THORNBURG MORTGAGE ASSET CORPORATION
                              AMENDED AND RESTATED
                             1992 STOCK OPTION PLAN



                   as Amended September 15, 1995; May 2, 1996



                      THORNBURG MORTGAGE ASSET CORPORATION
                              AMENDED AND RESTATED
                             1992 STOCK OPTION PLAN
                 (as Amended September 15, 1995 and May 2, 1996)

         1. PURPOSE. The Plan is intended to provide incentive to key employees,
officers,  directors and others expected to provide significant  services to the
Corporation,  including the employees, officers and directors of the Manager, to
encourage  proprietary  interest  in the  Corporation,  to  encourage  such  key
employees to remain in the employ of the Corporation and the Manager, to attract
new  employees  with  outstanding  qualifications,   and  to  afford  additional
incentive to others to increase their efforts in providing  significant services
to the Corporation.

         2.       DEFINITIONS.

         (a)      "Board" shall mean the Board of Directors of the Corporation.

         (b)  "Class  I  Participant"   shall  mean  the  any  director  of  the
Corporation  who is also appointed to serve on the Committee and who at the time
of  his   appointment   qualifies  as  a   "disinterested   person"  under  Rule
16b-3(c)(2)(i)  promulgated  under  the  Securities  Exchange  Act of  1934,  as
amended.  This Plan is intended to provide option grants to Class I Participants
pursuant to the formula set forth in Section  7(a) and thereby to permit Class I
Participants to act as disinterested  persons with respect to grants to Class II
Participants.

         (c)    "Class II Participant"  shall mean all Eligible Persons, except
the Class I Participants.

         (d)    "Code" shall mean the Internal Revenue Code of 1986, as amended.

         (e)    "Committee" shall mean the committee appointed by the Board in
accordance with Section 4 of the Plan.

         (f)    "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Corporation.

         (g)    "Corporation" shall mean Thornburg Mortgage Asset Corporation,
a Maryland corporation.

         (h)  "Disability"  shall mean the condition of an Employee or member of
the Board who is unable to engage in any substantial  gainful activity by reason
of any  medically  determinable  physical  or  mental  impairment  which  can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.

         (i) "Eligible Persons" shall mean officers,  directors and employees of
the Corporation or the Manager and other persons expected to provide significant
services to the Corporation. For purposes of this Plan, a director (other than a
member of the Committee) or a consultant, vendor, customer, or other provider of
significant  services to the Corporation shall be deemed to be an Employee,  and
will be eligible to receive  Non-statutory  Stock Options only after finding the
value of the services  rendered or to be rendered to the Corporation is at least
equal to the value of the options being granted.

         (j)  "Employee"  shall mean an individual  who is employed  (within the
meaning of Code Section 3401 and the regulations  thereunder) by the Corporation
or the Manager.

         (k)  "Exercise  Price" shall mean the price per Share of Common  Stock,
determined by the Board or the Committee, at which an Option may exercised.



         (l)  "Fair Market Value" shall mean the value of one (1) Share of
Common Stock, determined as follows:


                (1)  If the  Shares  are  traded on an  exchange,  the price at
which  Shares  traded at the close of business on the date of valuation;

                 (2) If the Shares are  traded  over-the-counter  on the NASDAQ
System, the closing price if one is available,  or the mean between thebid and
asked  prices on said  System at the close of  business  on the date of 
valuation; and

                 (3) If neither (1) nor (2)  applies,  the fair market value as
determined  by  the  Board  or  the  Committee in good faith.Such determination
shall be conclusive and binding on all persons.

         (m)  "Incentive Stock Option" shall mean an option described in Section
422(b) of the Code.

         (n)  "Manager" shall mean Thornburg Mortgage Advisory Corporation,
a Delaware corporation.

         (o)  "Non-statutory Stock Option" shall mean an option not described in
Section 422(b) or 423(b) of the Code.

         (p)  "Option" shall mean any stock granted pursuant to the Plan.

         (q)  "Optionee" shall mean any Eligible Person who has received an 
Option.

         (r)  "Plan" shall mean the Thornburg  Mortgage Asset  Corporation 1992
Stock Option Plan, as it may be amended from time to time.

         (s) "Purchase  Price" shall mean the Exercise Price times the number of
Shares with respect to which an Option is exercised.

