Document:

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                                                                    Exhibit 10.1

                                     FORM OF

                               SAXON CAPITAL, INC.

                            2001 STOCK INCENTIVE PLAN

                                   ARTICLE 1
                                  INTRODUCTION

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

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

                                    ARTICLE 2
                                 ADMINISTRATION

         2.1      COMMITTEE COMPOSITION.

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

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

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

         2.2      COMMITTEE RESPONSIBILITIES.

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

         2.3      COMMITTEE FOR NON-OFFICER GRANTS.

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

         2.4      INTERPRETATION.

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

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                                   ARTICLE 3
                           SHARES AVAILABLE FOR GRANTS

         3.1      BASIC LIMITATION.

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

         3.2      AUTOMATIC ADJUSTMENT TO NUMBER OF SHARES.

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

         3.3      ADDITIONAL SHARES.

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

         3.4      DIVIDEND EQUIVALENTS.

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

                                    ARTICLE 4
                                   ELIGIBILITY

         4.1      INCENTIVE STOCK OPTIONS.

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

         4.2      OTHER GRANTS.

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

                                    ARTICLE 5
                                     OPTIONS

         5.1      STOCK OPTION AGREEMENT.

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

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

5.2      NUMBER OF SHARES.

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

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

         5.3      EXERCISABILITY AND TERM.

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

         5.4      EFFECT OF CHANGE IN CONTROL.

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

         5.5      MODIFICATION OR ASSUMPTION OF OPTIONS.

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

         5.6      BUYOUT PROVISIONS.

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

                                    ARTICLE 6
                            PAYMENT FOR OPTION SHARES

         6.1      GENERAL RULE.

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

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

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

         6.2      SURRENDER OF STOCK.

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

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

         6.3      EXERCISE/SALE.

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

         6.4      EXERCISE/PLEDGE.

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

         6.5      PROMISSORY NOTE.

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

         6.6      OTHER FORMS OF PAYMENT.

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

                                    ARTICLE 7
                            STOCK APPRECIATION RIGHTS

         7.1      SAR AGREEMENT.

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

         7.2      NUMBER OF SHARES.

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

         7.3      EXERCISE PRICE.

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

         7.4      EXERCISABILITY AND TERM.

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

         7.5      EFFECT OF CHANGE IN CONTROL.

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

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         7.6      EXERCISE OF SARS.

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

         7.7      MODIFICATION OR ASSUMPTION OF SARS.

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

                                    ARTICLE 8
                                RESTRICTED SHARES

         8.1      RESTRICTED STOCK AGREEMENT.

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

         8.2      PAYMENT FOR AWARDS.

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

         8.3      VESTING CONDITIONS.

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

         8.4      VOTING AND DIVIDEND RIGHTS.

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

                                    ARTICLE 9
                                   STOCK UNITS

         9.1      STOCK UNIT AGREEMENT.

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

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

         9.2      PAYMENT FOR AWARDS.

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

         9.3      VESTING CONDITIONS.

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

         9.4      VOTING AND DIVIDEND RIGHTS.

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

         9.5      FORM AND TIME OF SETTLEMENT OF STOCK UNITS.

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

         9.6      DEATH OF RECIPIENT.

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

         9.7      CREDITORS' RIGHTS.

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

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                                   ARTICLE 10
                           PROTECTION AGAINST DILUTION

