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                                                                    Exhibit 10.5



                                     FORM OF
                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the seventh day of June, 2001, by and between SAXON CAPITAL, INC., a
Virginia corporation (the "Company"), MERITECH MORTGAGE SERVICES, INC., a Texas
corporation ("MMSI"), DENNIS G. STOWE ("Executive") and SAXON CAPITAL
ACQUISITION CORP., a Delaware corporation ("SCAC").

                                    RECITALS

         WHEREAS, the Company is a wholly-owned subsidiary of Dominion Capital,
Inc., a Virginia corporation ("DCI"), and SMI is a wholly-owned subsidiary of
the Company;

         WHEREAS, Executive and MMSI have entered into an Employment Agreement
dated as of January 1, 2001 (the "Original Agreement"), whereby Executive is
engaged and employed by MMSI as President;

         WHEREAS, DCI and the Company have entered into a Stock Purchase
Agreement dated as of June 7, 2001 (the "Stock Purchase Agreement"), whereby DCI
has agreed to sell all of the issued and outstanding capital stock of the
Company (the "Company Stock") to SCAC (Capitalized terms used but not defined in
this Agreement shall have the meanings ascribed thereto in the Stock Purchase
Agreement.);

         WHEREAS, pursuant to the Stock Purchase Agreement, it is a condition to
Closing that the Company and Executive shall enter into this Agreement;

         WHEREAS, the Company and Executive desire to enter into this Agreement
which provides for the terms and conditions of Executive's employment with the
Company as of, and effective upon, the Closing Date (the "Effective Date"); and

         WHEREAS, upon the Effective Date, this Agreement shall supersede and
replace the Original Agreement in its entirety and the Original Agreement shall
be of no further force or effect.

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

                                   AGREEMENT

                                   ARTICLE I.

                                   EMPLOYMENT

         1.1 TERM. This Agreement shall be effective from the Effective Date and
shall remain in effect until midnight on the third anniversary of the Effective
Date (the "Initial Term"), and will automatically be renewed for successive
one-year terms (each an "Additional Term" and referred to herein together with
the Initial Term as the "Term"), unless either the Company or


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Executive notifies the other in writing of its intention to terminate the
Agreement as of the end of the then current Initial Term or Additional Term, as
applicable, at least ninety (90) days prior to the end thereof.

         1.2 POSITION AND DUTIES. The Company hereby engages and employs
Executive as President and Chief Operating Officer of the Company. SCAC shall
appoint Executive as a Director of the Company's Board of Directors (the
"Board"). The Board may provide such additional designations of title to
Executive as the Board, in its discretion, may deem appropriate. Executive shall
perform the executive duties and functions related to the above positions,
subject to the limitations of authority set forth from time to time in any
resolution of the Board or applicable law.

         1.3 BEST EFFORTS. Executive agrees to devote his full time and
attention to the Company, to use his best efforts to advance the business and
welfare of the Company, to render his services under this Agreement fully,
faithfully, diligently, competently and to the best of his ability, and not to
engage in any other employment activities. Notwithstanding anything herein to
the contrary, Executive shall not be precluded from: (i) engaging in charitable
activities and community affairs and managing his personal investments and
affairs; PROVIDED, that such activities do not materially interfere with the
proper performance of his duties and responsibilities under this Agreement; or
(ii) owning up to 1% of a publicly-held company engaged in the same or similar
business as the Company.

                                  ARTICLE II.

                            COMPENSATION AND BENEFITS

         2.1 BASE SALARY. For all services to be rendered by Executive under
this Agreement, the Company agrees to pay Executive an annual base salary ("Base
Salary") of $325,000 (subject to adjustment upward as recommended by the
Compensation Committee of the Board (the "Compensation Committee")), less
deductions required by law, payable in accordance with the normal payroll
practices of the Company.

         2.2 ANNUAL PERFORMANCE BONUS.

             (a) PAYMENT OF PERFORMANCE BONUS. The Company shall pay to
Executive an annual cash bonus of up to 100% of Executive's Base Salary, as
determined by the Board, or the Compensation Committee, based on Executive's
performance and the performance of the Company during the prior fiscal year
("Bonus"). On or before March 1 of each year, the Company shall pay to Executive
the estimated amount of such Bonus (the "Estimated Bonus") based on the
unaudited financial statements of the Company for the prior fiscal year. On or
before April 15 of each year, the Estimated Bonus shall be adjusted in
accordance with the audited financial statements of the Company for the prior
fiscal year. The Board, or the Compensation Committee, shall promptly notify
Executive in writing of the amount of adjustment, if any. If the Bonus is
greater than the Estimated Bonus, the Company shall pay to Executive an
additional cash payment equal to the amount by which the Bonus exceeds the
Estimated Bonus. If the Bonus is less than the Estimated Bonus, Executive shall
pay to the Company a cash payment equal to the amount by which the Estimated
Bonus exceeds the Bonus. Any amount required to be paid pursuant to the
preceding two sentences shall be made by the



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responsible party within ten (10) business days of the delivery of notice of
adjustment to Executive. Except as provided in Section 2.2(b), the Company shall
not be obligated to pay Executive any Bonus for his performance or the Company's
performance during any year, unless Executive is employed through December 31 of
such year.

