ANNALY MORTGAGE MANAGEMENT, INC.
                           EXECUTIVE PERFORMANCE PLAN
 
                                    ARTICLE 1
                                     PURPOSE
 
         Annaly Mortgage Management, Inc. has adopted this Executive Performance
Plan to promote its success by providing participating executives the
opportunity to earn incentive compensation that qualifies as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended from time to time.
 
                                    ARTICLE 2
                             ADDITIONAL DEFINITIONS
 
SECTION 2.1       SPECIFIC TERMS.
 
         For purposes of the Plan, except where a different meaning is plainly
required by the context,
 
         "APPLICABLE PERCENTAGE" means the number specified by the Committee
with respect to a given Executive for a given Year or Years.
 
         "AVERAGE NET WORTH" means for any period the average of the net worth
of the Company on a consolidated basis or of one or more of its subsidiaries at
the end of each quarter during the period. For purposes of determining the
Average Net Worth, the "net worth" means the difference between (i) the
aggregate assets of the Company on a consolidated basis or of one or more of its
subsidiaries, before reserves for depreciation, bad debts and other similar
non-cash items, and (ii) the aggregate liabilities of the Company on a
consolidated basis or of one or more of its subsidiaries.
 
         "AWARD" means an award under this Plan of a conditional opportunity to
receive a Bonus if the applicable Performance Target(s) is (are) satisfied in
the applicable Performance Period, or an award of Restricted Stock or Restricted
Units the vesting of which will occur if the applicable Performance Target(s) is
(are) satisfied in the applicable Performance Period.
 
         "BONUS" means a cash payment (or the distribution of Shares or stock
units as provided in Section 4.10 hereof) or a cash payment opportunity (or an
opportunity to receive Shares or stock units) under the Plan, as the context
requires.
 
         "BOOK VALUE" means the aggregate amounts reported as stockholders
equity on the balance sheet of the Company or one of its subsidiaries as of the
end of each fiscal year determined in accordance with generally accepted
accounting principles but without taking into account any valuation reserves
(i.e., changes in the value of the portfolio of investments as a result of
mark-to-market valuation changes, referred to in the financial statements as
"Accumulated Other Comprehensive Gain or Loss").
 
 
         "BUSINESS CRITERIA" means any one or any combination of EPS, Net
Income, Return on Assets, Return on Equity, Revenue and Threshold Return.
 
         "CHIEF EXECUTIVE OFFICER" means the person so designated by the
Company.
 
         "CODE" means Internal Revenue Code of 1986, as amended from time to
time.
 
         "COMMITTEE" means the the Company's Compensation Committee or such
other committee as from time to time the Board of Directors may designate to
administer the Plan in accordance with Section 3.1 and Section 162(m).
 
         "COMPANY" means Annaly Mortgage Management, Inc.
 
         "EPS" for any Year means diluted earnings per share of the Company on a
consolidated basis or of one or more of its subsidiaries, as reported in the
applicable financial statements for the Year.
 
         "EXECUTIVE" means a key employee (including any officer) of the Company
or of a subsidiary who is a "covered employee" for purposes of Section 162(m)
(or in the opinion of the Committee may become a "covered employee" during the
applicable Performance Period or during any taxable year of the Company for
which remuneration resulting from an Award may be deductible (without regard to
Section 162(m)).
 
         "NET INCOME" for any Year means the consolidated net income of the
Company on a consolidated basis or of one or more of its subsidiaries, as
reported in the applicable financial statements for the Year.
 
         "PERFORMANCE PERIOD" means the Year or Years (or portions thereof) with
respect to which the Performance Targets are set by the Committee.
 
         "PERFORMANCE TARGET(S)" means the specific objective goal or goals that
are timely set in writing by the Committee pursuant to Section 4.2 for each
Executive for the applicable Performance Period in respect of any one or more of
the Business Criteria.
 
         "RESTRICTED STOCK" means an Award of Shares under Section 5 that are
nontransferable and subject to forfeiture conditions and other restrictions on
ownership until specific vesting conditions established by the Committee under
the Award are satisfied.
 
