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                                                                   Exhibit 10.11

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                         SAXON CAPITAL ACQUISITION CORP.

                                       AND

                     FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
                        AS REPRESENTATIVE OF THE HOLDERS

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

                                WARRANT AGREEMENT

                            DATED AS OF JULY 6, 2001

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                                WARRANT AGREEMENT

         This warrant agreement (this "Agreement") is made and entered into as
of July 6, 2001 by and between Saxon Capital Acquisition Corp., a Delaware
corporation (the "Company"), and Friedman, Billings, Ramsey & Co., Inc., a
Delaware corporation ("FBR").

                                    RECITALS

         A. The Company proposes to sell, pursuant to a purchase agreement (the
"Offering Purchase Agreement"), dated June 29, 2001, by and between the Company
and FBR, 28,000,000 shares (the "Shares") of the Company's common stock, par
value $.01 per share (the "Common Stock"), to FBR, as initial purchaser; FBR
will then make offers and sales of the Shares in accordance with the terms set
forth in the Offering Purchase Agreement and the final offering memorandum,
dated July 2, 2001 (the "Offering").

         B. Simultaneously with the sale of the Shares pursuant to the Offering
Purchase Agreement, the Company will consummate the purchase of all of the
issued and outstanding capital stock of Saxon Capital, Inc. (including its
wholly-owned subsidiaries, "Saxon") from Dominion Capital, Inc.

         C. The Company deems it advisable, in consideration for the services
rendered to the Company by FBR, as initial purchaser in connection with the
Offering, to issue to FBR, in its individual capacity (for its own account), and
to its designated affiliates, warrants (the "Warrants") entitling the holders
thereof to purchase an aggregate of 1,200,000 shares of Common Stock. The shares
of Common Stock issued upon exercise of the Warrants are referred to as the
"Warrant Shares".

         D. The Company desires to enter into this Agreement to set forth the
terms and conditions of the Warrants and the rights of the holders thereof.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                 ISSUANCE, EXECUTION, EXPIRATION AND TRANSFER OF
                              WARRANT CERTIFICATES

         SECTION 1.01. FORM OF WARRANT CERTIFICATES. The Warrants shall be
evidenced by certificates in temporary or definitive fully registered form (the
"Warrant Certificates") substantially in the form of EXHIBIT A hereto and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any securities exchange, or to conform to usage, or as consistently herewith may
be determined by the officers executing such Warrant Certificates as evidenced
by their

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execution of the Warrant Certificates. Each Warrant Certificate shall evidence
the right, subject to the provisions of this Agreement and of the Warrant
Certificate, to purchase the number of shares of Common Stock stated therein,
adjusted as provided for in Article III hereof, upon payment of the Exercise
Price (as defined in Section 2.01 hereof).

         SECTION 1.02. EXECUTION OF WARRANT CERTIFICATES. Each Warrant
Certificate, whenever issued, shall (i) be dated as of the date of signature
thereof by the Company either upon initial issuance or upon exchange,
substitution or transfer, (ii) be signed manually by, or bear the facsimile
signature of, the Chairman of the Board or the President or a Treasurer or a
Vice President of the Company, (iii) have the Company's seal or a facsimile
thereof affixed or imprinted thereon and (iv) be attested by the manual or
facsimile signature of the Secretary or an Assistant Secretary of the Company.
In the event any officer of the Company whose manual or facsimile signature has
been placed upon any Warrant Certificate shall have ceased to be such before
such Warrant Certificate is issued, such Warrant Certificate may be issued with
the same effect as if such officer had not ceased to be such at the date of
issuance. Any Warrant Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
whether or not any such person was such an officer at the date of the execution
of this Agreement.

         SECTION 1.03. ISSUANCE, DELIVERY AND REGISTRATION OF WARRANT
CERTIFICATES. The Company shall issue and deliver, at the closing of the
Offering, to FBR or its designees, Warrant Certificates representing the
Warrants in substantially the form of Exhibit A hereto. Additionally, the
Company shall sign and deliver Warrant Certificates upon exchange, transfer or
substitution for one or more previously signed Warrant Certificates as
hereinafter provided. The Company shall maintain books for the registration of
transfer and registration of Warrant Certificates (the "Warrant Register").

         SECTION 1.04. TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES. The
Company, from time to time, shall register the transfer of any outstanding
Warrant Certificates in the Warrant Register upon surrender at the principal
office of the Company of Warrant Certificates accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Company, duly
executed by the Warrantholder (as defined in Section 5.11 hereof) or the
Warrantholder's attorney duly authorized in writing, and evidence, satisfactory
to the Company, of compliance with the provisions of Section 5.04 hereof. Upon
any such registration of transfer, a new Warrant Certificate shall be signed by
the Company and issued to the transferee and the surrendered Warrant Certificate
shall be canceled by the Company. Warrant Certificates may be exchanged at the
option of the holder thereof, upon surrender, properly endorsed, at the
principal office of the Company, with written instructions, for other Warrant
Certificates signed by the Company entitling the registered holder thereof,
subject to the provisions thereof and of this Agreement, to purchase in the
aggregate a like number of shares of Common Stock as represented by the Warrant
Certificate so surrendered. The Company may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any such exchange or transfer.

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                                   ARTICLE II

      SHARES OF COMMON STOCK ISSUABLE, EXERCISE PRICE, EXPIRATION DATE AND
                              EXERCISE OF WARRANTS

         SECTION 2.01. WARRANT SHARES ISSUABLE; EXERCISE PRICE; EXPIRATION DATE.
Each Warrant Certificate shall entitle the registered holder thereof, subject to
the provisions thereof and of this Agreement, to purchase from the Company at
any time, or from time to time, from the time of issuance thereof up to the
close of business on the fifth anniversary of such date (or, if such date is not
a Business Day (as defined below), the first following Business Day) (the
"Exercise Period") the number of shares of Common Stock stated therein, adjusted
as provided in Article III, upon payment of $10.00 per share (which price is
equal to the purchase price per share paid by purchasers to whom FBR sells the
Shares in the Offering), adjusted as provided in Article III. Such price, as in
effect from time to time as provided in Article III, is referred to as the
"Exercise Price". Each Warrant not exercised during the Exercise Period shall
become void, and all rights thereunder and all rights in respect thereof under
this Agreement shall cease, at the end of such period. For purposes of this
Agreement, the term "Business Day" means any day of the week other than a
Saturday, Sunday or a day on which banking institutions in New York, New York or
in the city in which the principal office of the Company is located are
authorized or obligated by applicable law, regulation or order to close.

         SECTION 2.02.  EXERCISE OF WARRANTS.