             (b) PRO-RATED BONUS UPON CHANGE IN CONTROL OR DEATH. Within fifteen
(15) days following the consummation of a Change in Control (as defined below)
or Executive's death, the Company shall pay to Executive or to his estate or
heirs a pro-rated cash bonus equal to 100% of Executive's annual Base Salary,
pro-rated from January 1 of the year in which such Change in Control or death
occurs through and including the date of such Change in Control or death (the
"Pro-Rated Bonus").

         2.3 OTHER BENEFITS. The Company will further provide to Executive, at
the Company's expense, the following other benefits ("Other Benefits"):

             (a) An annual vacation leave of a minimum of five (5) weeks per
calendar year at full pay;

             (b) Full participation, on a basis commensurate with his position
with the Company, in all plans of life, accident, disability and health
insurance that generally are made available to senior executives of the Company;
and

             (c) Stock options ("Options") for 500,000 shares of the Common
Stock, par value $0.01 per share, of SCAC, which shall be incentive stock
options to the extent permissible pursuant to Section 422 of the Code, and which
are to be granted pursuant to the terms of 2001 Stock Incentive Plan (the
"Plan"). Any portion of such options not eligible from year to year for
treatment as incentive stock options pursuant to Section 422 of the Code shall
be treated as nonqualified employee stock options for purposes of the Code. The
Options shall have an exercise price equal to $10.00 and shall vest 25% on the
first anniversary of the Effective Date and 25% on each anniversary thereafter,
unless the vesting of such Options accelerate pursuant to Sections 3.1(b) or
3.2(b) hereof or such Options expire or accelerate pursuant to the Plan or
action of the Compensation Committee. The Options shall be governed by the Plan
and shall be exercisable in accordance with the terms thereof; PROVIDED,
HOWEVER, that to the extent any terms of the Plan are inconsistent with the
terms of this Agreement (including, but not limited to, the provisions regarding
the vesting or exercise of any Options), the terms of this Agreement shall
govern and shall constitute an amendment to the Plan. The Company agrees to
execute such documents and take any other action reasonably required to cause
such Options to be exercisable in accordance with the terms of this Agreement.
Executive acknowledges that such option grant is intended to cover the Initial
Term and that the Company has no commitment to issue additional options to
Executive during the Initial Term, any Additional Term or thereafter.

         2.4 EXPENSE REIMBURSEMENT. The Company shall promptly reimburse
Executive for all reasonable business expenses incurred by Executive in
promoting the business of the Company, including expenditures for entertainment,
travel, or other expenses; PROVIDED, that (i) such expenditures are of a nature
qualifying them as legitimate business expenses and (ii) Executive furnishes to
the Company adequate records and other documentary evidence reasonably required
by the Company to substantiate such expenditures in accordance with the
Company's policies and procedures.


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                                  ARTICLE III.
                TERMINATION, SEVERANCE PAY AND CHANGE IN CONTROL

         3.1 TERMINATION BY THE COMPANY.

             (a) SEVERANCE PAY.

                 (i) In the event that Executive's employment with the Company
         is terminated by the Company for Cause (as defined below), Executive
         shall not be entitled to any Severance Pay (as defined below) or
         employee benefits (including Other Benefits); PROVIDED, HOWEVER, that,
         notwithstanding any provision of the Plan, any Options that are vested
         as of the date of such termination shall expire and become
         unexercisable as of the earlier of (i) the date such Options would
         expire in accordance with their terms had the Executive remained
         employed or (ii) ten (10) calendar days after the date of such
         termination.

                 (ii) In the event that Executive's employment with the Company
         is terminated by the Company other than for Cause, or Executive becomes
         entitled to Severance Pay pursuant to Section 3.1(a)(ii), then, subject
         to Section 3.5 and in consideration of Executive's compliance with his
         obligations under Articles IV and V and Executive's execution of a
         general release in favor of the Company and its affiliates, Executive
         shall be entitled to severance pay in the form of monthly payments to
         Executive in an amount equal to 1/12th of the sum of (A) Executive's
         annual Base Salary plus (B) 100% of the maximum Bonus for the fiscal
         year in which termination occurs, less deductions required by law
         ("Severance Pay") payable in accordance with the normal payroll
         practices of the Company, for twenty-four (24) months following such
         termination (the "Severance Payout Period"). Alternatively, provided
         that Executive executes and delivers the said general release within
         fifteen (15) days following such a termination of employment by the
         Company other than for Cause, at the Executive's sole election the
         Executive's Severance Pay shall be payable at the time of such delivery
         of the general release and shall consist of a lump sum equal to 200
         percent (200%) of the sum of the amounts described in clauses (A) and
         (B) of this subsection. Executive acknowledges and agrees that in the
         event Executive breaches any provision of Articles IV or V or the
         general release, his right to receive Severance Pay under this Section
         3.1(a)(ii) shall automatically terminate and Executive shall repay all
         Severance Pay received.