         "RESTRICTED UNIT" means an Award under Section 5 of notional units of
measurement that are denominated in Shares, payable to the Executive in cash or
in Shares upon the satisfaction of specific conditions established by the
Committee under the Award.
 
         "RETURN ON ASSETS" means Net Income divided by the average of the total
assets of the Company on a consolidated basis or of one or more of its
subsidiaries at the end of the four fiscal quarters of the Year, as reported in
the applicable financial statements.
 
         "RETURN ON EQUITY" means the Net Income divided by the average of the
common shareholders equity of the Company on a consolidated basis or of one or
more of its subsidiaries
 
 
at the end of each of the four fiscal quarters of the Year, as reported in the
applicable financial statements.
 
         "REVENUE" for any Year means the revenue earned by the Company on a
consolidated basis or by one or more of its subsidiaries, as reported in the
applicable financial statements.
 
         "SECTION 162(m)" means Section 162(m) of the Code, and the regulations
promulgated thereunder, as amended from time to time.
 
         "SHARES" means shares of common stock of the Company or any securities
or property, including rights into which the same may be converted by operation
of law or otherwise.
 
         "STOCK PLAN" means the Company's Long-Term Stock Incentive Plan, as
amended, or any other stockholder approved stock incentive plan of the Company.
 
         "TEN-YEAR U.S. TREASURY RATE" means for any period the average of the
weekly average yields to maturity for actively traded current coupon U.S.
Treasury fixed interest rate securities (adjusted to a constant maturity of ten
years) published by the Federal Reserve Board for each week during such period,
or, if such rate is not published by the Federal Reserve Board, an Federal
Reserve Bank or agency or department of the federal government selected by the
Company. If the Company determines in good faith that the Ten-Year U.S. Treasury
Rate cannot be calculated as provided above, then the rate shall be the
arithmetic average of the per annum average yields to maturities, based upon
closing asked prices on each business day during such period, for each actively
traded marketable U.S. Treasury fixed interest rate security with a final
maturity date not less than eight (8) nor more than twelve (12) years from the
date of the closing asked prices as chosen and quoted for each business day in
each such period in New York City by at least three recognized dealers in U.S.
government securities selected by the Company.
 
         "THRESHOLD RETURN" means for any Year, a Return on Equity equal to the
sum of (i) the Ten-Year U.S. Treasury Rate for such fiscal year plus (ii) the
Applicable Percentage.
 
         "YEAR" means a fiscal year of the Company commencing on or after
January 1, 2006 that constitutes all or part of the applicable Performance
Period and ends no later than December 31, 2010.
 
SECTION2.2        ACCOUNTING TERMS.
 
         Except as otherwise expressly provided or the context otherwise
requires, financial and accounting terms are used as defined for purposes of,
and shall be determined in accordance with, generally accepted accounting
principles, as from time to time in effect, as applied and included in the
financial statements of the Company or its subsidiaries, as applicable.
 
 
                                    ARTICLE 3
                           ADMINISTRATION OF THE PLAN
 
SECTION 3.1       THE COMMITTEE.
 
         The Plan shall be administered by a Committee consisting of at least
three members of the Board of Directors of the Company, duly authorized by the
Board of Directors of the Company to administer the Plan who are "outside
directors" within the meaning of Section 162(m).
 
SECTION 3.2       POWERS OF THE COMMITTEE.
 
         The Committee shall have the sole authority to establish and administer
the Business Criteria and Performance Target(s) and the responsibility of
determining from among the Executives those persons who will participate in and
receive Awards under the Plan and, subject to the terms of the Plan, the amount
or Shares under such Awards, and the time or times at which and the form and
manner in which Awards will be paid (which may include elective or mandatory
deferral alternatives) and shall otherwise be responsible for the administration
of the Plan, in accordance with its terms. The Committee shall have the power to
establish Business Criteria and Performance Target(s) with respect to the
Company on a consolidated basis or with respect to one or more of the Company's
subsidiaries. The Committee shall have the authority to construe and interpret
the Plan (except as otherwise provided herein) and any agreement or other
document relating to any Awards under the Plan, may adopt rules and regulations
governing the administration of the Plan, and shall exercise all other duties
and powers conferred on it by the Plan, or which are incidental or ancillary
thereto.
 
