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                                                                    Exhibit 10.1

                                     FORM OF

                               SAXON CAPITAL, INC.

                            2001 STOCK INCENTIVE PLAN

                                   ARTICLE 1
                                  INTRODUCTION

         The 2001 Stock Incentive Plan (the "Plan") was adopted by the board of
directors (the "Board") and approved by the shareholders on May 31, 2001. The
Board and the Committee approved and ratified the Plan the reflect the change of
the name of Saxon Capital, Inc. (the "Company") and correction of clerical and
other non-material changes on November 15, 2001. The purpose of the Plan is to
promote the long-term success of. the Company and the creation of stockholder
value by (a) encouraging Employees, Outside Directors and Consultants to focus
on critical long-range objectives, (b) encouraging the attraction and retention
of Employees, Outside Directors and Consultants with exceptional qualifications
and (c) linking Employees, Outside Directors and Consultants directly to
stockholder interests through increased stock ownership. The Plan seeks to
achieve this purpose by providing for Awards in the form of Restricted Shares,
Stock Units, Options (which may constitute incentive stock options or
nonstatutory stock options) or stock appreciation rights.

         The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware (except their choice-of-law provisions). Certain
capitalized terms used herein are defined in Article 18 hereof.

                                    ARTICLE 2
                                 ADMINISTRATION

         2.1      COMMITTEE COMPOSITION.

         The Plan shall be administered by the Committee. The Committee shall
consist exclusively of two or more Independent Directors of the Company, who
shall be appointed by the Board. In addition, the composition of the Committee
shall satisfy:

         (a)      Such requirements as the Securities and Exchange Commission
may establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and

         (b)      Such requirements as the Internal Revenue Service may
establish for outside directors acting under plans intended to qualify for
exemption under section 162(m)(4)(C) of the Code.

         2.2      COMMITTEE RESPONSIBILITIES.

         The Committee shall (a) select the Employees, Outside Directors and
Consultants who are to receive Awards under the Plan, (b) determine the type,
number, vesting requirements and other features and conditions of such Awards,
(c) interpret the Plan and (d) make all other decisions relating to the
operation of the Plan. The Committee may adopt such rules or guidelines as it
deems appropriate to implement the Plan. The Committee's determinations under
the Plan shall be final and binding on all persons.

         2.3      COMMITTEE FOR NON-OFFICER GRANTS.

         The Board may also appoint a secondary committee of the Board, which
shall be composed of one or more directors of the Company who need not satisfy
the requirements of Section 2.1. Such secondary committee may administer the
Plan with respect to Employees and Consultants who are not considered officers
or directors of the Company under section 16 of the Exchange Act, may grant
Awards under the Plan to such Employees and Consultants and may determine all
features and conditions of such Awards. Within the limitations of this Section
2.3, any reference in the Plan to the Committee shall include such secondary
committee.

         2.4      INTERPRETATION.

         The interpretation and construction by the Committee or any secondary
committee of any provision of this Plan or any agreement, notification or
document evidencing the grant of Award, SAR or Restricted Shares, and any
determination by the Committee or any secondary committee pursuant to any
provision of this Plan or any such agreement, notification or document, shall be
final and conclusive. No member of the Committee or any secondary committee
shall be liable for any such action taken or determination made in good faith.


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                                   ARTICLE 3
                           SHARES AVAILABLE FOR GRANTS

         3.1      BASIC LIMITATION.

         Common Shares issued pursuant to the Plan may be authorized but
unissued shares or treasury shares. The aggregate number of Options, SARs, Stock
Units and Restricted Shares awarded under the Plan shall not exceed the greater
of (a) 2,998,556 or (b) the adjusted number of Common Shares described in
Section 3.2, and in each case plus the additional shares described in Section
3.3. The limitation of this Section 3.1 shall be subject to adjustment pursuant
to Article 10.

         3.2      AUTOMATIC ADJUSTMENT TO NUMBER OF SHARES.

         As of January 1 of each year, commencing after the effective date of
the Company's initial public offering or registration of its shares in Form S-1,
the aggregate number of Options, SARs, Stock Units and Restricted Shares that
may be awarded under the Plan shall automatically adjust to equal the greatest
of (a) 2,998,556; (b) 10.69% of the total number of Common Shares then
outstanding; or (c) the maximum number that has been previously awarded or
granted under the Plan, provided, however, that any such increase shall be made
only to the extent that the Company has sufficient authorized and unreserved
Common Shares for such purpose; FURTHER, PROVIDED, that the maximum aggregate
number of Shares to be issued under the Plan shall not exceed 6,000,000, of
which no more than 3,000,000 may be ISO's. The limitation of this Section 3.2
shall be subject to adjustment pursuant to Article 10.

