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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement"), dated as of February 6,
2004 (the "Commencement Date"), by and between Sunset Financial Resources, Inc.,
a Maryland real estate investment trust (the "Company"), and Michael L. Pannell,
an individual (the "Executive").

         WHEREAS, the Executive and the Company deem it in their respective best
interests to enter into an employment agreement for the Executive to serve as
the Chief Financial Officer and Treasurer of the Company on the terms and
subject to the conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:

         1. Definitions. For purposes of this Agreement, the following terms
shall have the following definitions:

                  (a) "Business" shall mean the acquisition and management of
portfolios of residential and commercial mortgage loans in the United States.

                  (b) "Cause" shall mean any one or more of the following:

                           (i) the continued and intentional failure by the
         Executive to substantially perform his duties with the Company, other
         than any such failure resulting from the Executive's Disability;
         provided, however, that no termination of the Executive's employment
         shall be for Cause as set forth in this clause (i) until (x) there
         shall have been delivered to the Executive written notice setting forth
         that the Executive committed the conduct set forth in this clause (i)
         and specifying the particulars thereof in reasonable detail and (y) the
         Executive shall have been provided an opportunity to present his
         position to the Board of Directors of the Company (the "Board"), either
         in writing or in person;

                           (ii) a breach by the Executive of his fiduciary
         duties as an officer of the Company, or a material breach by the
         Executive of any written rule, regulation, policy or procedure of the
         Company;

                           (iii) the Executive's excessive absenteeism not
         related to illness;

                           (iv) the Executive's conviction of or plea of nolo
         contendere to a felony or final non-appealable conviction of any other
         crime that incarcerates the Executive for a period of one year or
         longer; or

                           (v) the Executive's commission of a fraudulent act,
         embezzlement, theft or felony, in any case, whether or not involving
         the Company or the Executive's performance of his duties under this
         Agreement, that, in the reasonable opinion of the Board, renders the
         Executive's continued employment harmful to the Company.

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                  Notwithstanding the foregoing, no failure to perform by the
Executive after a Notice of Termination is given by the Executive shall
constitute Cause for purposes of this Agreement.

                  (c) "Change of Control" shall mean any one or more of the
following:

                           (i) at any time during any 12-month period, the Board
         of Directors of the Company in office at the beginning of such period
         shall have ceased to constitute a majority of the Board without the
         approval of the nomination of such directors by a majority of the Board
         consisting of directors who were serving at the beginning of such
         period;

                           (ii) any person (as defined in Section 13(d)(3) or
         Section 14(d)(2) of the Exchange Act) (other than the Company, any of
         its subsidiaries or any trustee, fiduciary or other person holding
         securities under any employee share ownership plan or any other
         employee benefit plan of the Company or any of its subsidiaries),
         together with its affiliates and associates (as such terms are defined
         in Rule 12b-2 under the Exchange Act) shall have become the beneficial
         owner (as defined in Rule 13d-3 of the Exchange Act) of securities
         representing 25% or more of the combined voting power of the Voting
         Shares;

                           (iii) the Company shall have filed a schedule, report
         or proxy statement with the Securities and Exchange Commission pursuant
         to the Exchange Act disclosing that a change in control of the Company
         has occurred;

                           (iv) a merger or consolidation of the Company shall
         have been consummated, other than (x) a merger or consolidation that
         would result in the Voting Shares outstanding immediately prior thereto
         continuing to represent (either by remaining outstanding or by being
         converted into voting securities of the surviving entity) at least 50%
         of the combined voting power of the voting securities of the surviving
         entity or (y) a merger or consolidation effected to implement a
         recapitalization of the Company (or similar transaction) in which no
         person acquires more than 50% of the Voting Shares;

                           (v) any person, other than a subsidiary of the
         Company, shall have acquired more than 50% of the combined assets of
         the Company and its subsidiaries; or

                           (vi) the shareholders of the Company shall have
         approved the complete liquidation or dissolution of the Company.

                  (d) "Confidential Information" shall mean all confidential
information of the Company and/or its subsidiaries, excluding any information
that is available in the public domain, and including trade secrets and, by way
of illustration, whether or not labeled or otherwise identified as
"confidential," the Company's:

                           (i) acquisition, expansion, marketing, financial and
         other business strategies, information and plans;

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                           (ii) compilations of data;

                           (iii) computer programs and/or records;

                           (iv) confidential information developed by
         consultants and contractors;

                           (v) employee information; and

                           (vi) manuals, memoranda, projections and minutes.

                  (e) "Disability" shall mean the physical or mental incapacity
of the Executive that, even with reasonable accommodation, has prevented the
execution of the duties of his office, as outlined in Section 2, for three
consecutive months or for more than 180 business days in the aggregate in any
18-month period and that, in either case, in the determination of the Board
after consultation with a medical doctor licensed to practice medicine in the
State of Florida appointed by the Board and the Executive, may be expected to
prevent the Executive for any period of time thereafter from devoting
substantial time and energies to the duties of his office, as outlined in
Section 2. The Executive agrees to submit to reasonable requests for medical
examinations to determine whether a Disability exists.

                  (f) "Employee Benefits" shall mean the perquisites, benefits
and service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or arrangements
in which the Executive is entitled to participate, including, without
limitation, any share option, share purchase, share appreciation, dividend
equivalent rights, savings, pension, supplemental executive retirement or other
retirement income or welfare benefit, deferred compensation, incentive
compensation, group or other life, health, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company), disability,
salary continuation, expense reimbursement, and other employee benefit policies,
plans, programs or arrangements that may now exist or any equivalent successor
policies, plans, programs or arrangements that may be adopted hereafter by the
Company, providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a Termination
Date or Change of Control Date, as the case may be.

                  (g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

                  (h) "Good Reason" shall mean any one or more of the following:

                           (i) a reduction by the Company without the
         Executive's consent in the Executive's position, duties,
         responsibilities or status with the Company that represents a
         substantial adverse change from his position, duties, responsibilities
         or status, or a removal of the Executive from or any failure to reelect
         the Executive to any of the positions referred to in Section 2, but
         specifically excluding any action in connection with the termination of
         the Executive's employment for death, Disability, Cause or as a result
         of a Change of Control or by the Executive for normal retirement;

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                           (ii) a reduction by the Company without the
         Executive's consent of the Base Salary;

                           (iii) a relocation of the Executive by the Company
         without the Executive's consent to a location more than 25 miles from
         the Jacksonville, Florida metropolitan area, other than for travel
         reasonably required in the performance of the Executive's
         responsibilities;

                           (iv) any material breach by the Company of any
         provision of this Agreement or any other agreement between the Company
         or any of its subsidiaries and the Executive that, in any case, is not
         cured within 14 days of written notice to the Company of such breach;

                           (v) the insolvency of or the filing (by any party,
         including the Company, but excluding the Executive) of a petition for
         bankruptcy of the Company, which petition is not dismissed within 60
         days; or

                           (vi) the failure by the Company to obtain the
         assumption of this Agreement by any successor or assign of the Company.

                  (i) "Severance Period" shall mean the period of time
commencing on the Change of Control Date or the Termination Date, as the case
may be, and ending on the first anniversary thereof.

                  (j) "Termination Date" shall mean (i) in the case of the
Executive's death, his date of death; (ii) in the case of a termination by the
Executive for Good Reason, the last day of his employment; and (iii) in all
other cases, the date specified in the Notice of Termination (as defined below)
or, if no Notice of Termination is sent, the last day of his employment;
provided, however, that if the Executive's employment is terminated by the
Company due to Disability, the date specified in the Notice of Termination shall
be the 30th day after receipt of the Notice of Termination by the Executive,
provided that the Executive shall not have returned to the full-time performance
of his duties within 30 days after such receipt.

