Document:

LIGHTPATH TECHNOLOGIES, INC.
                         DIRECTOR COMPENSATION AGREEMENT

     THIS  DIRECTOR  COMPENSATION  AGREEMENT  is entered into as of November 11,
1999, by and between LIGHTPATH  TECHNOLOGIES,  INC., a Delaware corporation (the
"Company"), and ROBERT RIPP ("Ripp").

                                    RECITALS:

     A. Subject to obtaining all necessary  approvals and compliance  with other
legal  requirements,  Ripp has agreed to serve as Chairman  ("Chairman")  of the
Board of Directors  ("Board") of the Company for a period of 24 months after the
date of his initial election to the Board.

     B. Ripp and the Company  wish to agree to the amount of  compensation  that
Ripp shall be entitled to receive if certain events occur during the period that
he is Chairman.

                                   AGREEMENT:

     NOW THEREFORE,  in consideration of the foregoing and other  consideration,
the receipt and sufficiency of which is hereby acknowledged,  the parties hereto
hereby agree as follows:

     1. BONUS AMOUNT.  In the event of a Company Sale (as defined  below) within
the 24-month  period  after  Ripp's  election to the Board and during the period
that Ripp is serving as Chairman, Ripp shall be entitled to a bonus ("Bonus") in
an amount equal to (a) 5% of the Company Sale Price (as defined below) in excess
of $200 million,  up to a maximum of $2.5  million,  plus (b) 10% of the Company
Sale Price in excess of $250 million.

     2. BONUS  PAYMENT.  The  Company  shall pay the Bonus to Ripp  within  five
Business  Days (as defined  below)  after the Company Sale with respect to which
the Bonus is  payable;  PROVIDED,  HOWEVER,  that,  in the event  holders of the
Company's  Class A Common  Stock  ("Common  Stock")  receive  securities  and/or
obligations of another corporation in lieu of or in addition to cash pursuant to
such Company Sale, the Company shall be entitled to pay some or all of the Bonus
by delivering a portion of such securities and/or obligations to Ripp;  PROVIDED
FURTHER, HOWEVER, that, in the event a portion of such consideration consists of
cash, the portion of cash paid to Ripp in  satisfaction of the Bonus shall be no
less than the portion of cash received by the  shareholders  of the Common Stock
pursuant to such Company Sale.

     3. SHARE GRANT SUBSTITUTION.  In the event that the closing price ("Closing
Price") of Common Stock (as  published in The Wall Street  Journal)  exceeds $20
per share for 45 consecutive  Business Days,  Ripp shall be entitled to elect to
receive a grant of Common Stock in accordance with the terms of this Paragraph 3
in satisfaction  of any obligations of the Company  pursuant to Paragraphs 1 and

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2. Ripp shall be entitled to exercise such election by delivering written notice
thereof to the Company. Within 30 days after receipt of such notice, the Company
shall issue to Ripp the number of shares of Common Stock equal to (a) the amount
of the Bonus that would be payable  pursuant  to  Paragraph  1 in the event of a
Company  Sale for an  amount  per  share of Common  Stock  equal to the  average
("Average  Closing Price") of the Closing Prices for the ten Business Days prior
to the date that Ripp  delivers his election  notice to the Company  pursuant to
this Paragraph 3, divided by (b) the Average Closing Price. Any shares issued to
Ripp pursuant to this Paragraph 3 shall be registered and tradable within twelve
months after the date of such issue.  For example,  if the Average Closing Price
of $25 per share  would yield a Bonus of $2.5  million,  the number of shares of
Common  Stock  issuable to Ripp under this  Paragraph 3 would be 100,000  (i.e.,
$2.5 million, divided by $25).

     4. OTHER COMPENSATION.  The compensation  provided to Ripp pursuant to this
Agreement shall be in addition to any  compensation  that Ripp shall be entitled
to as a director of the Company.

     5.  TERMINATION.  This Agreement shall terminate and be of no further force
and effect from and after the date that Ripp is no longer serving as Chairman.

     6. DEFINITIONS

          "Business Day" means a day of the year on which banks are not required
or authorized to close in Albuquerque, New Mexico.

          "Company Sale" shall mean the occurrence of any of the following:

               (a) a  reorganization,  merger,  consolidation or other corporate
     transaction  involving the Company (a  "Transaction"),  in each case,  with
     respect to which the stockholders of the Company  immediately prior to such
     Transaction do not, immediately after the Transaction,  own more than fifty
     (50%) of the  combined  voting  power of the  Company or other  corporation
     resulting from such Transaction;

               (b) all or  substantially  all of the assets of the  Company  are
     sold, liquidated or distributed; or

               (c) there is  "change  in  control"  of the  Company  within  the
     meaning of Section 280G of the Internal  Revenue Code of 1986,  as amended,
     and the regulations thereunder.

          "Company  Sale  Price"  means,  with  respect to a Company  Sale,  the
aggregate amount of cash and fair market value of securities and/or  obligations
that the shareholders of the Company are entitled to receive in return for their
shares  pursuant to such Company  Sale.  This  determination  shall be made on a
fully-diluted  basis assuming all options,  warrants and other rights to acquire
shares of the Company's voting securities  (excluding any such securities issued
directly in  connection  with any Company  Sale) are  exercised and the exercise
price is paid as of the date of such Company Sale.