SECTION 3.3       REQUISITE ACTION.
 
         A majority (but not fewer than two) of the members of the Committee
shall constitute a quorum. The vote of a majority of those present at a meeting
at which a quorum is present or the unanimous written consent of the Committee
shall constitute action by the Committee.
 
SECTION 3.4       EXPRESS AUTHORITY (AND LIMITATIONS ON AUTHORITY) TO CHANGE
                  TERMS AND CONDITIONS OF AWARDS; ACCELERATION OR DEFERRAL OF
                  PAYMENT.
 
         Without limiting the Committee's authority under other provisions of
the Plan, but subject to any express limitations of the Plan and compliance with
Section 162(m), the Committee shall have the authority to accelerate an Award
(after the attainment of the applicable Performance Target(s)) and to waive
restrictive conditions for an Award (including any forfeiture conditions, but
not Performance Target(s)), in such circumstances as the Committee deems
appropriate. In the case of any acceleration of an Award after the attainment of
the applicable Performance Target(s), the amount payable shall be discounted to
its present value using an interest rate equal to Moody's Average Corporate Bond
Yield for the month preceding the month in which such acceleration occurs (or
such other rate of interest that is deemed to constitute a "reasonable rate of
interest" for purposes of Section 162(m)). Any deferred payment shall be subject
to Section 4.9 and, if applicable, Section 4.10. In addition, and
notwithstanding anything elsewhere in the Plan to the contrary, the Committee
shall have the authority to provide under the terms of an
 
 
Award that payment or vesting shall be accelerated upon the death or disability
of an Executive, a change in control of the Company, or upon termination of the
Executive's employment without cause or as a constructive termination, as and in
the manner provided by the Committee, and subject to such provision not causing
the Award to fail to satisfy the requirements for performance-based compensation
under Section 162(m) generally.
 
                                    ARTICLE 4
                                     BONUSES
 
SECTION 4.1       PROVISION FOR BONUS.
 
         Each participating Executive may receive a Bonus if the Performance
Target(s) established by the Committee, relative to the applicable Business
Criteria, are attained in the applicable Performance Period established by the
Committee. The applicable Performance Period and Performance Target(s) shall be
determined by the Committee consistent with the terms of the Plan and Section
162(m). Notwithstanding the fact that the Performance Target(s) have been
attained, the Company may, in accordance with Section 4.7, pay a Bonus of less
than the amount determined by the formula or standard established pursuant to
Section 4.2 or may pay no Bonus at all, unless the Committee otherwise expressly
provides by written contract or other written commitment.
 
SECTION 4.2       SELECTION OF PERFORMANCE TARGET(S).
 
         The specific Performance Target(s) with respect to the Business
Criteria shall be established by the Committee (i) during a period when the
performance relating to the Performance Target(s) remains substantially
uncertain within the meaning of Section 162(m) and (ii) prior to the deadlines
applicable under Section 162(m). The Performance Target(s) with respect to any
Performance Period may be established on a cumulative basis or in the
alternative, and may be established on a stand-alone basis with respect to the
Company or on an a relative basis with respect to any peer companies or index
selected by the Committee. At the time the Performance Target(s) are selected,
the Committee shall provide, in terms of an objective formula or standard for
each participating Executive, and for any person who may become an Executive
after the Performance Target(s) are set, the method of computing the specific
amount that will represent the maximum amount of Bonus payable to the Executive
if the Performance Target(s) are attained, subject to Sections 4.1, 4.3, 4.7,
6.1 and 6.7. The objective formula or standard shall preclude the use of
discretion to increase the amount of any Bonus earned pursuant to the terms of
the Award.
 
SECTION 4.3       MAXIMUM INDIVIDUAL BONUS.
 
         Notwithstanding any other provision hereof, no Executive shall receive
Bonuses under the Plan for Performance Periods ending with or within any one
Year in excess of $15 million ($10 million for Executives other than the Chief
Executive Officer). The foregoing limits shall be subject to adjustments
consistent with Section 3.4 in the event of acceleration or deferral.
 