                  (k) "Voting Shares" shall mean the securities of the Company
entitled to vote generally in the election of directors of the Company.

         2. Employment and Duties.

                  (a) Employment. Pursuant to the terms and subject to the
conditions of this Agreement, the Company agrees to employ the Executive during
the Employment Term (as defined below) as Chief Financial Officer and Treasurer
of the Company, and the Executive accepts such employment.

                  (b) Duties. During the Employment Term, the Executive will
perform the executive and managerial duties customarily associated with the
office set forth in Section 2(a) under the control and at the direction of the
Board and other such executive and managerial

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duties as may, from time to time, reasonably be assigned to him by the Board
that are consistent with such position. During the Employment Term, the
Executive may also be required to perform services for one or more affiliates of
the Company. During the Employment Term, the Executive shall be located in or
about Jacksonville, Florida and shall travel to such geographical locations as
may be appropriate from time to time to carry out the duties of the office as
outlined in this Section 2.

                  (c) Scope of Employment. During the Employment Term, the
Executive will devote such time, energy, skill and knowledge to the performance
of his duties for the Company and for the benefit of the Company as may be
necessary or required for the effective conduct and operation of the Business.
Furthermore, the Executive shall exercise due diligence and care in the
performance of his duties to the Company under this Agreement. Notwithstanding
the foregoing, during the Employment Term, the Executive may serve on civic or
charitable boards and may serve as an officer, director, shareholder, or limited
partner in any business venture so long as such activities do not interfere with
the performance of the Executive's duties under this Agreement and do not
compete with the Business.

         3. Employment Term. The term of employment shall begin on the
Commencement Date. Unless earlier terminated pursuant to Section 4, this
Agreement will expire on February 6, 2007 (the "Expiration Date"); provided,
however, that on the Expiration Date and each subsequent anniversary of the
Expiration Date, the Expiration Date shall automatically be extended by one
additional year unless either the Executive or the Company shall have given
written notice of expiration of this Agreement to the other party at least 180
days prior to the date of automatic renewal of this Agreement. The Commencement
Date through and including the Expiration Date (as so extended) is hereinafter
referred to as the "Employment Term."

         4. Termination.

                  (a) Death. The Executive's employment will terminate
automatically upon the Executive's death.

                  (b) Disability. Upon the good faith determination by the
Company that the Disability of the Executive has occurred, the Company may
terminate the Executive's employment under this Agreement by notice pursuant to
Section 4(e). During the period of incapacitation, the salary otherwise payable
to the Executive may, at the absolute discretion of the Board, be reduced by the
amount of any disability benefits or payments received by the Executive,
excluding health insurance benefits or other reimbursement of medical expenses
for the Executive.

                  (c) By the Company. The Company may terminate the Executive's
employment under this Agreement for Cause, or without Cause, by notice pursuant
to Section 4(e), subject to the severance obligations set forth in Section 8.

                  (d) By the Executive. The Executive may terminate his
employment under this Agreement for Good Reason, or without Good Reason, by
notice pursuant to Section 4(e).

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                  (e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than a termination upon the
Executive's death, which does not require notice) must be communicated by
written notice (the "Notice of Termination") to the other party given in
accordance with the notice provisions of this Agreement. The Notice of
Termination must (i) indicate the specific termination provision of this
Agreement relied upon; (ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated; and (iii) if the Termination Date
is other than the date of receipt of such Notice of Termination, specify the
Termination Date (which date shall be not more than 30 days after the date of
giving of such Notice of Termination). The failure by the Company or the
Executive to set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of the basis for termination will not waive any
right of such party hereunder or preclude such party from asserting such fact or
circumstance in enforcing his or its rights hereunder.

         5. Compensation. During the Employment Term, for all services rendered
by the Executive to the Company, the Company shall pay to the Executive:

                  (a) Base Salary. For services rendered, the Company shall pay
the Executive a salary of $175,000 per calendar year (such annual salary, as
adjusted from time to time pursuant to this Section 5(a), the "Base Salary"),
payable in accordance with the Company's normal payroll practices. The Board
shall conduct an annual review of the Executive's Base Salary. The Executive
shall be entitled to receive increases in the Base Salary, if any, that may be
determined by the Board or an authorized committee thereof in its sole
discretion. Any increases to the Base Salary shall be effective January 1 for
each calendar year of the Employment Term. In no event shall the Executive's
Base Salary be reduced without the Executive's consent, except as provided in
Section 4(c).

                  (b) Annual Incentive Compensation. In further consideration of
the Executive's service, the Executive shall be eligible to receive annual
incentive compensation awards ("Annual Incentive Compensation") as determined by
the Board or an authorized committee thereof in its sole discretion.

                  (c) Taxes. All compensation paid to the Executive shall be
subject to applicable employment, payroll and withholding taxes, including taxes
resulting from a determination that any portion of any benefits supplied to the
Executive may be reimbursing personal as well as business expenses.

         6. Employee Benefits.

                  (a) Benefits. The Executive shall receive group health/dental
insurance, life insurance, disability insurance and other similar benefits
available to the Company's executive officers. Benefits may be changed, modified
or revoked at the sole discretion of the Company. The Executive shall not be
deemed to have a vested interest in any of the Company's plans or programs. The
Executive may receive benefits not generally provided to Company employees from
time to time at the sole discretion of the Board or an authorized committee
thereof.

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                  (b) Vacation. The Executive is entitled to receive 20 business
days paid vacation annually for each calendar year of the Employment Term. Such
vacation shall be taken at such times that are consistent with the reasonable
business needs of the Company. All vacation shall be subject to the policies and
procedures of the Company.

                  (c) Fringe Benefits. The Executive shall receive fringe
benefits as such benefits may exist from time to time at the sole discretion of
the Board or any committee thereof.

         7. Business Expenses. The Executive is authorized to incur reasonable,
ordinary and necessary business expenses in the performance of the duties
outlined above during the Employment Term in accordance with policies
established by the Company. The Executive shall account to the Company for all
such expenses. The Company shall reimburse the Executive or pay the expenses in
accordance with the policies established by the Company.

         8. Compensation Upon Termination or Change of Control. In all events,
the Company will pay to the Executive all Base Salary and benefits accrued to
the Executive through and including the Termination Date.

                  (a) Termination Without Cause, For Good Reason or Upon a
Change of Control. Upon (i) the occurrence of the first event constituting a
Change of Control (the "Change of Control Date") and the termination or
non-renewal of Executive's employment during the Severance Period (other than
for Cause) or (ii) if the Executive's employment is terminated (x) by the
Company without Cause, (y) by reason of Disability or (z) by the Executive for
Good Reason (any event specified in the foregoing clauses (i) or (ii), a
"Severance Event"), the Company shall pay or provide to the Executive the
following:

                           (i) The Company shall pay to the Executive as
         severance pay and in lieu of any further compensation for periods
         subsequent to the Termination Date or the Change of Control Date, as
         the case may be, an amount in cash (the "Severance Benefit") equal to
         the sum of: (A) the product of 2.99 times the amount of the Base
         Salary; and (B) the full amount of any Annual Incentive Compensation
         that Executive was eligible to receive for the year during which the
         termination or non-renewal of this Agreement occurs.

                           (ii) During the Severance Period, the Company will
         provide or arrange to provide the Executive with Employee Benefits that
         are welfare benefits (but not share options, share purchase, share
         appreciation, dividend equivalent rights or similar compensatory
         benefits) substantially similar to those that the Executive was
         receiving or entitled to receive immediately prior to the Change of
         Control Date or the Termination Date, as the case may be. The Severance
         Period will be considered service with the Company for the purpose of
         determining service credits and benefits due and payable to the
         Executive under the Company's retirement income, supplemental executive
         retirement, and other benefit plans applicable to the Executive, the
         Executive's dependents or the Executive's beneficiaries immediately
         prior to the Change of Control Date or the Termination Date, as the
         case may be. If and to the extent that any benefit described in the
         immediately preceding sentence is not or cannot be paid or provided

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         under any policy, plan, program or arrangement of the Company, then the
         Company will itself pay or provide for the payment of such Employee
         Benefits to the Executive, and, if applicable, the Executive's
         dependents and beneficiaries. Employee Benefits otherwise receivable by
         the Executive pursuant to this Section 8(a)(ii) will be reduced to the
         extent comparable welfare benefits are actually received by the
         Executive from another employer during the Severance Period.