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     7. MISCELLANEOUS

          (a) ASSIGNMENT;  SUCCESSORS. This Agreement is personal to each of the
parties  hereto.  No party may  assign or  delegate  any  rights or  obligations
hereunder without first obtaining the written consent of the other party hereto,
except that this Agreement shall be binding upon and inure to the benefit of any
successor  corporation to the Company. This Agreement shall inure to the benefit
of and be  enforceable  by  Ripp  and his  personal  or  legal  representatives,
executors,   administrators,   successors,  heirs,  distributees,   devises  and
legatees.

          (b) NOTICES. For the purpose of this Agreement,  notices and all other
communications  provided for in this Agreement  shall be in writing and shall be
deemed  to have been  duly  given  when  delivered  or  mailed by United  States
certified  or  registered  mail,  return  receipt  requested,  postage  prepaid,
addressed  to the  respective  addresses  set  forth  below,  or to  such  other
addresses  as  either  party  may have  furnished  to the  other in  writing  in
accordance  herewith,  except  that  notice  of a  change  of  address  shall be
effective only upon actual receipt:

          To the Company:    LightPath Technologies, Inc.
                             6820 Academy Parkway East NE,
                             Albuquerque, New Mexico 87109
                             Attn: President

          To Ripp:           21 Old Logging Road
                             Bedford, New York 10506

          (c)  AMENDMENTS  OR  ADDITIONS.  No  amendments  or  additions to this
Agreement  shall be binding  unless in writing and signed by each of the parties
hereto.

          (d) PARAGRAPH HEADINGS.  The paragraph headings used in this Agreement
are  included  solely  for  convenience  and  shall  not  affect,  or be used in
connection with, the interpretation of this Agreement.

          (e)  SEVERABILITY.  The provisions of this  Agreement  shall be deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

          (f) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which  shall be  deemed to be an  original  but all of which  together  shall
constitute one and the same instrument.

          (g)  ARBITRATION.  Any  dispute  or  controversy  arising  under or in
connection  with this Agreement  shall be settled  exclusively  by  arbitration,
conducted before a panel of three (3) arbitrators in Albuquerque,  New Mexico in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.  The  decision  of the  arbitrators  shall be final and  binding  on the
parties,  and  judgment  may be entered on the  arbitrators'  award in any court
having  jurisdiction.  The costs and expenses of such arbitration shall be borne
in accordance with the  determination  of the arbitrators.  Notwithstanding  any

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other provision of this Agreement,  if any termination of this Agreement becomes
subject to arbitration,  the Company shall not be required to pay any amounts to
Ripp  until  the  completion  of  the  arbitration  and  the  rendering  of  the
arbitrators'  decision. The amounts, if any, determined by the arbitrators to be
owed by the  Company  to Ripp  shall be paid  within  five (5)  days  after  the
decision by the arbitrators is rendered.

          (h) GOVERNING  LAW. The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be  governed  by the laws of the State of
Delaware without regard to its conflicts of law principles.

          (i) TAXES.  Any payments  provided for hereunder  shall be paid net of
any  applicable  withholding or other  employment  taxes required under federal,
state or local law.

     IN WITNESS  WHEREOF,  this  Agreement  is executed as of the date first set
forth above.

                                        LIGHTPATH TECHNOLOGIES, INC.,
                                        a Delaware corporation

                                        /s/ Donald Lawson
                                        ----------------------------------------
                                        By:  Donald E. Lawson
                                        Its: President

                                        ROBERT RIPP

                                        /s/ Robert Ripp
                                        ----------------------------------------

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<PAGE>
                  AMENDMENT TO DIRECTOR COMPENSATION AGREEMENT

     This Amendment to Director Compensation  Agreement is made as of the 11 day
of April, 2000 between LightPath Technologies, Inc., a Delaware corporation (the
"Company") and Robert Ripp ("Ripp").

                                    RECITALS

A.   Ripp and the Company  entered  into a Director  Compensation  Agreement  on
     November 11, 1999.

B.   Ripp and the  Company  wish to modify the  sections  in the  aforementioned
     agreement  relating  to  Bonus  Amount  and  Share  Grant  Substitution  in
     accordance with the terms set forth herein.

                                    AGREEMENT

Now, therefore, the parties agree as follows:

1.   The parties acknowledge the truth of the Recitals.

2.   Paragraph 1 Bonus  Amount (b) is modified to read "(b) 3.25% of the Company
     Sale Price in excess of $250  million." The existing  language,"(b)  10% of
     the  Company  Sale  Price in  excess  of $250  million."  is  deleted.  The
     definition of Company Sale Price as described in paragraph 6 is modified to
     include the  following  sentences.  "For the purposes of this  contract the
     Company  Sale Price  will be  calculated  using the  current  market  price
     multiplied  by the number of fully  diluted  shares  assuming  all dilutive
     options,  warrants  and other  rights to  acquire  shares of the  Company's
     voting  securities  (  although  such  number  shall not  exceed 24 million
     shares).  The  restriction of 24 million shares shall be increased pro rata
     in the event of a stock dividend or stock split."