         3.3      ADDITIONAL SHARES.

         If Restricted Shares or Common Shares issued upon the exercise of
Options are forfeited, then such Common Shares shall again become available for
Awards under the Plan. If Stock Units, Options or SARs are forfeited or
terminate for any other reason before being exercised, then the corresponding
Common Shares shall again become available for Awards under the Plan. If Stock
Units are settled, then only the number of Common Shares (if any) actually
issued in settlement of such Stock Units shall reduce the number available under
Section 3.1 and the balance shall again become available for Awards under the
Plan. If SARs are exercised, then only the number of Common Shares (if any)
actually issued in settlement of such SARs shall reduce the number available
under Section 3.1 and the balance shall again become available for Awards under
the Plan.

         3.4      DIVIDEND EQUIVALENTS.

         Any dividend equivalents paid or credited under the Plan shall not be
applied against the number of Restricted Shares, Stock Units, Options or SARs
available for Awards, whether or not such dividend equivalents are converted
into Stock Units.

                                    ARTICLE 4
                                   ELIGIBILITY

         4.1      INCENTIVE STOCK OPTIONS.

         Only Employees who are common-law employees of the Company, a Parent,
or a Subsidiary shall be eligible for the grant of ISOs. In addition, an
Employee who owns more than 10% of the total combined voting power of all
classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(6) of the Code are satisfied. No Option
intended to be an ISO shall be invalid due to such Option failing to to qualify
as an ISO under applicable requirements of the Code.

         4.2      OTHER GRANTS.

         Only Employees, Outside Directors and Consultants shall be eligible for
the grant of Restricted Shares, Stock Units, NSOs or SARs.

                                    ARTICLE 5
                                     OPTIONS

         5.1      STOCK OPTION AGREEMENT.

         Each grant of an Option under the Plan shall be evidenced by a Stock
Option Agreement between the Optionee and the Company. Such Option shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The Stock Option Agreement shall
specify whether the Option is an ISO or an NSO. The provisions of the various
Stock Option Agreements entered into under the Plan need not be identical.
Options may be granted in consideration of a reduction in the Optionee's other
compensation. A Stock Option Agreement may provide that a new Option will be
granted automatically to the Optionee


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when he or she exercises a prior Option and pays the Exercise Price in the form
described in Section 6.2.

5.2      NUMBER OF SHARES.

         Each Stock Option Agreement shall specify the number of Common Shares
subject to the Option and shall provide for the adjustment of such number in
accordance with Article 10. Options granted to any Optionee during any two
consecutive fiscal years of the Company shall not cover more than 500,000 Common
Shares.

         Each Stock Option Agreement shall specify the Exercise Price; provided
that the Exercise Price under an ISO shall in no event be less than 100% of the
Fair Market Value of a Common Share on the date of grant and the Exercise Price
under an NSO shall in no event be less than 85% of the Fair Market Value of a
Common Share on the date of grant. Subect to the foregoing provisions of this
section, in the case of an NSO, a Stock Option Agreement may specify an Exercise
Price that varies in accordance with a predetermined formula while the NSO is
outstanding.

         5.3      EXERCISABILITY AND TERM.

         Each Stock Option Agreement shall specify the date or event when all or
any installment of the Option is to become exercisable. The Stock Option
Agreement shall also specify the term of the Option; provided that the term of
an ISO shall in no event exceed 10 years from the date of grant. A Stock Option
Agreement may provide for accelerated exercisability in the event of the
Optionee's death, disability, or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee's service. Options may be awarded in combination with SARs, and such an
Award may provide that the Options will not be exercisable unless the related
SARs are forfeited.

         5.4      EFFECT OF CHANGE IN CONTROL.

         The Committee may determine, at the time of granting an Option or
thereafter, that such Option shall become exercisable as to all or part of the
Common Shares subject to such Option in the event that a Change in Control
occurs with respect to the Company.

         5.5      MODIFICATION OR ASSUMPTION OF OPTIONS.

         Within the limitations of the Plan, the Committee may modify, extend or
assume outstanding options or may accept the cancellation of outstanding options
(whether granted by the Company or by another issuer) in return for the grant of
new options for the same or a different number of shares and at the same or a
different exercise price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, alter or impair his or her
rights or obligations under such Option.

         5.6      BUYOUT PROVISIONS.

         The Committee may at any time (a) offer to buy out for a payment in
cash or cash equivalents an Option previously granted or (b) authorize an
Optionee to elect to cash out an Option previously granted, in either case at
such time and based upon such terms and conditions as the Committee shall
establish.

                                    ARTICLE 6
                            PAYMENT FOR OPTION SHARES

         6.1      GENERAL RULE.

         The entire Exercise Price of Common Shares issued upon exercise of
Options shall be payable in cash or cash equivalents at the time when such
Common Shares are purchased, except as follows:

         (a)      In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock Option
Agreement. The Stock Option Agreement may specify that payment may be made in
any form(s) described in this Article 6.

