Document:

Exhibit 10.34 Employment Agreement

EXHIBIT
10.34

EMPLOYMENT
AGREEMENT

THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the 2nd
day of March, 2005, by and between SAXON CAPITAL, INC., a Maryland corporation
(the “Company”), and DAVID L. DILL ("Executive").

RECITALS

WHEREAS,
Executive and Saxon Capital wish to enter into this Agreement in order to set
forth the terms and conditions of Executive’s employment by the
Company;

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 first 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 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 an Executive Vice President of
the Company. 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 $250,000 (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 with a target opportunity
equal to 100% of Executive’s Base Salary (“Target Bonus”) and a maximum
opportunity equal to 200% of Executive’s Base Salary, as approved 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 on 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 and additional cash payment equal to the amount
by which the Bonus exceeds the Estimated Bonus. If the Bonus is less that 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 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 (i) the consummation of a Change in Control (as
defined below), (ii) Executive's death, or (iii) termination of Executive’s
employment due to disability, the Company shall pay to Executive or to his
estate or heirs an amount 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 or termination of employment due to disability occurs through and
including the date of such Change in Control or death or termination of
employment due to disability (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) The
Company has granted certain restricted stock units and dividend equivalent
rights to Executive pursuant to the terms of the Saxon Capital, Inc. 2001 Stock
Incentive Plan. Executive acknowledges that the Company has no commitment to
grant additional equity-based compensation 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.

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).

(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(b)(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 Target 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 twelve (12) 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 Executive's sole election
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 100 percent (100%) 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)) or Executive voluntarily terminates his
employment for Good Reason (as defined below), for the longer or (A) twelve (12)
months after 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 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)), or Executive voluntarily terminates his
employment for Good Reason (as defined below), equity-based compensation granted
pursuant to the Plan or other shareholder-approved compensation plan (each a ,
“Shareholder-Approved Plan”) shall vest as of the effective date of such
termination and the underlying shares shall be delivered in accordance with the
terms of the applicable grant documents and Shareholder-Approved
Plan.

(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 RSUs 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 termination,
entitling Executive to Severance Pay and RSU 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, overall
position, responsibilities, or reporting relationship) (ii) any reduction
in Executive's Base Salary or Bonus opportunity 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
equity-based compensation shall be of no further force and effect. Termination
of Executive's employment as a result of his death shall not 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 applicable
grant documents and Shareholder-Approved Plan, Executive's equity-based
compensation shall vest as of the date of his death and the underlying shares,
as applicable, shall be delivered in accordance with the terms of the applicable
grant documents and Shareholder-Approved Plan.

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, 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 applicable grant documents and Shareholder-Approved Plan, Executive's
equity-based compensation (all grants and awards under any Shareholder-Approved
Plan) shall vest as of the date of the termination of his employment and the
underlying shares of such vested portion shall be delivered in accordance with
the terms of the applicable grant documents and Shareholder-Approved Plan. For
purposes of this Agreement, "Executive's Disability" shall mean the permanent
inability of Executive to perform all of 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 Target 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 twelve (12) months following consummation of such
Change in Control ("Change in Control Payment"). Alternatively, at Executive's
sole election, Executive's Change in Control Payment shall consist of a lump sum
equal to 100 percent (100%) 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 equity-based compensation shall immediately
vest and the underlying shares shall be delivered in accordance with the terms
of the applicable grant documents and Shareholder-Approved Plan. 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. 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
Executive, whether pursuant to this Agreement or from other plans or
arrangements maintained by the Company or any of the Consolidated Subsidiaries
(excluding the 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 Executive in
cash an additional amount equal to the Gross Up Payment. The "Gross Up Payment"
shall be an amount such that after payment by Executive of all federal, state,
local, employment and Medicare taxes thereon (and any penalties and interest
with respect thereto), Executive retains on an after tax basis an amount equal
to the amount that Executive would have retained if he had not been subject to
the Penalty Tax at all.

  (i) For
purposes of determining the amount of the 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 tax and
financial advisors in accordance with the principles of Section 280G(d)(3) and
(4) of the Code. In the event that, after the Gross Up Payment is made,
Executive becomes entitled to receive a refund of any portion of the Penalty
Tax, Executive shall promptly pay to the Company 100% of such Penalty Tax refund
attributable to the Payment (together with 100% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Gross Up Payment (together with 100% of any interest paid or
credited thereon by the Internal Revenue Service).

(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 Gross Up Payment (such excess amount is hereafter referred to as
the “Underpayment"). In such event, the Company shall pay to 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 Executive of the Underpayment plus all federal, state, local,
employment and Medicare taxes thereon (and any penalties and interest with
respect thereto), Executive retains on an after tax basis an amount equal to
$1.00.

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 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 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.

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.

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:
 

EXECUTIVE:

 

David L.
Dill

Address:

 

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.