3.   Paragraph 3 of the Director Compensation Agreement is eliminated.

4.   The other terms of the  Director  Compensation  Agreement  shall  remain in
     effect,  except as modified  by this  Amendment  to  Director  Compensation
     Agreement.

In Witness  Whereof,  this  Amendment  to  Director  Compensation  Agreement  is
executed as of the date first set forth above.

                                        LightPath Technologies, Inc.
                                        a Delaware corporation

                                        /s/ Donald Lawson
                                        ----------------------------------------
                                        Donald Lawson
                                        President

                                        /s/ Robert Ripp
                                        ----------------------------------------
                                        Robert Ripp

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<PAGE>
                          LIGHTPATH TECHNOLOGIES, INC.
                               STOCK OPTION GRANT
                                 APRIL 11, 2000

Robert Ripp (optionee) will receive two  nonqualified  stock options.  The first
option is for one  million  shares  with an  exercise  price of $6,  vesting  on
December 1, 2001. The second option is for 500,000 shares with an exercise price
equal to the market  price on the grant date  vesting on December 1, 2001.  Both
options will have immediate  vesting upon death,  full disability or termination
of optionee.  The options will be issued under the terms of a nonqualified stock
option  which  would be  registered  via Form S3 on the next such  filing by the
Company or 120 days.  The stock option shares shall be increased pro rata in the
event of a stock dividend or stock split.

The Board of  Directors  approved  these  options on April 11, 2000 with a grant
price equal to the closing price on April 12, 2000.

                                        /s/ Donald Lawson
                                        ----------------------------------------
                                        Donald Lawson
                                        President

                                        /s/ Robert Ripp
                                        ----------------------------------------
                                        Robert Ripp

                                        6<PAGE>   1
                                                                    EXHIBIT 10.1

                    AMENDED AND RESTATED MANAGEMENT AGREEMENT

        AMENDED AND RESTATED MANAGEMENT AGREEMENT, dated as of May 19, 2000, by
and among SPECIALTY MORTGAGE TRUST, INC., a Maryland corporation (the
"Company"), and GONZO FINANCIAL, INC., a Nevada corporation (the "Manager"),
with respect to the following:

                                  WITNESSETH:

        WHEREAS, the Company intends to invest in mortgage loans and expects to
continue to qualify for the tax benefits accorded by Sections 856 through 860 of
the Internal Revenue Code of 1986, as amended; and

        WHEREAS, the Company desires to retain the Manager to manage the
investments of the Company and to perform certain administrative services for
the Company in the manner and on the terms set forth herein;

        NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:

        SECTION 1. DEFINITIONS. Terms used but not defined herein shall have the
respective meanings assigned them below:

        (a) "Affiliate" means, with respect to any person, another person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with such person.

        (b) "Code" means the Internal Revenue Code of 1986, as amended.

        (c) "Governing Instruments" means the articles or certificate of
incorporation or other charter, as the case may be, and bylaws of the Company
and its subsidiaries.

        (d) "Mortgage loans" means loans secured by mortgages or deeds of trust
on real estate properties.

        (e) "REIT" means Real Estate Investment Trust as defined under Section
856 of the Code.

        (f) "REIT Provisions of the Code" means Sections 856 through 860 of the
Code.

        (g) "Unaffiliated Directors" shall mean those members of the Board of
Directors of the Company who are not officers or employees of the Company nor
officers, directors or Affiliates of the Manager.

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<PAGE>   2
        SECTION 2. GENERAL DUTIES OF THE MANAGER.

        (a) Administrative Services Provided by the Manager. The Manager will be
responsible for the day-to-day operations of the Company and will perform such
services and activities relating to the assets and operations of the Company as
may be appropriate, including:

                (i) representing the Company in connection with the origination
        or purchase of mortgage loans;

                (ii) in accordance with the directions of the Board of
        Directors, investing or reinvesting any money of the Company;

               (iii) furnishing reports and statistical and economic research to
        the Company regarding the Company's estate lending activities and the
        performance of its portfolio of mortgage loans;

               (iv) administering the day-to-day operations of the Company and
        performing administrative functions necessary in the management of the
        Company, including the collection of revenues, the payment of the
        Company's expenses, debts and obligations and the maintenance of
        appropriate computer services to perform such administrative functions;

                (v) counseling the Company in connection with policy decisions
        to be made by the Board of Directors;

                (vi) assisting the Company in its use of leverage to finance
        mortgage loan acquisitions;

                (vii) overseeing the servicing of the Company's mortgage loans;

                (viii) establishing underwriting, appraisal and quality control
        procedures for the mortgage loans of the Company;

                (ix) conducting a legal document review of each mortgage loan
        acquired to verify the accuracy and completeness of the information
        contained in the mortgage loans, security instruments and other
        pertinent documents in the mortgage file;

                (x) providing the Company with data processing, legal and
        administrative services to the extent required to implement the business
        strategy of the Company;