         (b)      In the case of an NSO, the Committee may at any time accept
payment in any form(s) described in this Article 6 to the extent such form(s) of
payment are expressly provided for in the Stock Option Agreement.

         6.2      SURRENDER OF STOCK.

         If so provided in the Stock Option Agreement, all or any part of the
Exercise Price may be paid by surrendering, or attesting to the ownership of,
Common Shares that are already owned by the Optionee. Such Common Shares shall
be valued at


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their Fair Market Value on the date when the new Common Shares are purchased
under the Plan. The Optionee shall not surrender, or attest to the ownership of,
Common Shares in payment of the Exercise Price if such action would cause the
Company to recognize compensation expense (or additional compensation expense)
with respect to the Option for financial reporting purposes.

         6.3      EXERCISE/SALE.

         If so provided in the Stock Option Agreement, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) an irrevocable direction to a securities broker
approved by the Company to sell all or part of the Common Shares being purchased
under the Plan and to deliver all or part of the sales proceeds to the Company.

         6.4      EXERCISE/PLEDGE.

         If so provided in the Stock Option Agreement, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) an irrevocable direction to pledge all or part of the
Common Shares being purchased under the Plan to a securities broker or lender
approved by the Company, as security for a loan, and to deliver all or part of
the loan proceeds to the Company.

         6.5      PROMISSORY NOTE.

         If so provided in the Stock Option Agreement, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) a full-recourse promissory note. However, the par
value of the Common Shares being purchased under the Plan, if newly issued,
shall be paid in cash or cash equivalents.

         6.6      OTHER FORMS OF PAYMENT.

         All or any part of the Exercise Price and any withholding taxes may be
paid in any other form that is set forth in the Stock Option Agreement and is
consistent with applicable laws, regulations and rules.

                                    ARTICLE 7
                            STOCK APPRECIATION RIGHTS

         7.1      SAR AGREEMENT.

         Each grant of an SAR under the Plan shall be evidenced by an SAR
Agreement between the Participant and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Participant's other compensation.

         7.2      NUMBER OF SHARES.

         Each SAR Agreement shall specify the number of Common Shares to which
the SAR pertains and shall provide for the adjustment of such number in
accordance with Article 10. SARs granted to any Participant during any two
consecutive fiscal years of the Company shall not cover more than 300,000 Common
Shares.

         7.3      EXERCISE PRICE.

         Each SAR Agreement shall specify the Exercise Price. An SAR Agreement
may specify an Exercise Price that varies in accordance with a predetermined
formula while the SAR is outstanding.

         7.4      EXERCISABILITY AND TERM.

         Each SAR Agreement shall specify the date or event when all or any
installment of the SAR is to become exercisable. The SAR Agreement shall also
specify the term of the SAR. An SAR Agreement may provide for accelerated
exercisability in the event of the Participant's death, disability or retirement
or other events and may provide for expiration prior to the end of its term in
the event of the termination of the Participant's service. SARs may be awarded
in combination with Options, and such an Award may provide that the SARs will
not be exercisable unless the related Options are forfeited. An SAR may be
included in an ISO only at the time of grant but may be included in an NSO at
the time of grant or thereafter. An SAR granted under the Plan may provide that
it will be exercisable only in the event of a Change in Control.

         7.5      EFFECT OF CHANGE IN CONTROL.

         The Committee may determine, at the time of granting an SAR or
thereafter, that such SAR shall become fully exercisable as to all Common Shares
subject to such SAR in the event that a Change in Control occurs with respect to
the Company.


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         7.6      EXERCISE OF SARS.

         Upon exercise of an SAR, the Participant (or any person having the
right to exercise the SAR after his or her death) shall receive from the Company
(a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as
the Committee shall determine. The amount of cash and/or the Fair Market Value
of Common Shares received upon exercise of SARs shall, in the aggregate, be
equal to the amount by which the Fair Market Value (on the date of surrender) of
the Common Shares subject to the SARs exceeds the Exercise Price. If, on the
date when an SAR expires, the Exercise Price under such SAR is less than the
Fair Market Value on such date but any portion of such SAR has not been
exercised or surrendered, then such SAR shall automatically be deemed to be
exercised as of such date with respect to such portion.

         7.7      MODIFICATION OR ASSUMPTION OF SARS.

         Within the limitations of the Plan, the Committee may modify, extend or
assume outstanding SARs or may accept the cancellation of outstanding SARs
(whether granted by the Company or by another issuer) in return for the grant of
new SARs for the same or a different number of shares and at the same or a
different exercise price. The foregoing notwithstanding, no modification of an
SAR shall, without the consent of the Participant, alter or impair his or her
rights or obligations under such SAR.

