residual           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                  b)       Commission Payment Schedule With Netting

                                               12 Month Contract - With Netting
                                                     Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residual           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                               24 Month Contract - With Netting
                                                    Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residual           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                                36 Month Contract - With Netting
                                                      Objective Attainment

<TABLE>
<CAPTION>
        Minimum                                                          Upfront
     Annual Revenue      Upfront                        Upfront
       Commitment           *           Residual           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                  c)       CV. The CV for a contract without Netting is
                           determined by the following formula: (MARC) x
                           (Contract Length in Years) = CV.

                                       48
<PAGE>   53

                           The CV for a contract with Netting is determined by
                           the following formula (Net MARC) X (Contract Length
                           in Years) = CV

         13.7     ValueLink Illinois Option F Preferred. The commission payment
                  schedules below applies to New sales of ValueLink Illinois
                  Option F Preferred.

                  a)       Commission Payment Schedules

                                                          12 Month Contract
                                                        Objective Attainment

<TABLE>
<CAPTION>
     Minimum Annual                                                      Upfront
     Minutes of Use      Upfront                        Upfront
       Commitment           *           Residual           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>
           *                *              *               *                *
</TABLE>

                                                         24 Month Contract
                                                        Objective Attainment

<TABLE>
<CAPTION>
     Minimum Annual                                                      Upfront
     Minutes of Use      Upfront                        Upfront
       Commitment           *           Residual           *                *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>
           *                *              *               *                *
</TABLE>

                                                          36 Month Contract
                                                        Objective Attainment

<TABLE>
<CAPTION>
     Minimum Annual                                                     Upfront
     Minutes of Use      Upfront                        Upfront
       Commitment           *           Residual           *               *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>
           *                *              *               *                *
</TABLE>

                  b)       CV. The CV for the above schedules is determined by
                           the following formula: (Minimum Annual MOU x Per
                           Minute Rate) x (Contract Length In Years)

                                       49
<PAGE>   54

         13.8     ValueLink Illinois Option F. The commission payment schedules
                  below applies to New Sales of ValueLink Illinois Option F.

                  a)       Commission Payment Schedules

                                                         12 Month Contract
                                                        Objective Attainment

<TABLE>
<CAPTION>
     Minimum Annual                                                     Upfront
     Minutes of Use      Upfront                        Upfront
       Commitment           *           Residual           *               *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                                             24 Month Contract
                                                           Objective Attainment

<TABLE>
<CAPTION>
     Minimum Annual                                                     Upfront
     Minutes of Use      Upfront                        Upfront
       Commitment           *           Residual           *               *
     --------------     --------       ---------       ---------       ----------
<S>                     <C>            <C>             <C>             <C>

           *                *              *               *                *

</TABLE>

                                       50

<PAGE>   55
<TABLE>
<CAPTION>

                                            36 Month Contract
                                          Objective Attainment
                                -------------------------------------------
                Minimum Annual
Upfront         Minutes of Use    Upfront                         Upfront
   *            Commitment           *           Residual            *
----------      ---------       ----------      ----------      ----------
<S>                <C>          <C>             <C>             <C>

   *                *               *               *                *

----------      ---------       ----------      ----------      ----------
</TABLE>

          b)   CV. The CV for the ABOVE schedules is determined by the
               following formula: (Minimum Annual MOU x per Minute Rate) x
               (Contract Length In Years) = CV

              (The Balance of this Page Intentionally Left Blank)

<PAGE>   56

         13.9 StraightRate Illinois. The commission payment schedule below
applies to New sales of StraightRate Illinois.

<PAGE>   57
             a)   Commission Payment Schedules

<TABLE>
<CAPTION>

                                            12 Month Contract
                                          Objective Attainment
                                -------------------------------------------
 Minimum Annual
 Minutes of Use      Upfront                         Upfront        Upfront
  Commitment            *           Residual             *             *
--------------      ---------       ----------      ----------      ---------
<S>                <C>          <C>             <C>             <C>

     *               *               *              *              *

--------------      ---------       ----------      ----------      ---------
</TABLE>

<TABLE>
<CAPTION>

                                            24 Month Contract
                                          Objective Attainment
                                -------------------------------------------
 Minimum Annual
 Minutes of Use      Upfront                        Upfront          Upfront
 Commitment             *            Residual           *               *
---------------      --------       ----------      ----------      ----------
<S>                 <C>             <C>             <C>             <C>

     *               *               *             *                *

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

</TABLE>

<PAGE>   58
<TABLE>
<CAPTION>

                                            36 Month Contract
                                          Objective Attainment
                                -------------------------------------------
Minimum Annual
Minutes of Use       Upfront                         Upfront         Upfront
Commitment              *            Residual           *               *
--------------      ---------       ----------      ----------      ----------
<S>                <C>          <C>             <C>             <C>

    *               *               *                *             *

--------------      ---------       ----------      ----------      ----------
</TABLE>

          b)   CV. The CV for the ABOVE schedules is determined by the
               following formula: (Minimum Annual MOU x per Minute Rate) x
               (Contract Length In Years) = CV

<PAGE>   59

     13.10 ValueLink Extra - HQ- Individual Case Basis (ICB) Usage. The
           following commission payment schedule applies to New sales of
           ValueLink Extra - HQ - Individual Case Basis (ICB) Usage contracts:

           a)    Upfront Commission Payment Schedule

<TABLE>
<CAPTION>

                            ValueLink Extra - HQ - ICB
                              Objective Attainment
                   -------------------------------------------
   Contract
    Length              *               *                *
--------------     ----------       ----------       ----------
<S>                <C>              <C>             <C>
      *            24 Months             *               *
                   36 Months
</TABLE>

          b)   CV. The CV for the above schedules is determined by the
               following formula: (MBRC) x (Contract Length in Months) = CV

          c)   Residual Commission Payment. No residual will be paid for
               commissions will be paid for ValueLink Extra - HQ - ICB Usage
               sales.

          d)   Contract term greater than 36 months. If ValueLink Extra - HQ -
               ICB usage sale is for a contract with a term greater than thirty
               six (36) months, the commission payment for such a sale will use
               a commission Payment Schedule set forth above for thirty a six
               (36) month ValueLink Extra - HQ - Usage sale.

     13.11 Contract Upgrade or Migration

         a)    Commission Payment

<PAGE>   60
               (i) When both the Product sold and the Ameritech product or
               service which is being replace are both specified in Exhibit B as
               "Products" for purposes of the Agreement, the Upfront Commission
               Payment for a sale deemed by Ameritech as an Upgrade or a
               Migration will be determined by the following formula:

               (Current Base Upfront Commission for New Product) - (minus)
               (Current Base Upfront Commission for Old Product) = Upfront
               Commission Payment

               (ii) When a sale for a Product is replacing an Ameritech product
               or service which is not specified in Exhibit B as a "Product",
               the Upfront Commission Payment for the sale (whether it is deemed
               an Upgrade or a Migration) is determined by the formula:

               (Current Base Upfront Commission for Product) x (50%) = Upfront
               Commission Payment

<PAGE>   61

               b)   Does Not Retire Objective. Neither an Upgrade nor a
                    Migration will serve to retire the AD's Usage Product family
                    objective, and neither will an Upgrade nor a Migration is
                    subject to an Objective Bonus.

               c)   Residual Commission Payment. The Residual Commission Payment
                    for an Upgrade or a Migration will be calculated in the same
                    manner and at the same rate as a New sale of the Product. In
                    every case, the Residual Commission Payment, if any, for the
                    product or service which is being replaced as the result of
                    the Upgrade or Migration will be discontinued effective the
                    date of the Completed Order.

     13.12     Takeback. If the AD received commission for a Product subject to
               this Section 13.0, and the customer discontinues the Product for
               any reason, Takeback applies. If the customer discontinues a
               Product within one-hundred and eighty days after the Completed
               Order date, the Takeback will equal one-hundred percent (100%) of
               the Upfront Commission Payment. Residual commissions cease
               effective the date the customer cancels the product.

     14.0 1-800-CONFERENCE

     14.1      Commission Payment Schedule. Sales of 1-800-CONFERENCE consist
               only of an Upfront Commission Payment, and no Residual Payment
               applies.

               a)   Non-ICB Term Contract Sale. The following commission payment
                    schedule applies to sales under which the customer signs a
                    term agreement which is not an ICB contract for
                    1-800-CONFERENCE service:

<PAGE>   62

<TABLE>
<CAPTION>

    Minimum
 Annual Revenue
  Commitment     1 Year Contract      2 Year Contract    3 Year Contract
---------------  ----------------     ---------------    ---------------
<S>                   <C>               <C>               <C>

      *                *                     *                 *

</TABLE>

               b)   CV. The CV is determined by the following formula:

                    (Annual Revenue Commitment) x (Contract Length In Years = CV

               c)   ICB Term Contract Sale. The commission to be paid is for an
                    ICB term contract sale for 1-800- CONFERENCE service will be
                    arrived at through the following formula:

                    (CV) x (Ten-Percent (10%)) = Commission Payment
<PAGE>   63
            14.2        Objective Attainment. For purposes of Objective
                        Attainment, the following factors will be applied to the
                        Base Payment to arrive at the Objective Attainment
                        number:

<TABLE>
<CAPTION>
Objective Attainment                     Factor
--------------------                     ------
<S>                                      <C>

       *                                   *

</TABLE>

            15.0        Ameritech Prepaid Products

            15.1        Commission Payment. The AD of Record will be paid
                        commission for PrePaid Product sales. If the customer
                        places orders for additional Product, the AD of Record
                        will be paid for those additional sales whether the
                        customer places the order with the AD or with
                        Ameritech's PrePaid product support organization.

             15.2       Commission Value. The Base Commission value and the
                        Upfront Commission Payment for a sale will equal
                        *    of the gross value of the sale, net of
                        taxes whether it is the original sale or a subsequent
                        sale as provided for under Section 15.1 above. No
                        Residual Commission Payment applies to Prepaid Products.

             15.3       Objective Attainment. For purposes of objective
                        attainment, the following factors will be applied to the
                        Base Commission.

<TABLE>
<CAPTION>
                        Objective Attainment                Factor
                        --------------------                ------
<S>                         <C>                              <C>

                                 *                             *

</TABLE>

         (The Balance of this Page Intentionally Left Blank}

                                       55

<PAGE>   64

                                                                     Exhibit D

                                                         COOP & 5-STAR PROGRAM

                       Exhibit D CO-OP AND 5-STAR PROGRAM

         This is Exhibit D to the Authorized Distributor Agreement between
Telecomm Industries, Inc. ("AD") and Ameritech, effective January 1, 1999, and
this Exhibit is incorporated into the Agreement by reference.

         Ameritech provides incentive programs as an integral part of the
Agreement. The "Co-Op Program" and the "5-Star Program" is governed by the rules
and regulations which are fully set forth in a document titled "Ameritech
Authorized Distributor Co-Op and 5-Star Program", and said document is dated
"January 1999, and said document is incorporated herein as if originally set
forth here as Exhibit D. The Co-op and 5-Star Program may be modified during the
term of the Agreement, and such modification is governed by the terms of the
Agreement, and each modification is incorporated by reference herein on the date
the modification is effective.

(The Balance of this Page Intentionally Left Blank)

                                       56

<PAGE>   65

                                                                     Exhibit E

                                                      Code of Business Conduct

                       Exhibit E CODE OF BUSINESS CONDUCT

         This is Exhibit E to the Authorized Distributor Agreement between
Telecomm Industries, Inc. ("AD") and Ameritech effective January 1, 1999, and
this Exhibit is incorporated into the Agreement by reference.

1. Every Authorized Distributor has the professional responsibility of fair
dealing towards Ameritech's customers, past and present, fellow Authorized
Distributors, and the general public.

2. Every Authorized Distributor has the professional responsibility of adhering
to generally accepted standards of accuracy and truth.

3. An Authorized Distributor shall not place itself in a position where the
Authorized Distributors interest is, or may be, in conflict with its duty to the
customer or Ameritech.

4. Each Authorized Distributor shall safeguard the confidence of both present
and former customers/clients, and shall not disclose or use these confidences to
disadvantage or prejudice such clients.

5. An Authorized Distributor shall not intentionally disseminate false or
misleading information, and each Authorized Distributor is obligated to use
appropriate means to avoid dissemination of false or misleading information.

6. An Authorized Distributor shall not disparage the professional reputation or
practice of another Authorized Distributor.

7. Each Authorized Distributor's employees shall be treated as individuals with
respect to their dignity and recognition of their merit.

(The Balance of this Page Intentionally Left Blank)

                                       57

<PAGE>   66

                                                                     Exhibit F

                                                                House Accounts

                            Exhibit F HOUSE ACCOUNTS

         This is Exhibit F to the Authorized Distributor Agreement between
Telecomm Industries, Inc. ("AD") and Ameritech effective January 1, 1999, and
this Exhibit is incorporated by reference therein.

<PAGE>   67

                                 House Accounts

         Pursuant to Article 1, Section 1.7. the customer accounts which
Ameritech designates, in its sole discretion, as "House Accounts" are listed on
the web site     #      and said list is incorporated by reference as if set
forth fully herein, as modified from time-to-time by Ameritech, and each such
modification is deemed incorporated as if set forth originally herein.

(The Balance of this Page Intentionally Left Blank)

<PAGE>   68

April 1, 1999

Dear Authorized Distributor:

RE: Notice of Modifications to Exhibit C COMMISSION of the Authorized
Distributor Agreement effective January 1, 1999.

This is Notice pursuant to ARTICLE 15 NOTICE of the above referenced Agreement
("Agreement") of the following Modifications. The modifications are in effect
thirty (30) calendar days after the date of this letter.

This Notice is being sent to you as required under ARTICLE 15 of said Agreement.
ADDITIONS TO THE CONTRACT ARE REFLECTED WITH UNDERSCORE AND DELETIONS BY
STRIKETHROUGH. (NOTE: Due to the limitations of the EDGAR system, underscores
will be preceded by "<<" and followed by ">>". Strikethroughs will be preceded
by "[[" and followed by "]]".)

John Maloney
Regional Channel Manager

    April 1, 1999 Ameritech Authorized Distributor Agreement Modifications

                             AMERITECH CONFIDENTIAL
<PAGE>   69

<<CENTREX COMMISSIONS FOR INDIANA AND OHIO>>

The Centrex commission information contained in the 1999 AD Agreement is amended
effective January 1, 1999 for Indiana and Ohio only. The modifications are
indicated below.

AMEND SECTION 7.3 TO READ:

         7.3      <<New Centrex Sales>>

                  Commission on New Centrex system sales will be paid provided
                  the sale results in a net increase in Centrex station lines of
                  at least fifteen percent (15%) of the existing installed
                  system. In Indiana, the Centrex station line net increase must
                  be at least <<seventy-five percent (75%)>> of the existing
                  installed system.

AMEND SECTION 7.4 TO READ:

         7.4      <<Upfront Commission Payment Schedule>>

                  The Upfront Commission Payment schedule set forth below
                  applies to New Centrex system sales. The Commission Payments
                  are stated in terms of one Centrex station line; the actual
                  Commission Payment for a particular sale will be based on the
                  number of lines sold, and, the Commission Payment amount will
                  be calculated by multiplying the rate set forth below for a
                  single Centrex station line by the total number or station
                  lines sold.

    April 1, 1999 Ameritech Authorized Distributor Agreement Modifications     2

                             AMERITECH CONFIDENTIAL
<PAGE>   70

<TABLE>
<CAPTION>
                                                  ACS and Indiana Advanced Centrex
                       ---------------------------------------------------------------------------------------

                                         Month-to-Month        36 Months          60 Months          84 Months
                                         --------------        ---------          ---------          ---------

<S>                                      <C>                 <C>                <C>                <C>
                       Illinois
                       <<Indiana>>
                       Michigan                *                    *                  *                *
                       <<Ohio>>
                       Wisconsin
</TABLE>

<TABLE>
<CAPTION>
                                                            ISDN Centrex
                       ---------------------------------------------------------------------------------------

                                         Month-to-Month        36 Months          60 Months          84 Months
                                         --------------        ---------          ---------          ---------

<S>                                      <C>                 <C>                <C>                <C>
                       Illinois
                      <<Indiana>>
                       Michigan               *                    *                  *                  *
                       <<Ohio>>
                       Wisconsin
</TABLE>

<TABLE>
<CAPTION>
                                                             ICB Centrex
                       ---------------------------------------------------------------------------------------

                                         Month-to-Month        36 Months          60 Months          84 Months
                                         --------------        ---------          ---------          ---------

<S>                                      <C>                 <C>                <C>                <C>
                       Illinois
                      <<Indiana>>
                       Michigan               *                    *                   *                *
                       <<Ohio>>
                       Wisconsin
                                              ---                 ---                ---                ---
</TABLE>

                  Note: ICB Centrex sales for contract lengths greater than 84
                  months will be awarded commission based on the 84 month
                  commission award.

AMEND SECTION 7.9 TO READ:

          7.9     <<Residual Commission Payment Schedule>>

                  A Residual Commission Payment will be paid at a rate of
                  *      per line, per month, and will continue for so
                  long as the customer's contract is in effect <<for Illinois,
                  Michigan and Wisconsin. A Residual Commission Payment will be
                  paid at a rate of              *               per line,
                  per month, and will continue for so long as the customer's
                  contract is in effect for Indiana and Ohio.>> In no event will
                  Residual Payments be paid on a month-to-month Centrex sale.

<<COMPLEX DATA PRODUCTS>>

AMEND ATTACHMENT 2: STANDARD DATA PRODUCTS AND SERVICES TO INCLUDE:

                  <<Ameritech AutoVAN (ANX) Service>>

AMEND ANNEX 2: STANDARD DATA PRODUCTS AND SERVICES OBJECTIVE RETIREMENT TO
               INCLUDE:

    April 1, 1999 Ameritech Authorized Distributor Agreement Modifications     3

                             AMERITECH CONFIDENTIAL
<PAGE>   71

            ELIGIBLE PRODUCTS AND SERVICES            OBJECTIVE RETIREMENT
            ------------------------------            --------------------

            <<Ameritech AutoVAN (ANX) Service>>             <<Yes>>

AMEND SECTION 12.4 TO INCLUDE:

         c)       <<Ameritech AutoVAN (ANX)>> Service. Commission payment for
                  Ameritech AutoVAN sales will equal      *      of CV.
                  Residuals will not be paid on AutoVAN sales. Payment of
                  commission on sales of AutoVAN is subject to a number of
                  conditions and requirements, all of which are specifically set
                  forth in the Ameritech AutoVAN sales kit found in the
                  Ameritech resource library at the          * or
                  successor website, as may be modified from time-to-time by
                  Ameritech.

<<VALUELINK EXTRA - SELECT>>

AMEND SECTION 13.6 TO READ:

         13.6     <<ValueLink Extra-Select.>> The commission award and payment
                  schedules provided below apply to New sales of ValueLink
                  Extra-Select <<with one exception. The schedules for New sales
                  of *   MARC ValueLink Extra-Select apply if and only if the
                  New sale also includes the New sale of at least one of the
                  following products: (i) one or more Local Access Lines or PBX
                  Trunks, (ii) one or more Centrex Lines and/or (iii) one or
                  more ISDN Direct Lines.>>

                  <<When the New sale of the *   MARC ValueLink Extra-Select
                  does not include the New sale of at least one of the above
                  referenced products, the upfront and residual commission
                  payments and the Objective Revenue dollar amount will be
                  reduced by     *     >>

    April 1, 1999 Ameritech Authorized Distributor Agreement Modifications     4

                             AMERITECH CONFIDENTIAL
<PAGE>   72
June 3, 1999

Dear Authorized Distributor:

RE: Notice of Modifications to Exhibit C COMMISSION of the Authorized
Distributor Agreement effective January 1, 1999, as last amended April 1, 1999.

This is Notice pursuant to ARTICLE 15 NOTICE of the above referenced Agreement
("Agreement") of the following Modifications. The modifications are in effect
thirty (30) calendar days after the date of this letter.

This Notice is being sent to you as required under ARTICLE 15 of said Agreement.
ADDITIONS TO THE CONTRACT ARE REFLECTED WITH <<UNDERSCORE>> AND DELETIONS BY
[[STRIKETHROUGH.]]

John Maloney
Regional Channel Manager

<PAGE>   73

SECTION 13.0 IS AMENDED WITH THE CHANGES WHICH ARE INDICATED BELOW. HOWEVER, FOR
YOUR CONVENIENCE SECTION 13.0 IN ITS ENTIRETY IS RESTATED BELOW, WITH THE
ADDITIONS INDICATED BY "UNDERLINE" AND DELETIONS INDICATED BY [[STRIKETHROUGH.]]

13.0   <<COMPLETELINK AND>> VALUELINK PRODUCTS

         13.1     For purposes of the Agreement, the Products referenced in this
                  Section 13.0 are collectively classified by Ameritech as the
                  Ameritech <<CompleteLink and>> ValueLink product famil<<ies>>.
                  The conditions and limitations regarding the sale of Products
                  apply to the <<CompleteLink and>> ValueLink product
                  famil<<ies>>, including, without limitation, that the AD shall
                  not sell the Products, and is not entitled to commission on
                  sales to customers who are not designated by Ameritech as
                  retail business customers.

         13.2     <<Month-to-month subscriptions.>> In no event will AD be
                  awarded commission for month-to-month <<CompleteLink or>>
                  ValueLink product sales.

         13.3     <<Enhanced ValueLink Plus>>. The commission payment schedule
                  provided below applies to New sales of Enhanced ValueLink
                  Plus.

                  a)       Commission Payment Schedule

<TABLE>
<CAPTION>
                                                                  12 Month Contract
                                                                 Objective Attainment
                             ---------------------------------------------------------------------------------------
                               Minimum Annual         Upfront                           Upfront          Upfront
                             Revenue Commitment           *           Residual             *               *
                             ------------------      ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                   *                      *              *                  *              *

</TABLE>

<TABLE>
<CAPTION>
                                                                   24 Month Contract
                                                                  Objective Attainment
                             ---------------------------------------------------------------------------------------
                               Minimum Annual          Upfront                          Upfront           Upfront
                             Revenue Commitment           *            Residual            *                 *
                             ------------------       ---------        --------        ----------      -------------
<S>                                                   <C>              <C>             <C>             <C>

                                    *                      *              *                 *                  *

</TABLE>

<PAGE>   74

<TABLE>
<CAPTION>
                                                                  36 Month Contract
                                                                Objective Attainment
                             ---------------------------------------------------------------------------------------
                                Minimum Annual        Upfront                           Upfront           Upfront
                             Revenue Commitment          *            Residual             *                 *
                             ------------------      ---------        --------        ----------       -------------
<S>                                                  <C>              <C>             <C>              <C>

                                    *                    *               *                 *                 *

</TABLE>

            b)   <<CV.>> The CV for the above schedule is determined by the
                 following formula:

                                    (MARC) x (Contract Length in Years) = CV

[[13.4      <<ValueLink Extra>>. The commission payment schedule below applies
            to New sales of ValueLink Extra.]]

            [[a) <<Commission Payment Schedules Without Netting>>]]

<TABLE>
<CAPTION>
                                                     [[24 Month Contract - Without Netting
                                                              Objective Attainment
                              -------------------------------------------------------------------------------------
                              Minimum Annual
                                  Revenue             Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

<TABLE>
<CAPTION>
                                                      [[36 Month Contract - Without Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                 *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

<PAGE>   75

                [[b)       Commission Payment Schedule With Netting]]

<TABLE>
<CAPTION>
                                                        [[24 Month Contract - With Netting
                                                                Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

<TABLE>
<CAPTION>
                                                         [[36 Month Contract - With Netting
                                                                 Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>               <C>            <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

                [[c)       <<CV>>. The CV for a contract without Netting is
                           determined by the following formula: (MARC) x
                           (Contract Length in Years) = CV]]

                           [[The CV for a contract with Netting is determined by
                           the following formula:
                           (Net MARC) x (Contract Length in Years) = CV]]

<<13.4.1          CompleteLink. The commission award and payment schedules
                  provided below apply to orders solicited by AD for New sales
                  of CompleteLink only under the conditions which follow. The
                  commission schedules below apply to a New CompleteLink
                  contract with a MARC of $700 or $1,200 (when such MARCs are
                  properly indicated on the customer contract) if and only if
                  the New sale also includes the New sale of at least one of the
                  following products: (i) one or more Local Access Lines or PBX
                  Trunks, (ii) one or more Centrex Lines and/or (iii) one or
                  more ISDN Direct Lines.>>

<PAGE>   76

                  <<When the New sale of the CompleteLink with a MARC of $700 or
                  $1,200 does not include the New sale of at least one of the
                  above referenced products, the Base and Residual commission
                  Payments, and the Objective Revenue amount will be reduced by
                  fifty percent (50%).>>

                  <<a) Commission Payment Schedules for the Minimum Annual
                       Revenue Commitment (MARC)>>

<TABLE>
<CAPTION>
                                                                <<12 Month Contract
                                                                Objective Attainment
                                 ----------------------------------------------------------------------------------
                                                      Upfront                           Upfront          Upfront
                                   MARC                  *            Residual             *                *
                                 --------            ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

<TABLE>
<CAPTION>
                                                                <<36 Month Contract
                                                                Objective Attainment
                                 ----------------------------------------------------------------------------------
                                                      Upfront                           Upfront          Upfront
                                   MARC                  *            Residual             *                *
                                 --------            ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

<PAGE>   77

<TABLE>
<CAPTION>
                                                                <<60 Month Contract
                                                                Objective Attainment
                                 ----------------------------------------------------------------------------------
                                                      Upfront                           Upfront          Upfront
                                   MARC                  *            Residual             *                *
                                 --------            ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                 *                 *

</TABLE>

               <<b)        Commission Payment Schedules for the Minimum Annual
                           Toll Usage Commitment (MATUC)>>

<TABLE>
<CAPTION>
                                                         <<12 Month Contract
                                                         Objective Attainment
                                  ----------------------------------------------------------------
                                                      Upfront          Upfront          Upfront
                                   MATUC                 *                *                *
                                  -------            ---------       ----------      -------------
<S>                                                  <C>             <C>             <C>

                                    *                    *                *                 *

</TABLE>

<PAGE>   78

<TABLE>
<CAPTION>
                                                         <<36 Month Contract
                                                         Objective Attainment
                                  ----------------------------------------------------------------
                                                      Upfront          Upfront          Upfront
                                   MATUC                 *                *                *
                                  -------            ---------       ----------      -------------
<S>                                                  <C>             <C>             <C>

                                    *                    *               *                 *

</TABLE>

<TABLE>
<CAPTION>
                                                         <<60 Month Contract
                                                          Objective Attainment
                                  ----------------------------------------------------------------
                                                      Upfront          Upfront          Upfront
                                   MATUC                 *                *                *
                                  -------            ---------       ----------      -------------
<S>                                                  <C>             <C>             <C>

                                    *                    *               *                 *

</TABLE>

[[13.5      ValueLink Extra - Local. The commission payment schedule below
            applies to New sales of ValueLink Extra - Local.]]

<PAGE>   79

          [[a)   Commission Payment Schedule Without Netting]]

<TABLE>
<CAPTION>
                                                      [[24 Month Contract - Without Netting
                                                                Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *                *                *                *

</TABLE>

<TABLE>
<CAPTION>
                                                      [[36 Month Contract - Without Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *                *                *                *

</TABLE>

          [[b)   <<Commission Payment Schedule With Netting>>]]

<TABLE>
<CAPTION>
                                                       [[24 Month Contract - With Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *                *                *                *

</TABLE>

<PAGE>   80

<TABLE>
<CAPTION>
                                                        [[36 Month Contract - With Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *                *                *                *

</TABLE>

          [[c)   <<CV>>. The CV for a contract without Netting is determined by
                 the following formula: (MARC) x (Contract Length in Years) =
                 CV.

                 The CV for a contract with Netting is determined by the
                 following formula: (Net MARC) x (Contract Length in Years) =
                 CV]]

[[13.6      ValueLink Extra-Select. The commission award and payment schedules
            provided below apply to orders solicited by AD for New sales of
            ValueLink Extra-Select only under the conditions which follow. The
            commission schedule below applies to a New ValueLink Extra-Select
            contract with a MARC of $700.00 (when such MARC is properly
            indicated on the customer contract) if and only if the New sale also
            includes the New sale of at least one of the following products: (i)
            one or more Local Access Lines or PBX Trunks, (ii) one or more
            Centrex Lines and/or (iii) one or more ISDN Direct Lines.

            When the New sale of the ValueLink Extra-Select with a MARC of
            $700.00 does not include the New sale of at least one of the above
            referenced products, the Base and Residual Commission Payments, and
            the Objective Revenue amount will be reduced by fifty percent (50%).

            a)   <<Commission Payment Schedules Without Netting>>]]

<TABLE>
<CAPTION>
                                                      [[12 Month Contract - Without Netting
                                                                Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                  *                      *               *                  *               *

</TABLE>

<PAGE>   81

<TABLE>
<CAPTION>
                                                      [[24 Month Contract - Without Netting
                                                                Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *               *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *                *                *               *

</TABLE>

<TABLE>
<CAPTION>
                                                               [[36 Month Contract - Without Netting
                                                                         Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment                *           Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                     *              *                 *                *

</TABLE>

          [[b)   <<Commission Payment Schedule With Netting>>]]

<TABLE>
<CAPTION>
                                                       [[12 Month Contract - With Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum                                                                Upfront
                              Annual Revenue          Upfront                           Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                    *                    *               *                  *               *

</TABLE>

<TABLE>
<CAPTION>
                                                        [[24 Month Contract - With Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment                *           Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                     *                    *               *                *                *

</TABLE>

<PAGE>   82

<TABLE>
<CAPTION>
                                                       [[36 Month Contract - With Netting
                                                               Objective Attainment
                              -------------------------------------------------------------------------------------
                                  Minimum
                              Annual Revenue          Upfront                           Upfront          Upfront
                                Commitment               *            Residual             *                *
                              --------------         ---------        --------        ----------      -------------
<S>                                                  <C>              <C>             <C>             <C>

                                     *                   *               *                 *                 *

</TABLE>

          [[c)   <<CV>>. The CV for a contract without Netting is determined by
                 the following formula: (MARC) x (Contract Length in Years) =
                 CV.

                 The CV for a contract with Netting is determined by the
                 following formula (Net MARC) x (Contract Length in Years) =
                 CV]]

13.7      <<ValueLink Illinois Option F Preferred>>. The commission payment
            schedules below applies to New sales of ValueLink Illinois Option F
            Preferred.

            a)   <<Commission Payment Schedules>>

<TABLE>
<CAPTION>
                                                                 12 Month Contract
                                                               Objective Attainment
                               --------------------------------------------------------------------------------------
                               Minimum Annual
                               Minutes of Use          Upfront                           Upfront           Upfront
                                 Commitment               *            Residual             *                 *
                               --------------         ---------        --------         ----------      -------------
<S>                                                   <C>              <C>              <C>             <C>
                                     *                    *               *                  *                 *
</TABLE>

<TABLE>
<CAPTION>
                                                                 24 Month Contract
                                                                Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment               *           Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>
                                      *                   *              *                  *                 *
</TABLE>

<TABLE>
<CAPTION>
                                                                 36 Month Contract
                                                                Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment              *            Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>
                                  12,000                $54              $36              $68               $81
</TABLE>

<PAGE>   83

            b)   <<CV>>. The CV for the above schedules is determined by the
                 following formula: (Minimum Annual MOU x Per Minute Rate) x
                 (Contract Length In Years)

13.8        <<ValueLink Illinois Option F>>. The commission payment schedules
            below applies to New sales of ValueLink Illinois Option F.

            a)   <<Commission Payment Schedules>>

<TABLE>
<CAPTION>
                                                                 12 Month Contract
                                                                Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment              *            Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>

                                     *                   *                *                 *                  *

</TABLE>

<TABLE>
<CAPTION>
                                                                 24 Month Contract
                                                               Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment              *            Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>

                                      *                  *               *                  *                  *

</TABLE>

<PAGE>   84

<TABLE>
<CAPTION>
                                                                 36 Month Contract
                                                               Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment              *            Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>

                                       *                  *              *                 *                   *

</TABLE>

            b) <<CV.>> The CV for the above schedules is determined by the
                 following formula: (Minimum Annual MOU x Per Minute Rate) x
                 (Contract Length In Years) = CV

[[13.9      <<StraightRate Illinois.>> The commission payment schedule below
            applies to New sales of StraightRate Illinois.]]

            [[a) <<Commission Payment Schedules>>]]

<TABLE>
<CAPTION>
                                                              [[12 Month Contract
                                                               Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment              *            Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>

                                      *                   *               *                 *                 *

</TABLE>

<TABLE>
<CAPTION>
                                                               [[24 Month Contract
                                                               Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment              *            Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>

                                      *                  *               *                 *                   *

</TABLE>

<PAGE>   85

<TABLE>
<CAPTION>
                                                               [[36 Month Contract
                                                               Objective Attainment
                                -------------------------------------------------------------------------------------
                                Minimum Annual
                                Minutes of Use        Upfront                           Upfront            Upfront
                                 Commitment               *           Residual             *                  *
                                --------------       ---------        --------         ----------       -------------
<S>                                                  <C>              <C>              <C>              <C>

                                      *                    *             *                  *                  *

</TABLE>

          [[b)   <<CV>>. The CV for the above schedules is determined by the
                 following formula:
                 (Minimum Annual MOU x Per Minute Rate) x (Contract Length In
                 Years) = CV]]

13.10       <<CompleteLink>> [[ValueLink Extra]] <<- HQ - Individual Case Basis
            (ICB) Usage>>. The following commission payment schedule applies to
            New sales of <<CompleteLink>> [[ValueLink Extra]] - HQ - Individual
            Case Basis (ICB) Usage contracts:

            a)   <<Upfront Commission Payment Schedule>>

<TABLE>
<CAPTION>
                                                  <<CompleteLink>> [[ValueLink Extra]] - HQ - ICB
                                                                  Objective Attainment
                                 -------------------------------------------------------------------------------
                                 Contract
                                  Length                   *                      *                      *
                                 --------             -----------            -----------           -------------
<S>                                                   <C>                    <C>                    <C>
                                 24 Months
                                 36 Months                 *                       *                     *
                               <<60 Months
</TABLE>

            b)   <<CV>>. The CV for the above schedule is determined by the
                 following formula: (MBRC) x (Contract Length In Months) = CV

            c)   <<Residual Commission Payment>>. No residual commissions will
                 be paid for <<CompleteLink>> [[ValueLink Extra]] - HQ - ICB
                 Usage sales.

            d)   <<Contract terms different than presented above>> [[greater
                 than 36 months]]. If a <<CompleteLink>> [[ValueLink Extra]] -
                 HQ - ICB Usage sale is for a contract with a term <<different
                 than presented in the above table,>> [[greater than thirty six
                 (36) months]], the commission payment for such a sale will use
                 the Commission Payment Schedule set forth above for <<the next
                 lowest contract length>> [[a thirty six (36) month ValueLink
                 Extra - HQ - ICB Usage sale.]]