         (a) Warrants may be exercised by surrendering the Warrant Certificate
evidencing such Warrants at the principal office of the Company or at the office
of the Company's transfer agent, with the Election to Exercise form set forth on
the reverse of the Warrant Certificate duly completed and signed, and by paying
in full to the Company (i) in cash, (ii) by certified or official bank check
payable to the Company's order, (iii) by wire transfer, (iv) through the
surrender of shares of Common Stock valued at the Current Market Value (as
defined below) of the Common Stock on the date of exercise, (v) by a Cashless
Exercise (as defined below) or (vi) by any combination of the foregoing, the
Exercise Price for each Warrant Share as to which Warrants are then being
exercised and any applicable taxes, other than taxes that the Company is
required to pay hereunder. A Warrantholder may exercise such Warrantholder's
Warrant for the full number of Warrant Shares issuable upon exercise thereof or
any lesser number of whole Warrant Shares.

         For purposes of this Agreement, a "Cashless Exercise" shall mean an
exercise of a Warrant in accordance with the immediately following two
sentences. To effect a Cashless Exercise, the holder may exercise a Warrant or
Warrants without payment of the Exercise Price in cash by surrendering such
Warrant or Warrants (represented by one or more Warrant Certificates) and, in
exchange therefor, receiving such number of Warrant Shares equal to the product
of (1) that number of Warrant Shares which would be issuable in the event of an
exercise with payment in cash of the Exercise Price and (2) the Cashless
Exercise Ratio. The "Cashless Exercise Ratio" shall equal a fraction, the
numerator of which is the excess of the Current Market Value per share of Common
Stock on the date of exercise over the Exercise

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Price per share of Common Stock as of the date of exercise and the denominator
of which is the Current Market Value per share of Common Stock on the date of
exercise. Upon surrender of a Warrant Certificate representing more than one
Warrant in connection with a holder's option to elect a Cashless Exercise,
such holder must specify the number of Warrants for which such Warrant
Certificate is to be exercised (assuming payment with no Cashless Exercise).
All provisions of this Agreement shall be applicable with respect to a
Cashless Exercise of a Warrant Certificate for less than the full number of
Warrants represented thereby.

         For purposes of this Agreement, "Current Market Value" shall mean (i)
if the security is not registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the value of the security, determined in good
faith by the board of directors of the Company and set forth in a certificate
thereof, or (ii) (a) if the security is registered under the Exchange Act, the
average of the daily closing sales prices of the securities for the 20
consecutive trading days immediately preceding such date, or (b) if the security
has been registered under the Exchange Act for less than 20 consecutive trading
days before such date, then the average of the closing sales prices for all of
the trading days before such date for which closing sales prices are available.
The closing sales price for each such trading day shall be: (A) in the case of a
security listed or admitted to trading on any U.S. national securities exchange
or quotation system, the closing sales price, regular way, on such day, or if no
sale takes place on such day, the average of the closing bid and asked prices on
such day, (B) in the case of a security not then listed or admitted to trading
on any U.S. national securities exchange or quotation system, the last reported
sale price on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reputable
quotation source designated by the Company, (C) in the case of a security not
then listed or admitted to trading on any U.S. national securities exchange or
quotation system and as to which no such reported sale price or bid and asked
prices are available, the average of the reported high bid and low asked prices
on such day, as reported by a reputable quotation service, or a newspaper of
general circulation in the Borough of Manhattan, The City and State of New York,
customarily published on each Business Day, designated by the Company, or, if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than 30
days prior to the date in question) for which prices have been so reported and
(D) if there are not bid and asked prices reported during the 30 days prior to
the date in question, the Current Market Value shall be determined as if the
securities were not registered under the Exchange Act.

         (b) As soon as practicable after the exercise of any Warrants and
payment by the Warrantholder of the full Exercise Price (including any election
of a Cashless Exercise) for the Warrant Shares as to which such Warrants are
then being exercised, the Company will requisition from the registrar and
transfer agent of the shares of Common Stock and deliver to or upon the order of
such Warrantholder a certificate or certificates for the number of full Warrant
Shares to which such Warrantholder is entitled (taking into account any Cashless
Exercise), registered in the name of such Warrantholder or as such Warrantholder
shall direct. Fractional Warrant Shares that otherwise would be issuable in
respect of such

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exercise shall be paid in cash as provided in Section 2.03, and the number of
Warrant Shares issuable to such Warrantholder shall be rounded down to the
next nearest whole number. If such Warrant Certificate shall not have been
exercised in full, the Company will issue to such Warrantholder a new Warrant
Certificate exercisable for the number of shares of Common Stock as to which
such Warrant shall not have been exercised (taking into account any Cashless
Exercise). The Company will cancel all Warrants so surrendered.

         (c) Each person in whose name any such certificate for Warrant Shares
is issued shall for all purposes be deemed to have become the holder of record
of such Warrant Shares on the date on which the Warrant Certificate was
surrendered to the Company and payment of the Exercise Price and any applicable
taxes was made to the Company, irrespective of the date of delivery of such
certificate for Warrant Shares.

         (d) All Warrant Shares will be duly authorized, validly issued, fully
paid and non-assessable. The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares. The Company will not be
required, however, to pay any tax imposed in connection with any transfer
involved in the issue of the Warrant Shares in a name other than that of the
Warrantholder. In such case, the Company will not be required to issue any
certificate for Warrant Shares until the person or persons requesting the same
shall have paid to the Company the amount of any such tax or shall have
established to the Company's satisfaction that the tax has been paid or that no
tax is due.

         SECTION 2.03. NO FRACTIONAL SHARES TO BE ISSUED. If more than one
Warrant Certificate shall be surrendered for exercise at one time by the same
holder, the number of full Warrant Shares which shall be issuable upon exercise
thereof shall be computed on the basis of the aggregate number of Warrants so
surrendered (and giving effect to the election of any Cashless Exercise). The
Warrantholders, by their acceptance of the Warrant Certificates, expressly waive
their right to receive any fraction of a Warrant Share or a share certificate
representing a fraction of a Warrant Share. In lieu thereof, the Company will
purchase such fractional interest for an amount in cash equal to the Current
Market Value of such fractional interest.

         SECTION 2.04. CANCELLATION OF WARRANTS. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, exchange or substitution, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall destroy canceled
Warrant Certificates. If the Company shall acquire any of the Warrants, such
acquisition shall not operate as a redemption or termination of the right
represented by such Warrants unless and until the Warrant Certificates
evidencing such Warrants are surrendered to the Company for cancellation.

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                                   ARTICLE III

     ADJUSTMENT OF EXERCISE PRICE; MERGER, ACQUISITION, ETC.; RESERVATION OF
                    SHARES OF COMMON STOCK; PAYMENT OF TAXES

         SECTION 3.01. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The Exercise Price shall be subject to adjustment from time to time as
provided in this Article III. After each adjustment of the Exercise Price, each
Warrantholder shall at any time thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of Warrant Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant to the
provisions of such Warrant immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.