         10.1     ADJUSTMENTS.

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

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

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

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

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

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

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

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

         10.2     DISSOLUTION OR LIQUIDATION.

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

         10.3     REORGANIZATIONS.

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

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

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

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

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

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

                                   ARTICLE 11
                               DEFERRAL OF AWARDS

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

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

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

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

<PAGE>

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

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

                                   ARTICLE 12
                            AWARDS UNDER OTHER PLANS

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

                                   ARTICLE 13
                    PAYMENT OF DIRECTOR'S FEES IN SECURITIES

         13.1     EFFECTIVE DATE.

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

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

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

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

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

                                   ARTICLE 14
                              LIMITATION ON RIGHTS

         14.1     RETENTION RIGHTS.

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

         14.2     STOCKHOLDERS' RIGHTS.

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

         14.3     REGULATORY REQUIREMENTS.

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

<PAGE>

                                   ARTICLE 15
                                WITHHOLDING TAXES

         15.1     GENERAL.

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

         15.2     SHARE WITHHOLDING.

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

                                   ARTICLE 16
                               FUTURE OF THE PLAN

         16.1     TERM OF THE PLAN.

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

         16.2     AMENDMENT OR TERMINATION.

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

                                   ARTICLE 17
                        LIMITATION ON PARACHUTE PAYMENTS

         17.1     SCOPE OF LIMITATION.

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

         17.2     BASIC RULE.

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

         17.3     REDUCTION OF PAYMENTS.

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

<PAGE>

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

         17.4     OVERPAYMENTS AND UNDERPAYMENTS.

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

         17.5     RELATED CORPORATIONS.

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

                                   ARTICLE 18
                                   DEFINITIONS

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

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

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

         18.4     "CHANGE IN CONTROL" shall mean:

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                   ARTICLE 19
                          AMENDMENTS AND OTHER MATTERS

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

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

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

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

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

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

<PAGE>

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

                                   ARTICLE 20
                                    EXECUTION

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

Saxon Capital, Inc.

----------------------------
By:  Michael L. Sawyer
Title:  Chief Executive Officer<Page>

                                                                    Exhibit 10.4

                                     FORM OF
                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the seventh day of June, 2001, by and between SAXON CAPITAL, INC., a
Virginia corporation (the "Company"), SAXON MORTGAGE, INC., a Virginia
corporation ("SMI"), MICHAEL L. SAWYER ("Executive") and SAXON CAPITAL
ACQUISITION CORP., a Delaware corporation ("SCAC").

                                    RECITALS

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

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

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

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

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

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

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

                                   AGREEMENT

                                   ARTICLE I.

                                   EMPLOYMENT

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

<Page>

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

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

                                  ARTICLE II.

                            COMPENSATION AND BENEFITS

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

         2.2 ANNUAL PERFORMANCE BONUS.

             (a) PAYMENT OF PERFORMANCE BONUS. The Company shall pay to
Executive an annual cash bonus of up to 100% of Executive's Base Salary, as
determined by the Board, or the Compensation Committee, based on Executive's
performance and the performance of the Company during the prior fiscal year
("Bonus"); PROVIDED, HOWEVER, that if a Registration Statement required to be
filed by the Company (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") pursuant to Section 2 of that certain
Registration Rights Agreement dated as of the Effective Date, between SCAC and
Friedman, Billings, Ramsey & Co., Inc., a Delaware corporation, is not filed
with the Commission within one hundred twenty (120) days of the Effective Date,
Executive's Bonus for the year ended December 31, 2001 shall in no event exceed
50% of Executive's Base Salary. 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

                                       2

<Page>

prior fiscal year. On or before April 15 of each year, the Estimated Bonus shall
be adjusted in accordance with the audited financial statements of the Company
for the prior fiscal year. The Board, or the Compensation Committee, shall
promptly notify Executive in writing of the amount of adjustment, if any. If the
Bonus is greater than the Estimated Bonus, the Company shall pay to Executive an
additional cash payment equal to the amount by which the Bonus exceeds the
Estimated Bonus. If the Bonus is less than the Estimated Bonus, Executive shall
pay to the Company a cash payment equal to the amount by which the Estimated
Bonus exceeds the Bonus. Any amount required to be paid pursuant to the
preceding two sentences shall be made by the responsible party within ten (10)
business days of the delivery of notice of adjustment to Executive. Except as
provided in Section 2.2(b), the Company shall not be obligated to pay Executive
any Bonus for his performance or the Company's performance during any year,
unless Executive is employed through December 31 of such year.