                           (iii) Vesting of benefits shall be treated as
         described in Section 8(d)(i).

                  (b) Termination By Reason of Disability. If the Employment
Term is terminated by reason of Disability, the Company shall pay to the
Executive as severance pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash equal to the Severance
Benefit. Vesting of benefits shall be treated as described in Section 8(d)(i).
The Executive shall continue to receive, so long as the Disability continues,
all benefits provided under any long-term disability program(s) of the Company
in effect at the time of such termination, subject to the terms and conditions
of any such program(s), as may be amended, changed, modified or terminated for
all employees of the Company.

                  (c) Payment of the Severance Benefit. The Company shall pay
the Severance Benefit to the Executive in a single lump sum in immediately
available funds, in United States Dollars, within five business days after the
Change of Control Date or the Termination Date, as applicable.

                  (d) Treatment of Award Grants.

                           (i) Vesting of Benefits. Notwithstanding any other
         provision of this Agreement, the Company's employee benefit plans, any
         agreement entered into under such plans, or any retirement, pension,
         profit sharing or other similar plan (collectively, the "Plans"), upon
         the occurrence of a Severance Event, all deferred or unvested portions
         of any award made to the Executive under any of the Plans shall
         automatically become fully vested as of the Termination Date or the
         Change of Control Date, as the case may be, and shall be in effect and
         redeemable by or payable to the Executive, or the Executive's
         designated beneficiary or estate, on the same conditions (other than
         vesting) as would have applied had the Severance Event not occurred.

                           (ii) Clarification Regarding Treatment of Award
         Grants. The Plans may contain language regarding the effects of certain
         changes of control of the Company or certain terminations of the
         Executive's employment. Notwithstanding such language in the Plans, for
         so long as this Agreement is in effect, the Company will be obligated,
         if the terms of this Agreement are more favorable in this regard than
         the terms of the Plans, to take the actions required under Section
         8(d)(i) upon the happening of the circumstances described therein.
         Notwithstanding the definition of "Change of Control," "Cause" or any
         other term relating to the vesting or exercise of awards made under any
         Plan that may appear in such Plan, for so long as this Agreement is in
         effect, the definitions and other provisions set forth in this
         Agreement relating thereto shall control and be binding on the Company
         and its affiliates.

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                  (e) Additional Payments.

                           (i) Notwithstanding anything in this Agreement to the
         contrary, in the event it is determined (as hereafter provided) that
         any right or interest that vests in the Executive, or any payment or
         distribution made by the Company to or for the benefit of the
         Executive, whether paid or payable or distributed or distributable
         pursuant to the terms of this Agreement or otherwise pursuant to or by
         reason of any other agreement, policy, Plan, program or arrangement,
         including without limitation any share option, share appreciation
         right, dividend equivalent right, restricted shares of similar right,
         the lapse or termination of any restriction on or the vesting or
         exercisability of any of the foregoing (any such right, interest,
         payment or distribution, a "Payment"), would be subject to the excise
         tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
         amended (the "Code") (or any successor provision thereto), by reason of
         being considered an "excess parachute payment," within the meaning of
         Section 280G of the Code (or any successor provision thereto) or to any
         similar tax imposed by state or local law, or any interest or penalties
         with respect to such tax (such tax or taxes, together with any such
         interest and penalties, being hereafter collectively referred to as the
         "Excise Tax"), then the Executive will be entitled to receive an
         additional payment or payments from the Company (collectively, a
         "Gross-Up Payment"). The Gross-Up Payment will be in an amount such
         that, after payment by the Executive of all taxes (including any
         interest or penalties imposed with respect to such taxes), including
         any Excise Tax imposed upon the Gross-Up Payment, the Executive will
         have received an amount of the Gross-Up Payment equal to the Excise Tax
         imposed upon the Payment.

                           (ii) Subject to the provisions of Section 8(e)(vi),
         all determinations required to be made under this Section 8(e),
         including whether an Excise Tax is payable by the Executive and the
         amount of such Excise Tax and whether a Gross-Up Payment is required to
         be paid by the Company to the Executive and the amount of such Gross-Up
         Payment, if any, will be made by a nationally recognized accounting
         firm (the "Accounting Firm") selected by the mutual written agreement
         of the Executive and the Company. The parties hereto will direct the
         Accounting Firm to submit its determination and detailed supporting
         calculations to both the Company and the Executive within 30 calendar
         days after the Executive's termination date, and any such other time or
         times as may be requested by the Company or the Executive. If the
         Accounting Firm determines that any Excise Tax is payable by the
         Executive, the Company will pay the required Gross-Up Payment to the
         Executive within five business days after receipt of such determination
         and calculations with respect to any payment to the Executive. If the
         Accounting Firm determines that no Excise Tax is payable by the
         Executive, it will, at the same time as it makes such determination,
         furnish the Company and the Executive an opinion that the Executive has
         substantial authority not to report any Excise Tax on the Executive's
         federal, state or local income or other tax return. As a result of the
         uncertainty in the application of Section 4999 of the Code (or any
         successor provision thereto) and the possibility of similar uncertainty
         regarding applicable state or local tax law at the time of any
         determination by the Accounting Firm hereunder, it is possible that
         Gross-Up Payments which will not have been made by the Company should
         have been

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         made (an "Underpayment"), consistent with the calculations required to
         be made hereunder. In the event that the Company exhausts or fails to
         pursue its remedies pursuant to Section 8(e)(vi) and the Executive
         thereafter is required to make a payment of any Excise Tax, the parties
         will direct the Accounting Firm to determine the amount of the
         Underpayment that has occurred and to submit its determination and
         detailed supporting calculations to both the Company and the Executive
         as promptly as possible. Any such Underpayment will be promptly paid by
         the Company to, or for the benefit of, the Executive within five
         business days after receipt of such determination and calculations.

                           (iii) The Company and the Executive will each provide
         the Accounting Firm access to and copies of any books, records and
         documents in the possession of the Company or the Executive, as the
         case may be, reasonably requested by the Accounting Firm, and otherwise
         cooperate with the Accounting Firm in connection with the preparation
         of and issuance of the determinations and calculations contemplated by
         Section 8(e)(ii). Any determination by the Accounting Firm as to the
         amount of the Gross-Up Payment will be binding upon the Company and the
         Executive.

                           (iv) The federal, state and local income or other tax
         returns filed by the Executive will be prepared and filed on a
         consistent basis with the determination of the Accounting Firm with
         respect to the Excise Tax payable by the Executive. The Executive will
         make proper payment of the amount of any Excise Payment and, at the
         request of the Company, provide to the Company true and correct copies
         (with any amendments) of the Executive's federal tax return as filed
         with the Internal Revenue Service and corresponding state and local tax
         returns, if relevant, as filed with the applicable taxing authority,
         and such other documents reasonably requested by the Company evidencing
         such payment. If, prior to the filing of the Executive's federal income
         tax return, or corresponding state or local tax return, if relevant,
         the Accounting Firm determines that the amount of the Gross-Up Payment
         should be reduced, the Executive will within five business days pay to
         the Company the amount of such reduction.