                                    ARTICLE 8
                                RESTRICTED SHARES

         8.1      RESTRICTED STOCK AGREEMENT.

         Each grant of Restricted Shares under the Plan shall be evidenced by a
Restricted Stock Agreement between the recipient and the Company. Such
Restricted Shares shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Restricted Stock Agreements entered into under the
Plan need not be identical.

         8.2      PAYMENT FOR AWARDS.

         Subject to the following sentence, Restricted Shares may be sold or
awarded under the Plan for such consideration as the Committee may determine,
including (without limitation) cash, cash equivalents, full-recourse promissory
notes, past services and future services. To the extent that an Award consists
of newly issued Restricted Shares, the Award recipient shall furnish
consideration with a value not less than the par value of such Restricted Shares
in the form of cash, cash equivalents or past services rendered to the Company
(or a Parent or Subsidiary), as the Committee may determine.

         8.3      VESTING CONDITIONS.

         Each Award of Restricted Shares may or may not be subject to vesting.
Vesting shall occur, in full or in installments, upon satisfaction of the
conditions specified in the Restricted Stock Agreement. The Committee may
include among such conditions the requirement that the performance of the
Company or a business unit of the Company for a specified period of one or more
years equal or exceed a target determined in advance by the Committee. Such
performance shall be determined by the Company's independent auditors. Such
target shall be based on one or more of the criteria set forth in Appendix A.
The Committee shall determine such target not later than the 90th day of such
period. In no event shall the number of Restricted Shares which are subject to
performance-based vesting conditions and which are granted to any Participant
over two calendar years exceed 300,000, subject to adjustment in accordance with
Article 10. A Restricted Stock Agreement may provide for accelerated vesting in
the event of the Participant's death, disability or retirement or other events.
The Committee may determine, at the time of granting Restricted Shares or
thereafter, that all or part of such Restricted Shares shall become vested in
the event that a Change in Control occurs with respect to the Company.

         8.4      VOTING AND DIVIDEND RIGHTS.

         The holders of Restricted Shares awarded under the Plan shall have the
same voting, dividend and other rights as the Company's other stockholders. A
Restricted Stock Agreement, however, may require that the holders of Restricted
Shares invest any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid.

                                    ARTICLE 9
                                   STOCK UNITS

         9.1      STOCK UNIT AGREEMENT.

         Each grant of Stock Units under the Plan shall be evidenced by a Stock
Unit Agreement


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between the recipient and the Company. Such Stock Units shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan. The provisions of the various Stock Unit Agreements
entered into under the Plan need not be identical. Stock Units may be granted in
consideration of a reduction in the recipient's other compensation.

         9.2      PAYMENT FOR AWARDS.

         To the extent that an Award is granted in the form of Stock Units, no
cash consideration shall be required of the Award recipients.

         9.3      VESTING CONDITIONS.

         Each Award of Stock Units may or may not be subject to vesting. Vesting
shall occur, in full or in installments, upon satisfaction of the conditions
specified in the Stock Unit Agreement. The Committee may include among such
conditions the requirement that the performance of the Company or a business
unit of the Company for a specified period of one or more years equal or exceed
a target determined in advance by the Committee. Such performance shall be
determined by the Company's independent auditors. Such target shall be based on
one or more of the criteria set forth in Appendix A. The Committee shall
determine such target not later than the 90th day of such period. In no event
shall the number of Stock Units which are subject to performance-based vesting
conditions and which are granted to any Participant over two calendar years
exceed 300,000, subject to adjustment in accordance with Article 10. A Stock
Unit Agreement may provide for accelerated vesting in the event of the
Participant's death, disability or retirement or other events. The Committee may
determine, at the time of granting Stock Units or thereafter, that all or part
of such Stock Units shall become vested in the event that a Change in Control
occurs with respect to the Company.

         9.4      VOTING AND DIVIDEND RIGHTS.

         The holders of Stock Units shall have no voting rights. Prior to
settlement or forfeiture, any Stock Unit awarded under the Plan may, at the
Committee's discretion, carry with it a right to dividend equivalents. Such
right entitles the holder to be credited with an amount equal to all cash
dividends paid on one Common Share while the Stock Unit is outstanding. Dividend
equivalents may be converted into additional Stock Units. Settlement of dividend
equivalents may be made in the form of cash, in the form of Common Shares, or in
a combination of both. Prior to distribution, any dividend equivalents which are
not paid shall be subject to the same conditions and restrictions as the Stock
Units to which they attach.