 
SECTION 4.4       SELECTION OF EXECUTIVES.
 
         For each Performance Period, the Committee shall determine, at the time
the Business Criteria and the Performance Target(s) are set, those Executives
who will participate in the Plan.
 
SECTION 4.5       TERMINATION OF EMPLOYMENT.
 
         If a participating Executive terminates employment prior to the payment
of a Bonus, the Executive shall not be entitled to any payment in respect of the
Bonus, unless otherwise expressly provided by the terms of the Awards to that
Executive or other written contract between the Company and the Executive.
 
SECTION 4.6       ADJUSTMENTS TO BUSINESS CRITERIA, PERFORMANCE TARGETS AND
                  OTHER TERMS OF BONUSES.
 
         To preserve the intended incentives and benefits of an Award, the
Committee shall apply the objective formula or standard with respect to the
applicable Performance Target in a manner that eliminates the effects of the
following: (i) the gain, loss, income or expense resulting from changes in
accounting principles that become effective during the Performance Period; (ii)
the gain, loss, income or expense reported by the Company in its public filings
with respect to the Performance Period that are extraordinary or unusual in
nature or infrequent in occurrence, excluding gains or losses on the early
extinguishment of debt, as determined in accordance with Opinion No. 30 of the
Accounting Principles Board, and (iii) the gains or losses resulting from, and
the direct expenses incurred in connection with, the disposition of a business,
in whole or in part. The Committee may, however, provide at the time the
Performance Targets are established that one or more of the foregoing
adjustments will not be made as to a specific Award. Each of the adjustments
described in this Section 4.6 may relate to the Company as a whole or any part
of the Company's business or operations, as determined by the Committee at the
time the Performance Targets are established. The adjustments are to be
determined in accordance with generally accepted accounting principles and
standards, unless another objective method of measurement is designated by the
Committee. In addition to the foregoing, the Committee shall adjust any Business
Criteria, Performance Targets or other features of an Award that relate to or
are wholly or partially based on the number of, or the value of, any Shares, to
reflect a change in the Company's capitalization, such as a stock split or
dividend, or a corporate transaction, such as a merger, consolidation,
separation (including a spin-off or other distribution of stock or property), or
a reorganization of the Company.
 
SECTION 4.7       COMMITTEE DISCRETION TO DETERMINE BONUSES.
 
         The Committee shall have the sole discretion to determine the standard
or formula pursuant to which each Executive's Bonus shall be calculated (in
accordance with Sections 4.1 and 4.2), whether all or any portion of the amount
so calculated will be paid, and the specific amount (if any) to be paid to each
Executive, subject in all cases to the terms, conditions and limits of the Plan
and of any other written commitment authorized by the Committee. To this same
extent, the Committee may at any time establish (and, once established, rescind,
waive or amend) additional conditions and terms of payment of Bonuses (including
but not limited to the achievement of other financial, strategic or individual
goals, which may be objective orsubjective) as it may deem desirable in carrying out the purposes of the Plan
and may take into account such other factors as it deems appropriate in
administering any aspect of the Plan. The Committee may not, however, increase
the maximum amount permitted to be paid to any individual under Section 4.2 or
4.3 of the Plan or award a Bonus under this Plan if the applicable Performance
Target(s) have not been satisfied.
 
SECTION 4.8       COMMITTEE CERTIFICATION.
 
         No Executive shall receive any payment under the Plan unless the
Committee has certified, by resolution or other appropriate action in writing,
that the amount thereof has been accurately determined in accordance with the
terms, conditions and limits of the Plan and that the Performance Target(s) and
any other material terms previously established by the Committee or set forth in
the Plan were in fact satisfied.
 
SECTION 4.9       TIME OF PAYMENT; DEFERRED AMOUNTS.
 