                           (v) The fees and expenses of the Accounting Firm for
         its services in connection with the determinations and calculations
         contemplated herein will be borne by the Company. If such fees and
         expenses are initially paid by the Executive, the Company will
         reimburse the Executive the full amount of such fees and expenses
         within five business days after receipt from the Executive of a
         statement therefor and reasonable evidence of the Executive's payment
         thereof.

                           (vi) The Executive will notify the Company in writing
         of any claim by the Internal Revenue Service or any other taxing
         authority that, if successful, would require the payment by the Company
         of a Gross-Up Payment. Such notification will be given as promptly as
         practicable but no later than 10 business days after the Executive
         actually receives notice of such claim and the Executive will further
         apprise the Company of the nature of such claim and the date on which
         such claim is requested to be paid (in each case, to the extent known
         by the Executive). The Executive will not pay such claim

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         prior to the earlier of (x) the expiration of the 30-calendar day
         period following the date on which the Executive gives such notice to
         the Company and (y) the date that any payment of amount with respect to
         such claim is due. If the Company notifies the Executive in writing
         prior to the expiration of such period that it desires to contest such
         claim, the Executive will:

                           (A)      provide the Company with any written records
                                    or documents in the Executive's possession
                                    relating to such claim reasonably requested
                                    by the Company;

                           (B)      take such action in connection with
                                    contesting such claim as the Company may
                                    reasonably request in writing from time to
                                    time, including without limitation accepting
                                    legal representation with respect to such
                                    claim by an attorney competent in respect of
                                    the subject matter and reasonably selected
                                    by the Company;

                           (C)      cooperate with the Company in good faith in
                                    order effectively to contest such claim; and

                           (D)      permit the Company to participate in any
                                    proceedings relating to such claims;

                  provided, however, that the Company will bear and pay directly
all costs and expenses (including interest and penalties) incurred in connection
with such contest and will indemnify and hold harmless the Executive, on an
after-tax basis, from and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing
provisions of this Section 8(e), the Company will control all proceedings taken
in connection with the contest of any claim contemplated by this Section
8(e)(vi) and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that the Executive may
participate therein at the Executive's own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive will prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction, and in one or more appellate courts, as the Company may
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and sue for a refund, the Company will advance the amount of
such payment to the Executive on an interest-free basis and will indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; provided, further, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount if claimed to be due is
limited solely to such contested amount. The Company's control of any such
contested claim will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive will be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

                                       11

<PAGE>

                           (vii) If, after the receipt by the Executive of an
         amount advanced by the Company pursuant to Section 8(e)(vi), the
         Executive receives any refund with respect to such claim, the Executive
         will (subject to the Company's complying with the requirements of
         Section 8(e)(vi)) pay to the Company the amount of such refund
         (together with any interest paid or credited thereon after taxes
         applicable thereto) within 30 calendar days after such receipt and the
         Company's satisfaction of all accrued obligations under this Agreement.
         If, after the receipt by the Executive of any amount advanced by the
         Company pursuant to Section 8(e)(vi), a determination is made that the
         Executive will not be entitled to any refund with respect to such claim
         and the Company does not notify the Executive in writing of its intent
         to contest such determination prior to the expiration of 30 calendar
         days after such determination, then such advance will be forgiven and
         will not be required to be repaid and the amount of any such advance
         will offset, to the extent thereof, the amount of Gross-Up Payment
         required to be paid by the Company to the Executive pursuant to this
         Section 8(e).

                           (viii) Notwithstanding any other provision of this
         Agreement, the Company shall pay to the Executive an amount equal to
         the Base Salary upon the occurrence of: (x) the Expiration Date; and
         (y) any failure for any reason of the Expiration Date to be
         automatically extended by one additional year as prescribed by Section
         3 of this Agreement.

                  (f) Nature of Payments. The amounts due under this Section 8
are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty. Such amounts are in full
satisfaction of all claims that the Executive may have in respect of his
employment by the Company or its affiliates and are provided as the sole and
exclusive benefits to be provided to the Executive in respect of his termination
of Employment from the Company. Notwithstanding any other provisions herein, it
shall be a condition precedent to the Company making any payments pursuant to
this Section 8 that the Executive has executed and delivered to the Company the
release contemplated pursuant to Section 12.

                  (g) No Mitigation or Set-Off. The Executive will not be
required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment. There will be no right of set-off or counterclaim in
respect of any claim, debt of obligation against any payment to or benefit for
the Executive provided for in this Agreement, except as expressly provided
herein.

         9. Confidentiality and Non-Competition.

                  (a) Confidentiality.

                           (i) During the Employment Term the Company agrees to
         provide the Executive with access to Confidential Information.

                           (ii) The Executive acknowledges that the Confidential
         Information is valuable and proprietary to the Company or to third
         parties that have entrusted the

                                       12

<PAGE>

         Company and/or its subsidiaries with such Confidential Information. The
         Executive agrees, except as required for the Executive to fulfill his
         duties hereunder, that the Executive shall not use, publish,
         disseminate or otherwise disclose any Confidential Information, no
         matter when learned or accessed, without the prior written consent of
         the Company.

                           (iii) All Confidential Information shall be the
         exclusive property of the Company and the Executive shall have no
         rights in or to the Confidential Information upon any termination of
         this Agreement or his employment with the Company. Upon the termination
         of the Executive's employment, the Executive shall immediately deliver
         to the Company all plans, designs, drawings, specifications, listings,
         manuals, records, notebooks and similar repositories of or documents
         containing Confidential Information, including all copies, then in the
         Executive's possession or control, whether prepared by the Executive or
         others. Upon such termination the Executive shall retain no copies of
         any such documents.

                           (iv) The provisions of this Section 9(a) shall
         survive the termination of this Agreement indefinitely.

                  (b) Restriction on Competitive Employment.

                           (i) In consideration of the numerous mutual promises
         contained in this Agreement, including, without limitation, those
         involving the Confidential Information, compensation, termination and
         arbitration, and in order to protect the Confidential Information and
         to reduce the likelihood of irreparable damage that would occur in the
         event such information is provided to or used by a competitor of the
         Company, during the Employment Term and, for a period of six months
         following the Termination Date in the case of a (x) termination by the
         Company for Cause, (y) a termination due to Disability or (z) a
         termination by the Executive other than for Good Reason (the
         "Non-Competition Period"), absent the Company's prior written approval,
         the Executive shall not, as an owner, part-owner, shareholder, partner,
         director, trust manager, trustee, principal, agent, employee,
         consultant, member, contractor or otherwise, within the United States,
         directly or indirectly engage or participate in activities relating to,
         or render services to or invest in any firm or business engaged or
         about to become engaged in, the Business.

                           (ii) Notwithstanding the foregoing, the Executive may
         make passive investments in an enterprise engaged in the Business, the
         shares of ownership of which are publicly traded, if the Executive's
         investment constitutes less than 2% of the total equity of such
         enterprise.

                           (iii) If, during any period within the
         Non-Competition Period, the Executive is not in compliance with the
         terms of this Section 9(b), the Company shall be entitled to, among
         other remedies, compliance by the Executive with the terms of this
         Section 9(b) for an additional period equal to the period of such
         noncompliance. For purposes of this Agreement, the term
         "Non-Competition Period" shall also include this additional period. The
         Executive hereby acknowledges that the geographic boundaries,

                                       13

<PAGE>

         scope of prohibited activities and the time duration of the provisions
         of this Section 9(b) are reasonable and are no broader than are
         necessary to protect the legitimate business interests of the Company.

                           (iv) The provisions of this Section 9(b) shall
         survive the termination of the Executive's employment for the duration
         of the Non-Competition Period.