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<PAGE>   3
                (xi) providing all actions necessary for compliance by the
        Company with all federal, state and local regulatory requirements
        applicable to the Company in respect of its business activities,
        including preparing or causing to be prepared all financial statements
        required under applicable regulations and contractual undertakings;

               (xii) providing all actions necessary to enable the Company to
        make required federal, state and local tax filings and reports and
        generally enable the Company to maintain its status as a REIT, including
        soliciting stockholders for required information to the extent required
        by the REIT Provisions of the Code;

               (xiii) communicating on behalf of the Company with the
        stockholders of the Company as required to satisfy any reporting
        requirements and to maintain effective relations with such stockholders;
        and

               (xiv) performing such other services as may be required from time
        to time for management and other activities relating to the assets of
        the Company as the Board of Directors shall reasonably request or the
        Manager shall deem appropriate under the particular circumstances.

        (b) Administrative Services Provided by Subcontractors.  The
Manager may enter into subcontracts with other parties to provide any
such services to the Company.

        (c) Cooperation of the Company. The Company agrees to take all actions
reasonably required to permit the Manager to carry out its duties and
obligations hereunder. The Company further agrees to make available all
materials reasonably required to enable the Manager to satisfy its obligations
to deliver financial statements and any other information or reports with
respect to the Company pursuant to the Securities Purchase Agreement.

        SECTION 3. ADDITIONAL ACTIVITIES OF MANAGER. Nothing herein shall
prevent the Manager or any of its officers, directors, employees or Affiliates
from engaging in other businesses or from rendering services of any kind to any
other person or entity, including the purchase of, or advisory service to others
investing in, any type of real estate investment, including investments which
meet the principal investment objectives of the Company, except that the Manager
and its officers, directors and employees shall not provide any such services to
any mortgage REIT other than the Company or another REIT sponsored by the
Manager or its Affiliates which has operating policies and strategies different
in one or more material respects from those of the Company, as confirmed by a
majority of the Unaffiliated Directors. Directors, officers, employees and
agents of the Manager or Affiliates of the

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Manager may serve as trustees, directors, officers, employees, agents, nominees
or signatories for the Company or any subsidiary of the Company, to the extent
permitted by their Governing Instruments, as from time to time amended, or by
any resolutions duly adopted by the Board of Directors pursuant to the Company's
Governing Instruments.

        SECTION 4. BANK ACCOUNTS. At the direction of the Board of Directors,
the Manager may establish and maintain one or more bank accounts in the name of
the Company or any subsidiary of the Company, and may collect and deposit into
any such account or accounts, and disburse funds from any such account or
accounts, under such terms and conditions as the Board of Directors may approve;
and the Manager shall from time to time render appropriate accountings of such
collections and payments to the Board of Directors and, upon request, to the
auditors of the Company or any subsidiary of the Company.

        SECTION 5. RECORDS. The Manager shall maintain appropriate books of
account and records relating to services performed hereunder, and such books of
account and records shall be accessible for inspection by representatives of the
Company or any subsidiary of the Company at any time during normal business
hours.

        SECTION 6. COMPENSATION OF THE MANAGER.

        (a) Base Management Fee. The Manager will receive a management fee
consisting of:

                (i) For mortgage loans or the portion thereof purchased by the
        Company, the mortgage loan origination fees or points, usually charged
        to a borrower for and upon the origination, extension or financing of a
        mortgage loan, up to 2.5% of the loan balance (i.e., 2.5 points) with
        any additional fees or points paid to the benefit of the Company. The
        amount of this fee is determined by competitive conditions, may vary and
        may have a direct effect on the interest rate a borrower is willing to
        pay the Company.

                (ii) A fee for loan servicing, equal to one-half of one percent
        of the total mortgage loan portfolio held by the Company. Payment of
        this fee, in effect, lowers the yield retained by the Company on its
        loans.

                (iii) All late payment charges from payments made by borrowers.

        (b) Incentive Compensation. The Company will also pay to the Manager as
incentive compensation for each fiscal quarter, an amount equal to 50% of the
net income of the Company, before

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deduction of such incentive compensation, in excess of the annualized return to
the Company equal to 12%. The incentive compensation calculation and payment
will be made quarterly in arrears. The term "return to the Company" is
calculated for the quarter by dividing the Company's Taxable Income for the
quarter by the Net Worth for the quarter. For such calculations, the "Taxable
Income" of the Company means the taxable income of the Company before the
Manager's incentive compensation, the deduction for dividends paid and net
operating loss deductions arising from losses in prior periods. A deduction for
the Company's interest expenses for borrowed money is taken when calculating
Taxable Income. "Net Worth" for any period means the arithmetic average of the
sum of the gross proceeds from any offering of its equity securities by the
Company, after deducting expenses and costs relating to the offering (not to
exceed $150,000 in this Offering), plus the Company's beginning retained
earnings (without taking into account any losses incurred in prior periods and
excluding amounts reflecting taxable income to be distributed as dividends and
amounts reflecting valuation allowance adjustments). The definition "Return to
the Company" is used only for purposes of calculating the incentive compensation
payable, and is not related to the actual distributions received by
stockholders. The incentive compensation payments to the Manager will be made
before any income distributions are made to the stockholders of the Company.