         (t) "Retirement" shall mean the voluntary  termination of employment by
an Employee upon the attainment of age sixty-five (65) and the completion of not
less than twenty (20) years of service with the  Corporation,  any Subsidiary or
the Manager.

         (u) "Share" shall mean one (1) share of Common Stock,  adjusted in 
accordance with Section 10 of the Plan (if applicable).

         (v)  "Subsidiary"  shall mean any  corporation  at least fifty  percent
(50%) of the total combined voting power of which is owned by the Corporation or
by another Subsidiary.

         (w)   "Termination  of  Employment"   shall  mean  the  time  when  the
employee-employer  relationship  or  directorship  between the  Optionee and the
Corporation is terminated for any reason,  with or without cause,  including but
not limited to any termination by resignation,  discharge,  death or retirement;
provided,  however,  Termination  of Employment  shall not include a termination
where there is a simultaneous  reemployment of the Optionee by the  Corporation.
The Committee,  in its absolute  discretion,  shall  determine the effect of all
matters and questions  relating to Termination of Employment,  including but not
limited to the question of whether any  Termination  of Employment was for cause
and  all  questions  of  whether   particular   leaves  of  absence   constitute
Terminations of Employment.  With respect to Incentive Stock Options, a leave of
absence shall constitute a Termination of Employment if, and to the extent that,
such  leave  of  absence  interrupts  employment  for the  purposes  of  Section
222(a)(2) of the Code and the then  applicable  regulations  and revenue rulings
thereunder.

         3.  EFFECTIVE  DATE. The Plan was adopted by the Board on September 29,
1992,  subject to the approval by the Corporation's  shareholders.  The Plan was
submitted to shareholders  for their approval within twelve months after receipt
of Board approval.  The effective date of the Plan shall be deemed to be 
September 29, 1993.

         4. ADMINISTRATION. The Plan shall be administered by a Committee of the
Board  which  shall  consist  of two or more  members  of the Board each of whom
qualify  as  a  "disinterested   person"  as  defined  in  Rule   16b-3(c)(2)(i)
promulgated  under the  Securities  and  Exchange  Act of 1934.  The Board shall
appoint one of the members of the  Committee as Chairman of the  Committee.  The
Committee shall hold meetings at such times and places as it may determine. Acts
of a majority of the  Committee,  or acts reduced to or approved in writing by a
majority  of the  members  of the  Committee,  shall  be the  valid  acts of the
Committee.  The Committee  shall from time to time at its discretion  select the
Class II  Participants  who are to be granted  Options,  determine the number of
Shares to be optioned to each Class II  Participant  and designate  such Options
such as Incentive Stock Options or Non-statutory  Stock Options,  except that no
Incentive Stock Option may be granted to a non-Employee of the Corporation.  The
interpretation and construction by the Committee of any provision of the Plan or
of any Option  granted  thereunder  shall be final.  No member of the  Committee
shall be liable for any action or determination  made in good faith with respect
to the Plan or any Option granted thereunder.

         5.     PARTICIPATION.

         (a)    Eligibility.  Only Eligible Persons shall be eligible to receive
grants of Options under the Plan.

         (b) Limitation of Ownership. No options shall be granted under the Plan
to any person who would after such grant  beneficially own more than 9.8% of the
outstanding shares of Common Stock of the Corporation.

         (c) Stock  Ownership.  For purposes of (b) above, in determining  stock
ownership an Employee shall be considered as owning the stock owned, directly or
indirectly,  by or for his  brothers,  sisters,  spouses,  ancestors  and lineal
descendants.  Stock  owned,  directly or  indirectly,  by or for a  corporation,
partnership,  estate or trust shall be considered as being owned proportionately
by or for its  shareholders,  partners or  beneficiaries.  Stock with respect to
which any person holds an Option shall be considered to be owned by such person.

         (d) Outstanding Stock. For purposes of (b) above,  "outstanding shares"
shall include all stock actually  issued and outstanding  immediately  after the
grant of the Option to the Optionee.  With respect to the stock ownership of any
Optionee,  "outstanding  shares" shall include shares authorized for issue under
outstanding  Options  held by such  Optionee,  but not options held by any other
person.