         SECTION 3.02. STOCK DIVIDENDS. If the Company shall declare a dividend
or any other distribution upon any capital stock which is payable in shares of
Common Stock or securities convertible into shares of Common Stock, the Exercise
Price shall be reduced to the quotient obtained by dividing (i) the number of
shares of Common Stock outstanding immediately prior to such declaration
multiplied by the then effective Exercise Price by (ii) the total number of
shares of Common Stock outstanding immediately after such declaration. All
shares of Common Stock and all convertible securities issuable in payment of any
dividend or other distribution upon the capital stock of the Company shall be
deemed to have been issued or sold without consideration.

         SECTION 3.03. STOCK SPLITS AND REVERSE STOCK SPLITS. If the Company
shall subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price shall be proportionately reduced and the number of
Warrant Shares issuable upon exercise of each Warrant shall be proportionately
increased. If the Company shall combine the outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price shall be proportionately
increased and the number of Warrant Shares issuable upon exercise of each
Warrant shall be proportionately decreased.

         SECTION 3.04. REORGANIZATIONS AND ASSET SALES. If any capital
reorganization or reclassification of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of the assets of the Company shall be effected in such a way
that the holders of the shares of Common Stock shall be entitled to receive
securities or assets with respect to or in exchange for shares of Common Stock,
adequate provision shall be made, prior to and as a condition of such
reorganization, reclassification, consolidation, merger or sale, whereby each
Warrantholder shall have the right to receive, upon the terms and conditions
specified herein and in lieu of the Warrant Shares otherwise receivable upon the
exercise of such Warrants, such securities or assets as may be issued or payable
with respect to or in exchange for the number of outstanding shares of Common
Stock equal to the number of Warrant Shares otherwise receivable had such
reorganization, reclassification, consolidation, merger or sale not taken place.
In any such case appropriate provision shall be made with respect to the rights
and interests of such Warrantholder so that the provisions of this Agreement
shall be applicable with respect to

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any securities or assets thereafter deliverable upon exercise of the Warrants.
The Company shall not effect any such consolidation, merger or sale unless
prior to or simultaneously with the consummation thereof the survivor or
successor corporation resulting from such consolidation or merger or the
purchaser of such assets shall assume by written instrument delivered to each
holder of Warrants the obligation to deliver to such holder such securities or
assets as such holder may be entitled to receive, subject to payment of the
Exercise Price. Notwithstanding any other provision contained herein, the
Company may, upon notice and subject to the provisions of Section 4.03 hereof,
terminate the Warrants in the event of a consolidation or merger described in
this Section 3.04.

         SECTION 3.05. COVENANT TO RESERVE SHARES FOR ISSUANCE UPON EXERCISE.
(a) The Company will cause an appropriate number of shares of Common Stock to be
duly and validly authorized and reserved and will keep available out of its
authorized shares of Common Stock, solely for the purpose of issue upon exercise
of Warrants as herein provided, the full number of shares of Common Stock, if
any, then issuable if all outstanding Warrants then exercisable were to be
exercised. The Company covenants that all shares of Common Stock that shall be
so issuable shall be duly and validly issued and, upon payment of the Exercise
Price (including any election of a Cashless Exercise), fully paid and
non-assessable. If at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient for such purpose, the Company will take
such action as, in the opinion of its counsel, may be necessary to increase its
authorized but unissued Common Stock to such number of shares as shall be
sufficient for such purpose. Prior to the issuance of any Warrant Shares, the
Company shall secure the listing of such Warrant Shares upon any securities
exchange upon which shares of Common Stock are then listed, if any.

         (b) The Company hereby authorizes and directs its current and future
transfer agents for the shares of Common Stock at all times to reserve such
number of authorized shares as shall be requisite for such purpose. The Company
will supply such transfer agents with duly executed stock certificates for such
purposes. Promptly after the date of expiration of the Warrants, no shares shall
be reserved in respect of such Warrants.

         SECTION 3.06. STATEMENTS ON WARRANTS. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to this Article III,
and Warrant Certificates issued after such adjustment may state the same
Exercise Price and the same number of shares of Common Stock as are stated in
the Warrant Certificates initially issued pursuant to this Agreement. The
Company, however, may at any time in its sole discretion (which shall be
conclusive) make any change in the form of Warrant Certificate that it may deem
appropriate and that does not affect the substance thereof; any Warrant
Certificates thereafter issued or countersigned, whether in exchange or
substitution for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.

         SECTION 3.07. NOTICE OF CHANGE IN SECURITIES ISSUABLE, ETC. Whenever
the securities issuable or deliverable in exchange for Warrants are changed
pursuant to this Article III, the Company shall, within ten (10) days after the
occurrence of the event resulting in such change, deliver or send to each
Warrantholder a notice, executed by its Chief Financial Officer, setting forth
in reasonable detail the facts requiring the change and

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specifying the effective date of such change and the number or amount of, and
describing the shares of Common Stock or other securities issuable or
deliverable in exchange for, each Warrant as so changed. Failure to publish
such notice, or any defect in such notice, shall not affect the legality or
validity of any such change.

         SECTION 3.08. REFERENCES TO COMMON STOCK. Unless the context otherwise
indicates, all references to Common Stock in this Agreement and in the Warrant
Certificates, in the event of a change under this Article III, shall be deemed
to refer also to any other securities issuable or deliverable in exchange for
Warrants pursuant to such change.

                                   ARTICLE IV

           OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS

         SECTION 4.01. NO RIGHTS AS STOCKHOLDERS. Nothing contained in this
Agreement or in any Warrant Certificate shall be construed as conferring on any
Warrantholder any rights whatsoever as a stockholder of the Company, including
the right to vote at, or to receive notice of, any meeting of stockholders of
the Company; the consent of any such holder shall not be required with respect
to any action or proceeding of the Company; no such holder, by reason of the
ownership or possession of a Warrant or the Warrant Certificate representing the
same, either at, before or after exercising such Warrant, shall have any right
to receive any cash dividends, stock dividends, allotments or rights, or other
distributions (except as specifically provided herein), paid, allotted or
distributed or distributable to the stockholders of the Company prior to the
date of the exercise of such Warrant, nor shall such holder have any right not
expressly conferred by such holder's Warrant or Warrant Certificate.

         SECTION 4.02. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company in its
discretion may issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, upon receipt of a proper
affidavit or other evidence satisfactory to the Company (and surrender of any
mutilated Warrant Certificate) and bond of indemnity in form and amount and with
corporate surety satisfactory to the Company in each instance protecting the
Company, a new Warrant Certificate of like tenor and exercisable for an
equivalent number of shares of Common Stock as the Warrant Certificate so lost,
stolen, mutilated or destroyed. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate at any time
shall be enforceable by anyone. An applicant for such a substitute Warrant
Certificate also shall comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe. All Warrant
Certificates shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.

