Document:

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                                                                 EXHIBIT 10.11.1

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                            THORNBURG MORTGAGE, INC.

                                  $200,000,000

                           8.00% SENIOR NOTES DUE 2013

                                   ----------

                          FIRST SUPPLEMENTAL INDENTURE

                                   ----------

                            Dated as of May 15, 2003

                                   ----------

                                  DEUTSCHE BANK
                             TRUST COMPANY AMERICAS

                                     Trustee

                                   ----------

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CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
Trust Indenture
Act Section                                                                                 Indenture Section
<S>                                                                                         <C>
310  (a)(1)...............................................................................  7.10
     (a)(2)...............................................................................  7.10
     (a)(3)...............................................................................  N.A.
     (a)(4)...............................................................................  N.A.
     (a)(5)...............................................................................  7.10
     (b)..................................................................................  7.10
     (c)..................................................................................  N.A.
311  (a)..................................................................................  7.11
     (b)..................................................................................  7.11
     (c)..................................................................................  N.A.
312  (a)..................................................................................  2.05
     (b)..................................................................................  11.03
     (c)..................................................................................  11.03
313  (a)..................................................................................  7.06
     (b)(2)...............................................................................  7.07
     (c)..................................................................................  7.06; 11.02
     (d)..................................................................................  7.06
314  (a)..................................................................................  4.03; 11.02
     (c)(1)...............................................................................  11.04
     (c)(2)...............................................................................  11.04
     (c)(3)...............................................................................  N.A.
     (e)..................................................................................  11.05
     (f)..................................................................................  N.A.
315  (a)..................................................................................  7.01
     (b)..................................................................................  7.05, 11.02
     (c)..................................................................................  7.01
     (d)..................................................................................  7.01
     (e)..................................................................................  6.11
316  (a) (last sentence)..................................................................  2.09
     (a)(1)(A)............................................................................  6.05
     (a)(1)(B)............................................................................  6.04
     (a)(2)...............................................................................  N.A.
     (b)..................................................................................  6.07
     (c)..................................................................................  2.13
317  (a)(1)...............................................................................  6.08
     (a)(2)...............................................................................  6.09
     (b)..................................................................................  2.04
318  (a)..................................................................................  11.01
     (b)..................................................................................  N.A.
     (c)..................................................................................  11.01
</TABLE>

N.A. means not applicable.
* This Cross-Reference Table is not part of this First Supplemental Indenture.

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
ARTICLE I             DEFINITIONS AND INCORPORATION BY REFERENCE.................................................1
         Section 1.01.     Definitions...........................................................................1
         Section 1.02.     Other Definitions....................................................................18
         Section 1.03.     Incorporation by Reference of Trust Indenture Act....................................18
         Section 1.04.     Rules of Construction................................................................19
ARTICLE II            THE NOTES.................................................................................19
         Section 2.01.     Creation of the Notes................................................................19
         Section 2.02.     Form and Dating......................................................................19
         Section 2.03.     Execution and Authentication.........................................................20
         Section 2.04.     Registrar and Paying Agent...........................................................21
         Section 2.05.     Paying Agent to Hold Money in Trust..................................................21
         Section 2.06.     Holder Lists.........................................................................21
         Section 2.07.     Transfer and Exchange................................................................21
         Section 2.08.     Legends..............................................................................23
         Section 2.09.     Replacement Notes....................................................................24
         Section 2.10.     Outstanding Notes....................................................................25
         Section 2.11.     Treasury Notes.......................................................................25
         Section 2.12.     Temporary Notes......................................................................25
         Section 2.13.     Cancellation.........................................................................25
         Section 2.14.     Defaulted Interest...................................................................26
         Section 2.15.     Record Date..........................................................................26
         Section 2.16.     CUSIP Numbers........................................................................26
ARTICLE III           REDEMPTION AND PREPAYMENT.................................................................26
         Section 3.01.     Notices to Trustee...................................................................26
         Section 3.02.     Selection of Notes to Be Redeemed....................................................26
         Section 3.03.     Notice of Redemption.................................................................27
         Section 3.04.     Effect of Notice of Redemption.......................................................27
         Section 3.05.     Deposit of Redemption Price..........................................................27
         Section 3.06.     Notes Redeemed in Part...............................................................28
         Section 3.07.     (a)  Optional Redemption.............................................................28
         Section 3.08.     Mandatory Redemption.................................................................29
ARTICLE IV            COVENANTS.................................................................................29
         Section 4.01.     Payment of Notes.....................................................................29
         Section 4.02.     Maintenance of Office or Agency......................................................29
</TABLE>

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<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
         Section 4.03.     Reports to Holders...................................................................29
         Section 4.04.     Compliance Certificate...............................................................30
         Section 4.05.     Taxes................................................................................30
         Section 4.06.     Stay, Extension and Usury Laws.......................................................30
         Section 4.07.     Limitation on Restricted Payments....................................................31
         Section 4.08.     Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.........32
         Section 4.09.     Limitation on Incurrence of Additional Senior Unsecured Indebtedness.................33
         Section 4.10.     Limitation on Incurrence of Additional Consolidated Indebtedness.....................34
         Section 4.11.     Limitation Based Upon Total Unencumbered Assets......................................34
         Section 4.12.     Limitations on Transactions with Affiliates..........................................34
         Section 4.13.     Limitation on Liens..................................................................35
         Section 4.14.     Corporate Existence..................................................................36
         Section 4.15.     Offer to Repurchase Upon Change of Control...........................................36
         Section 4.16.     Limitation on Preferred Stock of Subsidiaries........................................37
         Section 4.17.     Conduct of Business..................................................................37
         Section 4.18.     Limitation of Guarantees by Subsidiaries.............................................37
         Section 4.19.     Termination of Certain Covenants In Event of Investment Grade Rating.................38
         Section 4.20.     Maintenance of Properties; Books and Records; Compliance with Law....................38
ARTICLE V             EXCHANGE OFFER; REGISTRATION RIGHTS AGREEMENT.............................................39
ARTICLE VI            SUCCESSORS................................................................................40
         Section 6.01.     Merger, Consolidation and Sale of Assets.............................................40
         Section 6.02.     Successor Corporation Substituted....................................................41
ARTICLE VII           DEFAULTS AND REMEDIES.....................................................................41
         Section 7.01.     Events of Default....................................................................41
         Section 7.02.     Acceleration.........................................................................42
         Section 7.03.     Other Remedies.......................................................................43
         Section 7.04.     Waiver of Past Defaults..............................................................43
         Section 7.05.     Control by Majority..................................................................44
         Section 7.06.     Limitation on Suits..................................................................44
         Section 7.07.     Rights of Holders of Notes to Receive Payment........................................44
         Section 7.08.     Collection Suit by Trustee...........................................................44
         Section 7.09.     Trustee May File Proofs of Claim.....................................................44
         Section 7.10.     Priorities...........................................................................45
         Section 7.11.     Undertaking for Costs................................................................45
</TABLE>

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<TABLE>
<CAPTION>
                                                                                                              Page
<S>                                                                                                             <C>
ARTICLE VIII          TRUSTEE...................................................................................45
         Section 8.01.     Duties of Trustee....................................................................45
         Section 8.02.     Rights of Trustee....................................................................47
         Section 8.03.     Individual Rights of Trustee.........................................................47
         Section 8.04.     Trustee's Disclaimer.................................................................47
         Section 8.05.     Notice of Defaults...................................................................47
         Section 8.06.     Reports by Trustee...................................................................47
         Section 8.07.     Compensation and Indemnity...........................................................48
         Section 8.08.     Replacement of Trustee...............................................................48
         Section 8.09.     Successor Trustee by Merger, etc.....................................................49
         Section 8.10.     Eligibility; Disqualification........................................................49
         Section 8.11.     Preferential Collection of Claims....................................................49
ARTICLE IX            LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................................................50
         Section 9.01.     Option to Effect Legal Defeasance or Covenant Defeasance.............................50
         Section 9.02.     Legal Defeasance and Discharge.......................................................50
         Section 9.03.     Covenant Defeasance..................................................................50
         Section 9.04.     Conditions to Legal or Covenant Defeasance...........................................51
         Section 9.05.     Deposited Money and Government Securities to be Held in Trust; Other
                           Miscellaneous Provisions.............................................................52
         Section 9.06.     Repayment to Company.................................................................52
         Section 9.07.     Reinstatement........................................................................52
ARTICLE X             AMENDMENT, SUPPLEMENT AND WAIVER..........................................................53
         Section 10.01.    Without Consent of Holders of Notes..................................................53
         Section 10.02.    With Consent of Holders of Notes.....................................................53
         Section 10.03.    Compliance with Trust Indenture Act..................................................55
         Section 10.04.    Revocation and Effect of Consents....................................................55
         Section 10.05.    Notation on or Exchange of Notes.....................................................55
         Section 10.06.    Trustee to Sign Amendments, etc......................................................55
ARTICLE XI            SATISFACTION AND DISCHARGE................................................................55
         Section 11.01.    Satisfaction and Discharge...........................................................55
         Section 11.02.    Application of Trust Money...........................................................56
ARTICLE XII           MISCELLANEOUS.............................................................................56
         Section 12.01.    Trust Indenture Act Controls.........................................................56
         Section 12.02.    Notices..............................................................................56
         Section 12.03.    Communication by Holders of Notes with Other Holders of Note.........................57
</TABLE>

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<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
         Section 12.04.    Certificate and Opinion as to Conditions Precedent...................................57
         Section 12.05.    Statements Required in Certificate or Opinion........................................58
         Section 12.06.    Rules by Trustee and Agents..........................................................58
         Section 12.07.    No Personal Liability of Directors, Officers, Employees and Stockholders.............58
         Section 12.08.    Governing Law........................................................................58
         Section 12.09.    No Adverse Interpretation of Other Agreements........................................58
         Section 12.10.    Successors...........................................................................58
         Section 12.11.    Severability.........................................................................58
         Section 12.12.    Counterpart Originals................................................................58
         Section 12.13.    Table of Contents, Headings, etc.....................................................59
         Section 12.14.    Conflicts with Supplemental Indenture................................................59
EXHIBITS

Exhibit A        FORM OF  INITIAL RESTRICTED GLOBAL NOTE

Exhibit B        FORM OF INITIAL REGULATION S GLOBAL NOTE

Exhibit C        FORM OF INITIAL CERTIFICATED NOTE

Exhibit D        FORM OF EXCHANGE GLOBAL NOTE

Exhibit E        FORM OF EXCHANGE CERTIFICATED NOTE
</TABLE>

                                       iv

<PAGE>

        SUPPLEMENTAL INDENTURE dated as of May 15, 2003 between Thornburg
Mortgage, Inc., a Maryland corporation (the "Company"), and Deutsche Bank Trust
Company Americas, as trustee (the "Trustee").

        WHEREAS, the Company has heretofore delivered to the Trustee an
Indenture ("Original Indenture") dated as of May 15, 2003, providing for the
issuance from time to time of debt Securities of the Company;

        WHEREAS, the Original Indenture provides that by means of a supplemental
indenture, the Company may create one or more series of its debt Securities and
establish the form and terms and conditions thereof;

        WHEREAS, the Company intends by this First Supplemental Indenture to
create and provide for the following series of debt Securities (the "Initial
Notes"):

        (i)     8.00% Senior Notes due 2013, initially in an aggregate principal
amount of $200,000,000;

        WHEREAS, the Company further intends by this First Supplemental
Indenture to create and provide for, if and when issued in exchange for the
Initial Notes pursuant to this First Supplemental Indenture and the Registration
Rights Agreement (defined below), the following additional series of debt
Securities:

        (i)     8.00% Senior Notes due 2013 (the "Exchange 2013 Notes," and
together with the Initial Notes, the "2013 Notes"), initially in an aggregate
principal amount of $200,000,000;

        WHEREAS, the Board of Directors of the Company has duly adopted
resolutions authorizing the Company to execute and deliver this First
Supplemental Indenture; and

        WHEREAS, The Company and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the Notes:

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.   Definitions. Capitalized terms used and not defined herein shall
have the meanings assigned to them in the Indenture.

        "Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case whether or not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Subsidiary
of the Company or such acquisition, merger or consolidation.

        "Additional Notes" means Notes (other than the Initial Notes) issued
under this First Supplemental Indenture in accordance with Section 2.03.

        "Adjusted Debt" means aggregate Indebtedness of the Company and its
Consolidated Subsidiaries, net of Non-Marginable Indebtedness and fair value
adjustments to hedging instruments.

<PAGE>

        "Adjusted Earnings" means with respect to any Person, for any period,
the sum (without duplication) of: Consolidated Net Income and, to the extent
Consolidated Net Income has already been reduced thereby, depreciation and
amortization.

        "Adjusted Net Worth" means Consolidated Adjusted Tangible Net Worth plus
Senior Unsecured Indebtedness less NMI Equity.

        "Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting Securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.

        "Agent" means any Registrar, Paying Agent or co-registrar.

        "Asset Acquisition" means: (1) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Subsidiary of the Company, or
shall be merged with or into the Company or any Subsidiary of the Company; or
(2) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) that constitute
all or substantially all of the assets of such Person or comprises any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.

        "Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any
Subsidiary of the Company (including any sale and leaseback transaction) to any
Person other than the Company or a Wholly Owned Subsidiary of the Company of:

                (1)     any Capital Stock of any Subsidiary of the Company; or

                (2)     any of the Company's or the Subsidiaries' other property
        or assets other than sales of loan-related assets made in the ordinary
        course of the Company's real estate lending and loan acquisition
        business and other asset sales made in the ordinary course of the
        Company's business.

        "Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978,
as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.

        "Board of Directors" means, as to any Person, the Board of Directors of
such Person or any duly authorized committee thereof.

        "Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

                                        2

<PAGE>

        "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.

        "Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.

        "Capital Stock" means:

                (1)     with respect to any Person that is a corporation, any
        and all shares, interests, participations or other equivalents (however
        designated and whether or not voting) of corporate stock, including each
        class of Common Stock and Preferred Stock of such Person; and

                (2)     with respect to any Person that is not a corporation,
        any and all partnership, membership or other equity interests of such
        Person.

        "Change of Control" means the occurrence of one or more of the following
events:

                (1)     any sale, lease, exchange or other transfer (in one
        transaction or a series of related transactions) of all or substantially
        all of the assets of the Company to any Person or group of related
        Persons for purposes of Section 13(d) of the Exchange Act (a "Group"),
        together with any Affiliates thereof (whether or not otherwise in
        compliance with the provisions of this First Supplemental Indenture);

                (2)     the approval by the holders of Capital Stock of the
        Company of any plan or proposal for the liquidation or dissolution of
        the Company (whether or not otherwise in compliance with the provisions
        of this First Supplemental Indenture);

                (3)     any Person or Group shall become the owner, directly or
        indirectly, beneficially or of record, of shares representing more than
        50% of the aggregate ordinary voting power represented by the issued and
        outstanding Capital Stock of the Company; or

                (4)     the replacement of a majority of the Board of Directors
        of the Company over a two-year period from the directors who constituted
        the Board of Directors of the Company at the beginning of such period,
        and such replacement shall not have been approved by a vote of at least
        a majority of the Board of Directors of the Company then still in office
        who either were members of such Board of Directors at the beginning of
        such period or whose election as a member of such Board of Directors was
        previously so approved.

        "Clearstream Banking" means Clearstream Banking, societe anonyme, its
successors and assigns.

        "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
thereunder, in each case as in effect from time to time.

        "Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after the
execution of this First Supplemental Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.

                                        3

<PAGE>

        "Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

        "Company" means Thornburg Mortgage, Inc. and any and all successors
thereto that become a party to this First Supplemental Indenture in accordance
with its terms.

        "Consolidated Adjusted Tangible Net Worth" of any Person means the
excess of such Person's total assets over its total liabilities determined on a
consolidated basis in accordance with GAAP, plus the principal amount of any
Subordinated Indebtedness, excluding (1) Other Comprehensive Income or Loss, (2)
goodwill and (3) other intangibles, in each case as of the end of the last
completed fiscal quarter ending on or prior to the date of the transaction
giving rise to the need to calculate Consolidated Adjusted Tangible Net Worth.

        "Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of:

                (1)     Consolidated Net Income; and

                (2)     to the extent Consolidated Net Income has been reduced
        thereby:

                        (a)     all income taxes of such Person and its
                Subsidiaries paid or accrued in accordance with GAAP for such
                period (other than income taxes attributable to extraordinary
                gains or losses and direct impairment charges or the reversal of
                such charges on the Company's assets);

                        (b)     Consolidated Senior Unsecured Indebtedness
                Interest Expense; and

                        (c)     depreciation and amortization;

all as determined on a consolidated basis for such Person and its Subsidiaries
in accordance with GAAP.

        "Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
before the payment of dividends on Preferred Stock for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom:

                (1)     after-tax gains and losses from Asset Sales or
        abandonments or reserves relating thereto (including gains and losses
        from the sale of corporate tenant lease assets);

                (2)     after-tax items classified as extraordinary gains or
        losses and direct impairment charges or the reversal of such charges on
        the Company's assets;

                (3)     the net income of any Person acquired in a "pooling of
        interests" transaction accrued prior to the date it becomes a Subsidiary
        of the referent Person or is merged or consolidated with the referent
        Person or any Subsidiary of the referent Person;

                (4)     the net income (but not loss) of any Subsidiary of the
        referent Person to the extent that the declaration of dividends or
        similar distributions by that Subsidiary of that income is restricted by
        a contract, operation of law or otherwise, except for such restrictions
        permitted by

                                        4

<PAGE>

        clauses (f), (g) and (h) of Section 4.08 whether such permitted
        restrictions exist on the Issue Date or are created thereafter;

                (5)     the net income or loss of any other Person, other than a
        Consolidated Subsidiary of the referent Person, except:

                        (a)     to the extent (in the case of net income) of
                cash dividends or distributions paid to the referent Person, or
                to a Wholly Owned Subsidiary of the referent Person (other than
                a Subsidiary described in clause (4) above), by such other
                Person; or

                        (b)     that the referent Person's share of any net
                income or loss of such other Person under the equity method of
                accounting for Affiliates shall not be excluded;

                6.      any restoration to income of any contingency reserve of
        an extraordinary, nonrecurring or unusual nature, except to the extent
        that provision for such reserve was made out of Consolidated Net Income
        accrued at any time following the Issue Date;

                7.      income or loss attributable to discontinued operations
        (including, without limitation, operations disposed of during such
        period whether or not such operations were classified as discontinued);
        and

                8.      in the case of a successor to the referent Person by
        consolidation or merger or as a transferee of the referent Person's
        assets, any earnings of the successor corporation prior to such
        consolidation, merger or transfer of assets.

        "Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, as of the end of the last completed fiscal
quarter ending on or prior to the date of the transaction giving rise to the
need to calculate Consolidated Net Worth determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person and interests in such Person's
Consolidated Subsidiaries not owned, directly or indirectly, by such Person.

        "Consolidated Senior Unsecured Indebtedness Interest Coverage Ratio"
means, with respect to any Person, the ratio of Consolidated EBITDA of such
Person during the four full fiscal quarters (the "Four Quarter Period") ending
prior to the date of the transaction giving rise to the need to calculate the
Consolidated Senior Unsecured Indebtedness Interest Coverage Ratio for which
financial statements are available (the "Transaction Date") to Consolidated
Senior Unsecured Indebtedness Interest Expense of such Person for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Senior
Unsecured Indebtedness Interest Expense" shall be calculated after giving effect
on a pro forma basis for the period of such calculation to:

                (1)     the incurrence or repayment of any Senior Unsecured
        Indebtedness of such Person or any of its Subsidiaries (and the
        application of the proceeds thereof) giving rise to the need to make
        such calculation and any incurrence or repayment of other Senior
        Unsecured Indebtedness (and the application of the proceeds thereof),
        other than the incurrence or repayment of Senior Unsecured Indebtedness
        in the ordinary course of business for working capital purposes pursuant
        to working capital facilities, occurring during the Four Quarter Period
        or at any time subsequent to the last day of the Four Quarter Period and
        on or prior to the Transaction Date, as if such incurrence or repayment,
        as the case may be (and the application of the proceeds thereof),
        occurred on the first day of the Four Quarter Period; and

                                        5

<PAGE>

                (2)     any asset sales or other dispositions or any asset
        originations, asset purchases, Investments and Asset Acquisitions
        (including, without limitation, any Asset Acquisition giving rise to the
        need to make such calculation as a result of such Person or one of its
        Subsidiaries (including any Person who becomes a Subsidiary as a result
        of the Asset Acquisition) incurring, assuming or otherwise being liable
        for Senior Unsecured Indebtedness that is Acquired Indebtedness and also
        including any Consolidated EBITDA (including any pro forma expense and
        cost reductions calculated on a basis consistent with Regulation S-X
        under the Exchange Act) attributable to the assets which are originated
        or purchased, the Investments that are made and the assets that are the
        subject of the Asset Acquisition or asset sale or other disposition
        during the Four Quarter Period) occurring during the Four Quarter Period
        or at any time subsequent to the last day of the Four Quarter Period and
        on or prior to the Transaction Date, as if such asset sale or other
        disposition or asset origination, asset purchase, Investment or Asset
        Acquisition (including the incurrence, assumption or liability for any
        such Acquired Indebtedness) occurred on the first day of the Four
        Quarter Period. If such Person or any of its Subsidiaries directly or
        indirectly guarantees Senior Unsecured Indebtedness of a third Person,
        the preceding sentence shall give effect to the incurrence of such
        guaranteed Senior Unsecured Indebtedness as if such Person or any
        Subsidiary of such Person had directly incurred or otherwise assumed
        such guaranteed Senior Unsecured Indebtedness.

        "Consolidated Senior Unsecured Indebtedness Interest Expense" means,
with respect to any Person for any period, the sum of, without duplication:

                (1)     the aggregate of the interest expense on Senior
        Unsecured Indebtedness of such Person and its Subsidiaries for such
        period determined on a consolidated basis in accordance with GAAP,
        including without limitation: (a) any amortization of debt discount; (b)
        the net costs under Permitted Hedging Transactions; (c) all capitalized
        interest; and (d) the interest portion of any deferred payment
        obligation; and

                (2)     to the extent not already included in clause (1), the
        interest component of Capitalized Lease Obligations paid, accrued and/or
        scheduled to be paid or accrued by such Person and its Subsidiaries
        during such period as determined on a consolidated basis in accordance
        with GAAP.

        "Consolidated Subsidiary" means, with respect to any Person, a
Subsidiary of such Person, the financial statements of which are consolidated
with the financial statements of such Person in accordance with GAAP.

        "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 or such other address as to which the Trustee
may give notice to the Company.

        "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary of the Company against fluctuations in currency
values.

        "Custodian" means any custodian, receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.

        "Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.

                                        6

<PAGE>

        "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.04 as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this First Supplemental Indenture.

        "Disqualified Capital Stock" means that portion of any Capital Stock
that, by its terms (or by the terms of any Security into which it is convertible
or for which it is exchangeable at the option of the holder thereof), or upon
the happening of any event (other than an event which would constitute a Change
of Control), matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof (except, in each case, upon the occurrence of a Change of Control) on or
prior to the final maturity date of the Notes.

        "DTC" means The Depository Trust Company, its nominees and their
successors and assigns.

        "Equity Offering" means an underwritten public offering of Qualified
Capital Stock of the Company pursuant to a registration statement filed with the
Commission in accordance with the Securities Act or a private placement of
Qualified Capital Stock of the Company generating gross proceeds of at least
$25.0 million.

        "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear
System, its successors and assigns.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.

        "Exchange Certificated Notes" means a note in definitive, fully
registered form, without coupons, substantially in the form of Exhibit E hereto.

        "Exchange Global Notes" has the meaning set forth in Section 2.02(e).

        "Exchange Notes" has the meaning set forth in the Recitals hereto.

        "Exchange Offer" means the offer by the Company to exchange all of the
Initial Notes for Exchange Notes of the same series.

        "Exchange Offer Registration Statement" has the meaning set forth in
Section 5.01.

        "Exchange 2013 Notes" has the meaning set forth in the Recitals hereto.

        "Existing Warehouse Facilities" mean: (1) the Master Repurchase
Agreement dated as of November 20, 2001, as amended November 14, 2002, between
UBS Warburg Real Estate Securities Inc. and TMHL; (2) the Master Loan and
Security Agreement dated as of November 20, 2001, as amended November 19, 2002,
between Greenwich Capital Financial Products, Inc. and TMHL; (3) the TMA
Mortgage Funding Trust II Collateralized Asset-Backed Notes, Series 2000-1 and
Master Repurchase Agreement dated as of December 1, 2000 and March 22, 2000,
respectively, as amended March 24, 2003 and February 28, 2003, respectively,
between Wachovia Bank National Association and TMHL and Thornburg Mortgage
Acceptance Corp. II and Real Estate Asset Funding Corporation and Wilmington
Trust Company and Deutsche Bank National Trust Company and Ambac Assurance
Corporation; and (4) the Master Repurchase Agreement currently in its final
stages of negotiation, between CDC Mortgage Capital Inc. and TMHL, in each case,
together with the related documents thereto (including, without limitation, any
Security documents), in each case as such agreements may be amended (including
any

                                        7

<PAGE>

amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder (provided that such increase in borrowings is
permitted by Section 4.09, 4.10 and 4.11 hereof) or adding Subsidiaries of the
Company as additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.

        "fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.

        "First Supplemental Indenture" means this First Supplemental Indenture
as amended or supplemented from time to time.

        "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.

        "Global Notes" means, individually and collectively, the Initial
Restricted Global Notes, the Initial Regulation S Global Note and the Exchange
Global Note, in the form of the Exhibits hereto.

        "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and for the payment of which the
United States pledges its full faith and credit.

        "Guarantor" means each of the Company's Subsidiaries that in the future
executes a supplemental indenture in which such Subsidiary agrees to be bound by
the terms of this First Supplemental Indenture as a Guarantor; provided that any
Person constituting a Guarantor as described above shall cease to constitute a
Guarantor when its respective guarantee is released in accordance with the terms
of this First Supplemental Indenture.

        "Holder" or "Noteholder" means a Person in whose name a Note is
registered.

        "Indebtedness" means with respect to any Person, without duplication:

                (1)     all Obligations of such Person for borrowed money;

                (2)     all Obligations of such Person evidenced by bonds,
        debentures, notes or other similar instruments;

                (3)     all Capitalized Lease Obligations of such Person;

                (4)     all Obligations of such Person issued or assumed as the
        deferred purchase price of property, all conditional sale obligations
        and all Obligations under any title retention agreement (but excluding
        trade accounts payable and other accrued liabilities arising in the

                                        8

<PAGE>

        ordinary course of business that are not overdue by 90 days or more or
        are being contested in good faith by appropriate proceedings promptly
        instituted and diligently conducted);

                (5)     all Obligations for the reimbursement of any obligor on
        any letter of credit, banker's acceptance or similar credit transaction;

                (6)     guarantees and other contingent obligations in respect
        of Indebtedness referred to in clauses (1) through (5) above and clause
        (8) below;

                (7)     all Obligations of any other Person of the type referred
        to in clauses (1) through (6) above which are Secured by any lien on any
        property or asset of such Person, the amount of such Obligation being
        deemed to be the lesser of the fair market value of such property or
        asset and the amount of the Obligation so Secured;

                (8)     all Obligations under currency agreements and interest
        swap agreements of such Person; and

                (9)     all Disqualified Capital Stock issued by such Person
        with the amount of Indebtedness represented by such Disqualified Capital
        Stock being equal to the greater of its voluntary or involuntary
        liquidation preference and its maximum fixed repurchase price, but
        excluding accrued dividends, if any.