         9.5      FORM AND TIME OF SETTLEMENT OF STOCK UNITS.

         Settlement of vested Stock Units may be made in the form of (a) cash,
(b) Common Shares or (c) any combination of both, as determined by the
Committee. The actual number of Stock Units eligible for settlement may be
larger or smaller than the number included in the original Award, based on
predetermined performance factors. Methods of converting Stock Units into cash
may include (without limitation) a method based on the average Fair Market Value
of Common Shares over a series of trading days. Vested Stock Units may be
settled in a lump sum or in installments. The distribution may occur or commence
when all vesting conditions applicable to the Stock Units have been satisfied or
have lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents.
Until an Award of Stock Units is settled, the number of such Stock Units shall
be subject to adjustment pursuant to Article 10.

         9.6      DEATH OF RECIPIENT.

         Any Stock Units Award that becomes payable after the recipient's death
shall be distributed to the recipient's beneficiary or beneficiaries. Each
recipient of a Stock Units Award under the Plan shall designate one or more
beneficiaries for this purpose by filing the prescribed form with the Company. A
beneficiary designation may be changed by filing the prescribed form with the
Company at any time before the Award recipient's death. If no beneficiary was
designated or if no designated beneficiary survives the Award recipient, then
any Stock Units Award that becomes payable after the recipient's death shall be
distributed to the recipient's estate.

         9.7      CREDITORS' RIGHTS.

         A holder of Stock Units shall have no rights other than those of a
general creditor of the Company. Stock Units represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of the applicable
Stock Unit Agreement.


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                                   ARTICLE 10
                           PROTECTION AGAINST DILUTION

         10.1     ADJUSTMENTS.

         In the event of a subdivision of the outstanding Common Shares, a
declaration of a dividend payable in Common Shares, a declaration of a dividend
payable in a form other than Common Shares in an amount that has a material
effect on the price of Common Shares, a combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee (provided that for purposes of this section, the term "Committee"
shall not include any secondary committee) shall make such adjustments as it, in
its sole discretion, deems appropriate in one or more of:

         (a)      The number of Options, SARs, Restricted Shares and Stock Units
available for future Awards under Article 3;

         (b)      The limitations set forth in Sections 5.2, 7.2, 8.3, and 9.3;

         (c)      The number of NSOs to be granted to Outside Directors under
Article 8;

         (d)      The number of Common Shares covered by each outstanding Option
and SAR;

         (e)      The Exercise Price under each outstanding Option and SAR; or

         (f)      The number of Stock Units included in any prior Award which
has not yet been settled.

         Except as provided in this Article 10, a Participant shall have no
rights by reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

         10.2     DISSOLUTION OR LIQUIDATION.

         To the extent not previously exercised or settled, Options, SARs and
Stock Units shall terminate immediately prior to the dissolution or liquidation
of the Company.

         10.3     REORGANIZATIONS.

         In the event that the Company is a party to a merger or other
reorganization, outstanding Awards shall be subject to the agreement of merger
or reorganization. Such agreement shall provide for:

         (a)      The continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation;

         (b)      The assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary;

         (c)      The substitution by the surviving corporation or its parent or
subsidiary of its own awards for the outstanding Awards;

         (d)      Full exercisability or vesting and accelerated expiration of
the outstanding Awards; or

         (e)      Settlement of the full value of the outstanding Awards in cash
or cash equivalents followed by cancellation of such Awards.

                                   ARTICLE 11
                               DEFERRAL OF AWARDS

         The Committee (in its sole discretion) may permit, or if so provided in
a Stock Option Agreement, SAR Agreement, Restricted Stock Agreement, or Stock
Unit Agreement, require a Participant to:

         (a)      Have cash that otherwise would be paid to such Participant as
a result of the exercise of an SAR or the settlement of Stock Units credited to
a deferred compensation account established for such Participant by the
Committee as an entry on the Company's books;

         (b)      Have Common Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or SAR converted into an
equal number of Stock Units; or

         (c)      Have Common Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or SAR or the settlement of
Stock Units converted into amounts credited to a deferred compensation account
established for such Participant by the Committee as an entry on the Company's
books. Such amounts shall be determined by reference to the Fair Market Value of


<PAGE>


such Common Shares as of the date when they otherwise would have been delivered
to such Participant.

         A deferred compensation account established under this Article 11 may
be credited with interest or other forms of investment return, as determined by
the Committee. A Participant for whom such an account is established shall have
no rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Article 11.

                                   ARTICLE 12
                            AWARDS UNDER OTHER PLANS

         The Company may grant awards under other plans or programs. Such awards
may be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Common Shares
issued in settlement of Stock Units and shall, when issued, reduce the number of
Common Shares available under Article 3.

                                   ARTICLE 13
                    PAYMENT OF DIRECTOR'S FEES IN SECURITIES

         13.1     EFFECTIVE DATE.

         No provision of this Article 13 shall be effective unless and until the
Board has determined to implement such provision.