<PAGE>   86

13.11       CONTRACT UPGRADE OR MIGRATION

            a)   <<Commission Payment>>

                 (i)     <<The Upfront Commission Payment for a CompleteLink
                         Upgrade or Migration sale will consist only of the
                         commission payment appropriate for the MATUC component
                         of the Upgrade or Migration sale. Commission will not
                         be paid for any other Upgrade or Migration sales>>.
                         [[When both the Product sold and the Ameritech product
                         or service which is being replaced are both specified
                         in Exhibit B as "Products" for purposes of the
                         Agreement, the Upfront Commission Payment for a sale
                         deemed by Ameritech as an Upgrade or a Migration will
                         be determined by the following formula: (Current Base
                         Upfront Commission for New Product) - (minus) (Current
                         Base Upfront Commission for Old Product) = Upfront
                         Commission Payment]]

                 (ii)    [[When a sale for a Product is replacing an Ameritech
                         product or service which is not specified in Exhibit B
                         as a "Product", the Upfront Commission Payment for the
                         sale (whether it is deemed an Upgrade or a Migration)
                         is determined by the following formula:]]

[[(CURRENT BASE UPFRONT COMMISSION FOR NEW PRODUCT) X (50%) = UPFRONT COMMISSION
PAYMENT]]

            b)   <<Does Not Retire Objective>>. Neither an Upgrade nor a
                 Migration will serve to retire the AD's Usage Product family
                 objective, and neither an Upgrade nor a Migration is subject to
                 an Objective Bonus.

            c)   <<Residual Commission Payment. No residual commissions will be
                 paid for Upgrade or Migration sales. Additionally, any residual
                 commissions being paid for the former product will cease.>>
                 [[Residual Commission Payment for an Upgrade or a Migration
                 will be calculated in the same manner and at the same rate as a
                 New sale of the Product. In every case, the Residual Commission
                 Payment, if any, for the product or service which is being
                 replaced as the result of the Upgrade or Migration will be
                 discontinued effective the date of the Completed Order.]]

13.12       <<Takeback>>. If the AD received commission for a Product subject to
            this Section 13.0, and the customer discontinues the Product for any
            reason, Takeback applies. If the customer discontinues a Product
            within one-hundred and eighty days after the Completed Order date,
            the Takeback will equal one-hundred percent (100%) of the Upfront
            Commission Payment. Residual commissions cease effective the date
            the customer cancels the product.

<PAGE>   87
THE FOLLOWING IS A CHANGE TO EXHIBIT C, SECTION 12.6:

12.6        <<Ameritech AutoVan (ANX) Service>>

a)          Ameritech AutoVAN (ANX) Service. Commission payment for Ameritech
            AutoVAN sales will equal      *      of CV. Objective Bonus
            and Residual Payment will not be paid on AutoVAN orders. AD's
            authority to solicit orders for ANX, and AD's right to commission on
            orders for AutoVAN are subject to a number of conditions and
            requirements, all of which are specifically set forth in the
            Ameritech AutoVAN sales kit which will be provided upon completion
            of mandatory training. The AD guidelines for teaming with Ameritech
            on ANX sales are posted in the AD Sales Library and are referred to
            as AD ANX 6-Point Checklist.

<PAGE>   88
         July 15, 1999

Dear Authorized Distributor

     Re: <<Notice of Contract Change - Modifications to Exhibit C, COMMISSION,
           -------------------------------------------------------------------
           Authorized Distributor Agreement effective
           -------------------------------------------
           January 1, 1999, as last amended June 3, 1999>>
           ---------------------------------------------

This Notice is sent pursuant to Article 15 of the above-referenced Agreement.
The contract change(s), modification(s) or addition(s) are effective thirty (30)
calendar days after the date of this letter. ADDITIONS TO THE CONTRACT ARE
REFLECTED WITH <<UNDERSCORE>> AND DELETIONS BY [[STRIKETHROUGH]]. WHERE AN ITEM
IS UNDERLINED AND HAS A STRIKETHROUGH, THE STRIKETHROUGH TAKES PRECEDENCE.
(NOTE: Due to the limitations of the EDGAR system, underscores will be preceded
by "<<" and followed by ">>". Strikethroughs will be preceded by "[[" and
followed by "]]".)

      John Maloney
      Channel Manager

                                  Page 1 of 10
                             Ameritech Confidential

<PAGE>   89

THE FOLLOWING ARE CHANGES TO THE AMERITECH AUTHORIZED DISTRIBUTOR AGREEMENT AS
LAST UPDATED JUNE 3, 1999.

AMEND SECTION "13.1 COMPLETELINK AND VALUELINK PRODUCTS" TO READ:

13.0 COMPLETELINK AND VALUELINK PRODUCTS

     13.1 For purposes of the Agreement, the Products referenced in this Section
          13.0 are collectively classified by Ameritech as the <<tariffed>>
          Ameritech CompleteLink and ValueLink product families. The conditions
          and limitations regarding the sale of Products apply to
          the <<tariffed>> CompleteLink and ValueLink product families,
          including, without limitation, that the AD shall not sell the
          Products, and is not entitled to commission on sales to customers who
          are not designated by Ameritech as retail business customers.

AMEND SECTION "13.4.1a) COMMISSION PAYMENT SCHEDULES FOR THE MINIMUM ANNUAL
REVENUE COMMITMENT (MARC)" TO READ:

          <<a)>> Commission Payment Schedules for the Minimum Annual Revenue
                 Commitment (MARC)

               [THE BALANCE OF THIS PAGE LEFT INTENTIONALLY BLANK]

                                  Page 2 of 10
                             Ameritech Confidential

<PAGE>   90

<TABLE>
<CAPTION>

                       <<12 Month Contract
                       Objective Attainment
----------------------------------------------------------------
                                                        Upfront
               Upfront                    Upfront
  MARC            *        Residual          *             *
--------      --------      --------      --------      --------
<S>           <C>           <C>           <C>           <C>

   *             *             *               *            *

</TABLE>

<TABLE>
<CAPTION>

                       [[12 Month Contract
                       Objective Attainment
--------------------------------------------------------------------
                                                            Upfront
                Upfront                      Upfront
  MARC             *          Residual          *              *
--------       ---------      --------      ----------      --------
<S>            <C>            <C>            <C>            <C>

   *               *               *             *              *

</TABLE>

                                  Page 3 of 10
                             Ameritech Confidential

<PAGE>   91

<TABLE>
<CAPTION>

                         <<36 Month Contract
                        Objective Attainment
--------------------------------------------------------------------
                                                            Upfront
                Upfront                      Upfront
   MARC            *          Residual          *              *
--------       --------       --------       --------       --------
<S>           <C>            <C>            <C>            <C>

    *              *              *              *              *

</TABLE>

<TABLE>
<CAPTION>

                       [[36 Month Contract
                       Objective Attainment
--------------------------------------------------------------------
                                                             Upfront
                Upfront                      Upfront
   MARC            *          Residual          *               *
--------       --------       --------       --------       --------
<S>            <C>            <C>            <C>            <C>

   *               *              *             *                *

</TABLE>

                                  Page 4 of 10
                             Ameritech Confidential
<PAGE>   92

<TABLE>
<CAPTION>

                          <<60 Month Contract
                         Objective Attainment
--------------------------------------------------------------------
                                                            Upfront
               Upfront                       Upfront
  MARC            *            Residual         *              *
--------       --------       --------       --------       --------
<S>            <C>            <C>            <C>            <C>

    *             *                *            *               *

</TABLE>

<TABLE>
<CAPTION>

                        [[60 Month Contract
                        Objective Attainment
--------------------------------------------------------------------
                                                            Upfront
               Upfront                       Upfront
  MARC            *           Residual          *              *
--------       --------       --------       --------       --------
<S>            <C>            <C>            <C>            <C>

   *              *               *              *              *

--------       --------       --------       --------       --------
</TABLE>

                                  Page 5 of 10
                             Ameritech Confidential

<PAGE>   93

  AMEND SECTION "13.4.1b) COMMISSION PAYMENT SCHEDULES FOR THE MINIMUM ANNUAL
                    TOLL USAGE COMMITMENT (MATUC)" TO READ:

        <<b)   Commission Payment Schedules for the Minimum Annual Toll Usage
               Commitment (MATUC)>>

<TABLE>
<CAPTION>

              <<12 Month Contract
              Objective Attainment
-------------------------------------------------
                                          Upfront
               Upfront       Upfront
 MATUC            *             *            *
<S>           <C>           <C>           <C>

   *              *             *             *

</TABLE>

<TABLE>
<CAPTION>

              [[12 Month Contract
              Objective Attainment
-------------------------------------------------

                                           Upfront
              Upfront     Upfront
 MATUC           *            *              *
-------       -------       -------       -------
<S>           <C>           <C>           <C>

   *             *            *               *

-------       -------       -------       -------
</TABLE>

                                  Page 6 of 10
                             Ameritech Confidential

<PAGE>   94
<TABLE>
<CAPTION>
              <<36 Month Contract
              Objective Attainment
--------------------------------------------------
                                           Upfront
               Upfront      Upfront
 MATUC           *             *             *
-------       -------       -------       -------
<S>           <C>           <C>           <C>

   *            *               *              *

</TABLE>

<TABLE>
<CAPTION>

             [[36 Month Contract
             Objective Attainment
--------------------------------------------------
                                           Upfront
              Upfront      Upfront
 MATUC           *            *              *
-------       -------       -------       --------
<S>          <C>           <C>           <C>

   *             *             *             *

-------       -------       -------       -------
</TABLE>

                                  Page 7 of 10
                             Ameritech Confidential

<PAGE>   95

<TABLE>
<CAPTION>

               <<60 Month Contract
               Objective Attainment
--------------------------------------------------
                                           Upfront
              Upfront       Upfront
 MATUC           *             *             *
-------       -------       -------       --------
<S>           <C>           <C>           <C>

   *             *             *              *

</TABLE>

<TABLE>
<CAPTION>

              [[60 Month Contract
              Objective Attainment
--------------------------------------------------

                                           Upfront
              Upfront       Upfront
  MATUC          *             *             *
-------       -------       -------       -------
<S>           <C>           <C>           <C>

    *            *             *             *

-------       -------       -------       -------
</TABLE>

                                  Page 8 of 10
                             Ameritech Confidential

<PAGE>   96

AMEND SECTION "13.11a) (i) CONTRACT UPGRADE OR MIGRATION" TO READ:

          13.11 CONTRACT UPGRADE OR MIGRATION

                a)   <<Commission Payment>>

                   (i) <<Only upgrades or Migrations from Enhanced ValueLink
                         Plus to CompleteLink will be paid as New. Customers
                         with both Enhanced ValueLink Plus and ValueLink Extra
                         are not eligible. Upfront Commission will not be paid
                         for any other Upgrade or Migration sales.>>

                       [[The Upfront Commission Payment for a CompleteLink
                         Upgrade or Migration sale will consist only of the
                         commission payment appropriate for the MATUC component
                         of the Upgrade or Migration sale. Commission will not
                         be paid for any other Upgrade or Migration sales.]]

ADD A NEW SECTION "13.13 RENEWALS OF EXISTING USAGE CONTRACTS" THAT READS:

        <<13.13 Renewals of existing Usage Contracts>>

          a) <<If the customer's contract term in effect at the time of the
               Renewal is more than ninety (90) days from the date the contract
               expires, commission will not be paid to AD for a usage contract
               Renewal, unless Ameritech has provided prior written approval for
               such payment. Contract term is determined by the original
               customer signature date.>>

       << b)   After a customer contract has expired, any sale of that Product
               which is submitted by AD will be considered a Renewal for
               purposes of commission. If the customer contract expired six (6)
               or more months prior to the AD's submission, and the customer has
               been without a usage contract for that period, Ameritech will pay
               commission at the New sale rate.>>

         c) <<Commission for CompleteLink Renewals will be paid as follows:>>

             (i) <<The Base Commission will equal 75% of the amount paid for an
                   identical New CompleteLink sale.>>

            (ii) <<The Residual Commission Payment will be paid at the same
                   rate as an identical New CompleteLink sale.>>

        <<d)   Objective Retirement. Renewals will not retire the AD's Usage
               Product family objective, nor will renewals be subject to an
               Objective Bonus.>>

                                  Page 9 of 10
                             Ameritech Confidential

<PAGE>   97

ADD A NEW SECTION, "13.14 MULTI-STATE COMPLETELINK CONTRACTS" THAT READS:

       << 13.14 Multi-state CompeteLink Contracts.>>

       << a)   Multi-state contracts will retire objective based upon the Main
               BTN.>>

                                 Page 10 of 10
                             Ameritech Confidential

<PAGE>   98
     September 1, 1999

Dear Authorized Distributor

     Re:  <<Notice of Contract Change - Modifications to Exhibit C, COMMISSION,
          Authorized Distributor Agreement effective January 1, 1999, as last
          amended July 15, 1999>>

This Notice is sent pursuant to Article 15 of the above-referenced Agreement.
The contract change(s), modification(s) or addition(s) are effective thirty (30)
calendar days after the date of this letter. ADDITIONS TO THE CONTRACT ARE
REFLECTED WITH <<UNDERSCORE>> AND DELETIONS BY [[STRIKETHROUGH]]. WHERE AN ITEM
IS UNDERLINED AND HAS A STRIKETHROUGH, THE STRIKETHROUGH TAKES PRECEDENCE.
(NOTE: Due to the limitations of the EDGAR system, underscores will be preceded
by "<<" and followed by ">>". Strikethroughs will be preceded by "[[" and
followed by "]]".)

          John Maloney
          Channel Manager

   September 1, 1999 Ameritech Authorized Distributor Agreement Modifications
                            Ameritech Confidential                             1
<PAGE>   99

<<UNDER 7.0 CENTREX PRODUCT FAMILY>>, AMEND SECTION 7.4 TO READ:

     <<7.4 Upfront Commission Payment Schedule>>

          <<The Upfront Commission Payment schedule set forth below applies to
          New Centrex system sales. The Commission Payments are stated in terms
          of one Centrex station line; the actual Commission Payment for a
          particular sale will be based on the number of lines sold, and, the
          Commission Payment amount will be calculated by multiplying the rate
          set forth below for a single Centrex station line by the total number
          or station lines sold.>>

<TABLE>
<CAPTION>
                                                   <<ACS and Indiana Advanced Centrex>>
                                                     --------------------------------
                                 <<Month-to->>
                                   <<Month>>        <<36 Months>>       <<60 Months>>      <<84 Months>>
                                   ---------          ---------           ---------          ---------
<S>                              <C>                <C>                 <C>               <C>
        <<Illinois>>
        <<Indiana>>
        <<Michigan>>                   *                  *                   *                 *
        <<Ohio>>
        <<Wisconsin>>
</TABLE>

<TABLE>
<CAPTION>
                                                            <<ISDN Centrex>>
                                                              ------------
                                 <<Month-to->>
                                   <<Month>>        <<36 Months>>       <<60 Months>>      <<84 Months>>
                               ------------------- ------------------ ------------------ -------------------
<S>                            <C>                 <C>                <C>                <C>
        <<Illinois>>
        <<Indiana>>
        <<Michigan>>                 *                   *                     *                  *
        <<Ohio>>
        <<Wisconsin>>
</TABLE>

ADD A SECTION 7.4.1 AVN CENTREX THAT READS:

     <<7.4.1 AVN Centrex Feature>>

          <<AVN Centrex feature is paid at a    *      upfront commission
          payment. No residuals apply to AVN Centrex feature sales. ADs shall
          not receive commission on AVN Centrex feature renewals.>>

AMEND SECTION 8.0 AMERITECH FEATURELINK TO INCLUDE:

     8.0 AMERITECH FEATURELINK.

          Commission payment and conditions for payment for Ameritech
          FeatureLink service are the same as those set forth above for ACS
          Centrex, except that no Commitment Bonus is available for the sale of
          Ameritech FeatureLink, <<and the requirement of a 15 percent increase
          in lines does not apply for new sales of Ameritech FeatureLink.>>

   September 1, 1999 Ameritech Authorized Distributor Agreement Modifications
                           Ameritech Confidential                             2
<PAGE>   100

AMEND SECTION 9.0 OTHER VOICE PRODUCTS TO REFLECT THE FOLLOWING
ADDITIONS/DELETIONS:

     9.0 OTHER VOICE PRODUCTS

          9.1  The commission payment schedule set forth below applies to New
               sales of the following Products:
                                    CALLER ID
                                    CUSTOM CALLING SERVICES
                                    LINEBACKER
                                    [[LOCAL ACCESS LINES]]
                                    PBX TRUNKS
                                    REMOTE CALL FORWARDING
                                    VOICE MAIL SERVICE

<TABLE>
<CAPTION>
                Objective                             [[Winback Bonus]]
                Attainment           Upfront            [[(See Note)]]                   Residual
                ----------           -------            -------------                    --------
<S>                                <C>                  <C>                      <C>

                   *                   *                       *                            *

</TABLE>

               [[Note: The winback bonus applies only to the sale of Local
               Access Lines]]

          ADD A SECTION 9.1.1 WHICH READS:

          <<9.1.1 The commission payment schedule set forth below applies to
                    New sales of local access lines:>>

<TABLE>
<CAPTION>
                  <<Objective
                    Attainment             Upfront             Winback Bonus
                    ----------             -------             -------------
<S>                                      <C>                   <C>

                        *                     *                     *

</TABLE>

          MODIFY SECTION 9.3 RESIDUAL COMMISSION PAYMENTS TO READ:

          9.3  <<Residual Commission Payments>>. Residual Commission Payments
               will be paid for a period of twenty four (24) months, and in no
               event will AD be eligible for Residual Commission Payment on the
               above Products after twenty four (24) monthly commission payments
               have been made. <<There are no residual payments on access
               lines.>>

   September 1, 1999 Ameritech Authorized Distributor Agreement Modifications
                           Ameritech Confidential                             3
<PAGE>   101

AMEND SECTION 13.4.1 COMPLETELINK TO READ:

13.4.1 CompleteLink

     b)   Commission Payment Schedules for the Minimum Annual Toll Usage
          Commitment (MATUC)

   September 1, 1999 Ameritech Authorized Distributor Agreement Modifications
                           Ameritech Confidential                             4
<PAGE>   102

<TABLE>
<CAPTION>
                            12 Month Contract
                          Objective Attainment
                --------------------------------------
                                               Upfront
                 Upfront       Upfront
    MATUC           *             *               *      <<Winback Bonus>>
    -----       ---------     ----------       --------     -------------
<S>            <C>            <C>            <C>            <C>

    *               *              *                *              *

</TABLE>

<TABLE>
<CAPTION>
                           36 Month Contract
                          Objective Attainment
                ---------------------------------------
                                               Upfront
                 Upfront        Upfront
    MATUC           *              *              *        <<Winback Bonus>>
    -----       ---------     ----------      --------       -------------
<S>            <C>            <C>            <C>              <C>

     *               *              *             *                   *

</TABLE>

   September 1, 1999 Ameritech Authorized Distributor Agreement Modifications
                           Ameritech Confidential                             5
<PAGE>   103

<TABLE>
<CAPTION>
                   <<60 Month Contract Objective>>
                            <<Attainment>>
                --------------------------------------
                                               Upfront
                 Upfront        Upfront
    MATUC           *              *             *       <<Winback Bonus>>
    -----       ---------     ----------      --------     -------------
<S>            <C>            <C>            <C>            <C>

      *             *              *             *                *

</TABLE>

AMEND SECTION 13.11 CONTRACT UPGRADE OR MIGRATION TO READ:

     13.11 CONTRACT UPGRADE OR MIGRATION

a)   <<Commission Payment>>

                     (i)    Only Upgrades or Migrations from Enhanced ValueLink
                            Plus to CompleteLink will be paid as New. Customers
                            with both Enhanced ValueLink Plus and ValueLink
                            Extra are not eligible. [[Upfront Commission will
                            not be paid for any other Upgrade or Migration
                            sales.]]

                     (ii)   The commission payment for a CompleteLink Upgrade or
                            Migration sale will [[consist only of the commission
                            payment appropriate for the MATUC component of the
                            Upgrade or Migration sale. Commission will not be
                            paid for any other Upgrade or Migration sales.]]
                            <<be paid only when there is a Winback of toll and
                            will consist of the commission payment applicable to
                            the MATUC component plus the Winback Bonus
                            component.>>

                     (iii)  <<Commission will not be paid for any other Upgrade
                            or Migration sales.>>

   September 1, 1999 Ameritech Authorized Distributor Agreement Modifications
                           Ameritech Confidential                             6
<PAGE>   104

December 3, 1999

Dear Authorized Distributor

           Re:        <<Notice of Contract Change - Modifications to Exhibit C,
                      COMMISSION, Authorized Distributor Agreement effective
                      January 1, 1999, as last amended September 1, 1999>>

This Notice is sent pursuant to Article 15 of the above-referenced Agreement.
The contract change(s), modification(s) or addition(s) are effective thirty (30)
calendar days after the date of this letter. ADDITIONS TO THE CONTRACT ARE
REFLECTED WITH <<UNDERSCORE>> AND DELETIONS BY [[STRIKETHROUGH]]. WHERE AN ITEM
IS UNDERLINED AND HAS A STRIKETHROUGH, THE STRIKETHROUGH TAKES PRECEDENCE.
(NOTE: Due to the limitations of the EDGAR System, underscores will be preceded
by "<<" and followed by ">>". Strikethroughs will be preceded by "[[" and
followed by "]]".)

                  John Maloney
                  Channel Manager

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech

                                       1
<PAGE>   105

MODIFY <<SECTION 1.7>> <<HOUSE ACCOUNTS>> TO READ:

         <<Section 1.7>> <<House Accounts>>. Ameritech reserves the right to
identify certain accounts as "House Accounts", and AD is not authorized to, and
shall not Distribute Products to such accounts. A list of House Accounts is set
forth under Exhibit F of this Agreement, incorporated by reference herein, and
Ameritech, at its sole discretion, may modify Exhibit F from time-to-time via
the       #        <<Authorized Distributor>> web site and bulletin
board, and each modification will be deemed incorporated herein as if originally
set forth herein, and the modification shall be effective on the date the
modification is posted on the web site and bulletin board.

MODIFY ARTICLE 5 AUTHORIZED DISTRIBUTOR DUTIES, <<SECTION 5.3>> <<SALES
ACHIEVEMENT>> TO READ:

         <<Section 5.3>> <<Sales Achievement>>. The AD shall satisfy minimum
monthly, quarterly and annual sales performance requirements as set forth on the
document titled [["AD Annual Objective Sheet and Tier Multiplier" effective
January 1, 1999,]] <<"Authorized Distributor Objectives">> which has been signed
by each party and which is incorporated by reference herein and which may be
modified or amended during the term of this Agreement upon thirty (30) days
written notice by Ameritech to AD, and each such modification or amendment shall
be deemed to have been included as if originally set forth under Attachment 1.

MODIFY ARTICLE 6 AMERITECH'S DUTIES, <<SECTION 6.4>> <<AD INCENTIVE PROGRAMS>>
TO READ:

         <<Section 6.4>> <<AD Incentive Programs>>.

         (a) Ameritech will provide Co-Operative advertising funds under its
"Ameritech Authorized Distributor Co-Op Program" ("Co-Op"). The terms,
conditions, limitations and obligations of the parties under the Co-Op program
are set forth in the document titled, "The Co-Op and 5-Star Program" dated
January, 1999 set forth under Exhibit D hereto, which is incorporated by
reference herein. Notice of any modification to the Co-Op program will be made
via the            #               <<Ameritech Authorized Distributor>> web site
and bulletin board, and each modification will be deemed incorporated herein
under Exhibit D as if originally set forth therein in its entirety. The
modification will be effective the date it is posted by Ameritech on the web
site bulletin board. Modification means any change to the Co-Op program, up to
and including discontinuing all or part of the program.

MODIFY ARTICLE 15 NOTICE <<SECTION 15.1>> <<NOTICE>> TO READ:

         <<Section 15.1>> <<Notice>>. Unless Notice via
        #               <<the Ameritech Authorized Distributor web site>> is
expressly identified as proper communication elsewhere in this Agreement, Notice
or other communication given by one party to the other under this Agreement
shall be deemed sufficient and proper if the Notice is in writing and is
delivered personally, or is sent postage prepaid, first class U.S. Mail, or by
overnight courier, and such Notice shall be deemed received by the other party:
a) three (3) days after the Notice is deposited with the U.S. Postal Service;
or, b) the following business day if sent by overnight courier. Notice will also
be deemed sufficient and proper if sent by facsimile provided the original
notice is sent via postage prepaid, first class U.S. Mail the same day as the
facsimile; if sent

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech

                                       2
<PAGE>   106

by facsimile Notice will be deemed received by the other party on the date and
time shown on the original transmission confirmation sheet which is
electronically generated by the facsimile machine at the time the transmission
is completed. Notice must be directed as set forth below; each party reserves
the right to change the direction of the Notice, and will do so through proper
Notice to the other party.

MODIFY EXHIBIT B PRODUCTS TO READ:

         This is Exhibit B to the Authorized Distributor Agreement between
Ameritech and ("AD") dated January 1, 1999.

         AD is authorized to Distribute the Products specified under the
Attachments only if the following conditions are satisfied: i) the
above-referenced Agreement is fully executed by the parties; and, ii) all three
product family Attachment pages of this Exhibit are fully executed by each
party.

         Attachment 4 to this Exhibit specifies which Products retire AD's sales
objective [[in a Product family]]. Sales of Products which do not retire the
AD's objective are treated differently for purpose of commission, and such
treatment is specified in Exhibit C.

MODIFY EXHIBIT B, ATTACHMENT 1 VOICE NETWORK PRODUCTS TO READ:

                                                         EXHIBIT B, ATTACHMENT 1
                                                          VOICE NETWORK PRODUCTS

                ATTACHMENT 1: VOICE NETWORK PRODUCTS AND SERVICES

         This is incorporated as Attachment 1 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and ("AD") dated January 1, 1999.

          [[Ameritech 1 800 CONFERENCE]]
          Ameritech 9-1-1 Locator ID
          Ameritech Caller ID
          Ameritech Centrex Service (Includes ISDN Centrex)
          Ameritech Custom Calling Services
          [[Ameritech Digital Transport Service Enhanced(ADTS-E)]]
          [[Ameritech DSO (except Total Access Service)]]
          [[Ameritech DS1 (except Total Access Service)]]
          Ameritech FeatureLink
          [[Ameritech ISDN Direct Servioc]]
          [[Ameritech ISDN Prime Service]]
          Ameritech Linebacker
          Ameritech Local Access Lines
          Ameritech PBX Trunks <<(excludes DID)>>
          Ameritech Remote Call Forwarding
          Ameritech SmartFax Connections
          Ameritech Voice Mail

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       3
<PAGE>   107

MODIFY EXHIBIT B, ATTACHMENT 3 USAGE PRODUCTS TO READ:

                                                         EXHIBIT B, ATTACHMENT 3
                                                                  USAGE PRODUCTS

                    ATTACHMENT 3: USAGE PRODUCTS AND SERVICES

         This is incorporated as Attachment 3 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and ("AD") dated January 1, 1999.

<<Ameritech CompleteLink Product Family>>
Ameritech 1-800-CONFERENCE
[[Ameritech 9-1-1 Locator ID]]
[[Ameritech Caller ID]]
[[Ameritech Custom Calling Services]]
[[Ameritech Digital Transport Service - Enhanced (ADTS-E)]]
[[Ameritech Linebacker]]
[[Ameritech Local Access Lines]]
[[Ameritech PrePaid Products]]
[[Ameritech PBX Trunks]]
[[Ameritech Remote Call Forwarding]]
[[Ameritech SmartFax Connections]]
[[Ameritech ValueLink Product Family]]
[[Ameritech Voice Mail]]

MODIFY EXHIBIT B, ATTACHMENT 4 OBJECTIVE RETIREMENT PRODUCT LIST (BY PRODUCT
FAMILY) TO READ:

                                                         EXHIBIT B, ATTACHMENT 4
                       OBJECTIVE RETIREMENT PRODUCT LIST [[(BY PRODUCT FAMILY)]]

     ATTACHMENT 4: OBJECTIVE RETIREMENT PRODUCT LIST [[(BY PRODUCT FAMILY)]]

         This is incorporated as Attachment 4 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and ("AD") dated January 1, 1999.

         The products and services identified in each Annex to this Attachment
will or will not retire an AD's objective [[for the product family specified on
the Annex]] as indicated in the column titled "Objective Retirement".

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       4
<PAGE>   108

MODIFY EXHIBIT B, ATTACHMENT 4 ANNEX 1 VOICE NETWORK PRODUCTS TO READ:

                                                         EXHIBIT B, ATTACHMENT 4
                                                                         ANNEX 1
                                                          VOICE NETWORK PRODUCTS

                  ANNEX 1: VOICE NETWORK PRODUCTS AND SERVICES
                              OBJECTIVE RETIREMENT

         This is incorporated as Annex 1 to Attachment 4 of Exhibit B to the
Authorized Distributor Agreement between Ameritech and ("AD") dated January 1,
1999.

<TABLE>
<CAPTION>
------------------------------------------------------------------- ----------------------------

                  ELIGIBLE PRODUCTS AND SERVICES                       OBJECTIVE RETIREMENT

------------------------------------------------------------------- ----------------------------
<S>                                                                 <C>
[[Ameritech 1-800-CONFERENCE]]                                                [[Yes]]
------------------------------------------------------------------- ----------------------------
Ameritech 9-1-1 Locator ID                                                      Yes
------------------------------------------------------------------- ----------------------------
Ameritech Caller ID                                                             Yes
------------------------------------------------------------------- ----------------------------
Ameritech Centrex Service (Includes ISDN Centrex                                Yes
------------------------------------------------------------------- ----------------------------
Ameritech Custom Calling Services                                               Yes
------------------------------------------------------------------- ----------------------------
[[Ameritech Digital Transport Service-Enhanced (ADTS-E)]]                     [[Yes]]
------------------------------------------------------------------- ----------------------------
[[Ameritech DSO (except Total Access Service)}]]                              [[No]]
------------------------------------------------------------------- ----------------------------
[[Ameritech DS1 (except Total Access Service)]]                               [[No]]
------------------------------------------------------------------- ----------------------------
Ameritech FeatureLink                                                           Yes
------------------------------------------------------------------- ----------------------------
[[Ameritech ISDN Direct Service]]                                             [[Yes]]
------------------------------------------------------------------- ----------------------------
[[Ameritech ISDN Prime Service]]                                              [[Yes]]
------------------------------------------------------------------- ----------------------------
Ameritech Linebacker                                                            Yes
------------------------------------------------------------------- ----------------------------
Ameritech Local Access Lines                                                    Yes
------------------------------------------------------------------- ----------------------------
Ameritech PBX Trunks  <<(excludes DID)>>                                        Yes
------------------------------------------------------------------- ----------------------------
Ameritech Remote Call Forwarding                                                Yes
------------------------------------------------------------------- ----------------------------
Ameritech SmartFax Connections                                                  Yes
------------------------------------------------------------------- ----------------------------
Ameritech Voice Mail                                                            Yes
------------------------------------------------------------------- ----------------------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       5
<PAGE>   109

MODIFY EXHIBIT B, ATTACHMENT 4 ANNEX 3 USAGE PRODUCTS TO READ:

                                                         EXHIBIT B, ATTACHMENT 4
                                                                         ANNEX 3
                                                                  USAGE PRODUCTS

                      ANNEX 3: USAGE PRODUCTS AND SERVICES
                              OBJECTIVE RETIREMENT

         This is incorporated as Annex 3 to Attachment 4 of Exhibit B to the
Authorized Distributor Agreement between Ameritech and ("AD") dated January 1,
1999.

<TABLE>
<CAPTION>
--------------------------------------------------------------------- ---------------------------

                   ELIGIBLE PRODUCTS AND SERVICES                        OBJECTIVE RETIREMENT

--------------------------------------------------------------------- ---------------------------
<S>                                                                   <C>
<<Ameritech CompleteLink Product Family>>                                     <<No>>
--------------------------------------------------------------------- ---------------------------
Ameritech 1-800-CONFERENCE]]                                                  [[Yes]]<<No>>
--------------------------------------------------------------------- ---------------------------
[[Ameritech 9-1-1 Locator ID]]                                                [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech Caller ID]]                                                       [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech Custom Calling Services]]                                         [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech Digital Transport Service - Enhanced (ADTS-E)]]                   [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech Linebacker]]                                                      [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech Local Access Lines]]                                              [[No]]
--------------------------------------------------------------------- ---------------------------
Ameritech PrePaid Products                                                    [[Yes]]<<No>>
--------------------------------------------------------------------- ---------------------------
[[Ameritech PBX Trunks]]                                                      [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech Remote Call Forwarding]]                                          [[No]]
--------------------------------------------------------------------- ---------------------------
[[Ameritech SmartFax Connections]]                                            [[Yes]]
--------------------------------------------------------------------- ---------------------------
Ameritech ValueLink Product Family                                            [[Yes]]<<No>>
--------------------------------------------------------------------- ---------------------------
[[Ameritech Voice Mail]]                                                      [[No]]
--------------------------------------------------------------------- ---------------------------
</TABLE>

MODIFY EXHIBIT C COMMISSION TO READ:

                                                                       EXHIBIT C
                                                                      COMMISSION

                              EXHIBIT C COMMISSION

         This is incorporated as Exhibit C to the Authorized Distributor
Agreement Between Ameritech and Network Business Solutions, Inc. ("AD") dated
January 1, 1999 (hereinafter the "Agreement").

1.0      GENERAL

         1.1      <<Definitions>>

                  As used in this Agreement, the following definitions apply:

                  "<<AD OF RECORD>>" shall mean the Authorized Distributor firm
                  credited with the sale of a new or renewed Centrex System or
                  PrePaid Products.

                  "<<BASE COMMISSION>>" shall mean the amount paid upfront to an
                  AD for sales of Ameritech Products. The base commission may
                  increase as an AD's objective increases relative to other ADs.

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       6
<PAGE>   110

                  "<<BILLABLE REVENUE>>" shall mean those Recurring and
                  Non-Recurring charges which result from the customer service
                  order(s) which result from the sale submitted by the AD.