             (b) BENEFITS. Following the effective date of termination,
Executive shall cease to be a Company employee and shall not be entitled to any
employee benefits (including Other Benefits), except as set forth in this
Section 3.1(b). In the event that the Company terminates Executive's employment
other than for Cause (or, as provided in Section 3.2(b)(ii), Executive
voluntarily terminates his employment for Good Reason (as defined below), for
the longer of (A) twelve (12) months after the Executive's date of termination,
or (B) the Severance Payout Period in the event Executive has not elected a the
lump sum payment described in Section 3.1(a)(ii), Company shall continue to
provide benefits to Executive and/or Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 2.3(b) of this Agreement if
Executive's employment had not been terminated or, if more favorable to
Executive, as in effect



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generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies, PROVIDED, HOWEVER, that if Executive
becomes reemployed with another employer and is eligible to receive medical or
other welfare benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan. Notwithstanding anything herein to the contrary,
Executive's termination shall not preclude Executive from exercising his rights
under COBRA to pay for the continuation of benefits previously provided by the
Company. In the event that the Company terminates Executive's employment other
than for Cause (or, as provided in Section 3.2(b)(ii), Executive voluntarily
terminates his employment for Good Reason (as defined below)), all Options
granted pursuant to Section 2.3(c) shall vest as of the effective date of such
termination.

             (c) CAUSE. For purposes of this Agreement, "Cause" shall mean
(i) an act or acts of personal dishonesty by Executive that were intended to
result in substantial personal enrichment of Executive at the expense of the
Company; (ii) Executive's conviction of any felony; or (iii) Executive's gross
negligence, willful insubordination or misconduct, intentional or persistent
failure to perform stated duties or abide by the Company's policies, or material
breach of any provision of this Agreement, including without limitation any
representation or covenant contained in Articles IV or V.

         3.2 TERMINATION BY EXECUTIVE.

             (a) NOTICE. Executive shall have the right to voluntarily terminate
his employment with the Company for whatever reason by providing the Company
with at least sixty (60) days prior written notice.

             (b) SEVERANCE PAY.

                 (i) In the event Executive voluntarily terminates his
         employment with the Company without Good Reason, Executive shall not be
         entitled to any Severance Pay or employee benefits (including Other
         Benefits).

                 (ii) In the event Executive voluntarily terminates his
         employment with the Company for Good Reason, Executive shall be
         entitled, subject to Section 3.5, to Severance Pay and all Options
         granted pursuant to Section 2.3(c) shall vest as of the effective date
         of such termination to the same extent as if Executive's employment
         with the Company had been terminated other than for Cause as provided
         in Sections 3.1(a) and 3.1(b); PROVIDED, that (i) Executive gives
         written notice of his resignation within thirty (30) days of the
         occurrence of such Good Reason and advises, as part of such
         resignation, that he is resigning because of the Good Reason, and (ii)
         the occurrence of the Good Reason was not based on Cause. Executive
         acknowledges and agrees that in the event Executive breaches any
         provision of Articles IV or V or the general release, his right to
         receive Severance Pay under this Section 3.2(b)(ii) shall automatically
         terminate and Executive shall repay all Severance Pay received.

                 (iii) For purposes of this Agreement, a resignation tendered by
         Executive pursuant to a direct request of the Board or another officer
         with higher executive status shall, for purposes of this Agreement, be
         treated as an involuntary



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         termination, entitling Executive to Severance Pay and Option vesting in
         accordance with the provisions of Sections 3.1(a) and 3.1(b) so long as
         the request was not based on Cause.

             (c) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall include (i) the material reduction or material adverse modification
without Executive's prior written consent of Executive's authority or duties
(I.E., the substantial diminution or adverse modification in Executive's title,
status, overall position, responsibilities, reporting relationship or general
working environment); (ii) any reduction in Executive's Base Salary or Bonus
calculation or any material reduction in employee benefits; (iii) any
requirement to move Executive's principal place of employment to a location that
is more than a 50 mile radius from its current location; or (iv) any material
breach of this Agreement by the Company that is not cured within thirty (30)
days following demand for the cure thereof.