         13.2     ELECTIONS TO RECEIVE NSOS, RESTRICTED SHARES OR STOCK UNITS.

         An Outside Director may elect to receive his or her annual retainer
payments and/or meeting fees from the Company in the form of cash, NSOs,
Restricted Shares or Stock Units, or a combination thereof, as determined by the
Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the
Plan. An election under this Article 13 shall be filed with the Company on the
prescribed form.

         13.3     NUMBER AND TERMS OF NSOS, RESTRICTED SHARES OR STOCK UNITS.

         The number of NSOs, Restricted Shares or Stock Units to be granted to
Outside Directors in lieu of annual retainers and meeting fees that would
otherwise be paid in cash shall be calculated in a manner determined by the
Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be
determined by the Board.

                                   ARTICLE 14
                              LIMITATION ON RIGHTS

         14.1     RETENTION RIGHTS.

         Neither the Plan nor any Award granted under the Plan shall be deemed
to give any individual a right to remain an Employee, Outside Director or
Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve the
right to terminate the service of any Employee, Outside Director or Consultant
at any time, with or without cause, subject to applicable laws, the Company's
certificate of incorporation and by-laws and a written employment agreement (if
any).

         14.2     STOCKHOLDERS' RIGHTS.

         A Participant shall have no dividend rights, voting rights or other
rights as a stockholder with respect to any Common Shares covered by his or her
Award prior to the time when a stock certificate for such Common Shares is
issued or, if applicable, the time when he or she becomes entitled to receive
such Common Shares by filing any required notice of exercise and paying any
required Exercise Price. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to such time, except as expressly
provided in the Plan.

         14.3     REGULATORY REQUIREMENTS.

         Any other provision of the Plan notwithstanding, the obligation of the
Company to issue Common Shares under the Plan shall be subject to all applicable
laws, rules and regulations and such approval by any regulatory body as may be
required. The Company reserves the right to restrict, in whole or in part, the
delivery of Common Shares pursuant to any Award prior to the satisfaction of all
legal requirements relating to the issuance of such Common Shares, to their
registration, qualification or listing or to an exemption from registration,
qualification or listing.


<PAGE>

                                   ARTICLE 15
                                WITHHOLDING TAXES

         15.1     GENERAL.

         To the extent required by applicable federal, state, local or foreign
law, a Participant or his or her successor shall make arrangements satisfactory
to the Company for the satisfaction of any withholding tax obligations that
arise in connection with the Plan. The Company shall not be required to issue
any Common Shares or make any cash payment under the Plan until such obligations
are satisfied.

         15.2     SHARE WITHHOLDING.

         The Committee may permit a Participant to satisfy all or part of his or
her withholding or income tax obligations by having the Company withhold all or
a portion of any Common Shares that otherwise would be issued to him or her or
by surrendering all or a portion of any Common Shares that he or she previously
acquired. Such Common Shares shall be valued at their Fair Market Value on the
date when taxes otherwise would be withheld in cash.

                                   ARTICLE 16
                               FUTURE OF THE PLAN

         16.1     TERM OF THE PLAN.

         The Plan, as set forth herein, shall become effective on May 31, 2001.
The Plan shall remain in effect until it is terminated under Section 16.2,
except that no ISOs shall be granted on or after the 10th anniversary of the
later of (a) the date when the Board adopted the Plan or (b) the date when the
Board adopted the most recent increase in the number of Common Shares available
under Article 3 which was approved by the Company's stockholders.

         16.2     AMENDMENT OR TERMINATION.

         The Board may, at any time and for any reason, amend or terminate the
Plan. An amendment of the Plan shall be subject to the approval of the Company's
stockholders only to the extent required by applicable laws, regulations or
rules. No Awards shall be granted under the Plan after the termination thereof.
The termination of the Plan, or any amendment thereof, shall not affect any
Award previously granted under the Plan.

                                   ARTICLE 17
                        LIMITATION ON PARACHUTE PAYMENTS

         17.1     SCOPE OF LIMITATION.

         This Article 17 shall apply to an Award unless the Committee, at the
time of making an Award under the Plan or at any time thereafter, or the Company
in an employment, severance, or other agreement specifies in writing that such
Award shall not be subject to this Article 17. If this Article 17 applies to an
Award, it shall supersede any contrary provision of the Plan or of any Award
granted under the Plan.

         17.2     BASIC RULE.

         In the event that the independent auditors most recently selected by
the Board (the "Auditors") determine that any payment or transfer by the Company
under the Plan to or for the benefit of a Participant (a "Payment") would be
nondeductible by the Company for federal income tax purposes because of the
provisions concerning "excess parachute payments" in Section 280G of the Code,
then the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this Article 18, the "Reduced
Amount" shall be the amount, expressed as a present value, which maximizes the
aggregate present value of the Payments without causing any Payment to be
nondeductible by the Company because of Section 280G of the Code.