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         SECTION 4.03.  LIQUIDATION, MERGER, ETC.; NOTICE TO WARRANTHOLDERS.
If:

         (a)      the Company shall authorize the issuance to all holders of
Common Stock of rights or warrants to subscribe for or purchase capital stock of
the Company or of any other subscription rights or warrants; or

         (b)      the Company shall authorize the distribution to all holders of
Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of current earnings, retained
earnings or earned surplus or dividends payable in Common Stock); or

         (c)      there shall be proposed, and the Board of Directors of the
Company shall have approved, any consolidation or merger to which the Company is
to be a party and for which approval of the holders of Common Stock is required,
or the conveyance or transfer of the properties and assets of the Company
substantially as an entity, or such other merger or transaction described in
Section 3.04 hereof; or

         (d)      there shall be proposed, and the Board of Directors of the
Company shall have approved, the voluntary or involuntary dissolution,
liquidation or winding up of the Company;

the Company shall cause to be given to each Warrantholder a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, warrants or distribution are to be
determined or (ii) the date on which any consolidation, merger, conveyance,
transfer, reorganization, reclassification, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange the
shares for securities or other property, if any, deliverable upon the
consolidation, merger, conveyance, transfer, reorganization, reclassification,
dissolution, liquidation or winding up. Such notice shall be filed and mailed in
the case of a notice pursuant to (i) above at least ten calendar days before the
record date specified and in the case of a notice pursuant to clause (ii) above
at least 20 calendar days before the earlier of the dates specified. From the
time notice is required to be given pursuant to this Section 4.03, the holders
of Warrants shall be entitled to exercise such Warrants regardless of the
provisions of Section 2.01. Unless assumed by the survivor or successor
corporation resulting from any transaction described in Section 4.03(c) hereof,
the Warrants shall expire and be of no further force or effect upon consummation
of such transaction.

                                    ARTICLE V

                                  MISCELLANEOUS

         SECTION 5.01.  REGISTRATION OF WARRANT SHARES.

         (a) Warrantholders shall have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement"), to be dated
as of July 6, 2001, by and

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between the Company and FBR, for so long as the Warrant Shares constitute
"Registrable Securities" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Company will agree to file
with the Securities and Exchange Commission, under the circumstances set forth
therein, (i) a registration statement on Form S-1 under the Securities Act of
1933, as amended (the "Securities Act") for the initial public offering of the
Common Stock which includes the resale by holders of the Shares and the
Warrant Shares and/or (ii) a shelf registration statement on Form S-1 or such
other appropriate form pursuant to Rule 415 under the Securities Act relating
to the resale by holders of the Shares and the Warrant Shares, and to use its
best efforts to cause any such registration statement to be declared effective.

         SECTION 5.02. ENFORCEMENT OF WARRANT RIGHTS. All rights of action are
vested in the respective Warrantholders. Any holder of any Warrant, on its own
behalf and for its own benefit, may enforce, and may institute and maintain, any
suit, action or proceeding against the Company suitable to enforce, or otherwise
in respect of, its right to exercise its Warrant for the purchase of the number
of Warrant Shares issuable or deliverable in exchange therefor, in the manner
provided in the Warrant and in this Agreement.

         SECTION 5.03. NEGOTIABILITY AND OWNERSHIP. The Warrants issued
hereunder (and the Warrant Shares issuable upon exercise of the Warrants) shall
not, for a period of one year following the closing of the Offering, be sold,
transferred, assigned, pledged, hypothecated or disposed of by the holders
thereof except (a) to persons who are officers or partners of FBR or (b) in the
case of an individual, pursuant to such individual's last will and testament or
the laws of descent and distribution and, in any case, only in compliance with
the Securities Act. Any attempt to sell, transfer, assign, hypothecate or
dispose of the Warrants or Warrant Shares in contravention of this Section 5.03
shall be null and void.

         SECTION 5.04. WARRANT LEGEND. (a) Each Warrant shall contain a legend
in substantially the following form:

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         "THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT,
DATED JULY 6, 2001, BY AND BETWEEN SAXON CAPITAL ACQUISITION CORP. AND FRIEDMAN,
BILLINGS, RAMSEY & CO., INC. ANY ATTEMPT TO TRANSFER THIS WARRANT OR ANY SHARE
OF COMMON STOCK ISSUED UPON EXERCISE OF THIS WARRANT TO ANY UNAUTHORIZED
TRANSFEREE SHALL BE NULL AND VOID. NO TRANSFER IN VIOLATION OF SAID AGREEMENT
SHALL BE EFFECTIVE. THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POSTEFFECTIVE
AMENDMENT THERETO FOR SUCH SHARES UNDER THE ACT OR AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
THE ACT. THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
NOT BE SOLD OR TRANSFERRED WITHOUT AN EFFECTIVE AND CURRENT REGISTRATION
STATEMENT OR POSTEFFECTIVE AMENDMENT THERETO FOR SUCH SHARES UNDER THE ACT OR AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT."

         (b)      Each certificate representing Warrant Shares, unless
registered pursuant to Section 5.01, shall contain a legend substantially in the
following form:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE AND CURRENT
REGISTRATION STATEMENT OR POSTEFFECTIVE AMENDMENT THERETO FOR SUCH SHARES UNDER
THE ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT. THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE WARRANT
AGREEMENT, DATED JULY 6, 2001, BY AND BETWEEN SAXON CAPITAL ACQUISITION CORP.
AND FRIEDMAN, BILLINGS, RAMSEY & CO., INC. ANY ATTEMPT TO TRANSFER THE SHARES
REPRESENTED BY THIS CERTIFICATE TO ANY UNAUTHORIZED TRANSFEREE, SHALL BE NULL
AND VOID. NO TRANSFER IN VIOLATION OF SAID AGREEMENT SHALL BE EFFECTIVE."

         SECTION 5.05.  SUPPLEMENTS AND AMENDMENTS.

         (a) Notwithstanding the provisions of Section 5.05(b) below, FBR,
without the consent or concurrence of the registered holders of the Warrants,
may enter into one or more supplemental agreements or amendments with the
Company for the purpose of evidencing

                                      11

<Page>

the rights of Warrantholders upon consolidation, merger, sale, transfer or
reclassification pursuant to Section 3.04, making any changes or corrections
in this Agreement that are required to cure any ambiguity, to correct or
supplement any provision contained herein that may be defective or
inconsistent with any other provision herein or any clerical omission or
mistake or manifest error herein contained, or making such other provisions in
regard to matters or questions arising under this Agreement as shall not
adversely affect the interests of the holders of the Warrants or be
inconsistent with this Agreement or any supplemental agreement or amendment.

         (b) With the consent of the registered holders of at least a majority
in number of the Warrants at the time outstanding, the Company and FBR at any
time and from time to time by supplemental agreement or amendment may add any
provisions to or change in any manner or eliminate any of the provisions of this
Agreement or of any supplemental agreement or modify in any manner the rights
and obligations of the Warrantholders and of the Company; PROVIDED, HOWEVER,
that no such supplemental agreement or amendment, without the consent of the
registered holder of each outstanding Warrant affected thereby, shall:

         (1)      alter the provisions of this Agreement so as to affect
adversely the terms upon which the Warrants are exercisable or may be redeemed;
or

         (2)      reduce the number of Warrants outstanding the consent of whose
holders is required for any such supplemental agreement or amendment.