        For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this First Supplemental
Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Stock.

        "Indenture" means the Indenture, dated as of May 15, 2003 between the
Company and the Trustee as amended or supplemented from time to time.

        "Independent Financial Advisor" means a firm: (1) that does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company; and (2) that, in the judgment of the
Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.

        "Indirect Participant" means a Person who holds a beneficial interest in
a Global Note through a Participant.

        "Initial Certificated Notes" means notes in definitive, fully registered
certificated form, without coupons, substantially in the form of Exhibit C
hereto, bearing the legends set forth in Section 2.08 hereof.

        "Initial Global Notes" has the meaning set forth in Section 2.02(c).

        "Initial Notes" means the $200.0 million principal amount of 8.00%
Senior Notes due 2013 of the Company issued on the Issue Date.

        "Initial Purchaser" means Credit Suisse First Boston LLC.

                                        9

<PAGE>

        "Initial Regulation S Global Note" means a single fully registered
global note in book-entry form, substantially in the form of Exhibit B attached
hereto.

        "Initial Restricted Global Note" means a single fully registered global
note in book-entry form, substantially in the form of Exhibit A attached hereto.

        "Institutional Accredited Investor" means an institutional "accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.

        "Interest Payment Date" means May 15 and November 15 of each year
commencing November 15, 2003.

        "Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee),
or corporate tenant lease to or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or other Securities
or evidences or Indebtedness issued by, any Person. "Investment" shall exclude
extensions of trade credit by the Company and any Subsidiary of the Company on
commercially reasonable terms in accordance with the Company's or its
Subsidiaries' normal trade practices, as the case may be.

        "Investment Grade" means a rating of the Notes by both S&P and Moody's,
each such rating being one of such agency's four highest generic rating
categories that signifies investment grade (i.e. BBB- (or the equivalent) or
higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided, in
each case, such ratings are publicly available; provided, further, that in the
event Moody's or S&P is no longer in existence for purposes of determining
whether the Notes are rated "Investment Grade," such organization may be
replaced by a nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) designated by the Company, notice of which
shall be given to the Trustee.

        "Issue Date" means May 15, 2003.

        "Lien" means any lien, mortgage, deed of trust, pledge, Security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any Security interest).

        "Maturity" when used with respect to the Notes means the date on which
the principal of the Notes becomes due and payable as therein provided or as
provided in this First Supplemental Indenture, whether at Stated Maturity or on
a redemption date or pursuant to a Change of Control Offer (as defined in
Section 4.15(a)), and whether by declaration of acceleration, call for
redemption, purchase or otherwise.

        "Moody's" means Moody's Investors Service, Inc. or any successor rating
agency.

        "NMI Equity" means the excess of the value of the assets collateralizing
Non-Marginable Indebtedness over the amount of Non-Marginable Indebtedness, as
reported in accordance with GAAP.

        "Non-Marginable Indebtedness" means all Non-Recourse Indebtedness that
is secured by assets that are not subject to requirements that the borrower or
any third-party provide additional margin collateralization in the event of a
change in value of the assets.

                                       10

<PAGE>

        "Non-Recourse Indebtedness" means any of the Company's or any of its
Subsidiaries' Indebtedness that is:

                (1)     specifically advanced to finance the acquisition of
        investment assets and secured only by the assets to which such
        Indebtedness relates without recourse to the Company or any of its
        Subsidiaries (other than subject to such customary carve-out matters for
        which the Company or its Subsidiaries acts as a guarantor in connection
        with such Indebtedness, such as fraud, misappropriation and
        misapplication, unless, until and for so long as a claim for payment or
        performance has been made thereunder (which has not been satisfied) at
        which time the obligations with respect to any such customary carve-out
        shall not be considered Non-Recourse Indebtedness, to the extent that
        such claim is a liability of the Company for GAAP purposes);

                (2)     advanced to any of the Company's Subsidiaries or group
        of its Subsidiaries formed for the sole purpose of acquiring or holding
        investment assets, against which a loan is obtained that is made without
        recourse to, and with no cross-collateralization against our or any of
        the Company's Subsidiaries' other assets (other than: (A)
        cross-collateralization against assets which serve as collateral for
        other Non-Recourse Indebtedness; and (B) subject to such customary
        carve-out matters for which the Company or its Subsidiaries acts as a
        guarantor in connection with such Indebtedness, such as fraud,
        misappropriation and misapplication, unless, until and for so long as a
        claim for payment or performance has been made thereunder (which has not
        been satisfied) at which time the obligations with respect to any such
        customary carve-out shall not be considered Non-Recourse Indebtedness,
        to the extent that such claim is a liability of the Company for GAAP
        purposes) and upon complete or partial liquidation of which the loan
        must be correspondingly completely or partially repaid, as the case may
        be; or

                (3)     specifically advanced to finance the acquisition of real
        property and secured by only the real property to which such
        Indebtedness relates without recourse to the Company or any of its
        Subsidiaries (other than subject to such customary carve-out matters for
        which the Company or its Subsidiaries acts as a guarantor in connection
        with such Indebtedness, such as fraud, misappropriation and
        misapplication, unless, until and for so long as a claim for payment or
        performance has been made thereunder (which has not been satisfied) at
        which time the obligations with respect to any such customary carve-out
        shall not be considered Non-Recourse Indebtedness, to the extent that
        such claim is a liability of the Company for GAAP purposes).

        "Non-U.S. Person" means a Person that is not a U.S. Person as defined in
Regulation S, and includes dealers or other professional fiduciaries in the
United States acting on a discretionary basis for foreign beneficial owners
(other than an estate or trust) in offshore transactions meeting the
requirements of Rule 904 of Regulation S.

        "Notes" means, collectively, the Initial Notes, the Exchange Notes and
the Additional Notes, if any, and treated as a single class of securities, as
amended or supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this First Supplemental Indenture.

        "Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnification, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.

        "Officer" means, with respect to any Person, the President, Chief
Executive Officer, any Vice President, Chief Operating Officer, Treasurer,
Secretary or the Chief Financial Officer of such Person.

                                       11

<PAGE>

        "Officers' Certificate" means, with respect to any Person, a certificate
signed by two Officers of such Person; provided, however, that every Officers'
Certificate with respect to compliance with a covenant or condition provided for
in this First Supplemental Indenture shall include (i) a statement that the
Officers making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this First Supplemental
Indenture relating thereto and (ii) a statement as to whether, in the opinion of
the signers, such conditions have been complied with.

        "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee that meets the requirements of Section
12.05. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.

        "Other Comprehensive Income or Loss" shall mean the accumulated other
comprehensive income or loss of the Company and its Consolidated Subsidiaries as
determined in accordance with GAAP.

        "Participant" means, with respect to the Depositary, a Person who has an
account with the Depositary.

        "Permitted Hedging Transactions" means entering into instruments and
contracts and making margin calls thereon, covering Indebtedness of the Company
or any of its Subsidiaries and of any Subsidiary covering Indebtedness of such
Subsidiary that are entered into to protect the Company and its Subsidiaries
from fluctuations in interest rates on Indebtedness incurred in accordance with
this First Supplemental Indenture; and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar instruments, "interest
only" mortgage derivative assets or other mortgage derivative products, future
contracts and options on futures contracts on the Eurodollar, Federal Funds,
Treasury bills and Treasury rates and similar financial instruments.

        "Permitted Indebtedness" means, without duplication, each of the
following:

                (1)     Indebtedness under the Initial Notes;

                (2)     Indebtedness incurred pursuant to the Existing Warehouse
        Facilities in an aggregate principal amount at any time outstanding not
        to exceed the maximum amount available under each Existing Warehouse
        Facility as in effect on the Issue Date reduced by any required
        permanent repayments (which are accompanied by a corresponding permanent
        commitment reduction) thereunder;

                (3)     Other Indebtedness of the Company and its Subsidiaries
        outstanding on the Issue Date reduced by the amount of any scheduled
        amortization payments or mandatory prepayments when actually paid or
        permanent reductions thereon;

                (4)     Permitted Hedging Transactions of the Company covering
        Indebtedness of the Company or any of its Subsidiaries and Permitted
        Hedging Transactions of any Subsidiary of the Company covering
        Indebtedness of such Subsidiary; provided, however, that such Permitted
        Hedging Transactions are entered into to protect the Company and its
        Subsidiaries from fluctuations in interest rates on Indebtedness
        incurred in accordance with this First Supplemental Indenture to the
        extent the notional principal amount of such Permitted Hedging
        Transaction does not exceed the principal amount of the Indebtedness to
        which such Permitted Hedging Transactions relate;

                                       12

<PAGE>

                (5)     Indebtedness under Currency Agreements; provided that in
        the case of Currency Agreements which relate to Indebtedness, such
        Currency Agreements do not increase the Indebtedness of the Company and
        its Subsidiaries outstanding other than as a result of fluctuations in
        foreign currency exchange rates or by reason of fees, indemnities and
        compensation payable thereunder;

                (6)     Indebtedness of a Subsidiary of the Company to the
        Company or to a Wholly Owned Subsidiary of the Company for so long as
        such Indebtedness is held by the Company or a Wholly Owned Subsidiary of
        the Company;

                (7)     Indebtedness of the Company to a Wholly Owned Subsidiary
        of the Company for so long as such Indebtedness is held by a Wholly
        Owned Subsidiary of the Company, in each case subject to no Lien;
        provided that: (a) any Indebtedness of the Company to any Wholly Owned
        Subsidiary of the Company is unsecured and subordinated, pursuant to a
        written agreement, to the Company's obligations under this First
        Supplemental Indenture and the Notes; and (b) if as of any date any
        Person other than a Wholly Owned Subsidiary of the Company owns or holds
        any such Indebtedness or any Person holds a Lien in respect of such
        Indebtedness, such date shall be deemed the incurrence of Indebtedness
        not constituting Permitted Indebtedness by the Company;

                (8)     Indebtedness arising from the honoring by a bank or
        other financial institution of a check, draft or similar instrument
        inadvertently (except in the case of daylight overdrafts) drawn against
        insufficient funds in the ordinary course of business; provided,
        however, that such Indebtedness is extinguished within two business days
        of incurrence;

                (9)     Indebtedness of the Company or any of its Subsidiaries
        represented by letters of credit for the account of the Company or such
        Subsidiary, as the case may be, in order to provide security for
        workers' compensation claims, payment obligations in connection with
        self-insurance or similar requirements in the ordinary course of
        business;

                (10)    Indebtedness incurred pursuant to Principal and Interest
        Facilities in an aggregate principal amount at any time outstanding not
        to exceed the maximum amount available under each Principal and Interest
        Facility as in effect on the Issue Date reduced by any required
        permanent repayments (which are accompanied by a corresponding permanent
        commitment reduction) thereunder;

                (11)    Refinancing Indebtedness; and

                (12)    Additional Indebtedness of the Company and its
        Subsidiaries in an aggregate principal amount not to exceed $15.0
        million at any one time outstanding.

        For purposes of determining compliance with Section 4.09, 4.10 and 4.11
hereof, in the event that an item of Senior Unsecured Indebtedness or
Indebtedness, as the case may be, meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (1) through (12) above
or is entitled to be incurred pursuant to the second paragraph of each such
covenant, the Company shall, in its sole discretion, classify (or later
reclassify) such item of Senior Unsecured Indebtedness or Indebtedness, as the
case may be, in any manner that complies with this covenant. Accrual of
interest, accretion or amortization of original issue discount, the payment of
interest on any Senior Unsecured Indebtedness or Indebtedness, as the case may
be, in the form of additional Senior Unsecured Indebtedness or Indebtedness, as
the case may be, with the same terms, and the payment of dividends on
Disqualified Capital Stock in the form of additional shares of the same class of
Disqualified Capital Stock will not be

                                       13

<PAGE>

deemed to be an incurrence of Senior Unsecured Indebtedness or Indebtedness, as
the case may be, or an issuance of Disqualified Capital Stock for purposes of
the "Limitations on Incurrence of Additional Senior Unsecured Indebtedness,"
"Limitation Based Upon Total Unencumbered Assets," and "Limitation on Incurrence
of Additional Consolidated Indebtedness" covenants.

        "Permitted Liens" means the following types of Liens:

                (1)     Liens for taxes, assessments or governmental charges or
        claims either: (a) not delinquent; or (b) contested in good faith by
        appropriate proceedings and as to which the Company or its Subsidiaries
        shall have set aside on its books such reserves as may be required
        pursuant to GAAP;

                (2)     Statutory Liens of landlords and Liens of carriers,
        warehousemen, mechanics, suppliers, materialmen, repairmen and other
        Liens imposed by law incurred in the ordinary course of business for
        sums not yet delinquent or being contested in good faith, if such
        reserve or other appropriate provision, if any, as shall be required by
        GAAP shall have been made in respect thereof;

                (3)     Liens incurred or deposits made in the ordinary course
        of business in connection with workers' compensation, unemployment
        insurance and other types of social security, including any Lien
        securing letters of credit issued in the ordinary course of business
        consistent with past practice in connection therewith, or to secure the
        performance of tenders, statutory obligations, surety and appeal bonds,
        bids, leases, government contracts, performance and return-of-money
        bonds and other similar obligations (exclusive of obligations for the
        payment of borrowed money);

                (4)     Judgment Liens not giving rise to an Event of Default so
        long as such Lien is adequately bonded and any appropriate legal
        proceedings which may have been duly initiated for the review of such
        judgment shall not have been finally terminated or the period within
        which such proceedings may be initiated shall not have expired;

                (5)     Easements, rights-of-way, zoning restrictions and other
        similar charges or encumbrances in respect of real property not
        interfering in any material respect with the ordinary conduct of the
        business of the Company or any of its Subsidiaries;

                (6)     Any interest or title of a lessor under any Capitalized
        Lease Obligation; provided that such Liens do not extend to any property
        or assets which is not leased property subject to such Capitalized Lease
        Obligation;

                (7)     Liens upon specific items of inventory or other goods
        and proceeds of any Person securing such Person's obligations in respect
        of bankers' acceptances issued or created for the account of such Person
        to facilitate the purchase, shipment or storage of such inventory or
        other goods;

                (8)     Liens securing reimbursement obligations with respect to
        commercial letters of credit which encumber documents and other property
        relating to such letters of credit and products and proceeds thereof;

                (9)     Liens encumbering deposits made to secure obligations
        arising from statutory, regulatory, contractual, or warranty
        requirements of the Company or any of its Subsidiaries, including rights
        of offset and set-off;

                                       14

<PAGE>

                (10)    Liens securing Permitted Hedging Transactions and the
        costs thereof, which Permitted Hedging Transactions relate to
        Indebtedness that is otherwise permitted under this First Supplemental
        Indenture; and

                (11)    Liens securing Indebtedness under Currency Agreements.

        "Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.

        "Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.

        "Principal and Interest Facilities" means any principal and interest
facilities in aggregate borrowing capacity amount at any one time of up to $50
million, together with the related documents thereto (including, without
limitation, any security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring or adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.

        "Purchase Agreement" means the Purchase Agreement dated May 8, 2003
between the Company and the Initial Purchaser.

        "Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.

        "Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.

        "Refinancing Indebtedness" means any Refinancing by the Company or any
Subsidiary of the Company of Senior Unsecured Indebtedness incurred in
accordance with Section 4.09, 4.10 and 4.11 hereof (other than pursuant to
clauses (2), (4), (5), (6), (7), (8), (9), (10) or (12) of the definition of
Permitted Indebtedness), and in each case that does not:

                (1)     result in an increase in the aggregate principal amount
        of Senior Unsecured Indebtedness or Indebtedness, as the case may be, of
        such Person as of the date of such proposed Refinancing (plus the amount
        of any premium required to be paid under the terms of the instrument
        governing such Senior Unsecured Indebtedness or Indebtedness, as the
        case may be, and plus the amount of reasonable expenses incurred by the
        Company in connection with such Refinancing); or

                (2)     create Senior Unsecured Indebtedness or Indebtedness, as
        the case may be, with: (a) a Weighted Average Life to Maturity that is
        less than the Weighted Average Life to Maturity of the Senior Unsecured
        Indebtedness or Indebtedness being Refinanced; or (b) a final maturity
        earlier than the final maturity of the Senior Unsecured Indebtedness or
        Indebtedness being Refinanced; provided that (i) if such Senior
        Unsecured Indebtedness or Indebtedness being Refinanced is Senior
        Unsecured Indebtedness or Indebtedness, as the case may be, of the
        Company, then such Refinancing Indebtedness shall be Senior Unsecured
        Indebtedness or

                                       15

<PAGE>

        Indebtedness, as the case may be, solely of the Company, and (ii) if
        such Senior Unsecured Indebtedness or Indebtedness being Refinanced is
        subordinate or junior to the Notes, then such Refinancing Indebtedness
        shall be subordinate to the Notes at least to the same extent and in the
        same manner as the Senior Unsecured Indebtedness or Indebtedness being
        Refinanced.

        "Registration Rights Agreement" means the Registration Rights Agreement,
dated May 15, 2003, between the Company and the Initial Purchaser.

        "Regulation S" means Regulation S under the Securities Act.

        "REIT" means Real Estate Investment Trust.

        "Responsible Officer" means, when used with respect to the Trustee, any
managing director, director, principal, vice president, assistant vice
president, assistant treasurer, associate or any other officer within the
corporate trust department of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
shall mean, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge and familiarity
with the particular subject.

        "Rule 144A" means Rule 144A under the Securities Act.

        "Secured Indebtedness" means any Indebtedness secured by a Lien upon the
property of the Company or any of its Subsidiaries.

        "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute or statutes thereto.

        "Senior Unsecured Indebtedness" means all Indebtedness of the Company
and its Subsidiaries other than (1) Indebtedness that is secured by a Lien on
property or assets of the Company or its Subsidiaries and (2) Subordinated
Indebtedness.

        "Shelf Registration Statement" has the meaning set forth in Section
5.02.

        "Significant Subsidiary," with respect to any Person, means any
Subsidiary of such Person that satisfies the criteria for a "significant
subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the Exchange Act.

        "S&P" means Standard & Poor's Ratings Service, a division of McGraw Hill
Inc., a New York corporation, or any successor rating agency.

        "Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon means the dates specified in such Indebtedness
as the fixed date on which the principal of or premiums on such Indebtedness or
such installment of interest is due and payable.

        "Subordinated Indebtedness" means all of the Company's and its
Subsidiaries' Indebtedness that expressly provides that such Indebtedness shall
be subordinated in right of payment to any other Indebtedness and matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof (except, in each case, upon
the occurrence of a Change of Control) on or after the final maturity date of
the Notes.

        "Subsidiary," with respect to any Person, means:

                                       16

<PAGE>

                (1)     any corporation of which the outstanding Capital Stock
        having at least a majority of the votes entitled to be cast in the
        election of directors under ordinary circumstances shall at the time be
        owned, directly or indirectly, by such Person; or

                (2)     any other Person of which at least a majority of the
        voting interest under ordinary circumstances is at the time, directly or
        indirectly, owned by such Person.

        "TIA" means the Trust Indenture Act of 1939, as amended.

        "TMHL" means Thornburg Mortgage Home Loans, Inc., a Delaware
corporation.

        "Total Unencumbered Assets" as of any date means all assets (but
excluding intangibles and accounts receivable other than principal and interest
receivables on ARM assets) of the Company and its Subsidiaries not securing any
portion of secured Indebtedness determined on a consolidated basis in accordance
with GAAP.

        "Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this First Supplemental
Indenture and thereafter means the successor serving hereunder.

        "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

        "Unsecured Indebtedness" means any Indebtedness of the Company or any of
its subsidiaries that is not Secured Indebtedness.

        "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (1) the then
outstanding aggregate principal amount of such Indebtedness into; (2) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

        "Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting Securities (other than in the case of
a foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by such Person or any Wholly Owned Subsidiary of such Person.

        "2013 Notes" has the meaning set forth in the Recitals hereto.

Section 1.02.   Other Definitions.

                                                                    Defined in
                Term                                                  Section
                "Affiliate Transaction"............................    4.12
                "Authentication Order".............................    2.03
                "Change of Control Date"...........................    4.15
                "Change of Control Payment Date"...................    4.15
                "Change of Control Offer"..........................    4.15
                "Change of Control Purchase Date"..................    4.15
                "Change of Control Purchase Price".................    4.15
                "Covenant Defeasance"..............................    9.03

                                       17

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                "Event of Default".................................    7.01
                "incur"............................................    4.09
                "Legal Defeasance".................................    9.02
                "Paying Agent".....................................    2.04
                "Registrar"........................................    2.04
                "Redemption Date"..................................    3.07
                "Restricted Payment"...............................    4.07
                "Surviving Entity".................................    6.01

Section 1.03.   Incorporation by Reference of Trust Indenture Act. Whenever this
First Supplemental Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this First Supplemental
Indenture.

        All terms used in this First Supplemental Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by rule of the
Commission under the TIA have the meanings so assigned to them.

Section 1.04.   Rules of Construction. Unless the context otherwise requires:

        (a) a term has the meaning assigned to it;

        (b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;

        (c) "or" is not exclusive;

        (d) words in the singular include the plural, and in the plural include
the singular;

        (e) provisions apply to successive events and transactions; and

        (f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules adopted
by the Commission from time to time.

                                   ARTICLE II

                                    THE NOTES

Section 2.01.   Creation of the Notes.

        (a) Initial Notes. In accordance with Section 2.01 of the Original
Indenture, the Company hereby creates the Initial Notes as a separate series of
its securities issued pursuant to the Indenture. The Initial Notes shall be
issued initially in an aggregate principal amount of $200,000,000.

        (b) Exchange Notes. In accordance with Section 2.01 of the Original
Indenture, the Company hereby creates the Exchange Notes as a separate series of
its securities issued pursuant to the Indenture. The Exchange Notes are to be
issued in exchange for the Initial Notes as provided in this First Supplemental
Indenture and the Registration Rights Agreement. The Exchange Notes may be
issued initially in an aggregate principal amount of up to the principal amount
of the Initial Notes tendered in exchange therefor in an Exchange Offer.

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<PAGE>

Section 2.02.   Form and Dating.

        (a) The Initial Notes shall be in the form of Exhibit A or Exhibit B
hereto, as applicable, and the Exchange Notes shall be in the form of Exhibit D
or Exhibit E hereto, as applicable.

        (b) Initial Notes offered and sold to "qualified institutional buyers"
(as defined in Rule 144A) in reliance on Rule 144A as provided in the Purchase
Agreement shall be issued in book-entry form and shall be represented by a
single, permanent global note in fully registered form, without coupons,
substantially in the form of Exhibit A hereto and shall bear the legends set
forth in Section 2.08(a) and (b) (the "Initial Restricted Global Note"). Upon
issuance, the Initial Restricted Global Note shall be registered in the name of
"Cede & Co.," as nominee of DTC, duly executed by the Company and authenticated
by the Trustee and deposited with or on behalf of DTC.

        (c) Initial Notes offered and sold to Non-U.S. Persons in reliance on
Regulation S as provided in the Purchase Agreement shall be issued in book-entry
form and shall be represented by a single, permanent global note in definitive,
fully registered form, without coupons, substantially in the form of Exhibit B
hereto and shall bear the legends set forth in Section 2.08(a) and (b) (the
"Initial Regulation S Global Note," and together with the Initial Restricted
Global Note," the "Initial Global Notes"). Upon issuance, the Initial Regulation
S Global Note shall be registered in the name of "Cede & Co.," as nominee for
DTC, duly executed by the Company and authenticated by the Trustee and deposited
with or on behalf of DTC for the accounts of Euroclear or Clearstream Banking.
Interests in the Initial Regulation S Global Note may only be held through
Euroclear or Clearstream Banking.

        (d) [intentionally left blank]

        (e) In the event all or a portion of the Initial Notes of any series are
tendered in an Exchange Offer, such Notes or the portions thereof being
exchanged shall be exchanged for a single, permanent global note in definitive,
fully registered form, without coupons, substantially in the form of Exhibit D
hereto (the "Exchange Global Notes") and shall bear the legends set forth in
Section 2.08(c) hereof. Upon issuance, each Exchange Global Note shall be
registered in the name of "Cede & Co.," as nominee of DTC, duly executed by the
Company and authenticated by the Trustee and deposited with or on behalf of DTC.
Except as provided in Section 2.07(b), Exchange Certificated Notes shall not be
issued and the Company waives any discretionary right it may otherwise have to
cause the Notes to be issued in certificated form.

Section 2.03.   Execution and Authentication. Two Officers shall sign the Notes
for the Company by manual or facsimile signature. The Company's seal will be
reproduced on the Notes.

        A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this First Supplemental Indenture.

        The Trustee shall, upon a written order of the Company signed by one or
more Officers (an "Authentication Order"), authenticate Notes for original issue
on the Issue Date in aggregate principal amount not to exceed $200,000,000
(other than as provided in Section 2.09). The Trustee shall authenticate
Additional Notes thereafter (so long as permitted by the terms of this First
Supplemental Indenture) for original issue upon one or more Authentication
Orders in aggregate principal amount as specified in such order (other than as
provided in Section 2.09). Each such Authentication Order shall specify the
amount of Notes to be authenticated, whether the Notes are to be Initial Notes,
Additional Notes or Exchange Notes and whether the Notes are to be issued as
definitive notes or Global Notes or such other information as the Trustee shall
reasonably request.

                                       19

<PAGE>

        The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this First Supplemental
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.

Section 2.04.   Registrar and Paying Agent. The Company shall maintain an office
or agency where Notes may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where Notes may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this First Supplemental Indenture.
If the Company fails to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The Company or any of its
Subsidiaries may act as Paying Agent or Registrar.

        The Company initially appoints DTC to act as Depositary with respect to
the Global Notes.

        The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.05.   Paying Agent to Hold Money in Trust. The Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Notes, and will notify the Trustee in writing of any default by
the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Company or a Subsidiary) shall have no further liability for the money.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

Section 2.06.   Holder Lists. The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders and the Company shall otherwise comply with TIA Section 312(a).

Section 2.07.   Transfer and Exchange.