         17.3     REDUCTION OF PAYMENTS.

         If the Auditors determine that any Payment would be nondeductible by
the Company because of Section 280G of the Code, then the Company shall promptly
give the Participant notice to that effect and a copy of the detailed
calculation thereof and of the Reduced Amount, and the Participant may then
elect, in his or her sole discretion, which and how much of the Payments shall
be eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall advise the Company in
writing of his or her election within 10 days of receipt of notice. If no such
election is made by the Participant within such 10-day period, then the Company
may elect which and how much of the Payments shall be eliminated or reduced (as
long as after such election the aggregate present value of the Payments equals
the Reduced Amount) and shall notify the Participant promptly of such election.
For purposes of this Article 17, present value shall be determined in accordance
with


<PAGE>


Section 280G(d)(4) of the Code. All determinations made by the Auditors under
this Article 18 shall be binding upon the Company and the Participant and shall
be made within 60 days of the date when a Payment becomes payable or
transferable. As promptly as practicable following such determination and the
elections hereunder, the Company shall pay or transfer to or for the benefit of
the Participant such amounts as are then due to him or her under the Plan and
shall promptly pay or transfer to or for the benefit of the Participant in the
future such amounts as become due to him or her under the Plan.

         17.4     OVERPAYMENTS AND UNDERPAYMENTS.

         As a result of uncertainty in the application of Section 280G of the
Code at the time of an initial determination by the Auditors hereunder, it is
possible that Payments will have been made by the Company that should not have
been made (an "Overpayment") or that additional Payments that will not have been
made by the Company could have been made (an "Underpayment"), consistent in each
case with the calculation of the Reduced Amount hereunder. In the event that the
Auditors, based upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Participant that the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Participant which
he or she shall repay to the Company, together with interest at the applicable
federal rate provided in Section 7872(f)(2) of the Code; provided, however, that
no amount shall be payable by the Participant to the Company if and to the
extent that such payment would not reduce the amount subject to taxation under
Section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to or for the benefit of the Participant, together
with interest at the applicable federal rate provided in Section 7872(f)(2) of
the Code.

         17.5     RELATED CORPORATIONS.

         For purposes of this Article 17, the term "Company" shall include
affiliated corporations to the extent determined by the Auditors in accordance
with Section 280G(d)(5) of the Code.

                                   ARTICLE 18
                                   DEFINITIONS

         18.1     "AFFILIATE" means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.

         18.2     "AWARD" means any award of an Option, an SAR, a Restricted
Share or a Stock Unit under the Plan.

         18.3     "BOARD" means the Company's Board of Directors, as constituted
from time to time.

         18.4     "CHANGE IN CONTROL" shall mean:

                  (i)      The consummation of a merger or consolidation of the
         Company with or into another entity or any other corporate
         reorganization, if more than 50% of the combined voting power of the
         continuing or surviving entity's securities outstanding immediately
         after such merger, consolidation or other reorganization is owned by
         persons who were not stockholders of the Company immediately prior to
         such merger, consolidation or other reorganization; PROVIDED, HOWEVER,
         that a public offering of the Company's securities shall not
         constitute a corporate reorganization;

                  (ii)     The sale, transfer, or other disposition of all or
         substantially all of the Company's assets;

                  (iii)    A change in the composition of the Board of
         Directors, as a result of which fewer than 50% of the incumbent
         directors are directors who either (x) had been directors of the
         Company on the date 24 months prior to the date of the event that may
         constitute a Change in Control (the "original directors") or (y) were
         elected, or nominated for election, to the Board of Directors with the
         affirmative votes of at least a majority of the aggregate of the
         original directors who were still in office at the time of the
         election or nomination and the directors whose election or nomination
         was previously so approved; or

                  (iv)     Any transaction as a result of which any person is
         the "beneficial owner" (as defined in Rule 13d-3 under the


<PAGE>


         Exchange Act), directly or indirectly, of securities of the Company
         representing at least 30% of the total voting power represented by the
         Company's then outstanding voting securities. For purposes of this
         Paragraph (iv), the term "person" shall have the same meaning as when
         used in sections 13(d) and 14(d) of the Securities Exchange Act of
         1934, as amended, but shall exclude (x) a trustee or other fiduciary
         holding securities under an employee benefit plan of the Company or of
         a Parent or Subsidiary and (y) a corporation owned directly or
         indirectly by the stockholders of the Company in substantially the
         same proportions as their ownership of the common stock of the
         Company.

         Notwithstanding the foregoing, a transaction shall not constitute a
Change in Control if its sole purpose is to change the state of the Company's
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company's securities
immediately before such transaction.

         18.5     "CODE" means the Internal Revenue Code of 1986, as amended.

         18.6     "COMMITTEE" means a committee of the Board, as described in
Article 2.