         (c) Notwithstanding any other provision of this Agreement, this
Agreement may not be amended, modified or supplemented at any time without the
written consent of the Company and FBR.

         SECTION 5.06. COVENANT AS TO NO INVESTMENT COMPANY STATUS. The Company
shall use its best efforts, until the expiration of the Exercise Period, to
maintain its status that it is not an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

         SECTION 5.07. SUCCESSORS AND ASSIGNS. All covenants and provisions of
this Agreement by or for the benefit of the Company or FBR shall bind and inure
to the benefit of their respective successors and assigns hereunder.

         SECTION 5.08. NOTICES. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing delivered by
facsimile (with receipt confirmed), overnight courier or registered or certified
mail, return receipt requested, or by telegram and, if to FBR, shall be
sufficient in all respects if delivered or sent to Friedman, Billings, Ramsey &
Co., Inc., 1001 19th Street North, Arlington, Virginia 22209, Attention:
Compliance Department; (facsimile: 703-312-9698); if to the Company, shall be
sufficient in all respects if delivered to the Company at the offices of the
Company at 4880 Cox Road, Glen Allen, Virginia 23060, Attention: Michael l.
Sawyer; (facsimile: 804-967-5826); with a copy to Richard D. Shepherd at the
same address; (facsimile: 804-217-7679); and if to

                                      12

<Page>

the holder of any Warrants, shall be sufficient in all respects if delivered
to the last address of such holder as it shall appear on the Warrant Register.

         SECTION 5.09. APPLICABLE LAW. The validity, interpretation and
performance of this Agreement and of the Warrant Certificates shall be governed
by the law of the Commonwealth of Virginia, without regard to conflicts of laws
principles that would require the application of the law of any other state.

         SECTION 5.10. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the parties hereto and the holders of the Warrants any
right, remedy or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise or agreement hereof, and all covenants,
conditions, stipulations, promises and agreements in this Agreement contained
shall be for the sole and exclusive benefit of the parties hereto and their
successors and of the holders of the Warrants.

         SECTION 5.11. REGISTERED WARRANTHOLDERS. Prior to due presentment for
registration of transfer, the Company may deem and treat the person in whose
name any Warrants are registered in the Warrant Register as the absolute owner
thereof for all purposes whatever (notwithstanding any notation of ownership or
other writing thereon made by anyone other than the Company) and the Company
shall not be affected by any notice to the contrary or be bound to recognize any
equitable or other claim to or interest in any Warrants on the part of any other
person and shall not be liable for any registration of transfer of Warrants that
are registered or to be registered in the name of a fiduciary or the nominee of
a fiduciary unless made with actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration of transfer or with
such knowledge of such facts that its participation therein amounts to bad
faith. The terms "Warrantholder" and "holder of any "Warrants" and all other
similar terms used herein shall mean such person in whose name Warrants are
registered in the Warrant Register.

         SECTION 5.12. INSPECTION OF AGREEMENT. A copy of this Agreement shall
be available at all reasonable times for inspection by any Warrantholder at the
principal office of the Company. The Company may require any such Warrantholder
to submit its Warrant Certificate for inspection by it before allowing such
Warrantholder to inspect a copy of this Agreement.

         SECTION 5.13. HEADINGS. The Article and Section headings herein are for
convenience only and are not a part of this Agreement and shall not affect the
interpretation thereof.

         SECTION 5.14. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original.

                                      13

<Page>

         IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto under their respective seals as of the day and year first above
written.

                                SAXON CAPITAL ACQUISITION CORP.

                                By:         /s/ Michael L. Sawyer
                                         -----------------------------------
                                Name:    Michael L. Sawyer
                                Title:   President

                                FRIEDMAN, BILLINGS, RAMSEY
                                & CO., INC.,
                                on behalf of itself and any other designated
                                holders

                                By:      /s/ James R. Kleeblatt
                                         -----------------------------------
                                Name:    James R. Kleeblatt
                                Title:   Managing Director

                                     14

<Page>

                                                                       EXHIBIT A

                          [FORM OF WARRANT CERTIFICATE]

No. __________                                           _______ Warrant Shares

                                     WARRANT
                      TO PURCHASE SHARES OF COMMON STOCK OF
                         SAXON CAPITAL ACQUISITION CORP.

         Saxon Capital Acquisition Corp., a Delaware corporation (the
"Company"), for value received, hereby certifies that

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

or registered assign(s), is the owner of a Warrant, which represents the right,
subject to the terms and conditions hereof and of the Warrant Agreement
hereafter referred to, to purchase from the Company at any time, or from time to
time, from the time of issuance thereof up to the close of business on the fifth
anniversary of such date (or, if such date is not a Business Day (as defined
below), the first following Business Day) (the "Exercise Period") the number of
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock") set forth above (each share of Common Stock issuable upon exercise of a
Warrant is referred to as a "Warrant Share"). Subject to the terms and
conditions of the Warrant Agreement, the exercise price for the Warrant Shares
shall be $10.00 per Warrant Share, adjusted as provided in Article III of the
Warrant Agreement, payable in full as to each Warrant Share issued upon exercise
of a Warrant at the time of purchase. The term "Offering Purchase Agreement" as
used herein refers to the Purchase Agreement, dated June 29, 2001, by and
between the Company and Friedman, Billings, Ramsey & Co., Inc. ("FBR"). The term
"Exercise Price" as used herein refers to the foregoing price per share in
effect at any time.

         This Warrant Certificate is issued under and in accordance with the
warrant agreement (the "Warrant Agreement"), dated as of ________, 2001, by and
between the Company and FBR, as representative of any designated holders, and is
subject to the terms and provisions of the Warrant Agreement, and the
registration rights agreement (the "Registration Rights Agreement"), dated as of
_______, 2001, by and between the Company and FBR, which terms and provisions
are hereby incorporated by reference herein and made a part hereof. Copies of
the Warrant Agreement, the Offering Purchase Agreement and the Registration
Rights Agreement are available for inspection by the registered holder at the
principal office of the Company.

         This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period. The portion of this Warrant not
exercised during the Exercise Period shall become void, and all rights hereunder
and all rights in respect hereof and under the Warrant Agreement shall cease at
the end of the Exercise Period.