        (a) By its acceptance of any Initial Note represented by a certificate
bearing the legend set forth in Section 2.08(a) hereof (the "Private Placement
Legend"), each Holder of, and beneficial bearer of an interest in, such Initial
Note acknowledges the restrictions on transfer of such Initial Note and agrees
that it shall transfer such Initial Note only in accordance with such
restrictions. Each purchaser (other than the Initial Purchaser) of the Notes and
each Person to whom the Notes are transferred shall, prior to the Resale
Restriction Termination Date (as defined in the Private Placement Legend), be
deemed to have acknowledged, represented and agreed to the matters and
restrictions on transfer described under the heading "Notice to Investors" in
the Confidential Offering Circular of the Company, dated May 8, 2003,

                                       20

<PAGE>

relating to the Initial Notes. Upon the registration of transfer, exchange or
replacement of an Initial Note not bearing the Private Placement Legend, the
Trustee shall deliver an Initial Note or Initial Notes that do not bear the
Private Placement Legend. Upon the registration of transfer, exchange or
replacement of an Initial Note bearing the Private Placement Legend, the Trustee
shall deliver an Initial Note or Initial Notes bearing the Private Placement
Legend, unless such legend may be removed from such Note as provided in this
Section 2.07. If the Private Placement Legend has been removed from an Initial
Note, as provided herein, no other Initial Note issued in exchange for all or
any part of such Initial Note shall bear such legend, unless the Company has
reasonable cause to believe that such other Initial Note represents a
"restricted security" within the meaning of Rule 144 under the Securities Act
and instructs the Trustee in writing to cause a legend to appear thereon. Each
Initial Note shall bear the Private Placement Legend unless and until:

                (1) a transfer of such Initial Note is made pursuant to an
        effective Shelf Registration Statement, in which case the Private
        Placement Legend shall be removed from such Initial Note so transferred
        at the request of the Holder; or

                (2) there is delivered to the Company such satisfactory
        evidence, which may include an opinion of independent counsel licensed
        to practice law in the State of New York, as may reasonably be requested
        by the Company confirming that neither such legend nor the restrictions
        on transfer set forth therein are required to ensure that transfers of
        such Initial Note shall not violate the registration and prospectus
        delivery requirements of the Securities Act; provided, that the Trustee
        shall not be required to determine but may rely on a determination made
        by the Company with respect to the sufficiency of any such evidence; and
        upon written direction of the Company, the Trustee shall authenticate
        and deliver in exchange for such Initial Note, an Initial Note or
        Initial Notes representing the same aggregate principal amount of the
        Initial Note being exchanged) without such legend.

        (b) The Initial Global Note or Exchange Global Note, as the case may be,
shall be exchanged by the Company for one or more Initial Certificated Notes or
Exchange Certificated Notes, as applicable, if (i) DTC (1) has notified the
Company that it is unwilling or unable to continue as, or ceases to be, a
clearing agency registered under Section 17A of the Exchange Act and (2) a
successor to DTC registered as a clearing agency under Section 17A of the
Exchange Act is not able to be appointed by the Company within 90 calendar days
or (ii) DTC is at any time unwilling or unable to continue as depositary and the
Company is not able to appoint a successor to DTC within 90 calendar days. If an
Event of Default occurs and is continuing, the Company shall, at the request of
the Trustee or the Holder thereof, exchange all or part of the Initial Global
Note or Exchange Global Note, as the case may be, for one or more Initial
Certificated Notes or Exchange Certificated Notes, as applicable. Whenever a
Global Note is exchanged for one or more Initial Certificated Notes or Exchange
Certificated Notes, as the case may be, it shall be surrendered by the Holder
thereof to the Trustee and cancelled by the Trustee. All Initial Certificated
Notes or Exchange Certificated Notes issued in exchange for a Global Note or a
portion thereof shall be registered in such names, and delivered, as DTC shall
instruct the Trustee. Any Initial Certificated Notes issued pursuant to this
Section 2.07 shall include the Private Placement Legend, except as set forth in
Section 2.07(a) hereof.

        (c) Any Initial Notes that are presented to the Trustee for exchange
pursuant to an Exchange Offer shall be exchanged for Exchange Notes of equal
principal amount upon surrender to the Trustee in accordance with the terms of
the Exchange Offer. Whenever any Initial Notes are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver to the
surrendering Holder thereof, Exchange Notes in the same aggregate principal
amount as the Initial Notes so surrendered.

                                       21

<PAGE>

        (d) Any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book-entry system maintained by such Holder (or its
agent), and that ownership of a beneficial interest in the Notes represented
thereby shall be required to be reflected in book-entry form. Transfers of a
Global Note shall be limited to transfers in whole and not in part, to DTC, its
successors and their respective nominees. Interests of beneficial owners in a
Global Note shall be transferred in accordance with the rules and procedures of
DTC (or its successors).

Section 2.08.   Legends. The following legends shall appear on the Notes.

        (a) Except as provided in Section 2.08(b) hereof, each Initial Note
shall bear the following legends on the face thereof:

        THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY
IN MINIMUM DENOMINATIONS OF $1,000 ($100,000 FOR INSTITUTIONAL ACCREDITED
INVESTORS) AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.

        THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (a)
TO THE COMPANY OR THE INITIAL PURCHASER OR BY, THROUGH OR IN A TRANSACTION
APPROVED BY, THE INITIAL PURCHASER, (b) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (d) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT) ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR AS
A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS SUCH TRANSFEREE IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (e) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES TO AN INSTITUTION THAT IS NOT A U.S. PERSON (AND WAS NOT PURCHASING FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON) WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, OR (f) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS NOTE BEING COMPLETED AND DELIVERED BY THE TRANSFEROR AND, IF

                                       22

<PAGE>

APPLICABLE, THE TRANSFEREE TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

        THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY
THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL NOTES OF THE
SERIES.

        (b) In addition to the legends set forth in Section 2.08(a), each
Initial Global Note shall also bear the following legends on the face thereof:

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

        UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR
NOTES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE
OF SUCH SUCCESSOR.

        (c) The Exchange Global Note shall bear the following legends on the
face thereof:

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

        UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR
NOTES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE
OF SUCH SUCCESSOR.

Section 2.09.   Replacement Notes. If any mutilated Note is surrendered to the
Trustee or the Company and the Trustee receives evidence to its satisfaction of
the destruction, loss or theft of any Note, the

                                       23

<PAGE>

Company shall issue and the Trustee, upon receipt of an Authentication Order,
shall authenticate a replacement Note if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.

        Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this First Supplemental Indenture
equally and proportionately with all other Notes duly issued hereunder.

Section 2.10.   Outstanding Notes. The Notes outstanding at any time are all the
Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.11 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.

        If a Note is replaced pursuant to Section 2.09 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

        If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

        If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

Section 2.11.   Treasury Notes. In determining whether the Holders of the
required principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company, or by any Affiliate of the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee actually knows are so
owned shall be so disregarded.

Section 2.12.   Temporary Notes. Until certificates representing Notes are ready
for delivery, the Company may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of certificated Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.

        Holders of temporary Notes shall be entitled to all of the benefits of
this First Supplemental Indenture.

Section 2.13.   Cancellation. The Company at any time may deliver Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Notes (subject to the record retention requirement of the
Exchange Act). The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.

                                       24

<PAGE>

Section 2.14.   Defaulted Interest. If the Company defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Company shall notify
the Trustee in writing of the amount of defaulted interest proposed to be paid
on each Note and the date of the proposed payment. The Company shall fix or
cause to be fixed each such special record date and payment date; provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.

Section 2.15.   Record Date. The Company may set a record date for purposes of
determining the identity of Holders entitled to vote or to consent to any action
by vote or consent authorized or permitted by Sections 7.04 and 7.05.

Section 2.16.   CUSIP Numbers. The Company in issuing the Notes may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall use CUSIP
numbers in notices of redemption as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or the omission of such numbers. The Company will promptly notify
the Trustee in writing of any change in the CUSIP numbers.

                                   ARTICLE III

                            REDEMPTION AND PREPAYMENT

Section 3.01.   Notices to Trustee. If the Company elects to redeem Notes
pursuant to the optional redemption provisions of Section 3.07 hereof, it shall
furnish to the Trustee, at least 45 days but not more than 60 days before a
redemption date, an Officers' Certificate setting forth (i) the clause of this
First Supplemental Indenture pursuant to which the redemption shall occur, (ii)
the redemption date, (iii) the principal amount of Notes to be redeemed, (iv)
the redemption price and (v) the CUSIP numbers of the Notes to be redeemed.

Section 3.02.   Selection of Notes to Be Redeemed. In the event that the Company
chooses to redeem less than all of the Notes, selection of the Notes for
redemption will be made by the Trustee either:

                (1) in compliance with the requirements of the principal
        national Securities exchange, if any, on which the Notes are listed; or

                (2) on a pro rata basis, by lot or by such method as the Trustee
        shall deem fair and appropriate.

        No Notes of a principal amount of $1,000 or less shall be redeemed in
part. If a partial redemption is made with the proceeds of an Equity Offering
(as defined in Section 3.07(b)), the Trustee will select the Notes only on a pro
rata basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures).

        The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.

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<PAGE>

Notes and portions of Notes selected shall be in amounts of $1,000 or whole
multiples of $1,000; except that if all of the Notes of a Holder are to be
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this First Supplemental Indenture that apply to Notes
called for redemption also apply to portions of Notes called for redemption.

Section 3.03.   Notice of Redemption. At least 30 days but not more than 60 days
before a redemption date, the Company shall mail or cause to be mailed, by first
class mail (at its own expense), a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.

        The notice shall identify the Notes to be redeemed, including the CUSIP
numbers, and shall state:

        (a) the redemption date;

        (b) the redemption price and the amount of accrued and unpaid interest,
if any, to be paid;

        (c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;

        (d) the name and address of the Paying Agent;

        (e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

        (f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;

        (g) the paragraph of the Notes and/or section of this First Supplemental
Indenture pursuant to which the Notes called for redemption are being redeemed;
and

        (h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.

        At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have provided to the Trustee, at least 45 days prior to the
redemption date (unless a shorter notice shall be satisfactory to the Trustee),
the information required by clauses (a) through (h) above.

Section 3.04.   Effect of Notice of Redemption. Once notice of redemption is
mailed in accordance with Section 3.03 hereof, Notes called for redemption
become irrevocably due and payable on the redemption date at the redemption
price. A notice of redemption may not be conditional.

Section 3.05.   Deposit of Redemption Price. One Business Day prior to the
redemption date, the Company shall deposit with the Trustee or with the Paying
Agent money sufficient to pay the redemption price of and accrued interest on
all Notes to be redeemed on that date and any amounts owed the Trustee. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed and any amounts owed the Trustee.

                                       26

<PAGE>

        If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.

Section 3.06.   Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall issue and, upon the Company's written
request, the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.

Section 3.07.   (a) Optional Redemption. At any time on or after May 15, 2008,
the Notes may be redeemed or purchased in whole or in part at the Company's
option at a price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the date
of redemption or purchase (the "Redemption Date") (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).

        "Applicable Premium" means, with respect to a Note at any Redemption
Date: (1) 104% of the principal amount of such Note if the Redemption Date is on
or after May 15, 2008 and before May 15, 2009; (2) 102.667% of the principal
amount of such Note if the Redemption Date is on or after May 15, 2009 and
before May 15, 2010; (3) 101.333% of the principal amount of such Note if the
Redemption Date is on or after May 15, 2010 and before May 15, 2011; and (4) 0%
of the principal amount of such Note if the Redemption Date is on or after May
15, 2011. Calculation of the Applicable Premium will be made by the Company or
on behalf of the Company by such Person as the Company shall designate;
provided, however, that such calculation shall not be a duty or obligation of
the Trustee.

        "Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2013; provided,
however, that if the period from such Redemption Date to May 15, 2013 is not
equal to the constant maturity of the United States Treasury securities for
which a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields
are given, except that if the period from such Redemption Date to May 15, 2013
is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

        (b) Optional Redemption Upon Equity Offerings. At any time, or from time
to time, on or prior to May 15, 2006, the Company may, at its option, use the
net cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes issued under this First Supplemental Indenture at
a redemption price of 108% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the date of redemption; provided that:

                (1) at least 65% of the principal amount of Notes issued under
        this First Supplemental Indenture remains outstanding immediately after
        any such redemption; and

                                       27

<PAGE>

                (2) the Company makes such redemption not more than 60 days
        after the consummation of any such Equity Offering.

        Other than as specifically provided in this Section 3.07, any redemption
pursuant to this Section 3.07 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

Section 3.08.   Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes prior to Maturity.

                                   ARTICLE IV

                                    COVENANTS

Section 4.01.   Payment of Notes. The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the dates and in the
manner provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due.

        The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

Section 4.02.   Maintenance of Office or Agency. The Company shall maintain in
the Borough of Manhattan, the City of New York, an office or agency (which may
be an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Notes and this First Supplemental Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.

        The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.

        The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.04.

Section 4.03.   Reports to Holders. Whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
shall furnish the Holders of Notes:

                (1) all quarterly and annual financial information that would be
        required to be contained in a filing with the Commission on Forms 10-Q
        and 10-K if the Company were required to file

                                       28

<PAGE>

        such Forms, including a "Management's Discussion and Analysis of
        Financial Condition and Results of Operations" that describes the
        financial condition and results of operations of the Company and its
        consolidated Subsidiaries (showing in reasonable detail, either on the
        face of the financial statements or in the footnotes thereto and in
        Management's Discussion and Analysis of Financial Condition and Results
        of Operations, the financial condition and results of operations of the
        Company and its Subsidiaries separate from the financial condition and
        results of operations of the Subsidiaries of the Company, if any) and,
        with respect to the annual information only, a report thereon by the
        Company's certified independent accountants; and

                (2) all current reports that would be required to be filed with
        the Commission on Form 8-K if the Company were required to file such
        reports, in each case within the time periods specified in the
        Commission's rules and regulations.

        In addition, whether or not required by the rules and regulations of the
Commission, the Company shall file a copy of all such information and reports
with the Commission for public availability within the time periods specified in
the Commission's rules and regulations (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Company has agreed that,
for so long as any Notes remain outstanding, it will furnish to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

Section 4.04.   Compliance Certificate.

        (a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled
their obligations under this First Supplemental Indenture, and further stating,
as to each such Officer signing such certificate, that to the best of his or her
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this First Supplemental Indenture and is not in default in
the performance or observance of any of the terms, provisions and conditions of
this First Supplemental Indenture (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.

        (b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

Section 4.05.   Taxes. The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders.

Section 4.06.   Stay, Extension and Usury Laws. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time

                                       29

<PAGE>

hereafter in force, that may affect the covenants or the performance of this
First Supplemental Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.

Section 4.07.   Limitation on Restricted Payments. The Company shall not, and
shall not cause or permit any of its Subsidiaries to, directly or indirectly:

                (1) declare or pay any dividend or make any distribution (other
        than dividends or distributions payable in Qualified Capital Stock of
        the Company) on or in respect of shares of the Company's Capital Stock
        to holders of such Capital Stock;

                (2) purchase, redeem or otherwise acquire or retire for value
        any Capital Stock of the Company or any warrants, rights or options to
        purchase or acquire shares of any class of such Capital Stock; or

                (3) make any principal payment on, purchase, defease, redeem,
        prepay, decrease or otherwise acquire or retire for value, prior to any
        scheduled final maturity, scheduled repayment or scheduled sinking fund
        payment, any Indebtedness of the Company that is subordinate or junior
        in right of payment to the Notes

        if at the time of such action (each, a "Restricted Payment") or
        immediately after giving effect thereto,

                        (i)     a Default or an Event of Default shall have
                occurred and be continuing; or

                        (ii)    the Company is not able to incur at least $1.00
                of additional Indebtedness (other than Permitted Indebtedness)
                in compliance with Sections 4.09, 4.10 and 4.11 hereof; or

                        (iii)   the aggregate amount of Restricted Payments
                (including such proposed Restricted Payment) made subsequent to
                the Issue Date (the amount expended for such purposes, if other
                than in cash, being the fair market value of such property as
                determined in good faith by the Board of Directors of the
                Company) shall exceed the sum of:

                        (w)     $47.1 million (which amount represents the
                                Company's undistributed taxable income as of
                                March 31, 2003); plus

                        (x)     95% of the cumulative Adjusted Earnings (or if
                                the cumulative Adjusted Earnings shall be a
                                loss, minus 100% of such loss) of the Company,
                                less any dividends on Preferred Stock of the
                                Company paid or accrued, from and after March
                                31, 2003 and on or prior to the date the
                                Restricted Payment occurs (the "Reference Date")
                                (treating such period as a single accounting
                                period); plus

                        (y)     100% of the aggregate net cash proceeds received
                                by the Company from any Person (other than a
                                Subsidiary of the Company) from the issuance and
                                sale subsequent to the Issue Date and on or
                                prior to the Reference Date of Qualified Capital
                                Stock of the Company; plus

                                       30

<PAGE>

                        (z)     without duplication of any amounts included in
                                clause (iii)(y) above, 100% of the aggregate net
                                cash proceeds of any equity contribution
                                received by the Company from a holder of the
                                Company's Capital Stock (excluding, in the case
                                of clauses (iii)(y) and (z), any net cash
                                proceeds from an Equity Offering to the extent
                                used to redeem the Notes in compliance with the
                                provisions set forth under Section 3.07(b)
                                hereof.

        The foregoing provisions do not prohibit:

                (1)     the payment of any dividend within 60 days after the
        date of declaration of such dividend if the dividend would have been
        permitted on the date of declaration;

                (2)     if no Default or Event of Default shall have occurred
        and be continuing, the acquisition of any shares of Capital Stock of the
        Company, either (i) solely in exchange for shares of Qualified Capital
        Stock of the Company or (ii) through the application of net proceeds of
        a substantially concurrent sale for cash (other than to a Subsidiary of
        the Company) of shares of Qualified Capital Stock of the Company;

                (3)     so long as no Default or Event of Default shall have
        occurred and be continuing, repurchases by the Company of Common Stock
        of the Company from employees of the Company or any of its Subsidiaries
        or their authorized representatives upon the death, disability or
        termination of employment of such employees, in an aggregate amount not
        to exceed $500,000 in any calendar year;

                (4)     the declaration or payment by the Company of any
        dividend or distribution that is necessary to maintain its status as a
        REIT under the Code if:

                        (a)     the dividend or distribution does not exceed
                100% of the Consolidated Net Income for the fiscal quarter
                preceding the declaration and payment date; and

                        (b)     no Default or Event of Default shall have
                occurred and be continuing;

                (5)     the payment of any dividend on Preferred Stock of the
        Company; and

                (6)     Restricted Payments in an amount not to exceed $50.0
        million.

        In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) above, amounts
expended pursuant to clauses (1), (2) (ii), (3), (4) and (6) shall be included
in such calculation.

Section 4.08.   Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to:

                (1) pay dividends or make any other distributions on or in
        respect of its Capital Stock to the Company;

                (2) make loans or advances or to pay any Indebtedness or other
        obligation owed to the Company or any other Subsidiary of the Company;
        or

                                       31

<PAGE>

                (3) transfer any of its property or assets to the Company or any
        other Subsidiary of the Company, except for such encumbrances or
        restrictions existing under or by reason of:

                        (a) applicable law;

                        (b) this First Supplemental Indenture;

                        (c) customary non-assignment provisions of any contract
                or any lease governing a leasehold interest of any Subsidiary of
                the Company;

                        (d) any instrument governing Acquired Indebtedness,
                which encumbrance or restriction is not applicable to any
                Person, or the properties or assets of any Person, other than
                the Person or the properties or assets of the Person so
                acquired;

                        (e) agreements existing on the Issue Date to the extent
                and in the manner such agreements are in effect on the Issue
                Date;

                        (f) provisions of any agreement governing Indebtedness
                incurred in accordance with this First Supplemental Indenture
                that impose such encumbrances or restrictions upon the
                occurrence of a default or failure to meet financial covenants
                or conditions under the agreement;

                        (g) restrictions on the transfer of assets (other than
                cash) held in a Subsidiary of the Company imposed under any
                agreement governing Indebtedness incurred in accordance with
                this First Supplemental Indenture;

                        (h) provisions of any agreement governing Indebtedness
                incurred in accordance with this First Supplemental Indenture
                that require a Subsidiary to service its debt obligations before
                making dividends, distributions or advancements in respect of
                its Capital Stock;

                        (i) an agreement governing Indebtedness incurred to
                Refinance the Indebtedness issued, assumed or incurred pursuant
                to an agreement referred to in clause (b), (d) or (e) above;
                provided, however, that the provisions relating to such
                encumbrance or restriction contained in any such Indebtedness
                are not materially less favorable to the Company as determined
                by the Board of Directors of the Company in their reasonable and
                good faith judgment than the provisions relating to such
                encumbrance or restriction contained in agreements referred to
                in such clause (b), (d) or (e).

Section 4.09.   Limitation on Incurrence of Additional Senior Unsecured
Indebtedness. The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume, guarantee, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Senior Unsecured Indebtedness (including,
without limitation, Acquired Indebtedness) other than Permitted Indebtedness.

        Notwithstanding the foregoing, if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Senior Unsecured Indebtedness, the Company or any of its
Subsidiaries may incur Senior Unsecured Indebtedness (including, without
limitation, Acquired Indebtedness), in each case if on the date of the
incurrence of such Senior Unsecured Indebtedness, after giving effect to the
incurrence thereof and the use of proceeds thereof:

                                       32

<PAGE>

            .   the Consolidated Senior Unsecured Indebtedness Interest Coverage
                Ratio of the Company is greater than 3.0 to 1.0; and

            .   the ratio of the aggregate amount of Senior Unsecured
                Indebtedness outstanding to the Company's Consolidated Adjusted
                Tangible Net Worth is less than 0.25 to 1.0.

Section 4.10.   Limitation on Incurrence of Additional Consolidated
Indebtedness. The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, incur any Indebtedness (including, without
limitation, Acquired Indebtedness) other than Permitted Indebtedness.

        Notwithstanding the foregoing, if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company or any of its Subsidiaries may
incur Indebtedness (including, without limitation, Acquired Indebtedness), in
each case if on the date of the incurrence of such Indebtedness, after giving
effect to the incurrence thereof and the use of proceeds thereof:

            .   the ratio of Adjusted Debt to Adjusted Net Worth is less than 12
                to 1.

Section 4.11.   Limitation Based Upon Total Unencumbered Assets. If the Total
Unencumbered Assets of the Company and its Consolidated Subsidiaries is less
than 125% of the aggregate principal amount of the Unsecured Indebtedness of the
Company and its Consolidated Subsidiaries, in each case as of the last day of
any fiscal quarter of the Company during the term of the Notes (the "Quarter End
Date"), then from and after the Quarter End Date until such time as the Total
Unencumbered Assets of the Company and its Consolidated Subsidiaries is at least
125% of the aggregate principal amount of the Unsecured Indebtedness of the
Company and its Consolidated Subsidiaries, the Company will maintain a ratio of
Adjusted Debt to Adjusted Net Worth, that is no higher than the calculation of
such ratio at the Quarter End Date.

Section 4.12.   Limitations on Transactions with Affiliates. The Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than:
(1) Affiliate Transactions permitted as described below; and (2) Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the Company or such
Subsidiary.

        All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $5.0 million
shall be approved by the Board of Directors of the Company or such Subsidiary,
as the case may be, such approval to be evidenced by a Board Resolution stating
that such Board of Directors has determined that such transaction complies with
the foregoing provisions. If the Company or any Subsidiary of the Company enters
into an Affiliate Transaction (or a series of related Affiliate Transactions
related to a common plan) that involves an aggregate fair market value of more
than $10.0 million, the Company or such Subsidiary, as the case may be, shall,
prior to the consummation thereof, obtain a favorable opinion as to the fairness
of such transaction or series of related transactions to the Company or the
relevant Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.

                                       33

<PAGE>

        The restrictions set forth in the first paragraph of this Section 4.12
shall not apply to:

                (1) reasonable fees and compensation paid to and indemnity
        provided on behalf of, officers, directors, employees or consultants of
        the Company or any Subsidiary of the Company as determined in good faith
        by the Company's Board of Directors or senior management;

                (2) transactions exclusively between or among the Company and
        any of its Subsidiaries or exclusively between or among such
        Subsidiaries in the ordinary course of business, provided such
        transactions are not otherwise prohibited by this First Supplemental
        Indenture;

                (3) transactions between the Company or one of its Subsidiaries
        and any Person in which the Company or one of its Subsidiaries has made
        an Investment in the ordinary course of the Company's real estate
        lending business and such Person is an Affiliate solely because of such
        Investment;

                (4) transactions between the Company or one of its Subsidiaries
        and any Person in which the Company or one of its Subsidiaries holds an
        interest as a joint venture partner and such Person is an Affiliate
        solely because of such interest;

                (5) any agreement as in effect as of the Issue Date, including
        the Management Agreements between the Company and the Manager and
        between TMHL and the Manager or any amendment thereto or any transaction
        contemplated thereby (including pursuant to any amendment thereto) in
        any replacement agreement thereto so long as any such amendment or
        replacement agreement is not more disadvantageous to the Holders in any
        material respect than the original agreement as in effect on the Issue
        Date;

                (6) Restricted Payments permitted by Section 4.07; and

                (7) agreements with and rights of Affiliates under the Company's
        2002 Long-Term Incentive Plan or any predecessor or successor incentive
        compensation or employee benefits plan; and any mortgage loans
        outstanding or hereinafter entered into by and between the Company and
        an Affiliate under the Company's employee residential mortgage loan
        program.

Section 4.13.   Limitation on Liens. The Company shall not, and shall not cause
or permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind on the assets of the
Company securing Indebtedness of the Company unless:

                (1)     in the case of Liens securing Indebtedness of the
        Company that is expressly subordinate or junior in right of payment to
        the Notes, the Notes are secured by a Lien on such property, assets or
        proceeds that is senior in priority to such Liens; and

                (2)     in all other cases, the Notes are equally and ratably
        secured except for:

                        (a)     Liens existing as of the Issue Date to the
                extent and in the manner such Liens are in effect on the Issue
                Date;

                        (b)     Liens securing the Notes;

                        (c)     Liens securing reverse repurchase agreement
                indebtedness and Non-Recourse Indebtedness;

                                       34

<PAGE>

                        (d)     Liens securing Refinancing Indebtedness that is
                incurred to Refinance any Indebtedness that has been secured by
                a Lien permitted under this First Supplemental Indenture and
                that has been incurred in accordance with the provisions of this
                First Supplemental Indenture; provided, however, that such
                Liens: (i) are no less favorable to the Holders than the Liens
                in respect of the Indebtedness being Refinanced; and (ii) do not
                extend to or cover any property or assets of the Company not
                securing the Indebtedness so Refinanced; and

                        (e)     Permitted Liens.

Section 4.14.   Corporate Existence. Subject to Article 6 hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.

Section 4.15.   Offer to Repurchase Upon Change of Control.

        (a) Upon the occurrence of a Change of Control (the date of such
occurrence, the "Change of Control Date"), each Holder shall have the right to
require the Company to purchase such Holder's Notes in whole or in part in
integral multiples of $1,000 at a purchase price (the "Change of Control
Purchase Price") in cash equal to 101% of the principal amount of such Notes,
plus accrued and unpaid interest, if any, at the date of purchase (the "Change
of Control Purchase Date"), pursuant to and in accordance with the offer
described in this Section 4.15 (the "Change of Control Offer").