         3.3 DEATH. In the event of Executive's death, this Agreement shall
automatically terminate and shall be of no further force and effect. Termination
of Executive's employment as a result of his death shall not accelerate the
vesting of Executive's Options or result in any obligation by the Company to pay
to Executive's estate or heirs any Severance Pay or employee benefits (including
Other Benefits) except as set forth in Section 2.2(b). To the extent not
inconsistent with the terms of the Plan described in Section 2.3(c), Executive's
Options shall vest and be exercisable by Executive's estate at the same times as
if the Executive had continued to be employed by the Company.

         3.4 DISABILITY. In the event of Executive's Disability (as defined
below) during the Term for any period of at least three (3) consecutive months,
the Company shall have the right, which may be exercised in its sole discretion,
to terminate this Agreement. In the event the Company elects to terminate this
Agreement due to Executive's Disability, the vesting of the Options shall not
accelerate and Executive shall not be entitled to any Severance Pay or employee
benefits (including Other Benefits) at any time, but Executive shall be entitled
to disability benefits to the extent provided in accordance with the policies
and plans described in Section 2.3(c) of this Agreement as established from time
to time by the Company. To the extent not inconsistent with the terms of the
Plan described in Section 2.3(c), Executive's Options shall vest and be
exercisable by Executive or his legal representative at the same times as if the
Executive had continued to be employed by the Company. For purposes of this
Agreement, "Executive's Disability" shall mean the inability of Executive to
perform his employment services hereunder by reason of physical or mental
illness or incapacity as determined by a physician chosen by the Company and
reasonably satisfactory to Executive or his legal representative.

         3.5 CHANGE IN CONTROL.

             (a) Upon the consummation of a Change in Control, Executive shall
be entitled to pay in the form of monthly payments to Executive in an amount
equal to 1/12th of the sum of (A) Executive's annual Base Salary plus (B) the
maximum Bonus for the fiscal year in which the consummation of a Change in
Control occurs, less deductions required by law, payable in accordance with the
normal payroll practices of the Company, for twenty-four (24) months following
consummation of such Change in Control ("Change in Control Payment").
Alternatively, at the Executive's sole election, the Executive's Change in
Control Payment shall



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consist of a lump sum equal to 200 percent (200%) of the sum of the amounts
described in clauses (A) and (B) of this subsection. The Change in Control
Payment shall be in addition to, and not in lieu of, Executive's Base Salary and
Bonus, if any, payable in accordance with the terms of this Agreement. In
addition, upon the consummation of a Change in Control, all of the Options shall
become immediately and fully exercisable. Following the consummation of a Change
in Control, Executive shall not be entitled to receive, and hereby waives all
right to, Severance Pay pursuant to Section 3.1 or 3.2 in the event Executive's
employment with the Company is terminated for any reason. For purposes of this
Section 3.5, "Change in Control" shall mean an acquisition, merger or
consolidation of the Company or the sale of voting control or all or
substantially all of the assets of the Company with, by or to any person or
entity in which the stockholders of the Company immediately prior to the
effective date of such Change in Control do not own a majority of the
outstanding shares of the capital stock of the surviving entity after such
Change in Control; PROVIDED, HOWEVER, that "Change in Control" shall not be
deemed to have occurred as a result of the consummation of the transactions
provided for in the Stock Purchase Agreement or the resale of any securities
under the Registration Statement. If Executive's employment with the Company is
terminated by the Company other than for Cause at any time following the public
announcement of a prospective Change in Control, then, notwithstanding such
termination, the Company shall pay to Executive, the Change in Control Payment
based on Executive's Base Salary in effect on the date of such termination;
PROVIDED, HOWEVER, that such Change in Control Payment shall be reduced by the
total amount of any Severance Pay received by Executive, and Executive
thereafter shall not be entitled to any further payments of Severance Pay.

             (b) In the event that any payments, distributions or benefits
provided or to be provided to the Executive, whether pursuant to this Agreement
or from other plans or arrangements maintained by the Company or any of the
Consolidated Subsidiaries (excluding the Adjusted Gross Up Payment and
Additional Gross Up Payment (as such terms are hereinafter defined))
(collectively, the "Payment") would be subject to excise tax under Section 4999
of the Code (such excise tax and any penalties and interest collectively, the
"Penalty Tax"), the Company shall pay to the Executive in cash an additional
amount equal to the Adjusted Gross Up Payment. The "Adjusted Gross Up Payment"
shall be an amount such that after payment by the Executive of all federal,
state, local, employment and medicare taxes thereon (and any penalties and
interest with respect thereto), the Executive retains on an after tax basis a
portion of such amount equal to the aggregate of 80% of the Penalty Tax imposed
upon the Payment and 100% of the Penalty Tax imposed upon the Adjusted Gross Up
Payment.