        (c) Payment. The Manager's base fee shall be calculated by the Manager
within 15 days after the end of each month, and such calculation shall be
promptly delivered to the Company. The Company is obligated to pay the amount of
the final base fee in excess of the amount paid to Manager at the beginning of
the month pursuant to the Manager's good faith estimate within 30 days after the
end of each month. The Company shall pay the incentive fee with respect to each
fiscal quarter within 15 days following the delivery to the Company of the
Manager's written statement setting forth the computation of the incentive fee
for such quarter. The Manager shall re-compute the quarterly incentive fee
within 45 days after the end of each fiscal year, and any required adjustments
shall be paid by the Company or the Manager within 15 days after the delivery of
the Manager's written computation to the Company.

        SECTION 7. EXPENSES OF THE COMPANY.

        (a) Expenses Borne by the Manager. Without regard to the compensation
received hereunder by the Manager, the Manager shall bear the following
expenses:

                (i) Employment expenses of the personnel employed by the
        Manager, including, but not limited to, salaries, wages, payroll taxes,
        and the cost of employee benefit plans;

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                (ii) Rent, telephone, utilities, office furniture, equipment and
        machinery (including computers, to the extent utilized) and other office
        expenses (such as asset/liability software, modeling software and other
        software and hardware) of the Manager needed in order to perform its
        duties as set forth herein;

                (iii) Bookkeeping fees and expenses including any costs of
        computer services, other than in connection with communications to
        security holders of the Company;

                (iv) Miscellaneous administrative expenses incurred in
        supervising and monitoring the Company's investments or any subsidiary's
        investments or relating to performance by the Manager of its functions
        hereunder;

                (v) Fees and expenses paid to advisors and independent
        contractors, consultants, managers, and other agents engaged by the
        Manager for the account of the Company or any subsidiary of the Company;

                (vi) Expenses connected with the acquisition of the Company's
        assets and mortgage loans;

                (vii) Expenses related to the servicing and subservicing of
        mortgage loans; and

                (viii) Travel and related expenses of personnel of the Manager
        when attending meetings or performing other business activities which
        relate to the Company or any subsidiary of the Company.

        (b) Expenses Borne by the Company. The Company or any subsidiary of the
Company shall pay all of its expenses except those which are the specific
responsibility of the Manager pursuant to this Agreement; and, without limiting
the generality of the foregoing, it is specifically agreed that the following
expenses of the Company or any subsidiary of the Company shall not be paid by
the Manager:

                (i) The cost of the borrowed money;

                (ii) All taxes applicable to the Company or any subsidiary of
        the Company including interest and penalties thereon;

                (iii) Legal, accounting and auditing fees and expenses relating
        to the Company's or any subsidiary's operations;

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<PAGE>   7
                (iv) Expenses relating to any office or office facilities
        maintained by the Company or any subsidiary of the Company exclusive of
        the office of the Manager;

                (v) Expenses connected with the ownership and disposition of the
        Company's or any subsidiary's assets, including, but not limited to,
        costs of foreclosure, maintenance, repair and improvement of property
        and premiums for insurance on property owned by the Company or any
        subsidiary of the Company;

                (vi) Legal, audit, accounting, underwriting, brokerage, listing,
        rating agency, registration and other fees, printing, engraving and
        other expenses and taxes incurred in connection with the issuance,
        distribution, transfer, registration and stock exchange listing of the
        Company's or any subsidiary's equity securities or debt securities;

                (vii) The expenses of organizing, modifying or dissolving the
        Company or any subsidiary of the Company;

                (viii) All insurance costs incurred in connection with the
        Company or any subsidiary of the Company;

                (ix) Expenses connected with payments of dividends or interest
        or distributions in any other form made or caused to be made by the
        Board of Directors to holders of the securities of the Company or any
        subsidiary of the Company;

                (x) Expenses connected with the structuring of the issuance of
        mortgage securities by the Company or any subsidiary of the Company,
        including but not limited to trustee's fees, insurance premiums, and
        costs of required credit enhancements;

                (xi) Travel and related expenses of the directors of the Company
        when attending meetings or performing other business activities which
        relate to the Company;

                (xii) All expenses of third parties connected with
        communications to holders of equity securities or debt securities of the
        Company or any subsidiary of the Company and the other bookkeeping and
        clerical work necessary in maintaining relations with holders of such
        securities and in complying with the continuous reporting and other
        requirements of governmental bodies or agencies, including any costs of
        computer services in connection with this function, the cost of printing
        and mailing certificates for such securities and proxy solicitation
        materials and reports to holders of the Company's or any subsidiary's
        securities and reports to third parties required under any indenture to

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<PAGE>   8
which the Company or any subsidiary of the Company is a party;

               (xiii) Transfer agent's and registrar's fees and charges;

               (xiv) Fees and expenses paid to trustees or directors of the
        Company or any subsidiary of the Company, the cost of director and
        officer liability insurance and premiums for fidelity and errors and
        omissions insurance;

               (xv) Any judgment rendered against the Company or any subsidiary
        of the Company, or against any trustee or director of the Company or any
        subsidiary of the Company in his capacity as such for which the Company
        or any subsidiary of the Company is required to indemnify such trustee
        or director, or any court or governmental agency; and

               (xvi) Other miscellaneous expenses of the Company or any
        subsidiary of the Company which are not specified expenses of the
        Manager under this Agreement.