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

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

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

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

             (c) Stock options ("Options") for 500,000 shares of the Common
Stock, par value $0.01 per share, of SCAC, which shall be incentive stock
options to the extent permissible pursuant to Section 422 of the Code, and which
are to be granted pursuant to the terms of 2001 Stock Incentive Plan (the
"Plan"). Any portion of such options not eligible from year to year for
treatment as incentive stock options pursuant to Section 422 of the Code shall
be treated as nonqualified employee stock options for purposes of the Code. The
Options shall have an exercise price equal to $10.00 and shall vest 25% on the
first anniversary of the Effective Date and 25% on each anniversary thereafter,
unless the vesting of such Options accelerate pursuant to Sections 3.1(b) or
3.2(b) hereof or such Options expire or accelerate pursuant to the Plan or
action of the Compensation Committee. The Options shall be governed by the Plan
and shall be exercisable in accordance with the terms thereof; PROVIDED,
HOWEVER, that to the extent any terms of the Plan are inconsistent with the
terms of this Agreement (including, but not limited to, the provisions regarding
the vesting or exercise of any Options), the terms of this Agreement shall
govern and shall constitute an amendment to the Plan. The Company agrees to
execute such documents and take any other action reasonably required to cause
such Options to be exercisable in accordance with the terms of this Agreement.
Executive acknowledges that such option grant

                                       3
<Page>

is intended to cover the Initial Term and that the Company has no commitment to
issue additional options to Executive during the Initial Term, any Additional
Term or thereafter.

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

                                  ARTICLE III.

                TERMINATION, SEVERANCE PAY AND CHANGE IN CONTROL

         3.1 TERMINATION BY THE COMPANY.

             (a) Severance PAY.

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

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

                                       4
<Page>

             (b) BENEFITS. Following the effective date of termination,
Executive shall cease to be a Company employee and shall not be entitled to any
employee benefits (including Other Benefits), except as set forth in this
Section 3.1(b). In the event that the Company terminates Executive's employment
other than for Cause (or, as provided in Section 3.2(b)(ii), Executive
voluntarily terminates his employment for Good Reason (as defined below), for
the longer of (A) twelve (12) months after the Executive's date of termination,
or (B) the Severance Payout Period in the event Executive has not elected a the
lump sum payment described in Section 3.1(a)(ii), Company shall continue to
provide benefits to Executive and/or Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 2.3(b) of this Agreement if
Executive's employment had not been terminated or, if more favorable to
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies, PROVIDED, HOWEVER,
that if Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be secondary to
those provided under such other plan. Notwithstanding anything herein to the
contrary, Executive's termination shall not preclude Executive from exercising
his rights under COBRA to pay for the continuation of benefits previously
provided by the Company. In the event that the Company terminates Executive's
employment other than for Cause (or, as provided in Section 3.2(b)(ii),
Executive voluntarily terminates his employment for Good Reason (as defined
below)), all Options granted pursuant to Section 2.3(c) shall vest as of the
effective date of such termination.

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

         3.2 TERMINATION BY EXECUTIVE.

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

             (b) SEVERANCE PAY.

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

                 (ii) In the event Executive voluntarily terminates his
employment with the Company for Good Reason, Executive shall be entitled,
subject to Section 3.5, to Severance Pay and all Options granted pursuant to
Section 2.3(c) shall vest as of the effective date of such termination to the
same extent as if Executive's employment with the Company had been

                                       5
<Page>

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 Option vesting
in accordance with the provisions of Sections 3.1(a) and 3.1(b) so long as the
request was not based on Cause.

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

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

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

                                       6
<Page>

physician chosen by the Company and reasonably satisfactory to Executive or his
legal representative.