                 (i) For purposes of determining the amount of the Adjusted
         Gross Up Payment, the value of any non-cash benefits and deferred
         payments or benefits subject to the Penalty Tax shall be determined by
         the Company's independent auditors in accordance with the principles of
         Section 280G(d)(3) and (4) of the Code. In the event that, after the
         Adjusted Gross Up Payment is made, the Executive becomes entitled to
         receive a refund of any portion of the Penalty Tax, the Executive shall
         promptly pay to the Company 80% of such Penalty Tax refund attributable
         to the Payment (together with 80% of any interest paid or credited
         thereon by the Internal Revenue Service) and 100% of the Penalty Tax
         refund attributable to the Adjusted Gross Up Payment (together with
         100% of any interest paid or credited thereon by the Internal Revenue
         Service).

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                 (ii) As a result of the uncertainty regarding the application
         of Section 4999 of the Code, it is possible that the Internal Revenue
         Service may assert that the Penalty Tax due is in excess of the amount
         of the anticipated Penalty Tax used in calculating the Adjusted Gross
         Up Payment (such excess amount is hereafter referred to as the
         Underpayment"). In such event, the Company shall pay to the Executive,
         in immediately available funds, at the time the Underpayment is
         assessed or otherwise determined, an additional amount equal to the
         Additional Gross Up Payment. The "Additional Gross Up Payment" shall be
         an amount such that after payment by the Executive of all federal,
         state, local, employment and medicare taxes thereon (and any penalties
         and interest with respect thereto), the Executive retains on an after
         tax basis a portion of such amount equal to the aggregate of (i) 80% of
         the portion of the Underpayment attributable to the Payment, (ii) 100%
         of the portion of the Underpayment attributable to the Adjusted Gross
         Up Payment and (iii) 100% of the Penalty Tax imposed on the Additional
         Gross Up Payment.

                                  ARTICLE IV.
                          NONDISCLOSURE OF INFORMATION

         4.1 NONDISCLOSURE OF PROPRIETARY INFORMATION. At all times during and
after Executive's employment with the Company (whether or not such termination
is voluntary or involuntary, with or without Cause or Good Reason or by
Executive's Disability), Executive agrees to keep in strict confidence and trust
all Proprietary Information (as defined below) and not to use or disclose (or
induce or assist in the use or disclosure of) any Proprietary Information
without the prior express written consent of the Company, except as may be
necessary in the ordinary course of performing Executive's duties as an officer
of the Company. Executive acknowledges that irreparable injury will result to
the Company from Executive's violation or continued violation of the terms of
this Article IV, and Executive expressly agrees that the Company shall be
entitled, in addition to damages and any other remedies provided by law, to an
injunction or other equitable remedy respecting such violation or continued
violation. For purposes of this Agreement, "Proprietary Information" shall mean
information generally unavailable to the public that has been created,
discovered, developed or otherwise become known to the Company or in which
property rights have been assigned or otherwise conveyed to the Company,
including any modifications or enhancements thereto, which information has
material economic value or potential material economic value to the Company or
the business in which the Company is or will be engaged. Proprietary Information
shall include, but not be limited to, financial, sales and distribution
information; business plans, strategies and forecasts; lists of employees,
contractors, customers, agents and independent brokers; trade secrets;
processes; formulas; data; know-how; negative know-how; improvements;
discoveries; developments; designs; inventions; techniques; proposals; reports;
client information; and software programs and information (whether or not
expressed in written form). Such restrictions on the use or disclosure of
Proprietary Information do not extend to any item of information which (i) is
publicly known immediately prior to the time of its disclosure, (ii) is lawfully
received from a third party not bound in a confidential relationship to the
Company or (iii) is published or otherwise made known to the public by the
Company.

         4.2 RETURN OF PROPRIETARY INFORMATION AND PROPERTY. Upon termination of
Executive's employment for any reason, Executive will deliver to the Company all
Proprietary Information and any equipment, supplies, facilities and other
tangible property owned, leased or contracted



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for by the Company which property is in Executive's possession as of the date of
such termination.

                                   ARTICLE V.

                      NON-COMPETITION AND NON-SOLICITATION

         5.1 NON-COMPETITION. Executive agrees that, so long as he is employed
by the Company and for a period of one (1) year after termination of his
employment for any reason except termination by the Company for Cause, he shall
not, without the prior written consent of the Company, either directly or
indirectly, including, without limitation, through a partnership, joint venture,
corporation or other entity or as a consultant, director or employee, engage in
any activity which the Company shall determine in good faith to be in
competition with the Company, including, without limitation, any business
activities conducted by the Company as of the date hereof within those
geographic areas in which the Company conducts active business operations. The
parties hereto agree that both the scope and nature of the covenant and the
duration and area for which the covenant not to compete set forth in this
Article V is to be effective are reasonable in light of all facts and
circumstances.