                  "<<COMPLETED ORDERS>>" shall mean a "completed" status in an
                  Ameritech service ordering or billing systems.

                  "<<CONTRACT VALUE" OR "CV>>" shall mean the value of the
                  Recurring and Non-Recurring revenue charges for each product
                  which is used by Ameritech for purposes of establishing the
                  value of a sale for commission purposes.

                  "<<ELIGIBLE PRODUCT" OR "PRODUCT ELIGIBILITY>>" shall mean
                  those Products the AD is authorized to promote, market and
                  sell under this Agreement and which are identified fully under
                  Exhibit B of the Agreement. AD is authorized to sell all the
                  Products, but only sales of those Products for which AD has an
                  annual sales objective will retire the AD's sales objective
                  [[for that product family.]]

                  "<<GROWTH REVENUE" shall mean one month of the Recurring
                  Revenue associated with the New sale of a Product included in
                  Exhibit B, Attachment 1, Voice Network Products, and
                  Attachment 2, Standard Data Products. Only Growth Revenue can
                  retire an AD's sales objective.>>

                  "<<MIGRATION>>" occurs when a customer with an existing
                  Ameritech Usage contract signs a new contract for a different
                  Ameritech Usage product, and that product is deemed solely by
                  Ameritech to be within the same product family as the replaced
                  product.

                  [["<<NETTING>>" is applied to the sale of certain ValueLink
                  products when existing products such as, but not limited to,
                  centrex are already existing at that location of the
                  customer.]]

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       7
<PAGE>   111

                  "<<NEW>>" shall mean the sale of a Product to a customer who
                  does not currently have that specific Product and Ameritech in
                  its sole discretion will determine if customer currently has
                  the Product. To retire an AD's objective [[in the applicable
                  product family,]] the sale must be made in the AD's Objective
                  Territory and must be an Eligible Product. In no event will a
                  sale which is classified by Ameritech in its sole discretion
                  as a Recast, a Renewal, a Renegotiation, a Migration or an
                  Upgrade be considered a "New" sale for purposes of the
                  Agreement.

                  "<<NON-RECURRING REVENUE>>" shall mean those one-time billed
                  charges which are a result of a sale by AD.

                  "<<OBJECTIVE BONUS>>" shall mean the amount paid as the
                  Upfront Payment once an AD exceeds the sales volume
                  thresholds, as those sales volumes are stated in dollars, and
                  which are related to the AD's annual [[product family]] sales
                  objective in each state. The amount of the Objective Bonus
                  payment may increase over the term of this Agreement based
                  upon the AD's objective relative to other ADs' objectives. The
                  Objective Bonus payment shall apply only to New sales of
                  Products which retire the objective [[for its product family]]
                  in the Objective Territory.

                  "<<OBJECTIVE RETIREMENT>>" shall mean the process whereby New
                  sales of Ameritech Products retire the <<sales>> objectives
                  [[for the product family. In the event a Product retires AD's
                  Objective as specified under Exhibit B, Attachment 4 in more
                  than one product family, New sales of those products will
                  retire the AD's objective in one, and only one, product family
                  in the following order: (i) Data; (ii) Voice; and (iii)
                  Usage.]] Sales of Products which do not retire objective (see
                  Attachments to Exhibit B) are considered "Sales Without
                  Objective Retirement" for purposes of this Agreement.

                  "<<OBJECTIVE REVENUE>>" shall mean that dollar amount which is
                  considered the unit of measure to retire an AD's sales
                  objective [[in a product family]]. <<Only Growth Revenue can
                  retire an AD's sales objective.>> Objective Retirement shall
                  equal one month of the Recurring Revenue associated with the
                  New sale of a Product.

                  "<<OBJECTIVE TERRITORY>>" shall mean a sales area or region
                  which is a sub-set of AD's authorized Territory. Objective
                  Retirement is satisfied only by sales in AD's Objective
                  Territory, and Ameritech in its sole discretion will establish
                  and assign AD an "Objective Territory".

                  "<<OBJECTIVE TIER ("TIER")>>" means that the AD has been
                  assigned to Tier I, Tier II or Tier III for purposes of
                  commission value calculation and Objective Retirement.
                  Determining the Tier the AD is assigned is at the sole
                  discretion of Ameritech.

                  "<<PARTNERING>>" means that the AD is not the sole sales
                  entity in the sales effort with a particular customer, and AD
                  markets Product(s) to a particular customer with another AD or
                  Ameritech sales representative. AD must receive prior written
                  approval by Ameritech for each Partnering effort, and
                  commission will not be paid on sales which result from such
                  efforts without the prior written consent of Ameritech.
                  Ameritech reserves the right to set commission values for each
                  partnering arrangement.

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       8
<PAGE>   112

                  "<<RECAST/RENEWAL/RENEGOTIATION>>" collectively shall mean a
                  sale of Data or Voice, or a sales which includes data and
                  voice, and such sale is not classified as a New sale for
                  purposes of Objective Retirement or Commission Payment
                  purposes. For purposes of the Agreement, a sale will be deemed
                  a Recast or a Renewal (whichever is appropriate) when a
                  customer signs a new contract for a Product, and the customer
                  already subscribes to the same Ameritech product or to an
                  Ameritech product which is deemed solely by Ameritech to be
                  similar to the Product covered under the new contract, and the
                  new contract extends the customer's term commitment for the
                  Product.

                  A sale will be deemed a Renegotiation when a customer enters
                  into a new contract with Ameritech for a Product they already
                  subscribe to, and the terms of the contract are substantially
                  changed from the contract then-in-effect for that Product, and
                  Ameritech determines, in its sole discretion that the sale is
                  eligible for commission payment to the AD at the Renegotiation
                  rate.

                  "<<RECURRING REVENUE>>" shall mean those monthly charges
                  billed to the customer for Products as a result of a sale by
                  AD.

                  "<<RESIDUAL PAYMENT>>" shall mean the commission payment which
                  is paid by Ameritech over time, and the time period for
                  payment is established by Ameritech based on contract term or
                  other factors relevant to the sale. Ameritech determines the
                  amount and payment schedule in its sole discretion.

                  "<<TAKEBACK>>" shall mean commission amounts which are
                  forfeited or returned by the AD as a result of a customer
                  discontinuing its subscription to the Product(s). In the event
                  the Takeback is accomplished by the AD returning commissions
                  already paid, Ameritech will debit the AD's future commission
                  payments by the amount to be returned. If such a debit does
                  not satisfy the Takeback amount, Ameritech may demand full
                  payment from the AD immediately.

                  "<<TERRITORY>>" is defined under Exhibit B of the Agreement
                  and the rules governing payment of commission for sales made
                  to customers outside the Territory are set forth in the
                  Agreement.

                  "<<UPFRONT COMMISSION PAYMENT>>" shall mean that portion of
                  the total commission paid to the AD upon Ameritech's
                  verification that the order(s) associated with the sale are
                  Completed Orders.

                  "<<UPGRADE>>" means that a customer signs a contract for an
                  Ameritech Product to which the customer already subscribes, or
                  for a Product which Ameritech deems is similar to the Product
                  the customer already subscribes to, and the new contract is
                  for a term that extends the customer's contract term beyond
                  the existing contract's expiration date, <<and>> the new
                  contract includes a product commitment which is larger than
                  that which is in effect at the time of the new contract.

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       9
<PAGE>   113

                  "<<WINBACK BONUS>>" shall mean the incremental commission
                  amount paid to AD because the sale of an Eligible Product is
                  deemed solely by Ameritech to satisfy Ameritech's criteria to
                  be classified as a "winback" sale as that term is understood
                  in the telecommunications industry.

MODIFY 5.0 SALES OUTSIDE OF TERRITORY AND SALES OUTSIDE OF "OBJECTIVE TERRITORY"
TO READ:

5.0      SALES OUTSIDE OF TERRITORY AND SALES OUTSIDE OF "OBJECTIVE TERRITORY"

                  In the event the AD sells Product outside of the Territory,
         and such sale has received Ameritech's prior written consent, the
         commission payment for such sale will be established by Ameritech at
         its sole discretion.

                  In the event that AD sells Product for which the AD does not
         have a sales objective, (which is deemed a sale outside of Objective
         Territory), the sale is subject to a twenty-five percent (25%)
         reduction in the Upfront Commission Payment. <<This provision does not
         apply to sales of Usage Products since Usage Products do not carry a
         sales objective.>>

MODIFY 6.0 PARTNERING TO READ:

6.0      PARTNERING

                  Provided a Partnering arrangement complies with the
         requirements under Article 7, Section 7.7 of the Agreement, Ameritech
         will pay commission on such sales. The general commission payment
         treatment for a Partnering sale is that AD will be paid an Upfront
         Commission Payment equal to fifty percent (50%) of the Upfront
         Commission Payment which would be paid for the same sale if no
         Partnering took place. If two ADs partner, each will receive this
         reduction. An exception to the general commission payment treatment for
         a Partnering sale when the Partnering efforts are with an Ameritech GBS
         Territory Manager <<or Universal Account Executive>>, and the result of
         the effort is a Data Product sale, the Upfront Commission Payment for
         all resulting sales will be twenty-five percent (25%) less than the
         Upfront Commission Payment for the same sale if no Partnering took
         place.

MODIFY 7.0 CENTREX PRODUCT FAMILY, SECTION 7.3 NEW CENTREX SALES TO READ:

         7.3      <<New Centrex Sales.>> Commission on New Centrex system sales
                  will be paid provided the sale results in a net increase in
                  Centrex station lines of at least fifteen percent (15%) of the
                  existing installed system. In Indiana, the Centrex station
                  line net increase must be at least one hundred percent (100%)
                  of the existing installed system. <<If the Centrex system
                  sales results in a zero (0) to fourteen and nine tenths (14.9)
                  percent net increase in Centrex station lines, the sales will
                  be paid as section 7.10d. In Indiana, if the Centrex system
                  sale results in zero (0) to seventy-four and nine tenths
                  (74.9) percent net increase in Centrex station lines, the
                  sales will be paid as section 7.10d.>>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       10
<PAGE>   114

MODIFY SECTION 7.4 <<UPFRONT COMMISSION PAYMENT SCHEDULE>> TO READ:

                  The Upfront Commission Payment schedule set forth below
                  applies to New Centrex system sales. The Commission Payments
                  are stated in terms of one Centrex station line; the actual
                  Commission Payment for a particular sale will be based on the
                  number of lines sold, and, the Commission Payment amount will
                  be calculated by multiplying the rate set forth below for a
                  single Centrex station line by the total number or station
                  lines sold.

<TABLE>
<CAPTION>
                  ------------------------------------------------------------------------------------------
                                          ACS and Indiana Advanced Centrex
                  ------------------------------------------------------------------------------------------

                                     Month-to-          36 Months          60 Months          84 Months
                                       Month
                  ------------  ------------------  -----------------  -----------------  ------------------
<S>                             <C>                 <C>                <C>                <C>
                  Illinois
                  Indiana
                  Michigan             *                   *                  *                    *
                  Ohio
                  Wisconsin
                  ------------  ------------------  -----------------  -----------------  ------------------
</TABLE>

MODIFY SECTION 7.4.1 AVN CENTREX FEATURE TO READ:

         7.4.1    AVN Centrex Feature

                           AVN Centrex feature is paid at a      *
                           <<U>>[[up]]front commission payment. No residuals
                           apply to AVN Centrex feature sales. ADs shall not
                           receive commission on AVN Centrex feature renewals.

MODIFY SECTION 7.7 <<COMMITMENT BONUS>> TO READ:

         7.7      <<Commitment Bonus>>

                  If a new Centrex sale results in a contract which commits the
                  customer to a number of Centrex station lines which Ameritech
                  identifies in the chart that follows here as the appropriate
                  number of lines based upon the number of lines sold, the AD
                  will be eligible to receive the commitment bonus. The
                  commitment bonus increases the Upfront Commission Payment by
                  fifteen percent (15%). Ameritech, in its sole discretion, will
                  determine if a sale is eligible for the Commitment Bonus. The
                  following schedule will be used to determine the applicability
                  of the commitment bonus for ACS and ISDN Centrex.

<TABLE>
<CAPTION>
                  ----------------------------------------------------
                    Number of Lines Sold     Number of Lines Committed
                  -------------------------  -------------------------
<S>               <C>                        <C>
                          <<2-6>> [[2 - 7]]               2
                        <<7-24>> [[8 - 25]]               7
                      <<25-49>> [[26 - 50]]              25
                     <<50-99>> [[51 - 100]]              50
                  <<100-199>> [[101 - 200]]             100
                   <<200-499>> [[over 200]]             200
                               <<over 500>>           <<500>>
                  -------------------------  -------------------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       11
<PAGE>   115

MODIFY SECTION 7.10 <<RECASTS, RENEWALS, RENEGOTIATIONS OF EXISTING CENTREX
CONTRACTS>>, c) TO READ:

                  c)       After a customer contract has expired, and the
                           customer is under a month-to-month term for that
                           Product, any sale of that Product which is submitted
                           by AD will be considered a Recast or Renewal for
                           purposes of commission. If the customer contract
                           expired six (6) or more months prior to the AD's
                           submission, and the customer has been on a
                           month-to-month subscription for that period,
                           Ameritech will pay commission at the New sale rate
                           <<provided that sale meets the requirements defined
                           in 7.3>>.

MODIFY SECTION 7.12 <<TAKEBACK>> TO READ:

         7.12     <<Takeback>>. The Upfront Commission Payment <<and all bonuses
                  are>> [[is]] subject to Takeback in the event the customer
                  discontinues a service (for any or no reason) for which AD
                  received commission in the past. The Takeback amount will be
                  based upon the length of time the customer retained the
                  service and whether the sale was under a term contract:

MODIFY SECTION 8.0 AMERITECH FEATURELINK TO READ:

                  Commission payment and conditions for payment for Ameritech
                  FeatureLink service are the same as those set forth above for
                  ACS Centrex, except that no Commitment Bonus is available for
                  the sale of Ameritech FeatureLink, and the requirement of a
                  15% increase in lines does not apply for <<New>> [[new]] sales
                  of Ameritech FeatureLink.

MODIFY SECTION 9.0 OTHER VOICE PRODUCTS TO READ:

         9.1      <<Other Voice Products are not compensated when sold on
                  Centrex services.>> The commission payment schedule set forth
                  below applies to New sales of the following Products:

MODIFY SECTION 12.0 ELIGIBLE STANDARD DATA PRODUCTS, e) TO READ:

                  e)       <<Takeback.>> If the AD received commission for a
                           Product subject to this Section 12.0, and the
                           customer discontinues the Product for any reason,
                           Takeback applies. The amount of Takeback is based
                           upon the length of time the customer retained the
                           service and if the sale was a term contract: a) if
                           the customer discontinues the Product during the
                           first fifty percent (50%) of the contract term, the
                           Takeback amount<<, including Upfront Commission and
                           all bonuses,>> will be prorated to the length of time
                           remaining on the customer's contract; b) if the

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       12
<PAGE>   116

                           customer discontinues a month-to-month subscription
                           of the Product within sixty (60) days of
                           installation, the Takeback will equal one-hundred
                           percent (100%) of the Upfront Commission Payment
                           <<and all bonuses>>. Residual Commission Payments
                           cease when a contract is discontinued.

MODIFY SECTION 13.0 COMPLETELINK AND VALUELINK PRODUCTS TO READ:

13.0     COMPLETELINK AND VALUELINK PRODUCTS

         13.1     For purposes of the Agreement, the Products referenced in this
                  Section 13.0 are collectively classified by Ameritech as the
                  tariffed Ameritech CompleteLink and ValueLink product
                  families. The conditions and limitations regarding the sale of
                  Products apply to the tariffed CompleteLink and ValueLink
                  product families, including, without limitation, that the AD
                  shall not sell the Products, and is not entitled to commission
                  on sales to customers who are not designated by Ameritech as
                  retail business customers.

         13.2     <<Month-to-month subscriptions. >>In no event will AD be
                  awarded commission for month-to-month CompleteLink or
                  ValueLink product sale.

         13.3     <<Enhanced ValueLink Plus>>. The commission payment schedule
                  provided below applies to New sales of Enhanced ValueLink
                  Plus.

                  a)       Commission Payment Schedule

<TABLE>
<CAPTION>
                                                -------------------------------------------------------------
                                                                      12 Month Contract
                                                                   [[Objective Attainment]]
                                                -------------------------------------------------------------
                              Minimum Annual                                                     [[Upfront
                                  Revenue           Upfront                       [[Upfront
                                Commitment             *           Residual          *               *
                           -------------------- --------------- -------------- -------------- ---------------
<S>                                             <C>             <C>            <C>            <C>

                                    *                  *              *              *                *

                           -------------------- --------------- -------------- -------------- ---------------
</TABLE>

<TABLE>
<CAPTION>
                                                -------------------------------------------------------------
                                                                       24 Month Contract
                                                                    [[Objective Attainment]]
                                                -------------------------------------------------------------
                              Minimum Annual                                                     [[Upfront
                                  Revenue           Upfront                       [[Upfront
                                Commitment             *           Residual           *              *
                           -------------------- --------------- -------------- -------------- ---------------
<S>                                             <C>             <C>            <C>            <C>

                                    *                  *               *              *              *

                           -------------------- --------------- -------------- -------------- ---------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       13
<PAGE>   117

<TABLE>
<CAPTION>
                                                -------------------------------------------------------------
                                                                       36 Month Contract
                                                                    [[Objective Attainment]]
                                                -------------------------------------------------------------
                              Minimum Annual                                                     [[Upfront
                            Revenue Commitment      Upfront                       [[Upfront
                                                        *          Residual            *             *
                           -------------------- --------------- -------------- -------------- ---------------
<S>                                             <C>             <C>            <C>            <C>

                                    *                   *              *               *             *

                           -------------------- --------------- -------------- -------------- ---------------
</TABLE>

                  b)       <<CV>>. The CV for the above schedule is determined
                           by the following formula:

                                   (MARC) x (Contract Length in Years) = CV

         13.4.1   CompleteLink. The commission award and payment schedules
                  provided below apply to orders solicited by AD for New sales
                  of CompleteLink only under the conditions which follow. The
                  commission schedules below apply to a New CompleteLink
                  contract with a MARC of $700 or $1,200 (when such MARCs are
                  properly indicated on the customer contract) if and only if
                  the New sale also includes the New sale of at least one of the
                  following products: (i) one or more Local Access Lines or PBX
                  Trunks, (ii) one or more Centrex Lines and/or (iii) one or
                  more ISDN Direct Lines.

                  When the New sale of the CompleteLink with a MARC of $700 or
                  $1,200 does not include the New sale of at least one of the
                  above referenced products, the Base and Residual commission
                  Payments[[, and the Objective Revenue amount]] will be reduced
                  by fifty percent (50%).

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       14
<PAGE>   118

                  a)       Commission Payment Schedules for the Minimum Annual
                           Revenue Commitment (MARC)

<TABLE>
<CAPTION>
                                                --------------------------------------------------------------
                                                                       12 Month Contract
                                                                    [[Objective Attainment]]
                                                --------------------------------------------------------------
                                                                                                  [[Upfront
                                                    Upfront                        [[Upfront
                                   MARC               *               Residual          *             *
                           -------------------- ---------------- ---------------- ------------ ---------------
<S>                                             <C>              <C>              <C>          <C>

                                      *                  *             *               *              *

                           -------------------- ---------------- ---------------- ------------ ---------------
</TABLE>

<TABLE>
<CAPTION>
                                                ----------------------------------------------------------------
                                                                       36 Month Contract
                                                                    [[Objective Attainment]]
                                                ----------------------------------------------------------------
                                                                                                    [[Upfront
                                                     Upfront                        [[Upfront
                                   MARC                  *            Residual           *               *
                           -------------------- ----------------- ---------------- ------------- ---------------
<S>                                             <C>               <C>              <C>           <C>

                                      *                  *               *               *               *

                           -------------------- ----------------- ---------------- ------------- ---------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       15
<PAGE>   119

<TABLE>
<CAPTION>
                                     -------------------------------------------------
                                                     60 Month Contract
                                                  [[Objective Attainment]]
                                     -------------------------------------------------
                                                                                         [[Upfront
                                          Upfront                           [[Upfront
                             MARC           *               Residual             *           *
                           --------  -----------------  ----------------  ------------  ------------
<S>                                  <C>                <C>               <C>           <C>

                               *            *                   *               *            *

                           --------  -----------------  ----------------  ------------  ------------
</TABLE>

                           b)       Commission Payment Schedules for the Minimum
                                    Annual Toll Usage Commitment (MATUC)

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       16
<PAGE>   120

<TABLE>
<CAPTION>
                                     -------------------------------------------------
                                                     12 Month Contract
                                                  [[Objective Attainment]]
                                     -------------------------------------------------
                                                                           [[Upfront        Winback
                                           Upfront        [[Upfront                          Bonus
                             MATUC            *                *                *
                           --------  -----------------  ----------------  ------------  ----------------
<S>                                  <C>                <C>               <C>           <C>

                               *              *                  *               *               *

                           --------  -----------------  ----------------  ------------  ----------------
</TABLE>

<TABLE>
<CAPTION>
                                                  --------------------------------------------------
                                                                  36 Month Contract
                                                              [[Objective Attainment]]
                                                  --------------------------------------------------
                                                                                       [[Upfront          Winback
                                                      Upfront         [[Upfront                            Bonus
                                   MATUC                 *                 *                *
                           ---------------------- ---------------- ---------------- ---------------- ----------------
<S>                                               <C>              <C>              <C>              <C>

                                      *                  *                *                 *               *

                           ---------------------- ---------------- ---------------- ---------------- ----------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       17
<PAGE>   121

<TABLE>
<CAPTION>
                                                  --------------------------------------------------
                                                                  60 Month Contract
                                                               [[Objective Attainment]]
                                                  --------------------------------------------------
                                                                                      [[Upfront          Winback
                                                      Upfront         [[Upfront                           Bonus
                                   MATUC                 *                 *              *
                           ---------------------- ---------------- ---------------- ---------------- ----------------
<S>                                               <C>              <C>              <C>              <C>

                                       *                 *                  *             *                 *

                           ---------------------- ---------------- ---------------- ---------------- ----------------
</TABLE>

         13.7     <<ValueLink Illinois Option F Preferred>>. The commission
                  payment schedules below applies to New sales of ValueLink
                  Illinois Option F Preferred.

                  a)       <<Commission Payment Schedules>>

<TABLE>
<CAPTION>
                                                  --------------------------------------------------------------------
                                                                           12 Month Contract
                                                                        [[Objective Attainment]]
                                                  --------------------------------------------------------------------
                                  Minimum
                                   Annual                                                               [[Upfront
                               Minutes of Use         Upfront                           [[Upfront
                                 Commitment              *             Residual             *                *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
<S>                                               <C>              <C>              <C>               <C>
                                      *                  *                *                 *                *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

<TABLE>
<CAPTION>
                                                  --------------------------------------------------------------------
                                                                           24 Month Contract
                                                                        [[Objective Attainment]]
                                                  --------------------------------------------------------------------
                                 Minimum
                                  Annual                                                                 [[Upfront
                              Minutes of Use          Upfront                          [[Upfront
                                Commitment               *             Residual            *                 *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
<S>                                               <C>              <C>              <C>               <C>

                                     *                   *               *                 *                 *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       18
<PAGE>   122

<TABLE>
<CAPTION>
                                                  --------------------------------------------------------------------
                                                                           36 Month Contract
                                                                       [[Objective Attainment]]
                                                  --------------------------------------------------------------------
                                 Minimum
                                  Annual                                                                 [[Upfront
                              Minutes of Use          Upfront                          [[Upfront
                                Commitment               *              Residual           *                  *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
<S>                                               <C>              <C>              <C>               <C>
                                     *                   *                *                *                  *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

                  b)       <<CV>>. The CV for the above schedules is determined
                           by the following formula: (Minimum Annual MOU x Per
                           Minute Rate) x (Contract Length In Years)

         13.8     <<ValueLink Illinois Option F>>. The commission payment
                  schedules below applies to New sales of ValueLink Illinois
                  Option F.

                  a)       <<Commission Payment Schedules>>

<TABLE>
<CAPTION>
                                                  --------------------------------------------------------------------
                                                                           12 Month Contract
                                                                       [[Objective Attainment]]
                                                  --------------------------------------------------------------------
                                 Minimum
                                  Annual                                                                 [[Upfront
                              Minutes of Use          Upfront                          [[Upfront
                                Commitment               *              Residual           *                  *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
<S>                                               <C>              <C>              <C>               <C>

                                    *                    *                 *               *                    *

                           ---------------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

<TABLE>
<CAPTION>
                                                  --------------------------------------------------------------------
                                                                           24 Month Contract
                                                                       [[Objective Attainment]]
                                                  --------------------------------------------------------------------
                                 Minimum
                                  Annual                                                                 [[Upfront
                              Minutes of Use          Upfront                          [[Upfront
                                Commitment               *             Residual            *                 *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
<S>                                               <C>              <C>              <C>               <C>

                                     *                   *                 *               *                  *

                           ---------------------- ---------------- ---------------- ----------------- ----------------
</TABLE>

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       19
<PAGE>   123

<TABLE>
<CAPTION>
                                                  --------------------------------------------------------------------
                                                                           36 Month Contract
                                                                       [[Objective Attainment]]
                                                  --------------------------------------------------------------------
                                 Minimum
                                  Annual                                                                 [[Upfront
                              Minutes of Use          Upfront                          [[Upfront
                                Commitment                *            Residual            *                *
                           ---------------------- ---------------- ---------------- ----------------- ----------------
<S>                                               <C>              <C>              <C>               <C>

                                    *                    *                *                *                *

                           ---------------------- ---------------- ---------------- ---------------- ----------------
</TABLE>

                  b)       <<CV>>. The CV for the above schedules is determined
                           by the following formula: (Minimum Annual MOU x Per
                           Minute Rate) x (Contract Length In Years) = CV

         13.10    CompleteLink<< - HQ - Individual Case Basis (ICB) Usage>>. The
                  following commission payment schedule applies to New sales of
                  CompleteLink - HQ - Individual Case Basis (ICB) Usage
                  contracts:

                  a)       <<Upfront Commission Payment Schedule>>

<TABLE>
<CAPTION>
                                                  -------------------------------------------------------------------
                                                                        CompleteLink - HQ - ICB
                                                                        [[Objective Attainment]]
                                                  -------------------------------------------------------------------
                                 Contract              <<Upfront>>
                                  Length                    *                    *                        *
                           ---------------------- --------------------- ---------------------- ----------------------
<S>                                               <C>                   <C>                    <C>
                              24 Months
                              36 Months                      *                    *                         *
                              60 Months
                           ---------------------- --------------------- ---------------------- ----------------------
</TABLE>

                  b)       <CV>>. The CV for the above schedule is determined by
                           the following formula: (MBRC) x (Contract Length In
                           Months) = CV

                  c)       <<Residual Commission Payment>>. No residual
                           commissions will be paid for CompleteLink - HQ - ICB
                           Usage sales.

                  d)       <<Contract terms different than presented above>>. If
                           a CompleteLink - HQ - ICB Usage sale is for a
                           contract with a term different than presented in the
                           above table, the commission payment for such a sale
                           will use the Commission Payment Schedule set forth
                           above for the next lowest contract length.

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       20
<PAGE>   124

         13.11    CONTRACT UPGRADE OR MIGRATION

                  a)       <<Commission Payment>>

                           (i)      Only Upgrades or Migrations from Enhanced
                                    ValueLink Plus to CompleteLink will be paid
                                    as New. Customers with both Enhanced
                                    ValueLink Plus and ValueLink Extra are not
                                    eligible.

                           (ii)     The commission payment for a CompleteLink
                                    Upgrade or Migration sale will be paid only
                                    when there is a Winback of toll and will
                                    consist of the commission payment applicable
                                    to the MATUC component plus the Winback
                                    Bonus component.

                           (iii)    Commission will not be paid for any other
                                    Upgrade or Migration sales.

                  [[b)     <<Does Not Retire Objective.>> Neither an Upgrade nor
                           a Migration will serve to retire the AD's Usage
                           Product family objective, and neither an Upgrade nor
                           a Migration is subject to an Objective Bonus.]]

                  [[C]] b) <<Residual Commission Payment>>. No residual
                           commissions will be paid for Upgrade or Migration
                           sales. Additionally, any residual commissions being
                           paid for the former product will cease.

         13.12    <<Takeback>>. If the AD received commission for a Product
                  subject to this Section 13.0, and the customer discontinues
                  the Product for any reason, Takeback applies. If the customer
                  discontinues a Product within one-hundred and eighty days
                  after the Completed Order date, the Takeback will equal
                  one-hundred percent (100%) of the Upfront Commission Payment
                  <<and all bonuses>>. Residual commissions cease effective the
                  date the customer cancels the product.

         13.13    <<Renewals of existing Usage Contracts>>

                  a)       If the customer's contract term in effect at the time
                           of the Renewal is more than ninety (90) days from the
                           date the contract expires, commission will not be
                           paid to AD for a usage contract Renewal, unless
                           Ameritech has provided prior written approval for
                           such payment. Contract term is determined by the
                           original customer signature date.

                  b)       After a customer contract has expired, any sale of
                           that Product [[with is]] submitted by AD will be
                           considered a Renewal for purposes of commission. If
                           the customer contract expired six (6) or more months
                           prior to the AD's submission, and the customer has
                           been without a usage contract for that period,
                           Ameritech will pay commission at the New sale rate.

                  c)       Commission for CompleteLink Renewals will be paid as
                           follows:

                           (i)      The Base Commission will equal seventy-five
                                    percent (75%) of the amount paid for an
                                    identical New CompleteLink sale.

                           (ii)     The Residual Commission Payment will be paid
                                    at the same rate as an identical New
                                    CompleteLink sale.

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       21
<PAGE>   125

                [[d)       Objective Retirement. Renewals will not retire the
                           AD's Usage Product family objective, nor will
                           renewals be subject to an Objective Bonus.]]

         [[13.14  Multi-state Complete Link Contracts.]]

                [[a)       Multistate contracts will retire objective based upon
                           the Main BTN.]]

DELETE SECTION 14.2 1-800-CONFERENCE OBJECTIVE ATTAINMENT:

[[14.2   <<Objective Attainment>>. For purposes of Objective Attainment, the
         following factors will be applied to the Base Commission Payment to
         arrive at the Objective Attainment number:]]

                  ---------------------------- ----------
                    [[Objective Attainment       Factor
                  ---------------------------- ----------
                           0 - 69.9%             1.00
                          70 - 99.9%             1.25
                         100% and over           1.50]]
                  ---------------------------- ----------

DELETE SECTION 15.3 AMERITECH PREPAID PRODUCTS OBJECTIVE ATTAINMENT:

         [[15.3   <<Objective Attainment>>. For purposes of objective
                  attainment, the following factors will be applied to the Base
                  Commission:]]

                  ---------------------------- ----------------
                     [[Objective Attainment         Factor
                  ---------------------------- ----------------
                           0 - 69.9%                1.00
                          70 - 99.9%                1.25
                         100% and over              1.50]]
                  ---------------------------- ----------------

                            Effective January 1, 1999
 Confidential and Proprietary Information of Ameritech. Not to be disclosed to
            another party without prior written consent of Ameritech
                                       22
<PAGE>   126
April 18, 2000 Ameritech Authorized Distributor Agreement Modification         1

[AMERITECH LOGO]

April 18, 2000

Dear Authorized Distributor

       Re:    <<Notice of Contract Change - Modifications to Authorized
              Distributor Agreement effective January 1, 1999, as last amended
              December 3, 1999>>

This Notice is sent pursuant to Article 15 of the above-referenced Agreement.
The contract change(s), modification(s) or addition(s) are effective thirty (30)
calendar days after the date of this letter. ADDITIONS TO THE CONTRACT ARE
REFLECTED WITH <<UNDERSCORE>> AND DELETIONS BY [[STRIKETHROUGH]]. WHERE AN ITEM
IS UNDERLINED AND HAS A STRIKETHROUGH, THE STRIKETHROUGH TAKES PRECEDENCE.
(NOTE: Due to the limitations of the EDGAR system, underscores will be preceded
by "<<" and followed by ">>". Strikethroughs will be preceded by "[[" and
followed by "]]".)

                  John Maloney
                  Channel Manager

<PAGE>   127

April 18, 2000 Ameritech Authorized Distributor Agreement Modification         2

REVISE ARTICLE 1, SECTION 1.9 TO READ:

<<Section 1.9 End User of Product>>. In no event is AD granted the right or
authority under this Agreement to distribute Products to anyone whom the AD
knows, or should have known, at the time of sale or within two (2) years
thereafter, is: a) not the end user of the Product; b) subscribing to the
Product for the purpose of reselling it to retail customers; or, c) [[is]] not
designated by Ameritech [[GBS]] as a "retail" customer of Ameritech.

REVISE ARTICLE 1, SECTION 1.11 TO READ:

<<Section 1.11 Sole Agreement.>> Ameritech utilizes various channels to
Distribute Product to its retail business customers, and Ameritech's strategy
prohibits cross-over appointments between its channels. Therefore, AD is
prohibited from acting as an Ameritech [[Enhanced Service Provider]],
<<Enterprise Solutions Provider (ESP),>> an Authorized Video Sales
Representative or to enter into any other Distribution agreement with Ameritech
under which an appointment to market or sell landline Products to Ameritech's
retail customers is granted.

MODIFY EXHIBIT A TERRITORY TO READ:
                                                                       EXHIBIT A
                                                                       TERRITORY

                              EXHIBIT A TERRITORY

This is Exhibit A to the Authorized Distributor Agreement Between Ameritech and
SAMPLE ("AD") dated January 1, 1999.

       AD is hereby granted the right to distribute in the Territory specified
under this Exhibit. AD's right under the Agreement and this Exhibit is
conditioned on full execution of the Agreement and the signature of both parties
at the end of each Exhibit.

       Ameritech and AD agree that sales outside of the Territory are not
encouraged and AD's authority to market, promote or sell Ameritech products to
customers outside of the Territory requires prior written approval by Ameritech.

       STATE:
       AREA CODES*:

       If a business unit is not specifically listed below, sales by AD to
customers classified by Ameritech as served by that business unit are considered
"out of Territory" sales for purpose of this Agreement.**

*Any area code split will result in automatic inclusion of the new area codes
unless AD is otherwise notified in writing by Ameritech.