         3.5 CHANGE IN CONTROL.

             (a) Upon the consummation of a Change in Control, Executive shall
be entitled to pay in the form of monthly payments to Executive in an amount
equal to 1/12th of the sum of (A) Executive's annual Base Salary plus (B) the
maximum Bonus for the fiscal year in which the consummation of a Change in
Control occurs, less deductions required by law, payable in accordance with the
normal payroll practices of the Company, for twenty-four (24) months following
consummation of such Change in Control ("Change in Control Payment").
Alternatively, at the Executive's sole election, the Executive's Change in
Control Payment shall consist of a lump sum equal to 200 percent (200%) of the
sum of the amounts described in clauses (A) and (B) of this subsection. The
Change in Control Payment shall be in addition to, and not in lieu of,
Executive's Base Salary and Bonus, if any, payable in accordance with the terms
of this Agreement. In addition, upon the consummation of a Change in Control,
all of the Options shall become immediately and fully exercisable. Following the
consummation of a Change in Control, Executive shall not be entitled to receive,
and hereby waives all right to, Severance Pay pursuant to Section 3.1 or 3.2 in
the event Executive's employment with the Company is terminated for any reason.
For purposes of this Section 3.5, "Change in Control" shall mean an acquisition,
merger or consolidation of the Company or the sale of voting control or all or
substantially all of the assets of the Company with, by or to any person or
entity in which the stockholders of the Company immediately prior to the
effective date of such Change in Control do not own a majority of the
outstanding shares of the capital stock of the surviving entity after such
Change in Control; PROVIDED, HOWEVER, that "Change in Control" shall not be
deemed to have occurred as a result of the consummation of the transactions
provided for in the Stock Purchase Agreement or the resale of any securities
under the Registration Statement. If Executive's employment with the Company is
terminated by the Company other than for Cause at any time following the public
announcement of a prospective Change in Control, then, notwithstanding such
termination, the Company shall pay to Executive, the Change in Control Payment
based on Executive's Base Salary in effect on the date of such termination;
PROVIDED, HOWEVER, that such Change in Control Payment shall be reduced by the
total amount of any Severance Pay received by Executive, and Executive
thereafter shall not be entitled to any further payments of Severance Pay.

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

                                       7
<Page>

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

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

                                  ARTICLE IV.

                          NONDISCLOSURE OF INFORMATION

         4.1 NONDISCLOSURE OF PROPRIETARY INFORMATION. At all times during and
after Executive's employment with the Company (whether or not such termination
is voluntary or involuntary, with or without Cause or Good Reason or by
Executive's Disability), Executive agrees to keep in strict confidence and trust
all Proprietary Information (as defined below) and not to use or disclose (or
induce or assist in the use or disclosure of) any Proprietary Information
without the prior express written consent of the Company, except as may be
necessary in the ordinary course of performing Executive's duties as an officer
of the Company. Executive acknowledges that irreparable injury will result to
the Company from Executive's violation or continued violation of the terms of
this Article IV, and Executive expressly agrees that the Company shall be
entitled, in addition to damages and any other remedies provided by law, to an
injunction or other equitable remedy respecting such violation or continued
violation. For purposes of this Agreement, "Proprietary Information" shall mean
information generally unavailable to the public that has been created,
discovered, developed or otherwise become known to the Company or in which
property rights have been assigned or otherwise conveyed to the Company,
including any modifications or enhancements thereto, which information has
material economic value or potential material economic value to the Company or
the business in which the Company is or will be engaged. Proprietary Information
shall include, but not be limited to, financial, sales and distribution
information; business plans, strategies and forecasts;

                                       8
<Page>

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

                                       9
<Page>

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.

                                       10
<Page>

         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.

                                       11

<Page>

         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:_________________________________

                                        SAXON MORTGAGE, INC.:

                                        By:_____________________________________
                                           Name:________________________________
                                           Its:_________________________________

                                        SAXON CAPITAL ACQUISITION CORP.:

                                        By:_____________________________________
                                           Name:________________________________
                                           Its:_________________________________

                                        EXECUTIVE:

                                        ----------------------------------------
                                        Michael L. Sawyer
                                        Address:

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

                                       12

<Page>

                                    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

                                       13
<Page>

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

                                       14

<Page>

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 posthearing brief. The time for filing such a brief shall be set
by the Arbitrator.

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

         ARBITRATION FEES AND COSTS

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

         JUDICIAL REVIEW

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

         INTERSTATE COMMERCE

                                       15
<Page>

         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

                                       16

<Page>

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

                                       17

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