                           (v) The Company and the Executive agree and stipulate
         that the agreements and covenants not to compete contained in this
         Section 9(b) are fair and reasonable in light of all of the facts and
         circumstances of the relationship between the Executive and the
         Company; however, the Executive and the Company are aware that in
         certain circumstances courts have refused to enforce certain terms of
         agreements not to compete. Therefore, in furtherance of, and not in
         derogation of the provisions of this Section 9(b), the Company and the
         Executive agree that in the event a court should decline to enforce any
         provision of this Section 9(b), that this Section 9(b) shall be deemed
         to be modified or reformed to restrict the Executive's competition with
         the Company or its affiliates to the maximum extent, as to time,
         geography and business scope, that the court shall find enforceable;
         provided, however, in no event shall the provisions of this Section
         9(b) be deemed to be more restrictive to the Executive than those
         contained herein.

                  (c) Inducement/Enticement. In order to prevent the Executive
from violating the provisions of Section 9(b), during the Employment Term and,
in the case of (x) a termination by the Company for Cause, (y) a termination due
to Disability or (z) a termination by the Executive other than for Good Reason,
during the Non-Competition Period, the Executive shall not, directly or
indirectly:

                           (i) induce, or attempt to induce, any employees or
         agents of, or consultants of or to, the Company or any subsidiary of
         the Company to do anything from which the Executive is restricted by
         reason of Sections 9(a) or (b); or

                           (ii) offer or aid others to offer employment to or
         recruit or solicit anyone who is an employee or agent of, or consultant
         of or to, the Company or a subsidiary of the Company at the time of
         termination of the Executive, unless such person's employment was
         terminated by the Company or any such subsidiary.

                  In the case of (x) a termination by the Company for Cause, (y)
a termination due to Disability or (z) a termination by the Executive other than
for Good Reason, the provisions of this Section 9(c) shall survive the
termination of the Executive's employment for the duration of the
Non-Competition Period.

                  (d) Injunctive Relief. The Executive acknowledges that a
breach of any of the agreements contained in this Section 9 will give rise to
irreparable injury to the Company, inadequately compensable in damages.
Accordingly, the Company shall be entitled to injunctive relief to prevent or
cure breaches or threatened breaches of the provisions of this Section 9 and to
enforce specific performance of the terms and provisions hereof in any court of
competent

                                       14

<PAGE>

jurisdiction, in addition to any other legal or equitable remedies that may be
available. The Executive further acknowledges and agrees that in the event of
the termination of this Agreement, his experience and capabilities are such that
he can obtain employment in business activities that are of a different or
noncompeting nature with his activities as an employee of the Company and that
the enforcement of a remedy hereunder by way of injunction shall not prevent the
Executive from earning a reasonable livelihood. The Executive further
acknowledges and agrees that the covenants contained herein are necessary for
the protection of the Company's legitimate business interests and are reasonable
in scope and content. The Executive also acknowledges that the Company would not
enter into this Agreement or agree to provide him with access to its
Confidential Information without the Executive's promises contained in this
Section 9.

         10. Remedies for the Company. The termination of this Agreement by the
Company for Cause shall not be deemed to be a waiver by the Company of any
breach by the Executive of this Agreement or any other obligation owed the
Company, and, notwithstanding such a termination, the Executive shall be liable
for all damages attributable to such a breach.

         11. Remedies for the Executive.

                  (a) The termination of this Agreement by the Executive for
Good Reason shall not be deemed to be a waiver by the Executive of any breach by
the Company of this Agreement or any other obligation owed the Executive, and,
notwithstanding such a termination, the Company shall be liable for all damages
attributable to such a breach.

                  (b) In the event that the Executive is terminated for Cause
and it is ultimately determined that the Company lacked Cause, (i) the
termination shall be treated as a termination other than for Cause; (ii) the
Executive shall have the right to seek remedy for a breach of this Agreement by
the Company, including, but not limited to, any other such damages as may be
suffered and/or incurred by the Executive, the Executive's costs incurred during
the dispute and reasonable attorneys' fees in connection with such dispute; and
(iii) the Executive shall receive all Severance Benefits.

         12. Full Satisfaction; Waiver and Release. As a condition to receiving
the payments and benefits described in Section 8, the Executive and the Company
shall execute a document in form reasonably acceptable to them, releasing and
waiving any and all claims, causes of actions and the like against the other
party and its respective successors, subsidiaries, affiliates, shareholders,
officers, directors, managers, agents and employees, regarding all matters
relating to the Executive's service as an employee of the Company, its
subsidiaries or any of their affiliates and the termination of such
relationship. Such claims include, without limitation, any claims arising under
the Age Discrimination in Employment Act of 1967, as amended; Title VII of the
Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended;
the Equal Pay Act of 1962; the Americans with Disabilities Act of 1990; the
Family and Medical Leave Act, as amended; the Employee Retirement Income
Security Act of 1974, as amended; or any other federal, state or local statute
or ordinance, but exclude any claims that arise out of an asserted breach of the
terms of this Agreement and any benefits payable to the Executive under the
Company's benefit plans, practices and programs in which he participates.

                                       15

<PAGE>

         13. No Waiver. No waiver or non-action by either party with respect to
any breach by the other party of any provision of this Agreement, nor the waiver
or non-action with respect to the provisions of any similar agreement with other
employees or the breach thereof, shall be deemed or construed to be a waiver of
any succeeding breach of such provision, or as a waiver of the provision itself.

         14. Invalid Provisions. Should any portion of this Agreement be
adjusted or held invalid, unenforceable or void, such holding shall not have the
effect of invalidating or voiding the remainder of this Agreement and the
parties hereby agree that the portion so held invalid, unenforceable, or void
shall, if possible, be deemed amended or reduced in scope, or otherwise be
stricken from this Agreement, to the extent required for the purposes of
validity and enforcement thereof.

         15. Successor and Assigns. Neither the Executive nor the Company may
assign its rights, duties, or obligations hereunder without consent of the
other.

         16. Survival. The provisions of Sections 9 and 22 of this Agreement
shall survive the Executive's termination of employment. Other provisions of
this Agreement shall survive any termination of the Executive's employment to
the extent necessary to ensure the preservation of each party's respective
rights and obligations.

         17. Prior Agreements. This Agreement incorporates the entire agreement
between both parties with respect to the subject matter hereof and supersedes
all other prior agreements (oral or written), documents or other instruments
with respect to the matters covered herein.

         18. Governing Law. This Agreement shall be governed by, and interpreted
in accordance with the internal substantive laws of the State of Florida,
without giving effect to the principles of conflicts of law. Each party hereto
hereby irrevocably submits itself to the exclusive personal jurisdiction of the
Federal and State courts sitting in the State of Florida, and hereby waives any
claims it may have as to inconvenient forum.

         19. No Oral Modifications. This Agreement may not be changed or
terminated orally, and no change, termination or waiver of this Agreement or of
any of the provisions herein contained shall be binding unless made in writing
and signed by both parties, and, in the case of the Company, by a person
designated by the Board or any committee thereof. Without limiting the
foregoing, any change or changes, from time to time, in the Executive's salary
or duties or both shall not be, nor be deemed to be, a change, termination or
waiver of this Agreement or of any of the provisions herein contained.

         20. Notices. All notices and other communications required or permitted
hereunder shall be made in writing, and shall be deemed properly given if
delivered personally, mailed by certified mail, postage prepaid and return
receipt requested, sent by facsimile, or sent by Express Mail or Federal Express
or other nationally recognized express delivery service, as follows:

                                       16

<PAGE>

                  If to the Company:

                  Sunset Financial Resources, Inc.
                  4231 Walnut Bend
                  Jacksonville, Florida  32257
                  Attention: Chairman of the Board

                  If to the Executive:

                  Michael L. Pannell
                  Sunset Financial Resources, Inc.
                  4231 Walnut Bend
                  Jacksonville, Florida  32257

                  Notice given by hand, Express Mail, Federal Express, or other
such express delivery service shall be effective upon actual receipt. Notice
given by facsimile transmission shall be effective upon actual receipt during
the recipient's customary business hours, or at the beginning of the recipient's
next business day after receipt if not received during the recipient's customary
business hours. All notices sent by facsimile transmission shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.