         Any Bonuses granted by the Committee under the Plan shall be paid as
soon as practicable following the Committee's determinations under this Section
4 and the certification of the Committee's findings under Section 4.8. Any such
payment shall be in cash or cash equivalent or in such other form of equal value
on such payment date (including Shares or share equivalents as contemplated by
Section 4.10) as the Committee may approve or require, subject to applicable
withholding requirements and, if applicable, Section 4.10. Notwithstanding the
foregoing, the Committee, in its sole discretion (but subject to compliance with
Section 162(m) and to any prior written commitments and to any conditions
consistent with Sections 3.4, 4.3, 4.10 and 6.7 that it deems appropriate),
defer the payout or vesting of any Bonus and/or provide to Executives the
opportunity to elect to defer the payment of any Bonus under a nonqualified
deferred compensation plan and as contemplated by Section 4.10. In the case of
any deferred payment of a Bonus after the attainment of the applicable
Performance Target(s), any amount in excess of the amount otherwise payable
shall be based on either Moody's Average Corporate Bond Yield (or such other
rate of interest that is deemed to constitute a "reasonable rate of interest"
for purposes of Section 162(m)) over the deferral period or the return over the
deferral period of one or more predetermined actual investments (including
Shares) such that the amount payable at the later date will be based upon actual
returns, including any decrease or increase in the value of the investment(s).
 
SECTION 4.10      SHARE PAYOUTS OF BONUS.
 
         Any Bonus payable in Shares shall be pursuant to a combined Award under
the Plan and the Stock Plan. The number of Shares or stock units (or similar
deferred award representing a right to receive Shares) awarded in lieu of all or
any portion of a Bonus shall be equal to the largest whole number of Shares
which have an aggregate fair market value no greater than the amount of cash
otherwise payable as of the date the cash payment of the Bonus would have been
made. For this purpose, "fair market value" shall mean the average of the high
and low prices of the Shares on such date. Any such Shares, stock units (or
similar rights) shall thereafter be subject to adjustments for changes in
corporate capitalization as provided in the Stock Plan. Dividend equivalent
rights thereafter earned may be accrued and payable in additional stock units,
cash or Shares or any combination thereof, in the Committee's discretion.
 
                                    ARTICLE 5
                      RESTRICTED STOCK AND RESTRICTED UNITS
 
SECTION 5.1.      AWARDS.
 
         The Committee may grant Awards under the Plan in the form of Restricted
Stock or Restricted Units, which shall become vested or payable based upon the
achievement of Performance Target(s) established by the Committee and upon the
continued employment of the Executive for such period or periods as the
Committee shall specify. Such Awards may be granted at any time after the Plan
is approved by the stockholders of the Company in accordance with Section 162(m)
and before the date of the first meeting of stockholders in 2010. The selection
of Executives, Business Criteria, Performance Targets and Performance Period and
other terms and conditions of the Award shall be established and administered by
the Committee on the same basis as provided for Bonuses under Article 4 hereof
(other than Section 4.3 hereof), except as context otherwise requires. Any
Shares subject to a Restricted Stock Award or distributed to an Executive under
a Restricted Unit Award shall be pursuant to a combined Award under the Plan and
Stock Plan, and shall be subject to adjustments for changes in corporate
capitalization as provided in the Stock Plan. Unless otherwise provided by the
Committee, any dividends, distributions and equivalent rights payable with
respect to Restricted Stock or Restricted Units shall be subject to the same
vesting or payment conditions established pursuant to the Award. Notwithstanding
the fact that Performance Targets have been attained with respect to any Award
in the form of Restricted Stock or Restricted Units, the Company may, on the
same basis as provided for Bonuses under Section 4.1 and 4.7, reduce the amount
vesting or payable, or eliminate vesting or payment, unless the Committee
otherwise expressly provides by written contract or other written commitment.
 
SECTION 5.2       MAXIMUM AWARDS.
 
         The maximum number of Shares or stock units that may be subject to
Restricted Stock and/or Restricted Units granted to any one Executive under
Section 5.1 shall be limited to 2,500,000 Shares, subject to adjustment to
reflect changes in corporate capitalization in the same manner as provided in
the Stock Plan. An Award of Restricted Stock or Restricted Units shall not
affect the Executive's maximum Bonus under Section 4.3, and the provisions of
Section 4.3 shall not apply to Awards under this Article 5.
 