        (b) Within 30 days following the Change of Control Date the Company
shall send, by first class mail, a notice to the Holders and the Trustee
stating:

                (i)     that the Change of Control Offer is being made pursuant
        to this Section 4.15 and that all Notes validly tendered will be
        accepted for payment;

                (ii)    the Change of Control Purchase Price and the Change of
        Control Purchase Date, which shall be a Business Day that is no earlier
        than 30 days nor later than 60 days from the date such notice is mailed
        (the "Change of Control Payment Date") other than as may be required by
        law;

                (iii)   that any Note not tendered will continue to accrue
        interest;

                (iv)    that any Note accepted for payment pursuant to the
        Change of Control Offer shall cease to accrue interest after the Change
        of Control Payment Date unless the Company shall default in the payment
        of the Change of Control Purchase Price of the Notes and the only
        remaining right of the Holder is to receive payment of the Change of
        Control Purchase Price upon surrender of the applicable Note to the
        Paying Agent;

                (v)     that Holders electing to have a portion of a Note
        purchased pursuant to a Change of Control Offer may only elect to have
        such Note purchased in integral multiples of $1,000;

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<PAGE>

                (vi)    that if a Holder elects to have a Note purchased
        pursuant to the Change of Control Offer it will be required to surrender
        the Note, with the form entitled "Option of Holder to Elect Purchase" on
        the reverse of the Note completed, or transfer by book-entry transfer,
        to the Paying Agent at the address specified in the notice prior to the
        close of business on the third Business Day prior to the Change of
        Control Payment Date;

                (vii)   that a Holder will be entitled to withdraw its election
        if the Company receives, not later than the third Business Day preceding
        the Change of Control Payment Date, a telegram, telex, facsimile
        transmission or letter setting forth the name of such Holder, the
        principal amount of Notes such Holder delivered for purchase, and a
        statement that such Holder is withdrawing its election to have such Note
        purchased; and

                (viii)  that if Notes are purchased only in part a new Note of
        the same type will be issued in principal amount equal to the
        unpurchased portion of the Notes surrendered.

        (c) On or before the Change of Control Payment Date, the Company shall,
to the extent lawful, accept for payment, all Notes or portions thereof validly
tendered pursuant to the Change of Control Offer, and shall deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 4.15. The Company, the Depositary or the Paying Agent, as the case may
be, shall promptly mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof.

        (d) The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an offer hereunder. To the extent the provisions
of any securities laws or regulations conflict with the provisions under this
Section 4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.

Section 4.16.   Limitation on Preferred Stock of Subsidiaries. The Company shall
not permit any of its Subsidiaries to issue any Preferred Stock (other than to
the Company or to a Wholly Owned Subsidiary of the Company) or permit any Person
(other than the Company or a Wholly Owned Subsidiary of the Company) to own any
Preferred Stock of any Subsidiary of the Company, other than Preferred Stock
outstanding on the Issue Date of Subsidiaries formed to facilitate maintaining
the Company's REIT status.

Section 4.17.   Conduct of Business. The Company and its Subsidiaries shall
engage primarily in the business of acquiring and originating adjustable rate
mortgages and assets comprised of adjustable rate mortgage securities and other
activities related to or arising out of those activities.

Section 4.18.   Limitation of Guarantees by Subsidiaries. The Company shall not
permit any of its Subsidiaries, directly or indirectly, by way of the pledge of
any intercompany note or otherwise, to assume, guarantee or in any other manner
become liable with respect to any Indebtedness of the Company, unless, in any
such case:

                (1)     such Subsidiary executes and delivers a supplemental
        indenture to this First Supplemental Indenture, providing a guarantee of
        payment of the Notes by such Subsidiary; and

                                       36

<PAGE>

                (2)     if such assumption, guarantee or other liability of such
        Subsidiary is provided in respect of Indebtedness that is expressly
        subordinated to the Notes, the guarantee or other instrument provided by
        such Subsidiary in respect of such subordinated Indebtedness shall be
        subordinated to the Guarantee pursuant to subordination provisions no
        less favorable to the Holders of the Notes than those contained in this
        First Supplemental Indenture.

        Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the
Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged, without any further action required on
the part of the Trustee or any Holder, upon:

                (1)     the unconditional release of such Subsidiary from its
        liability in respect of the Indebtedness in connection with which such
        Guarantee was executed and delivered pursuant to the preceding
        paragraph; or

                (2)     any sale or other disposition (by merger or otherwise)
        to any Person that is not a Subsidiary of the Company of all of the
        Company's Capital Stock in, or all or substantially all of the assets
        of, such Subsidiary; provided that: (a) such sale or disposition of such
        Capital Stock or assets is otherwise in compliance with the terms of
        this First Supplemental Indenture; and (b) such assumption, guarantee or
        other liability of such Subsidiary has been released by the holders of
        the other Indebtedness so guaranteed.

Section 4.19.   Termination of Certain Covenants In Event of Investment Grade
Rating. In the event that each of the Rating Categories assigned to the Notes by
the Rating Agencies is Investment Grade, the obligations under the covenants
contained in Sections 4.07, 4.08, 4.11, 4.12, 4.13, 4.16, 4.17 and 4.18 hereof
shall cease to apply to the Company in the event, and only for so long as, the
Notes are rated Investment Grade and no Default or Event of Default has occurred
and is continuing.

Section 4.20.   Maintenance of Properties; Books and Records; Compliance
with Law.

        (a) The Company shall and shall cause each of its Subsidiaries to at all
times cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment, and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that nothing in this Section 4.20 shall prevent
the Company or any of its Subsidiaries from discontinuing the operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is either (i) in the ordinary course of business,
(ii) in the reasonable and good faith judgment of the Board of Directors or
management of the Company or the Subsidiary concerned, as the case may be,
desirable in the conduct of the business of the Company or such Subsidiary, as
the case may be, or (iii) otherwise permitted by this First Supplemental
Indenture.

        (b) The Company shall and shall cause each of its Subsidiaries to keep
proper and true books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Company and each of its Subsidiaries, and reflect on its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP
consistently applied to the Company and its Subsidiaries taken as a whole.

        (c) The Company shall and shall cause each of its Subsidiaries to comply
in all material respects with all statutes, laws, ordinances, or government
rules and regulations to which it is subject, non-compliance with which would
materially adversely affect the business, earnings, properties, assets or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole.

                                       37

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                                    ARTICLE V

                  EXCHANGE OFFER; REGISTRATION RIGHTS AGREEMENT

Section 5.01.   The Company and the Initial Purchaser will enter into the
Registration Rights Agreement prior to or concurrently with the issuance of the
Notes whereby the Company will agree to (i) file with the Commission on or prior
to 45 days after the Issue Date, a registration statement (the "Exchange Offer
Registration Statement") relating to a registered exchange offer (the "Exchange
Offer") for the Notes under the Securities Act; (ii) use its best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 140 days after the Issue Date; (iii) use its best
efforts to keep the Exchange Offer Registration Statement effective for not less
than 30 days (or longer if required by applicable law) after the date notice of
the Exchange Offer is mailed to the holders of the Notes; and (iv) be required
to cause the Exchange Offer to be consummated no later than 40 days following
the date on which the Exchange Offer Registration Statement is declared
effective. Upon the effectiveness of the Exchange Offer Registration Statement,
the Company will offer to the holders of registrable securities who are not
prohibited by any law or policy of the Commission from participating in the
Exchange Offer the opportunity to exchange their registrable securities for an
issue of notes (the "Exchange Notes") that are identical in all material
respects to their registrable securities (except that the Exchange Notes will
not contain terms with respect to certain interest rate provisions and transfer
restrictions) and that would be registered under the Securities Act. The Company
will keep the Exchange Offer open for not less than 30 days (or longer, if
required by applicable law) after the date on which notice of the Exchange Offer
is mailed to the holders of the Notes.

Section 5.02.   If (i) because of any change in law or in applicable
interpretations thereof by the Commission, the Company is not permitted to
effect the Exchange Offer as contemplated in the Registration Rights Agreement;
(ii) the Exchange Offer is not consummated by the 180th day after the Issue
Date; (iii) the Initial Purchaser of the Notes requests with respect to Notes
not eligible to be exchanged for Exchange Notes in the Exchange Offer and held
by it following consummation of the Exchange Offer; or (iv) any holder (other
than a broker-dealer) of Notes is not eligible to participate in the Exchange
Offer or, in the case of any holder (other than a broker-dealer) of Notes that
participates in the Exchange Offer, such holder does not receive Exchange Notes
on the date of the exchange and any such holder so requests, (each such event
referred to in clauses (i) through (iv) above a "Trigger Date"), the Company
will promptly (but in no event more than 45 days after the Trigger Date), file
with the Commission and thereafter use its best efforts to cause to be declared
effective no later than 140 days after such Trigger Date a shelf registration
statement (the "Shelf Registration Statement") relating to the offer and sale of
the registrable securities by the holders of the Notes to cover such Notes;
provided, however, such holders must agree in writing to be bound by the terms
of the Shelf Registration Statement applicable to such holder.

Section 5.03.   Each holder of Notes participating in the Exchange Offer shall
be required to make certain representations at the time of the consummation of
the Exchange Offer, including representations that (i) any Exchange Notes
received by such holder will be acquired in the ordinary course of business;
(ii) such holder has no arrangements or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the Securities Act; (iii) such holder is not an "affiliate," as
defined in Rule 405 of the Securities Act, of the Company or if it is an
affiliate, such holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable; (iv) if such holder
is not a broker-dealer, that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Notes; and (v) if such holder of Notes is a
broker-dealer, that it will receive Exchange Notes for its own account in
exchange for Notes that were acquired as a result of market-making activities or
other trading activities and that it will be required to acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.

                                       38

<PAGE>

                                   ARTICLE VI

                                   SUCCESSORS

Section 6.01.   Merger, Consolidation and Sale of Assets. The Company will
not, in a single transaction or series of related transactions, consolidate or
merge with or into any Person, or sell, assign, transfer, lease, convey or
otherwise dispose of (or cause or permit any Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's assets (determined on a consolidated basis for the Company
and the Company's Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless:

                (1) either:

                        (a) the Company shall be the surviving or continuing
                corporation; or

                        (b) the Person (if other than the Company) formed by
                such consolidation or into which the Company is merged or the
                Person which acquires by sale, assignment, transfer, lease,
                conveyance or other disposition the properties and assets of the
                Company and of the Company's Subsidiaries substantially as an
                entirety (the "Surviving Entity"):

                                (i) shall be a corporation organized and validly
                        existing under the laws of the United States or any
                        State thereof or the District of Columbia; and

                                (ii) shall expressly assume, by supplemental
                        indenture (in form and substance satisfactory to the
                        Trustee), executed and delivered to the Trustee, the due
                        and punctual payment of the principal of, and premium,
                        if any, and interest on all of the Notes and the
                        performance of every covenant of the Notes and the
                        Indenture on the part of the Company to be performed or
                        observed;

                (2) immediately after giving effect to such transaction and the
        assumption contemplated by clause (1)(b)(ii) above (including giving
        effect to any Indebtedness and Acquired Indebtedness incurred or
        anticipated to be incurred in connection with or in respect of such
        transaction), the Company or such Surviving Entity, as the case may be:
        (a) shall have a Consolidated Net Worth equal to or greater than the
        Consolidated Net Worth of the Company immediately prior to such
        transaction; and (b) shall be able to incur at least $1.00 of additional
        Indebtedness (other than Permitted Indebtedness) pursuant to Section
        4.09, 4.10 and 4.11 hereof;

                (3) immediately before and immediately after giving effect to
        such transaction and the assumption contemplated by clause (1)(b)(ii)
        above (including, without limitation, giving effect to any Indebtedness
        and Acquired Indebtedness incurred or anticipated to be incurred and any
        Lien granted in connection with or in respect of the transaction), no
        Default or Event of Default shall have occurred or be continuing; and

                (4) the Company or the Surviving Entity shall have delivered to
        the Trustee an Officers' Certificate and an Opinion of Counsel, each
        stating that such consolidation, merger, sale, assignment, transfer,
        lease, conveyance or other disposition and, if a supplemental indenture
        is required in connection with such transaction, such supplemental
        indenture comply with the applicable provisions of this First
        Supplemental Indenture and that all conditions precedent in this First
        Supplemental Indenture relating to such transaction have been satisfied.

                                       39

<PAGE>

        For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

Section 6.02.   Successor Corporation Substituted. Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 6.01 hereof, in which the Company is not the continuing
corporation, the successor corporation formed by such consolidation or into or
with which the Company is merged or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this First
Supplemental Indenture referring to the "Company" shall refer instead to the
successor corporation and not to the Company), and may exercise every right and
power of, the Company under this First Supplemental Indenture and the Notes with
the same effect as if such successor corporation had been named as the Company
herein; provided, however, that, in the case of a transfer by lease, the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes.

                                   ARTICLE VII

                              DEFAULTS AND REMEDIES

Section 7.01.   Events of Default.  The following are "Events of Default":

                (1) the failure to pay interest on any Notes when the same
        becomes due and payable and the default continues for a period of 30
        days;

                (2) the failure to pay the principal on any Notes, when such
        principal becomes due and payable, at maturity, upon redemption or
        otherwise (including the failure to make a payment to purchase Notes
        tendered pursuant to a Change of Control Offer);

                (3) a default in the observance or performance of any other
        covenant or agreement contained in this First Supplemental Indenture and
        such default continues for a period of 30 days after the Company
        receives written notice specifying the default (and demanding that such
        default be remedied) from the Trustee or the Holders of at least 25% of
        the outstanding principal amount of the Notes (except in the case of a
        default with respect to Section 5.01 hereof, which will constitute an
        Event of Default with such notice requirement but without such passage
        of time requirement);

                (4) the failure to pay at final maturity (giving effect to any
        applicable grace periods and any extensions thereof) the principal
        amount of any Indebtedness (other than Non-Recourse Indebtedness) of the
        Company or any Subsidiary of the Company, or the acceleration of the
        final stated maturity of any such Indebtedness (which acceleration is
        not rescinded, annulled or otherwise cured within 20 days of receipt by
        the Company or such Subsidiary of notice of any such acceleration) if
        the aggregate principal amount of such Indebtedness, together with the
        principal amount of any other such Indebtedness in default for failure
        to pay principal at final maturity or which has been accelerated,
        aggregates $5.0 million or more at any time;

                (5) one or more judgments in an aggregate amount in excess of
        $5.0 million shall have been rendered against the Company or any of its
        Subsidiaries and such judgments remain

                                       40

<PAGE>

        undischarged, unpaid or unstayed for a period of 60 days after such
        judgment or judgments become final and non-appealable (other than any
        judgments as to which, and only to the extent, a reputable insurance
        company has acknowledged coverage of such judgments in writing);

                (6) there shall have been the entry by a court of competent
        jurisdiction of:

                        (a)     a decree or order for relief in respect of the
                Company or any Significant Subsidiary in an involuntary case or
                proceeding under any applicable Bankruptcy Law; or

                        (b)     a decree or order adjudging the Company or any
                Significant Subsidiary bankrupt or insolvent, or seeking
                reorganization, arrangement, adjustment or composition of or in
                respect of the Company or any Significant Subsidiary under any
                applicable federal or state law, or appointing a custodian,
                receiver, liquidator, assignee, trustee, sequestrator or other
                similar official of the Company or any Significant Subsidiary or
                of any substantial part of its property, or ordering the winding
                up or liquidation of its affairs, and any such decree or order
                for relief shall continue to be in effect, or any such other
                decree or order shall be unstayed and in effect, for a period of
                60 consecutive days; or

                (7) (a) the Company or any Significant Subsidiary commences a
        voluntary case or proceeding under any applicable Bankruptcy Law or any
        other case or proceeding to be adjudicated bankrupt or insolvent;

                        (b)     the Company or any Significant Subsidiary
                consents to the entry of a decree or order for relief in respect
                of the Company or such Significant Subsidiary in an involuntary
                case or proceeding under any applicable Bankruptcy Law or to the
                commencement of any bankruptcy or insolvency case or proceeding
                against it;

                        (c)     the Company or any Significant Subsidiary files
                a petition or answer or consent seeking reorganization or relief
                under any applicable federal or state law;

                        (d)     the Company or any Significant Subsidiary:

                                (i)     consents to the filing of such petition
                        or the appointment of, or taking possession by, a
                        custodian, receiver, liquidator, assignee, trustee,
                        sequestrator or similar official of the Company or such
                        Significant Subsidiary or of any substantial part of its
                        property;

                                (ii)    makes an assignment for the benefit of
                        creditors; or

                                (iii)   admits in writing its inability to pay
                        its debts generally as they become due; or

                        (e)     the Company or any Significant Subsidiary takes
                any corporate action in furtherance of any such actions in this
                clause (7).

Section 7.02.   Acceleration. If an Event of Default (other than an Event of
Default specified in clauses (6) or (7) above with respect to the Company) shall
occur and be continuing, the Trustee or the Holders of at least 25% in principal
amount of outstanding Notes may declare the principal of and accrued interest on
all the Notes to be due and payable by notice in writing to the Company and the
Trustee specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same shall become immediately
due and payable.

                                       41

<PAGE>

        If an Event of Default specified in clauses (6) or (7) above with
respect to the Company occurs and is continuing, then all unpaid principal of,
and premium, if any, and accrued and unpaid interest on all of the outstanding
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

        At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences:

                (1) if the rescission would not conflict with any judgment or
        decree;

                (2) if all existing Events of Default have been cured or waived
        except nonpayment of principal or interest that has become due solely
        because of the acceleration;

                (3) to the extent the payment of such interest is lawful,
        interest on overdue installments of interest and overdue principal,
        which has become due otherwise than by such declaration of acceleration,
        has been paid;

                (4) if the Company has paid the Trustee its reasonable
        compensation and reimbursed the Trustee for its expenses, disbursements
        and advances; and

                (5) in the event of the cure or waiver of an Event of Default of
        the type described in clauses (6) or (7) of Section 7.01 hereof, the
        Trustee shall have received an Officers' Certificate and an Opinion of
        Counsel that such Event of Default has been cured or waived. No such
        rescission shall affect any subsequent Default or impair any right
        consequent thereto.

Section 7.03.   Other Remedies. If an Event of Default occurs and is continuing,
the Trustee may pursue any available remedy to collect the payment of principal,
premium, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this First Supplemental Indenture.

        The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 7.04.   Waiver of Past Defaults. Holders of not less than a majority in
aggregate principal amount of the then outstanding Notes by notice in writing to
the Trustee may on behalf of the Holders of all of the Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of the principal of, premium, if any,
or interest on, the Notes (including in connection with a Change of Control
Offer or other offer to purchase) (provided, however, that the Holders of a
majority in aggregate principal amount of the then outstanding Notes may rescind
an acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this First Supplemental Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

Section 7.05.   Control by Majority. Holders of a majority in principal amount
of the then outstanding Notes may, by written notice, direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the Trustee or exercising any trust or power conferred on it. However,

                                       42

<PAGE>

the Trustee may refuse to follow any direction that conflicts with law or this
First Supplemental Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in any personal liability.

Section 7.06.   Limitation on Suits. A Holder of a Note may pursue a remedy with
respect to this First Supplemental Indenture or the Notes only if:

        (a) a Holder gives to the Trustee written notice of a continuing Event
of Default;

        (b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;

        (c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;

        (d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

        (e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a written direction
inconsistent with the request.

        (f) A Holder may not use this First Supplemental Indenture to prejudice
the rights of another Holder or to obtain a preference or priority over another
Holder.

Section 7.07.   Rights of Holders of Notes to Receive Payment. Notwithstanding
any other provision of this First Supplemental Indenture, the right of any
Holder to receive payment of principal, premium, if any, and interest on the
Notes so held, on or after the respective due dates expressed in the Notes
(including in connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

Section 7.08.   Collection Suit by Trustee. If an Event of Default specified in
Section 7.01(1) or (2) occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal of, premium, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any amounts due the Trustee under Section 8.07 hereof.

Section 7.09.   Trustee May File Proofs of Claim. The Trustee is authorized to
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent in writing to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 8.07
hereof. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any

                                       43

<PAGE>

other amounts due the Trustee under Section 8.07 hereof out of the estate in any
such proceeding, shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 7.10.   Priorities.  If the Trustee  collects any money  pursuant to
this Article, it shall pay out the money in the following order:

                First: to the Trustee, its agents and attorneys for amounts due
        under Section 8.07 hereof, including payment of all compensation,
        expense and liabilities incurred, and all advances made, by the Trustee
        and the costs and expenses of collection;

                Second: to Holders of Notes for amounts due and unpaid on the
        Notes for principal, premium, if any, and interest, ratably, without
        preference or priority of any kind, according to the amounts due and
        payable on the Notes for principal, premium, if any and interest,
        respectively; and

                Third: to the Company or to such party as a court of competent
        jurisdiction shall direct.

        The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 7.10.

Section 7.11.   Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this First Supplemental Indenture or in any suit against
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 7.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.

                                  ARTICLE VIII

                                     TRUSTEE

Section 8.01.   Duties of Trustee.

        (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this First
Supplemental Indenture, and use the same degree of care and skill in its
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.

        (b) Except during the continuance of an Event of Default:

                (i)     the Trustee undertakes to perform such duties and only
        such duties as are specifically set forth in this First Supplemental
        Indenture and no implied covenants or obligations shall be read into
        this First Supplemental Indenture against the Trustee; and

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<PAGE>

                (ii)    the Trustee may conclusively rely, as to the truth of
        the statements and the correctness of the opinions expressed therein,
        upon certificates or opinions furnished to the Trustee and conforming to
        the requirements of this First Supplemental Indenture in the absence of
        bad faith on the Trustee's part; provided, however, that the Trustee
        shall examine the certificates and opinions to determine whether or not
        they substantially conform to the requirements of this First
        Supplemental Indenture.

        (c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

                (i)     this paragraph does not limit the effect of paragraph
        (b) of this Section 8.01;

                (ii)    the Trustee shall not be liable for any error of
        judgment made in good faith by a Responsible Officer, unless it is
        conclusively determined by a court of competent jurisdiction, such
        determination no longer subject to appeal or review, that the Trustee
        was negligent in ascertaining the pertinent facts;

                (iii)   the Trustee shall not be liable with respect to any
        action it takes or omits to take in good faith in accordance with a
        written direction received by it pursuant to Section 7.05; and

                (iv)    the Trustee shall not be required to expend or risk its
        own funds or otherwise incur financial liability in the performance of
        any of its duties under this First Supplemental Indenture or in the
        exercise of any of its rights or powers, if it has reasonable grounds to
        believe repayment of the funds or indemnity satisfactory to it against
        the risk or liability is not reasonably assured to it.

        (d) Every provision of this First Supplemental Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee is
subject to the provisions of this Section 8.01 and to the provisions of the TIA.

        (e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.

        (f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money and
Government Securities held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.

        (g) The Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in principal amount of the Notes at the time
outstanding given pursuant to Section 7.05 of this First Supplemental Indenture,
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee under this First Supplemental Indenture.

Section 8.02.   Rights of Trustee.

        (a) The Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in such documents.

                                       45

<PAGE>

        (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel that conforms to Section 12.04.
The Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel.

        (c) The Trustee may act through agents, attorneys, custodians or
nominees and shall not be responsible for the misconduct or negligence of any
attorneys, custodians or nominees appointed with due care.

        (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers, except conduct that constitutes willful misconduct, negligence or bad
faith.

        (e) The Trustee may consult with counsel, and the advice or any opinion
of counsel shall be full and complete authorization and protection in respect of
any action taken or omitted by it hereunder in good faith reliance and in
accordance with such written advice or opinion of counsel.

        (f) The Trustee will not be required to investigate any facts or matters
stated in any document, but if it decides to investigate any matters or facts,
the Trustee or its agents or attorneys will be entitled to examine the books,
records and premises of the Company.

Section 8.03.   Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Company or any Affiliate of the Company with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 8.10 and 8.11 hereof.

Section 8.04.   Trustee's Disclaimer. The Trustee (i) is not responsible for and
makes no representation as to the validity or adequacy of this First
Supplemental Indenture, (ii) shall not be accountable for the Company's use of
the proceeds from the Notes and (iii) shall not be responsible for any statement
of the Company in this First Supplemental Indenture, other than the Trustee's
certificate of authentication, or in any prospectus used in the sale of any of
the Notes, other than statements, if any, provided in writing by the Trustee for
use in such prospectus.

Section 8.05.   Notice of Defaults. The Trustee will give to the Holders notice
of any Default with regard to the Notes actually known to a Responsible Officer
within 90 days after receipt of such knowledge and in the manner and to the
extent provided in TIA Section 313(c), and otherwise as provided in Section
12.02 of this First Supplemental Indenture; provided, however, that except in
the case of a Default in payment of the principal of, premium, if any, or
interest on any Note, the Trustee will be protected in withholding notice of
Default if and so long as a committee of its Responsible Officers in good faith
determines that withholding of the notice is in the interests of the Holders of
the Notes.

Section 8.06.   Reports by Trustee. Within 60 days after each October 15
beginning with the October 15 following the date of this First Supplemental
Indenture, the Trustee will mail to each Holder, at the name and address which
appears on the registration books of the Company, and to each Holder who has,
within the two years preceding the mailing, filed that person's name and address
with the Trustee for that purpose and each Holder whose name and address have
been furnished to the Trustee pursuant to Section 2.05, a brief report dated as
of that October 15 which complies with TIA Section 313(a). Reports to
Noteholders pursuant to this Section 8.06 shall be transmitted in the manner and
to the extent provided in TIA Section 313(c). The Trustee also will comply with
TIA Section 313(b).

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<PAGE>

        A copy of each report will at the time of its mailing to Holders be
filed with each stock exchange on which the Notes are listed and also with the
Commission. The Company will promptly notify the Trustee when the Notes are
listed on any stock exchange and of any delisting of the Notes.

Section 8.07.   Compensation and Indemnity. The Company shall indemnify, defend
and hold harmless the Trustee and its officers, directors, employees,
representatives and agents, from and against and reimburse the Trustee for any
and all claims, expenses, obligations, liabilities, losses, damages, injuries
(to person, property, or natural resources), penalties, stamp or other similar
taxes, actions, suits, judgments, reasonable costs and expenses (including
reasonable attorney's and agent's fees and expenses) of whatever kind or nature
regardless of their merit, demanded, asserted or claimed against the Trustee
directly or indirectly relating to, or arising from, claims against the Trustee
by reason of its participation in the transactions contemplated hereby,
including without limitation all reasonable costs required to be associated with
such claims for damages to persons or property, and reasonable attorneys' and
consultants' fees and expenses and court costs except to the extent caused by
the Trustee's gross negligence or willful misconduct. The provisions of this
Section 8.07 shall survive the termination of this First Supplemental Indenture
or the earlier resignation or removal of the Trustee.

        To secure the Company's obligations to make payments to the Trustee
under this Section 8.07, the Trustee shall have a Lien prior to the Notes on all
money or property held or collected by the Trustee, other than money or property
held in trust to pay principal or interest on particular Notes. The obligations
of the Company under this Section 8.07 to compensate the Trustee and to pay or
reimburse the Trustee for reasonable expenses, disbursements and advances shall
survive the satisfaction and discharge of this First Supplemental Indenture or
the earlier resignation or removal of the Trustee.