         6. STOCK.  The stock subject to Options granted under the Plan shall be
Shares of the Corporation's  authorized but unissued or reacquired Common Stock.
The  aggregate  number of Shares  which may be issued  upon  exercise of Options
under the Plan shall not exceed 1,000,000  shares.  The number of Shares subject
to  Options  outstanding  at any time  shall  not  exceed  the  number of Shares
remaining available for issuance under the Plan and shall not at any time exceed
5% of the total  outstanding  shares of the  Corporation's  Common Stock. In the
event that any outstanding  Option for any reason expires or is terminated,  the
Shares  allocable  to the  unexercised  portion of such Option may again be made
subject to any Option.  The  limitations  established by this Section 6 shall be
subject to  adjustment  in the  manner  provided  in Section 10 hereof  upon the
occurrence of an event specified therein.

         7.       TERMS AND CONDITIONS OF OPTIONS.

         (a)      Class I Participants.

                  (i) Initial  Awards.  Awards  under this Section 7(a) shall be
made to Class I Participants only. Each Class I Participant shall  automatically
be granted a  Non-statutory  Stock  Option to purchase  13,333  shares of Common
Stock upon the date such person is initially appointed to the Committee.

                  (ii) Periodic Awards.  Subject to the limitations set forth in
         Sections 5 and 6, without any further  action by the Board of Directors
         or  the   Committee,   each  Class  I  Participant   shall  be  granted
         Non-statutory Options to purchase:

                  a)  Fixed  offering.  As of  the  pricing  date  of  any  firm
                  commitment  public offering or direct  placement of the Common
                  Stock,  a number of shares of Common  Stock equal to the total
                  number  of  shares of Common  Stock  sold  under the  offering
                  (including shares sold under the underwriter's  overallotment)
                  multiplied by .002; and

                  b) Continuous  Offering.  As of the last business day on which
                  the New York Stock  Exchange is open for  trading  during each
                  fiscal  quarter  of the  Corporation,  a number  of  shares of
                  Common  Stock  equal to the  total  number of shares of Common
                  Stock  sold by the  Corporation  during  such  fiscal  quarter
                  multiplied by .002,  excluding (i) Options granted pursuant to
                  the sale of Common Stock during the quarter  under  section a)
                  above,  (ii) any  shares  of  Common  Stock  issued  under the
                  Corporation's Dividend Reinvestment and Stock Purchase Plan or
                  (iii)  pursuant to the exercise of Options  granted  under the
                  Plan.

         This amendment shall be applicable to the Common Stock issued under the
         Corporation's  firm  commitment  public offering with a pricing date of
         April 23, 1996,  except that Options granted  pursuant to such offering
         shall be  exercisable  at the Fair Market  Value of the Common Stock on
         the date of this amendment.  The provisions of Section 7(a)(i) and (ii)
         of the Plan shall not be amended more than once every six months, other
         than to comport  with  changes  in the Code,  the  Employee  Retirement
         Income Security Act, or the rules thereunder.
                                                                   (Amd. 5/2/96)

          (iii)  Exercise  Price.  Each Option  granted to Class I  Participants
shall be  exercisable at the Fair Market Value of the Common Stock on the date 
of grant.

                  (iv) Option Period and  Adjustments.  Each Option granted to a
Class I Participant shall become exercisable commencing six (6) months after the
date of grant and shall  expire ten (10) years  thereafter.  Options  granted to
Class I  Participants  shall be subject to  adjustment as provided in Section 10
provided that such  adjustment and any action by the Board or the Committee with
respect to the Plan and such Options  satisfies the  requirements  of Rule 16b-3
and  does  not  cause  any  member  of the  Committee  to be  disqualified  as a
"disinterested person."

         (b)      Class II Participants.

                  (i)  Stock  Option  Agreements.  Options  granted  to Class II
Participants  shall be evidenced by written stock option agreements in such form
as the Committee shall from time to time determine. Such agreements shall comply
with and be subject to the terms and conditions set forth below.

                  (ii)  Number of  Shares.  Each  Option  granted  to a Class II
Participant  shall  state the  number of Shares to which it  pertains  and shall
provide for the adjustment  thereof in accordance with the provisions of Section
10 hereof.

                  (iv)  Exercise  Price.  Each Option granted to a Class II 
Participant shall state the Exercise Price.  The Exercise Price for any Option 
shall not be less than the Fair Market Value on the date of grant.