        SECTION 8. LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION.

        The Manager assumes no responsibility under this Agreement other than to
render the services called for hereunder in good faith and shall not be
responsible for any action of the Board of Directors in following or declining
to follow any advice or recommendations of the Manager. The Manager, its
directors, officers, stockholders and employees will not be liable to the
Company, any subsidiary of the Company, its subsidiary's stockholders or the
Unaffiliated Directors for any acts or omissions by the Manager, its directors,
officers, stockholders or employees under or in connection with this Agreement,
except by reason of acts or omissions constituting bad faith, willful
misconduct, gross negligence or reckless disregard of their duties under this
Agreement. The Company and its subsidiaries shall reimburse, indemnify and hold
harmless the Manager, its directors, officers, stockholders and employees of and
from any and all expenses, losses, damages, liabilities, demands, charges and
claims of any nature whatsoever (including, without limitation, attorneys' fees)
in respect of or arising from any acts or omissions of the Manager, its
stockholders, directors, officers and employees made in good faith in the
performance of the Manager's duties under this Agreement and not constituting
bad faith, willful misconduct, gross negligence or reckless disregard of its
duties.

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        SECTION 9. TERM; TERMINATION FEE.

        (a) This Agreement shall commence on the date of the first closing of
the Company's private placement and shall continue in force until the third
anniversary of such date, and thereafter it shall be renewed automatically for
successive one-year periods unless a notice of non-renewal is timely delivered
as described below.

        (b) In addition to such further liability or obligation of either party
to the other due upon termination of this Agreement, if this Agreement is
terminated without cause (as "cause" is defined below), the Company shall pay
the Manager a termination fee in an amount equal to the greater of (i) the fair
market value of this Agreement determined by an independent appraisal or (ii)
four percent (4%) of the mortgage loan portfolio of the Company. Such appraisal
shall be conducted by a nationally-recognized appraisal firm mutually agreed
upon by the parties and the costs of such appraisal shall be borne equally by
the parties. If the parties are unable to agree upon such appraisal firm within
30 days following delivery of the notice of non-renewal, then each party shall,
as soon as reasonably practicable, but in no event more than 45 days following
delivery of the notice of non-renewal, choose a nationally-recognized
independent appraisal firm to conduct an appraisal. In such event, (i) the fair
market value amount shall be deemed to be the average of the appraisals as
conducted by each party's chosen appraiser and (ii) each party shall pay the
costs of its appraiser so chosen. Any appraisal conducted hereunder shall be
performed no later than 45 days following selection of the appraiser or
appraisers. The termination fee payable by the Company shall be paid within 30
days following receipt of the final appraisal to be obtained hereunder.

        SECTION 10. TERMINATION BY COMPANY FOR CAUSE. At the option of the
Company, this Agreement shall be and become terminated upon written notice of
termination to the Manager if any of the following events shall occur
(termination for any of such events shall constitute termination for "cause"):

        (a) if a majority of the Unaffiliated Directors determines that the
Manager has violated this Agreement in any material respect and, after notice of
such violation, the Manager has failed to cure such violation within 60 days; or

        (b) there is entered an order for relief or similar decree or order with
respect to the Manager by a court having competent jurisdiction in an
involuntary case under the federal bankruptcy laws as now or hereafter
constituted or under any applicable federal or state bankruptcy, insolvency or
other similar laws; or the Manager (i) ceases, or admits in writing its
inability, to pay

                                       9
<PAGE>   10
its debts as they become due and payable, or makes a general assignment for the
benefit of, or enters into any composition or arrangement with, creditors; (ii)
applies for, or consents (by admission of material allegations of a petition or
otherwise) to the appointment of a receiver, trustee, assignee, custodian,
liquidator or sequestrator (or other similar official) of the Manager or of any
substantial part of its properties or assets, or authorizes such an application
or consent, or proceedings seeking such appointment are commenced without such
authorization, consent or application against the Manager and continue
undismissed for 60 days; (iii) authorizes or files a voluntary petition in
bankruptcy, or applies for or consents (by admission of material allegations of
a petition or otherwise) to the application of any bankruptcy, reorganization,
arrangement, readjustment of debt, insolvency, dissolution, liquidation or other
similar law of any jurisdiction, or authorizes such application or consent, or
proceedings to such end are instituted against the Manager without such
authorization, application or consent and are approved as properly instituted
and remain undismissed for 60 days or result in adjudication of bankruptcy or
insolvency; or (iv) permits or suffers all or any substantial part of its
properties or assets to be sequestered or attached by court order and the order
remains undismissed for 60 days. If any of the events specified above shall
occur, the Manager shall give prompt written notice thereof to the Board of
Directors upon the happening of such event.