        When the Trustee incurs expenses or renders services after an Event of
Default specified in Sections 7.01(6) or (7) hereof occurs, the expenses and the
compensation for the services of the Trustee are intended to constitute expenses
of administration under any Bankruptcy Law.

        For purposes of this Section 8.07, "Trustee" will include any
predecessor Trustee, but the willful misconduct, negligence or bad faith of any
Trustee shall not affect the rights of any other Trustee under this Section
8.07.

Section 8.08.   Replacement of Trustee. The Trustee may resign at any time by so
notifying the Company. The Holders of a majority in aggregate principal amount
of the then outstanding Notes may remove the Trustee by so notifying the Trustee
and the Company and may appoint a successor Trustee. The Company may remove the
Trustee if:

        (a) the Trustee fails to comply with Section 8.10;

        (b) the Trustee is adjudged bankrupt or insolvent or an order for relief
is entered with respect to the Trustee under any Bankruptcy Law;

        (c) a custodian or public officer takes charge of the Trustee or its
property; or

        (d) the Trustee becomes incapable of acting.

        If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

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<PAGE>

        No removal or appointment of a Trustee will be valid if that removal or
appointment would conflict with any law applicable to the Company.

        A successor Trustee will deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee will, subject to the Lien provided for in Section 8.07, transfer all
property held by it as Trustee to the successor Trustee, the resignation or
removal of the retiring Trustee will become effective, and the successor Trustee
will have all the rights, powers and duties of the Trustee under this First
Supplemental Indenture. A successor Trustee will mail notice of its succession
to each Holder.

        If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

        If the Trustee fails to comply with Section 8.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

        Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 8.07 shall continue for the benefit of
the retiring Trustee.

Section 8.09.   Successor Trustee by Merger, etc. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust assets to, another Person, the resulting, surviving or
transferee Person will, without any further act, be the successor Trustee.

        If at the time a successor by merger, conversion or consolidation to the
Trustee succeeds to the trusts created by this First Supplemental Indenture any
of the Notes have been authenticated but not delivered, the successor to the
Trustee may adopt the certificate of authentication of the predecessor Trustee,
and deliver the Notes which were authenticated by the predecessor Trustee; and
if at that time any of the Notes have not been authenticated, the successor to
the Trustee may authenticate those Notes in its own name as the successor to the
Trustee; and in either case the certificates of authentication will have the
full force provided in this First Supplemental Indenture for certificates of
authentication.

Section 8.10.   Eligibility; Disqualification. The Trustee will at all times
satisfy the requirements of TIA Section 310(a). The Trustee will at all times
have (or shall be a member of a bank holding company system whose parent
corporation has) a combined capital and surplus of at least $50,000,000 as set
forth in its most recently published annual report of condition, which will be
deemed for this paragraph to be its combined capital and surplus. The Trustee
will comply with TIA Section 310(b).

Section 8.11.   Preferential Collection of Claims. The Trustee shall comply with
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.

                                   ARTICLE IX

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 9.01.   Option to Effect Legal Defeasance or Covenant Defeasance. The
Company may, at the option of its Board of Directors evidenced by a Board
Resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 9.02 or 9.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 9.

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<PAGE>

Section 9.02.   Legal Defeasance and Discharge. Upon the Company's exercise
under Section 9.01 hereof of the option applicable to this Section 9.02, the
Company shall, subject to the satisfaction of the conditions set forth in
Section 9.04 hereof, be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 9.05 hereof and the
other Sections of this First Supplemental Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and this
First Supplemental Indenture (and the Trustee, on written demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Notes to receive solely from the trust fund described in Section 9.04 hereof,
and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due, (b) the Company's obligations with respect to such Notes under Article 2
and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article 9. Subject to compliance with this Article 9, the Company
may exercise its option under this Section 9.02 notwithstanding the prior
exercise of its option under Section 9.03 hereof.

Section 9.03.   Covenant Defeasance. Upon the Company's exercise under Section
9.01 hereof of the option applicable to this Section 9.03, the Company shall,
subject to the satisfaction of the conditions set forth in Section 9.04 hereof,
be released from its obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.16, 4.17, 4.18 and 4.19 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 9.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 7.01
hereof, but, except as specified above, the remainder of this First Supplemental
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 9.01 hereof of the option applicable to this
Section 9.03 hereof, subject to the satisfaction of the conditions set forth in
Section 9.04 hereof, Sections 7.01(4) and (5) hereof shall not constitute Events
of Default.

Section 9.04.   Conditions to Legal or Covenant Defeasance. The following shall
be the conditions to the application of either Section 9.02 or 9.03 hereof to
the outstanding U.S. Notes:

        In order to exercise either Legal Defeasance or Covenant Defeasance:

        (a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States Dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the written opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the outstanding Notes on the stated date for payment thereof or on
the applicable redemption date, as the case may be, and any other amounts owing
under this First Supplemental Indenture, if in the case of an optional
redemption date

                                       49

<PAGE>

prior to electing to exercise either Legal Defeasance or Covenant Defeasance,
the Company has delivered to the Trustee an irrevocable notice to redeem all of
the outstanding Notes on such redemption date;

        (b) in the case of an election under Section 9.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the State of New
York reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this First Supplemental Indenture, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;

        (c) in the case of an election under Section 9.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the State of New
York reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;

        (d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit;

        (e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under this First Supplemental
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;

        (f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others;

        (g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with; and

        (h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, assuming no intervening bankruptcy of the Company
between the date of deposit and the 91st day following the date of deposit and
that no Holder is an insider of the Company, after the 91st day following the
date of deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.

        Notwithstanding the foregoing, the opinion of counsel required by clause
(b) above with respect to Legal Defeasance need not be delivered if all Notes
not theretofore delivered to the Trustee for cancellation (1) have become due
and payable or (2) will become due and payable on the maturity date within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company.

                                       50

<PAGE>

Section 9.05.   Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions. Subject to Section 9.06 hereof, all money and
non-callable Government Securities (including the proceeds thereof) deposited
with the Trustee pursuant to Section 9.04 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this First Supplemental Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

        The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 9.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

        Anything in this Article 9 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the written request
of the Company any money or non-callable Government Securities held by it as
provided in Section 9.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 9.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 9.06.   Repayment to Company. Any money deposited with the Trustee or
any Paying Agent, or then held by the Company, in trust for the payment of the
principal of, premium, if any, or interest on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its written request or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

Section 9.07.   Reinstatement. If the Trustee or Paying Agent is unable to apply
any United States dollars or non-callable Government Securities in accordance
with Section 9.02 or 9.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this First Supplemental Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 9.02 or 9.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 9.02 or 9.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.

                                       51

<PAGE>

                                   ARTICLE X

                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 10.01.  Without Consent of Holders of Notes. Notwithstanding Section
10.02 of this First Supplemental Indenture, the Company and the Trustee may
amend or supplement this First Supplemental Indenture or the Notes without the
consent of any Holder of a Note:

        (a) to cure any ambiguity, defect or inconsistency that does not
adversely affect in any material respect the rights hereunder of any Holder of
the Notes;

        (b) to provide for certificated Notes in addition to or in place of
uncertificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;

        (c) to provide for the assumption of the Company's obligations to the
Holders by a successor to the Company pursuant to Article 6 hereof;

        (d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect in any
material respect the rights hereunder of any Holder of the Notes;

        (e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this First Supplemental Indenture under the TIA;
or

        (f) to evidence and provide for the acceptance of appointment under this
First Supplemental Indenture of a successor Trustee.

        Upon the written request of the Company accompanied by, to the extent
necessary, a Board Resolution authorizing the execution of any such amended or
supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 8.02 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this First Supplemental Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
indenture which it believes affects its own rights, duties, indemnities or
immunities under this First Supplemental Indenture or otherwise.

Section 10.02.  With Consent of Holders of Notes. Except as provided below in
this Section 10.02, the Company and the Trustee may amend or supplement this
First Supplemental Indenture (including Section 4.15 hereof), and the Notes with
the written consent of the Holders of at least a majority in principal amount of
the Notes then outstanding voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 7.04 and 7.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this First Supplemental Indenture or the Notes may be
waived with the written consent of the Holders of a majority in principal amount
of the then outstanding Notes voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes).

        Upon the written request of the Company accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of

                                       52

<PAGE>

evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
8.02 hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental indenture unless such amended or supplemental indenture
directly affects the Trustee's own rights, duties or immunities under this First
Supplemental Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.

        It shall not be necessary for the consent of the Holders of Notes under
this Section 10.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

        After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental indenture
or waiver. Subject to Sections 7.04 and 7.07 hereof, the Holders of a majority
in aggregate principal amount of the Notes then outstanding voting as a single
class may waive in writing compliance in a particular instance by the Company
with any provision of this First Supplemental Indenture or the Notes. However,
without the written consent of each Holder affected, an amendment or waiver
under this Section 10.02 may not (with respect to any Notes held by a
non-consenting Holder):

        (a) reduce the amount of Notes whose Holders must consent to an
amendment;

        (b) reduce the rate of or change or have the effect of changing the time
for payment of interest, including defaulted interest, on any Notes;

        (c) reduce the principal of or change or have the effect of changing the
fixed maturity of any Notes, or change the date on which any Notes may be
subject to redemption or reduce the redemption price therefor;

        (d) make any Notes payable in money other than that stated in the Notes;

        (e) make any change in provisions of this First Supplemental Indenture
protecting the right of each Holder to receive payment of principal of and
interest on such Note on or after the due date thereof or to bring suit to
enforce such payment, or permitting Holders of a majority in principal amount of
Notes to waive Defaults or Events of Default;

        (f) after the Company's obligation to purchase Notes arises thereunder,
amend, change or modify in any material respect the obligation of the Company to
make and consummate a Change of Control Offer in the event of a Change of
Control, modify any of the provisions or definitions with respect thereto; or

        (g) modify or change any provision of this First Supplemental Indenture
or the related definitions affecting the subordination or ranking of the Notes
in a manner which adversely affects the Holders.

Section 10.03.  Compliance with Trust Indenture Act. Every amendment or
supplement to this First Supplemental Indenture or the Notes shall be set forth
in a amended or supplemental indenture that complies with the TIA as then in
effect.

Section 10.04.  Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder of a Note and every

                                       53

<PAGE>

subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
its Note if the Trustee receives written notice of revocation before the date
the waiver, supplement or amendment becomes effective. An amendment, supplement
or waiver becomes effective in accordance with its terms and thereafter binds
every Holder.

Section 10.05.  Notation on or Exchange of Notes. The Trustee may place an
appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all Notes may issue and
the Trustee shall, upon receipt of an Authentication Order, authenticate new
Notes that reflect the amendment, supplement or waiver.

        Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

Section 10.06.  Trustee to Sign Amendments, etc. The Trustee shall sign any
amended or supplemental indenture authorized pursuant to this Article 10 if the
amendment or supplement does not adversely affect the rights, duties,
liabilities, indemnities or immunities of the Trustee. The Company may not sign
an amendment or supplemental indenture until the Board of Directors approves it.
In executing any amended or supplemental indenture, the Trustee shall be
entitled to receive and (subject to Section 8.01 hereof) shall be fully
protected in relying conclusively upon, in addition to the documents required by
Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this First Supplemental Indenture.

                                   ARTICLE XI

                           SATISFACTION AND DISCHARGE

Section 11.01.  Satisfaction and Discharge. This Supplemental Indenture will be
discharged and will cease to be of further effect (except as to surviving rights
or registration of transfer or exchange of the Notes, as expressly provided for
in this First Supplemental Indenture) as to all outstanding Notes, when:

        (a) either:

                        (i)     all the Notes theretofore authenticated and
                delivered (except lost, stolen or destroyed Notes that have been
                replaced or paid and Notes for whose payment money has
                theretofore been deposited in trust or segregated and held in
                trust by the Company and thereafter repaid to the Company or
                discharged from such trust) have been delivered to the Trustee
                for cancellation; or

                        (ii)    all Notes not theretofore delivered to the
                Trustee for cancellation have become due and payable and the
                Company has irrevocably deposited or caused to be deposited with
                the Trustee funds in an amount sufficient to pay and discharge
                the entire Indebtedness on the Notes not theretofore delivered
                to the Trustee for cancellation, for principal of, premium, if
                any, and interest on the Notes to the date of deposit together
                with irrevocable instructions from the Company directing the
                Trustee to apply such funds to the payment thereof at maturity
                or redemption, as the case may be;

        (b) the Company has paid all other sums payable under this First
Supplemental Indenture by the Company; and

                                       54

<PAGE>

        (c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel stating that all conditions precedent under this First
Supplemental Indenture relating to the satisfaction and discharge of this First
Supplemental Indenture have been complied with.

Section 11.02.  Application of Trust Money. Subject to the provisions of Section
9.06, all money deposited with the Trustee pursuant to Section 11.01 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this First Supplemental Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, of the principal
(and premium, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.

        If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this First Supplemental Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 11.01; provided that if the Company has made any payment of principal
of, premium, if any, or interest on any Notes because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.

                                   ARTICLE XII

                                  MISCELLANEOUS

Section 12.01.  Trust Indenture Act Controls. If any provision of this First
Supplemental Indenture limits, qualifies or conflicts with the duties imposed by
TIA Section 318(c), the imposed duties shall control.

Section 12.02.  Notices. Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:

        If to the Company:

                Thornburg Mortgage, Inc.
                150 Washington Avenue, Suite 302
                Santa Fe, New Mexico  87501
                Facsimile:  (505) 989-8156
                Attention:  Larry Goldstone, Chief Executive Officer

        With a copy to:

                Dechert LLP
                4675 MacArthur Court
                Suite 1400
                Newport Beach, CA  92660
                Attention:  Michael Jeffers

                                       55

<PAGE>

        If to the Trustee:

                Deutsche Bank Trust Company Americas
                60 Wall Street - MSNYC 60-2515
                New York, NY  10005
                Attention:  Corporate Trust and Agency Services

        The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.

        All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

        Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.

        If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

        If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.

Section 12.03.  Communication by Holders of Notes with Other Holders of Note.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this First Supplemental Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).

Section 12.04.  Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this First Supplemental Indenture, the Company shall furnish to the Trustee:

        (a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this First
Supplemental Indenture relating to the proposed action have been satisfied; and

        (b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

Section 12.05.  Statements Required in Certificate or Opinion. Each certificate
or opinion with respect to compliance with a condition or covenant provided for
in this First Supplemental Indenture (other than a certificate provided pursuant
to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:

        (a) a statement that the Person making such certificate or opinion has
read such covenant or condition;

                                       56

<PAGE>

        (b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

        (c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and

        (d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.

Section 12.06.  Rules by Trustee and Agents. The Trustee may make reasonable
rules for action by or at a meeting of Holders. The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its functions.

Section 12.07.  No Personal Liability of Directors, Officers, Employees and
Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes, this First Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.

Section 12.08.  Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE NOTES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 12.09.  No Adverse Interpretation of Other Agreements. This First
Supplemental Indenture may not be used to interpret any other supplemental
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such supplemental indenture, loan or debt agreement may not be
used to interpret this First Supplemental Indenture.

Section 12.10.  Successors. All agreements of the Company in this First
Supplemental Indenture and the Notes shall bind its successors. All agreements
of the Trustee in this First Supplemental Indenture shall bind its successors.

Section 12.11.  Severability. In case any provision in this First Supplemental
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

Section 12.12.  Counterpart Originals. The parties may sign any number of copies
of this First Supplemental Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.

Section 12.13.  Table of Contents, Headings, etc. The Table of Contents,
Cross-Reference Table and Headings of the Articles and Sections of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered a part of this First Supplemental Indenture and shall in no
way modify or restrict any of the terms or provisions hereof.

                                       57

<PAGE>

Section 12.14.  Conflicts with Supplemental Indenture. If any provision of this
First Supplemental Indenture is inconsistent with any provision of the
Indenture, the provision of this First Supplemental Indenture will control with
regard to the Notes.

[Signatures on following page]

                                       58

<PAGE>

                                   SIGNATURES

Dated as of May 15, 2003

                                THORNBURG MORTGAGE, INC.

                                By: /s/ Larry A. Goldstone
                                    ----------------------------------
                                        Name:  Larry A. Goldstone
                                        Title: President and Chief Operating
                                               Officer

                                DEUTSCHE BANK TRUST COMPANY  AMERICAS,
                                not in its  individual capacity, but solely
                                as Trustee

                                By: /s/ Susan Johnson
                                    ----------------------------------
                                        Name:  Susan Johnson
                                        Title: Vice President

<PAGE>

                                                                       EXHIBIT A

                                 [Face of Note]

                     FORM OF INITIAL RESTRICTED GLOBAL NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY
IN MINIMUM DENOMINATIONS OF $1,000 ($100,000 FOR INSTITUTIONAL ACCREDITED
INVESTORS) AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (a)
TO THE COMPANY OR THE INITIAL PURCHASER OR BY, THROUGH OR IN A TRANSACTION
APPROVED BY, THE INITIAL PURCHASER, (b) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (d) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT) ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR AS
A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS SUCH TRANSFEREE IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (e) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES TO AN INSTITUTION THAT IS NOT A U.S. PERSON (AND WAS NOT PURCHASING FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON) WITHIN THE MEANING OF REGULATIONS
UNDER THE SECURITIES ACT, OR (f) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS NOTE BEING COMPLETED AND DELIVERED BY THE TRANSFEROR AND, IF
APPLICABLE, THE TRANSFEREE TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL NOTES OF THE
SERIES.

                                       A-1

<PAGE>

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.

                                                            CUSIP/CINS [       ]

                           8.00% Senior Notes due 2013

No. ___                                                             $___________

                            THORNBURG MORTGAGE, INC.

promises to pay to __________________________, or registered assigns, the
principal sum of

Dollars on May 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated: May 15, 2003

                                     THORNBURG MORTGAGE, INC.

                                     By:
                                        ------------------------------
                                        Name:
                                        Title:

                                     By:
                                        ------------------------------
                                        Name:
                                        Title:

SEAL

                                       A-2

<PAGE>

This is one of the Notes referred to
in the within-mentioned Supplemental Indenture:

DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee

By:
   -----------------------------
     Authorized Signatory

                                       A-3

<PAGE>

                                 [Back of Note]
                           8.00% Senior Notes due 2013

        Capitalized terms used herein shall have the meanings assigned to them
in this First Supplemental Indenture referred to below unless otherwise
indicated.

        1.      INTEREST. Thornburg Mortgage, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
8.00% per annum from May 15, 2003 until maturity. The Company will pay interest
semi-annually in arrears on May 15 and November 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 2003; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 2003. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

        2.      METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 1 or November 1 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of this
First Supplemental Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, and premium,
if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. The
Company reserves the right to pay interest to Holders of Notes by check mailed
to such Holders at their registered addresses or by wire transfer to Holders of
at least $5 million aggregate principal amount of Notes.

        3.      PAYING AGENT AND REGISTRAR. Initially, Deutsche Bank Trust
Company Americas, the Trustee under this First Supplemental Indenture, will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

        4.      INDENTURE. The Company issued the Notes under an Indenture dated
as of May 15, 2003 as supplemented by a Supplemental Indenture dated as of May
15, 2003 (collectively, the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company. The Company is issuing
$200.0 million

                                       A-4

<PAGE>

in aggregate principal amount on the Issue Date and may issue Additional Notes
in accordance with the terms of the Indenture.

        5.      OPTIONAL REDEMPTION.

        Optional Redemption. At any time on or after May 15, 2008, the Notes may
be redeemed or purchased in whole or in part at the Company's option at a price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of redemption or purchase
(the "Redemption Date") (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date). Such redemption or purchase may be made upon notice mailed by first-class
mail to each Holder's registered address, not less than 30 nor more than 60 days
prior to the Redemption Date.

        "Applicable Premium" means, with respect to a Note at any Redemption
Date: (1) 104% of the principal amount of such Note if the Redemption Date is on
or after May 15, 2008 and before May 15, 2009; (2) 102.667% of the principal
amount of such Note if the Redemption Date is on or after May 15, 2009 and
before May 15, 2010; (3) 101.333% of the principal amount of such Note if the
Redemption Date is on or after May 15, 2010 and before May 15, 2011; and (4) 0%
of the principal amount of such Note if the Redemption Date is on or after May
15, 2011. Calculation of the Applicable Premium will be made by the Company or
on behalf of the Company by such Person as the Company shall designate;
provided, however, that such calculation shall not be a duty or obligation of
the Trustee.

        "Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2013; provided,
however, that if the period from such Redemption Date to May 15, 2013 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to May 15, 2013 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

        Optional Redemption Upon Equity Offerings. At any time, or from time to
time, on or prior to May 15, 2006, the Company may, at its option, use the net
cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes issued under the Indenture at a redemption price
of 108% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that:

                (1) at least 65% of the principal amount of Notes issued under
        the Indenture remains outstanding immediately after any such redemption;
        and

                (2) the Company makes such redemption not more than 60 days
        after the consummation of any such Equity Offering.

        6.      MANDATORY REDEMPTION.

        Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.

                                       A-5

<PAGE>

        7.      REPURCHASE AT OPTION OF HOLDER.

        Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of repurchase.

        8.      NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

        9.      DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company and the Trustee may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. If, this Note is exchanged in an
Exchange Offer prior to the Record Date for the first Interest Payment Date
following such exchange, accrued and unpaid interest, if any, on this Note, up
to but not including the date of issuance of the Note(s) issued in exchange (the
"Exchange Note") for this Note, shall be paid on the first Interest Payment Date
for such Exchange Note(s) to the Holder or Holders of such Exchange Note(s) on
the first Record Date with respect to such Exchange Note(s). If this Note is
exchanged in an Exchange Offer subsequent to the Record Date for the first
Interest Payment Date following such exchange but on or prior to the Interest
Payment Date, then any such accrued and unpaid interest with respect to this
Note and any accrued and unpaid interest on the Exchange Note(s) issued in
exchange for this Note, through the day before such Interest Payment Date, shall
be paid on such Interest Payment Date to the Holder of this Note on the Record
Date.

        The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement dated May 15, 2003 (the "Registration Rights Agreement") among
the Issuer and Credit Suisse First Boston LLC (the "Initial Purchaser").

        If the Company fails to comply with certain provisions of the
Registration Rights Agreement, in each case as described below, then a special
interest premium (the "Special Interest Premium") shall become payable in
respect of the Notes as follows:

        If (i) any Registration Statement required to be filed pursuant to the
Registration Rights Agreement is not filed within the applicable time periods
stated above; (ii) any Registration Statement required to be filed pursuant to
the Registration Rights Agreement is not declared effective within the
applicable time periods specified above; (iii) the Exchange Offer has not been
consummated within the time period specified above; or (iv) any Registration
Statement required to be filed pursuant to the Registration Rights Agreement
that has been declared effective either (A) thereafter ceases to be effective,
or (B) thereafter ceases, or the related prospectus ceases, to be usable in
connection with the resales of the registrable securities during the periods in
which such Registration Statement is obligated to be usable as specified above,
because (1) any event occurs as a result of which the related prospectus forming
part of such Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or (2) it will be necessary to amend such Registration
Statement, to supplement the related prospectus, or to comply with the
Securities Act or the Exchange Act or the respective rules thereunder, the
Company will be obligated to pay additional interest to each holder of
registrable securities (each such event in clauses (i) through (iv) above, a
"Registration Default").

                                       A-6

<PAGE>

        Additional interest will accrue on the Notes over and above the interest
rate from and including the date on which any Registration Defaults occur, up to
but excluding the date on which all such Registration Defaults have been cured,
at a rate of one-half of one percent (0.50%) per annum for the first 90-day
period immediately following the occurrence of such Registration Default. The
additional interest rate will increase by an additional one-half of one percent
(0.50%) per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum interest rate of 2.0% per
annum.

        10.     PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

        11.     AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the written consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. Without the consent of any Holder of
a Note, the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect in any
material respects the rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to evidence and
provide for the acceptance of appointment under the Indenture of a successor
Trustee.

        12.     DEFAULTS AND REMEDIES. Events of Default are set forth in the
Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in this First Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in writing in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.

        13.     TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

        14.     NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations

                                       A-7

<PAGE>

or their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

        15.     AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

        16.     ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

        17.     CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

Thornburg Mortgage, Inc.
150 Washington Avenue, Suite 302
Santa Fe, New Mexico  87501
Attention:  Investor Relations

                                       A-8

<PAGE>

                                 ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:  _______________

                            Your Signature:
                                           -------------------------------------
                                           (Sign exactly as your name appears on
                                           the face of this Note)

Signature Guarantee*:
                     ------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       A-9

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased by the Company pursuant
to Section 4.15 of this First Supplemental Indenture, check the following box:
[ ]

        If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of this First Supplemental Indenture, state the
amount you elect to have purchased:

                                $_______________

Date:_______________

                            Your Signature:
                                           -------------------------------------
                                           (Sign exactly as your name appears on
                                           the face of this Note)

                            Tax Identification No.:_____________________________

Signature Guarantee*:
                     ------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-10

<PAGE>

                        ASSIGNMENT & TRANSFER CERTIFICATE

TO BE COMPLETED AND DELIVERED WITH THIS NOTE TO THE TRUSTEE IF THE UNDERSIGNED
REGISTERED HOLDER WISHES TO SELL, ASSIGN AND TRANSFER NOTE:

        In connection with the resale or other transfer of this Note occurring
prior to the time the legend originally set forth on the face of this Note (or
one or more predecessor Notes) restricting resales and other transfers thereof
has been removed in accordance with the procedures set forth in the Indenture
(other than a resale or other transfer made to the Company or to, by, through,
or in a transaction approved by the Initial Purchaser), the undersigned
registered holder certifies that without utilizing any general solicitation or
general advertising:

                                   [CHECK ONE]

[ ]     (a)     Such Note is being transferred by the undersigned registered
                holder to a "qualified institutional buyer," as defined in Rule
                144A under the Securities Act of 1933, as amended, pursuant to
                the exemption from registration under the Securities Act of
                1933, as amended, provided by Rule 144A thereunder.

                                       or

[ ]     (b)     Such Note is being transferred by the undersigned
                registered holder to an institutional investor which is an
                "accredited investor," as defined in Rule 501(a)(1), (2), (3) or
                (7) under the Securities Act of 1933, as amended, and that the
                undersigned has been advised by the prospective transferee that
                such transferee shall hold such Note for its own account, or as
                a fiduciary or agent for others (which others are also
                institutional accredited investors, unless such transferee is a
                bank acting in its fiduciary capacity), for investment purposes
                and not for distribution, subject to any requirement of law that
                the disposition of such transferee's property shall at all times
                be and remain within its control.

                                       or

[ ]     (c)     Such Note is being transferred by the undersigned
                registered holder to an institutional investor which is a person
                that is not a "U.S. person" (or acquiring such Note for the
                account or benefit of a U.S. person) in an "offshore
                transaction," as such terms are defined in Regulation S under
                the Securities Act of 1933, as amended, pursuant to the
                exemption from registration under the Securities Act of 1933, as
                amended, provided by Regulation S thereunder.