                  (v) Medium and Time of Payment.  The  Purchase  Price for each
Option  granted  to a Class II  Participant  shall be  payable in full in United
States dollars upon the exercise of the Option;  provided,  however, that if the
applicable  Option  Agreement so provides the Purchase  Price may be paid (i) by
the  surrender  of  Shares  in good  form  for  transfer,  owned  by the  person
exercising  the Option and having a Fair  Market  Value on the date of  exercise
equal to the Purchase Price,  or in any combination of cash and Shares,  as long
as the sum of the cash so paid  and the  Fair  Market  Value  of the  Shares  so
surrendered  equal the Purchase Price, (ii) by cancellation of indebtedness owed
by the Corporation to the Optionee,  (iii) with a full recourse  promissory note
executed by the Optionee, or (iv) any combination of the foregoing. The interest
rate and other  terms and  conditions  of such note shall be  determined  by the
Committee.  The Committee may require that the Optionee pledge his or her Shares
to the  Corporation  for the purpose of securing the payment of such note. In no
event shall the stock certificate(s) representing such Shares by released to the
Optionee  until  such  note  shall  be  been  paid in  full.  In the  event  the
Corporation  determines  that it is required to withhold state or Federal income
tax as a result of the  exercise of an Option,  as a condition  to the  exercise
thereof,  an Employee may be required to make  arrangements  satisfactory to the
Corporation to enable it to satisfy such withholding requirements.

         (c) Term and Nontransferability of Options. Each Option shall state the
time or times  which all or part  thereof  becomes  exercisable,  subject to the
following  restrictions.  No Option shall be exercisable  (i) until at least six
(6)  months  after the date of grant and (ii) after the  expiration  of ten (10)
years from the date it was granted. No Option shall be exercisable except by the
Optionee.  No Option shall be assignable or  transferable,  except pursuant to a
qualified  domestic relations order as defined in Code Section 414(p) or, in the
event of the Optionee's death, by will or the laws of descent and distribution.

         (d)  Termination  of  Employment,   Except  by  Death,   Disability  or
Retirement.  Upon any Termination of Employment for any reason other than his or
her death, Disability or Retirement, such Optionee shall have the right, subject
to the  restrictions  of (c) above,  to  exercise  the Option at any time within
three (3) months after  termination of employment,  but only to the extent that,
at the date of termination of employment,  the Optionee's right to exercise such
Option had accrued pursuant to the terms of the applicable  option agreement and
had not previously been exercised;  provided,  however, that if the Optionee was
terminated  as an  Employee  or  removed  as a member of the Board for cause (as
defined in the  applicable  option  agreement or as determined by the Committee)
any Option not  exercised in full prior to such  termination  shall be canceled.
For this purpose,  the  employment  relationship  shall be treated as continuing
intact  while the Optionee is on military  leave,  sick leave or other bona fide
leave of absence (to be determined in the sole discretion of the Committee). The
foregoing notwithstanding,  in the case of an Incentive Stock Option, employment
shall  not be deemed to  continue  beyond  the  ninetieth  (90th)  day after the
Optionee's reemployment rights are guaranteed by statute or by contract.

         (e) Death of Optionee.  If an Optionee dies while an Employee or within
three (3) months after any Termination of Employment  other than for cause,  and
has not fully  exercised  the Option,  then the Option may be exercised in full,
subject to the  restrictions of (c) above, at any time within twelve (12) months
after the Optionee's  death,  by the executors or  administrators  of his or her
estate or by any person or persons who have  acquired the Option  directly  from
the Optionee by bequest or inheritance, but only to the extent that, at the date
of death,  the Optionee's  right to exercise such Option had accrued and had not
been forfeited  pursuant to the terms of the applicable Option Agreement and had
not previously been exercised.

         (f) Disability of Optionee.  Upon  Termination of Employment for reason
of Disability,  such Optionee shall have the right,  subject to the restrictions
of (c) above, to exercise the Option at any time within twelve (12) months after
termination  of  employment,  but  only  to the  extent  that,  at the  date  of
termination  of  employment,  the  Optionee's  right to exercise such Option had
accrued  pursuant to the terms of the  applicable  Option  Agreement and had not
previously been exercised.
         (g) Retirement of Optionee. Upon Retirement, an Optionee shall have the
right,  subject to the  restrictions of (c) above, to exercise the Option at any
time within three (3) months after  termination of  employment,  but only to the
extent that, at the date of termination of employment,  the Optionee's  right to
exercise such Option had accrued pursuant to the terms of the applicable  Option
Agreement and had not previously been exercised.