         5.2 NON-SOLICITATION. Executive agrees that, so long as he is employed
by the Company and for a period of one (1) year after termination of his
employment for any reason except termination by the Company for Cause, he shall
not (i) directly or indirectly solicit, induce or attempt to solicit or induce
any Company employee to discontinue his or her employment with the Company, (ii)
usurp any opportunity of the Company that Executive became aware of during his
tenure at the Company or which is made available to him on the basis of the
belief that Executive is still employed by the Company, or (iii) directly or
indirectly solicit or induce or attempt to influence any person or business that
is an account, customer or client of the Company to restrict or cancel the
business of any such account, customer or client with the Company.

         5.3 SPECIFIC PERFORMANCE. Because of the difficulty of measuring
economic losses to the Company as a result of a breach of the foregoing
covenants, and because of the immediate and irreparable damage that could be
caused to the Company for which it would have no other adequate remedy,
Executive agrees that the foregoing covenants, in addition to and not in
limitation of any other rights, remedies or damages available to the Company at
law, in equity or under this Agreement, may be enforced by the Company in the
event of the breach or threatened breach by Executive, by injunctions and/or
restraining orders. If the Company is involved in court or other legal
proceedings to enforce the covenants contained in this Article V, then, in the
event the Company prevails in such proceedings, Executive shall be liable for
the payment of reasonable attorneys' fees, costs and ancillary expenses incurred
by the Company in enforcing its rights hereunder.

                                  ARTICLE VI.
                                 MISCELLANEOUS

         6.1 SUCCESSORS AND ASSIGNS; BINDING AGREEMENT. This Agreement shall
inure to the benefit of and shall be binding upon the Company, its successors
and assigns. The obligations and duties of Executive hereunder are personal and
otherwise not assignable. This Agreement



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shall inure to the benefit of and be enforceable by Executive's legal
representatives. This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any Change in Control. In the event
of any such Change in Control, the provisions of this Agreement shall bind and
inure to the benefit of the surviving or resulting entity, or the entity to
which such assets shall have been transferred, as the case may be; PROVIDED,
HOWEVER, that the Company will require any successor to all or substantially all
of the business and/or assets of the Company, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform under this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.

         6.2 ARBITRATION. Other than with respect to Articles IV and V hereof,
any and all disputes arising out of the interpretation, application or breach of
this Agreement shall be subject to arbitration pursuant to the Company's Mutual
Agreement to Arbitrate Claims, a copy of which is attached hereto as Exhibit A
and incorporated herein by this reference.

         6.3 NO WAIVER. The waiver by either party of a breach of any provision
of this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.

         6.4 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws and decisions of the Commonwealth of Virginia
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof).

         6.5 NOTICE. All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery, or first-class mail,
certified or registered with return receipt requested, or by commercial
overnight courier or by fax and shall be deemed to have been duly given upon
hand delivery, receipt if mailed, the first business day following delivery to a
commercial overnight courier or upon receipt of a fax, and addressed, if to the
Company, to its then principal office, attention Chairman of the Board; and if
to Executive, at Executive's address appearing below on the signature page
hereto or at such other address as Executive may designate from time to time in
accordance with the terms of this Section 6.5.

         6.6 AMENDMENTS. No amendment or modification of the terms of this
Agreement shall be valid unless made by written agreement executed by the
parties hereto or their respective successors and legal representative.

         6.7 SEVERABILITY. In the event that any provision of this Agreement,
including without limitation any provision of Article IV or Article V, shall to
any extent be held invalid, unreasonable or unenforceable, in any circumstances,
the parties hereto agree that the remainder of this Agreement and the
application of such provision of this Agreement to other circumstances shall be
valid and enforceable to the fullest extent permitted by law, but only to the
extent that such enforceability is in accordance with the intent of the parties
as evidenced by this Agreement. If any provision, or any part thereof, is held
to be unenforceable because of the scope or duration of or the area covered by
such provision, the parties hereto agree that the court making such
determination shall have the power, and is hereby asked by the parties, to
reduce the scope, duration and/or area of such provisions (and to substitute
appropriate provisions for any such unenforceable provisions) in order to make
such provisions enforceable to the fullest extent permitted by law, and/or to
delete specific words and phrases, and such modified provisions shall then be
enforceable and shall be enforced.

                                       10
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         6.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties regarding the subject matter hereof, and supersedes all
prior or contemporaneous negotiations, understandings or agreements of the
parties, whether written or oral, with respect to such subject matter.

         6.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.



                                       11
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         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.