         18.7     "COMMON SHARE" means one share of the common stock of the
Company.

         18.8     "COMPANY" means Saxon Capital, Inc., a Delaware corporation.

         18.9     "CONSULTANT" means a consultant or adviser who provides bona
fide services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.1.

         18.10    "EMPLOYEE" means a common-law employee of the Company, a
Parent, a Subsidiary or an Affiliate.

         18.11    "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         18.12    "EXERCISE PRICE," in the case of an Option, means the amount
for which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.

         18.13    "FAIR MARKET VALUE" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Wall Street Journal or any other
nationally recognized newspaper. Such determination shall be conclusive and
binding on all persons.

         18.14    "INDEPENDENT DIRECTORS" means the directors of the Company who
are not currently officers of the Company.

         18.15    "ISO" means an incentive stock option described in
Section 422(b) of the Code.

         18.16    "NSO" means a stock option not described in sections 422 or
423 of the Code.

         18.17    "OPTION" means an ISO or NSO granted under the Plan and
entitling the holder to purchase Common Shares.

         18.18    "OPTIONEE" means an individual or estate who holds an Option
or SAR.

         18.19    "OUTSIDE DIRECTOR" shall mean a member of the Board who is not
an Employee. Service as an Outside Director shall be considered employment for
all purposes of the Plan, except as provided in Section 4.1.

         18.20    "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.

         18.21    "PARTICIPANT" means an individual or estate who holds an
Award.


<PAGE>


         18.22    "PLAN" means this Saxon Capital, Inc. 2001 Stock Incentive
Plan, as amended from time to time.

         18.23    "RESTRICTED SHARE" means a Common Share awarded under the
Plan.

         18.24    "RESTRICTED STOCK AGREEMENT" means the agreement between the
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Share.

         18.25    "SAR" means a stock appreciation right granted under the Plan.

         18.26    "SAR AGREEMENT" means the agreement between the Company and
an Optionee which contains the terms, conditions and restrictions pertaining to
his or her SAR.

         18.27    "SERVICE" means service to the Company, a Parent, a Subsidiary
or an Affiliate as an Employee, Consultant, or Outside Director.

         18.28    "STOCK OPTION AGREEMENT" means the agreement between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.

         18.29    "STOCK UNIT" means a bookkeeping entry representing the
equivalent of one Common Share, as awarded under the Plan.

         18.30    "STOCK UNIT AGREEMENT" means the agreement between the Company
and the recipient of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.

         18.31    "SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

                                   ARTICLE 19
                          AMENDMENTS AND OTHER MATTERS

         19.1     This Plan may be amended from time to time by the Committee;
PROVIDED, HOWEVER, that except as expressly authorized by this Plan, no such
amendment shall cause this Plan to cease to satisfy any applicable condition of
Rule 16b-3 or cause any award under the Plan to cease to qualify for any
applicable exception under Section 162(m) of the Code, without the further
approval of the stockholders of the Company, and provided further that for
purposes of this section, the term "Committee" shall not include any secondary
committee.

         19.2     With the concurrence of the affected Participant, the
Committee may cancel any agreement evidencing an Award granted under this Plan.
In the event of any such cancellation, the Committee may authorize the granting
of a new Award hereunder, which may or may not cover the same number of Common
Shares as had been covered by the cancelled Award, at such Exercise Price, in
such manner and subject to such other terms, conditions and discretion as would
have been permitted under this Plan had the cancelled Award not been granted.

         19.3     The Committee may condition the grant of any Award or
combination of Awards authorized under this Plan on the surrender or deferral by
the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Company or a Subsidiary to the
Participant.

         19.4     This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any
Subsidiary and shall not interfere in any way with any right that the Company or
any Subsidiary would otherwise have to terminate any Participant's employment or
other service at any time.

         19.5     To the extent that any provision of this Plan would prevent
any Option Right that was intended to qualify as an incentive Stock Option from
so qualifying, any such provision shall be null and void with respect to any
such Option Right; PROVIDED, HOWEVER, that any such provision shall remain in
effect with respect to other Awards, and there shall be no further effect on any
provision of this Plan.

         19.6     Any Award that may be made pursuant to an amendment to this
Plan that shall have been adopted without the approval of the stockholders of
the Company shall be null and void if it is subsequently determined that such
approval was required under the terms of the Plan or applicable law.


<PAGE>


         19.7     Unless otherwise determined by the Committee, this Plan is
intended to comply with Rule 16b-3 at all times that awards hereunder are
subject to such Rule.

                                   ARTICLE 20
                                    EXECUTION

         To record the adoption of the Plan by the Board, the Company has caused
its duly authorized officer to execute this document in the name of the Company.





Saxon Capital, Inc.




----------------------------
By:  Michael L. Sawyer
Title:  Chief Executive Officer