       **Key - CBS means customers of the Custom Business Services business unit
               GBS means customers of the General Business Services business
               unit

               <<GLOBAL MEANS CUSTOMERS OF THE SBC GLOBAL MARKETS BUSINESS UNIT
               BCS MEANS CUSTOMERS OF THE BUSINESS COMMUNICATIONS SERVICES
               BUSINESS UNIT>>

<PAGE>   128

April 18, 2000 Ameritech Authorized Distributor Agreement Modification         3

MODIFY ATTACHMENT 2: STANDARD DATA PRODUCTS AND SERVICES TO READ:

                                                         EXHIBIT B, ATTACHMENT 2
                                                          STANDARD DATA PRODUCTS

                ATTACHMENT 2: STANDARD DATA PRODUCTS AND SERVICES

       This is incorporated as Attachment 2 to Exhibit B to the Authorized
Distributor Agreement between Ameritech and SAMPLE ("AD") dated January 1, 1999.

<<Ameritech.net SpeedPath with ADSL>>
<<Ameritech ADSL Transport Service>>
Ameritech AutoVAN (ANX) Service
Ameritech Analog Video Service
Ameritech Asynchronous Transfer Mode Service (ATM)
Ameritech Broadcast Video Service
Ameritech Connectionless Broadband Data Service (CBDS)
Ameritech Digital Transport Service - Enhanced (ADTS-E)
Ameritech DSO (except Total Access Service)
Ameritech DS1 (except Total Access Service)
Ameritech DS3 (except Total Access Service)
Ameritech Fiber Distributed Data Interface Service (FDDI)
Ameritech Fractional DS1 (384) (except Total Access Service)
Ameritech Frame Relay Service (FRS)
Ameritech Host Interconnection Service (AHIS)
Ameritech Internet Access (Dedicated Access over Frame Relay or CBDS)
Ameritech ISDN Direct Service
Ameritech ISDN Prime Service
Ameritech LAN Interconnect Service (ALIS)
Ameritech Packet Switched Data Service
Ameritech Reconfiguration Service (ARS)
Ameritech Remote Office Access Manager (ROAM)
Ameritech Synchronized Optical Network Service (SONET)

<PAGE>   129

April 18, 2000 Ameritech Authorized Distributor Agreement Modification         4

REVISE ANNEX 2: STANDARD DATA PRODUCTS AND SERVICES OBJECTIVE RETIREMENT TO
READ:

                                                         EXHIBIT B, ATTACHMENT 4
                                                                         ANNEX 2
                                                          STANDARD DATA PRODUCTS

                  ANNEX 2: STANDARD DATA PRODUCTS AND SERVICES
                              OBJECTIVE RETIREMENT

       This is incorporated as Annex 2 to Attachment 4 of Exhibit B to the
Authorized Distributor Agreement between Ameritech and SAMPLE ("AD") dated
January 1, 1999.

<TABLE>
<CAPTION>
                   ELIGIBLE PRODUCTS AND SERVICES                          OBJECTIVE RETIREMENT
                   ------------------------------                          --------------------
<S>                                                                        <C>
<<Ameritech.net SpeedPath with ADSL>>                                             <<Yes>>
<<Ameritech ADSL Transport Service>>                                              <<Yes>>
Ameritech AutoVAN (ANX) Service                                                     Yes
Ameritech Analog Video Service                                                      Yes
Ameritech Asynchronous Transfer Mode Service (ATM)                                  Yes
Ameritech Broadcast Video Service                                                   Yes
Ameritech Connectionless Broadband Data Service (CBDS)                              Yes
Ameritech Digital Transport Service - Enhanced (ADTS-E)                             Yes
Ameritech DSO (except Total Access Service)                                         Yes
Ameritech DS1 (except Total Access Service)                                         Yes
Ameritech DS3 (except Total Access Service)                                         Yes
Ameritech Fiber Distributed Data Interface Service (FDDI)                           Yes
Ameritech Fractional DS1 (384) (except Total Access Service)                        Yes
Ameritech Frame Relay Service (FRS)                                                 Yes
Ameritech Host Interconnection Service (AHIS)                                       Yes
Ameritech Internet Access (Dedicated Access over Frame Relay or CBDS)               Yes
Ameritech ISDN Direct Service                                                       Yes
Ameritech ISDN Prime Service                                                        Yes
Ameritech LAN Interconnect Service (ALIS)                                           Yes
Ameritech Packet Switched Data Service                                              Yes
Ameritech Reconfiguration Service (ARS)                                             Yes
Ameritech Remote Office Access Manager (ROAM)                                       Yes
Ameritech Synchronized Optical Network Service (SONET)                              Yes
</TABLE>

<PAGE>   130

April 18, 2000 Ameritech Authorized Distributor Agreement Modification         5

MODIFY EXHIBIT C COMMISSION, SECTION 1.3 COMMISSION AMOUNT AND PAYMENT SCHEDULES
TO READ:

1.3    <<Commission Amount and Payment Schedules.>> The commission value and the
       time of payment for each sale is based upon a number of factors, first
       and foremost is the Product sold and the terms and conditions of this
       Agreement. To be eligible for commission on a specific sale, the AD must
       comply with all Ameritech practices and procedures, including, but not
       limited to, those related to the processing of sales and subscriber
       agreements by AD, and the accuracy of each submission by AD. Ameritech
       reserves the sole right to modify or change any or all of its practices
       and procedures related to the AD program, and will provide AD with a
       minimum of thirty (30) days prior written Notice of any modification
       which will affect the AD's own practices or procedures. Ameritech may
       elect to serve this Notice via the [["         *"]]
       <<Authorized Distributor>> web site and bulletin board, and the Notice
       will be considered given on the date the Notice is posted by Ameritech on
       the web site.

MODIFY EXHIBIT C COMMISSION, SECTION 9.1.1 TO READ:

       9.1.1 The commission payment schedule set forth below applies to New
sales of local access lines:

<TABLE>
<CAPTION>
              Objective
              Attainment            Upfront           [[Winback Bonus]]
              ----------            -------             -------------
<S>                               <C>                   <C>

                  *                    *                      *

</TABLE>

ADD TO EXHIBIT C COMMISSION, UNDER SECTION 9.0 OTHER VOICE PRODUCTS, A SECTION
9.6 THAT READS:

       9.6    WINBACK. The commission payment schedule set forth below applies
              to Winback sales of local access lines on a per line basis:

<TABLE>
<CAPTION>
                                                  <<Winback>>
                           <<State>>               <<Bonus>>
                             -----                   -----
<S>                                                   <C>
                          <<Illinois>>
                          <<Indiana>>
                          <<Michigan>>                 *
                            <<Ohio>>
                          <<Wisconsin>>
</TABLE>

<PAGE>   131

April 18, 2000 Ameritech Authorized Distributor Agreement Modification         6

MODIFY EXHIBIT C COMMISSION, SECTION 12.4 COMPLEX DATA PRODUCTS TO READ:

       12.4   COMPLEX DATA PRODUCTS

              a)   <<Commission Payment Schedule>>. The following commission
                   payment schedule applies to New sales and additions to
                   existing installations of the following Data products:

                       <<Ameritech ADSL Transport Service>>
                       Ameritech Synchronized Optical Network Service (SONET)
                       Ameritech Frame Relay Service (FRS)
                       Ameritech Connectionless Broadband Data Service (CBDS)
                       Ameritech Internet Access (Dedicated Access over FRS
                       or CBDS)
                       Ameritech Remote Office Access Manager (ROAM)
                       Ameritech LAN Interconnection Service (ALIS)
                       Ameritech Host Interconnection Service (AHIS)
                       Ameritech Fiber Distributed Data Interface Service (FDDI)
                       Ameritech Asynchronous Transfer Mode Service (ATM)

ADD TO EXHIBIT C COMMISSION, UNDER SECTION 12.0 ELIGIBLE STANDARD DATA PRODUCTS,
SECTIONS 12.8 a) AND 12.8 b) THAT READ:

12.8   <<AMERITECH.NET SPEEDPATH WITH ADSL>>

       <<a)   The Upfront Commission Payment schedule set forth below applies to
              a New sale of an Ameritech.net SpeedPath with ADSL:>>

<TABLE>
<CAPTION>
                         <<SpeedPath Package>>              <<Upfront>>
                           -----------------                  -------
<S>                                                           <C>
                                <<768>>
                            <<768 Office>>                       *
                          <<768 Office Plus>>
                         <<1500 Office Plus>>
</TABLE>

       <<b)   Objective Attainment. The following factors will be applied to the
              Base Upfront Commission Payment for purposes of Objective
              Attainment:>>

<TABLE>
<CAPTION>
                        <<Objective Attainment>>              <<Factor>>
                          --------------------                  ------
<S>                                                             <C>

                                  *                                *

</TABLE>

<PAGE>   132

April 18, 2000 Ameritech Authorized Distributor Agreement Modification         7

STRIKE EXHIBIT C COMMISSION, SECTION 13.0 COMPLETELINK AND VALUELINK PRODUCTS,
SECTION 13.4.1 COMPLETELINK:

     [[13.4.1 COMPLETELINK. The commission award and payment schedules provided
              below apply to orders solicited by AD for New sales of
              CompleteLink only under the conditions which follow. The
              commission schedules below apply to a New CompleteLink contract
              with a MARC of $700 or $1,200 (when such MARCs are properly
              indicated on the customer contract) if and only if the New sale
              also includes the New sale of at least one of the following
              products: (i) one or more Local Access Lines or PBX Trunks, (ii)
              one or more Centrex Lines and/or (iii) one or more ISDN Direct
              Lines.]]

MODIFY EXHIBIT C COMMISSION, SECTION 13.0 COMPLETELINK AND VALUELINK PRODUCTS,
SECTION 13.11 CONTRACT UPGRADE OR MIGRATION A) AND B) TO READ:

       13.11  CONTRACT UPGRADE OR MIGRATION

              a)     <<Commission Payment>>

                     (i) Only Upgrades or Migrations from Enhanced ValueLink
                     Plus, <<ValueLink Illinois product family, and Straight
                     Rate>> to CompleteLink will be paid as New. Customers with
                     both Enhanced ValueLink Plus and ValueLink Extra are not
                     eligible.

                     (ii) The commission payment for a CompleteLink Upgrade or
                     Migration sale will be paid only when there is a Winback of
                     toll and will consist of the commission payment applicable
                     to the MATUC component plus the Winback Bonus component.

                     (iii) Commission will not be paid for any other Upgrade or
                     Migration sales.

              b)     <<Residual Commission Payment.>> No residual commissions
                     will be paid for Upgrade or Migration sales.
                     [[Additionally, any residual commissions being paid for the
                     former product will cease.]]<PAGE>   1
                                                                    EXHIBIT 10.7

Public Securities Association
40 Broad Street, New York, NY 10004-2373
Telephone (212) 809-7000                                              [PSA LOGO]

                          MASTER REPURCHASE AGREEMENT

                                                   Dated as of: NOVEMBER 5, 1999

Between:

IMPACT WAREHOUSE LENDING GROUP

and

STARNET FINANCIAL, INC. AND STARNET MORTGAGE

1. Applicability

     From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities or
financial instruments ("Securities") against the transfer of funds by Buyer,
with a simultaneous agreement by Buyer to transfer to Seller such Securities at
a date certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "Transaction" and shall be governed
by this Agreement, including any supplemental terms or conditions contained in
Annex 1 hereto, unless otherwise agreed in writing.

2. Definitions

     (a) "Act of Insolvency", with respect to any party, (i) the commencement by
such party as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar law, or such party seeking
the appointment of a receiver, trustee, custodian or similar official for such
party or any substantial part of its property, or (ii) the commencement of any
such case or proceeding against such party, or another seeking such an
appointment, or the filing against a party of an application for a protective
decree under the provisions of the Securities Investor Protection Act of 1970,
which (A) is consented to or not timely contested by such party, (B) results in
the entry of an order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by a party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by a
party of such party's inability to pay such party's debts as they become due;

     (b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;

     (c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage (which may be equal to
the percentage that is agreed to as the Seller's Margin Amount under
subparagraph (q) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction as
of such date;

     (d) "Confirmation", the meaning specified in Paragraph 3(b) hereof;

     (e) "Income", with respect to any Security at any time, an principal
thereof then payable and all interest, dividends or other distributions thereon;

     (f) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;

     (g) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;

     (h) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);

     (i) "Price Differential", with respect to any transaction hereunder as of
any date, the aggregate amount obtained by daily application of the Pricing Rate
for such Transaction to the Purchase Price for such Transaction on a 360 day per
year basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);

<PAGE>   2

     (j) "Pricing Rate", the per annum percentage rate for determination of the
Price Differential;

     (k) "Prime Rate", the prime rate of U.S. money center commercial banks as
published in The Wall Street Journal;

     (l) "Purchase Date", the date on which Purchased Securities are transferred
by Seller to Buyer;

     (m) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter,
such price increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash
transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to
reduce Seller's obligations under clause (ii) of Paragraph 5 hereof;

     (n) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefore in
accordance with Paragraph 9 hereof. The term "Purchased Securities" to Paragraph
4(a) and shall exclude Securities returned pursuant to Paragraph 4(b);

     (o) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by application of
the provisions of Paragraphs 3(c) or 11 hereof;

     (p) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such
determination, increased by any amount determined by the application of the
provisions of Paragraph 11 hereof;

     (q) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage (which may be equal to
the percentage that is agreed to as the Buyer's Margin Amount under subparagraph
(c) of this Paragraph), agreed to by Buyer and Seller prior to entering into the
Transaction, to the Repurchase Price for such Transaction as of such date.

3. Initiation; Confirmation; Termination

     (a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase Date for
the Transaction, the Purchased Securities shall be transferred to Buyer or its
agent against the transfer of the Purchase price to an account of Seller.

     (b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other party a
written confirmation of each Transaction (a "Confirmation"). The Confirmation
shall describe the Purchased Securities (including CUSIP number, if any),
Identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase
Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the
Transaction, and (v) any additional terms or conditions of the Transaction not
inconsistent with this Agreement. The Confirmation, together with this
Agreement, shall constitute conclusive evidence of the terms agreed between
Buyer and Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection is made
promptly after receipt thereof. In the event of any conflict between the terms
of such Confirmation and this Agreement, this Agreement shall prevail.

     (c) In the case of transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
business day on which such termination will be effective. On the date specified
in such demand, or on the date fixed for termination in the case of Transactions
having a fixed term, termination of the Transaction will be effected by transfer
to Seller or its agent of the purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against
the transfer of the Repurchase Price to an account of Buyer.

4. Margin Maintenance

     (a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Buyer is less than the aggregate Buyer's Margin Amount for all such Transactions
(a "Margin Deficit"), the Buyer may by notice to Seller require Seller in such
Transactions, at Seller's option, to transfer to Buyer cash or additional
Securities reasonably acceptable to Buyer ("Additional Purchased Securities"),
so that the cash and aggregate Market Value of the Purchased Securities,
including any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer's Margin Amount (decreased by the amount of any
Margin Deficit as of such date arising from any Transactions in which such Buyer
is acting as Seller).

     (b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Seller exceeds the aggregate Seller's Margin Amount for all such Transactions at
such time (a "Margin Excess"), then Seller may by notice to Buyer require
Buyer in such Transactions, at Buyer's option to transfer cash or Purchased
Securities to Seller, so that the aggregate Market Value of the Purchased
Securities, after deduction of any such cash or any Purchased Securities so
transferred, will thereupon not exceed such aggregate Seller's Margin Amount
(increased by the amount of any Margin Excess as of such date arising from any
Transactions in which such Seller is acting as Buyer).

     (c) Any cash transferred pursuant to this Paragraph shall be attributed to
such Transactions as shall be agreed upon by Buyer and Seller.

<PAGE>   3

     (d) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both) under
subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin
Deficit or Margin Excess exceeds a specified dollar amount or a specified
percentage of the Repurchase Prices for such Transactions (which amount or
percentage shall be agreed to by Buyer and Seller prior to entering into any
such Transactions).

     (e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under subparagraphs
(a) and (b) of this Paragraph to require the elimination of a Margin Deficit or
a Margin Excess, as the case may be, may be exercised whenever such a Margin
Deficit or Margin Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under this
Agreement).

5. Income Payments

     Where a particular Transaction's term extends over an Income payment date
on the Securities subject to that Transaction, Buyer shall, as the parties may
agree with respect to such Transaction (or, in the absence of any agreement, as
Buyer shall reasonably determine in its discretion), on the date such Income
is payable either (i) transfer to or credit to the account of Seller an amount
equal to such Income payment or payments with respect to any Purchased
Securities subject to such Transaction or (ii) apply the Income payment or
payments to reduce the amount to be transferred to Buyer by Seller upon
termination of the Transaction. Buyer shall not be obligated to take any action
pursuant to the preceding sentence to the extent that such action would result
in the creation of a Margin Deficit, unless prior thereto or simultaneously
therewith Seller transfers to Buyer cash or Additional Purchased Securities
sufficient to eliminate such Margin Deficit.

6. Security Interest

     Although the parties intend that all transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all proceeds thereof.

7. Payment and Transfer

     Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. All Securities transferred by one party hereto
to the other party (i) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer. As used herein with respect to Securities, "transfer" is
intended to have the same meaning as when used in Section 8-313 of the New York
Uniform Commercial Code or, where applicable, in any federal regulation
governing transfers of the Securities.

8. Segregation of Purchased Securities

     To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its possession
and shall be identified as subject to this Agreement. Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial intermediary or a clearing corporation. Title to
all Purchased Securities shall pass to Buyer an, unless otherwise agreed by
Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging
in repurchase transactions with the Purchased Securities or otherwise pledging
or hypothecating the Purchased Securities, but no such transaction shall relieve
Buyer of its obligations to transfer Purchased Securities to Seller pursuant to
Paragraphs 3, 4, or 11 hereof, or of Buyer's obligation to credit or pay Income
to, or apply Income to the obligations of, Seller pursuant to Paragraph 5
hereof.

     Required Disclosure for Transactions in Which the Seller Retains Custody of
     the Purchased Securities

     Seller is not permitted to substitute other securities for those subject to
this Agreement and therefore must keep Buyer's securities segregated at all
times, unless in this Agreement Buyer grants Seller the right to substitute
other securities. If Buyer grants the right to substitute, this means that
Buyer's securities will likely be commingled with Seller's own securities during
the trading day. Buyer is advised that, during any trading day that Buyer's
securities are commingled with Seller's securities, the [will]*[may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties]** and
may be used by Seller for deliveries on other securities transactions. Whenever
the securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy [the
clearing]* [any]** lien or to obtain substitute securities.

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

*    Language to be used under 17 C.F.R. Section 403.4(e) if Seller is a
     government securities broker or dealer other than a financial institution.

**   Language to be used under 17 C.F.R. Section 403.4(d) if Seller is a
     financial institution.

<PAGE>   4
9. Substitution

     (a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such substitution
shall be made by transfer to Buyer of such other Securities and transfer to
Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.

     (b) In Transactions in which the Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed, for purposes
of subparagraph (a) of this Paragraph, to have agreed to and accepted in this
Agreement substitution by Seller of other Securities for Purchased Securities;
provided, however, that such other Securities shall have a Market Value at least
equal to the Market Value of the Purchased Securities for which they are
substituted.

10. Representations

     Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing in advance of any Transaction by the other party hereto, as
agent for a disclosed principal), (iii) the person signing this Agreement on its
behalf is duly authorized to do so on its behalf (or on behalf of any such
disclosed principal), (iv) it has obtained all authorizations of any
governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(v) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law or
rule applicable to it or any agreement by which it is bound or by which any of
its assets are affected. On the Purchase Date for any Transaction Buyer and
Seller shall each be deemed to repeat all the foregoing representations made by
it.

11. Events of Default

     In the event that (i) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon the applicable Repurchase Date, (ii) Seller or Buyer
fails, after one business day's notice, to comply with Paragraph 4 hereof, (iii)
Buyer fails to comply with Paragraph 5 hereof, (iv) an Act of insolvency occurs
with respect to Seller or Buyer, (v) any representation made by Seller or Buyer
shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated, or (vi) Seller or Buyer shall
admit to the other its inability to, or its intention not to, perform any of its
obligations hereunder (each an "Event of Default"):

     (a) At the option of the nondefaulting party, exercised by written notice
to the defaulting party (which option shall be deemed to have been exercised,
even if no notice is given, immediately upon the occurrence of an Act of
insolvency), the Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.

     (b) In all Transactions in which the defaulting party is acting as Seller,
if the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of the Paragraph, (i) the defaulting party's
obligations hereunder to repurchase all Purchased Securities in such
Transactions shall thereupon become immediately due and payable, (ii) to the
extent permitted by applicable law, the Repurchase Price with respect to each
such Transaction shall be increased by the aggregate amount obtained by daily
application of (x) the greater of the Pricing Rate for such Transaction or the
Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase
Date as determined pursuant to subparagraph (a) of this Paragraph (decreased as
of any day by (A) any amounts retained by the nondefaulting party with respect
to such Repurchase Price pursuant to clause (iii) of the subparagraph, (B) any
proceeds from the sale of Purchased Securities pursuant to subparagraph (d)(i)
of this Paragraph, and (C) any amounts credited to the account of the defaulting
party pursuant to subparagraph (e) of the Paragraph) on a 360 day per year basis
for the actual number of days during the period from and including the date of
the Event of Default giving rise to such option to but excluding the date of
payment of the Repurchase Price as so increased, (iii) all Income paid after
such exercise or deemed exercise shall be retained by the nondefaulting party
and applied to the aggregate unpaid Repurchase Prices owed by the defaulting
party, and (iv) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such Transactions then
in the defaulting party's possession.

     (c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate Repurchase
Prices for all such Transactions, the defaulting party's right, title and
interest in ail Purchased Securities subject to such Transactions shall be
deemed transferred to the nondefaulting party, and the defaulting party shall
deliver all such Purchased Securities to the non defaulting party.

     (d) After one business day's notice to the defaulting party (which notice
need not be given if an Act of Insolvency shall have occurred, and which may be
the notice given under subparagraph (a) of this Paragraph or the notice referred
to in clause (ii) of the first sentence of this Paragraph), the nondefaulting
party may:

         (i) as to Transactions in which the defaulting party is acting as
     Seller, (A) immediately sell, in a recognized market at such price or
     prices as the nondefaulting party may reasonably deem satisfactory, any or
     all Purchased Securities subject to such Transactions and apply the
     proceeds thereof to the aggregate
<PAGE>   5

     unpaid Repurchase Prices and any other amounts owing by the defaulting
     party hereunder or (B) in its sole discretion elect, in lieu of selling all
     or a portion of such Purchased Securities, to give the defaulting party
     credit for such Purchased Securities in an amount equal to the price
     therefor on such date, obtained from a generally recognized source or the
     most recent dosing bid quotation from such a source, against the aggregate
     unpaid Repurchase Prices and any other amounts owing by the defaulting
     party hereunder, and

         (ii) as to the Transactions in which the defaulting party is acting as
     Buyer, (A) purchase securities ("Replacement Securities") of the same class
     and amount as any Purchased Securities that are not delivered by the
     defaulting party to the nondefaulting party as required hereunder or (B) in
     its sole discretion elect, in lieu of purchasing Replacement Securities, to
     be deemed to have purchased Replacement Securities at the price therefor on
     such date, obtained from a generally recognized source or the most recent
     closing bid quotation from such a source.

     (e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party (i) with respect
to Purchased Securities (other than Additional Purchased Securities), for any
excess of the price paid (or deemed paid) by the nondefaulting party for
Replacement Securities therefor over the Repurchase Price for such Purchased
Securities and (ii) with respect to Additional Purchased Securities, for the
price paid (or deemed paid) by the nondefaulting party for the Replacement
Securities therefor. In addition, the defaulting party shall be liable to the
nondefaulting party for interest on such remaining liability with respect to
each such purchase (or deemed purchase) of Replacement Securities from the date
of such purchase (or deemed purchase until paid in full by Buyer. Such interest
shall be at a rate equal to the greater of the Pricing Rate for such Transaction
or the Prime Rate.

     (f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting as
Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by the
nondefaulting party of its option under subparagraph (a) of this Paragraph.

     (g) The defaulting party shall be liable to the nondefaulting party for the
amount of all reasonable legal or other expenses incurred by the nondefaulting
party in connection with or as a consequence of an Event of Default, together
with interest thereon at a rate equal to the greater of the Pricing Rate for the
relevant Transaction or the Prime Rate.

     (h) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under an other agreement or
applicable law.

12. Single Agreement

     Buyer and Seller acknowledge that, and have entered hereunto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.

13. Notices and Other Communications

     Unless another address is specified in writing by the respective party to
whom any notice or other communication is to be given hereunder, all such
notices or communications shall be in writing or confirmed in writing and
delivered at the respective addresses set forth in Annex II attached hereto.

14. Entire Agreement; Severability

     This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.

15. Non-assignability; Termination

     The rights and obligations of the parties under this Agreement and under
any Transaction shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. This Agreement may be cancelled by
either party upon giving written notice to the other, except that this Agreement
shall, notwithstanding such notice, remain applicable to any Transactions then
outstanding.

<PAGE>   6

16. Governing Law

     This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.

17. No Waivers, Etc.

     No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder. No modification or waiver of any provision of this agreement and no
consent by any party to a departure herefrom shall be effective unless and until
such shall be in writing and duly executed by both of the parties hereto.
Without limitation on any of the foregoing, the failure to give a notice
pursuant to subparagraphs 4(a) or 4(b) hereof will not constitute a waiver of
any right to do so at a later date.

18. Use of Employee Plan Assets

     (a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be
used by either party hereto (the "Plan Party") in a Transaction, the Plan Party
shall so notify the other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does not constitute
a prohibited transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required so to
proceed.

     (b) Subject to the last sentence of subparagraph (a) of this Paragraph, any
such Transaction shall proceed only if Seller furnishes or has furnished to
Buyer its most recent available audited statement of its financial condition and
its most recent subsequent unaudited statement of its financial condition.

     (c) By entering into a Transaction pursuant to this Paragraph, Seller shall
be deemed (i) to represent to Buyer that since the date of Seller's latest such
financial statements, there has been no material adverse change in Seller's
financial condition which Seller has not disclosed to Buyer, and (ii) to agree
to provide Buyer with future audited and unaudited statements of its financial
condition as they are issued, so long as it is a Seller in any outstanding
transaction Involving a Plan Party.

19. Intent

     (a) The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except insofar as the type of Securities subject to such Transaction or
the term of such Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.

     (b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Paragraph 11 hereof, is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11 of
the United States Code, as amended.

20. Disclosure Relating to Certain Federal Protections

          The parties acknowledge that they have been advised that:

     (a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC") under
Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities
Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 ("SIPA") do not protect
the other party with respect to any Transaction hereunder;

     (b) in the case of Transactions in which one of the parties is a government
securities broker or a government securities dealer registered with the SEC
under Section 15C of the 1934 Act, SIPA will not provide protection to the other
party with respect to any Transaction hereunder; and

     (c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal Deposit
Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the
National Credit Union Share Insurance Fund, as applicable.

IMPAC WAREHOUSE LENDING GROUP, INC.          STARNET FINANCIAL, INC. AND
                                             STARNET MORTGAGE

By                                           By   /s/ KENNETH F. URBANUS
   -------------------------------------        --------------------------------
Title                                        Title  President
      ----------------------------------           -----------------------------
Date                                         Date  11/5/99
     -----------------------------------          ------------------------------

<PAGE>   7

                                    ANNEX I

                       SUPPLEMENTAL TERMS AND CONDITIONS

<PAGE>   8

                                    ANNEX II

             NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES

<PAGE>   9

                                    ANNEX I

                       SUPPLEMENTAL TERMS AND CONDITIONS

     The Master Repurchase Agreement between Impac Warehouse Lending Group
("Buyer") and STARNET FINANCIAL, INC. AND STARNET MORTGAGE ("Seller"), dated as
of NOVEMBER 5, 1999 is amended and supplemented as set forth below. All
capitalized terms used herein that are defined in the Master Repurchase
Agreement are used herein as defined therein except to the extent such terms are
amended or supplemented herein.

     1. Paragraph 1 of the Master Repurchase Agreement is amended by adding the
following after the word "instruments" and before the parenthetical
"("Securities")" in the second line thereof:

         "or whole mortgage loans or any interests in any whole mortgage loans,
     including, without limitation, mortgage participation certificates and
     mortgage passthrough certificates".

     2. Subparagraph 2(a) of the Master Repurchase Agreement is amended by
adding the following after the word "any" and before the word "bankruptcy" in
the second line thereof:

         "conservatorship or receivership (within the meaning of the Financial
     Institutions Reform, Recovery, and Enforcement Act of 1989),".

     3. Subparagraph 2(a) of the Master Repurchase Agreement is further amended
by adding the following after the word "a" and before the word "receiver" in the
third line thereof:

         "conservator,".

     4. Subparagraph 2(h) of the Master Repurchase Agreement is amended by
deleting the defined term "Market Value" and replacing it with the defined term
"Assumed Repurchase Value", and the term Market Value throughout the Master
Repurchase Agreement shall be deemed to denote the Assumed Repurchase Value.

     5. Subparagraph 2(h) of the Master Repurchase Agreement is amended by
adding at the end thereof:

         "except that the Assumed Repurchase Value of any Securities that are
     loans secured by mortgages or deeds of trust on residential dwellings (such
     loans, "Mortgage Loans") as of any date shall be the dollar amount ascribed
     to such Mortgage Loans on that date by Buyer in its reasonable and sole
     discretion, and shall not include any Income on such Mortgage Loans paid to
     and held by Seller pursuant to Paragraph 5 hereof, and the Assumed
     Repurchase Value of any Additional Purchased Securities shall be the fair
     market value thereof as determined by Buyer in its reasonable and sole
     discretion"

<PAGE>   10
     6. Subparagraph 3(b) of the Master Repurchase Agreement is amended by
adding at the end of the first sentence of Paragraph 3(b):

         "In the case of Transactions involving Securities that are Mortgage
     Loans, (a) the Purchased Securities shall be identified on a detailed
     listing to be provided by Seller to Buyer (a "Mortgage Loan Schedule")
     attached to a Certificate of Seller in the form attached hereto, (b) the
     Confirmation shall be sent by Seller to Buyer, (c) the documents contained
     in the Mortgage File (as defined in Paragraph 7) shall be delivered at the
     option of the Buyer to the Buyer, or the Custodian, and held by the
     Custodian pursuant to the terms of a Custody Agreement, dated of even date
     herewith (the "Custody Agreement"), among Seller, Buyer and Custodian
     pursuant to which Custodian shall, among other things, issue Trust
     Receipts, as defined therein (the "Trust Receipts"), and (d) the Mortgage
     Loans shall be serviced for Buyer by Seller pursuant to the Servicing
     Agreement, dated of even date herewith (the "Servicing Agreement"),
     between Seller and Buyer."

     7. Paragraph 3(b) of the Master Repurchase Agreement is further amended by
deleting the last sentence and replacing it with the following:

         "In the event of any conflict between the terms of such Confirmation
     and this Agreement, the terms of such Confirmation shall prevail."

     8. Subparagraph 3(c) of the Master Repurchase Agreement is amended by
adding at the end of the first sentence of Paragraph 3(c);

         "In the case of Transactions involving Securities that are Mortgage
     Loans, (i) which meet the requirements of the Seller's Warranties
     Agreement, such demand by Buyer may not be made prior to 60 days following
     the date of the Transaction in which the Securities were originally
     conveyed to Buyer provided no event of default has occurred; (ii) which do
     not meet the requirements of the Seller's Warranties Agreement in all
     material respects, such demand by Buyer may be made at any time; or (iii)
     Seller may repurchase at any time, irrespective of whether the particular
     Mortgage Loans(s) meets requirements of the Seller's Warranties Agreement.
     In any case, such demand either by Buyer or by Seller shall be for a
     repurchase of all Purchased Securities subject to the related Transaction
     and such demand shall be made no later than 5:00 p.m. New York City time on
     the business day preceding the day on which such termination will be
     effective, which termination shall also be on a business day. Upon receipt
     of the Repurchase Price in immediately available funds, Buyer shall deliver
     the Trust Receipt for such Transaction to Custodian for further disposition
     in accordance with the terms of the Custody Agreement."

     9. Paragraph 4 of the Master Repurchase Agreement is amended by adding a
new subparagraph (f) as follows:

<PAGE>   11
         "(f) In the case of Transactions involving Securities that are Mortgage
     Loans, (i) the percentage used in calculating Buyer's Margin Amount for
     such Transaction shall be the percentage specified in the Confirmation and
     (ii) Additional Purchased Securities shall be limited to obligations
     issued by the United States government or mortgaged-backed securities
     issued by the Federal National Mortgage Association ("FNMA") or guaranteed
     by the Government National Mortgage Association ("GNMA") and otherwise
     acceptable to Buyer in its sole discretion, and (iii) the provisions of
     subparagraphs (b), (d) and (e) of this Paragraph shall not apply."

     10. Paragraph 5 of the Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 5:

         "Notwithstanding the foregoing and except as provided in Paragraph 11
     of this Agreement, in the case of Transactions involving Securities that
     are Mortgage Loans, Seller shall be deemed to hold for the benefit of, and
     in trust for, Buyer all Income, including without limitation all scheduled
     and unscheduled principal and interest payments, received by Seller with
     respect to such Mortgage Loans. Seller shall service the Mortgage Loans, or
     supervise the servicing of the Mortgage Loans, for the benefit of Buyer in
     accordance with the terms of the Servicing Agreement. On the 10th day of
     each month, Seller will provide Buyer with reports substantially identical
     in form to FNMA's form 2010 remittance report with respect to all Mortgage
     Loans then involved in any Transaction hereunder. Within three business
     days of its receipt of each such report, Buyer either (i) shall determine
     that a Margin Deficit has occurred and direct Seller to pay to Buyer all
     Income received in the period covered by such report to the extent of such
     Margin Deficit, in which case Buyer shall be deemed to have released any
     excess Income to Seller, or (ii) shall determine that a Margin Deficit has
     not occurred, in which case Buyer shall be deemed to have released all such
     Income to Seller."

     11. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the word "the" and before the words "Purchased Securities" in
the fourth line thereof:

         "Seller's right (including the power to convey title thereto), title
     and interest in and to the".

     12. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the words "Purchased Securities" and before the word "with" in
the fourth line thereof:

<PAGE>   12

         ", the contractual right to receive payments, including the right to
     payments of principal and interest and the right to enforce such payments,
     arising from or under any other Purchased Securities, the contractual right
     to service each Mortgage Loan, any sub-servicing agreements with respect to
     each Mortgage Loan, and all documents in each Mortgage File,".