                  Any party may change any address to which notice shall be
given to it by giving notice as provided above of such change in address.

         21. Executive's Representation and Warranties. The Executive represents
and warrants that he is legally free to make and perform this Agreement, that he
has no obligation to any other person or entity that would affect or conflict
with any of his obligations hereunder, and that the complete performance of his
obligations hereunder will not violate any law, regulation, order, or decree of
any governmental or jurisdictional body or contract by which he is bound.

         22. Entire Agreement. The parties expressly agree that this Agreement
is contractual in nature and not a mere recital, and that it contains all the
terms and conditions of the agreement between the parties with respect to the
matters set forth herein. All prior negotiations, agreements, arrangements,
understandings and statements between the parties relating to the matters set
forth herein that have occurred at any time or contemporaneously with the
execution of this Agreement are superseded and merged into this completely
integrated Agreement. The Recitals set forth above shall be deemed to be part of
this Agreement.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                       17

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                  THE COMPANY:

                                  SUNSET FINANCIAL RESOURCES, INC.,
                                  a Maryland corporation

                                  By: /s/ JOHN BERT WATSON
                                      ---------------------------------------
                                      John Bert Watson
                                      President and Chief Executive Officer

                                  THE EXECUTIVE:

                                  MICHAEL L. PANNELL

                                  /s/ MICHAEL L. PANNELL
                                  -------------------------------------------

                                       18<PAGE>

                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement"), dated as of February 6,
2004 (the "Commencement Date"), by and between Sunset Financial Resources, Inc.,
a Maryland real estate investment trust (the "Company"), and Byron Boston, an
individual (the "Executive").

         WHEREAS, the Executive and the Company deem it in their respective best
interests to enter into an employment agreement for the Executive to serve as
the Vice Chairman and Executive Vice President - Chief Investment Officer of the
Company on the terms and subject to the conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:

         1. Definitions. For purposes of this Agreement, the following terms
shall have the following definitions:

               (a) "Business" shall mean the acquisition and management of
portfolios of residential and commercial mortgage loans in the United States.

               (b) "Cause" shall mean any one or more of the following:

                  (i) the continued and intentional failure by the Executive to
         substantially perform his duties with the Company, other than any such
         failure resulting from the Executive's Disability; provided, however,
         that no termination of the Executive's employment shall be for Cause as
         set forth in this clause (i) until (x) there shall have been delivered
         to the Executive written notice setting forth that the Executive
         committed the conduct set forth in this clause (i) and specifying the
         particulars thereof in reasonable detail and (y) the Executive shall
         have been provided an opportunity to present his position to the Board
         of Directors of the Company (the "Board"), either in writing or in
         person;

                  (ii) a breach by the Executive of his fiduciary duties as an
         officer of the Company, or a material breach by the Executive of any
         written rule, regulation, policy or procedure of the Company;

                  (iii) the Executive's excessive absenteeism not related to
         illness;

                  (iv) the Executive's conviction of or plea of nolo contendere
         to a felony or final non-appealable conviction of any other crime that
         incarcerates the Executive for a period of one year or longer; or

                  (v) the Executive's commission of a fraudulent act,
         embezzlement, theft or felony, in any case, whether or not involving
         the Company or the Executive's performance of his duties under this
         Agreement, that, in the reasonable opinion of the Board, renders the
         Executive's continued employment harmful to the Company.

<PAGE>

               Notwithstanding the foregoing, no failure to perform by the
Executive after a Notice of Termination is given by the Executive shall
constitute Cause for purposes of this Agreement.

               (c) "Change of Control" shall mean any one or more of the
following:

                  (i) at any time during any 12-month period, the Board of
         Directors of the Company in office at the beginning of such period
         shall have ceased to constitute a majority of the Board without the
         approval of the nomination of such directors by a majority of the Board
         consisting of directors who were serving at the beginning of such
         period;

                  (ii) any person (as defined in Section 13(d)(3) or Section
         14(d)(2) of the Exchange Act) (other than the Company, any of its
         subsidiaries or any trustee, fiduciary or other person holding
         securities under any employee share ownership plan or any other
         employee benefit plan of the Company or any of its subsidiaries),
         together with its affiliates and associates (as such terms are defined
         in Rule 12b-2 under the Exchange Act) shall have become the beneficial
         owner (as defined in Rule 13d-3 of the Exchange Act) of securities
         representing 25% or more of the combined voting power of the Voting
         Shares;

                  (iii) the Company shall have filed a schedule, report or proxy
         statement with the Securities and Exchange Commission pursuant to the
         Exchange Act disclosing that a change in control of the Company has
         occurred;

                  (iv) a merger or consolidation of the Company shall have been
         consummated, other than (x) a merger or consolidation that would result
         in the Voting Shares outstanding immediately prior thereto continuing
         to represent (either by remaining outstanding or by being converted
         into voting securities of the surviving entity) at least 50% of the
         combined voting power of the voting securities of the surviving entity
         or (y) a merger or consolidation effected to implement a
         recapitalization of the Company (or similar transaction) in which no
         person acquires more than 50% of the Voting Shares;

                  (v) any person, other than a subsidiary of the Company, shall
         have acquired more than 50% of the combined assets of the Company and
         its subsidiaries; or

                  (vi) the shareholders of the Company shall have approved the
         complete liquidation or dissolution of the Company.

               (d) "Confidential Information" shall mean all confidential
information of the Company and/or its subsidiaries, excluding any information
that is available in the public domain, and including trade secrets and, by way
of illustration, whether or not labeled or otherwise identified as
"confidential," the Company's:

                  (i) acquisition, expansion, marketing, financial and other
         business strategies, information and plans;

                                       2
<PAGE>

                  (ii) compilations of data;

                  (iii) computer programs and/or records;

                  (iv) confidential information developed by consultants and
         contractors;

                  (v) employee information; and

                  (vi) manuals, memoranda, projections and minutes.

               (e) "Disability" shall mean the physical or mental incapacity of
the Executive that, even with reasonable accommodation, has prevented the
execution of the duties of his office, as outlined in Section 2, for three
consecutive months or for more than 180 business days in the aggregate in any
18-month period and that, in either case, in the determination of the Board
after consultation with a medical doctor licensed to practice medicine in the
State of Florida appointed by the Board and the Executive, may be expected to
prevent the Executive for any period of time thereafter from devoting
substantial time and energies to the duties of his office, as outlined in
Section 2. The Executive agrees to submit to reasonable requests for medical
examinations to determine whether a Disability exists.

               (f) "Employee Benefits" shall mean the perquisites, benefits and
service credit for benefits as provided under any and all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
the Executive is entitled to participate, including, without limitation, any
share option, share purchase, share appreciation, dividend equivalent rights,
savings, pension, supplemental executive retirement or other retirement income
or welfare benefit, deferred compensation, incentive compensation, group or
other life, health, medical/hospital or other insurance (whether funded by
actual insurance or self-insured by the Company), disability, salary
continuation, expense reimbursement, and other employee benefit policies, plans,
programs or arrangements that may now exist or any equivalent successor
policies, plans, programs or arrangements that may be adopted hereafter by the
Company, providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a Termination
Date or Change of Control Date, as the case may be.