         (h)  Rights  as a  Stockholder.  An  Optionee,  or a  transferee  of an
Optionee,  shall  have no rights as a  stockholder  with  respect  to any Shares
covered  by his or her  Option  until  the  date  of  the  issuance  of a  stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary,  whether in cash, securities or other property), distributions
or other  rights  for which  the  record  date is prior to the date  such  stock
certificate is issued, except as provided in Section 10 hereof.

         (i)  Modification,   Extension  and  Renewal  of  Option.   Within  the
limitations  of the Plan,  and only with respect to Options  granted to Class II
Participants,  the Committee may modify,  extend or renew outstanding Options or
accept the  cancellation  of  outstanding  Options (to the extent not previously
exercised)  for the  granting  of new  Options  in  substitution  therefor.  The
Committee  may not  modify,  extend or renew any  Option  granted to any Class I
Participant  unless such  modification,  extension or renewal  shall satisfy the
requirements of Rule 16b-3. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, alter or impair any rights or
obligations under any Option previously granted.

         (j) Other Provisions.  The stock option agreements authorized under the
Plan may contain such other  provisions not  inconsistent  with the terms of the
Plan  (including,  without  limitation,  restrictions  upon the  exercise of the
Option) as the Committee shall deem advisable.

         8. LIMITATION ON VALUE OF EXERCISABLE  SHARES. In the case of Incentive
Stock Options granted hereunder,  the aggregate Fair Market Value (determined as
of the date of the grant thereof) of the Shares with respect to which  Incentive
Stock Options  become  exercisable  by any employee of the Company for the first
time during any calendar year (under this Plan and all other plans maintained by
the Corporation, its parent or its Subsidiaries) shall not exceed $100,000.

         9. TERM OF PLAN.  Options may be granted  pursuant to the Plan until 
the  expiration  of ten (10) years from the effective date of the Plan.

         10. RECAPITALIZATIONS.  Subject to any required action by shareholders,
and provided that all  requirements  of Rule 16b-3 are satisfied,  the number of
Shares covered by the Plan as provided in Section 6 hereof, the number of Shares
covered by each  outstanding  Option and the  Exercise  Price  thereof  shall be
proportionately  adjusted  for any  increase or decrease in the number of issued
Shares resulting from a subdivision or consolidation of Shares or the payment of
a stock dividend (but only of Common Stock) or any other increase or decrease in
the number of issued Shares  effected  without receipt of  consideration  by the
Corporation.  Subject to any required action by stockholders, if the Corporation
is the surviving  corporation in any merger or  consolidation,  each outstanding
Option shall pertain and apply to the securities to which a holder of the number
of Shares  subject to the Option  would  have been  entitled.  In the event of a
merger  or   consolidation  in  which  the  Corporation  is  not  the  surviving
corporation,  the date of  exercisability  of each  outstanding  Option shall be
accelerated  to a date  prior  to  such  merger  or  consolidation,  unless  the
agreement of merger or  consolidation  provides for the assumption of the Option
by  the  successor  to  the  Corporation.  To  the  extent  that  the  foregoing
adjustments  relate to securities of the Corporation,  such adjustments shall be
made by the Committee,  whose  determination  shall be conclusive and binding on
all persons. Except as expressly provided in this Section 10, the Optionee shall
have no rights by reason of subdivision or  consolidation  of shares of stock of
any class,  the payment of any stock  dividend or any other increase or decrease
in the  number of shares of stock of any class or by reason of any  dissolution,
liquidation,  merger or  consolidation or spin-off of assets or stock of another
corporation,  and any issue by the  Corporation of shares of stock of any class,
or securities  convertible into shares of stock of any class,  shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option.  The grant of an Option  pursuant
to the Plan shall not affect in any way the right or power to the Corporation to
make adjustments,  reclassifications,  reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve,  liquidate,  sell
or transfer all or any part of its business assets.

