EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (this Agreement) is made and entered into as of the _16th____ day of June, 2002, by and between BRADLEY D. ADAMS (Executive); SAXON MORTGAGE, INC., a Virginia corporation (SMI); and SAXON CAPITAL, Inc., a Delaware corporation (the Company ).

RECITALS

        WHEREAS, the Company and Executive desire to enter into this Agreement which provides for the terms and conditions of Executives employment with the Company as of the date of this Agreement (the Effective Date)

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

AGREEMENT

ARTICLE I.

EMPLOYMENT

    1.1.        Term. This Agreement shall be effective from the Effective Date and shall remain in effect until midnight on the first anniversary of the Effective Date (the Initial Term), and will automatically be renewed for successive one-year terms (each an Additional Term and referred to herein together with the Initial Term as the Term), unless either the Company or Executive notifies the other in writing of an 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 Executive Vice President and Director of Capital Markets of the Company. In addition, Executive shall be appointed as Executive Vice President and Director of Capital Markets of SMI. The Companys Board of Directors (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 $225,000 (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. On or before March 1 of each year (provided that the Companys audited financial statements for the applicable year shall be available prior to such date) or as soon thereafter as practicable following availability of the Companys audited financial statements for the applicable year, but no later than April 15 of each year, the Company shall pay to Executive a cash bonus (Bonus) of up to 100% of Executives Base Salary, as determined by the Board, or the Compensation Committee, based on Executives performance and the performance of the Company during the prior fiscal year. Except as provided in Section 2.2(b), the Company shall not be obligated to pay Executive any Bonus for his performance or the Companys 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 thirty (30) days following the consummation of a Change in Control (as defined below) or Executives death, the Company shall pay to Executive or to his estate or heirs a pro-rated cash bonus equal to 100% of Executives 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 Companys expense, as other benefits (Other Benefits) full participation, on a basis commensurate with his position with the Company, in all plans of life, accident, disability and medical insurance that generally are made available to senior executives of the Company.

    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 Companys 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 Executives 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) after the date of such termination.

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