     13. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the word "all" and before the word "proceeds" in the fifth line
thereof:

         "income, payments, products and".

     14. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the word "thereof" and before the period in the fifth line
thereof:

         "(the "Collateral")".

     15. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 6:

         "In such event, the parties hereto intend to create for the benefit of
     Buyer, as secured party, a legally valid and enforceable first priority
     perfected security interest in the Collateral. On or prior to each Purchase
     Date, Seller shall cause to be filed in the appropriate filing offices of
     the jurisdiction in which Seller maintains its place of business, or its
     chief executive office if Seller has more than one place of business, in
     accordance with applicable law, Uniform Commercial Code financing
     statements naming Sellar as debtor, Buyer as secured party, and the
     Collateral as collateral."

     16. Paragraph 7 of the Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 7:

         "In the case of Transactions involving Securities that are Mortgage
     Loans, the transfer of such Mortgage Loans for the purposes of this
     Paragraph 7 shall include the delivery to the Buyer or Custodian, as
     directed by the Buyer, the following documents (the "Mortgage File") with
     respect to each Mortgage Loan, as set forth in the Custody Agreement:
     subject, however, to the paragraph immediately following clause (xii)
     below;"

         (i) the original note or other evidence of indebtedness (the "Mortgage
     Note") of the obligor thereon (each such obligor, a "Mortgagor"), endorsed
     to the order of or assigned to Seller by the holder/payee thereof, without
     recourse, and endorsed by Seller, without recourse, in blank;

         (ii) the original mortgage, deed of trust or other instrument (the
     "Mortgage") creating a first lien on the underlying property securing the
     Mortgage Loan (the "Mortgaged Property"), naming Seller as the "mortgagee"
     or "beneficiary"

<PAGE>   13

     thereof, and bearing on the face thereof the address of Seller as provided
     in Paragraph 13 of this Agreement, or, if the Mortgage does not name Seller
     as the mortgagee/beneficiary, the Mortgage, together with an instrument of
     assignment assigning the Mortgage, individually or together with other
     Mortgages, to Seller and bearing on the face thereof the address of Seller
     as provided in Paragraph 13 of this Agreement, and, in either case, bearing
     evidence that such instruments have been recorded in the appropriate
     jurisdiction where the Mortgaged Property is located (or, in lieu of the
     original of the Mortgage or the assignment thereof, a duplicate or
     conformed copy of the Mortgage or the instrument of assignment, if any,
     together with a certificate of either the closing attorney or an officer of
     the title insurer that issued the related title insurance policy, or a
     certificate of receipt from the recording office, certifying that such copy
     or copies represent true and correct copy(ies) of the original(s) and that
     such original(s) have been or are currently submitted to be recorded in the
     appropriate governmental recording office of the jurisdiction where the
     Mortgaged Property is located);

         (iii) an original assignment of Mortgage, in blank, which assignment
     shall be in form and substance acceptable for recording and, in the event
     that the Seller acquired the Mortgage Loan in a merger, the assignment must
     be by "[Seller], successor by merger to [name of predecessor]";

         (iv) any intervening assignment of the Mortgage not included in (ii)
     above, including any warehousing assignment;

         (v) any assumption, modification, extension or guaranty agreement;

         (vi) the Lender's title insurance policy, or, if such policy has not
     been issued, a written commitment or interim binder issued by the title
     insurance company evidencing that the required title insurance coverage is
     in effect and unconditionally guaranteeing the holder of the Mortgage Loan
     that the lender's title insurance policy will be issued;

         (vii) if applicable, any policy or certificate of primary mortgage
     guaranty insurance;

         (viii) if the Mortgage Note or Mortgage or any other material document
     or instrument relating to the Mortgage Loan has been signed by a person on
     behalf of the Mortgagor, the power of attorney or other instrument that
     authorized and empowered such person to sign with recording information
     thereon;

         (ix) with respect to FHA insured Mortgage Loans, the original FHA
     Insurance Contract, together with a completed HUD Form 92080 "Mortgagee
     Record Change" with the Purchasing Mortgagees name left blank;

<PAGE>   14
         (x) with respect to VA guaranteed Mortgage Loans, the original VA Loan
     Guaranty Certificate;

         (xi) with respect to each Mortgage Loan which is subject to the
     provisions of the Homeownership and Equity Protection Act of 1994, a copy
     of a notice to each entity which was a purchaser or assignee of the
     Mortgage Loan, satisfying the provisions of such Act and the regulations
     issued thereunder, to the effect that the Mortgage Loan is subject to
     special truth in lending rules; and

         (xii) any other document as may be requested by Buyer.

         "Notwithstanding the above; Seller shall, at least one Business Day
     prior to the related Purchase Date, deliver to or cause to be delivered to
     Buyer or Custodian, as directed by Buyer, originals or true copies of such
     documents contained in the Mortgage File; and within forty-eight (48) hours
     after such purchase date Seller shall deliver or cause to be delivered to
     Buyer or Custodian, as directed by Buyer, the originals (to the extent not
     previously delivered) of all such documents in the Mortgage File. Failure
     by Seller to deliver or cause to be delivered such documents within
     such time periods specified in the immediately preceding sentence shall
     constitute an Event of Default under the Master Repurchase Agreement.
     Seller shall cause each closing agent to hold any originals of such
     documents in the Mortgage File held by such closing agent prior to delivery
     thereof to Buyer or Custodian, as directed by Buyer, in trust and as
     bailee for Buyer.

         In addition to the documents contained in the Mortgage File, Seller
     shall deliver to buyer on or prior to the Purchase Date for such
     Transaction a security release certification acceptable to Buyer,
     certifying the release of any security interest of a third party which may
     have existed with respect to any of the Mortgage Loans subject to such
     Transaction during the 45-day period prior to the related Purchase Date.

         Seller shall include on each Mortgage Loan Schedule a code indicating
     whether the Mortgage Loan is subject to the Homeownership and Equity
     Protection Act of 1994."

     Seller shall cause to be maintained a servicing file ("Servicing File")
with respect to each Mortgage Loan that shall contain the following documents:

         (a)   copies of all the documents contained in the Mortgage File;

         (b)   any instrument necessary to complete identification of any
               exception set forth in the exception schedule in the title
               insurance policy (e.g., map or plat, restrictions, easements,
               sewer agreements,
<PAGE>   15

                           home association declarations, etc.);

                  (c)      a survey of the Mortgaged Property;

                  (d)      any hazard insurance policy or flood insurance
                           policy, with extended coverage of the hazard
                           insurance policy;

                  (e)      the Mortgage Loan closing statement (Form HUD-1) and
                           any other truth-in-lending, real estate settlement
                           procedure forms or other disclosure statements
                           required by law;

                  (f)      the residential loan application, if applicable;

                  (g)      any verification of employment and income;

                  (h)      if applicable, any verification of acceptable
                           evidence of source and amount of downpayment;

                  (i)      any credit report on the borrower under the Mortgage
                           Loan;

                  (j)      each residential appraisal report;

                  (k)      a photograph of the Mortgaged Property;

                  (1)      any tax receipts, insurance premiums, ledger sheets,
                           payment records, insurance claim files and
                           correspondence, current and historical computerized
                           data files, underwriting standards used for
                           origination and all other papers and records
                           developed or originated by the Seller, any servicer
                           or others, required to document the Mortgage Loan or
                           to service the Mortgage Loan; and

                  (m)      any other document as may be requested by Buyer.

Seller shall cause to be delivered to Buyer each Servicing File upon Event of
Default by Seller under the Master Repurchase Agreement.

         17. Paragraph 8 of the Master Repurchase Agreement is amended by
deleting the last sentence of Paragraph 8 and substituting the following:

                  "Title to all Purchased Securities (except for Securities that
         are Mortgage Loans) shall pass to Buyer. In the case of Purchased
         Securities that are Mortgage

<PAGE>   16

         Loans, upon transfer of the Mortgage Loans to Buyer as set forth in
         Paragraph 3(a) of this Agreement and until termination of any
         Transactions as set forth in Paragraphs 3(c) or 11 of this Agreement,
         ownership of each Mortgage Loan, including each document in the related
         Mortgage File, is vested in Buyer. Upon transfer of the Mortgage Loans
         to Buyer as set forth in Paragraph 3(a) of this Agreement and until
         termination of any Transactions as set forth in Paragraphs 3(c) or 11
         of this Agreement, record title in the name of Seller to each Mortgage
         shall be retained by Seller in trust, for the benefit of Buyer, for the
         sole purpose of facilitating the servicing and the supervision of the
         servicing of the Mortgage Loans pursuant to the Servicing Agreement.
         Unless otherwise agreed by Buyer and Seller, nothing in this Agreement
         shall preclude Buyer from engaging in repurchase transactions with the
         Purchased Securities or otherwise pledging or hypothecating the
         Purchased Securities, but no such transaction shall relieve Buyer of
         its obligations to transfer Purchased Securities (and, with respect to
         the Mortgage Loans, not substitutes therefor) to Seller pursuant to
         Paragraphs 3, 4 or 11 hereof. Upon termination of any Transactions as
         set forth in Paragraph 3(c) of this Agreement, Buyer agrees to execute
         promptly endorsements of the Mortgage Notes, assignments of the
         Mortgages and UCC-3 assignments, to the extent that such documents are
         prepared by Seller for Buyer's execution, are delivered to Buyer by
         Seller and are necessary to reconvey, without recourse, to Seller and
         perfect title of like tenor to that conveyed to Buyer to the related
         Mortgage Loans. Buyer agrees to cooperate with Seller to identify
         documents that may be required to effect such reconveyance and
         perfection of title to Seller."

         18. Subparagraph 9(b) of the Master Repurchase Agreement is amended by
adding the following after the word "substituted" and before the period in the
fifth line thereof:

                  "; provided, further, that, in the case of Transactions
                     --------  -------
         involving Securities that are Mortgage Loans, the retention by Seller
         of custody of any document in any Mortgage File or otherwise shall be
         held by Seller in trust Buyer for purposes of servicing or supervising
         the servicing of the related Mortgage Loan and shall not be deemed to
         constitute Seller's retention of custody of the Purchased Securities
         for purposes of this subparagraph".

         19. Paragraph 10 of the Master Repurchase Agreement is amended by
adding the following clauses at the end of the first sentence of Paragraph 10
after the word "affected" and before the period:

                  ", (vi) Seller and Buyer have entered into the Transaction
         described in each Confirmation contemporaneously with the sale of the
         Purchased Securities by Seller to Buyer and the transfer of the
         Purchase Price by Buyer to Seller, or, in the event that the
         Transaction is deemed to constitute a loan, contemporaneously with the
         grant of the security interest in the Collateral by Seller to Buyer
         pursuant to Paragraph 6 hereof and the transfer of the consideration
         therefor, consisting of the

<PAGE>   17

         extension of the Purchase Price, which represents the loan proceeds, by
         Buyer to Seller, (vii) the board of directors of Seller has approved
         the form of Confirmation and the Master Repurchase Agreement, and such
         approval is reflected in the minutes of said board, and (viii) each
         Confirmation, the Master Repurchase Agreement, the Custody Agreement
         and the Servicing Agreement have been and shall be, continuously, from
         the time of their execution, a corporate record of Seller."

         20. Paragraph 11 is amended by inserting the words ", other than any
representation made by Seller as to a particular Mortgage Loan," after the words
"made by Seller or Buyer" on the fourth line thereof.

         21. Paragraph 11 is further amended by deleting the word "or"
immediately preceding clause (vi) and by adding at the end of such clause,
immediately preceding the parenthesis, the following:

         (vii)    Buyer shall have reasonably determined that Seller is or will
                  be unable to meet its commitments under this Agreement, the
                  Custody Agreement, the Guaranty, the Sellers Warranties
                  Agreement, the Servicing Agreement and any other related
                  agreement (such agreements, the "Transaction Documents") and
                  shall have notified Seller of such determination and such
                  other party shall not have responded with appropriate
                  information to the contrary to the satisfaction of the
                  notifying party within 24 hours;

         (viii)   The Master Repurchase Agreement shall for any reason cease to
                  create a valid, first priority security interest in any of
                  the Purchased Securities purported to be covered thereby;

         (ix)     A final judgment by any competent court in the United States
                  of America for the payment of money in an amount of at least
                  $100,000 is rendered against Seller, and the same remains
                  undischarged for a period of 30 days during which execution of
                  such judgment is not effectively stayed;

         (x)      Seller shall fail to observe or perform any of the covenants
                  or agreements under any Transaction Document, which failure
                  materially and adversely affects the rights of the Buyer;

         (xi)     Any event of default or any event which with notice, the
                  passage of time or both shall constitute an event of default
                  shall occur and be continuing under any repurchase or other
                  financing agreement for borrowed funds or indenture for
                  borrowed funds by which Seller is bound or affected shall
                  occur and be continuing;

         (xii)    In the good faith judgment of Buyer, a material adverse change
                  shall have

<PAGE>   18

                  occurred in the business, operations, properties, prospects or
                  condition (financial or otherwise) of Seller;

         (xiii)   Seller shall request written assurances as to the financial
                  well-being of Buyer and such assurances shall not have been
                  provided within 24 hours of such request;

         (xiv)    Seller shall be in default with respect to any normal and
                  customary covenants under any debt contract or agreement, any
                  servicing agreement or any lease to which it is a party, which
                  default could materially and adversely affect the financial
                  condition of Seller (which covenants include, but are not
                  limited to, an Act of Insolvency of Seller or the failure of
                  Seller to make required payments under such contract or
                  agreement as they become due);

         (xv)     Any representation or warranty made by Seller in any
                  Transaction Document shall have been incorrect or untrue in
                  any material respect (to the extent that such representation
                  or warranty does not incorporate a materiality limitation in
                  its terms) when made or repeated or when deemed to have been
                  made or repeated;

         (xvi)    Seller shall fail to promptly notify Buyer of (i) the
                  acceleration of any debt obligation or the termination of any
                  credit facility of Seller, respectively; (ii) the amount and
                  maturity of any such debt assumed after the date hereof; (iii)
                  any adverse developments with respect to pending or future
                  litigation involving Seller, respectively; and (iv) any other
                  developments which might materially and adversely affect the
                  financial condition of Seller;

         (xvii)   Seller's audited annual financial statements or the notes
                  thereto or other opinions or conclusions stated therein shall
                  be qualified or limited by reference to Seller's status as a
                  "going concern";

         (vxiii)  Seller shall fail to maintain a tangible net worth of no less
                  than $ 1,000,000. The term "tangible net worth" shall mean the
                  excess of all of the Seller's assets (excluding any value for
                  goodwill, trademarks, patents, copyrights, organization
                  expense and other similar intangible items) over all its
                  liabilities as completed and determined in accordance with
                  generally accepted accounting principles consistently applied.

         (xx)     Seller shall fail to deliver to Buyer or Custodian as directed
                  by Buyer the documents in the Mortgage File within the time
                  period specified in 1 Paragraph 7 of the Master Repurchase
                  Agreement.

<PAGE>   19

         22. Subparagraph 11(d) of the Master Repurchase Agreement is amended
by deleting the words that precede Subparagraph 11(d)(i) and replacing them with
the words "The nondefaulting party may with concurrent notice to the defaulting
party".

         23. Subparagraph 11(d)(i) of the Master Repurchase Agreement is amended
by inserting the words "or in any other commercially reasonable manner" after
the word "market" and before the word "at", on the second line thereof.

         24. Subparagraph 11(d)(i) of the Master Repurchase Agreement is amended
by adding the following after the word "hereunder" and before the semi-colon:

                  "and in either case upon the determination and receipt by
         Buyer, in a manner deemed final and complete by Buyer in its sole
         discretion, of the aggregate unpaid Repurchase Prices and any other
         amounts owing by the defaulting party, including, without limitation,
         any unpaid fees, expenses or other amounts owing to the Custodian under
         the Custody Agreement, or to which Buyer is otherwise entitled
         hereunder, Buyer shall transfer the portion of the Purchased Securities
         and proceeds thereof, including without limitation, any proceeds of a
         sale of the servicing rights to the Mortgage Loans, held by Buyer
         following such receipt to either (i) Seller, if in Buyer's sole
         discretion Seller is legally entitled thereto, (ii) such other party or
         person as is in Buyer's reasonable judgment is legally entitled
         thereto, or (iii) if Buyer cannot determine in its reasonable judgment
         the person or party entitled thereto, a court of competent
         jurisdiction."

         25. Paragraph 11 of the Master Repurchase Agreement is amended by
adding a new Subparagraph (j) as follows:

                  "(j) Seller acknowledges that any delay in the ability of
         Buyer to exercise its remedies pursuant to Paragraph 11 hereof shall
         result in irreparable injury to Buyer."

         26. Paragraph 13 of the Master Repurchase Agreement is amended by
deleting the text thereof and replacing it with the following:

<PAGE>   20

         "Any notice or communication in respect of this Agreement will be
sufficiently given to a party if in writing and delivered in person, sent by
certified or registered mail, return receipt requested, or by overnight courier
or given by facsimile transfer at the following address or facsimile number:

         If to [BUYER]:

               Impac Warehouse Lending Group
               1401 Dove Street
               Newport Beach, CA 92660

               Attention: Zoila Velasco
               Facsimile No.: (949) 475-3950

         If to [SELLER]:

               RADIUS CAPITAL CORPORATION DBA
               HOME MORTGAGE OF AMERICA
               17000 PRESTON RD #350
               DALLAS, TX 75248
               Attention: LINDA LEFEVRE:
               Facsimile Number: (972) 665-0052

         A notice or communication will be effective:

         (i)      if delivered by hand or sent by overnight courier, on the day
                  and time it is delivered;

         (ii)     If sent by facsimile transfer, on the day it is sent; or

         (iii)    if sent by certified or registered mail, return receipt
                  requested, three days after dispatch.

         Either party may by notice to the other change the address or facsimile
         number at which notices or communications are to be given to it."

         27. Paragraph 14 of the Master Repurchase Agreement is amended by
inserting the words "with respect to Securities that consist of mortgage loans"
after the word "transactions" and before the period on the second line
thereof.

<PAGE>   21

         28. Intentionally Omitted

         29. Intentionally Omitted

         30. Subparagraph 20(c) is amended by deleting the words "the Federal
Savings and Loan Insurance Corporation" in the third line thereof and
substituting therefor the following: "through either the Bank Insurance Fund or
the Savings Association Insurance Fund,".

         31. This Annex I is executed and shall be construed as an agreement
supplemental to the Master Repurchase Agreement and, as provided in the Master
Repurchase Agreement, this Annex I forms a part thereof.

         32. All of the covenants, stipulations, promises and agreements in
this Annex I shall bind the successors and assigns of the parties hereto,
whether expressed or not.

         33. This Annex I may be executed in any number of counterparts, each
of which shall be an original but such counterparts shall together constitute
but one and the same instrument.

         34. Seller shall promptly provide such further assurances or agreements
as Buyer may request in order to effect the purposes of this Master Repurchase
Agreement, including without limitation, the delivery of any further documents
to ensure that Buyer maintains a first priority perfected security interest in
the collateral pursuant to Paragraph 6 hereof and to carry into effect the
purpose, of the Transaction Documents.

         35. Buyer is hereby appointed the attorney-in-fact of Seller for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing or endorsing any instruments that Buyer may deem necessary or
advisable to accomplish the purposes hereof, including, without limitation,
completing or correcting any endorsement of a Mortgage Note or assignment of a
Mortgage, which appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, Buyer shall have
the right and power during the occurrence and continuation of any Event of
Default to receive, endorse and collect all checks made payable to the order of
Seller representing any payment on account of the principal of or interest on
any of the Collateral and to give full discharge for the same.

         36. Seller shall promptly pay as and when payment is due all, and Buyer
shall not be liable for any, expenses, fees and charges incurred by Buyer or
Seller (other than the salaries and overhead of Buyer and its affiliates)
arising out of or related in any way, to the administration and enforcement of
this Agreement or the Custody Agreement ("Costs"), including, without
limitation, legal expenses, the fees and expenses of the Custodian, recording
and filing fees and any costs associated with reconveyance of the Purchased
Securities and, in the event that any Costs are incurred by Buyer, Seller shall
reimburse Buyer on demand of Buyer accompanied by a statement describing the
circumstances and the nature of the Cost, by wire transfer of immediately
available federal funds.

<PAGE>   22

         37. Seller and Buyer contemplate that all Mortgage Loans purchased by
Buyer and subject to repurchase pursuant to this Master Repurchase Agreement
shall have an average daily balance (in principal amount) of $12,500,000 (the
"Minimum Usage Amount"). If, within forty-five (45) days of the date hereof,
Seller shall not have sold any Mortgage Loans to Buyer pursuant to this Master
Repurchase Agreement, Seller shall promptly pay Buyer $1,500. If at any time
after forty-five (45) days after the Seller shall have commenced selling
Mortgage Loans to Buyer, pursuant to this Master Repurchase Agreement but the
average daily balance (in principal amount) of all Mortgage Loans held by Buyer
is less than the Minimum Usage Amount, Seller shall pay Buyer a fee to be
determined by Buyer in its sole discretion, provided, however such fee shall not
exceed $1,500 during any thirty (30) day period.

         38. This Annex I shall supersede any existing annex to or modification
of the Master Repurchase Agreement.

[BUYER]                                 [SELLER]

IMPAC WAREHOUSE LENDING GROUP      STARNET FINANCIAL INC
                                   AND
                                   STARNET MORTGAGE

By:                                     By: KENNETH F. URBANUS
   ----------------------                  --------------------------
Name:                                   Name: Kenneth F. Urbanus
     --------------------                    ------------------------
Title:                                  Title: President
      -------------------                     -----------------------
Date:                                   Date: 11/5/99
     --------------------                    ------------------------
<PAGE>   23

                              CERTIFICATE OF SELLER

     I, _________________, hereby certify that I am the duly appointed
___________ of __________, a ___________ (the "Seller"). The undersigned hereby
represents, warrants and covenants on behalf of the Seller as follows:

     1. Pursuant to the sale of the mortgage loans set forth on Annex 1 hereto
(the "Mortgage Loans") by the Seller to Impac Warehouse Lending Group ("Impac")
pursuant to a Master Repurchase Agreement, dated as of NOVEMBER 5, 1999 between
the Company and Impac, the Company hereby sells, transfers, assigns, sets over
and otherwise conveys to Impac all of its right (including the power to convey
title thereto), title and interest in and to each document, including, without
limitation, those documents set forth on Exhibit A hereto, held by or on behalf
of the Company with respect to each Mortgage Loan.

     IN WITNESS WHEREOF, I have hereunto signed my name.

Dated:
      ---------------------

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

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

<PAGE>   24

================================================================================

                          IMPAC WAREHOUSE LENDING GROUP
                                      Initial Holder

                                      and

                  STARNET FINANCIAL, INC. AND STARNET MORTGAGE
                                            Servicer

                              SERVICING AGREEMENT
                          Dated as of NOVEMBER 5,1999

                                 Mortgage Loans

                                   ----------

================================================================================

<PAGE>   25

                               TABLE OF CONTENTS

PRELIMINARY STATEMENT

                                   ARTICLE I

Section Title

1.01      Defined Terms.

                                   ARTICLE II

2.01      Record Title and Possession of Mortgage Files.
2.02      Books and Records.
2.03      Transfer of Mortgage Loans.

                                  ARTICLE III

3.01      Representations and Warranties as to the Company.

                                   ARTICLE IV

4.01      Company to Act as Servicer.
4.02      Establishment of Custodial Account; Deposits in Custodial Account.
4.03      Permitted Withdrawals from the Custodial Account.
4.04      Establishment of the Escrow Account; Deposits in Escrow Account.
4.05      Permitted Withdrawals from the Escrow Account.
4.06      Title, Management and Disposition of REO Property.

                                   ARTICLE V

5.01      Distribution.

                                   ARTICLE VI

6.01      Company Shall Provide Information as Reasonably Required.

                                  ARTICLE VII

7.01      Indemnification; Third Party Claims.
7.02      Merger or Consolidation of the Company.
7.03      Limitation on Liability of the Company and Others.
7.04      Company Not to Resign.

                                      -1-

<PAGE>   26

Section Title

                                  ARTICLE VIII

8.01      Events of Default.

8.02      Waiver of Defaults.

                                   ARTICLE 1X

9.01      Termination.

9.02      Termination Without Cause.

                                   ARTICLE X

10.01     Successor to the Company.
10.02     Amendment.
10.03     Recordation of Agreement.
10.04     Governing Law.
10.05     Notices.
10.06     Severability of Provisions.
10.07     Exhibits.
10.08     General Interpretive Principles.
10.09     Reproduction of Documents.
10.10     Entire Agreement.

                                    EXHIBITS

A    Custodial Account Letter Agreement
B    Escrow Account Letter Agreement
C    REO Account Letter Agreement
D    Form of Assignment and Certification
E    Mortgage Loan Schedule
F    Monthly Trial Balance Format

                                      -2-

<PAGE>   27

     This is a Servicing Agreement, dated and effective as of NOVEMBER 5,1999 is
executed between IMPAC WAREHOUSE LENDING GROUP, a California corporation, as the
initial holder ("Initial Holder"), and STARNET FINANCIAL, INC. AND STARNET
MORTGAGE as servicer ("Company").

                             PRELIMINARY STATEMENTS

     From time to time, the Initial Purchaser will be purchasing from the Seller
pursuant to a Master Repurchase Agreement dated as of the Closing Date between
the Seller and the Initial Purchaser (the "Master Repurchase Agreement") the
mortgage loans which are subject to this Agreement, and the Seller has agreed to
make certain representations and warranties with respect thereto.

     In consideration of the premises and the mutual agreements hereinafter set
forth, the Initial Holder and the Company agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

     Section 1.01 Defined Terms.

     Capitalized terms not defined herein shall have the meanings given to them
in the Warranties Agreement. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meaning specified in this Article:

     "Agreement": This Servicing Agreement including all exhibits hereto,
amendments hereof and supplements hereto.

     "Assignment": An assignment of the Mortgage, notice of transfer or
equivalent instrument, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale or transfer
of the Mortgage Loan, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.

     "Actual Principal Balance": With respect to any Mortgage Loan as of any
date of determination, (i) the outstanding principal balance as of the Cut-off
Date after application of principal payments due on or before such date whether
or not received, minus (ii) the aggregate of all amounts previously distributed
to the Holder with respect to the Mortgage Loan representing payments or
recoveries of principal or Monthly Advances in lieu thereof.

     "Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
legal holiday in the State of California, or (iii) a day on which banking
institutions in the state where the initial Holder or any subsequent Holder has
its principal place of business are authorized or obligated by law or

<PAGE>   28

executive order to be closed.

     "Cash Liquidation": Recovery of all cash proceeds by the Company with
respect to the termination of any defaulted Mortgage Loan other than a Mortgage
Loan which became an REO Property, including all Insurance Proceeds, Liquidation
Proceeds, Condemnation Proceeds and other payments or recoveries whether made at
one time or over a period of time which the Company deems to be finally
recoverable, in connection with the sale or assignment of such Mortgage Loan,
trustee's sale, foreclosure sale or otherwise.

     "Closing Date": NOVEMBER 5,1999

     "Company": STARNET FINANCIAL, INC. AND STARNET MORTGAGE or its successor in
interest or any successor under this Agreement appointed as herein provided.

     "Condemnation Proceeds": All awards or settlements in respect of a taking
of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.

     "Custodial Account": The separate account or accounts created and
maintained pursuant to Section 4.02.

     "Determination Date": The 20th day of the month of the related Remittance
Date or if such 20th day is not a Business Day, the Business Day immediately
following such 20th day.

     "Due Date": The day of the month of the related Remittance Date on which
each Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

     "Due Period": With respect to any Remittance Date, the period commencing on
the first day of the month preceding the month of such Remittance Date and
ending on the last day of the month preceding the month of such Remittance Date.

     "Eligible Account": An account maintained with the depository institution
approved as such by FNMA and which is insured by the FDIC to the limits
established by such corporation.

     "Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 4.03.

     "Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.

     "Event of Default": Any one of the conditions or circumstances enumerated
in Section 8.01.

     "FDIC": The Federal Deposit Insurance Corporation or any successor
organization.

<PAGE>   29

     "FHLMC": The Federal Home Loan Mortgage Corporation or any successor
organization.

     "Fidelity Bond": A fidelity bond to be maintained by the Company pursuant
to Section 4.12.

     "First Remittance Date": The 25th day of the month following the date
hereof, or if such day is not a Business Day, the first Business Day immediately
preceding such day, provided that, if such 25th day is not a Business Day by
reason of clause (iii) of the definition of Business Day and the Company has not
received written notice of such fact from the Holder, the First Remittance Date
shall be the immediately following Business Day.

     "FNMA": The Federal National Mortgage Association or any successor
organization.

     "Holder": The Initial Holder of the Mortgage Loans and any subsequent
holder or holders of the Mortgage Loans.

     "Guide": All terms and provisions of Part I, Part II, Part IV, Part V and
Part VI of the FNMA Servicing Guide, June 30, 1990 Version, as amended from time
to time, which relate to MBS pool mortgages serviced under the special servicing
option.

     "Initial Holder": Impac Warehouse Lending Group

     "Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan, to the extent such proceeds are not
to be applied to the restoration of the related Mortgaged Property or released
to the Mortgagor in accordance with the procedures that the Company would follow
in servicing mortgage loans held for its own account.

     "Late Collections": With respect to any Mortgage Loan, all amounts received
during any Due Period, whether as late payments of Monthly Payments or as
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, proceeds of any
REO Disposition or otherwise, which represent late payments or collections of
Monthly Payments due but delinquent for a previous Due Period and not previously
recovered.

     "Liquidation Proceeds": Amounts, other than Condemnation Proceeds and
Insurance Proceeds, received by the Company in connection with the liquidation
of a defaulted Mortgage Loan through trustee's sale, foreclosure sale or
otherwise, other than amounts received following the acquisition of an REO
Properly pursuant to the Guide.

     "Loan-to-Value Ratio" or "LTV": As of any date of determination with
respect to any Mortgage Loan, the principal balance of such Mortgage Loan
divided by the appraised value of the related Mortgaged Property, as such
appraised value is derived from the LTV at origination shown on the Mortgage
Loan Schedule.

     "Monthly Advance": The aggregate of the Delinquency Advances (as defined in
the Guide) made by the Company on any Remittance Date.

<PAGE>   30

     "Monthly Payment": The scheduled monthly payment of principal and interest
on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage
Note.

     "Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on real property securing the Mortgage Note.

     "Mortgage File": The mortgage documents pertaining to a particular Mortgage
Loan which were delivered to the Company by the prior servicer and any
additional documents developed or received by the Company in servicing such
Mortgage Loan which are reasonably necessary to document or service the Mortgage
Loan.

     "Mortgage Impairment Insurance Policy": A mortgage impairment or blanket
hazard insurance policy as described by the Guide.

     "Mortgage Interest Rate": The annual rate at which interest accrues on any
Mortgage Loan.

     "Mortgage Loan": An individual Mortgage Loan, including but not limited to,
all documents included in the Mortgage File, the Monthly Payments, Principal
Prepayments, Cash Liquidations, Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds, proceeds from REO Dispositions and any and all rights,
benefits, proceeds and obligations arising therefrom or in connection therewith,
the Mortgage Loan which is sold by the Company to the Initial Holder and which
is the subject of this Agreement. The Mortgage Loans originally subject to this
Agreement are identified on the Mortgage Loan Schedule.

     "Mortgage Loan Remittance Rate": With respect to each Mortgage Loan, the
annual rate of interest payable to the Holder which shall equal the Mortgage
Interest Rate less the Servicing Fee Rate.

     "Mortgage Loan Schedule": The list of Mortgage Loans subject to this
Agreement and identified on the schedules delivered to the Holder from time to
time pursuant to the Master Repurchase Agreement.

     "Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.

     "Mortgaged Property": The underlying real property securing repayment of a
Mortgage Note.

     "Mortgagor": The obligor on a Mortgage Note.

     "Officers' Certificate": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President and by the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Company, and delivered to the Holder as required by this
Agreement.

<PAGE>   31

     "Opinion of Counsel": A written opinion of counsel, who may be an employee
of the Company, acceptable to Holder.

     "Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

     "Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon, which is not accompanied by an amount
of interest representing scheduled interest due on any date or dates in any
month or months subsequent to the month of prepayment.

     "Principal Prepayment Period": As to any Remittance Date, the calendar
month preceding the month of distribution.

     "Record Date": The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.

     "Remittance Date": The 25th day of any month, beginning with the First
Remittance Date, or if such 25th day is not a Business Day, the first Business
Day immediately preceding such day, provided that, if such 25th day is not a
Business Day by reason of clause (iii) of the definition of Business Day and the
Company has not received written notice of such fact from the Holder, the
Remittance Date shall be the immediately following Business Day.

     "REO Account": The separate trust account or accounts created and
maintained pursuant to Section 4.06.

     "REO Disposition": The final sale by the Company of any REO Property.

     "REO Property": A Mortgaged Property acquired by the Company on behalf of
the Holder as described in the Guide.

     "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Company in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures and (iii) the
management and liquidation of the REO Property pursuant to Section 4.06, all in
accordance with this Agreement, the Guide and any related fee schedules
published by FNMA.

     "Servicing Fee": With respect to each Mortgage Loan, the amount of the
annual contractual fee payable to the Company, in its capacity as servicer which
shall be equal to the product of (i) the Servicing Fee Rate, and (ii) the
outstanding principal amount of each Mortgage Loan. The Servicing Fee shall be
payable monthly and shall be computed on the basis of the same principal amount
and for the period respecting which any related interest payment on a Mortgage
Loan is computed. The Servicing Fee shall be payable only at the time of and
with respect to those

<PAGE>   32

Mortgage Loans for which payment is in fact made of the entire amount of the
Monthly Payments. The obligation of the Holder to pay the Servicing Fee is
limited to, and payable solely from, the interest portion of such Monthly
Payments collected by the Company, or as otherwise provided under Section 4.03.

     "Servicing Fee Rate": (servicing for "A-" thru "C" product @ .375%)
                           (All Libor Adjustables @ .375%)
                           (Fixed rate "A" product @.25%)

     "Servicing Officer": Any officer of the Company involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Company to the Holder upon
request, as such list may from time to time be amended.

     "Sub-Servicer": A servicer appointed by the Company pursuant to the Guide.

     "Sub-Servicing Agreement": Any agreement entered into by the Company with a
Sub-Servicer pursuant to the Guide.

     "Warranties Agreement": The Seller's Warranties Agreement dated as of the
date hereof between the Company and the Initial Holder.