               (g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

               (h) "Good Reason" shall mean any one or more of the following:

                  (i) a reduction by the Company without the Executive's consent
         in the Executive's position, duties, responsibilities or status with
         the Company that represents a substantial adverse change from his
         position, duties, responsibilities or status, or a removal of the
         Executive from or any failure to reelect the Executive to any of the
         positions referred to in Section 2, but specifically excluding any
         action in connection with the termination of the Executive's employment
         for death, Disability, Cause or as a result of a Change of Control or
         by the Executive for normal retirement;

                                       3
<PAGE>

                  (ii) a reduction by the Company without the Executive's
         consent of the Base Salary;

                  (iii) a relocation of the Executive by the Company without the
         Executive's consent to a location more than 25 miles from the
         Jacksonville, Florida metropolitan area, other than for travel
         reasonably required in the performance of the Executive's
         responsibilities;

                  (iv) any material breach by the Company of any provision of
         this Agreement or any other agreement between the Company or any of its
         subsidiaries and the Executive that, in any case, is not cured within
         14 days of written notice to the Company of such breach;

                  (v) the insolvency of or the filing (by any party, including
         the Company, but excluding the Executive) of a petition for bankruptcy
         of the Company, which petition is not dismissed within 60 days; or

                  (vi) the failure by the Company to obtain the assumption of
         this Agreement by any successor or assign of the Company.

               (i) "Severance Period" shall mean the period of time commencing
on the Change of Control Date or the Termination Date, as the case may be, and
ending on the first anniversary thereof.

               (j) "Termination Date" shall mean (i) in the case of the
Executive's death, his date of death; (ii) in the case of a termination by the
Executive for Good Reason, the last day of his employment; and (iii) in all
other cases, the date specified in the Notice of Termination (as defined below)
or, if no Notice of Termination is sent, the last day of his employment;
provided, however, that if the Executive's employment is terminated by the
Company due to Disability, the date specified in the Notice of Termination shall
be the 30th day after receipt of the Notice of Termination by the Executive,
provided that the Executive shall not have returned to the full-time performance
of his duties within 30 days after such receipt.

               (k) "Voting Shares" shall mean the securities of the Company
entitled to vote generally in the election of directors of the Company.

         2. Employment and Duties.

               (a) Employment. Pursuant to the terms and subject to the
conditions of this Agreement, the Company agrees to employ the Executive during
the Employment Term (as defined below) as Vice Chairman and Executive Vice
President - Chief Investment Officer of the Company, reporting to the Chairman,
President and Chief Executive Officer and the Board, and the Executive accepts
such employment.

               (b) Duties. During the Employment Term, the Executive will
perform the executive and managerial duties customarily associated with the
office set forth in Section 2(a)

                                       4
<PAGE>

under the control and at the direction of the Board and other such executive and
managerial duties as may, from time to time, reasonably be assigned to him by
the Board that are consistent with such position. During the Employment Term,
the Executive may also be required to perform services for one or more
affiliates of the Company. During the Employment Term, the Executive shall be
located in or about Jacksonville, Florida and shall travel to such geographical
locations as may be appropriate from time to time to carry out the duties of the
office as outlined in this Section 2.

               (c) Scope of Employment. During the Employment Term, the
Executive will devote such time, energy, skill and knowledge to the performance
of his duties for the Company and for the benefit of the Company as may be
necessary or required for the effective conduct and operation of the Business.
Furthermore, the Executive shall exercise due diligence and care in the
performance of his duties to the Company under this Agreement. Notwithstanding
the foregoing, during the Employment Term, the Executive may serve on civic or
charitable boards and may serve as an officer, director, shareholder, or limited
partner in any business venture so long as such activities do not interfere with
the performance of the Executive's duties under this Agreement and do not
compete with the Business.

         3. Employment Term. The term of employment shall begin on the
Commencement Date. Unless earlier terminated pursuant to Section 4, this
Agreement will expire on February 6, 2007 (the "Expiration Date"); provided,
however, that on the Expiration Date and each subsequent anniversary of the
Expiration Date, the Expiration Date shall automatically be extended by one
additional year unless either the Executive or the Company shall have given
written notice of expiration of this Agreement to the other party at least 180
days prior to the date of automatic renewal of this Agreement. The Commencement
Date through and including the Expiration Date (as so extended) is hereinafter
referred to as the "Employment Term."

         4. Termination.

               (a) Death. The Executive's employment will terminate
automatically upon the Executive's death.

               (b) Disability. Upon the good faith determination by the Company
that the Disability of the Executive has occurred, the Company may terminate the
Executive's employment under this Agreement by notice pursuant to Section 4(e).
During the period of incapacitation, the salary otherwise payable to the
Executive may, at the absolute discretion of the Board, be reduced by the amount
of any disability benefits or payments received by the Executive, excluding
health insurance benefits or other reimbursement of medical expenses for the
Executive.

               (c) By the Company. The Company may terminate the Executive's
employment under this Agreement for Cause, or without Cause, by notice pursuant
to Section 4(e), subject to the severance obligations set forth in Section 8.

               (d) By the Executive. The Executive may terminate his employment
under this Agreement for Good Reason, or without Good Reason, by notice pursuant
to Section 4(e).

                                       5
<PAGE>

               (e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than a termination upon the
Executive's death, which does not require notice) must be communicated by
written notice (the "Notice of Termination") to the other party given in
accordance with the notice provisions of this Agreement. The Notice of
Termination must (i) indicate the specific termination provision of this
Agreement relied upon; (ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated; and (iii) if the Termination Date
is other than the date of receipt of such Notice of Termination, specify the
Termination Date (which date shall be not more than 30 days after the date of
giving of such Notice of Termination). The failure by the Company or the
Executive to set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of the basis for termination will not waive any
right of such party hereunder or preclude such party from asserting such fact or
circumstance in enforcing his or its rights hereunder.

         5. Compensation. During the Employment Term, for all services rendered
by the Executive to the Company, the Company shall pay to the Executive:

               (a) Base Salary. For services rendered, the Company shall pay the
Executive a salary of $300,000 per calendar year (such annual salary, as
adjusted from time to time pursuant to this Section 5(a), the "Base Salary"),
payable in accordance with the Company's normal payroll practices. The Board
shall conduct an annual review of the Executive's Base Salary. The Executive
shall be entitled to receive increases in the Base Salary, if any, that may be
determined by the Board or an authorized committee thereof in its sole
discretion. Any increases to the Base Salary shall be effective January 1 for
each calendar year of the Employment Term. In no event shall the Executive's
Base Salary be reduced without the Executive's consent, except as provided in
Section 4(c).

               (b) Annual Incentive Compensation. In further consideration of
the Executive's service, the Executive shall be eligible to receive annual
incentive compensation awards ("Annual Incentive Compensation") as determined by
the Board or an authorized committee thereof in its sole discretion.

               (c) Taxes. All compensation paid to the Executive shall be
subject to applicable employment, payroll and withholding taxes, including taxes
resulting from a determination that any portion of any benefits supplied to the
Executive may be reimbursing personal as well as business expenses.

               (d) Relocation Expenses. The Company shall pay the Executive the
sum of $25,000 for relocation expenses. In addition, the Company shall reimburse
the Executive for all reasonable relocation expenses incurred by the Executive,
including but not limited to real estate commissions and temporary housing
costs, to the extent those expenses exceed $25,000. The Executive shall present
appropriate documentation to the Company in support of any reimbursement request
hereunder.

               (e) Attorneys' Fees. The Company shall reimburse the Executive
for the fees of his legal counsel up to $10,000 incurred in negotiating
Executive's separation from

                                       6
<PAGE>

employment with his former employer and in advising him with respect to his
position with the Company.

         6. Employee Benefits.

               (a) Benefits. The Executive shall receive group health/dental
insurance, life insurance, disability insurance and other similar benefits
available to the Company's executive officers. Benefits may be changed, modified
or revoked at the sole discretion of the Company. The Executive shall not be
deemed to have a vested interest in any of the Company's plans or programs. The
Executive may receive benefits not generally provided to Company employees from
time to time at the sole discretion of the Board or an authorized committee
thereof.