                                     A-1

<Page>

         Each such purchase of Warrant Shares shall be made, and shall be deemed
effective for the purpose of determining the date of exercise, only upon
surrender hereof to the Company at the principal office of the Company, with the
form of Election to Exercise on the reverse hereof duly filled in and signed,
and upon payment in full to the Company of the Exercise Price (i) in cash, (ii)
by certified or official bank check, (iii) through the surrender of shares of
Common Stock valued at the Current Market Value of the Common Stock on the date
of exercise, (iv) by a Cashless Exercise or (v) by any combination of the
foregoing, and any applicable taxes, other than taxes the Company is required to
pay under the Warrant Agreement, subject to the conditions set forth herein and
in the Warrant Agreement. A Warrantholder may exercise this Warrant for the full
number of Warrant Shares issuable upon exercise hereof or any lesser number of
whole Warrant Shares.

         For purposes of this Warrant Certificate, a "Cashless Exercise" shall
mean an exercise of a Warrant in accordance with the immediately following two
sentences. To effect a Cashless Exercise, the holder may exercise a Warrant or
Warrants without payment of the Exercise Price in cash by surrendering such
Warrant or Warrants (represented by one or more Warrant Certificates) and, in
exchange therefor, receiving such number of shares of Common Stock equal to the
product of (1) that number of shares of Common Stock for which such Warrant or
Warrants are exercisable and which would be issuable in the event of an exercise
with payment in cash of the Exercise Price and (2) the Cashless Exercise Ratio.
The "Cashless Exercise Ratio" shall equal a fraction, the numerator of which is
the excess of the Current Market Value per share of Common Stock on the date of
exercise over the Exercise Price per share of Common Stock as of the date of
exercise and the denominator of which is the Current Market Value per share of
Common Stock on the date of exercise. Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with a holder's option to elect
a Cashless Exercise, such holder must specify the number of Warrants for which
such Warrant Certificate is to be exercised (assuming payment with no Cashless
Exercise). All provisions of the Warrant Agreement shall be applicable with
respect to a Cashless Exercise of a Warrant Certificate for less than the full
number of Warrants represented thereby.

         For purposes of this Warrant Certificate, "Current Market Value" shall
mean (i) if the security is not registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the value of the security, determined in
good faith by the board of directors of the Company and set forth in a
certificate thereof, or (ii) (a) if the security is registered under the
Exchange Act, the average of the daily closing sales prices of the securities
for the 20 consecutive trading days immediately preceding such date, or (b) if
the security has been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of the closing sales
prices for all of the trading days before such date for which closing sales
prices are available. The closing sales price for each such trading day shall
be: (A) in the case of a security listed or admitted to trading on any U.S.
national securities exchange or quotation system, the closing sales price,
regular way, on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) in the case of a security not
then listed or admitted to trading on any U.S. national securities exchange or
quotation system, the last reported sale price on such day, or if no sale

                                     A-2

<Page>

takes place on such day, the average of the closing bid and asked prices on
such day, as reported by a reputable quotation source designated by the
Company, (C) in the case of a security not then listed or admitted to trading
on any U.S. national securities exchange or quotation system and as to which
no such reported sale price or bid and asked prices are available, the average
of the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, The City and State of New York, customarily published on
each Business Day, designated by the Company, or, if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than 30 days prior to the date
in question) for which prices have been so reported and (D) if there are not
bid and asked prices reported during the 30 days prior to the date in
question, the Current Market Value shall be determined as if the securities
were not registered under the Exchange Act.

         The Company shall not be required upon the exercise of the Warrant
represented hereby to issue fractions of Warrant Shares or to distribute share
certificates that evidence fractional Warrant Shares. Every holder of this
Warrant Certificate expressly waives its right to receive any fraction of a
Warrant Share or a share certificate representing a fraction of a Warrant Share.
Fractional Warrant Shares that otherwise would be issuable in respect of such
exercise shall be paid in cash as provided in the Warrant Agreement, and the
number of Warrant Shares issuable to such Warrantholder shall be rounded down to
the next nearest whole number. If such Warrant Certificate shall not have been
exercised in full, the Company will issue to such Warrantholder a new Warrant
Certificate exercisable for the number of shares of Common Stock as to which
such Warrant shall not have been exercised.

         This Warrant Certificate may be exchanged either separately or in
combination with other Warrant Certificates at the principal office of the
Company for new Warrant Certificates representing the same aggregate number of
Warrant Shares as were evidenced by the Warrant Certificate or Warrant
Certificates exchanged, upon surrender of this Warrant Certificate and upon
compliance with and subject to the conditions set forth herein and in the
Warrant Agreement.

         This Warrant Certificate is transferable (subject to restrictions set
forth in the Warrant Agreement) at the principal office of the Company by the
registered holder hereof in person or by its attorney duly authorized in
writing, upon (i) surrender of this Warrant Certificate and (ii) upon compliance
with and subject to the conditions set forth herein and in the Warrant
Agreement. Upon any such transfer, a new Warrant Certificate or new Warrant
Certificates of different denominations, representing in the aggregate a like
number of Warrant Shares, will be issued to the transferee. Every holder of
Warrants, by accepting this Warrant Certificate, consents and agrees with the
Company and with every subsequent holder of this Warrant Certificate that until
due presentation for the registration of transfer of this Warrant Certificate on
the Warrant Register maintained by the Company, the Company may deem and treat
the person in whose name this Warrant Certificate is registered as the absolute
and lawful owner for all purposes whatsoever and the Company shall not be
affected by any notice to the contrary.

                                     A-3

<Page>

         Nothing contained in the Warrant Agreement or in this Warrant
Certificate shall be construed as conferring on the holder of any Warrants or
its transferee any rights whatsoever as a stockholder of the Company.

         The Warrant Agreement and each Warrant Certificate, including this
Warrant Certificate, shall be deemed a contract made under the laws of the
Commonwealth of Virginia and for all purposes shall be construed in accordance
with the laws of the Commonwealth of Virginia without giving effect to the
principles of conflicts of law thereof.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.

Dated:

                                             SAXON CAPITAL ACQUISITION CORP.

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

         (CORPORATE SEAL)

         ATTEST:

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

                                     A-4

<Page>

                              ELECTION TO EXERCISE

                    (To be executed upon exercise of Warrant)

TO SAXON CAPITAL ACQUISITION CORP.:

         The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, ___________ shares of Common Stock, as provided for therein, and
tenders herewith payment of the purchase price in full in the form of:

         (i) cash or a certified or official bank check (or combination thereof)
in the amount of $________________;

         (ii) a wire transfer, confirmation number ____________;

         (iii) surrender of ________shares of Common Stock having a Current
Market Value of $______; and/or

         (iv) surrender of the Warrant, or portion thereof, pursuant to a
Cashless Exercise (as defined in the Warrant Agreement) for __________ shares of
Common Stock at the current Cashless Exercise Ratio.

         Please issue a certificate or certificates for such shares of Common
Stock in the name of:

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF
ASSIGNEE:                                    Name ___________________________

         _____________________________       Address ________________________

                                             Signature ______________________

                                             ________________________________

                                             Note: The above signature should
                                             correspond exactly with the name on
                                             the face of this Warrant
                                             Certificate or with the name of
                                             assignee appearing in the
                                             assignment form below.