<PAGE>   33

                                   ARTICLE II

                 RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
                               BOOKS AND RECORDS;
                      DELIVERY OF MORTGAGE LOAN DOCUMENTS

     Section 2.01 Record Title and Possession of Mortgage Files.

     During such period as the Mortgage Loans are owned by Holder pursuant to
the Repurchase Agreement (the "Purchase Period") record title to the Mortgage
Loans shall be retained by the Holder, and possession of the Mortgage Files not
delivered to the Holder shall be retained by the Company as provided in this
Agreement, in trust and as bailee and agent for the Holder as the owner thereof,
for the sole purpose of servicing the Mortgage Loans; unless otherwise directed
by Buyer. During the Purchase Period, the ownership of each Mortgage Loan,
including the Mortgage Note, the Mortgage, the contents of the related Mortgage
File and all rights, benefits, proceeds and obligations arising therefrom or in
connection therewith, is vested in the Holder. During the Purchase Period all
rights arising out of the Mortgage Loans including, but not limited to, all
funds received on or in connection with the Mortgage Loans and all records or
documents with respect to the Mortgage Loans prepared by or which come into the
possession of the Company shall be received and held by the Company in trust
for the benefit of the Holder as the owners of the Mortgage Loans. Any portion
of the Mortgage Files retained by the Company shall be segregated from the other
books and records of the Company and shall be appropriately marked to clearly
reflect the ownership of the Mortgage Loans by the Holder. The Company shall
release its custody of the contents of the Mortgage Files only in accordance
with written instructions of the Holder, except when such release is required as
incidental to the Company's servicing of a foreclosure or collection action or a
satisfaction of a Mortgage.

     Section 2.02   Books and Records.

     The Company shall be responsible for maintaining, and shall maintain, a
complete set of books and records for the Mortgage Loans which shall be clearly
marked to reflect the ownership of the Mortgage Loan by the Holder.

     Section 2.03   Transfer of Mortgage Loans.

     Holder shall have the right, without the consent of Company, to assign its
interest under this Agreement with respect to some or all of the Mortgage Loans,
and designate any person to exercise any rights of Holder hereunder, and the
assignee or designee shall accede to the rights and obligations hereunder of
Holder with respect to such Mortgage Loans. All references to Holder shall be
deemed to include its assignee or designee.

     The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with

<PAGE>   34

any person with respect to this Agreement or the Mortgage Loans unless the books
and records show such person as the owner of the Mortgage Loan. The Holder may,
subject to the terms of this Agreement, sell and transfer, in whole or in part,
the Mortgage Loans, provided that no such sale and transfer shall be binding
upon the Company unless such transferee shall agree in writing in the form of
Assignment attached hereto as Exhibit D, to be bound by the terms of this
Agreement and an executed copy of such Assignment shall have been delivered to
the Company. Upon receipt thereof, the Company shall mark its books and records
to reflect the ownership of the Mortgage Loan by such assignee, and the previous
Holder shall be released from its obligations hereunder to the extent such
obligations relate to Mortgage Loans sold by the Holder. This Agreement shall be
binding upon and inure to the benefit of the Holder and Company and their
permitted successors, assignees and designees.

<PAGE>   35

                                  ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Section 3.01 Representations and Warranties of the Company.

     The Seller represents and warrants to the Purchaser that as of the Closing
Date and as of each date thereafter on which the Master Repurchase Agreement is
in effect:

         (i) The Company is duly organized, validly existing and in good
standing under the laws of Delaware and is qualified to transact business in and
is in good standing under the laws of each state where a Mortgaged Property is
located or is otherwise exempt under applicable law from such qualification or
is otherwise not required under applicable law to effect such qualification and
no demand for such qualification has been made upon the Company by any state
having jurisdiction and in any event the Company is or will be in compliance
with the laws of any such state to the extent necessary to insure the
enforceability of each Mortgage Loan and the servicing of the Mortgage Loans in
accordance with the terms of this Agreement;

         (ii) The Company has the full power and authority to service each
Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The Company has
duly authorized the execution, delivery and performance of this Agreement, has
duly executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Initial Holder constitutes a legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms;

         (iii) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Company's certificate of limited partnership and partnership agreement or any
legal restriction or any agreement or instrument to which the Company is now a
party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Company or its property
is subject;

         (iv) [Intentionally Omitted]

         (v) The Company does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement;

         (vi) There is no litigation pending or, to the Company's knowledge,
threatened, which if determined adversely to the Company would adversely affect
the execution, delivery or enforceability of this Agreement, or the ability of
the Company to service the Mortgage Loans hereunder in accordance with the terms
hereof or which would have a material adverse effect on the financial condition
of the Company; and

<PAGE>   36

         (vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with this Agreement
or the consummation of the transactions contemplated by this Agreement.

<PAGE>   37

                                   ARTICLE IV

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

     Section 4.01 Company to Act as Servicer.

     The Company, as independent contract servicer, shall service and administer
the Mortgage Loans in accordance with the Guide and all applicable federal,
state and local laws relating to the performance of its duties as Mortgage Loan
servicer hereunder. Notwithstanding any provision to the contrary in this
Agreement, the Company shall not be required to (i) establish a Custodial
Account, an Escrow Account or an REO Account or otherwise segregate or hold in
trust, or provide remittance statements with respect to, any funds collected in
respect of the Mortgage Loans, nor shall the Company be entitled to receive a
Servicing Fee or any other payment hereunder from the Holder, or (ii) remit any
funds to the Holder, until the Company shall have received written notice from
the Holder requesting such services, whereupon the Company shall promptly, and
in any event within five (5) Business Days, commence and maintain such services,
provided, however, that the Company shall provide to the Initial Holder monthly
commencing in the month following the Closing Date, on or about the    day of
each month, a Trial Balance in the format of Exhibit F. For this purpose, the
Guide is incorporated by reference in this Agreement, subject to the following
deletions and modifications:

          (a) Deletions: the following provisions of the Guide are not
     incorporated for purposes of this Agreement:

                         Part I, Section 206.01;
                         Part IV, Sections 509 and 513; and
                         Part VI, Chapter III.

          (b) Modifications: The following provisions of the Guide are
     incorporated in this Agreement subject to the following modifications:

               (i) Part I, Section 202 is modified to provide that all
          references to consents, guidelines and policies of FNMA refer to
          consent of the Holder.

               (ii) Part II, Section 101 is amended to provide that recoveries
          on the Mortgage Loans shall be applied by the Company in accordance
          with the provisions of the Mortgage Note and Mortgage or, absent such
          provisions, as provided in such Section 101.

               (iii) The last paragraph of Part II, Section 101.03 and any other
          provision of the Guide of like tenor are amended to provide that the
          Company shall not be obligated to make a Monthly Advance to the extent
          that it reasonably determines that it would not be recoverable from
          proceeds of the related Mortgage Loan, any such determination to be
          evidenced by an Officer's Certificate delivered to the Holder.

<PAGE>   38

               (iv) Part III, Section 103 is modified to provide for the
          Holder's acknowledgement that not all Mortgage Loans provide for
          Escrow Payments.

               (v) Part IV, Section 507 is amended to incorporate only the first
          paragraph, and such Section 507 and other provisions of the Guide
          inconsistent with Section 4.03 of this Agreement are modified to
          provide that the Company shall be reimbursed for Delinquency Advances,
          Servicing Advances and unpaid Servicing Fees from collections and
          recoveries on the related Mortgage Loan or REO Property, or, if such
          collections and recoveries are insufficient, from the P&I custodial
          account generally, with the Company's right to such reimbursement to
          be prior to the rights of the Holder, all as further described in
          Section 4.03 of this Agreement.

               (vi) Provisions of Part V which are inconsistent with Section
          4.06 of this Agreement are superseded by such Section 4.06.

               (vii) Part VI, Section 101 is modified. The term P&I Custodial
          Account shall mean the Custodial Account under this Agreement, and the
          T&I Custodial Account shall mean the Escrow Account under this
          Agreement.

               (viii) Provisions of Chapter 2 of Part VI which are inconsistent
          with Section 5.01 of this Agreement are superseded by such Section
          5.01.

          (c) Whenever the following terms are referred to in the Guide, they
     shall have the meaning given to them below.

               (i) "servicer" shall mean the Company.

               (ii) "Pass Through Rate" shall mean the current weighted average
          Mortgage Loan Remittance Rate.

               (iii) "we" or "us" shall mean the Holder.

          (d) The reference to "Servicing Fee" in Section 205.03 shall have the
     meaning given to it in this Agreement.

     Section 4.02 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.

     The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand Eligible Accounts. The creation of any
Custodial Account shall be evidenced by a letter agreement in the form shown in
Exhibit A hereto. A copy of such letter agreement shall be furnished to the
Holder.

     The Company shall deposit in the Custodial Account on a daily basis, and
retain therein the following payments and collections received or made by it on
or subsequent to the Cut-off Date, or

<PAGE>   39

received by it prior to the Cut-off Date but allocable to a period subsequent
thereto, other than in respect of principal due on or before the Cut-off Date,
and interest accrued prior to the Cut-off Date, on the Mortgage Loans:

         (i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;

         (ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;

         (iii) all proceeds from a Cash Liquidation;

         (iv) all Insurance Proceeds, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Company's normal
servicing procedures, the loan documents or applicable law;

         (v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Company's normal
servicing procedures, the loan documents or applicable law;

         (vi) any Monthly Advances;

         (vii) any amounts required to be deposited by the Company pursuant to
the Guide in connection with the deductible clause in any blanket hazard
insurance policy, such deposit being made from the Company's own funds, without
reimbursement therefor;

         (viii) [intentionally omitted]

         (ix) any amounts required to be deposited by the Company in connection
with any REO Property pursuant to the Guide; and

         (x) any other amounts required to be deposited in the Custodial Account
pursuant to the Guide.

The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees need not be deposited by the Company in the Custodial Account. Any interest
paid on funds deposited in the Custodial Account by the depository institution
shall accrue to the benefit of the Company and the Company shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to Section
4.03(iv).

<PAGE>   40

     Section 4.03 Permitted Withdrawals From the Custodial Account.

     The Company may, from time to time, withdraw from the Custodial Account for
the following purposes:

         (i) to make payments to the Holder in the amounts and in the manner
provided for in Section 5.01;

         (ii) to reimburse itself for Monthly Advances, the Company's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net of
the related Servicing Fees) respecting which any such advance was made it being
understood that, in the case of such reimbursement, the Company's right thereto
shall be prior to the rights of Holder except that, where the Company has made a
monthly advance when it was required to repurchase a Mortgage Loan;

         (iii) to reimburse itself for unreimbursed Servicing Advances, Monthly
Advances and any unpaid Servicing Fee, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan being limited
to related proceeds from Cash Liquidation, Liquidation Proceeds, Condemnation
Proceeds and other Insurance Proceeds;

         (iv) to pay to itself as servicing compensation (a) any interest earned
on funds in the Custodial Account (all such interest to be withdrawn monthly not
later than each Remittance Date), and (b) the Servicing Fee from that portion of
any payment or recovery as to interest to a particular Mortgage Loan;

         (v) to reimburse itself for unreimbursed Servicing Advances and Monthly
Advances to the extent that the Company has determined that such advances will
not be recoverable from proceeds or payments on the related Mortgage Loan, any
such reimbursement to be evidenced by an Officer's Certificate delivered to each
Holder detailing the basis of such determination;

         (vi) to reimburse itself to the extent provided in Section 7.01; and

         (vii) to clear and terminate the Custodial Account upon the termination
of this Agreement.

     Section 4.04 Establishment of Escrow Accounts; Deposits in Escrow Accounts.

     The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
Eligible Accounts. The creation of any Escrow Account shall be evidenced by a
letter agreement in the form of Exhibit B hereto. A copy of such letter
agreement shall be finished to the Holder.

<PAGE>   41
     The Company shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein, (i) all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Company shall make withdrawals therefrom only to effect such payments as are
required under this Agreement, and for such other purposes as shall be as set
forth in, or in accordance with, the Guide. The Company shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Company shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes.

     Section 4.05 Permitted Withdrawals From Escrow Account.

     Withdrawals from the Escrow Account may be made by the Company (i) to
effect timely payments of ground rents, taxes, assessments, water rates,
mortgage insurance premiums, and comparable items (ii) to reimburse Company for
any Servicing Advance made by the Company with respect to a related Mortgage
Loan but only from amounts received on the related Mortgage Loan which represent
late payments or collections of Escrow Payments thereunder, (iii) to refund to
the Mortgagor any funds as may be determined to be overages, (iv) for transfer
to the Custodial Account in accordance with the terns of this Agreement, (v) for
application to restoration or repair of the Mortgaged Property, (vi) to pay to
the Company, or to the Mortgagor to the extent required by law, any interest
paid on the funds deposited in the Escrow Account, or (vii) to clear and
terminate the Escrow Account on the termination of this Agreement. As part of
its servicing duties, the Company shall pay to the Mortgagors interest on funds
in Escrow Account, to the extent required by law, and to the extent that
interest earned on funds in the Escrow Account is insufficient, shall pay such
interest from its own funds, without any reimbursement therefor.

     Section 4.06 Title Management and Disposition of REO Property.

     In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Company for the benefit of the Holder (the
"Owner").

     The Company shall either itself or through an agent selected by the
Company, manage, conserve, protect and operate each foreclosed and REO Property
on behalf of the Holder, in the same manner that it manages, conserves, protects
and operates other foreclosed property for its own account, and in the same
manner that similar property in the same locality as REO Property managed for
FNMA. The Company shall cause each REO Property to be inspected promptly upon
the acquisition of title thereto and shall cause each REO Property to be
inspected at least annually thereafter. The Company shall make or cause the
Company to be made a written report of each such inspection. Such reports shall
be retained in the Mortgage File and copies thereof shall be forwarded by the
Company to the Holder. The Company shall attempt to sell the same (and may
temporarily rent the same) on such terms and conditions as directed by the
Holder.

<PAGE>   42

     The Company shall segregate and hold all funds collected and received in
connection with the operation of the REO Properties separate and apart from its
own funds or general assets and shall establish and maintain an REO Account in
the form of a non-interest bearing demand Eligible Account. The creation of any
REO Account shall be evidenced by a letter agreement in the form shown in
Exhibit C hereto, in the case of an account held by a depository. An original of
such letter agreement shall be furnished to the Holder upon request.

     The Company shall deposit or cause to be deposited, on a daily basis in the
REO Account all revenues received with respect to the related REO Property and
shall withdraw therefrom funds necessary for the proper operation, management
and maintenance of the REO Property, including the cost of maintaining any
hazard insurance pursuant to the Guide hereof and, with the consent of the
Holder, the fees of any managing agent acting on behalf of the Company. In the
event that the Holder withholds its consent pursuant to the preceding sentence,
the related REO Property shall be managed by the Holder itself. The Company
shall not be entitled to retain interest paid or other earnings, if any, on
funds deposited in such REO Account. On or before each Determination Date, the
Company shall withdraw from each REO Account and deposit into the Custodial
Account the net income from the REO Property on deposit in the REO Account.

     The Company shall furnish to the Holder on each Remittance Date, an
operating statement for each REO Property covering the operation of each REO
Property for the previous month. Such operation statement shall be accompanied
by such other information as the Holder shall reasonably request.

     The Company shall dispose of the REO Property as soon as possible and shall
sell such REO Property in any event within one year after taking title to such
REO Property, unless the Company determines, and gives an appropriate notice to
the Holder and the Holder agrees in writing, that a longer period is necessary
for the orderly liquidation of such REO Property. If a period longer than one
year is permitted under this Agreement and is necessary to sell any REO
Property, the Company shall report monthly to the Holder as to the progress
being made in selling such REO Property.

     Each REO Disposition shall be carried out by the Company at such price and
upon such terms and conditions as approved by the Holder. If as of the date
title to any REO Property was acquired by the Company there were outstanding
unreimbursed Servicing Advances with respect to the REO Property, the Company,
upon an REO Disposition of such REO Property, shall be entitled to reimbursement
for any related unreimbursed Servicing Advances from proceeds received in
connection with such REO Disposition. The proceeds from the REO Disposition, net
of any payment to the Company as provided above, shall be deposited in the REO
Account and shall be remitted to the Holder within five (5) business days of
property settlement.

<PAGE>   43

                                   ARTICLE V

                             PAYMENTS TO THE HOLDER

     Section 5.01 Distributions.

     On each Remittance Date, the Company shall make distributions in compliance
with Paragraph 10 of Annex I to the Master Repurchase Agreement.

     All distributions made to the Holder on each Remittance Date will be made
to the Holder of record on the preceding Record Date and shall be made by wire
transfer of immediately available funds to the account of the Holder at a bank
or other entity having appropriate facilities.

     With respect to any remittance received by the Holder after the Remittance
Date, the Company shall pay to the Holder interest on any such late payment at
an annual rate equal to the rate of interest as is publicly announced from time
to time at its principal office by Chemical Bank, New York, New York, as its
prime lending rate, adjusted as of the date of each change, plus three
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Company to the Holder on the
date such late payment is made and shall cover the period commencing with the
day following such Remittance Date and ending with the Business Day on which
such payment is made, both inclusive. Such interest shall be remitted along with
such late payment. The payment by the Company of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Holder.

<PAGE>   44

                                   ARTICLE VI

                       REPORTS TO BE PREPARED BY COMPANY

     Section 6.01 Company Shall Provide Information as Reasonably Required.

     The Company shall furnish to each Holder during the term of this Agreement,
such periodic, special or other reports, information or documentation, whether
or not provided for herein, as shall be necessary, reasonable or appropriate in
respect to Holder, or otherwise in respect to the purposes of this Agreement,
including any reports, information or documentation reasonably required to
comply with any regulations regarding any supervisory agents or examiners of the
Holder all such reports or information to be as provided by and in accordance
with such applicable instructions and directions as the Holder may reasonably
request and which do not entail material additional expense to the Company. The
Company agrees to execute and deliver all such instruments and take all such
action as the Holder, from time to time, may reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.

     Section 6.02 Delinquency Report.

     The Company is responsible for providing a monthly delinquency report to
the Holder.

<PAGE>   45

                                  ARTICLE VII

                                  THE COMPANY

     Section 7.01 Indemnification: Third Party Claims.

     The Company agrees to indemnify the Holder and hold it harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses that the Holder may
sustain in any way related to either a breach by the Company of the
representations and warranties contained in Section 3.01 or the failure of the
Company to perform its duties and service the Mortgage Loans in accordance with
the terms of this Agreement. The Company shall immediately notify the Holder if
a claim is made by a third party with respect to this Agreement or the Mortgage
Loans, assume (with the consent of the Holder) the defense of any such claim and
pay all expenses in connection therewith, including counsel fees, and promptly
pay, discharge and satisfy any judgment or decree which may be entered against
it or the Holder in respect of such claim. The Company shall follow any written
instructions received from the Holder in connection with such claim.

         The Company shall provide the Holder with prompt written notice of any
material correspondence received or developed by the Company in respect of such
claim, and any other related developments of which the Company becomes aware,
and consult with the Holder regarding the conduct of any defense. The Company
shall provide to the Holder statements detailing each incurral of $1,000 which
the Company believes to be reimbursable to it pursuant to this Section 7.01
promptly following such incurral but in no event more frequently than monthly
(an "Accounting"). Unless the claim in any way relates to a breach of the
Company's representations or warranties in this Agreement or the failure of the
Company to service and administer the Mortgage Loans in compliance with the
terms of this Agreement, the Company shall be entitled to reimbursement from the
Holder of all amounts incurred by it pursuant to this Section 7.01 within thirty
(30) days following receipt by the Holder of the related Accounting.

     Section 7.02 Merger or Consolidation of the Company.

     The Company will keep in full effect its existence, rights and franchises
as a limited partnership under the laws of the state under which it is
organized, and will preserve its qualification to do business as a foreign
entity in each jurisdiction in which such qualification is or shall be necessary
to protect the validity and enforceability of this Agreement, or any of the
Mortgage Loans and to perform its duties under this Agreement.

     Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person shall be an institution approved to service
mortgage loans for FNMA.

<PAGE>   46

     The Holder shall be notified in writing of any such changes.

     Section 7.03 Limitation on Liability of the Company and Others.

     Neither the Company nor any of the officers, employees or agents of the
Company shall be under any liability to the Holder for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Company or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in compliance with this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this Agreement.
The Company and any officer, employee or agent of the Company may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Company shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its duties to service the Mortgage Loans in accordance with
this Agreement; provided, however, that the Company may, with the consent of the
Holder, undertake any such action which it may deem necessary or desirable in
respect to this Agreement and the rights and duties of the parties hereto. In
such event, the legal expenses and costs of such action taken with the written
approval of the Holder and any liability resulting therefrom shall be expenses,
costs and liabilities for which the Holder will be liable, the Company shall be
entitled to be reimbursed therefor from the Holder upon written demand.

     Section 7.04 Company Not to Resign.

     The Company shall not assign this Agreement or resign from the obligations
and duties hereby imposed on it except by mutual consent of the Company and the
Holder, which consent shall not be unreasonably withheld or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Holder which Opinion of
Counsel shall be in form and substance acceptable to the Holder. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.

<PAGE>   47

                                  ARTICLE VIII

                                    DEFAULT

     Section 8.01 Events of Default.

     In case one or more of the following Events of Default by the Company shall
occur, that is to say:

         (i) any failure by the Company to remit to the Holder any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of three days after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to the Company
by the Holder; or

         (ii) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement which continues unremedied for a period of
thirty days (except that such number of days shall be fifteen in the case of a
failure to pay any premium for any insurance policy required to be maintained
under this Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company by the
Holder; or

         (iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Company and such decree or order
shall have remained in force undischarged or unstayed for a period of sixty
days; or

         (iv) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Company or
of or relating to all or substantially all of its property; or

         (v) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or

         (vi) the Company shall, for any reason, become incapacitated to perform
its duties and obligations under this Agreement by operation of law or
otherwise; or

         (vii) an Event of Default under the Master Repurchase Agreement shall
have occurred;

         (viii) [intentionally omitted]

<PAGE>   48

     then, and in each and every such case, the Holder, by notice in writing to
the Company may, in addition to whatever rights the Holder may have at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Company under this Agreement and
in and to the Mortgage Loans and the proceeds thereof. On or after the receipt
by the Company of such written notice, all authority and power of the Company
under this Agreement and any Sub-Servicing Agreement, whether with respect to
the Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 10.01. Upon written request from the Holder, the
Company shall prepare, execute and deliver, any and all documents and other
instruments, place in such successor's possession all Mortgage Piles, and do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise, at the Company's sole expense. The Company agrees to cooperate with
the Holder and such successor in effecting the termination of the Company's
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Company to the Custodial Account, REO
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans.

     Section 8.02 Waiver of Defaults.

     The Holder may waive any default by the Company in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.

<PAGE>   49

                                   ARTICLE IX

                                  TERMINATION

     Section 9.01 Termination.

     In addition to the termination rights arising from the occurrence of an
Event of Default, the respective obligations and responsibilities of the Company
shall terminate upon: (i) the later of the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or the
disposition of all REO Property and the remittance of all funds due hereunder;
or (ii) by mutual consent of the Company and the Holder in writing.

     Section 9.02 Termination Without Cause.

     Except as provided in this Section 9.02, the Holder may, at its or their
sole option, terminate any rights the Company may have hereunder, without cause,
upon at least 60 days' prior written notice, which notice shall be accompanied
by payment to the Company, as liquidated damages, of 1.00% of the then Assumed
Principal Balance of the Mortgage Loans. Any such notice of termination shall be
in writing and delivered to the Company as provided in Section 10.05 of this
Agreement.

<PAGE>   50

                                   ARTICLE X
                            MISCELLANEOUS PROVISIONS

     Section 10.01 Successor to the Company.

     Prior to termination of Company's responsibilities and duties under this
Agreement pursuant to Sections 7.04, 8.01, 9.01 or 9.02, the Holder shall (i)
succeed to and assume all of the Company's responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Company under this Agreement prior to the termination of
Company's responsibilities, duties and liabilities under this Agreement. In
connection with such appointment and assumption, the Holder may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree. In the event that the Company's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned Sections, the Company shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of Company pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section and shall in no
event relieve the Company of the representations and warranties made pursuant to
Section 3.01.

     Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Holder an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Company, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Company or this Agreement pursuant to
Section 7.04, 8.01, 9.01, or 9.02 shall not affect any claims that the Holder
may have against the Company arising prior to any such termination or
resignation.

         The Company shall timely deliver to the successor the funds in the
Custodial Account, REO Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Company shall
account for all funds. The Company shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company, including, without
limitation, execution and delivery of transfer of servicing notices in
accordance with the Real Estate Settlement Procedures Act and any other state or
federal law. The successor shall make arrangements as it may deem appropriate to
reimburse the Company for amounts the Company actually expended pursuant to this
Agreement which the successor is entitled to retain hereunder and which would
otherwise have been recovered by the Company pursuant to this Agreement but for
the appointment of the successor servicer.

     Upon a successor's acceptance of appointment as such, the Holder shall
notify by mail the

<PAGE>   51

Company of such appointment.

     Section 10.02 Amendment.

     This Agreement may be amended from time to time by the Company and the
Holder by written agreement signed by the Company and the Holder.

     Section 10.03 Recordation of Agreement.

     To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any of all the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Company at the Company's expense on direction of Holder accompanied by an
opinion of counsel to the effect that such recordation materially and
beneficially affects the interest of the Holder or is necessary for the
administration or servicing of the Mortgage Loans.

     Section 10.04 Governing Law.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, except to the extent preempted by Federal law.

     Section 10.05 Notices.

     Any notices or other communications permitted or required hereunder shall
be in writing and shall be deemed conclusively to have been given if personally
delivered at or mailed by registered mail, postage prepaid, and return receipt
requested or transmitted by telex, telegraph or telecopier and confirmed by a
similar mailed writing, if (i) is the case of the Company STARNET FINANCIAL,
INC. AND STARNET MORTGAGE Attention: KEN URBANUS or such other address as may
hereafter be furnished to the Holder in writing by the Company and (ii) in the
case of the Holder, Impac Warehouse Lending Group, 1401 Dove Street, Newport
Beach, CA 92660, Attention: Zoila Velasco, or such other address as may be
furnished to the Company in writing by the Holder.

     Section 10.06 Severability Provisions.

     If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement, provided, however, that if the invalidity of any covenant, agreement
or provision shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is as nearly as possible the
same as the economic effect of this Agreement.

<PAGE>   52

     Section 10.07 Exhibits.

     The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.

     Section 10.08 General Interpretive Principles.

     For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

     (i) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;

     (ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

     (iii) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

     (iv) a reference to a Subsection without further reference to a Section is
a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

     (v) the words "herein", "hereof', "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular provision;
and

     (vi) the tern "include" or "including" shall mean without limitation by
reason of enumeration.

     Section 10.09 Reproduction of Documents.

     This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

<PAGE>   53

     Section 10.10 Entire Agreement.

     This Agreement is the entire agreement between the parties hereto. Without
limiting the generality of the preceding sentence, each Holder acknowledges that
no affiliate of the Company expressly or impliedly has made any representation,
warranty or promise of performance with respect to the Company and, if made,
such representation, warranty or promise shall not be relied upon unless made in
writing by a duly authorized officer.

     IN WITNESS WHEREOF, the Company and the Initial Holder have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.

                                   IMPAC WAREHOUSE LENDING GROUP

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

                                   STARNET FINANCIAL/STARNET MORTGAGE

                                   By: /s/ KENNETH F. URBANUS
                                      ------------------------------------------
                                   Name:   Kenneth F. Urbanus
                                        ----------------------------------------
                                   Title:  President
                                         ---------------------------------------

<PAGE>   54

STATE OF ___________)
                    )    SS.
COUNTY OF __________)

     On the __________ day of _____________, 1999 before me, a Notary Public in
and for said State, personally appeared _____________________, known to me to be
______________of STARNET FINANCIAL, INC. AND STARNET MORTGAGE the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand affixed my official seal
the day and year in this certificate first above written.

                                        ---------------------------------
                                                  Notary Public

                                        My Commission expires:

<PAGE>   55

STATE OF CALIFORNIA )
                    )     SS.
COUNTY OF ORANGE    )

     On the __________ day of _________________, 1999 before me, a Notary Public
in and for said State, personally appeared ________________, known to me to be a
________________ of Impac Warehouse Lending Group, the corporation that executed
the within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand affixed my official seal
the day and year in this certificate first above written.

                                        ---------------------------------
                                                  Notary Public

                                        My Commission expires:

<PAGE>   56

                                   EXHIBIT A

                       CUSTODIAL ACCOUNT LETTER AGREEMENT

         To:
            ---------------------------------------

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

            ---------------------------------------
            (the 'Depository")

     As "Company" under the Servicing Agreement, dated as of ______________,
1999, Conventional Mortgage Loans, _____________________ (the "Agreement"), we
hereby authorize and request you to establish an account, as a Custodial Account
pursuant to Section 4.02 of the Agreement, to be designated as "[Company], in
trust for the Holder - Conventional Mortgage Loans - Servicing Agreement dated
__________, 1997 with Impac Warehouse Lending Group". All deposits in the
account shall be subject to withdrawal therefrom by order signed by the Company.
This letter is submitted to you in duplicate. Please execute and return one
original to us.

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

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

     The undersigned, as "Depository", hereby certifies that the above described
account has been established under Account Number ______________, at the office
of the depository indicated above, and agrees to honor withdrawals on such
account as provided above. The amount deposited at any time in the account will
be insured by the Federal Deposit Insurance Corporation to the limit established
by such corporation or the National Credit Union Administration.

                                             --------------------------------
                                                    (name of Depository)

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

<PAGE>   57
                                   EXHIBIT B

                    FORM OF ESCROW ACCOUNT LETTER AGREEMENT

                                     (date)

               To:
                   ------------------------------

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

                   ------------------------------
                   (the "Depository")

         As "Company" under the Servicing Agreement, dated as of ___________,
1999, Conventional Mortgage Loans, _______________ (the "Agreement") we hereby
authorize and request you to establish an account, as an Escrow Account pursuant
to Section 4.04 of the Agreement, to be designated as "________________, in
trust for the Holder - Conventional Mortgage Loans - _______________ as tenants
in common". All deposits in the account shall be subject to withdrawal therefrom
by order signed by the Company. This letter is submitted to you in duplicate.
Please execute and return one original to us.

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

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

         The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number _______________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amount deposited at any time in the account
will be insured by the Federal Deposit Insurance Corporation to the limit
established by such corporation.

                                        ----------------------------
                                        (name of Depository)

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

<PAGE>   58

                                   EXHIBIT C

                      FORM OF REO ACCOUNT LETTER AGREEMENT

                                     (date)

               To:
                   ------------------------------

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

                   ------------------------------
                   (the "Depository")

         As "Company" under the Servicing Agreement, dated as of
_______________, 1999, Conventional Mortgage Loans, ___________________ (the
"Agreement") we hereby authorize and request you to establish an account, as an
REO Account pursuant to Section 4.06 of the Agreement, to be designated as
"___________________, in trust for the Holder - Conventional Mortgage Loans -
___________________". All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company. This letter is submitted to you in
duplicate. Please execute and return one original to us.

                                        [COMPANY]
                                        ----------------------------

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

         The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number _____________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amount deposited at any time in the account
will be insured by the Federal Deposit Insurance Corporation to the limit
established by such corporation.

                                        ----------------------------
                                        (name of Depository)

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

<PAGE>   59

                                   EXHIBIT D

                       FORM OF ASSIGNMENT AND ASSUMPTION

         ASSIGNMENT AND ASSUMPTION, dated __________________, 1999, between a
corporation ____________________________, a _______________ corporation
("Assignor"), and _____________________________________, a ___________________
corporation ("Assignee"):

         For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:

         1. The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor, as Holder, in, to and under that
certain Servicing Agreement, Conventional Mortgage Loans, _______________ (the
"Servicing Agreement"), dated _______________, 1996, by and between
____________________________ and _______________________________________________
(the "Company").

         2. The Assignor warrants and represents to, and covenants with, the
Assignee that:

           a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;

           b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Servicing Agreement; and

           c. The Assignor has not agreed to any amendment or other modification
of the Servicing Agreement unless disclosed to Assignee, including without
limitation the transfer of the servicing obligations under the Servicing
Agreement. The Assignor has no knowledge of, and has not received notice of, any
waivers under or amendments or other modifications of, or assignments of rights
or obligations under, the Servicing Agreement.

         3. The Assignee warrants and represents to, and covenants with, the
Assignor that:

           a. The Assignee agrees to be bound, as Holder, by all of the terms,
covenants and conditions of the Servicing Agreement;

           b. The Assignee has been furnished with all information regarding the
Servicing Agreement that it has requested from Assignor; and

<PAGE>   60

                                      -2-

           c. The Assignee's address for purposes of all notices and
correspondence related to the Servicing Agreement is:

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

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

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

                The Assignee's wire transfer instructions for purposes of all
           remittances and payments related to the Servicing Agreement are:

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

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

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

         IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption to be executed by their duly authorized officers as of the date first
above written.

                                  ,                                            ,
----------------------------------        ------------------------------------
Assignor                                  Assignee

By:                                       By:
   -------------------------------           -----------------------------------

Its:                                      Its:
    ------------------------------            ----------------------------------

Taxpayer                                  Taxpayer
Identification No.                        Identification No.
                  ----------------                          --------------------

<PAGE>   61

                                   EXHIBIT E

                          MONTHLY TRIAL BALANCE FORMAT

<PAGE>   62

================================================================================

                         IMPAC WAREHOUSE LENDING GROUP

                               Initial Purchaser

                                      and

                  STARNET FINANCIAL, INC. AND STARNET MORTGAGE

                                     Seller

                         SELLER'S WARRANTIES AGREEMENT
                          Dated as of NOVEMBER 5,1999

                                 Mortgage Loans

                                   ----------

================================================================================

<PAGE>   63

         This is a Seller's Warranties Agreement, dated and effective as of
NOVEMBER 5, 1999 and is executed between IMPAC WAREHOUSE LENDING GROUP, a
California corporation, as the initial purchaser ("Initial Purchaser"), and
STARNET FINANCIAL, INC. AND STARNET MORTGAGE as the seller ("Seller").

                             PRELIMINARY STATEMENTS

         From time to time, the Initial Purchaser will be purchasing from the
Seller pursuant to a Master Repurchase Agreement dated as of the Closing Date
between the Seller and the Initial Purchaser (the "Master Repurchase Agreement")
the mortgage loans which are subject to this Agreement, and the Seller has
agreed to make certain representations and warranties with respect thereto.