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 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
post-hearing 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

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 EXECUTIVE'S PRIVATE LEGAL COUNSEL AND HAS
AVAILED HIM/HERSELF OF THAT OPPORTUNITY TO THE EXTENT EXECUTIVE WISHES TO DO
SO.Exhibit 10_35 Employment Agreement

EXHIBIT
10.35

EMPLOYMENT
AGREEMENT

THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the 2nd
day of March, 2005, by and between SAXON CAPITAL, INC., a Maryland corporation
(the “Company”), and JAMES V. SMITH ("Executive").

RECITALS

WHEREAS,
Executive and Saxon Capital wish to enter into this Agreement in order to set
forth the terms and conditions of Executive’s employment by the
Company;

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 first 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 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 an Executive Vice President of
the Company. 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 $250,000 (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.

(b) Payment
of Performance Bonus. The
Company shall pay to Executive an annual cash bonus with a target opportunity
equal to 100% of Executive’s Base Salary (“Target Bonus”) and a maximum
opportunity equal to a percentage of total mortgage loan production by the
Company and its subsidiaries, which percentage and total bonus shall be approved
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 on
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 and additional cash payment equal to the amount
by which the Bonus exceeds the Estimated Bonus. If the Bonus is less that 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 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 (i) the consummation of a Change in Control (as
defined below), (ii) Executive's death, or (iii) termination of Executive’s
employment due to disability, the Company shall pay to Executive or to his
estate or heirs an amount 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 or termination of employment due to disability occurs through and
including the date of such Change in Control or death or termination of
employment due to disability (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) The
Company has granted certain restricted stock units and dividend equivalent
rights to Executive pursuant to the terms of the Saxon Capital, Inc. 2001 Stock
Incentive Plan. Executive acknowledges that the Company has no commitment to
grant additional equity-based compensation 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.

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).

(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(b)(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 Target 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 twelve (12) 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 Executive's sole election
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 100 percent (100%) 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)) or Executive voluntarily terminates his
employment for Good Reason (as defined below), for the longer or (A) twelve (12)
months after 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 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)), or Executive voluntarily terminates his
employment for Good Reason (as defined below), equity-based compensation granted
pursuant to the Plan or other shareholder-approved compensation plan (each a
“Shareholder-Approved Plan”) shall vest as of the effective date of such
termination and the underlying shares shall be delivered in accordance with the
terms of the applicable grant documents and Shareholder-Approved
Plan.

(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 RSUs 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 termination,
entitling Executive to Severance Pay and RSU 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.

(b) 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, overall
position, responsibilities, or reporting relationship (ii) any reduction in
Executive's Base Salary or Bonus opportunity 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
equity-based compensation shall be of no further force and effect. Termination
of Executive's employment as a result of his death shall not 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 applicable
grant documents and Shareholder-Approved Plan, Executive's equity-based
compensation shall vest as of the date of his death and the underlying shares,
as applicable, shall be delivered in accordance with the terms of the applicable
grant documents and Shareholder-Approved Plan.

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, 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 applicable grant documents and Shareholder-Approved Plan, Executive's
equity-based compensation (all grants and awards under any Shareholder-Approved
Plan) shall vest as of the date of the termination of his employment and the
underlying shares of such vested portion shall be delivered in accordance with
the terms of the applicable grant documents and Shareholder-Approved Plan. For
purposes of this Agreement, "Executive's Disability" shall mean the permanent
inability of Executive to perform all of 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 Target 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 twelve (12) months following consummation of such
Change in Control ("Change in Control Payment"). Alternatively, at Executive's
sole election, Executive's Change in Control Payment shall consist of a lump sum
equal to 100 percent (100%) 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 equity-based compensation shall immediately
vest and the underlying shares shall be delivered in accordance with the terms
of the applicable grant documents and Shareholder-Approved Plan. 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. 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
Executive, whether pursuant to this Agreement or from other plans or
arrangements maintained by the Company or any of the Consolidated Subsidiaries
(excluding the 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 Executive in
cash an additional amount equal to the Gross Up Payment. The "Gross Up Payment"
shall be an amount such that after payment by Executive of all federal, state,
local, employment and Medicare taxes thereon (and any penalties and interest
with respect thereto), Executive retains on an after tax basis an amount equal
to the amount that Executive would have retained if he had not been subject to
the Penalty Tax at all.

  (i) For
purposes of determining the amount of the 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 tax and
financial advisors in accordance with the principles of Section 280G(d)(3) and
(4) of the Code. In the event that, after the Gross Up Payment is made,
Executive becomes entitled to receive a refund of any portion of the Penalty
Tax, Executive shall promptly pay to the Company 100% of such Penalty Tax refund
attributable to the Payment (together with 100% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Gross Up Payment (together with 100% of any interest paid or
credited thereon by the Internal Revenue Service).

(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 Gross Up Payment (such excess amount is hereafter referred to as
the “Underpayment"). In such event, the Company shall pay to 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 Executive of the Underpayment plus all federal, state, local,
employment and Medicare taxes thereon (and any penalties and interest with
respect thereto), Executive retains on an after tax basis an amount equal to
$1.00.

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 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 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.

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.

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:
 

EXECUTIVE:

 

James V.
Smith

Address:

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.

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 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
post-hearing 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

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}]]