                                      A-11

<PAGE>

        If none of the foregoing boxes are checked, then, so long as this Note
shall bear a legend on the face thereof restricting resales and other transfers
thereof (except in the case of a resale or other transfer made to the Company or
to, by, through, or in a transaction approved by, the Initial Purchaser), the
Trustee shall not be obligated to register such Note in the name of any Person
other than the registered holder thereof and until the conditions to any such
registration of transfer set forth in this Note and in the Indenture shall have
been satisfied.

Dated:______________           _________________________________________________
                               [Type or print name of registered holder]

                               By:
                                  ----------------------------------------------
                               The signature of the registered holder must
                               correspond with the name as written upon the face
                               of this Note in every particular, without
                               alteration or enlargement or any change
                               whatsoever.

TO BE COMPLETED BY TRANSFEREE
IF (a) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that (i) it is a
"qualified institutional buyer," as defined in Rule 144A under the Securities
Act of 1933, as amended, and acknowledges that the undersigned either has
received such information regarding the Company as the undersigned transferee
has requested pursuant to Rule 144A or has determined not to request such
information, (ii) this instrument has been executed on behalf of the undersigned
transferee by one of its executive officers and (iii) it is aware that the
registered holder of this Note is relying upon the undersigned transferee's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A. The undersigned transferee acknowledges and agrees that
this Note has not been registered under the Securities Act of 1933, as amended,
and may not be transferred except in accordance with the resale and other
transfer restrictions set forth in the legend on the face thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (b) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and an "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended, and
that this instrument has been executed on behalf of the undersigned transferee
by one of its executive officers. The undersigned transferee undertakes to hold
this Note acquired from the registered holder thereof for its own account, or as
a fiduciary or agent for others (which others are also institutional accredited
investors, unless such transferee is a bank acting in its fiduciary capacity),
for investment purposes and not for distribution, subject to any requirement of
law that the disposition of the undersigned transferee's property shall at all
times be and remain within its control. The undersigned acknowledges

                                      A-12

<PAGE>

and agrees that this Note has not been registered under the Securities Act of
1933, as amended, and may not be transferred except in accordance with the
resale and other transfer restrictions set forth in the legend on the face
thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (c) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and that it is not a U.S. person (as defined in
Regulation S under the Securities Act of 1933, as amended) and it is acquiring
this Note from the registered holder thereof in an "offshore transaction" (as
defined in Regulation S) pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder. The
undersigned transferee acknowledges and agrees that this Note has not been
registered under the Securities Act of 1933, as amended, and may not be
transferred except in accordance with the resale and other transfer restrictions
set forth in the legend on the face thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

                                      A-13

<PAGE>

                                                                       EXHIBIT B

                                 [Face of Note]

                    FORM OF INITIAL REGULATION S GLOBAL NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION, THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY
IN MINIMUM DENOMINATIONS OF $1,000 ($100,000 FOR INSTITUTIONAL ACCREDITED
INVESTORS) AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (a)
TO THE COMPANY OR THE INITIAL PURCHASER OR BY, THROUGH OR IN A TRANSACTION
APPROVED BY, THE INITIAL PURCHASER, (b) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (d) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT) ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR AS
A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS SUCH TRANSFEREE IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (e) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES TO AN INSTITUTION THAT IS NOT A U.S. PERSON (AND WAS NOT PURCHASING FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON) WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, OR (f) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS NOTE BEING COMPLETED AND DELIVERED BY THE TRANSFEROR AND, IF
APPLICABLE, THE TRANSFEREE TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

                                       B-1

<PAGE>

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL NOTES OF THE
SERIES.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.

                                                             CUSIP/CINS [      ]

                            8% Senior Notes due 2013

No. ___                                                             $___________

                            THORNBURG MORTGAGE, INC.

promises to pay to __________________________, or registered assigns, the
principal sum of

Dollars on May 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated: May 15, 2003

                                     THORNBURG MORTGAGE, INC.

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:

                                       B-2

<PAGE>

SEAL

This is one of the Notes referred to
in the within-mentioned Supplemental Indenture:

DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee

By:
   ---------------------------------
   Authorized Signatory

                                       B-3

<PAGE>

                                 [Back of Note]
                            8% Senior Notes due 2013

        Capitalized terms used herein shall have the meanings assigned to them
in this First Supplemental Indenture referred to below unless otherwise
indicated.

        1.      INTEREST. Thornburg Mortgage, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8%
per annum from May 15, 2003 until maturity. The Company will pay interest
semi-annually in arrears on May 15 and November 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 2003; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 2003. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

        2.      METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 1 or November 1 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of this
First Supplemental Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, and premium,
if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. The
Company reserves the right to pay interest to Holders of Notes by check mailed
to such Holders at their registered addresses or by wire transfer to Holders of
at least $5 million aggregate principal amount of Notes.

        3.      PAYING AGENT AND REGISTRAR. Initially, Deutsche Bank Trust
Company Americas, the Trustee under this First Supplemental Indenture, will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

        4.      INDENTURE. The Company issued the Notes under an Indenture dated
as of May 15, 2003 as supplemented by a Supplemental Indenture dated as of May
15, 2003 (collectively, the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company. The Company is issuing
$200.0 million

                                       B-4

<PAGE>

in aggregate principal amount on the Issue Date and may issue Additional Notes
in accordance with the terms of the Indenture.

        5.      OPTIONAL REDEMPTION.

        Optional Redemption. At any time on or after May 15, 2008, the Notes may
be redeemed or purchased in whole or in part at the Company's option at a price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of redemption or purchase
(the "Redemption Date") (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date). Such redemption or purchase may be made upon notice mailed by first-class
mail to each Holder's registered address, not less than 30 nor more than 60 days
prior to the Redemption Date.

        "Applicable Premium" means, with respect to a Note at any Redemption
Date: (1) 104% of the principal amount of such Note if the Redemption Date is on
or after May 15, 2008 and before May 15, 2009; (2) 102.667% of the principal
amount of such Note if the Redemption Date is on or after May 15, 2009 and
before May 15, 2010; (3) 101.333% of the principal amount of such Note if the
Redemption Date is on or after May 15, 2010 and before May 15, 2011; and (4) 0%
of the principal amount of such Note if the Redemption Date is on or after May
15, 2011. Calculation of the Applicable Premium will be made by the Company or
on behalf of the Company by such Person as the Company shall designate;
provided, however, that such calculation shall not be a duty or obligation of
the Trustee.

        "Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2013; provided,
however, that if the period from such Redemption Date to May 15, 2013 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to May 15, 2013 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

        Optional Redemption Upon Equity Offerings. At any time, or from time to
time, on or prior to May 15, 2006, the Company may, at its option, use the net
cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes issued under the Indenture at a redemption price
of 108% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that:

                (1) at least 65% of the principal amount of Notes issued under
        the Indenture remains outstanding immediately after any such redemption;
        and

                (2) the Company makes such redemption not more than 60 days
        after the consummation of any such Equity Offering.

        6.      MANDATORY REDEMPTION.

        Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.

                                       B-5

<PAGE>

        7.      REPURCHASE AT OPTION OF HOLDER.

        Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of repurchase.

        8.      NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

        9.      DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company and the Trustee may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. If, this Note is exchanged in an
Exchange Offer prior to the Record Date for the first Interest Payment Date
following such exchange, accrued and unpaid interest, if any, on this Note, up
to but not including the date of issuance of the Note(s) issued in exchange (the
"Exchange Note") for this Note, shall be paid on the first Interest Payment Date
for such Exchange Note(s) to the Holder or Holders of such Exchange Note(s) on
the first Record Date with respect to such Exchange Note(s). If this Note is
exchanged in an Exchange Offer subsequent to the Record Date for the first
Interest Payment Date following such exchange but on or prior to the Interest
Payment Date, then any such accrued and unpaid interest with respect to this
Note and any accrued and unpaid interest on the Exchange Note(s) issued in
exchange for this Note, through the day before such Interest Payment Date, shall
be paid on such Interest Payment Date to the Holder of this Note on the Record
Date.

        The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement dated May 15, 2003 (the "Registration Rights Agreement") among
the Issuer and Credit Suisse First Boston LLC (the "Initial Purchaser").

        If the Company fails to comply with certain provisions of the
Registration Rights Agreement, in each case as described below, then a special
interest premium (the "Special Interest Premium") shall become payable in
respect of the Notes as follows:

        If (i) any Registration Statement required to be filed pursuant to the
Registration Rights Agreement is not filed within the applicable time periods
stated above; (ii) any Registration Statement required to be filed pursuant to
the Registration Rights Agreement is not declared effective within the
applicable time periods specified above; (iii) the Exchange Offer has not been
consummated within the time period specified above; or (iv) any Registration
Statement required to be filed pursuant to the Registration Rights Agreement
that has been declared effective either (A) thereafter ceases to be effective,
or (B) thereafter ceases, or the related prospectus ceases, to be usable in
connection with the resales of the registrable securities during the periods in
which such Registration Statement is obligated to be usable as specified above,
because (1) any event occurs as a result of which the related prospectus forming
part of such Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or (2) it will be necessary to amend such Registration
Statement, to supplement the related prospectus, or to comply with the
Securities Act or the Exchange Act or the respective rules thereunder, the
Company will be obligated to pay additional interest to each holder of
registrable securities (each such event in clauses (i) through (iv) above, a
"Registration Default").

                                       B-6

<PAGE>

        Additional interest will accrue on the Notes over and above the interest
rate from and including the date on which any Registration Defaults occur, up to
but excluding the date on which all such Registration Defaults have been cured,
at a rate of one-half of one percent (0.50%) per annum for the first 90-day
period immediately following the occurrence of such Registration Default. The
additional interest rate will increase by an additional one-half of one percent
(0.50%) per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum interest rate of 2.0% per
annum.

        10.     PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

        11.     AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the written consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. Without the consent of any Holder of
a Note, the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect in any
material respects the rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to evidence and
provide for the acceptance of appointment under the Indenture of a successor
Trustee.

        12.     DEFAULTS AND REMEDIES. Events of Default are set forth in the
Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in
writing in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

        13.     TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

        14.     NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations

                                       B-7

<PAGE>

or their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

        15.     AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

        16.     ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

        17.     CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

Thornburg Mortgage, Inc.
150 Washington Avenue, Suite 302
Santa Fe, New Mexico  87501
Attention:  Investor Relations

                                       B-8

<PAGE>

                                 ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:___________________________________
                                               (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:  _______________

                            Your Signature:
                                           -------------------------------------
                                           (Sign exactly as your name appears on
                                           the face of this Note)

Signature Guarantee*:
                     ------------------------
*       Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

                                       B-9

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased by the Company pursuant
to Section 4.15 of this First Supplemental Indenture, check the following box:
[ ]

        If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of this First Supplemental Indenture, state the
amount you elect to have purchased:

                                $_______________

Date:_______________

                            Your Signature:
                                           -------------------------------------
                                           (Sign exactly as your name appears on
                                           the face of this Note)
                            Tax Identification No.:_____________________________

Signature Guarantee*:
                     ---------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      B-10

<PAGE>

                        ASSIGNMENT & TRANSFER CERTIFICATE

TO BE COMPLETED AND DELIVERED WITH THIS NOTE TO THE TRUSTEE IF THE UNDERSIGNED
REGISTERED HOLDER WISHES TO SELL, ASSIGN AND TRANSFER NOTE:

        In connection with the resale or other transfer of this Note occurring
prior to the time the legend originally set forth on the face of this Note (or
one or more predecessor Notes) restricting resales and other transfers thereof
has been removed in accordance with the procedures set forth in the Indenture
(other than a resale or other transfer made to the Company or to, by, through,
or in a transaction approved by the Initial Purchaser), the undersigned
registered holder certifies that without utilizing any general solicitation or
general advertising:

                                   [CHECK ONE]

[ ]     (a)     Such Note is being transferred by the undersigned
                registered holder to a "qualified institutional buyer," as
                defined in Rule 144A under the Securities Act of 1933, as
                amended, pursuant to the exemption from registration under the
                Securities Act of 1933, as amended, provided by Rule 144A
                thereunder.

                                       or

[ ]     (b)     Such Note is being transferred by the undersigned
                registered holder to an institutional investor which is an
                "accredited investor," as defined in Rule 501(a)(1), (2), (3) or
                (7) under the Securities Act of 1933, as amended, and that the
                undersigned has been advised by the prospective transferee that
                such transferee shall hold such Note for its own account, or as
                a fiduciary or agent for others (which others are also
                institutional accredited investors, unless such transferee is a
                bank acting in its fiduciary capacity), for investment purposes
                and not for distribution, subject to any requirement of law that
                the disposition of such transferee's property shall at all times
                be and remain within its control.

                                       or

[ ]     (c)     Such Note is being transferred by the undersigned
                registered holder to an institutional investor which is a person
                that is not a "U.S. person" (or acquiring such Note for the
                account or benefit of a U.S. person) in an "offshore
                transaction," as such terms are defined in Regulation S under
                the Securities Act of 1933, as amended, pursuant to the
                exemption from registration under the Securities Act of 1933, as
                amended, provided by Regulation S thereunder.

                                      B-11

<PAGE>

        If none of the foregoing boxes are checked, then, so long as this Note
shall bear a legend on the face thereof restricting resales and other transfers
thereof (except in the case of a resale or other transfer made to the Company or
to, by, through, or in a transaction approved by, the Initial Purchaser), the
Trustee shall not be obligated to register such Note in the name of any Person
other than the registered holder thereof and until the conditions to any such
registration of transfer set forth in this Note and in the Indenture shall have
been satisfied.

Dated:______________           _________________________________________________
                               [Type or print name of registered holder]

                               By:
                                  ----------------------------------------------

                               The signature of the registered holder must
                               correspond with the name as written upon the face
                               of this Note in every particular, without
                               alteration or enlargement or any change
                               whatsoever.

TO BE COMPLETED BY TRANSFEREE
IF (a) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that (i) it is a
"qualified institutional buyer," as defined in Rule 144A under the Securities
Act of 1933, as amended, and acknowledges that the undersigned either has
received such information regarding the Company as the undersigned transferee
has requested pursuant to Rule 144A or has determined not to request such
information, (ii) this instrument has been executed on behalf of the undersigned
transferee by one of its executive officers and (iii) it is aware that the
registered holder of this Note is relying upon the undersigned transferee's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A. The undersigned transferee acknowledges and agrees that
this Note has not been registered under the Securities Act of 1933, as amended,
and may not be transferred except in accordance with the resale and other
transfer restrictions set forth in the legend on the face thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (b) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and an "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended, and
that this instrument has been executed on behalf of the undersigned transferee
by one of its executive officers. The undersigned transferee undertakes to hold
this Note acquired from the registered holder thereof for its own account, or as
a fiduciary or agent for others (which others are also institutional accredited
investors, unless such transferee is a bank acting in its fiduciary capacity),
for investment purposes and not for distribution, subject to any requirement of
law that the disposition of the undersigned transferee's property shall at all
times be and remain within its control. The undersigned acknowledges

                                      B-12

<PAGE>

and agrees that this Note has not been registered under the Securities Act of
1933, as amended, and may not be transferred except in accordance with the
resale and other transfer restrictions set forth in the legend on the face
thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (c) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and that it is not a U.S. person (as defined in
Regulation S under the Securities Act of 1933, as amended) and it is acquiring
this Note from the registered holder thereof in an "offshore transaction" (as
defined in Regulation S) pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder. The
undersigned transferee acknowledges and agrees that this Note has not been
registered under the Securities Act of 1933, as amended, and may not be
transferred except in accordance with the resale and other transfer restrictions
set forth in the legend on the face thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

                                      B-13

<PAGE>

                                                                       EXHIBIT C

                                 [Face of Note]

                        FORM OF INITIAL CERTIFICATED NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION, THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY
IN MINIMUM DENOMINATIONS OF $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS
THEREOF.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (a)
TO THE COMPANY OR THE INITIAL PURCHASER OR BY, THROUGH OR IN A TRANSACTION
APPROVED BY, THE INITIAL PURCHASER, (b) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (d) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT) ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR AS
A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS SUCH TRANSFEREE IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (e) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES TO AN INSTITUTION THAT IS NOT A U.S. PERSON (AND WAS NOT PURCHASING FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON) WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, OR (f) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS NOTE BEING COMPLETED AND DELIVERED BY THE TRANSFEROR AND, IF
APPLICABLE, THE TRANSFEREE TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

                                       C-1

<PAGE>

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL NOTES OF THE
SERIES.

                                                              CUSIP/CINS [     ]

                           8.00% Senior Notes due 2013

No. ___                                                             $___________

                            THORNBURG MORTGAGE, INC.

promises to pay to __________________________, or registered assigns, the
principal sum of

Dollars on May 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated: May 15, 2003

                                     THORNBURG MORTGAGE, INC.

                                     By:
                                        -------------------------------
                                        Name:
                                        Title:

                                     By:
                                        -------------------------------
                                        Name:
                                        Title:

SEAL

This is one of the Notes referred to
in the within-mentioned Supplemental Indenture:

DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee

By:
   --------------------------------
   Authorized Signatory

                                       C-2

<PAGE>

                                 [Back of Note]
                           8.00% Senior Notes due 2013

        Capitalized terms used herein shall have the meanings assigned to them
in this First Supplemental Indenture referred to below unless otherwise
indicated.

        1.      INTEREST. Thornburg Mortgage, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
8.00% per annum from May 15, 2003 until maturity. The Company will pay interest
semi-annually in arrears on May 15 and November 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 2003; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 2003. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

        2.      METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 1 or November 1 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of this
First Supplemental Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, and premium,
if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. The
Company reserves the right to pay interest to Holders of Notes by check mailed
to such Holders at their registered addresses or by wire transfer to Holders of
at least $5 million aggregate principal amount of Notes.

        3.      PAYING AGENT AND REGISTRAR. Initially, Deutsche Bank Trust
Company Americas, the Trustee under this First Supplemental Indenture, will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

        4.      INDENTURE. The Company issued the Notes under an Indenture dated
as of May 15, 2003 as supplemented by a Supplemental Indenture dated as of May
15, 2003 (collectively, the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company. The Company is issuing
$200.0 million

                                       C-3

<PAGE>

in aggregate principal amount on the Issue Date and may issue Additional Notes
in accordance with the terms of the Indenture.

        5.      OPTIONAL REDEMPTION.

        Optional Redemption. At any time on or after May 15, 2008, the Notes may
be redeemed or purchased in whole or in part at the Company's option at a price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of redemption or purchase
(the "Redemption Date") (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date). Such redemption or purchase may be made upon notice mailed by first-class
mail to each Holder's registered address, not less than 30 nor more than 60 days
prior to the Redemption Date.

        "Applicable Premium" means, with respect to a Note at any Redemption
Date: (1) 104% of the principal amount of such Note if the Redemption Date is on
or after May 15, 2008 and before May 15, 2009; (2) 102.667% of the principal
amount of such Note if the Redemption Date is on or after May 15, 2009 and
before May 15, 2010; (3) 101.333% of the principal amount of such Note if the
Redemption Date is on or after May 15, 2010 and before May 15, 2011; and (4) 0%
of the principal amount of such Note if the Redemption Date is on or after May
15, 2011. Calculation of the Applicable Premium will be made by the Company or
on behalf of the Company by such Person as the Company shall designate;
provided, however, that such calculation shall not be a duty or obligation of
the Trustee.

        "Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2013; provided,
however, that if the period from such Redemption Date to May 15, 2013 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to May 15, 2013 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

        Optional Redemption Upon Equity Offerings. At any time, or from time to
time, on or prior to May 15, 2006, the Company may, at its option, use the net
cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes issued under the Indenture at a redemption price
of 108% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that:

                (1) at least 65% of the principal amount of Notes issued under
        the Indenture remains outstanding immediately after any such redemption;
        and

                (2) the Company makes such redemption not more than 60 days
        after the consummation of any such Equity Offering.

        6.      MANDATORY REDEMPTION.

        Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.

                                       C-4

<PAGE>

        7.      REPURCHASE AT OPTION OF HOLDER.

        Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of repurchase.

        8.      NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

        9.      DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company and the Trustee may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. If, this Note is exchanged in an
Exchange Offer prior to the Record Date for the first Interest Payment Date
following such exchange, accrued and unpaid interest, if any, on this Note, up
to but not including the date of issuance of the Note(s) issued in exchange (the
"Exchange Note") for this Note, shall be paid on the first Interest Payment Date
for such Exchange Note(s) to the Holder or Holders of such Exchange Note(s) on
the first Record Date with respect to such Exchange Note(s). If this Note is
exchanged in an Exchange Offer subsequent to the Record Date for the first
Interest Payment Date following such exchange but on or prior to the Interest
Payment Date, then any such accrued and unpaid interest with respect to this
Note and any accrued and unpaid interest on the Exchange Note(s) issued in
exchange for this Note, through the day before such Interest Payment Date, shall
be paid on such Interest Payment Date to the Holder of this Note on the Record
Date.

        The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement dated May 15, 2003 (the "Registration Rights Agreement") among
the Issuer and Credit Suisse First Boston LLC (the "Initial Purchaser").

        If the Company fails to comply with certain provisions of the
Registration Rights Agreement, in each case as described below, then a special
interest premium (the "Special Interest Premium") shall become payable in
respect of the Notes as follows:

        If (i) any Registration Statement required to be filed pursuant to the
Registration Rights Agreement is not filed within the applicable time periods
stated above; (ii) any Registration Statement required to be filed pursuant to
the Registration Rights Agreement is not declared effective within the
applicable time periods specified above; (iii) the Exchange Offer has not been
consummated within the time period specified above; or (iv) any Registration
Statement required to be filed pursuant to the Registration Rights Agreement
that has been declared effective either (A) thereafter ceases to be effective,
or (B) thereafter ceases, or the related prospectus ceases, to be usable in
connection with the resales of the registrable securities during the periods in
which such Registration Statement is obligated to be usable as specified above,
because (1) any event occurs as a result of which the related prospectus forming
part of such Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or (2) it will be necessary to amend such Registration
Statement, to supplement the related prospectus, or to comply with the
Securities Act or the Exchange Act or the respective rules thereunder, the
Company will be obligated to pay additional interest to each holder of
registrable securities (each such event in clauses (i) through (iv) above, a
"Registration Default").

                                       C-5

<PAGE>

        Additional interest will accrue on the Notes over and above the interest
rate from and including the date on which any Registration Defaults occur, up to
but excluding the date on which all such Registration Defaults have been cured,
at a rate of one-half of one percent (0.50%) per annum for the first 90-day
period immediately following the occurrence of such Registration Default. The
additional interest rate will increase by an additional one-half of one percent
(0.50%) per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum interest rate of 2.0% per
annum.

        10.     PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

        11.     AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the written consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. Without the consent of any Holder of
a Note, the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect in any
material respects the rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to evidence and
provide for the acceptance of appointment under the Indenture of a successor
Trustee.

        12.     DEFAULTS AND REMEDIES. Events of Default are set forth in the
Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in this First Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in writing in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.

        13.     TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

        14.     NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations

                                       C-6

<PAGE>

or their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

        15.     AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

        16.     ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

        17.     CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

Thornburg Mortgage, Inc.
150 Washington Avenue, Suite 302
Santa Fe, New Mexico  87501
Attention:  Investor Relations

                                       C-7

<PAGE>

                                 ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:  _______________

                            Your Signature:
                                           -------------------------------------
                                           (Sign exactly as your name appears on
                                           the face of this Note)

Signature Guarantee*:
                     -----------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       C-8

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased by the Company pursuant
to Section 4.15 of this First Supplemental Indenture, check the following box:
[ ]

        If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of this First Supplemental Indenture, state the
amount you elect to have purchased:

                                $_______________

Date:  _______________

                            Your Signature:
                                           -------------------------------------
                                           (Sign exactly as your name appears on
                                           the face of this Note)
                            Tax Identification No.:_____________________________

Signature Guarantee*:
                     -----------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       C-9

<PAGE>

                        ASSIGNMENT & TRANSFER CERTIFICATE

TO BE COMPLETED AND DELIVERED WITH THIS NOTE TO THE TRUSTEE IF THE UNDERSIGNED
REGISTERED HOLDER WISHES TO SELL, ASSIGN AND TRANSFER NOTE:

        In connection with the resale or other transfer of this Note occurring
prior to the time the legend originally set forth on the face of this Note (or
one or more predecessor Notes) restricting resales and other transfers thereof
has been removed in accordance with the procedures set forth in the Indenture
(other than a resale or other transfer made to the Company or to, by, through,
or in a transaction approved by the Initial Purchaser), the undersigned
registered holder certifies that without utilizing any general solicitation or
general advertising:

                                   [CHECK ONE]

[ ]     (a)     Such Note is being transferred by the undersigned
                registered holder to a "qualified institutional buyer," as
                defined in Rule 144A under the Securities Act of 1933, as
                amended, pursuant to the exemption from registration under the
                Securities Act of 1933, as amended, provided by Rule 144A
                thereunder.

                                       or

[ ]     (b)     Such Note is being transferred by the undersigned
                registered holder to an institutional investor which is an
                "accredited investor," as defined in Rule 501(a)(1), (2), (3) or
                (7) under the Securities Act of 1933, as amended, and that the
                undersigned has been advised by the prospective transferee that
                such transferee shall hold such Note for its own account, or as
                a fiduciary or agent for others (which others are also
                institutional accredited investors, unless such transferee is a
                bank acting in its fiduciary capacity), for investment purposes
                and not for distribution, subject to any requirement of law that
                the disposition of such transferee's property shall at all times
                be and remain within its control.

                                       or

[ ]     (c)     Such Note is being transferred by the undersigned
                registered holder to an institutional investor which is a person
                that is not a "U.S. person" (or acquiring such Note for the
                account or benefit of a U.S. person) in an "offshore
                transaction," as such terms are defined in Regulation S under
                the Securities Act of 1933, as amended, pursuant to the
                exemption from registration under the Securities Act of 1933, as
                amended, provided by Regulation S thereunder.

                                      C-10

<PAGE>

        If none of the foregoing boxes are checked, then, so long as this Note
shall bear a legend on the face thereof restricting resales and other transfers
thereof (except in the case of a resale or other transfer made to the Company or
to, by, through, or in a transaction approved by, the Initial Purchaser), the
Trustee shall not be obligated to register such Note in the name of any Person
other than the registered holder thereof and until the conditions to any such
registration of transfer set forth in this Note and in the Indenture shall have
been satisfied.

Dated:______________           _________________________________________________
                               [Type or print name of registered holder]

                               By:
                                  ----------------------------------------------

                               The signature of the registered holder must
                               correspond with the name as written upon the face
                               of this Note in every particular, without
                               alteration or enlargement or any change
                               whatsoever.