         In consideration of the premises and the mutual agreements hereinafter
set forth, the Initial Purchaser and the Seller agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

         Section 1.01 Defined Terms.

         Capitalized terms not defined herein shall have the meanings given to
them in the Master Repurchase Agreement. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings specified in this Article:

         "Agreement": This Seller's Warranties Agreement including all exhibits
hereto, amendments hereof and supplements hereto.

         "Appraised Value": With respect to any Mortgage Loan, the value of the
related Mortgaged Property based upon the appraisal made for the originator at
the time of origination of the Mortgage Loan or the sales price of the Mortgaged
Property at such time of origination, whichever is less, provided, however, that
in the case of a Refinanced Mortgage Loan, such value is based solely upon the
appraisal made at the time of origination of such Refinanced Mortgage Loan.

         "Assignment": An individual assignment of the Mortgage, notice of
transfer or equivalent instrument, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the sale
or transfer of the Mortgage Loan.

         "Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
legal holiday in the State of New York, or (iii) a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to be closed.

         "Closing Date": The date on which the Initial Purchaser funds any
purchase pursuant to the Master Repurchase Agreement.

         "Cut-off Date": The first day of the month in which the related
Purchase Date occurs.

<PAGE>   64
                                      -2-

         Due Date": The date of each month on which each Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.

         "Escrow Account": An account maintained by the Seller for the deposit
of Escrow Payments received in respect of one or more Mortgage Loans.

         "Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, common charges in condominiums and planned unit
developments, mortgage insurance premiums, fire and hazard insurance premiums
and other payments which have been escrowed by the Mortgagor with the mortgagee
pursuant to any Mortgage Loan.

         "FHA": The Federal Housing Administration or any successor thereto.

         "FHLMC": The Federal Home Loan Mortgage Corporation or any successor
organization.

         "FNMA": The Federal National Mortgage Association or any successor
organization.

         "Initial Purchaser": Impac Warehouse Lending Group

         "Interim Period": The period of time from the Closing Date to the
Servicing Transfer Date, during which period the Seller shall service the
Mortgage Loans on behalf of the Purchaser.

         "Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the Appraised Value
of the related Mortgaged Property.

         "Master Repurchase Agreement": As defined in the Preliminary Statement
hereto.

         "Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note.

         "Mortgage": The mortgage, deed of trust or other instrument creating a
lien on real property securing the Mortgage Note.

         "Mortgage File": The mortgage documents pertaining to a particular
Mortgage Loan which are specified in Exhibit A hereto.

         "Mortgage Interest Rate": The annual rate at which interest accrues on
any Mortgage Loan.

         "Mortgage Loan": An individual Mortgage Loan, including but not limited
to, all documents included in the Mortgage File, the Monthly Payments, principal
prepayments, cash liquidations, primary insurance proceeds, other insurance
proceeds, condemnation proceeds, liquidation proceeds, and any and all rights,
benefits, proceeds and obligations arising therefrom or in connection therewith,
which is sold by the Seller to the Initial Purchaser and which is the subject

<PAGE>   65
                                      -3-

of this Agreement. The Mortgage Loans originally subject to this Agreement are
identified on the Mortgage Loan Schedule.

         "Mortgage Loan Schedule": The list of Mortgage Loans subject to this
Agreement and identified on the schedule attached to the related Certificate of
Seller, which list shall set forth the following information with respect to
each Mortgage Loan:

                  (i)      the loan number;

                  (ii)     the Mortgagor's name;

                  (iii)    the street address of the Mortgaged Property,
                           including city, state and zip code;

                  (iv)     the Mortgage Interest Rate as of the Cut-off Date;

                  (v)      the original term;

                  (vi)     the original principal balance;

                  (vii)    the first payment date;

                  (viii)   the remaining term to amortized maturity and the
                           stated maturity date;

                  (ix)     the Monthly Payment as of the Cut-off Date;

                  (x)      the outstanding principal balance as of the Cut-off
                           Date, after giving effect to all payments of
                           principal received on or before such date;

                  (xi)     the Loan-to-Value Ratio at origination;

                  (xii)    a code indicating whether the Mortgaged Property is
                           occupied by owner;

                  (xiii)   a code indicating the lien priority of the related
                           Mortgage;

                  (xiv)    a code indicating the type of residential dwelling;

                  (xv)     a code indicating the credit grade of the related
                           Mortgagor;

                  (xvi)    with respect to each adjustable rate Mortgage Loan,
                           the index;

                  (xvii)   with respect to each adjustable rate Mortgage Loan,
                           the margin;

                  (xviii)  with respect to each adjustable rate Mortgage Loan,
                           the Mortgage Interest Rate at origination; and

<PAGE>   66
                                      -4-

                  (xix)    with respect to each adjustable rate Mortgage Loan,
                           the Monthly Payment at origination.

Such schedule shall also set forth the weighted average of the amounts set forth
in (iv) and (viii) above and the total of the amounts described under (x) above
for all of the Mortgage Loans. Such list may be in the form of more than one
list, collectively setting forth all of the information required.

         "Mortgage Note": The note of a Mortgagor secured by a Mortgage.

         "Mortgaged Property": The underlying real property securing repayment
of a Mortgage Note.

         "Mortgagor": The obligor on a Mortgage Note.

         "Purchaser": Impac Warehouse Lending Group as Initial Purchaser and
holder of the Mortgage Loans and any subsequent holder or holders of the
Mortgage Loans.

         "Refinanced Mortgage Loan": A Mortgage Loan which was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy an
existing mortgage.

         "Related Documents": The documents, other than this Agreement, entered
into between the Seller and the Initial Purchaser with respect to the Mortgage
Loans, which documents consist of (a) each Confirmation, (b) the Master
Repurchase Agreement, (c) the Servicing Agreement, and (d) the Custody
Agreement.

         "Seller": STARNET FINANCIAL, INC. AND STARNET MORTGAGE or its successor
in interest or any successor under this Agreement appointed as herein provided.

         "Servicing Agreement": The Servicing Agreement dated NOVEMBER 5, 1999
between the Purchaser and the Seller.

         "Underwriting Guidelines": The underwriting guidelines used by the
Seller in connection with the origination of the Mortgage Loans and, if
applicable, which have been submitted to and approved by the Initial Purchaser.

         "VA": The United States Department of Veterans Affairs or any successor
thereto.

<PAGE>   67
                                      -5-

                                   ARTICLE II

                 REPRESENTATIONS AND WARRANTIES OF THE SELLER;
                          REPURCHASE AND SUBSTITUTION;
                            REVIEW OF MORTGAGE LOANS

         Section 2.01 Representations and Warranties of the Seller.

         The Seller represents and warrants to the Purchaser that as of the
Closing Date and as of each date thereafter on which the Master Repurchase
Agreement is in effect:

         (i) The Seller is duly organized, validly existing and in good standing
under the laws of TEXAS and is qualified to transact business in and is in good
standing under the laws of each state where a Mortgaged Property is located or
is otherwise exempt under applicable law from such qualification or is otherwise
not required under applicable law to effect such qualification; no demand for
such qualification has been made upon the Seller by any state having
jurisdiction; and in any event the Seller is or will be in compliance with the
laws of any such state to the extent necessary to insure the enforceability of
each Mortgage Loan and the servicing of the Mortgage Loans in accordance with
the terms of the Servicing Agreement;

         (ii) The Seller has the full power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan and to execute, deliver and perform, and to
enter into and consummate, all transactions contemplated by this Agreement and
each Related Document. The Seller has duly authorized the execution, delivery
and performance of this Agreement and the Related Documents, has duly executed
and delivered this Agreement, and this Agreement and the Related Documents,
assuming due authorization, execution and delivery by the Initial Purchaser each
constitutes a legal, valid and binding obligation of the Seller, enforceable
against it in accordance with its terms;

         (iii) Neither the execution and delivery of this Agreement and the
Related Documents, the acquisition or origination of the Mortgage Loans by the
Seller, the sale of the Mortgage Loans to the Initial Purchaser, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement and the Related
Documents, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which the Seller is now a party or
by which it is bound, or constitute a default or result in an acceleration under
any of the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Seller or its property is subject;

         (iv) There is no litigation pending or, to the Seller's knowledge,
threatened, which if determined adversely to the Seller would adversely affect
the sale of the Mortgage Loans to the initial Purchaser, the execution, delivery
or enforceability of this Agreement or any Related Document, or the ability of
the Seller to service the Mortgage Loans or which would have a material adverse
effect on the financial condition of the Seller;

<PAGE>   68
                                      -6-

         (v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement and
the Related Documents, the delivery of the Mortgage Files to the Purchaser for
the benefit of the Purchaser, the sale of the Mortgage Loans to the Initial
Purchaser or the consummation of the transactions contemplated by this Agreement
and the Related Documents;

         (vi) The consummation of the transactions contemplated by this
Agreement and the Related Documents are in the ordinary course of business of
the Seller, and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller as contemplated by this Agreement and the
Related Documents are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;

         (vii) The Seller used no adverse selection procedures in selecting the
Mortgage Loans from among the outstanding home mortgage loans in the Seller's
portfolio at the Closing Date as to which the representations and warranties set
forth in Section 2.02 could be made and had outstanding principal balances on
the Cut-off Date of at least $10,000;

         (viii) The Seller has good and marketable title to, and is the sole
owner of, the Mortgage Loan, free and clear of any lien, charge or encumbrance
or any ownership or participation interest in favor of any other person, and the
mortgage note has not been assigned, pledged, hypothecated or otherwise
transferred to any person; and

         (ix) Neither this Agreement nor any statement, report or other document
prepared and furnished by or on behalf of the Seller pursuant to this Agreement
or any Related Document or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to state a fact necessary
to make the statements contained therein not misleading.

         Section 2.02 Representations and Warranties as to Individual Mortgage
                      --------------------------------------------------------
Loans.
-----
         The Seller hereby represents and warrants to the Purchaser that, as to
each Mortgage Loan, as of the related Purchase Date and each date thereafter up
to the related Repurchase Date:

             (i) The information set forth in the Mortgage Loan Schedule is
complete, true and correct as of the Closing Date;

             (ii) All payments required to be made for such Mortgage Loan under
the terms of the Mortgage have been made; the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party other
than the owner of the Mortgaged Property subject to the Mortgage, directly or
indirectly, for the payment of any amount required by the Mortgage Loan, except
for interest accruing from the date of the mortgage note or date of disbursement
of the Mortgage Loan proceeds, whichever is greater, to the day that precedes by
one month the due date of the first installment of principal and interest; and
there has been no delinquency of more than thirty days in any payment by the
Mortgagor thereunder at any time since the origination of the Mortgage Loan;

<PAGE>   69
                                      -7-

             (iii) There are no delinquent taxes, ground rents, water charges,
sewer rents or assessments, including assessments payable in future
installments, or other outstanding charges affecting the related Mortgaged
Property;

             (iv) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, the substance of which waiver, alteration or modification has been
approved by the primary mortgage guaranty insurer, if any, and is reflected on
the Mortgage Loan Schedule. No instrument of waiver, alteration or modification
has been executed, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement approved by the primary
mortgage insurer, if any, and which assumption agreement is part of the Mortgage
File and the terms of which are reflected in the Mortgage Loan Schedule;

             (v) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;

             (vi) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements
imposed by FNMA for similar mortgage loans which are serviced under its MBS
program in an amount at least equal to the outstanding principal balance of the
applicable Mortgage Loan (without coinsurance). If the Mortgaged Property is in
an area identified on a Flood Hazard Map or Flood Insurance Rate Map issued by
the Federal Emergency Management Agency as having special flood hazards (and
such flood insurance has been made available) a flood insurance policy meeting
the requirements of the current guidelines of the Federal Insurance
Administration is in effect which policy conforms to the requirements of FNMA
and FHLMC. All such insurance policies (collectively, the "hazard insurance
policy") contain a standard mortgagee clause naming the Seller, its successors
and assigns as mortgagee and all premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to maintain such insurance at Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor;

             (vii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;

<PAGE>   70
                                      -8-

             (viii) The Mortgage has not been satisfied, canceled or
subordinated, in whole, or rescinded, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission;

             (ix) The Mortgage is a valid, subsisting and enforceable lien on
the Mortgaged Property, including all improvements on the Mortgaged Property
subject only to (a) the lien of any prior mortgage, (b) the lien of current real
property taxes and assessments not yet due and payable, (c) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and which do
not adversely affect the Appraised Value of the Mortgaged property, and (d)
other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first or second lien
and first or second priority security interest on the property described
therein;

             (x) The Mortgage Note and the Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terns. The mortgage note is on a form acceptable to FNMA and
FHLMC. The Assignment of Mortgage is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the mortgaged property is
located;

             (xi) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The Mortgagor under the Mortgage Note is a
natural person. The debt of the Mortgage Loan is evidenced by one mortgage note
only;

             (xii) The proceeds of the Mortgage Loan have been fully disbursed
and there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the mortgage were paid, and the mortgagor is not entitled to any
refund of any amounts paid or due under the mortgage note or mortgage. Any
future advance made prior to the date such Mortgage Loan was delivered to
Custodian have been consolidated with the outstanding principal amount secured
by the Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan.

             (xiii) The Mortgage Note and the Mortgage have not been assigned or
pledged, and the Seller has good and marketable title thereto, and the Seller is
the sole owner thereof and has full

<PAGE>   71
                                      -9-

right to transfer and sell the Mortgage Loan to the Initial Purchaser free and
clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;

             (xiv) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable licensing and "doing business" requirements of the laws of
the state wherein the Mortgaged Property is located;

             (xv) The Mortgage Loan is covered by an ALTA lender's title
insurance policy acceptable to FNMA or FHLMC, issued by a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring (subject to the exceptions
contained in (ix)(a) through (d) above) the Seller, its successors and assigns
as to the first priority lien of the Mortgage in the original principal amount
of the Mortgage Loan. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller is the sole insured
of such lender's title insurance policy, and such lender's title insurance
policy is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy;

             (xvi) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation or
event of acceleration;

             (xvii) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;

             (xviii) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the mortgaged property is in violation
of any applicable zoning law or regulation. The Mortgaged Property is lawfully
occupied under applicable law, and all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of such
mortgaged property and, with respect to the use and occupancy of the same,
including but not limited to, certificates of occupancy, have been made or
obtained from the appropriate authorities;

             (xix) The Mortgage Loan was originated by the Seller or a savings
association, a savings bank, a commercial bank or similar banking institution
which is supervised and examined by a federal or state authority or by a
mortgagee approved by the Secretary of Housing and Urban

<PAGE>   72
                                      -10-

Development pursuant to Section 203 of the National Housing Act. With respect to
adjustable rate Mortgage Loans, the Mortgage Interest Rate is adjusted on each
interest rate adjustment date to equal the index plus the gross margin, rounded
up or down to the nearest 1/8%, subject to the mortgage interest rate cap. With
respect to fixed rate Mortgage Loans, the mortgage note is payable in equal
monthly installments of principal and interest which are sufficient to amortize
the principal balance of the Mortgage Loan over its term and pay interest at the
Mortgage Interest Rate. With respect to adjustable rate Mortgage Loans,
installments of interest are subject to change due to the adjustments to the
Mortgage Interest Rate on each interest rate adjustment date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than thirty
years from commencement of amortization. No Mortgage Loan is an interest only
mortgage loan. No Mortgage Note provides for negative amortization. No
adjustable rate Mortgage Loan is convertible to a fixed interest rate mortgage
loan. Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months;

             (xx) The Mortgage contains the usual and customary "due-on-sale"
clause or other similar provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event the related Mortgaged
Property is sold without the prior consent of the mortgagee thereunder;

             (xxi) The Mortgaged Property is free of damage and waste and there
is no proceeding pending for the total or partial condemnation thereof. The
mortgaged property is in good repair and undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to affect
adversely the value of the mortgaged property as security for the Mortgage Loan
or the use for which the premises were intended;

             (xxii) The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (a) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (b) otherwise by judicial foreclosure. There is
no other exemption available to the Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage. The Mortgaged Property or is not currently subject to
any bankruptcy proceeding or foreclosure proceeding and the Mortgagor or is not
currently seeking protection under applicable bankruptcy laws. There is no
homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the mortgage. No Mortgagor has requested relief under the Soldiers
and Sailors Civil Relief Act of 1940;

             (xxiii) The Mortgage Loan was originated in accordance with the
Underwriting Guidelines. The documents, instruments and agreements submitted for
loan underwriting were not falsified and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the information and statements therein not misleading;

             (xxiv) The Mortgage Note is not and has not been secured by any
collateral except

<PAGE>   73
                                      -11-

the lien of the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to in (ix) above;

             (xxv) The Mortgage File contains an appraisal of the related
Mortgaged Property, on a form acceptable to FNMA or FHLMC signed prior to the
approval of the Mortgage Loan application by a qualified appraiser, duly
appointed by the Seller, who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and such appraisal met the requirements of applicable laws and regulations
governing the originator thereof at the time of origination of the Mortgage
Loan, and the appraisal satisfies the requirements of Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated. The determination of the Appraised Value of the Mortgaged Property
was based on sales of comparable properties;

             (xxvi) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;

             (xxvii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. No Mortgage Loan is a graduated payment mortgage loan or growing
equity mortgage loan;

             (xxviii) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable law
with respect thereto. Such statement is included in the Mortgage File;

             (xxix) [Intentionally Omitted]

             (xxx) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
sale or exchange of a Mortgaged Property by the lender;

             (xxxi) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including without limitation the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;

<PAGE>   74
                                      -12-

             (xxxii) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor or
the Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan;

             (xxxiii) The Mortgaged Property is located in the state indicated
on the Mortgage Loan Schedule, and consists of a single parcel of real property
with a detached single family residence erected thereon, or a two to four family
dwelling, or an individual condominium unit in a low-rise condominium, or an
individual unit in a planned unit development as defined by FNMA, none of which
is a mobile home;

             (xxxiv) The original LTV of the Mortgage Loan was not more than
100%;

             (xxxv) With respect to each Mortgage Loan which is subject to the
provisions of the Homeownership and Equity Protection Act of 1994; the Mortgage
Loan is identified as such on the Mortgage Loan Schedule, the related Mortgage
File contains a notice from the originator, and a copy of a notice to each
entity which was a purchaser or assignee of the Mortgage Loan, satisfying the
provisions of such Act and the regulations issued thereunder, to the effect that
the Mortgage Loan is subject to special truth in lending rules.

             (xxxvi) All Escrow Accounts are maintained with Seller and have
been maintained in accordance with applicable law and the terms of the Mortgage
Loans. The Escrow Payments required by the Mortgages which have been paid to the
Seller for the account of the Borrower are on deposit in the appropriate Escrow
Account. No escrow deposits or Escrow Payments or other charges or payments due
the Seller have been capitalized under any Mortgage or the related Mortgage
Note;

             (xxxvii) Except for such documents that are held by the Custodian
or a servicer of the related Mortgage Loan, the Seller is in possession of a
complete mortgage file (including a copy of the survey of the mortgaged
property, if any; an original hazard insurance policy and, if required by law,
flood insurance policy, with extended coverage of the hazard insurance policy; a
Mortgage Loan closing statement; a Mortgage Loan application; verification of
employment and income, if any; evidence of source and amount of downpayment;
credit report on the mortgagor; an appraisal report; a photograph of the
mortgaged property; an executed Truth-in-Lending disclosure statement and
rescission rights waiver and a copy of all other materials required by law to be
delivered to the mortgagor; a contract of sale, if any, and any other documents
customarily collected or created, and retained, in connection with the
origination of mortgage loans). Seller has delivered, or caused to be delivered,
to the Buyer or Custodian as directed by Buyer, each document required to be so
delivered under the Custody Agreement;

             (xxxviii) All funds received by the Seller in connection with the
Mortgage Loans, including, without limitation, foreclosure proceeds, fire
insurance proceeds from fire losses, condemnation proceeds and principal
reductions, have been applied to reduce the principal balance

<PAGE>   75
                                      -13-

of the Mortgage Loans in question or deposited in the Escrow Account, or for
reimbursement of repairs to the Mortgaged Property or as otherwise required by
applicable law;

             (xxxix) The Seller and any current or prior mortgagee or servicer
of the Mortgage Loans have complied in all respects material to the value of the
Servicing Rights with every applicable federal, state, or local law, statute,
and ordinance, and any rule, regulation, or order issued thereunder including,
without limitation, the fair housing, anti-redlining, equal credit opportunity,
truth-in-lending, real estate settlement procedures, fair credit reporting, and
every other prohibition against unlawful discrimination in residential lending
or governing consumer credit, and also including, without limitation, the
Consumer Credit Reporting Act, Equal Credit Opportunity Act of 1975 and
Regulation B, Fair Credit Reporting Act, Truth-in-Lending Law, in particular,
Regulation Z as amended, the Flood Disaster Protection Act of 1973, the Real
Estate Settlement Procedures Act of 1974 as amended, and state and local
consumer credit codes and laws, and the origination, collection and all other
practices of the originator, the Seller and all prior servicers in connection
with the origination or servicing of each Mortgage and Mortgage Note are and
have been in all respects legal, proper, prudent and customary in the mortgage
origination and servicing business. All mortgage interest rate adjustments have
been made in strict compliance with state and federal law and the terms of the
related mortgage note. Any interest required to be paid pursuant to state and
local law has been properly paid and credited; and

             (xl) Neither the Seller nor any of its agents or affiliates has
contacted or shall contact any Mortgagor for the purpose of inducing or
encouraging the early prepayment or refinancing of the related Mortgage Loan,
nor has the Seller or any of its agents or affiliates utilized, nor shall they
utilize, any information held or acquired by the Seller or such agency or
affiliates in their capacity as mortgagees or servicers of the Mortgage Loans to
derive any other incidental income or benefit from the servicing thereof, nor
has the Seller or such agents or affiliates given, nor will they give, a list of
Mortgagors to any person for such purpose or to derive any other incidental
income or benefit from the servicing thereof; provided, however that the
foregoing shall not be construed to limit or impair other activities of the
Seller in its capacities other than as servicer of the Mortgage Loans,
including, without limitation, the provision of banking and related services to
customers (which may include the Mortgagors under the Mortgage Loans other than
in their capacity as such) in the ordinary course and any general solicitation
or encouragement of such customers to prepay or refinance existing mortgages or
to purchase or renew insurance in connection therewith so long as the provisions
of such services and any such solicitation or encouragement does not result in
the refinancing of a Mortgage Loan by the Seller or any affiliate of the Seller.

             Section 2.03 Breach of Representation or Warranty.

             It is understood and agreed that the representations and warranties
set forth in Sections 2.01 and 2.02 shall survive the sale of the Mortgage Loans
to the Purchaser and shall inure to the benefit of the Purchaser and its
successors and assigns, notwithstanding any restrictive or qualified endorsement
on any Mortgage Note or Assignment or the examination of any Mortgage File and
without regard to any applicable statute of limitations. Upon discovery by
Seller of a breach of any

<PAGE>   76
                                      -14-

of the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser in any
Mortgage Loan, the Seller shall give prompt written notice to the Purchaser.

             The Seller shall indemnify the Purchaser and hold it or them
harmless against any loss, damages, penalties, fines, forfeitures, legal fees
and related costs, judgments, and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting from
a breach of the Seller's representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in this Section 2.03 to indemnify the Purchaser as provided in this
Section 2.03 are in addition to any other remedies of the Purchaser respecting a
breach of the foregoing representations and warranties.

<PAGE>   77

                                      -15-

                                  ARTICLE III

                            MISCELLANEOUS PROVISIONS

     3.01 Amendment.

     This Agreement may be amended from time to time by the Purchaser and the
Seller only by written agreement signed by the Purchaser and the Seller.

     Section 3.02 Governing.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York except to the extent preempted by Federal law.

     Section 3.03 Notices.

     Any notices or other communications permitted or required hereunder shall
be in writing and shall be deemed conclusively to have been given if personally
delivered at or mailed by registered mail, postage prepaid, and return receipt
requested or transmitted by telex, telegraph or telecopier and confirmed by a
similar mailed writing, if (i) in the case of the Seller and STARNET FINANCIAL,
INC. AND STARNET MORTGAGE Attention: KEN URBANUS or such other address as may
hereafter be furnished to the Purchaser in writing by the Seller and (ii) in the
case of the Purchaser, Impac Warehouse Lending Group, 1401 Dove Street, Newport
Beach, CA 92660, Attention: Zoila Velasco, or such other address as may be
furnished to the Seller in writing by the Purchaser.

     Section 3.04 Severability Provisions.

     If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement, provided, however, that if the invalidity of any covenant, agreement
or provision shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is as nearly as possible the
same as the economic effect of this Agreement.

<PAGE>   78

                                      -16-

     Section 3.05 Exhibits.

     The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.

     Section 3.06 General Interpretive Principles.

     For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

         (i) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;

         (ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

         (iii) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

         (iv) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

         (v) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and

         (vi) the term "include" or "including" shall mean without limitation by
reason of enumeration.

     Section 3.07 Reproduction of Documents.

     This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

<PAGE>   79

                                      -17-

     Section 3.08 Counterparts.

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one instrument. It shall not be necessary in making proof of this Agreement
or any counterpart thereof to produce or account for any other counterpart.

     Section 3.09 Entire Agreement. Successors and Assigns.

     Except as otherwise provided herein, this Agreement together with the
Related Documents constitutes the entire agreement between the parties hereto
and supersedes all rights and prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
This Agreement shall not be assignable in whole or in part by the Seller. The
Purchaser may assign this Agreement, in whole or in part. The Purchaser shall
give the Seller prompt written notice of any such assignment, provided, however,
that any failure to give such notice shall not be deemed to condition, qualify
or affect any obligation of the Seller hereunder. This Agreement and any rights,
remedies, obligations or liabilities under or by reason of the Agreement shall
inure to the benefit of and be binding on the parties hereto or their respective
successors and permitted assigns.

     IN WITNESS WHEREOF, the Seller and the Initial Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.

                              IMPAC WAREHOUSE LENDING GROUP

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

                              STARNET FINANCIAL, INC. AND
                              STARNET MORTGAGE

                              By: /s/ KENNETH F. URBANUS
                                 ----------------------------------
                              Name:   Kenneth F. Urbanus
                                   --------------------------------
                              Title:  President
                                    -------------------------------

<PAGE>   80

STATE OF CALIFORNIA )
                    )  SS.
COUNTY OF           )

On the ___________ day of _______________. 1999 before me, a Notary Public in
and for said State, personally appeared _____________________, known to me to be
a ______________________of and STARNET FINANCIAL, INC. AND STARNET MORTGAGE a
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand affixed my official seal
the day and year in this certificate first above written.

                                             ----------------------------
                                                     Notary Public

                                             My Commission expires:

<PAGE>   81

STATE OF CALIFORNIA )
                    )  SS.
COUNTY OF           )

     On the _______________ day of _________________, 1999 before me, a Notary
Public in and for said State, personally appeared ______________________ known
to me to be ______________________ of Impac Warehouse Lending Group, the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand affixed my official seal
the day and year in this certificate first above written.

                                             ----------------------------
                                                     Notary Public

                                             My Commission expires:

<PAGE>   82

                                    EXHIBIT A

                           CONTENTS OF MORTGAGE FILE

     With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser.

          1    The original note or other evidence of indebtedness (the
               "Mortgage Note") of the obligor thereon (each such obligor, a
               "Mortgagor"), endorsed to the order of or assigned to Seller by
               the holder/payee thereof, without recourse, and endorsed by
               Seller, without recourse, in blank.

          2    The original mortgage, deed of trust or other instrument (the
               "Mortgage") creating a first lien on the underlying property
               securing the Mortgage Loan (the "Mortgaged Property"), naming
               Seller as the "mortgagee" or "beneficiary" thereof, and bearing
               on the face thereof the address of Seller, or, if the Mortgage
               does not name Seller as the mortgagee/beneficiary, the Mortgage,
               together with an instrument of assignment assigning the Mortgage,
               individually or together with other Mortgages, to Seller and
               bearing on the face thereof the address of Seller, and, in either
               case, bearing evidence that such instruments have been recorded
               in the appropriate jurisdiction where the Mortgaged Property is
               located (or, in lieu of the original of the Mortgage or the
               assignment thereof, a duplicate or conformed copy of the Mortgage
               or the instrument of assignment, if any, together with a
               certificate of either the closing attorney or an officer of the
               title insurer that issued the related title insurance policy, or
               a certificate of receipt from the recording office, certifying
               that such copy or copies represent true and correct copy(ies) of
               the original(s) and, that such original(s) have been or are
               currently submitted to be recorded in the appropriate
               governmental recording office of the jurisdiction where the
               Mortgaged Property is located).

          3    An original assignment of Mortgage, in blank, which assignment
               shall be in form and substance acceptable for recording and, in
               the event that the Seller acquired the Mortgage Loan in a merger,
               the assignment must be by "[Seller], successor by merger to [name
               of predecessor]".

          4    Any intervening assignment of the Mortgage not included in (ii)
               above, including any warehousing assignment.

          5    Any assumption, modification, extension or guaranty agreement.

          6    The Lender's title insurance policy, or, if such policy has not
               been issued, a written commitment or interim binder issued by the
               title insurance company evidencing that the required title
               insurance coverage is in effect and unconditionally guaranteeing
               the holder of the Mortgage Loan that the lender's title insurance
               policy will be issued.

<PAGE>   83

                                      -2-

          7    Any instrument necessary to complete identification of any
               exception set forth in the exception schedule in the title
               insurance policy (e.g., map or plat, restrictions, easements,
               sewer agreements, home association declarations, etc.).

          8    A survey of the Mortgaged Property.

          9    Any hazard insurance policy or flood insurance policy, with
               extended coverage of the hazard insurance policy.

          10   The Mortgage Loan closing statement (Form HUD-1) and any other
               truth-in-lending, real estate settlement procedure forms or other
               disclosure statements required by law.

          11   The residential loan application, if applicable.

          12   Any verification of employment and income.

          13   Any verification of acceptable evidence of source and amount of
               downpayment.

          14   Any credit report on the borrower under the Mortgage Loan.

          15   Each residential appraisal report.

          16   A photograph of the Mortgaged Property.

          17   If the Mortgage Note or Mortgage or any other material document
               or instrument relating to the Mortgage Loan has been signed by a
               person on behalf of the Mortgagor, the power of attorney or other
               instrument that authorized and empowered such person to sign with
               recording information thereon.

          18   Any policy or certificate of primary mortgage guaranty insurance.

          19   Any tax receipts, insurance premiums, ledger sheets, payment
               records, insurance claim files and correspondence, current and
               historical computerized data files, underwriting standards used
               for origination and all other papers and records developed or
               originated by the Seller, any servicer or others, required to
               document the Mortgage Loan or to service the Mortgage Loan.

<PAGE>   84

                                      -3-

          20   With respect to FHA insured Mortgage Loans, the original FHA
               Insurance Contract, together with a completed HUD Form 92080
               "Mortgagee Record Change" with the Purchaser's name left blank.

          21   With respect to VA guaranteed Mortgage Loans, the original VA
               Guaranty Certificate.

<PAGE>   85

                               CUSTODY AGREEMENT

     This CUSTODY AGREEMENT dated as of NOVEMBER 5, 1999 by and among IMPAC
WAREHOUSE LENDING GROUP (IWLG), a California corporation, having an address at
1401 Dove Street, Newport Beach, CA 92660 ("Buyer"), Bankers Trust Company,
having an address at 3 Park Plaza, 16th Floor, Irvine, California 92714,
("Custodian"), STARNET FINANCIAL, INC. AND STARNET MORTGAGE having an address
17000 PRESTON RD #350 DALLAS, TX 75248 ("Seller").

                                  WITNESSETH:

     WHEREAS, the Seller and the Buyer may, from time to time, enter into
transactions (each, a "Transaction") in which the Buyer agrees to purchase from
the Seller certain one- to four-family residential mortgage loans (the "Mortgage
Loans"), with a simultaneous agreement by the Seller to repurchase such Mortgage
Loans on demand as provided in a Master Repurchase Agreement, dated as of
NOVEMBER 5, 1999 between the Seller and the Buyer (the "Master Repurchase
Agreement") and a Confirmation between the Seller and the Buyer (the
"Confirmation"; as to each Transaction, the related Confirmation and the Master
Repurchase Agreement are referred to collectively as the "Repurchase
Agreement");

     WHEREAS, pursuant to the terms of a Servicing Agreement, dated as of
NOVEMBER 5,1999 between the Buyer and the Seller (the "Servicing Agreement"),
the Seller will service the Mortgage Loans for the Buyer; and

     WHEREAS, the Buyer has directed the Seller, and the Seller has agreed, to
deliver certain documents with respect to the Mortgage Loans subject to each
Transaction to the Custodian, and the Custodian has agreed to take and maintain
possession of such documents in accordance with the terms and conditions hereof;

     NOW, THEREFORE, in consideration of the mutual undertakings herein
expressed, the parties hereto agree as follows:

     1. All capitalized terms not otherwise defined herein have the respective
meanings set forth in the Repurchase Agreement.