         11.  SECURITIES LAW REQUIREMENTS.

         (a) Legality of Issuance.  The issuance of any Shares upon the exercise
of any Option and the grant of any Option shall be contingent upon the 
following:

                  (1) the  Corporation  and the  Optionee  shall  have taken all
                  actions  required to register the Shares under the  Securities
                  Act of 1933, as amended (the "Act"), and to qualify the Option
                  and the Shares under any and all applicable  state  securities
                  or "blue sky" laws or regulations,  or to perfect an exemption
                  from   the   respective    registration   and    qualification
                  requirements thereof;

                  (2) any applicable  listing  requirement of any stock exchange
                  on which the Common Stock is listed shall have been satisfied;
                  and

                  (3) any other  applicable  provision  of state or federal  law
                  shall have been satisfied.

         (b)  Restrictions  on Transfer.  Regardless of whether the offering and
sale of  Shares  under  the plan has been  registered  under the Act or has been
registered or qualified under the securities laws of any state,  the Corporation
may impose  restrictions  on the sale,  pledge or other  transfer of such Shares
(including the placement of appropriate  legends on stock  certificates)  if, in
the judgment of the Corporation and its counsel, such restrictions are necessary
or desirable in order to achieve  compliance with the provisions of the Act, the
securities  laws of any state or any other  law.  In the event  that the sale of
Shares  under  the Plan is not  registered  under  the Act but an  exemption  is
available which required an investment  representation or other  representation,
each Optionee shall be required to represent that such Shares are being acquired
for investment,  and not with a view to the sale or distribution thereof, and to
make such other  representations  as are deemed  necessary or appropriate by the
Corporation  and its  counsel.  Any  determination  by the  Corporation  and its
counsel in connection with any of the matters set forth in this Section 11 shall
be conclusive and binding on all persons.  Stock certificates  evidencing Shares
acquired under the Plan pursuant to an unregistered  transaction  shall bear the
following  restrictive legend and such other restrictive legends as are required
or deemed advisable under the provisions of any applicable law.

         "THE SALE OF THE SECURITIES  REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE  SECURITIES ACT OF 1933 (THE "ACT").  ANY TRANSFER OF SUCH  SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH  REGISTRATION  IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."

         (c) Registration or  Qualification of Securities.  The Corporation may,
but shall not be  obligated  to,  register  or qualify  the  issuance of Options
and/or  the sale of  Shares  under  the Act or any  other  applicable  law.  The
Corporation  shall not be obligated to take any  affirmative  action in order to
cause the  issuance  of Options  or the sale of Shares  under the plan to comply
with any law.

         (d) Exchange of Certificates. If, in the opinion of the Corporation and
its counsel,  any legend placed on a stock certificate  representing shares sold
under the Plan is no longer required,  the holder of such  certificate  shall be
entitled to exchange such  certificate for a certificate  representing  the same
number of Shares but lacking such legend.

         12.  AMENDMENT  OF THE PLAN.  The  Board  may from  time to time,  with
respect to any Shares at the time not subject to Options, suspend or discontinue
the plan or revise or amend it in any respect  whatsoever  except that,  without
the approval of the  Corporation's  stockholders,  no such revision or amendment
shall:

  (a)  Materially increase the benefits accruing to participants under the Plan;

  (b)  Materially increase the number of Shares subject to the Plan;

  (c)  Materially modify the requirements as to eligibility for participation in
       the Plan; or

  (d)  Amend this Section 12 to defeat its purpose.

         Notwithstanding  the foregoing,  the Board may revise or amend the Plan
without  stockholder  approval in order to ensure the Plan's compliance with the
Code, any successor provisions of the Code or any other applicable law.

         13. APPLICATION OF FUNDS.  The proceeds  received by the  Corporation
from the sale of Common Stock pursuant to the exercise of an Option will be used
for general corporate purposes.

         14. EXECUTION.  To record the adoption of the Amended and Restated Plan
in the form set forth above by the Board as of May 2, 1996, the  Corporation has
caused  this Plan to be  executed  in the name and on behalf of the  Corporation
where provided below by an officer of the Corporation thereunto duly authorized.

                                       THORNBURG MORTGAGE ASSET CORPORATION


                                       By:_____________________________
                                          H. Garrett Thornburg, Jr.,
                                          Chairman