TO BE COMPLETED BY TRANSFEREE
IF (a) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that (i) it is a
"qualified institutional buyer," as defined in Rule 144A under the Securities
Act of 1933, as amended, and acknowledges that the undersigned either has
received such information regarding the Company as the undersigned transferee
has requested pursuant to Rule 144A or has determined not to request such
information, (ii) this instrument has been executed on behalf of the undersigned
transferee by one of its executive officers and (iii) it is aware that the
registered holder of this Note is relying upon the undersigned transferee's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A. The undersigned transferee acknowledges and agrees that
this Note has not been registered under the Securities Act of 1933, as amended,
and may not be transferred except in accordance with the resale and other
transfer restrictions set forth in the legend on the face thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (b) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and an "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended, and
that this instrument has been executed on behalf of the undersigned transferee
by one of its executive officers. The undersigned transferee undertakes to hold
this Note acquired from the registered holder thereof for its own account, or as
a fiduciary or agent for others (which others are also institutional accredited
investors, unless such transferee is a bank acting in its fiduciary capacity),
for investment purposes and not for distribution, subject to any requirement of
law that the disposition of the undersigned transferee's property shall at all
times be and remain within its control. The undersigned acknowledges

                                      C-11

<PAGE>

and agrees that this Note has not been registered under the Securities Act of
1933, as amended, and may not be transferred except in accordance with the
resale and other transfer restrictions set forth in the legend on the face
thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (c) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and that it is not a U.S. person (as defined in
Regulation S under the Securities Act of 1933, as amended) and it is acquiring
this Note from the registered holder thereof in an "offshore transaction" (as
defined in Regulation S) pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder. The
undersigned transferee acknowledges and agrees that this Note has not been
registered under the Securities Act of 1933, as amended, and may not be
transferred except in accordance with the resale and other transfer restrictions
set forth in the legend on the face thereof.

Dated:______________           _________________________________________________
                               [Type or print name of transferee]

                               By:
                                  ----------------------------------------------
                                              Executive Officer

                                      C-12

<PAGE>

                                                                       EXHIBIT D

                          FORM OF EXCHANGE GLOBAL NOTE

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.

                                       D-1

<PAGE>

                                                                  CUSIP/CINS:

                            8% Senior Notes due 2013

No. ___                                                            $___________

                            THORNBURG MORTGAGE, INC.

promises to pay to __________________________, or registered assigns, the
principal sum of

Dollars on May 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated: May   , 2003

                                          THORNBURG MORTGAGE, INC.

                                          By:
                                              ---------------------------------
                                              Name:
                                              Title:

SEAL

This is one of the Notes referred to
in the within-mentioned Supplemental Indenture:

DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee

By:
    --------------------------------
    Authorized Signatory

                                      D-2

<PAGE>

                                 [Back of Note]
                            8% Senior Notes due 2013

        Capitalized terms used herein shall have the meanings assigned to them
in this First Supplemental Indenture referred to below unless otherwise
indicated.

        1.      INTEREST. Thornburg Mortgage, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8%
per annum from May 15, 2003 until maturity. The Company will pay interest
semi-annually in arrears on May 15 and November 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 2003; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 2003. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

        2.      METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 1 or November 1 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of this
First Supplemental Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, and premium,
if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. The
Company reserves the right to pay interest to Holders of Notes by check mailed
to such Holders at their registered addresses or by wire transfer to Holders of
at least $5 million aggregate principal amount of Notes.

        3.      PAYING AGENT AND REGISTRAR. Initially, Deutsche Bank Trust
Company Americas, the Trustee under this First Supplemental Indenture, will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

        4.      INDENTURE. The Company issued the Notes under an Indenture dated
as of May 15, 2003 as supplemented by a Supplemental Indenture dated as of May
15, 2003 (collectively, the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company. The Company is issuing
$200.0 million

                                       D-3

<PAGE>

in aggregate principal amount on the Issue Date and may issue Additional Notes
in accordance with the terms of the Indenture.

        5.      OPTIONAL REDEMPTION.

        Optional Redemption. At any time on or after May 15, 2008, the Notes may
be redeemed or purchased in whole or in part at the Company's option at a price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of redemption or purchase
(the "Redemption Date") (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date). Such redemption or purchase may be made upon notice mailed by first-class
mail to each Holder's registered address, not less than 30 nor more than 60 days
prior to the Redemption Date.

        "Applicable Premium" means, with respect to a Note at any Redemption
Date: (1) 104% of the principal amount of such Note if the Redemption Date is on
or after May 15, 2008 and before May 15, 2009; (2) 102.667% of the principal
amount of such Note if the Redemption Date is on or after May 15, 2009 and
before May 15, 2010; (3) 101.333% of the principal amount of such Note if the
Redemption Date is on or after May 15, 2010 and before May 15, 2011; and (4) 0%
of the principal amount of such Note if the Redemption Date is on or after May
15, 2011. Calculation of the Applicable Premium will be made by the Company or
on behalf of the Company by such Person as the Company shall designate;
provided, however, that such calculation shall not be a duty or obligation of
the Trustee.

        "Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2013; provided,
however, that if the period from such Redemption Date to May 15, 2013 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to May 15, 2013 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

        Optional Redemption Upon Equity Offerings. At any time, or from time to
time, on or prior to May 15, 2006, the Company may, at its option, use the net
cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes issued under the Indenture at a redemption price
of 108% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that:

                (3) at least 65% of the principal amount of Notes issued under
        the Indenture remains outstanding immediately after any such redemption;
        and

                (4) the Company makes such redemption not more than 60 days
        after the consummation of any such Equity Offering.

        6.      MANDATORY REDEMPTION.

        Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.

                                       D-4

<PAGE>

        7.      REPURCHASE AT OPTION OF HOLDER.

        Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of repurchase.

        8.      NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

        9.      DENOMINATIONS AND TRANSFER. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company and the Trustee may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture.

        10.     PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

        11.     AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the written consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. Without the consent of any Holder of
a Note, the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect in any
material respects the rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to evidence and
provide for the acceptance of appointment under the Indenture of a successor
Trustee.

        12.     DEFAULTS AND REMEDIES. Events of Default are set forth in the
Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in
writing in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware

                                       D-5

<PAGE>

of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.

        13.     TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

        14.     NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

        15.     AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

        16.     ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

        17.     CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

Thornburg Mortgage, Inc.
150 Washington Avenue, Suite 302
Santa Fe, New Mexico  87501
Attention:  Investor Relations

                                       D-6

<PAGE>

                                 ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: _________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

              (Print or type assignee's name, address and zip code)

and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:
     -------------
                                    Your Signature:
                                                   -----------------------------
                                                   (Sign  exactly as your name
                                                    appears on the face of this
                                                    Note)

Signature Guarantee*:
                     ------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       D-7

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased by the Company pursuant
to Section 4.15 of this First Supplemental Indenture, check the following box:
[ ]

        If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of this First Supplemental Indenture, state the
amount you elect to have purchased:

                                  $___________

Date:
      ------------
                                    Your Signature:
                                                    ----------------------------
                                                    (Sign  exactly as your name
                                                     appears on the face of this
                                                     Note)

                                    Tax Identification No.:
                                                           ---------------------

Signature Guarantee*:
                     ------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       D-8

<PAGE>

                        ASSIGNMENT & TRANSFER CERTIFICATE

TO BE COMPLETED AND DELIVERED WITH THIS NOTE TO THE TRUSTEE IF THE UNDERSIGNED
REGISTERED HOLDER WISHES TO SELL, ASSIGN AND TRANSFER NOTE:

        In connection with the resale or other transfer of this Note occurring
prior to the time the legend originally set forth on the face of this Note (or
one or more predecessor Notes) restricting resales and other transfers thereof
has been removed in accordance with the procedures set forth in the Indenture
(other than a resale or other transfer made to the Company or to, by, through,
or in a transaction approved by the Initial Purchaser), the undersigned
registered holder certifies that without utilizing any general solicitation or
general advertising:

                                   [CHECK ONE]

[ ]     (a)     Such Note is being transferred by the undersigned registered
                holder to a "qualified institutional buyer," as defined in Rule
                144A under the Securities Act of 1933, as amended, pursuant to
                the exemption from registration under the Securities Act of
                1933, as amended, provided by Rule 144A thereunder.

                                       or

[ ]     (b)     Such Note is being transferred by the undersigned registered
                holder to an institutional investor which is an "accredited
                investor," as defined in Rule 501(a)(1), (2), (3) or (7) under
                the Securities Act of 1933, as amended, and that the undersigned
                has been advised by the prospective transferee that such
                transferee shall hold such Note for its own account, or as a
                fiduciary or agent for others (which others are also
                institutional accredited investors, unless such transferee is a
                bank acting in its fiduciary capacity), for investment purposes
                and not for distribution, subject to any requirement of law that
                the disposition of such transferee's property shall at all times
                be and remain within its control.

                                       or

[ ]     (c)     Such Note is being transferred by the undersigned registered
                holder to an institutional investor which is a person that is
                not a "U.S. person" (or acquiring such Note for the account or
                benefit of a U.S. person) in an "offshore transaction," as such
                terms are defined in Regulation S under the Securities Act of
                1933, as amended, pursuant to the exemption from registration
                under the Securities Act of 1933, as amended, provided by
                Regulation S thereunder.

                                       D-9

<PAGE>

        If none of the foregoing boxes are checked, then, so long as this Note
shall bear a legend on the face thereof restricting resales and other transfers
thereof (except in the case of a resale or other transfer made to the Company or
to, by, through, or in a transaction approved by, the Initial Purchaser), the
Trustee shall not be obligated to register such Note in the name of any Person
other than the registered holder thereof and until the conditions to any such
registration of transfer set forth in this Note and in the Indenture shall have
been satisfied.

Dated:
      ------------                  --------------------------------------------
                                    [Type or print name of registered holder]

                                    By:
                                        ----------------------------------------

                                    The signature of the registered holder must
                                    correspond with the name as written upon the
                                    face of this Note in every particular,
                                    without alteration or enlargement or any
                                    change whatsoever.

TO BE COMPLETED BY TRANSFEREE
IF (a) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that (i) it is a
"qualified institutional buyer," as defined in Rule 144A under the Securities
Act of 1933, as amended, and acknowledges that the undersigned either has
received such information regarding the Company as the undersigned transferee
has requested pursuant to Rule 144A or has determined not to request such
information, (ii) this instrument has been executed on behalf of the undersigned
transferee by one of its executive officers and (iii) it is aware that the
registered holder of this Note is relying upon the undersigned transferee's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A. The undersigned transferee acknowledges and agrees that
this Note has not been registered under the Securities Act of 1933, as amended,
and may not be transferred except in accordance with the resale and other
transfer restrictions set forth in the legend on the face thereof.

Dated:
      ------------                  --------------------------------------------
                                    [Type or print name of transferee]

                                    By:
                                        ----------------------------------------
                                                   Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (b) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and an "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended, and
that this instrument has been executed on behalf of the undersigned transferee
by one of its executive officers. The undersigned transferee undertakes to hold
this Note acquired from the registered holder thereof for its own account, or as
a fiduciary or agent for others (which others are also institutional accredited
investors, unless such transferee is a bank acting in its fiduciary capacity),
for investment purposes and not for distribution, subject to any requirement of
law that the disposition of the undersigned transferee's property shall at all
times be and remain within its control. The undersigned acknowledges

                                      D-10

<PAGE>

and agrees that this Note has not been registered under the Securities Act of
1933, as amended, and may not be transferred except in accordance with the
resale and other transfer restrictions set forth in the legend on the face
thereof.

Dated:
      ------------                  --------------------------------------------
                                     [Type or print name of transferee]

                                    By:
                                        ----------------------------------------
                                                    Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (c) ABOVE IS CHECKED:

         The undersigned transferee represents and warrants that it is an
institutional investor and that it is not a U.S. person (as defined in
Regulation S under the Securities Act of 1933, as amended) and it is acquiring
this Note from the registered holder thereof in an "offshore transaction" (as
defined in Regulation S) pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder. The
undersigned transferee acknowledges and agrees that this Note has not been
registered under the Securities Act of 1933, as amended, and may not be
transferred except in accordance with the resale and other transfer restrictions
set forth in the legend on the face thereof.

Dated:
      ------------                  --------------------------------------------
                                     [Type or print name of transferee]

                                    By:
                                        ----------------------------------------
                                                   Executive Officer

                                      D-11

<PAGE>

                                                                       EXHIBIT E

                       FORM OF EXCHANGE CERTIFICATED NOTE

                                                                 CUSIP/CINS:

                            8% Senior Notes due 2013

No. ___                                                             $___________

                            THORNBURG MORTGAGE, INC.

promises to pay to __________________________, or registered assigns, the
principal sum of

Dollars on May 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated: May   , 2003

                                        THORNBURG MORTGAGE, INC.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

SEAL

This is one of the Notes referred to
in the within-mentioned Supplemental Indenture:

DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee

By:
    --------------------------------
    Authorized Signatory

<PAGE>

                                 [Back of Note]
                            8% Senior Notes due 2013

        Capitalized terms used herein shall have the meanings assigned to them
in this First Supplemental Indenture referred to below unless otherwise
indicated.

        1.      INTEREST.  Thornburg Mortgage, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8%
per annum from May 15, 2003 until maturity. The Company will pay interest
semi-annually in arrears on May 15 and November 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 2003; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 2003. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

        2.      METHOD OF PAYMENT.  The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 1 or November 1 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of this
First Supplemental Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, and premium,
if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. The
Company reserves the right to pay interest to Holders of Notes by check mailed
to such Holders at their registered addresses or by wire transfer to Holders of
at least $5 million aggregate principal amount of Notes.

        3.      PAYING AGENT AND REGISTRAR. Initially, Deutsche Bank Trust
Company Americas, the Trustee under this First Supplemental Indenture, will act
as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

        4.      INDENTURE. The Company issued the Notes under an Indenture dated
as of May 15, 2003 as supplemented by a Supplemental Indenture dated as of May
15, 2003 (collectively, the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company. The Company is issuing
$200.0 million

                                       E-2

<PAGE>

in aggregate principal amount on the Issue Date and may issue Additional Notes
in accordance with the terms of the Indenture.

        5.      OPTIONAL REDEMPTION.

        Optional Redemption. At any time on or after May 15, 2008, the Notes may
be redeemed or purchased in whole or in part at the Company's option at a price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of redemption or purchase
(the "Redemption Date") (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date). Such redemption or purchase may be made upon notice mailed by first-class
mail to each Holder's registered address, not less than 30 nor more than 60 days
prior to the Redemption Date.

        "Applicable Premium" means, with respect to a Note at any Redemption
Date: (1) 104% of the principal amount of such Note if the Redemption Date is on
or after May 15, 2008 and before May 15, 2009; (2) 102.667% of the principal
amount of such Note if the Redemption Date is on or after May 15, 2009 and
before May 15, 2010; (3) 101.333% of the principal amount of such Note if the
Redemption Date is on or after May 15, 2010 and before May 15, 2011; and (4) 0%
of the principal amount of such Note if the Redemption Date is on or after May
15, 2011. Calculation of the Applicable Premium will be made by the Company or
on behalf of the Company by such Person as the Company shall designate;
provided, however, that such calculation shall not be a duty or obligation of
the Trustee.

        "Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2013; provided,
however, that if the period from such Redemption Date to May 15, 2013 is not
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Redemption Date to May 15, 2013 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

        Optional Redemption Upon Equity Offerings. At any time, or from time to
time, on or prior to May 15, 2006, the Company may, at its option, use the net
cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes issued under the Indenture at a redemption price
of 108% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that:

                (1) at least 65% of the principal amount of Notes issued under
        the Indenture remains outstanding immediately after any such redemption;
        and

                (2) the Company makes such redemption not more than 60 days
        after the consummation of any such Equity Offering.

        6.      MANDATORY REDEMPTION.

        Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.

                                       E-3

<PAGE>

        7.      REPURCHASE AT OPTION OF HOLDER.

        Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of repurchase.

        8.      NOTICE OF REDEMPTION.  Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

        9.      DENOMINATIONS, TRANSFER.  The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company and the Trustee may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture.

        10.     PERSONS DEEMED OWNERS.  The registered Holder of a Note may be
treated as its owner for all purposes.

        11.     AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the written consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. Without the consent of any Holder of
a Note, the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect in any
material respects the rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to evidence and
provide for the acceptance of appointment under the Indenture of a successor
Trustee.

        12.     DEFAULTS AND REMEDIES.  Events of Default are set forth in the
Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in
writing in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware

                                       E-4

<PAGE>

of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.

        13.     TRUSTEE DEALINGS WITH COMPANY.  The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

        14.     NO RECOURSE AGAINST OTHERS.  A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

        15.     AUTHENTICATION.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

        16.     ABBREVIATIONS.  Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

        17.     CUSIP NUMBERS.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

Thornburg Mortgage, Inc.
150 Washington Avenue, Suite 302
Santa Fe, New Mexico  87501
Attention:  Investor Relations

                                       E-5

<PAGE>

                                 ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: _________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

              (Print or type assignee's name, address and zip code)

and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:
     -------------
                                    Your Signature:
                                                   -----------------------------
                                                   (Sign  exactly as your name
                                                    appears on the face of this
                                                    Note)

Signature Guarantee*:
                     ------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       E-6

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased by the Company pursuant
to Section 4.15 of this First Supplemental Indenture, check the following box:
[ ]

        If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 of this First Supplemental Indenture, state the
amount you elect to have purchased:

                                  $___________

Date:
      ------------
                                    Your Signature:
                                                    ----------------------------
                                                    (Sign  exactly as your name
                                                     appears on the face of this
                                                     Note)

                                    Tax Identification No.:
                                                           ---------------------

Signature Guarantee*:
                     ------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                       E-7

<PAGE>

                        ASSIGNMENT & TRANSFER CERTIFICATE

TO BE COMPLETED AND DELIVERED WITH THIS NOTE TO THE TRUSTEE IF THE UNDERSIGNED
REGISTERED HOLDER WISHES TO SELL, ASSIGN AND TRANSFER NOTE:

        In connection with the resale or other transfer of this Note occurring
prior to the time the legend originally set forth on the face of this Note (or
one or more predecessor Notes) restricting resales and other transfers thereof
has been removed in accordance with the procedures set forth in the Indenture
(other than a resale or other transfer made to the Company or to, by, through,
or in a transaction approved by the Initial Purchaser), the undersigned
registered holder certifies that without utilizing any general solicitation or
general advertising:

                                   [CHECK ONE]

[ ]     (a)     Such Note is being transferred by the undersigned registered
                holder to a "qualified institutional buyer," as defined in Rule
                144A under the Securities Act of 1933, as amended, pursuant to
                the exemption from registration under the Securities Act of
                1933, as amended, provided by Rule 144A thereunder.

                                       or

[ ]     (b)     Such Note is being transferred by the undersigned registered
                holder to an institutional investor which is an "accredited
                investor," as defined in Rule 501(a)(1), (2), (3) or (7) under
                the Securities Act of 1933, as amended, and that the undersigned
                has been advised by the prospective transferee that such
                transferee shall hold such Note for its own account, or as a
                fiduciary or agent for others (which others are also
                institutional accredited investors, unless such transferee is a
                bank acting in its fiduciary capacity), for investment purposes
                and not for distribution, subject to any requirement of law that
                the disposition of such transferee's property shall at all times
                be and remain within its control.

                                       or

[ ]     (c)     Such Note is being transferred by the undersigned registered
                holder to an institutional investor which is a person that is
                not a "U.S. person" (or acquiring such Note for the account or
                benefit of a U.S. person) in an "offshore transaction," as such
                terms are defined in Regulation S under the Securities Act of
                1933, as amended, pursuant to the exemption from registration
                under the Securities Act of 1933, as amended, provided by
                Regulation S thereunder.

                                       E-8

<PAGE>

        If none of the foregoing boxes are checked, then, so long as this Note
shall bear a legend on the face thereof restricting resales and other transfers
thereof (except in the case of a resale or other transfer made to the Company or
to, by, through, or in a transaction approved by, the Initial Purchaser), the
Trustee shall not be obligated to register such Note in the name of any Person
other than the registered holder thereof and until the conditions to any such
registration of transfer set forth in this Note and in the Indenture shall have
been satisfied.

Dated:
      ------------                  --------------------------------------------
                                     [Type or print name of registered holder]

                                    By:
                                        ----------------------------------------

                                    The signature of the registered holder must
                                    correspond with the name as written upon the
                                    face of this Note in every particular,
                                    without alteration or enlargement or any
                                    change whatsoever.

TO BE COMPLETED BY TRANSFEREE
IF (a) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that (i) it is a
"qualified institutional buyer," as defined in Rule 144A under the Securities
Act of 1933, as amended, and acknowledges that the undersigned either has
received such information regarding the Company as the undersigned transferee
has requested pursuant to Rule 144A or has determined not to request such
information, (ii) this instrument has been executed on behalf of the undersigned
transferee by one of its executive officers and (iii) it is aware that the
registered holder of this Note is relying upon the undersigned transferee's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A. The undersigned transferee acknowledges and agrees that
this Note has not been registered under the Securities Act of 1933, as amended,
and may not be transferred except in accordance with the resale and other
transfer restrictions set forth in the legend on the face thereof.

Dated:
      ------------                  --------------------------------------------
                                     [Type or print name of transferee]

                                    By:
                                        ----------------------------------------
                                                 Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (b) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and an "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended, and
that this instrument has been executed on behalf of the undersigned transferee
by one of its executive officers. The undersigned transferee undertakes to hold
this Note acquired from the registered holder thereof for its own account, or as
a fiduciary or agent for others (which others are also institutional accredited
investors, unless such transferee is a bank acting in its fiduciary capacity),
for investment purposes and not for distribution, subject to any requirement of
law that the disposition of the undersigned transferee's property shall at all
times be and remain within its control. The undersigned acknowledges

                                       E-9

<PAGE>

and agrees that this Note has not been registered under the Securities Act of
1933, as amended, and may not be transferred except in accordance with the
resale and other transfer restrictions set forth in the legend on the face
thereof.

Dated:
      ------------                  --------------------------------------------
                                     [Type or print name of transferee]

                                    By:
                                        ----------------------------------------
                                                 Executive Officer

TO BE COMPLETED BY TRANSFEREE
IF (c) ABOVE IS CHECKED:

        The undersigned transferee represents and warrants that it is an
institutional investor and that it is not a U.S. person (as defined in
Regulation S under the Securities Act of 1933, as amended) and it is acquiring
this Note from the registered holder thereof in an "offshore transaction" (as
defined in Regulation S) pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder. The
undersigned transferee acknowledges and agrees that this Note has not been
registered under the Securities Act of 1933, as amended, and may not be
transferred except in accordance with the resale and other transfer restrictions
set forth in the legend on the face thereof.

Dated:
      ------------                  --------------------------------------------
                                     [Type or print name of transferee]

                                    By:
                                        ----------------------------------------
                                                 Executive Officer

                                      E-10<PAGE>

                                                                   EXHIBIT 10.12

                                                                  EXECUTION COPY

                                  $200,000,000

                            THORNBURG MORTGAGE, INC.

                           8.00% Senior Notes Due 2013

                          REGISTRATION RIGHTS AGREEMENT

May 15, 2003

Credit Suisse First Boston LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010-3629

Dear Sirs:

        Thornburg Mortgage, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to Credit Suisse First Boston Corporation (the
"Initial Purchaser"), upon the terms set forth in a purchase agreement of even
date herewith (the "Purchase Agreement"), $200 million aggregate principal
amount of its 8.00% Senior Notes due 2013 (the "Initial Securities"). The
Initial Securities will be issued pursuant to an Indenture, dated as of May 15,
2003 (the "Indenture"), between the Company and Deutsche Bank Trust Company
Americas, as trustee (the "Trustee"). As an inducement to the Initial Purchaser
to enter into the Purchase Agreement, the Company agrees with the Initial
Purchaser, for the benefit of the Initial Purchaser and the holders of the
Securities (as defined below) (collectively, the "Holders"), as follows:

        1. Registered Exchange Offer. Unless not permitted by applicable law
(after the Company has complied with the ultimate paragraph of this Section 1),
the Company shall prepare and, not later than 45 days (such 45th day being a
"Filing Deadline") after the date on which the Initial Purchaser purchases the
Initial Securities pursuant to the Purchase Agreement (the "Closing Date"), file
with the Securities and Exchange Commission (the "Commission") a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to a proposed offer (the "Registered Exchange Offer") to the Holders of
Transfer Restricted Securities (as defined in Section 6 hereof), who are not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer, to issue and deliver to such Holders, in exchange for
the Initial Securities, a like aggregate principal amount of debt securities of
the Company issued under the Indenture, identical in all material respects to
the Initial Securities and registered under the Securities Act (the "Exchange
Securities"). The Company shall use its best efforts to (i) cause such Exchange
Offer Registration Statement to become effective under the Securities Act within
140 days after the Closing Date (such 140th day being an "Effectiveness
Deadline") and (ii) keep the Exchange Offer Registration Statement effective for
not less than 30 days (or longer, if required by applicable law) after the date
notice of the Registered Exchange Offer is mailed to the Holders (such period
being called the "Exchange Offer Registration Period").

<PAGE>

        If the Company commences the Registered Exchange Offer, the Company (i)
will be entitled to consummate the Registered Exchange Offer 30 days after such
commencement (provided that the Company has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer) and (ii) will be required to consummate the Registered Exchange
Offer no later than 40 days after the date on which the Exchange Offer
Registration Statement is declared effective (such 40th day being the
"Consummation Deadline").

        Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities electing to exchange the
Initial Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.

        The Company acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) the Initial Purchaser, if it so elects to
sell Securities acquired in exchange for Initial Securities constituting any
portion of an unsold allotment, is required to deliver a prospectus containing
the information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in connection with such sale.

        The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchaser have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Company shall
make such prospectus and any amendment or supplement thereto available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 180 days after the consummation of the Registered
Exchange Offer.

        If, upon consummation of the Registered Exchange Offer, the Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
the Initial Purchaser upon the written request of the Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by the Initial
Purchaser, a like principal amount of debt securities of the Company issued
under the Indenture and identical in all material respects to the Initial
Securities (the "Private Exchange Securities"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities."

                                       2

<PAGE>

        In connection with the Registered Exchange Offer, the Company shall:

                (a) mail to each Holder a copy of the prospectus forming part of
        the Exchange Offer Registration Statement, together with an appropriate
        letter of transmittal and related documents;

                (b) keep the Registered Exchange Offer open for not less than 30
        days (or longer, if required by applicable law) after the date notice
        thereof is mailed to the Holders;

                (c) utilize the services of a depositary for the Registered
        Exchange Offer with an address in the Borough of Manhattan, The City of
        New York, which may be the Trustee or an affiliate of the Trustee;

                (d) permit Holders to withdraw tendered Securities at any time
        prior to the close of business, New York time, on the last business day
        on which the Registered Exchange Offer shall remain open; and

                (e) otherwise comply with all applicable laws.

        As soon as practicable after the close of the Registered Exchange Offer
or the Private Exchange, as the case may be, the Company shall:

                (x) accept for exchange all the Initial Securities validly
        tendered and not withdrawn pursuant to the Registered Exchange Offer and
        the Private Exchange;

                (y) deliver to the Trustee for cancellation all the Initial
        Securities so accepted for exchange; and

                (z) cause the Trustee to authenticate and deliver promptly to
        each Holder of the Initial Securities, Exchange Securities or Private
        Exchange Securities, as the case may be, equal in principal amount to
        the Initial Securities of such Holder so accepted for exchange.

        The Indenture will provide that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.

        Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.

        Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a

                                       3

<PAGE>

result of market-making activities or other trading activities and that it will
be required to acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Securities.

        Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

        If following the date hereof there has been announced a change in
Commission policy with respect to exchange offers that in the reasonable opinion
of counsel to the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal law, the Company
will seek a no-action letter or other favorable decision from the Commission
allowing the Company to consummate the Registered Exchange Offer. The Company
will pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company will take all such other actions as
may be requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (i) participating in
telephonic conferences with the Commission, (ii) delivering to the Commission
staff an analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that the Registered
Exchange Offer should be permitted and (iii) diligently pursuing a resolution
(which need not be favorable) by the Commission staff.

        2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the
180th day after the Closing Date, (iii) the Initial Purchaser so requests with
respect to the Initial Securities (or the Private Exchange Securities) not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following consummation of the Registered Exchange Offer or
(iv) any Holder (other than an Exchanging Dealer) is not eligible to participate
in the Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange and any such Holder so requests, the Company shall take the following
actions (the date on which any of the conditions described in the foregoing
clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv)
the receipt of the required notice, being a "Trigger Date"):

                (a) The Company shall promptly (but in no event more than 45
        days after the Trigger Date (such 45th day being a "Filing Deadline"))
        file with the Commission and thereafter use its best efforts to cause to
        be declared effective no later than 140 days after the Trigger Date
        (such 140th day being an "Effectiveness Deadline") a registration
        statement (the "Shelf Registration Statement" and, together with the
        Exchange Offer Registration Statement, a "Registration Statement") on an
        appropriate form under the Securities Act relating to the offer and sale
        of the Transfer Restricted Securities by the Holders thereof from time
        to time in accordance with the methods of distribution set forth in the
        Shelf Registration Statement and Rule 415 under the Securities Act
        (hereinafter, the "Shelf Registration"); provided, however, that no
        Holder (other than the Initial Purchaser) shall be entitled to have the
        Securities held by it covered by such Shelf

                                       4

<PAGE>

        Registration Statement unless such Holder agrees in writing to be bound
        by all the provisions of this Agreement applicable to such Holder.

                (b) The Company shall use its best efforts to keep the Shelf
        Registration Statement continuously effective in order to permit the
        prospectus included therein to be lawfully delivered by the Holders of
        the relevant Securities, for a period of two years (or for such longer
        period if extended pursuant to Section 3(j) below) from the date of its
        effectiveness or such shorter period that will terminate when all the
        Securities covered by the Shelf Registration Statement (i) have been
        sold pursuant thereto or (ii) are no longer restricted securities (as
        defined in Rule 144 under the Securities Act or any successor rule
        thereof). The Company shall be deemed not to have used its best efforts
        to keep the Shelf Registration Statement effective during the requisite
        period if it voluntarily takes any action that would result in Holders
        of the Securities covered thereby not being able to offer and sell such
        Securities during that period, unless such action is required by
        applicable law.

                (c) Notwithstanding any other provisions of this Agreement to
        the contrary, the Company shall cause the Shelf Registration Statement
        and the related prospectus and any amendment or supplement thereto, as
        of the effective date of the Shelf Registration Statement, amendment or
        supplement, (i) to comply in all material respects with the applicable
        requirements of the Securities Act and the rules and regulations of the
        Commission and (ii) not to contain any untrue statement of a material
        fact or omit to state a material fact required to be stated therein or
        necessary in order to make the statements therein, in light of the
        circumstances under which they were made, not misleading.

        3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:

                (a) The Company shall (i) furnish to the Initial Purchaser,
        prior to the filing thereof with the Commission, a copy of the
        Registration Statement and each amendment thereof and each supplement,
        if any, to the prospectus included therein and, in the event that the
        Initial Purchaser (with respect to any portion of an unsold allotment
        from the original offering) is participating in the Registered Exchange
        Offer or the Shelf Registration Statement, the Company shall use its
        best efforts to reflect in each such document, when so filed with the
        Commission, such comments as such Initial Purchaser reasonably may
        propose; (ii) include the information set forth in Annex A hereto on the
        cover, in Annex B hereto in the "Exchange Offer Procedures" section and
        the "Purpose of the Exchange Offer" section and in Annex C hereto in the
        "Plan of Distribution" section of the prospectus forming a part of the
        Exchange Offer Registration Statement and include the information set
        forth in Annex D hereto in the Letter of Transmittal delivered pursuant
        to the Registered Exchange Offer; (iii) if requested by the Initial
        Purchaser, include the information required by Items 507 or 508 of
        Regulation S-K under the Securities Act, as applicable, in the
        prospectus forming a part of the Exchange Offer Registration Statement;
        (iv) include within the prospectus contained in the Exchange Offer
        Registration Statement a section entitled "Plan of Distribution,"
        reasonably acceptable to the Initial Purchaser, which shall contain a
        summary statement of the positions taken or policies made by the staff
        of the Commission with respect to the potential "underwriter" status of
        any broker-dealer that is the beneficial owner (as defined in Rule 13d-3
        under the Securities Exchange Act of 1934, as amended (the "Exchange
        Act")) of Exchange Securities received by such broker-dealer in the
        Registered Exchange Offer (a "Participating Broker-Dealer"), whether
        such positions or policies have been publicly disseminated by the staff
        of the Commission or such positions or policies, in the reasonable
        judgment of the Initial Purchaser based upon advice of counsel (which
        may be

                                       5

<PAGE>

        in-house counsel), represent the prevailing views of the staff of the
        Commission; and (v) in the case of a Shelf Registration Statement,
        include the names of the Holders who propose to sell Securities pursuant
        to the Shelf Registration Statement as selling securityholders.

                (b) The Company shall give written notice to the Initial
        Purchaser, the Holders of the Securities and any Participating
        Broker-Dealer from whom the Company has received prior written notice
        that it will be a Participating Broker-Dealer in the Registered Exchange
        Offer (which notice pursuant to clauses (ii) through (v) hereof shall be
        accompanied by an instruction to suspend the use of the prospectus until
        the requisite changes have been made):

                        (i) when the Registration Statement or any amendment
                thereto has been filed with the Commission and when the
                Registration Statement or any post-effective amendment thereto
                has become effective;

                        (ii) of any request by the Commission for amendments or
                supplements to the Registration Statement or the prospectus
                included therein or for additional information;

                        (iii) of the issuance by the Commission of any stop
                order suspending the effectiveness of the Registration Statement
                or the initiation of any proceedings for that purpose;

                        (iv) of the receipt by the Company or its legal counsel
                of any notification with respect to the suspension of the
                qualification of the Securities for sale in any jurisdiction or
                the initiation or threatening of any proceeding for such
                purpose; and

                        (v) of the happening of any event that requires the
                Company to make changes in the Registration Statement or the
                prospectus in order that the Registration Statement or the
                prospectus do not contain an untrue statement of a material fact
                nor omit to state a material fact required to be stated therein
                or necessary to make the statements therein (in the case of the
                prospectus, in light of the circumstances under which they were
                made) not misleading.

                (c) The Company shall make every reasonable effort to obtain the
        withdrawal at the earliest possible time, of any order suspending the
        effectiveness of the Registration Statement.

                (d) The Company shall furnish to each Holder of Securities
        included within the coverage of the Shelf Registration, without charge,
        at least one copy of the Shelf Registration Statement and any
        post-effective amendment thereto, including financial statements and
        schedules, and, if the Holder so requests in writing, all exhibits
        thereto (including those, if any, incorporated by reference).

                (e) The Company shall deliver to each Exchanging Dealer and the
        Initial Purchaser, and to any other Holder who so requests, without
        charge, at least one copy of the Exchange Offer Registration Statement
        and any post-effective amendment thereto, including financial statements
        and schedules, and, if the Initial Purchaser or any such Holder
        requests, all exhibits thereto (including those incorporated by
        reference).

                (f) The Company shall, during the period in which the Company is
        required to keep a Shelf Registration Statement effective pursuant to
        Section 2 hereof, deliver to each Holder of Securities included within
        the coverage of the Shelf Registration, without charge, as many copies
        of the prospectus (including each preliminary prospectus) included in
        the Shelf Registration

                                       6

<PAGE>

        Statement and any amendment or supplement thereto as such person may
        reasonably request. The Company consents, subject to the provisions of
        this Agreement, to the use of the prospectus or any amendment or
        supplement thereto by each of the selling Holders of the Securities in
        connection with the offering and sale of the Securities covered by the
        prospectus, or any amendment or supplement thereto, included in the
        Shelf Registration Statement.

                (g) The Company shall deliver to the Initial Purchaser, any
        Exchanging Dealer, any Participating Broker-Dealer and such other
        persons required to deliver a prospectus following the Registered
        Exchange Offer, without charge, as many copies of the final prospectus
        included in the Exchange Offer Registration Statement and any amendment
        or supplement thereto as such persons may reasonably request. The
        Company consents, subject to the provisions of this Agreement, to the
        use of the prospectus or any amendment or supplement thereto by the
        Initial Purchaser, if necessary, any Participating Broker-Dealer and
        such other persons required to deliver a prospectus following the
        Registered Exchange Offer in connection with the offering and sale of
        the Exchange Securities covered by the prospectus, or any amendment or
        supplement thereto, included in such Exchange Offer Registration
        Statement.

                (h) Prior to any public offering of the Securities pursuant to
        any Registration Statement the Company shall register or qualify or
        cooperate with the Holders of the Securities included therein and their
        respective counsel in connection with the registration or qualification
        of the Securities for offer and sale under the securities or "blue sky"
        laws of such states of the United States as any Holder of the Securities
        reasonably requests in writing and do any and all other acts or things
        necessary or advisable to enable the offer and sale in such
        jurisdictions of the Securities covered by such Registration Statement;
        provided, however, that the Company shall not be required to (i) qualify
        generally to do business in any jurisdiction where it is not then so
        qualified or (ii) take any action which would subject it to general
        service of process or to taxation in any jurisdiction where it is not
        then so subject.

                (i) The Company shall cooperate with the Holders of the
        Securities to facilitate the timely preparation and delivery of
        certificates representing the Securities to be sold pursuant to any
        Registration Statement free of any restrictive legends and in such
        denominations and registered in such names as the Holders may request a
        reasonable period of time prior to sales of the Securities pursuant to
        such Registration Statement.

                (j) Upon the occurrence of any event contemplated by paragraphs
        (ii) through (v) of Section 3(b) above during the period for which the
        Company is required to maintain an effective Registration Statement, the
        Company shall promptly prepare and file a post-effective amendment to
        the Registration Statement or a supplement to the related prospectus and
        any other required document so that, as thereafter delivered to Holders
        of the Securities or purchasers of Securities, the prospectus will not
        contain an untrue statement of a material fact or omit to state any
        material fact required to be stated therein or necessary to make the
        statements therein, in light of the circumstances under which they were
        made, not misleading. If the Company notifies the Initial Purchaser, the
        Holders of the Securities and any known Participating Broker-Dealer in
        accordance with paragraphs (ii) through (v) of Section 3(b) above to
        suspend the use of the prospectus until the requisite changes to the
        prospectus have been made, then the Initial Purchaser, the Holders of
        the Securities and any such Participating Broker-Dealers shall suspend
        use of such prospectus, and the period of effectiveness of the Shelf
        Registration Statement provided for in Section 2(b) above and the
        Exchange Offer Registration Statement provided for in Section 1 above
        shall each be extended by the number of days from and including the date
        of the giving of such notice to and including the date when the Initial
        Purchaser, the Holders of the

                                       7

<PAGE>

        Securities and any known Participating Broker-Dealer shall have received
        such amended or supplemented prospectus pursuant to this Section 3(j).

                (k) Not later than the effective date of the applicable
        Registration Statement, the Company will provide a CUSIP number for the
        Initial Securities, the Exchange Securities or the Private Exchange
        Securities, as the case may be, and provide the applicable trustee with
        printed certificates for the Initial Securities, the Exchange Securities
        or the Private Exchange Securities, as the case may be, in a form
        eligible for deposit with The Depository Trust Company.

                (l) The Company will comply with all rules and regulations of
        the Commission to the extent and so long as they are applicable to the
        Registered Exchange Offer or the Shelf Registration and will make
        generally available to its securityholders (or otherwise provide in
        accordance with Section 11(a) of the Securities Act) an earnings
        statement satisfying the provisions of Section 11(a) of the Securities
        Act, no later than 45 days after the end of a 12-month period (or 90
        days, if such period is a fiscal year) beginning with the first month of
        the Company's first fiscal quarter commencing after the effective date
        of the Registration Statement, which statement shall cover such 12-month
        period.

                (m) The Company shall cause the Indenture to be qualified under
        the Trust Indenture Act of 1939, as amended, in a timely manner and
        containing such changes, if any, as shall be necessary for such
        qualification. In the event that such qualification would require the
        appointment of a new trustee under the Indenture, the Company shall
        appoint a new trustee thereunder pursuant to the applicable provisions
        of the Indenture.

                (n) The Company may require each Holder of Securities to be sold
        pursuant to the Shelf Registration Statement to furnish to the Company
        such information regarding the Holder and the distribution of the
        Securities as the Company may from time to time reasonably require for
        inclusion in the Shelf Registration Statement, and the Company may
        exclude from such registration the Securities of any Holder that
        unreasonably fails to furnish such information within a reasonable time
        after receiving such request.

                (o) The Company shall enter into such customary agreements
        (including, if requested, an underwriting agreement in customary form)
        and take all such other action, if any, as any Holder of the Securities
        shall reasonably request in order to facilitate the disposition of the
        Securities pursuant to any Shelf Registration.

                (p) In the case of any Shelf Registration, the Company shall (i)
        make reasonably available for inspection by the Holders of the
        Securities, any underwriter participating in any disposition pursuant to
        the Shelf Registration Statement and any attorney, accountant or other
        agent retained by the Holders of the Securities or any such underwriter
        all relevant financial and other records, pertinent corporate documents
        and properties of the Company and (ii) cause the Company's officers,
        directors, employees, attorneys, accountants and auditors to supply all
        relevant information reasonably requested by the Holders of the
        Securities or any such underwriter, attorney, accountant or agent in
        connection with the Shelf Registration Statement, in each case, as shall
        be reasonably necessary to enable such persons, to conduct a reasonable
        investigation within the meaning of Section 11 of the Securities Act;
        provided, however, that the foregoing inspection and information
        gathering shall be coordinated on behalf of the Initial Purchaser by you
        and on behalf of the other parties, by one counsel designated by and on
        behalf of such other parties as described in Section 4 hereof.

                                       8

<PAGE>

                (q) In the case of any Shelf Registration, the Company, if
        requested by any Holder of Securities covered thereby, shall cause (i)
        its counsel to deliver an opinion and updates thereof relating to the
        Securities in customary form addressed to such Holders and the managing
        underwriters, if any, thereof and dated, in the case of the initial
        opinion, the effective date of such Shelf Registration Statement (it
        being agreed that the matters to be covered by such opinion shall
        include, without limitation, the due incorporation and good standing of
        the Company and its subsidiaries; the qualification of the Company and
        its subsidiaries to transact business as foreign corporations; the due
        authorization, execution and delivery of the relevant agreement of the
        type referred to in Section 3(o) hereof; the due authorization,
        execution, authentication and issuance, and the validity and
        enforceability, of the applicable Securities; the absence of material
        legal or governmental proceedings involving the Company and its
        subsidiaries; the absence of governmental approvals required to be
        obtained in connection with the Shelf Registration Statement, the
        offering and sale of the applicable Securities, or any agreement of the
        type referred to in Section 3(o) hereof; the compliance as to form of
        such Shelf Registration Statement and any documents incorporated by
        reference therein and of the Indenture with the requirements of the
        Securities Act and the Trust Indenture Act, respectively; the
        organization and operation of the Company in conformity with the
        requirements for qualification and taxation as a real estate investment
        trust under Sections 856 through 860 of the Internal Revenue Code of
        1986, as amended; the availability of an applicable exemption from the
        Investment Company Act of 1940, as amended, for the Company and its
        subsidiaries; and, as of the date of the opinion and as of the effective
        date of the Shelf Registration Statement or most recent post-effective
        amendment thereto, as the case may be, the absence from such Shelf
        Registration Statement and the prospectus included therein, as then
        amended or supplemented, and from any documents incorporated by
        reference therein of an untrue statement of a material fact or the
        omission to state therein a material fact required to be stated therein
        or necessary to make the statements therein not misleading (in the case
        of any such documents, in the light of the circumstances existing at the
        time that such documents were filed with the Commission under the
        Exchange Act); (ii) its officers to execute and deliver all customary
        documents and certificates and updates thereof requested by any
        underwriters of the applicable Securities and (iii) its independent
        public accountants to provide to the selling Holders of the applicable
        Securities and any underwriter therefor a comfort letter in customary
        form and covering matters of the type customarily covered in comfort
        letters in connection with primary underwritten offerings, subject to
        receipt of appropriate documentation as contemplated, and only if
        permitted, by Statement of Auditing Standards No. 72.

                (r) In the case of the Registered Exchange Offer, if requested
        by the Initial Purchaser or any known Participating Broker-Dealer, the
        Company shall cause (i) its counsel to deliver to such Initial Purchaser
        or such Participating Broker-Dealer a signed opinion in the form set
        forth in Section 6(c) of the Purchase Agreement with such changes as are
        customary in connection with the preparation of a Registration Statement
        and (ii) its independent public accountants to deliver to the Initial
        Purchaser or such Participating Broker-Dealer a comfort letter, in
        customary form, meeting the requirements as to the substance thereof as
        set forth in Section 6(a) of the Purchase Agreement, with appropriate
        date changes.

                (s) If a Registered Exchange Offer or a Private Exchange is to
        be consummated, upon delivery of the Initial Securities by Holders to
        the Company (or to such other Person as directed by the Company) in
        exchange for the Exchange Securities or the Private Exchange Securities,
        as the case may be, the Company shall mark, or caused to be marked, on
        the Initial Securities so exchanged that such Initial Securities are
        being canceled in exchange for the Exchange Securities or the Private
        Exchange Securities, as the case may be; in no event shall the Initial
        Securities be marked as paid or otherwise satisfied.

                                       9

<PAGE>

                (t) The Company will use its best efforts to (a) if the Initial
        Securities have been rated prior to the initial sale of such Initial
        Securities, confirm such ratings will apply to the Securities covered by
        a Registration Statement, or (b) if the Initial Securities were not
        previously rated, cause the Securities covered by a Registration
        Statement to be rated with the appropriate rating agencies, if so
        requested by Holders of a majority in aggregate principal amount of
        Securities covered by such Registration Statement, or by the managing
        underwriters, if any.

                (u) In the event that any broker-dealer registered under the
        Exchange Act shall underwrite any Securities or participate as a member
        of an underwriting syndicate or selling group or "assist in the
        distribution" (within the meaning of the Conduct Rules (the "Rules") of
        the National Association of Securities Dealers, Inc. ("NASD")) thereof,
        whether as a Holder of such Securities or as an underwriter, a placement
        or sales agent or a broker or dealer in respect thereof, or otherwise,
        the Company will assist such broker-dealer in complying with the
        requirements of such Rules, including, without limitation, by (i) if
        such Rules, including Rule 2720, shall so require, engaging a "qualified
        independent underwriter" (as defined in Rule 2720) to participate in the
        preparation of the Registration Statement relating to such Securities,
        to exercise usual standards of due diligence in respect thereto and, if
        any portion of the offering contemplated by such Registration Statement
        is an underwritten offering or is made through a placement or sales
        agent, to recommend the yield of such Securities, (ii) indemnifying any
        such qualified independent underwriter to the extent of the
        indemnification of underwriters provided in Section 5 hereof and (iii)
        providing such information to such broker-dealer as may be required in
        order for such broker-dealer to comply with the requirements of the
        Rules.

                (v) The Company shall use its best efforts to take all other
        steps necessary to effect the registration of the Securities covered by
        a Registration Statement contemplated hereby.

        4. Registration Expenses. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;

                (i) all registration and filing fees and expenses;

                (ii) all fees and expenses of compliance with federal securities
        and state "blue sky" or securities laws;

                (iii) all expenses of printing (including printing certificates
        for the Securities to be issued in the Registered Exchange Offer and the
        Private Exchange and printing of Prospectuses), messenger and delivery
        services and telephone;

                (iv) all fees and disbursements of counsel for the Company;

                (v) all application and filing fees in connection with listing
        the Exchange Securities on a national securities exchange or automated
        quotation system pursuant to the requirements hereof; and

                (vi) all fees and disbursements of independent certified public
        accountants of the Company (including the expenses of any special audit
        and comfort letters required by or incident to such performance).

                                       10

<PAGE>

        The Company will bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any person, including special experts, retained by the Company.

        (b) In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchaser and the Holders of
Transfer Restricted Securities who are tendering Initial Securities in the
Registered Exchange Offer and/or selling or reselling Securities pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Clifford Chance US LLP,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.

        5. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and each
person, if any, who controls such Holder or such Participating Broker-Dealer
within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to a Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that a prospectus
relating to such Securities was required to be delivered by such Holder or
Participating Broker-Dealer under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder or
Participating Broker-Dealer results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the final prospectus if the Company
had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.

        (b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or

                                       11

<PAGE>

the Exchange Act from and against any losses, claims, damages or liabilities or
any actions in respect thereof, to which the Company or any such controlling
person may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company for any legal
or other expenses reasonably incurred by the Company or any such controlling
person in connection with investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity agreement will be in
addition to any liability which such Holder may otherwise have to the Company or
any of its controlling persons.

        (c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action, and does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

        (d) If the indemnification provided for in this Section 5 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the exchange of the Securities, pursuant to
the Registered Exchange Offer, or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or

                                       12

<PAGE>

such other indemnified party, as the case may be, on the other, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding any other provision of this Section 5(d), the
Holders of the Securities shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Securities pursuant to a Registration Statement exceeds the amount
of damages which such Holders have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each person, if any, who controls such indemnified party within
the meaning of the Securities Act or the Exchange Act shall have the same rights
to contribution as such indemnified party and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act shall
have the same rights to contribution as the Company.

        (e) The agreements contained in this Section 5 shall survive the sale of
the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

        6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Securities shall be
assessed as follows if any of the following events occur (each such event in
clauses (i) through (iv) below being herein called a "Registration Default"):

        (i)     any Registration Statement required by this Agreement is not
                filed with the Commission on or prior to the applicable Filing
                Deadline;

        (ii)    any Registration Statement required by this Agreement is not
                declared effective by the Commission on or prior to the
                applicable Effectiveness Deadline;

        (iii)   the Registered Exchange Offer has not been consummated on or
                prior to the Consummation Deadline; or

        (iv)    any Registration Statement required by this Agreement has been
                declared effective by the Commission but (A) such Registration
                Statement thereafter ceases to be effective or (B) such
                Registration Statement or the related prospectus ceases to be
                usable in connection with resales of Transfer Restricted
                Securities during the periods specified herein because either
                (1) any event occurs as a result of which the related prospectus
                forming part of such Registration Statement would include any
                untrue statement of a material fact or omit to state any
                material fact necessary to make the statements therein in the
                light of the circumstances under which they were made not
                misleading, or (2) it shall be necessary to amend such
                Registration Statement or supplement to the related prospectus,
                to comply with the Securities Act or the Exchange Act or the
                respective rules thereunder.

        Each of the foregoing will constitute a Registration Default whatever
the reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a result
of any action or inaction by the Commission.

                                       13

<PAGE>

        Additional Interest shall accrue on the Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at a rate of 0.50% per
annum (the "Additional Interest Rate") for the first 90-day period immediately
following the occurrence of such Registration Default. The Additional Interest
Rate shall increase by an additional 0.50% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum Additional Interest Rate of 2.0% per annum.

        (b) A Registration Default referred to in Section 6(a)(iv) hereof shall
be deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.

        (c) Any amounts of Additional Interest due pursuant to Section 6(a) will
be payable in cash on the regular interest payment dates with respect to the
Securities. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest Rate by the principal amount of the
Securities and further multiplied by a fraction, the numerator of which is the
number of days such Additional Interest Rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.

        (d) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered
Exchange Offer of an Initial Security for an Exchange Note, the date on which
such Exchange Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.

        7. Rules 144 and 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder of Securities, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A. The Company covenants that it
will take such further action as any Holder of Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Initial Securities identified to the
Company by the Initial Purchaser upon request. Upon the request of any Holder of
Initial Securities, the Company shall deliver to such Holder a written statement
as to whether it has complied with such requirements. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.

                                       14

<PAGE>

        8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of such Transfer Restricted Securities to be
included in such offering.

        No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

        9. Miscellaneous.

        (a) Remedies. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations under Section 1 and 2 hereof may
result in material irreparable injury to the Initial Purchaser or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 1 and
2 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

        (b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

        (c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.

        (d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:

                (1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.

                (2) if to the Initial Purchaser;

                        Credit Suisse First Boston LLC
                        Eleven Madison Avenue
                        New York, NY 10010-3629
                        Fax No.: (212) 325-8278
                        Attention: Transactions Advisory Group

        with a copy to:

                        Clifford Chance US LLP
                        200 Park Avenue

                                       15

<PAGE>

                        New York, NY 10166
                        Fax: (212) 878-8375
                        Attention:  Timothy W. Korth

                (3)     if to the Company, at its address as follows:

                        Thornburg Mortgage, Inc.
                        150 Washington Avenue
                        Suite 302
                        Santa Fe, NM 87501
                        Attention: Larry Goldstone, President

        with a copy to:

                        Dechert LLP
                        4675 MacArthur Court
                        Suite 1400
                        Newport Beach, CA 92660
                        Attention: Michael Jeffers

        All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

        (e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.

        (f) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.

        (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

        (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

        (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

        (j) Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

                                       16

<PAGE>

        (k) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.

        (l) Submission to Jurisdiction; Waiver of Immunities. By the execution
and delivery of this Agreement, the Company submits to the nonexclusive
jurisdiction of any such court in any such suit or proceeding. To the extent
that the Company may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service of notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, it hereby irrevocably waives such immunity in respect
of this Agreement, to the fullest extent permitted by law.

                                       17

<PAGE>

        If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Initial Purchaser and the Company in accordance with its terms.

                                Very truly yours,

                                THORNBURG MORTGAGE, INC.

                                by: /s/ Larry A. Goldstone
                                    ----------------------
                                    Name:  Larry A. Goldstone
                                    Title: President and Chief Operating Officer

The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.

CREDIT SUISSE FIRST BOSTON LLC

by:  /s/ Andrew C. Rosenburgh
     ------------------------
     Name:  Andrew C. Rosenburgh
     Title: Managing Director

                                       18

<PAGE>

                                                                         ANNEX A

        Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the consummation of the Registered Exchange
Offer (as defined herein), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."

                                       A-1

<PAGE>

                                                                         ANNEX B

        Each broker-dealer that receives Exchange Securities for its own account
in exchange for Initial Securities, where such Initial Securities were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

                                       B-1

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

        Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the consummation of the Registered
Exchange Offer, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until May 15, 2013, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.

        The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

        For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

                                       C-1

<PAGE>

                                                                         ANNEX D

[ ]    CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

        Name:
        Address:

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

                                       D-1

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