         Dated:  _______________, _______

<Page>

                                   ASSIGNMENT

        (To be executed only upon assignment of Warrant Certificate)

         For value received, __________________________ hereby sells, assigns
and transfer unto ___________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _______________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.

Dated:  _____________________, _______

                                  __________________________________________
                                  NOTE:    The above signature should correspond
                                           exactly with the name on the face of
                                           this Warrant Certificate.<Page>

                                                                   Exhibit 10.12

                                 PROMISSORY NOTE

Amount:      $25,000,000                                Date: July 6, 2001

FOR VALUE RECEIVED, Saxon Capital Acquisition Corp., a Delaware corporation
(hereinafter referred to as "Borrower"), hereby promises to pay to the order of
Dominion Capital, Inc., a Virginia corporation, or any successor holder of this
Note (hereinafter referred to as "Lender"), at the location set forth in Section
12 hereof or such other location as shall be designated in writing from time to
time by Lender, in lawful money of the United States of America in immediately
available funds, the principal sum of Twenty-Five Million U.S. Dollars
($25,000,000) or such greater or lesser amount as may be outstanding hereunder
in accordance with the terms hereof, together with interest thereon at the
following rate and on the following terms:

                  1.       REPAYMENT. Interest shall accrue on the outstanding
principal balance of this Note at the rate of 8% per annum on the principal
amount of the Loan made by Lender to Borrower commencing on the date hereof.
The entire outstanding principal balance of the Loan together with all accrued
but unpaid interest shall be due and payable on July __, 2006. Interest shall
be computed hereunder based on a 365-day year (or a 366-day year in each leap
year) and the actual number of days (including the first day and excluding the
last day) occurring in the period for which interest is calculated. Interest
shall accrue daily and be compounded quarterly. To the extent permitted by
law, any payment not made when due shall bear interest from the date when due
until payment is made at the rate of 13% per annum.

                  2.       INTEREST PAYMENTS. Interest shall be payable on the
last day of each calendar quarter (I.E., March 31, June 30, September 30, and
December 31), or if such day is not a business day, on the next succeeding
business day, beginning September 30, 2001. Notwithstanding the foregoing, the
Borrower may elect not to pay interest due on any such date before September
30, 2004, and interest which the Borrower elects not to pay shall be added to
the principal amount of this Note.

                  3.       PREPAYMENT. The Borrower expressly reserves the right
to prepay in full or in part any portion of the outstanding principal balance,
together with all accrued but unpaid interest, without penalty.

                  4.       NOTE SENIOR TO UNSECURED DEBT. The payment of the
principal of, and interest on, this Note shall be senior in right of payment to
all other unsecured indebtedness for borrowed money of the Borrower. For so long
as any amount under this Note shall remain unpaid, the Borrower shall not incur
any indebtedness for borrowed money, the terms of which prohibit the payment of
any amount under this Note; PROVIDED, that the terms of such indebtedness may
prohibit the payment of any amount under this Note if a default under such
indebtedness occurs.

                  5.       CHANGE IN CONTROL. For so long as any amount under
this Note shall remain unpaid, if a Change of Control occurs, the Lender shall
have the right, at the Lender's

<Page>

option, by written notice to the Borrower delivered within ninety (90) days
following such Change in Control, to declare this Note to be due and payable,
whereupon one hundred ten percent (110%) of the outstanding principal of and
accrued interest on this Note shall be immediately due and payable. The
Borrower hereby agrees to notify the Lender in writing of a Change in Control
within five business days of the occurrence thereof.

         For purposes of this Note, a "Change in Control" shall mean the
consummation of a transaction which results in any Person or Group acquiring,
directly or indirectly, (i) all or substantially all of the consolidated assets,
business or operations of the Borrower, (ii) by way of merger, consolidation,
share exchange, other business combination or otherwise (x) in excess of 50% of
the Beneficial Ownership of the outstanding capital stock of, or the power to
elect more than 50% of the directors of, the Borrower, except that in no event
shall the following constitute a Change of Control: (a) the sale of common
stock, par value $.01 per share, of the Borrower ("Common Stock") to Friedman,
Billings, Ramsey & Co., Inc. ("FBR") and the resales by FBR of such stock to
third parties and/or the registration under the Securities Act of 1933, as
amended, of the resales by such third parties of such stock, in, pursuant to or
as a result of, the Offering, or (b) any subsequent public, private or similar
offering of capital stock by the Acquisition Corp. in a transaction that does
not otherwise result in an event described in clauses (i) or (ii) of this
definition.

         For purposes of this Note, "Person" shall mean any individual,
corporation, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof.

         For purposes of this Note, "Group" shall have the meaning assigned to
such term under Rule 13d-5 under the Securities Exchange Act of 1934, as
amended. For purposes of this Note, "Beneficial Ownership" shall have the
meaning assigned to such term under Rule 13d-3 under the Securities Exchange Act
of 1934, as amended.

         For purposes of this Note, "Offering" shall mean the private placement
or an offering pursuant to Rule 144A promulgated under the Securities Act, each
exempt from the registration requirements of the Securities Act, of the Common
Stock.

                  6.       EVENTS OF DEFAULT. If any of the following events
(each an "Event of Default") occur,

         (a)      The Borrower fails to pay any principal of this Note when due
and payable;

         (b)      The Borrower fails to pay any interest of this Note when due
and payable, and such failure continues for a period of fifteen (15) days;

         (c)      The Borrower commences any voluntary proceeding under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
receivership, dissolution, or liquidation law or statute, of any jurisdiction,
whether now or subsequently in effect; or the Borrower is adjudicated insolvent
or bankrupt by a court of competent jurisdiction; or the Borrower petitions or
applies for, acquiesces in, or consents to, the appointment of any receiver or
trustee of the Borrower or for all or substantially all of its property or
assets; or the Borrower

                                       2

<Page>

makes an assignment for the benefit of its creditors; or the Borrower admits
in writing its inability to pay its debts as they mature; or

         (d)      There is commenced against the Borrower any proceeding
relating to the Borrower under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, receivership, dissolution, or liquidation law
or statute, of any jurisdiction, whether now or subsequently in effect, and such
proceeding remains undismissed for a period of sixty (60) days or the Borrower
by any act indicates its consent to, approval of, or acquiescence in, such
proceeding; or a receiver or trustee is appointed for the Borrower or for all or
substantially all of its property or assets, and the receivership or trusteeship
remains undischarged for a period of sixty (60) days;

THEN in any such event the registered holder of this Note may, by written notice
to the Borrower declare this Note to be due and payable, whereupon the principal
of and accrued interest on this Note shall be immediately due and payable.

If an Event of Default shall occur and be continuing, the Borrower may not (i)
declare or pay any cash dividends on any of its capital stock or (ii) pay
principal of or interest on any indebtedness which is PARI PASSU with, or
subordinated in right of payment to, this Note. When such Event of Default is
cured or waived, the Borrower may (i) declare and pay cash dividends on its
capital stock and (ii) resume payments on debt which is PARI PASSU with, or
subordinated in right of payment to, this Note.