                                    ARTICLE 6
                               GENERAL PROVISIONS
 
SECTION 6.1       NO RIGHT TO AWARDS OR CONTINUED EMPLOYMENT.
 
         This Plan or the provision for or payment of any amounts under the Plan
does not and shall not be construed to confer upon any person any legal right to
receive, or any interest in, an Award or any other benefit under the Plan, or
any legal right to be continued in the employ of the Company. Subject to any
other written agreement between an Executive and the Company, the Company
expressly reserves any and all rights to discharge an Executive in its sole
discretion, without liability of any person, entity or governing body under the
Plan or otherwise. This Plan does not, and shall not be construed to adversely
affect any express independent right of any
 
 
person under a separate employment agreement. Notwithstanding any other
provision hereof and notwithstanding the fact that the Performance Target(s)
have been attained and/or the individual maximum amounts hereunder have been
calculated, the Company shall have no obligation to pay any Bonus or distribute
any Award hereunder nor to pay the maximum amount so calculated or any prorated
amount based on service during the period, except to the extent that the
specific amount to be paid or distributed to a participating Executive has been
determined by the Committee pursuant to Section 4.7 hereof, unless the Committee
otherwise expressly provides by written contract or other written commitment.
 
SECTION 6.2       DISCRETION OF COMPANY, BOARD OF DIRECTORS AND COMMITTEE.
 
         Any decision made or action taken by the Company or by the Board of
Directors of the Company or by the Committee arising out of or in connection
with the creation, amendment, construction, administration, interpretation and
effect of the Plan shall be within the absolute discretion of such entity and
shall be conclusive and binding upon all persons. No member of the Committee
shall have any liability for actions taken or omitted under the Plan by the
member or any other person.
 
SECTION 6.3       NO FUNDING OF PLAN.
 
         The Company shall not be required to fund or otherwise segregate any
cash or any other assets which may at any time be paid to Executives under the
Plan. The Plan shall constitute an "unfunded" plan of the Company. The Company
shall not, by any provisions of the Plan, be deemed to be a trustee of any
property, and any rights of any Executive or former Executive shall be no
greater than those of a general unsecured creditor or stockholder of the
Company, as the case may be.
 
SECTION 6.4       NON-TRANSFERABILITY OF BENEFITS AND INTERESTS.
 
         Except as expressly provided by the Committee, no benefit payable under
the Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such attempted
action shall be void and no such benefit shall be in any manner liable for or
subject to debts, contracts, liabilities, engagements or torts of any Executive
or former Executive. This Section 6.4 shall not apply to an assignment of a
contingency or payment due (i) after the death of an Executive to the deceased
Executive's legal representative or beneficiary or (ii) after the disability of
an Executive to the disabled Executive's personal representative.
 
SECTION 6.5       LAW TO GOVERN.
 
         All questions pertaining to the construction, regulation, validity and
effect of the provisions of the Plan shall be determined in accordance with the
laws of the State of New York.
 
SECTION 6.6       NON-EXCLUSIVITY.
 
         The Plan does not limit the authority of the Company, the Board or the
Committee, or any subsidiary of the Company to grant awards or authorize any
other compensation to any
 
 
person under any other plan or authority of the Company, including, without
limitation, the payment of cash bonuses or the issuance of restricted stock or
restricted stock units or any other awards.
 
SECTION 6.7       SECTION 162(m) CONDITIONS; BIFURCATION OF PLAN.
 
         It is the intent of the Company that the Plan and Awards made hereunder
satisfy and be interpreted in a manner, that, in the case of Executives who are
persons whose compensation is subject to Section 162(m), satisfies any
applicable requirements as performance-based compensation. Any provision,
application or interpretation of the Plan inconsistent with this intent to
satisfy the standards in Section 162(m) of the Code shall be disregarded.
 
                                    ARTICLE 7
                  AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN
 
         The Board of Directors or the Committee may from time to time amend,
suspend or terminate in whole or in part, and if suspended or terminated, may
reinstate, any or all of the provisions of the Plan. Notwithstanding the
foregoing, no amendment shall be effective without Board of Directors and/or
stockholder approval if such approval is necessary to comply with the applicable
provisions of Section 162(m).