                                        SAXON CAPITAL, INC.:


                                        By:_____________________________________
                                           Name:________________________________
                                           Its:_________________________________


                                        MERITECH MORTGAGE SERVICES, INC.:


                                        By:_____________________________________
                                           Name:________________________________
                                           Its:_________________________________


                                        SAXON CAPITAL ACQUISITION CORP.:


                                        By:_____________________________________
                                           Name:________________________________
                                           Its:_________________________________


                                        EXECUTIVE:


                                        ----------------------------------------
                                        Dennis G. Stowe
                                        Address:

                                        ----------------------------------------
                                        ----------------------------------------
                                        ----------------------------------------



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                                    EXHIBIT A

                      MUTUAL AGREEMENT TO ARBITRATE CLAIMS


         Executive recognizes that differences may arise between the Company and
Executive during or following Executive's employment with the Company, and that
those differences may or may not be related to Executive's employment. Executive
understands and agrees that by entering into the Employment Agreement (the
"Employment Agreement") with the Company into which this Mutual Agreement to
Arbitrate Claims is incorporated by reference (this "Arbitration Agreement"),
Executive anticipates gaining the benefits of a speedy, impartial
dispute-resolution procedure.

         Executive understands that any capitalized terms used but not defined
in this Arbitration Agreement shall have the meanings ascribed thereto in the
Employment Agreement, provided that any reference in this Arbitration Agreement
to the Company will also be a reference to all subsidiary and affiliated
entities; all benefit plans; the benefit plans' sponsors, fiduciaries,
administrators, affiliates; and all successors and assigns of any of them.

         CLAIMS COVERED BY THIS ARBITRATION AGREEMENT

         The Company and Executive mutually consent to the resolution by
arbitration of all claims ("claims"), whether or not arising out of Executive's
employment (or its termination), that the Company may have against Executive or
that Executive may have against the Company or against its officers, directors,
employees or agents in their capacity as such or otherwise. The claims covered
by this Arbitration Agreement include, but are not limited to, claims for wages
or other compensation due; claims for breach of any contract or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to, race, sex, religion, national origin, age, marital status, medical
condition, or disability); claims for benefits (except where an employee benefit
or pension plan specifies that its claims procedure shall culminate in an
arbitration procedure different from this one), and claims for violation of any
federal, state, or other governmental law, statute, regulation, or ordinance,
except claims excluded in the Claims Not Covered section below.

         Except as otherwise provided in this Arbitration Agreement, both the
Company and Executive agree that neither shall initiate or prosecute any lawsuit
or administrative action (other than an administrative charge of discrimination)
in any way related to any claim covered by this Arbitration Agreement.

         CLAIMS NOT COVERED BY THIS ARBITRATION AGREEMENT

         Claims Executive may have for workers' compensation or unemployment
compensation benefits are not covered by this Arbitration Agreement.

         Also not covered are claims by the Company for injunctive and/or other
equitable relief for unfair competition and/or the use and/or unauthorized
disclosure of trade secrets or confidential information, as to which Executive
understands and agrees that the Company may seek and obtain relief from a court
of competent jurisdiction.

                                      A-1

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         REQUIRED NOTICE OF ALL CLAIMS AND STATUTES OF LIMITATIONS

         The Company and Executive agree that the aggrieved party must give
written notice of any claim to the other party within one (1) year of the date
the aggrieved party first has knowledge of the event giving rise to the claim;
otherwise the claim shall be void and deemed waived even if there is a federal
or state statute of limitations which would have given more time to pursue the
claim.

         Written notice to the Company, or its officers, directors, employees or
agents, shall be sent to its General Counsel at the Company's then-current
address. Executive will be given written notice at the last address recorded in
Executive's personnel file.

         The written notice shall identify and describe the nature of all claims
asserted and the facts upon which such claims are based. The notice shall be
sent to the other party by certified or registered mail, return receipt
requested.

         DISCOVERY

         Each party shall have the right to take the deposition of one
individual and any expert witness designated by another party. Each party also
shall have the right to propound requests for production of documents to any
party. The subpoena right specified below shall be applicable to discovery
pursuant to this paragraph. Additional discovery may be had only where the
Arbitrator selected pursuant to this Agreement so orders, upon a showing of
substantial need.

         DESIGNATION OF WITNESSES

         At least thirty (30) days before the arbitration, the parties must
exchange lists of witnesses, including any expert, and copies of all exhibits
intended to be used at the arbitration.

         SUBPOENAS

         Each party shall have the right to subpoena witnesses and documents for
the arbitration.

         ARBITRATION PROCEDURES

         The Company and Executive agree that, except as provided in this
Arbitration Agreement, any arbitration shall be in accordance with the
then-current Model Employment Arbitration Procedures of the American Arbitration
Association ("AAA") before an Arbitrator who is licensed to practice law in the
Commonwealth of Virginia ("Arbitrator"). The arbitration shall take place at the
Company's headquarters in Richmond, Virginia.