        SECTION 11. ACTION UPON TERMINATION. From and after the effective date
of termination of this Agreement, except as otherwise specified in of this
Agreement, the Manager shall not be entitled to compensation for further
services hereunder, but shall be paid all compensation accruing to the date of
termination, including accrued and unpaid incentive compensation. Upon such
termination, the Manager shall forthwith:

        (a) after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled, pay over to the Company or any subsidiary
of the Company all money collected and held for the account of the Company or
any subsidiary of the Company pursuant to this Agreement;

        (b) deliver to the Board of Directors a full accounting, including a
statement showing all payments collected by it and a statement of all money held
by it, covering the period following the date of the last accounting furnished
to the Board of Directors with respect to the Company or any subsidiary of the
Company; and

        (c) deliver to the Board of Directors all property and documents of the
Company or any subsidiary of the Company then in the custody of the Manager.

                                       10
<PAGE>   11
        SECTION 12. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST. The
Manager agrees that any money or other property of the Company or any subsidiary
of the Company held by the Manager under this Agreement shall be held by the
Manager as custodian for the Company or such subsidiary, and the Manager's
records shall be appropriately marked clearly to reflect the ownership of such
money or other property by the Company or such subsidiary. Upon the receipt by
the Manager of a written request signed by a duly authorized officer of the
Company requesting the Manager to release to the Company or any subsidiary of
the Company any money or other property then held by the Manager for the account
of the Company or any subsidiary of the Company under this Agreement, the
Manager shall release such money or other property to the Company or such
subsidiary of the Company within a reasonable period of time, but in no event
later than the later to occur of (i) 30 days following such request and (ii) the
earliest time following such request that remittance will not cause the Manager
to violate any law or breach any agreement to which it or the Company is a
party. The Manager shall not be liable to the Company, any subsidiaries of the
Company, the unaffiliated Directors, or the Company's or its subsidiaries'
stockholders for any acts performed or omissions to act by the Company or any
subsidiary of the Company in connection with the money or other property
released to the Company or any subsidiary of the Company and not constituting
bad faith, willful misconduct, gross negligence or reckless disregard of its
duties. The Company and any subsidiary of the Company shall indemnify the
Manager, its directors, officers, stockholders and employees against any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever, which arise in connection with the Manager's release of such
money or other property to the Company or any subsidiary of the Company unless
such expenses, losses, damages, liabilities, demands, charges and claims arise
in connection with acts or omissions which constitute bad faith, willful
misconduct, gross negligence or reckless disregard of its duties.
Indemnification pursuant to this provision shall be in addition to any right of
the Manager to indemnification under this Agreement.

        SECTION 13. REPRESENTATIONS AND WARRANTIES.

        (a) The Company hereby represents and warrants to the Manager
as follows:

                (i) The Company is duly organized, validly existing and in good
        standing under the laws of Maryland, has the power to own its assets and
        to transact the business in which it is now engaged and is duly
        qualified and in good standing under the laws of each jurisdiction where
        its ownership or lease of property or the conduct of its business
        requires such qualification, except for failures to be so qualified,
        authorized or licensed that could not in the aggregate have a

                                       11
<PAGE>   12
        material adverse effect on the business operations, assets or financial
        condition of the Company and its subsidiaries, taken as a whole. The
        Company does not do business under any fictitious business name.

                (ii) The Company has the power and authority to execute, deliver
        and perform this Agreement and all obligations required hereunder and
        has taken all necessary action to authorize this Agreement on the terms
        and conditions hereof and the execution, delivery and performance of
        this Agreement and all obligations required hereunder. Except as shall
        have been obtained, no consent of any other person including, without
        limitation, stockholders and creditors of the Company, and no license,
        permit, approval or authorization of, exemption by, notice or report to,
        or registration, filing or declaration with, any governmental authority
        is required by the Company in connection with this Agreement or the
        execution, delivery, performance, validity or enforceability of this
        Agreement and all obligations required hereunder. This Agreement has
        been, and each instrument or document required hereunder will be,
        executed and delivered by a duly authorized officer of the Company, and
        this Agreement constitutes, and each instrument or document required
        hereunder when executed and delivered hereunder will constitute, the
        legally valid and binding obligation of the Company enforceable against
        the Company in accordance with its terms.

                (iii) The execution, delivery and performance of this Agreement
        and the documents or instruments required hereunder will not violate any
        provision of any existing law or regulation binding on the Company, or
        any order, judgment, award or decree of any court, arbitrator or
        governmental authority binding on the Company, or the governing
        instruments of, or any securities issued by, the Company or of any
        mortgage, indenture, lease, contract or other agreement, instrument or
        undertaking to which the Company is a party or by which the Company or
        any of its assets may be bound, the violation of which would have a
        material adverse effect on the business operations, assets or financial
        condition of the Company and its subsidiaries, taken as a whole, and
        will not result in, or require, the creation or imposition of any lien
        on any of its property, assets or revenues pursuant to the provisions of
        any such mortgage, indenture, lease, contract or other agreement,
        instrument or undertaking (other than the pledge of amounts payable to
        the Manager hereunder to secure the Manager's obligations to its
        lenders).