     2. On or before the effective date for each Transaction (the "Purchase
Date"), the Seller shall deliver, or cause to be delivered, to the Custodian a
schedule of Mortgage Loans subject to such Transaction ("Mortgage Loan
Schedule"), and the Seller shall deliver, or shall cause to be delivered, and
shall release to the Custodian the following documents pertaining to each of the
Mortgage Loans identified in the Mortgage Loan Schedule, which documents the
Custodian shall hold for the benefit of the Buyer, its successors or assigns, as
the owner thereof:

          (i)  the original note or other evidence of indebtedness (the
               "Mortgage Note") of the obligor thereon (each such obligor, a
               "Mortgagor"), endorsed to the order of or assigned to Seller by
               the holder/payee thereof, without recourse, and endorsed by
               Seller, without recourse, in blank;

<PAGE>   86

         (ii)  the original mortgage, deed of trust or other instrument (the
               "Mortgage") creating a first lien on the underlying property
               securing the Mortgage Loan (the "Mortgaged Property"), naming
               Seller as the "mortgagee" or "beneficiary" thereof, and bearing
               on the face thereof the address of Seller, or, if the Mortgage
               does not name Seller as the mortgagee/beneficiary, the Mortgage,
               together with an instrument of assignment assigning the Mortgage,
               individually or together with other Mortgages, to Seller and
               bearing on the face thereof the address of Seller, and, in either
               case, bearing evidence that such instruments have been recorded
               in the appropriate jurisdiction where the Mortgaged Property is
               located (or, in lieu of the original of the Mortgage or the
               assignment thereof, a duplicate or conformed copy of the Mortgage
               or the instrument of assignment, if any, together with a
               certificate of either the closing attorney or an officer of the
               title insurer that issued the related title insurance policy, or
               a certificate of receipt from the recording office, certifying
               that such copy or copies represent true and correct copy(ies) of
               the original(s) and that such original(s) have been or are
               currently submitted to be recorded in the appropriate
               governmental recording office of the jurisdiction where the
               Mortgaged Property is located);

         (iii) an original assignment of Mortgage, in blank, which assignment
               shall be in form and substance acceptable for recording and, in
               the event that the Seller acquired the Mortgage Loan in a merger,
               the assignment must be by "[Seller], successor by merger to [name
               of predecessor]";

         (iv)  any intervening assignment of the Mortgage not included in (ii)
               above, including any warehousing assignment;

         (v)   any assumption, modification, extension or guaranty agreement;

         (vi)  Lender's title insurance policy, or, if such policy has not
               been issued, a written commitment or interim binder issued by the
               title insurance company evidencing that the required title
               insurance coverage is in effect and unconditionally guaranteeing
               the holder of the Mortgage Loan that the lender's title insurance
               policy will be issued;

         (vii) any instrument necessary to complete identification of any
               exception set forth in the exception schedule in the title
               insurance policy (e.g., map or plat, restrictions, easements,
               sewer agreements, home association declarations, etc.); and

<PAGE>   87

        (viii) if the Mortgage Note or Mortgage or any other material document
               or instrument relating to the Mortgage Loan has been signed by a
               person on behalf of the Mortgagor, the original power of attorney
               or other instrument that authorized and empowered such person to
               sign bearing evidence that such instrument has been recorded, if
               so required, in the appropriate jurisdiction where the Mortgaged
               Property is located (or, in lieu thereof, a duplicate or
               conformed copy of such instrument, together with a certificate of
               receipt from the recording office, certifying that such copy
               represents a true and complete copy of the original and that such
               original has been or is currently submitted to be recorded in the
               appropriate governmental recording office of the jurisdiction
               where the Mortgaged Property is located).

From time to time, the Seller shall forward to the Custodian additional original
documents evidencing an assumption or modification of a Mortgage Loan approved
by the Seller. All documents held by the Custodian as to each Mortgage Loan
pursuant to this Section 2 are referred to herein as the "Custodian's Mortgage
File". On the respective Purchase Date for each Transaction, the Seller shall
deliver to the Buyer a Certificate of the Seller, in the form attached hereto as
Exhibit One, with respect to all of the Mortgage Loans and related documents
described in this Section 2 sold to the Buyer on such Purchase Date in
connection with such Transaction.

        3. The Buyer hereby appoints the Custodian, in its independent corporate
capacity, as the custodian of the Buyer and any successor to or assignee of the
Buyer, and the Custodian hereby accepts and agrees to act as custodian for the
Buyer and any successor to or assignee of the Buyer in accordance with the
terms and conditions of this Agreement. With respect to each Custodian's
Mortgage File delivered to the Custodian, the Custodian is solely and
exclusively the custodian for the Buyer or its successor or assignee for all
purposes (including, but not limited to, the perfection of the security interest
of the Buyer in such Mortgage Loans to the extent that the Seller shall be
deemed to have pledged the Mortgage Loans to Buyer pursuant to Section 6 of the
Repurchase Agreement). The Custodian shall hold in its possession at 3 Park
Plaza 16th Floor, Irvine, California 92714, all Custodian's Mortgage Files
received by it from the Seller from time to time for the sole and exclusive use
and benefit of the Buyer and the Buyer's successors and assignees as provided
herein and, except as otherwise expressly provided herein, shall make
disposition thereof only in accordance with the written instructions of the
Buyer. The Custodian shall segregate and maintain continuous custody of all
documents constituting the Custodian's Mortgage Files received by it in secure
and fireproof facilities, all in accordance with customary standards for such
custody.

        4. When the Custodian has received from the Seller possession of each
Custodian's Mortgage File for the related Transaction, the Custodian shall
verify that:

     (a)  all documents required to be delivered to it pursuant to this
          Agreement are in the Custodian's possession;

     (b)  such documents have been reviewed by the Custodian and appear regular
          on their face and relate to the Mortgage Loans and neither the
          Mortgage Note, the: Mortgage nor the Assignment of Mortgage contains
          evidence of any claims, liens,

<PAGE>   88

         security interests, encumbrances or restrictions on transfer;

    (c)  based only on the Custodian's examination of the foregoing documents:

         (i)   the information set forth on the Mortgage Loan Schedule with
               respect to each Mortgage Loan accurately reflects the information
               contained in the documents contained in each Custodian's Mortgage
               File as to, (A) the name of the respective Mortgagor, (B) the
               address of the respective Mortgaged Property, (C) the original
               principal amount of the related Mortgage Note;

         (ii)  the Mortgage Note and the Mortgage each bears an original
               signature or signatures purporting to be the signature or
               signatures of the person or persons named as the maker and
               mortgagor or grantor or, in the case of copies of the Mortgage
               permitted under paragraph 2(a)(ii), that such copies bear a
               reproduction of such signature or signatures;

         (iii) the principal amount of the indebtedness secured by the Mortgage
               is identical to the original principal amount of the Mortgage
               Note;

         (iv)  if the Note does not name "[Seller]" as the holder or payee, the
               Mortgage Note bears original endorsements that complete the chain
               of ownership from the original holder or payee to "[Seller]"; and

         (v)   if the Mortgage does not name "[Seller]" as the mortgagee or
               beneficiary, the original of the Assignment of Mortgage and any
               intervening assignments of mortgage bear the original signature
               purporting to be the signature of the named mortgagee or
               beneficiary (and any other necessary party including subsequent
               assignors) or in the case of copies permitted under paragraph
               2(a)(ii), that such copies bear a reproduction of such signature
               or signatures and that the Assignment of Mortgage and any
               intervening assignments of mortgage complete the chain of title
               from the originator to "[Seller]";

    (d)  each Mortgage Note has been endorsed as noted in paragraph 2(a)(i)
         herein and each Assignment of Mortgage has been completed as noted in
         paragraph 2(a)(iii) herein; and

    (e)  the Lender's title insurance policy, or written commitment to issue or
         interim binder for such policy, is for not less than the original
         principal amount of the Mortgage Note and insures that the Mortgage
         constitutes a first lien, senior in priority to all other mortgages,
         deeds of trust, security interests and other contractual liens.

<PAGE>   89
In making such verification, the Custodian may rely conclusively on the Mortgage
Loan Schedule and the documents constituting the Custodian's Mortgage File, and
the Custodian shall have no obligation to, independently verify the correctness
of such Mortgage Loan Schedule or any document. Upon completing such
verification, the Custodian shall advise the Buyer of its receipt of all such
Custodian's Mortgage Files and shall forward to the Buyer on the Purchase Date a
trust receipt in the foam annexed hereto as Exhibit Two (the "Trust Receipt")
with respect to the Mortgage Loans (other than any Mortgage Loan paid in full or
any Mortgage Loan specifically identified on the Schedule of Exceptions attached
to the Trust Receipt as not covered by such Trust Receipt) listed on the
Mortgage Loan Schedule for such Transaction. If the Custodian determines from
such verification that any discrepancy or deficiency exists with respect to a
Custodian's Mortgage File, the Custodian shall note such discrepancy on the
Schedule of Exceptions attached to the Trust Receipt, and, upon the request of
the Seller, the Custodian shall deliver a copy of the Schedule of Exceptions to
the Seller. During the life the Mortgage Loans, in the event the Custodian
discover any defect with respect to the Custodian's Mortgage File, the Custodian
shall give written specification of such defect to the Seller and the Buyer.
Except as specifically provided above, the Custodian shall be under no duty to
review, inspect or examine such documents to determine that any of them are
enforceable or appropriate for their prescribed purpose.

     5. Each Trust Receipt, upon initial issuance or reissuance upon transfer,
shall be dated the date of issuance thereof and shall evidence the receipt and
possession of the Custodian's Mortgage File by the Custodian on behalf of the
holder of the Trust Receipt and the holder's right to possess the Custodian's
Mortgage File with respect to which that Trust Receipt is issued. Prior to due
surrender of a Trust Receipt pursuant to Paragraph 6, the Custodian shall treat
the individual person or entity in whose name any Trust Receipt is registered as
the individual person or entity entitled to possession of the Custodian's
Mortgage File evidenced by such Trust Receipt for all purposes whatsoever,
subject to the terms of this Agreement, and the Custodian shall not be affected
by notice of any facts to the contrary. No Trust Receipt shall be valid for any
purpose unless substantially in the form set forth in Exhibit Two to this
Agreement and executed by manual signature of an authorized officer of the
Custodian, and such signature upon any Trust Receipt shall be conclusive
evidence, and the only evidence, that such Trust Receipt has been duly delivered
under this Agreement. Trust Receipts bearing the manual signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Custodian shall bind the Custodian, notwithstanding
that such individuals or any of them have ceased to be so authorized prior to
the delivery of those Trust Receipts. Each Trust Receipt shall have attached
thereto a schedule, in the format of the Mortgage Loan Schedule, identifying the
Mortgage Loans for which the Trust Receipt is issued. The Custodian shall keep a
register in which the Custodian shall provide for the registration of transfers
of Trust, Receipts as herein provided and in which it shall record the name and
address of the person to whom each Trust Receipt is issued. In the event that
the Trust Receipt is lost, stolen, mutilated or destroyed, the Custodian shall
issue a new Trust Receipt to the registered holder of such lost, stolen,
mutilated or destroyed Trust Receipt upon receiving a reasonably satisfactory
commitment from such holder to indemnify the Custodian and hold the Custodian
harmless in respect of the issuance of such new Trust Receipt.

<PAGE>   90

     6. Upon receipt of written directions from the Buyer at any time, and upon
the prior tender by the Buyer of the applicable Trust Receipt, the Custodian
shall deliver all or any portion of the Custodian's Mortgage Files held by it to
the Buyer, or to such other party as the Buyer may direct, and to the place
indicated in any such written direction from the Buyer and shall deliver to the
Buyer a new Trust Receipt with respect to the Custodian's Mortgage Files
retained by the Custodian. Upon receipt by the Custodian of written notification
from the Buyer that the Buyer has sold all or a portion of the Mortgage Loans,
which notification shall state the name and address of the purchaser and the
date of sale and shall be accompanied by the original Trust Receipt or Trust
Receipts for such Mortgage Loans delivered to the Buyer, the Custodian shall
change its records to reflect that such purchaser is the owner of such Mortgage
Loans and the related Custodian's Mortgage Files and shall immediately, upon the
direction of the Buyer, either deliver the applicable Custodian's Mortgage Files
to such purchaser or issue a Trust Receipt in the name of such purchaser. The
Custodian shall then deliver to the Buyer a new Trust Receipt reflecting all
Mortgage Loans evidenced by the surrendered Trust Receipts with respect to which
the Custodian still holds the related Custodian's Mortgage Files on behalf of
the Buyer. The Buyer shall deliver to the Seller a copy of any written requests
made pursuant to this Paragraph 6. Every Trust Receipt presented or surrendered
for transfer shall be duly endorsed by the holder thereof, or be accompanied by
a written instrument of transfer, duly executed by the holder thereof and such
holder's prospective transferee. No service charge against the presenter of a
Trust Receipt shall be made for any registration or transfer of any Trust
Receipt, but the Custodian may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
of any Trust Receipt, which shall be paid by the transferee. Each Trust Receipt
surrendered for registration of transfer shall be canceled by the Custodian. Any
purchaser of a Mortgage Loan shall succeed to all the rights and obligations of
the Buyer under this Agreement with respect to such Mortgage Loan and the
related Custodian's Mortgage File.

     7. In the event that any specific Mortgage Loan document is required by the
Seller, in its capacity as the servicer pursuant to the Servicing Agreement,
either (a) because such Mortgage Loan has been paid in full and is to be
released by the Seller, in its capacity as the servicer pursuant to the
Servicing Agreement, to the maker of the respective Mortgage Note, or (b) to
facilitate enforcement and collection procedures with respect to any Mortgage
Note, the Seller, in its capacity as the servicer pursuant to the Servicing
Agreement, shall send to the Custodian a certificate in the form of Exhibit
Three. The Custodian shall promptly send a copy of such certificate to the
Buyer, and in the event that Buyer consents to the release of such documents,
the Buyer will return such copy to the Custodian with such consent indicated
thereon. Notwithstanding anything to the contrary herein, the Custodian shall in
no event release to the Buyer any documents contained in a Custodian's Mortgage
File without the written authorization of the Buyer. Any Trust Receipt issued
while any documents are outstanding with the Seller, in its capacity as the
servicer pursuant to the Servicing Agreement, shall reflect that the Custodian
holds such documents as custodian for the Buyer pursuant to this Agreement, but
the Schedule of Exceptions shall specify that the Custodian has released such
documents to the Seller, in its capacity as the servicer pursuant to the
Servicing Agreement, pursuant to this paragraph. All documents so released to
the Seller, in its capacity as the servicer pursuant to the Servicing Agreement,
shall be held by it in trust for the benefit of the Buyer in accordance with
Paragraph 9(b) of the Repurchase Agreement. In the case of documents released
pursuant to clause (b) above, the Seller shall return to the Custodian the
Custodian's Mortgage File, or such other documents that have been released to
the Seller, when the Seller's need therefor in connection with such enforcement
or collection

<PAGE>   91

procedures no longer exists, unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certification to this effect from the Seller to
the Custodian in the form annexed hereto as Exhibit Three, the Seller's receipt
shall be released by the Custodian to the Seller, and the Custodian shall
thereupon reflect any such liquidation on the list of Mortgage Loans maintained
by it pursuant to Paragraph 13 of this Agreement.

     8. It is understood that Custodian will charge such fees for its services
under this Agreement as are set forth in a separate agreement between the
Custodian and the Seller, the payment of which, together with the Custodian's
expenses in connection herewith, shall be solely the obligation of the Seller.

     9. The Buyer, with or without cause, may (i) require the Custodian to
complete the endorsements on the Mortgage Notes, and to complete the Assignments
of Mortgages and/or (ii) upon thirty (30) days written notice, remove and
discharge the Custodian, or any successor Custodian thereafter appointed, from
the performance of its duties under this Agreement by written notice from the
Buyer to the Custodian or the successor Custodian, with a copy of such notice to
the Seller. Having given notice of such removal, the Buyer shall promptly
appoint by written instrument a successor Custodian to act on behalf of the
Buyer. One original counterpart of such instrument shall be delivered to the
Buyer, one copy shall be delivered to the Seller and one copy shall be delivered
to the successor Custodian. In the event of any such removal, the Custodian
shall promptly transfer to the successor Custodian, as directed by the Buyer,
all of the Custodian's Mortgage Files being administered under this Agreement
and shall complete the Assignments of Mortgage and endorse the Mortgage Notes
to the successor Custodian, if, and in the form, directed by the Buyer. In the
event of any such appointment, the Seller shall not be responsible for any fees
of the successor Custodian in excess of the fees formerly paid to the Custodian.

     10. The Custodian may terminate its obligations under this Agreement upon
at least sixty (60) days written notice to the Seller and the Buyer. In the
event of such termination, the Seller shall appoint a successor Custodian,
subject to approval by the Buyer. If the Seller is unable to appoint a successor
Custodian within a reasonable period of time, the Buyer shall appoint a
successor Custodian. The payment of such successor Custodian's fees and expenses
shall be the sole responsibility of the Buyer. Upon such appointment, the
Custodian shall promptly transfer to the successor Custodian, as directed, all
Custodian's Mortgage Files being administered under this Agreement and shall
complete the Assignments of Mortgage and endorse the Mortgage Notes as, and if,
requested by the Buyer. The Custodian's obligations hereunder shall not in any
event be terminated until the Custodian's Mortgage Files have been delivered to
the successor Custodian or to the Buyer.

     11. Upon reasonable prior written notice to the Custodian, the Buyer and
its agents, accountants, attorneys and auditors will be permitted during normal
business hours to examine the Custodian's Mortgage Files.

     12. The Custodian shall, at its own expense, maintain at all times during
the existence of this Agreement and keep in full force and effect (a) fidelity
insurance, (b) theft of documents insurance, (c) forgery insurance and (d)
insurance covering the risk of errors and omissions. All such insurance shall be
in amounts, with standard coverage and subject to deductibles, as are customary
for insurance typically maintained by banks that act as custodian in similar
transactions. A certificate of the respective insurer as to each such policy
shall be furnished to the Buyer, upon request,

<PAGE>   92

containing the insured's statement or endorsement that such insurance shall not
terminate prior to receipt by the Buyer, by registered mail, of ten (10) days
notice thereof.

         13. Upon the request of the Buyer at any time, the Custodian shall
provide to the Buyer a list of all the Mortgage Loans for which Custodian holds
a Custodian's Mortgage File pursuant to this Agreement and a list of documents
missing from each Custodian's Mortgage File. Such list may be in the form of a
copy of the Mortgage Loan Schedules with manual deletions to specifically denote
any Mortgage Loans paid of liquidated or repurchased since the date of this
Agreement.

         14. Upon the request of the Buyer and at the cost and expense of the
Buyer, the Custodian shall provide the Buyer with copies of the Mortgage Notes,
Mortgages, Assignments of Mortgage and other documents contained in the
Custodian's Mortgage File relating to one or more of the Mortgage Loans.

         15. By execution of this Agreement, the Custodian warrants that it does
not currently hold, and during the existence of this Agreement shall not hold,
any adverse interest, by way of security or otherwise, in any Mortgage Loan, and
hereby waives and releases any such interest that it may have in any Mortgage
Loan as of the date hereof. Notwithstanding any other provisions of this
Agreement and without limiting the generality of the foregoing, the Custodian
shall not at any time exercise or seek to enforce any claim, right or remedy,
including any statutory or common law rights of set-off, if any, that the
Custodian may otherwise have against all or any part of a Custodian's Mortgage
File, Mortgage Loan or proceeds of either.

         15A. The Custodian represents and warrants to, and covenants that:

          (a) The Custodian is (i) a New York corporation duly organized,
     validly existing and in good standing under the laws of New York and (ii)
     duly qualified and in good standing and in possession of all requisite
     authority, power, licenses, permits and franchises in order to execute,
     deliver and comply with its obligations under the terms of this Agreement;

          (b) The execution, delivery and performance of this Agreement have
     been duly authorized by all necessary corporate action and the execution
     and delivery of this Agreement by the Custodian in the manner contemplated
     herein and the performance of and compliance with the terms hereof by it
     will not (i) violate, contravene or create a default under any applicable
     laws, licenses or permits to the best of its knowledge, or (ii) violate,
     contravene or create a default under any charter document or bylaw of the
     Custodian or, to the best of the Custodian's knowledge, any contract,
     agreement or instrument to which the Custodian or by which any of its
     property may be bound and will not result in the creation of any lien,
     security interest or other charge or encumbrance upon or with respect to
     any of its property;

          (c) The execution and delivery of this Agreement by the Custodian and
     the performance of and compliance with its obligations and covenants
     hereunder do not require the consent or approval of any governmental
     authority, or, if such consent or approval is required, it has be obtained;
     and

<PAGE>   93

          (d) This Agreement, and each Trust Receipt issued hereunder, when
     executed and delivered by the Custodian will constitute valid, legal and
     binding obligations of the Custodian, enforceable against the Custodian in
     accordance with their respective terms, except (i) as the enforcement
     thereof may be limited by applicable debtor relief laws and (ii) that
     certain equitable remedies may not be available regardless of whether
     enforcement is sought in equity or law.

         16. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered to the other
party at the address shown on the first page hereon or such other address as may
hereafter be furnished to the other party by like notice.

         17. Each authorized representative (an "Authorized Representative") of
the Buyer is authorized to give and receive notices, requests and instructions
and to deliver certificates and documents in connection with this Agreement on
behalf of the Buyer and the specimen signature for each such Authorized
Representative of the Buyer initially authorized hereunder is set forth on
Exhibit Four hereof. From time to time, the Buyer shall deliver to the Custodian
a revised Exhibit Four, reflecting changes in the information previously given,
but the Custodian shall be entitled to rely conclusively on the last Exhibit
Four until receipt of a superseding Exhibit Four. Each Authorized Representative
of the Seller is authorized to give and receive notices, requests and
instructions and to deliver certificates and documents in connection with this
Agreement on behalf of the Seller and the specimen signature for each such
Authorized Representative of the Seller initially authorized hereunder is set
forth on Exhibit Five hereof. From time to time, the Seller shall deliver to the
Custodian a revised Exhibit Five, reflecting changes in the information
previously given, but the Custodian shall be entitled to rely conclusively on
the last Exhibit Five until receipt of a superseding Exhibit Five.

         18. The Seller shall indemnify and hold the Custodian and its
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against it or them hereunder and under the
Repurchase Agreement.

         19. The duties and obligations of the Custodian shall be determined
solely by the express provisions of this Agreement. The Custodian shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement or as set forth in a written amendment
to this Agreement executed by the parties hereto or their successors or assigns.
The Custodian shall not assign, transfer, pledge or grant a security interest in
any of its rights, benefits or privileges hereunder, nor shall the Custodian
delegate or appoint any other person or entity to perform or carry out any of
its duties, responsibilities or obligations under this Agreement. Any act or
instrument purporting to effect any such assignment, transfer, pledge, grant,
delegation or appointment shall be void. No representations, warranties,
covenants (other than those expressly made by the Custodian in this Agreement)
or obligations of the Custodian shall be implied with respect to this Agreement
or the Custodian's services hereunder. Without limiting the generality of the
foregoing, the Custodian:

<PAGE>   94

         (a) shall have no duties or obligations other than those specifically
set forth herein or as may subsequently be agreed in writing by the parties
hereto and shall use the same degree of care and skill as is reasonably expected
of financial institutions acting in comparable capacities;

         (b) will be regarded as making no representations and having no
responsibilities (except as expressly set forth herein) as to the validity,
sufficiency, value, genuineness, ownership or transferability of any
certificates or Mortgage Loans represented thereby, and will not be required to
and will not make any representations as to the validity, value or genuineness
of Mortgage Loans;

         (c) shall not be obligated to take any legal action hereunder that
might in its judgment involve any expense or liability unless it has been
furnished with reasonable indemnity;

         (d) may rely on and shall be protected in acting in good faith upon any
certificate, instrument, opinion, notice, letter, telegram or other document, or
any security, delivered to it and in good faith believed by it to be genuine and
to have been signed by the proper party or parties;

         (e) may rely on and shall be protected in acting in good faith upon the
written instructions of the Seller and such employees and representatives of the
Seller as the Seller may hereinafter designate in writing;

         (f) may consult counsel satisfactory to it (including counsel for the
Seller and the Buyer) and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered, or
omitted by it hereunder in good faith and in furtherance of its duties
hereunder, in accordance with the opinion of such counsel;

         (g) shall not be liable for any error of judgment, or for any act done
or step taken or omitted by it, in good faith, or for any mistake of fact or
law, or for anything that it may do or refrain from doing in connection
therewith, except in the case of negligent performance or omission; and

         (h) may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or through agents or attorneys, provided,
however, that the execution of such trusts or powers by any such agents or
attorneys shall not diminish, or relieve the Custodian for, responsibility
therefor to the same degree as if the Custodian itself had executed such trusts
or powers.

     20. For the purpose of facilitating the execution of this Agreement and for
other purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, and together
shall constitute and be one and the same instrument.

     21. The Buyer shall have the right, without the consent of the Custodian or
the Seller, to assign, in whole or in part, its interests under this Agreement
in all of the Mortgage Loans subject to any Transaction, and designate any
person to exercise any rights of the Buyer, hereunder, and the assignee or
designee shall accede to the rights and obligations hereunder of the Buyer with
respect to such Mortgage Loans. All references to the Buyer shall be deemed to
include its assignee or designee. In connection with any such assignment, the
Custodian may require that arrangements reasonably satisfactory to it be made
for the exchange of previously executed and outstanding Trust Receipts for a
Trust Receipt representing such assignment.

<PAGE>   95

         22. This Agreement shall terminate with respect to any Transaction upon
the earlier of (a) the repurchase of all of the Mortgage Loans subject to such
Transaction by the Seller pursuant to the Repurchase Agreement, which repurchase
shall be evidenced by a notice from the Buyer to the Custodian stating that
beneficial ownership of the Mortgage Loans has been transferred to the Seller,
or (b) the Buyer's election to obtain possession of the Mortgage Loans subject
to a Transaction following an Event of Default (as defined in the Repurchase
Agreement) by the Seller, which election shall be evidenced by a notice from the
Buyer to the Custodian stating that the Seller is in default under the
Repurchase Agreement, a copy of which notice shall be simultaneously delivered
to the Seller, and delivery of the Custodian's Mortgage Files pursuant to the
Buyer's instructions.

     23. Neither the failure nor any delay on the part of any party hereto to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or any other right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power or privilege with respect to any occurrence be construed as
a waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the party or parties purportedly granting such waiver.

     24. The provisions of this Agreement are independent of and severable from
each other, and no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other provision or
provisions may be invalid or unenforceable in whole or in part.

         25. This Agreement constitutes the entire agreement and understanding
of the parties with respect to the matters and transactions contemplated by this
Agreement and supersedes any prior agreement and understandings with respect to
those matters and transactions.

         26. This Agreement shall be construed in accordance with the laws of
the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

         27. This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by any party at the closing, and (c)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. Any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

         28. The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.

<PAGE>   96

         29. For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

          (a)  the terms defined in this Agreement have the meanings assigned to
                    them in this Agreement and include the plural as well as the
                    singular, and the use of any gender herein shall be deemed
                    to include the other gender;

          (b)  accounting terms not otherwise defined herein have the meanings
                    assigned to them in accordance with generally accepted
                    accounting principles;

          (c)  references herein to "Articles", "Sections", "Subsections",
                    "Paragraphs", and other subdivisions without reference to a
                    document are to designated Articles, Sections, Subsections,
                    Paragraphs and other subdivisions of this Agreement;

          (d)  a reference to a Subsection without further reference to a
                    Section is a reference to such Subsection as contained in
                    the same Section in which the reference appears, and this
                    rule shall also apply to Paragraphs and other subdivisions;

          (e)  the words "herein", "hereof", "hereunder" and other words of
                    similar import refer to this Agreement as a whole and not to
                    any particular provision; and

          (f)  the term "include" or "including" shall mean without limitation
                    by reason of enumeration.

<PAGE>   97

     IN WITNESS WHEREOF, Seller, Buyer and Custodian have caused their names to
be signed hereto by their respective officers thereunto duly authorized, all as
of the date first written above.

                                STARNET FINANCIAL, INC. AND STARNET MORTGAGE.
                                   as Seller

                                By: /s/ KENNETH F. URBANUS
                                   ---------------------------------------------
                                Name:   Kenneth F. Urbanus
                                     -------------------------------------------
                                Title:  President
                                      ------------------------------------------

                                IMPAC WAREHOUSE LENDING GROUP as Buyer
                                By:
                                   ---------------------------------------------
                                Name:
                                     -------------------------------------------
                                Title:
                                      ------------------------------------------

                                BANKERS TRUST COMPANY,
                                as Custodian

                                By:
                                   ---------------------------------------------
                                Name:
                                     -------------------------------------------
                                Title:
                                      ------------------------------------------
<PAGE>   98
                                  EXHIBIT ONE

                             CERTIFICATE OF SELLER

         I, _________________, hereby certify that I am the duly elected
___________________ of STARNET FINANCIAL, INC. AND STARNET MORTGAGE. (the
"Seller"). All terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms in the Custody Agreement, dated as of NOVEMBER 5,
1999 among the Seller, Impac Warehouse Lending Group (the "Buyer"), Bankers
Trust Company, as custodian.

     The undersigned hereby represents, warrants and covenants on behalf of the
Seller that, pursuant to the sale of the mortgage loans set forth on Annex 1
hereto (the "Mortgage Loans") by the Seller to Buyer pursuant to a Master
Repurchase Agreement, dated as of NOVEMBER 5, 1999 between the Seller and the
Buyer, the Seller sells, transfers, assigns, sets over and otherwise conveys to
Buyer all of its right (including the power to convey title thereto), title and
interest in and to each document held by or on behalf of the Seller with respect
to each Mortgage Loan. Any such documents that have not been delivered to the
Custodian shall be held by the Seller, in trust for the benefit of the Buyer and
shall be delivered to the Buyer or its assignee or designee upon demand.

     IN WITNESS WHEREOF, I have hereunto signed my name, this ___ day of
______________ 1999.

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

<PAGE>   99

                                    ANNEX 1

                             MORTGAGE LOAN SCHEDULE

<PAGE>   100

                                    ANNEX 2

(1)  the original note or other evidence of indebtedness (the "Mortgage Note")
     of the obligor thereon (each such obligor, a "Mortgagor").

(2)  the original mortgage, deed of trust or other instrument (the "Mortgage")
     creating a first lien on the underlying property securing the Mortgage Loan
     (the "Mortgaged Property").

(3)  the original assignment of the Mortgage.

(4)  any intervening assignment of the Mortgage, including any warehousing
     assignment.

(5)  any assumption, modification, extension or guaranty agreement.

(6)  any lender's title insurance policy and any written commitment or interim
     binder issued by the title insurance company evidencing that the required
     title insurance coverage is in effect and unconditionally guaranteeing the
     holder of the Mortgage Loan that the lender's title insurance policy will
     be issued.

(7)  any instrument necessary to complete identification of any exception set
     forth in the exception schedule in the title insurance policy (e.g., map or
     plat, restrictions, easements, sewer agreements, home association
     declarations, etc.).

(8)  any survey of the Mortgaged Property.

(9)  any hazard insurance policy or flood insurance policy, with extended
     coverage of the hazard insurance policy.

(10) any Mortgage Loan closing statement (Form HUD-1) and any other truth-in-
     lending, real estate settlement procedure forms or other disclosure
     statements required by law.

(11) any residential loan application.

(12) any verification of employment and income.

(13) any verification of acceptable evidence of source and amount of
     downpayment.

(14) any credit report on the borrower under the Mortgage Loan.

(15) any residential appraisal report.

(16) any photograph of the Mortgaged Property.

<PAGE>   101

(17) any power of attorney or other instrument that authorized and empowered any
     person other than the Mortgagor to sign the Mortgage Note or Mortgage or
     any other material document or instrument relating to the Mortgage Loan not
     signed by the Mortgagor.

(18) any tax receipts, insurance premiums, ledger sheets, payment records,
     insurance claim files and correspondence, current and historical
     computerized data files, underwriting standards used for origination and
     all other papers and records developed or originated by the Seller, any
     servicer or others, required to document the Mortgage Loan or to service
     the Mortgage Loan.

<PAGE>   102

                                  EXHIBIT TWO

                                 TRUST RECEIPT

                       TRANSACTION NUMBER _______________

                                             _____________, 199_

To:  [BUYER]

     Reference is made to the Custody Agreement among Impac Warehouse Lending
Group (the "Buyer"),____________________________ (the "Seller") and
_____________________, as custodian (the "Custodian") dated a of ________ 1,
1999 (the "Custody Agreement"), pursuant to which the Seller has delivered to
the Custodian, with respect to each Mortgage Loan set forth on Schedule A hereto
(the "Mortgage Loan Schedule"), the documents set forth in Section 2 of the
Custody Agreement.

     With respect to each Mortgage Loan listed on the Mortgage Loan Schedule and
except as otherwise noted on the Schedule of Exceptions set forth on Schedule B
hereto, the Custodian confirms that (1) the Custodian has received all of the
documents required to be delivered to the Custodian pursuant to Section 2 of the
Custody Agreement, (2) the Custodian has reviewed each Custodian's Mortgage File
in accordance with Section 4 of the Custody Agreement, and the documents
contained in each Custodian's Mortgage File conform to the requirements set
forth in Section 4 of the Custody Agreement, and (3) the Custodian has physical
possession of the documents in each Custodian's Mortgage File and will continue
to hold each Custodian's Mortgage File as bailee of and agent for, and for the
sole and exclusive use and benefit of, the addressee of this Trust Receipt,
until such addressee directs the Custodian to the contrary in accordance with
the Custody Agreement.

     All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Custody Agreement.

                                   (CUSTODIAN]

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

<PAGE>   103

                                   SCHEDULE A

                             MORTGAGE LOAN SCHEDULE

<PAGE>   104

                                   SCHEDULE B

                             SCHEDULE OF EXCEPTIONS

<PAGE>   105

                                 EXHIBIT THREE

                        REQUEST FOR RELEASE OF DOCUMENTS

To: [CUSTODIAN]

          Re:  Custody Agreement, dated as of ________ 1, 1999, among Impac
               Warehouse Lending Group ("Buyer"), ________ ("Seller"), ________
               and as custodian ("Custodian")

          In connection with the administration of the Mortgage Loans held by
you as Custodian for the Buyer pursuant to the above-captioned Custody
Agreement, we request the release, and hereby acknowledge receipt, of the
(Custodian's Mortgage File/[specify documents]) for the Mortgage Loan described
below, for the reason indicated.

Mortgage Loan Number:

Reason for Requesting Documents (check one)

        1.     Mortgage Loan Paid in Full
--
               (Seller, in its capacity as servicer, hereby certifies that all
               amounts received in connection therewith will be held in trust
               for the Buyer as provided in the Master Repurchase Agreement,
               dated as of ________ 1, 199_, between the Seller and the Buyer
               (the "Repurchase Agreement").

        2.     Mortgage Loan Liquidated by ________
--
               (Seller, in its capacity as servicer, hereby certifies that all
               proceeds of foreclosure, insurance or other liquidation have been
               finally received and will be held in trust for the Buyer as
               provided in the Repurchase Agreement.)

        3.     Mortgage Loan in Foreclosure.
--
        4.     Other (explain)
--                            -----------------------

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

<PAGE>   106

         If box 1 or 2 above is checked, and if all or part of the Custodian's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.

         If box 3 or 4 above is checked, upon our return of all of the above
documents to you as Custodian, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

                              ---------------------------------------
                                     as Servicer

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

Release of documents consented to:

[BUYER]

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

                              Documents returned
                              to Custodian:

                              [CUSTODIAN]

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

<PAGE>   107

                                  EXHIBIT FOUR

                        AUTHORIZED OFFICERS OF THE BUYER

          Name                                    Specimen Signature

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

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

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

<PAGE>   108

                                  EXHIBIT FIVE

                       AUTHORIZED OFFICERS OF THE SELLER

          Name                                    Specimen Signature

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

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

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

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