                  7.       FINANCIAL STATEMENTS. Within 30 days after the end of
each fiscal month of the Borrower (commencing with its fiscal month ending July
30, 2001), the Borrower will cause to be prepared and will furnish to the Lender
the unaudited consolidated balance sheet of the Borrower as at the end of such
fiscal month and the related unaudited consolidated statements of income and
cash flows for such fiscal month as well as such other unaudited financial
statements as shall be reasonably requested by Lender.

                  8.       HOLDERS. This Note is registered on the books of the
Borrower and is transferable only by surrender hereof at the principal office of
the Borrower duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder or its attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest on
this Note shall be made only to or upon the order in writing of the registered
holder.

                  9.       TRANSFER. The registered holder of this Note may,
prior to maturity or prepayment thereof, surrender this Note at the principal
office of the Borrower for transfer or exchange, together with a properly
executed written assignment. Within a reasonable time after the Borrower's
receipt thereof and without expense to such holder, except for any transfer or
similar tax that may be imposed on the transfer or exchange, the Borrower shall
issue in exchange therefor another note or notes (each a "Note") dated the date
to which interest has been paid and for the same aggregate principal amount as
the unpaid principal amount of the Note so surrendered, having the same maturity
and rate of interest, containing the same provisions and subject to the same
terms and conditions as the Note so surrendered. Each new Note shall be made
payable to such person or persons, or transferees, as the holder of such
surrendered Note may designate, and such transfer or exchange shall be made in
such a manner that no gain or loss

                                       3

<Page>

of principal or interest shall result therefrom. The Borrower may elect not to
permit a transfer of this Note if it has not obtained satisfactory assurance
that such transfer is exempt from the registration requirements of, or covered
by an effective registration statement under, the Securities Act of 1933, as
amended, and the rules and regulations thereunder and is in compliance with
all applicable state securities laws, including without limitation receipt of
an opinion of counsel satisfactory to the Borrower, which opinion shall be
satisfactory to the Borrower.

                  10.      REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Borrower of the loss, theft, destruction or mutilation of
this Note, the Borrower will issue a new Note, of like tenor and amount and
dated the date to which interest has been paid in lieu of such lost, stolen,
destroyed or mutilated Note, PROVIDED that the Borrower, in its reasonable
judgment, may require the holder to post a bond with the Borrower prior to
issuing a replacement for the Note.

                  11.      SUCCESSORS AND ASSIGNS. As used herein, the terms
"Borrower" and "Lender" shall be deemed to include their respective heirs,
successors, legal representatives and assigns, whether voluntary by action of
the parties or involuntary by operation of law.

                  12.      NOTICES. All notices, request, demands and other
communications hereunder shall be in writing and shall be delivered personally,
by courier, by telecopy or by mail (regular, certified or registered), postage
prepaid, addressed as follows:

                  If to Lender:

                                    Dominion Capital, Inc.
                                    120 Tredegar Street
                                    Richmond, VA 23219
                                    Attn:  Charles E. Coudriet
                                    Telephone: (804) 819-2309
                                    Telecopy: (804) 819-2214

                                    with copies to:

                                    Dominion Resources Services, Inc.
                                    100 Tredegar Street
                                    Richmond, VA 23220
                                    Attn:  Mark O. Webb
                                    Telephone: (804) 819-2140
                                    Telecopy: (804) 819-2202

                  and:

                                    McGuireWoods LLP
                                    One James Center
                                    901 East Cary Street
                                    Richmond, VA 23219
                                    Attn.: Leslie A. Grandis
                                    Attn: Joseph C. Carter, III

                                       4

<Page>

                                    Telephone: (804) 775-4322
                                    Telecopy: (804) 698-2069

                  If to Borrower:

                                    Saxon Capital Acquisition Corp.
                                    4880 Cox Road
                                    Glen Allen, VA 23060
                                    Attn: Michael L. Sawyer
                                    Attn: Richard Shepherd
                                    Telephone: (804) 967-7497
                                    Telecopy: (804) 967-5826

                  with copies to:

                                    Dennis G. Stowe.
                                    Meritech Mortgage Services, Inc.
                                    4708 Mercantile Drive North
                                    Fort Worth, TX 76137
                                    Telephone: (817) 665-7201
                                    Telecopy: (817) 665-7401

                  and:

                                    Gibson, Dunn & Crutcher LLP
                                    1050 Connecticut Avenue, N.W.
                                    Washington, DC 20036
                                    Attn:  Howard B. Adler, Esq.
                                    Telephone: (202) 955-8589
                                    Telecopy: (202) 530-9526

                  and:

                                    McKee Nelson LLP
                                    1919 M Street NW
                                    Washington, DC 20036
                                    Attn:  Nicholas Singh
                                    Telephone: (202) 775-4134
                                    Telecopy: (202) 775-8586

or to such other address as a party may from time to time designate in writing
in accordance with this section. Each notice or other communication given to any
party hereto in accordance with the provisions of this Agreement shall be deemed
to have been received (i) on the business day it is sent, if sent by personal
delivery, or (ii) on the first business day after sending, if sent by courier or
overnight delivery, or (iii) on the third business day after sending, if sent by
mail (regular, certified or registered); PROVIDED, that notice of change of
address shall be effective only upon receipt.

                                       5

<Page>

                  13.      SEVERABILITY. Should any provision of this Note for
any reason be declared invalid or unenforceable, (i) such decision shall not
affect the validity or enforceability of any of the other provisions of this
Note, which remaining provisions shall remain in full force and effect, and (ii)
the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law, but only to
the extent that such enforceability or application is in accordance with the
intent of the parties as evidenced by this Note.

                  14.      MISCELLANEOUS. No delay or omission on the part of
the holder hereof in exercising any right hereunder shall operate as a waiver of
such right or of any other right of such holder, nor shall any such delay,
omission or waiver on any one occasion be deemed a bar to or waiver of the same
day or any other right on any future occasion. The Borrower hereby waives
presentment, demand, notice of nonpayment, protest and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note and agrees to pay upon demand all reasonable costs of collecting
amounts due under this Note, including reasonable attorneys' fees and expenses
incurred or paid by the Lender in connection therewith. This Note may not be
modified except by a written instrument signed by the Borrower and the
registered holder hereof. The captions herein are for convenience and reference
only and in no way define or limit the scope or content of this Note or in any
way affect its provisions. This Note shall be governed by and construed in
accordance with the laws of the State of New York.

         IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer as an instrument under seal as of
the date first above written.

                              SAXON CAPITAL ACQUISITION CORP.

                              By:      /s/ Michael L. Sawyer
                                   ------------------------------------------
                              Name:  Michael L. Sawyer
                              Title: Chief Executive Officer

                                       6

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