                                       12
<PAGE>   13
        (b) The Manager hereby represents and warrants to the Company as
follows:

               (i) The Manager is duly organized, validly existing and in good
        standing under the laws of Nevada, has the corporate power to own its
        assets and to transact the business in which it is now engaged and is
        duly qualified to do business and is in good standing under the laws of
        each jurisdiction where its ownership or lease of property or the
        conduct of its business requires such qualification, except for failures
        to be so qualified, authorized or licensed that could not in the
        aggregate have a material adverse effect on the business operations,
        assets or financial condition of the Manager and its subsidiaries, taken
        as a whole. The Manager does not do business under any fictitious
        business name.

               (ii) The Manager has the corporate power and authority to
        execute, deliver and perform this Agreement and all obligations required
        hereunder and has taken all necessary corporate action to authorize this
        Agreement on the terms and conditions hereof and the execution, delivery
        and performance of this Agreement and all obligations required
        hereunder. Except as shall have been obtained, no consent of any other
        person including, without limitation, stockholders and creditors of the
        Manager, and no license, permit, approval or authorization of, exemption
        by, notice or report to, or registration, filing or declaration with,
        any governmental authority is required by the Manager in connection with
        this Agreement or the execution, delivery, performance, validity or
        enforceability of this Agreement and all obligations required hereunder.
        This Agreement has been and each instrument or document required
        hereunder will be executed and delivered by a duly authorized officer of
        the Manager, and this Agreement constitutes, and each instrument or
        document required hereunder when executed and delivered hereunder will
        constitute, the legally valid and binding obligation of the Manager
        enforceable against the Manager in accordance with its terms.

                (iii) The execution, delivery and performance of this Agreement
        and the documents or instruments required hereunder, will not violate
        any provision of any existing law or regulation binding on the Manager,
        or any order, judgment, award or decree of any court, arbitrator or
        governmental authority binding on the Manager, or the governing
        instruments of, or any securities issued by, the Manager or of any
        mortgage, indenture, lease, contract or other agreement, instrument or
        undertaking to which the Manager is a party or by which the Manager or
        any of its assets may be bound, the violation of which would have a
        material adverse effect on the business operations, assets, or financial

                                       13
<PAGE>   14
        condition of the Manager and its subsidiaries, taken as a whole, and
        will not result in, or require, the creation or imposition of any lien
        on any of its property, assets or revenues pursuant to the provisions of
        any such mortgage indenture, lease, contract or other agreement,
        instrument or undertaking.

        SECTION 14. NOTICES. Unless expressly provided otherwise herein, all
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received when (1) delivered by hand, (2) otherwise delivered against
receipt therefore or (3) upon actual receipt of registered or certified mail,
postage prepaid. The parties may deliver to each other notice by electronically
transmitted facsimile copies ("FAX") provided that such FAX notice is followed
within twenty-four (24) hours by any type of notice otherwise provided for in
this paragraph. Any notice shall be duly addressed to the parties as follows:

        (a) If to the Company:

               6160 Plumas Street
               Reno, Nevada  89509
               Attn: Board of Directors
               Fax:  (702) 826-0166

        (b) If to the Manager:

               6160 Plumas Street
               Reno, Nevada  89509
               Attn: Nello Gonfiantini
               Fax:  (702) 826-0166

        Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address.

        SECTION 15. ASSIGNMENTS. Except as set forth in this section, this
Agreement shall terminate automatically in the event of its assignment, in whole
or in part, by the Manager (other than the pledge of amounts payable to the
Manager hereunder to secure the Manager's obligations to its lenders), unless
such assignment is consented to in writing by the Company with the consent of a
majority of the Unaffiliated Directors. Any such assignment shall bind the
assignee hereunder in the same manner as the Manager is bound. In addition, the
assignee shall execute and deliver to the Company a counterpart of this
Agreement naming such assignee as Manager. This Agreement shall not be assigned
by the Company without the prior written consent of the Manager, except in the
case of assignment by the Company to a REIT or other organization which is a
successor (by merger, consolidation or purchase of

                                       14
<PAGE>   15
assets) to the Company, in which case such successor organization shall be bound
hereunder and by the terms of such assignment in the same manner as the Company
is bound hereunder.

        SECTION 16. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.

        SECTION 17. CONTROLLING LAW. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement shall be governed
by and construed, interpreted and enforced in accordance with the laws of the
State of Nevada.

        SECTION 18. WAIVERS. Neither the failure nor any delay on the part of a
party 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 of any 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 asserted to have granted such waiver.

        SECTION 19. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts.

        SECTION 20. PROVISIONS SEPARABLE. The provisions of this Agreement are
independent of and separable 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 or others of them may be invalid or unenforceable in whole or in part.

                          [ Signature Page to Follow ]

                                       15
<PAGE>   16

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

        SPECIALTY MORTGAGE TRUST, INC.

        /s/ Nello Gonfiantini III
        --------------------------------------
        By: Nello Gonfiantini III

        Its: President

        GONZO FINANCIAL, INC.

        /s/ Grace C. Caudill
        --------------------------------------
        By: Grace C. Caudill

        Its: Corporate Secretary & Manager

                                       16

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