         The Arbitrator shall be selected as follows. The AAA shall give each
party a list of eleven (11) arbitrators drawn from its panel of labor-management
dispute arbitrators. Each party may strike all names on the list it deems
unacceptable. If only one common name remains on the lists of all parties, that
individual shall be designated as the Arbitrator. If more than one common name
remains on the lists of all parties, the parties shall strike names alternately
until only one remains. The party who did not initiate the claim shall strike
first. If no common name remains

                                      A-2

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on the lists of all parties, the AAA shall furnish an additional list or lists
until the Arbitrator is selected.

         The Arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the state in which the claim arose, or federal law,
or both, as applicable to the claim(s) asserted. The Federal Rules of Evidence
shall apply. The Arbitrator, and not any federal, state, or local court or
agency, shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement,
including but not limited to any claim that all or any part of this Agreement is
void or voidable. The arbitration shall be final and binding upon the parties.

         The Arbitrator shall have jurisdiction to hear and rule on pre-hearing
disputes and is authorized to hold pre-hearing conferences by telephone or in
person as the Arbitrator deems necessary. The Arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for summary judgment
by any party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure.

         Either party, at its expense, may arrange for and pay the cost of a
court reporter to provide a stenographic record of proceedings.

         Either party, upon request at the close of hearing, shall be given
leave to file a posthearing brief. The time for filing such a brief shall be set
by the Arbitrator.

         The Arbitrator shall render an award and opinion in the form typically
rendered in labor arbitrations.

         ARBITRATION FEES AND COSTS

         The Company and Executive shall equally share the fees and costs of the
Arbitrator. Each party will deposit funds or post other appropriate security for
its share of the Arbitrator's fee, in an amount and manner determined by the
Arbitrator, 10 days before the first day of hearing. Each party shall pay for
its own costs and attorneys' fees, if any. However, if any party prevails on a
statutory claim which affords the prevailing party attorneys' fees, or if there
is a written agreement providing for fees, the Arbitrator may award reasonable
fees to the prevailing party.

         JUDICIAL REVIEW

         Either party may bring an action in any court of competent jurisdiction
to compel arbitration under this Agreement and to enforce an arbitration award.
A party opposing enforcement of an award may not do so in an enforcement
proceeding, but must bring a separate action in any court of competent
jurisdiction to set aside the award, where the standard of review will be the
same as that applied by an appellate court reviewing a decision of a trial court
sitting without a jury.

         INTERSTATE COMMERCE

                                      A-3

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         Executive understands and agrees that the Company is engaged in
transactions involving interstate commerce and that Executive's employment
involves such commerce.

         REQUIREMENTS FOR MODIFICATION OR REVOCATION

         This Arbitration Agreement shall survive the termination of Executive's
employment. It can only be revoked or modified by a writing signed by the
parties which specifically states an intent to revoke or modify this Arbitration
Agreement.

         SOLE AND ENTIRE AGREEMENT

         This is the complete agreement of the parties on the subject of
arbitration of disputes, except for any arbitration agreement in connection with
any pension or benefit plan. This Agreement supersedes any prior or
contemporaneous oral or written understanding on the subject. No party is
relying on any representations, oral or written, on the subject of the effect,
enforceability or meaning of this Arbitration Agreement, except as specifically
set forth in this Arbitration Agreement.

         CONSTRUCTION

         If any provision of this Arbitration Agreement is adjudged to be void
or otherwise unenforceable, in whole or in part, such adjudication shall not
affect the validity of the remainder of this Arbitration Agreement.

         CONSIDERATION

         The promises by the Company and by Executive to arbitrate differences,
rather than litigate them before courts or other bodies, provide consideration
for each other.

         EMPLOYMENT AGREEMENT

         This Arbitration Agreement is not, and shall not be construed to
create, any contract of employment, express or implied.

         VOLUNTARY AGREEMENT

         EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS
ARBITRATION AGREEMENT, THAT EXECUTIVE UNDERSTANDS ITS TERMS, THAT ALL
UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND EXECUTIVE RELATING TO THE
SUBJECTS COVERED IN THIS ARBITRATION AGREEMENT ARE CONTAINED IN IT, AND THAT
EXECUTIVE HAS ENTERED INTO THIS ARBITRATION AGREEMENT VOLUNTARILY AND NOT IN
RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE
CONTAINED IN THIS ARBITRATION AGREEMENT ITSELF.

         EXECUTIVE FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THE
OPPORTUNITY TO DISCUSS THIS ARBITRATION AGREEMENT WITH

                                      A-4

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EXECUTIVE'S PRIVATE LEGAL COUNSEL AND HAS AVAILED HIM/HERSELF OF THAT
OPPORTUNITY TO THE EXTENT EXECUTIVE WISHES TO DO SO.




















                                      A-5