               (b) Vacation. The Executive is entitled to receive 20 business
days paid vacation annually for each calendar year of the Employment Term. Such
vacation shall be taken at such times that are consistent with the reasonable
business needs of the Company. All vacation shall be subject to the policies and
procedures of the Company.

               (c) Fringe Benefits. The Executive shall receive fringe benefits
as such benefits may exist from time to time at the sole discretion of the Board
or any committee thereof.

               (d) Stock Options. Subject to the completion of the initial
public offering of the Company's common stock (the "IPO"), the Company shall
grant the Executive options to purchase 50,000 shares of the Company's common
stock at an exercise price per share equal to the IPO price per share, subject
to the terms and conditions of the 2003 Share Incentive Plan and related stock
option agreement.

               (e) Restricted Stock. Subject to the completion of the IPO, the
Company shall grant the Executive 5,000 shares of restricted stock under the
2003 Share Incentive Plan, subject to the terms and conditions of that plan and
the related grant document.

         7. Business Expenses. The Executive is authorized to incur reasonable,
ordinary and necessary business expenses in the performance of the duties
outlined above during the Employment Term in accordance with policies
established by the Company. The Executive shall account to the Company for all
such expenses. The Company shall reimburse the Executive or pay the expenses in
accordance with the policies established by the Company.

         8. Compensation Upon Termination or Change of Control. In all events,
the Company will pay to the Executive all Base Salary and benefits accrued to
the Executive through and including the Termination Date.

               (a) Termination Without Cause, For Good Reason or Upon a Change
of Control. Upon (i) the occurrence of the first event constituting a Change of
Control (the "Change of Control Date") and the termination or non-renewal of
Executive's employment during the Severance Period (other than for Cause) or
(ii) if the Executive's employment is terminated (x) by the Company without
Cause, (y) by reason of Disability or (z) by the

                                       7
<PAGE>

Executive for Good Reason (any event specified in the foregoing clauses (i) or
(ii), a "Severance Event"), the Company shall pay or provide to the Executive
the following:

                  (i) The Company shall pay to the Executive as severance pay
         and in lieu of any further compensation for periods subsequent to the
         Termination Date or the Change of Control Date, as the case may be, an
         amount in cash (the "Severance Benefit") equal to the sum of: (A) the
         product of 2.99 times the amount of the Base Salary; and (B) the full
         amount of any Annual Incentive Compensation that Executive was eligible
         to receive for the year during which the termination or non-renewal of
         this Agreement occurs.

                  (ii) During the Severance Period, the Company will provide or
         arrange to provide the Executive with Employee Benefits that are
         welfare benefits (but not share options, share purchase, share
         appreciation, dividend equivalent rights or similar compensatory
         benefits) substantially similar to those that the Executive was
         receiving or entitled to receive immediately prior to the Change of
         Control Date or the Termination Date, as the case may be. The Severance
         Period will be considered service with the Company for the purpose of
         determining service credits and benefits due and payable to the
         Executive under the Company's retirement income, supplemental executive
         retirement, and other benefit plans applicable to the Executive, the
         Executive's dependents or the Executive's beneficiaries immediately
         prior to the Change of Control Date or the Termination Date, as the
         case may be. If and to the extent that any benefit described in the
         immediately preceding sentence is not or cannot be paid or provided
         under any policy, plan, program or arrangement of the Company, then the
         Company will itself pay or provide for the payment of such Employee
         Benefits to the Executive, and, if applicable, the Executive's
         dependents and beneficiaries. Employee Benefits otherwise receivable by
         the Executive pursuant to this Section 8(a)(ii) will be reduced to the
         extent comparable welfare benefits are actually received by the
         Executive from another employer during the Severance Period.

                  (iii) Vesting of benefits shall be treated as described in
         Section 8(d)(i).

               (b) Termination By Reason of Disability. If the Employment Term
is terminated by reason of Disability, the Company shall pay to the Executive as
severance pay and in lieu of any further compensation for periods subsequent to
the Termination Date an amount in cash equal to the Severance Benefit. Vesting
of benefits shall be treated as described in Section 8(d)(i). The Executive
shall continue to receive, so long as the Disability continues, all benefits
provided under any long-term disability program(s) of the Company in effect at
the time of such termination, subject to the terms and conditions of any such
program(s), as may be amended, changed, modified or terminated for all employees
of the Company.

               (c) Payment of the Severance Benefit. The Company shall pay the
Severance Benefit to the Executive in a single lump sum in immediately available
funds, in United States Dollars, within five business days after the Change of
Control Date or the Termination Date, as applicable.

                                       8
<PAGE>

               (d) Treatment of Award Grants.

                  (i) Vesting of Benefits. Notwithstanding any other provision
         of this Agreement, the Company's employee benefit plans, any agreement
         entered into under such plans, or any retirement, pension, profit
         sharing or other similar plan (collectively, the "Plans"), upon the
         occurrence of a Severance Event, all deferred or unvested portions of
         any award made to the Executive under any of the Plans shall
         automatically become fully vested as of the Termination Date or the
         Change of Control Date, as the case may be, and shall be in effect and
         redeemable by or payable to the Executive, or the Executive's
         designated beneficiary or estate, on the same conditions (other than
         vesting) as would have applied had the Severance Event not occurred.

                  (ii) Clarification Regarding Treatment of Award Grants. The
         Plans may contain language regarding the effects of certain changes of
         control of the Company or certain terminations of the Executive's
         employment. Notwithstanding such language in the Plans, for so long as
         this Agreement is in effect, the Company will be obligated, if the
         terms of this Agreement are more favorable in this regard than the
         terms of the Plans, to take the actions required under Section 8(d)(i)
         upon the happening of the circumstances described therein.
         Notwithstanding the definition of "Change of Control," "Cause" or any
         other term relating to the vesting or exercise of awards made under any
         Plan that may appear in such Plan, for so long as this Agreement is in
         effect, the definitions and other provisions set forth in this
         Agreement relating thereto shall control and be binding on the Company
         and its affiliates.

               (e) Additional Payments.

                  (i) Notwithstanding anything in this Agreement to the
         contrary, in the event it is determined (as hereafter provided) that
         any right or interest that vests in the Executive, or any payment or
         distribution made by the Company to or for the benefit of the
         Executive, whether paid or payable or distributed or distributable
         pursuant to the terms of this Agreement or otherwise pursuant to or by
         reason of any other agreement, policy, Plan, program or arrangement,
         including without limitation any share option, share appreciation
         right, dividend equivalent right, restricted shares of similar right,
         the lapse or termination of any restriction on or the vesting or
         exerciseability of any of the foregoing (any such right, interest,
         payment or distribution, a "Payment"), would be subject to the excise
         tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
         amended (the "Code") (or any successor provision thereto), by reason of
         being considered an "excess parachute payment," within the meaning of
         Section 280G of the Code (or any successor provision thereto) or to any
         similar tax imposed by state or local law, or any interest or penalties
         with respect to such tax (such tax or taxes, together with any such
         interest and penalties, being hereafter collectively referred to as the
         "Excise Tax"), then the Executive will be entitled to receive an
         additional payment or payments from the Company (collectively, a
         "Gross-Up Payment"). The Gross-Up Payment will be in an amount such
         that, after payment by the Executive of all taxes (including any
         interest or penalties imposed with respect to such taxes), including
         any Excise Tax imposed upon

                                       9
<PAGE>

         the Gross-Up Payment, the Executive will have received an amount of the
         Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

                  (ii) Subject to the provisions of Section 8(e)(vi), all
         determinations required to be made under this Section 8(e), including
         whether an Excise Tax is payable by the Executive and the amount of
         such Excise Tax and whether a Gross-Up Payment is required to be paid
         by the Company to the Executive and the amount of such Gross-Up
         Payment, if any, will be made by a nationally recognized accounting
         firm (the "Accounting Firm") selected by the mutual written agreement
         of the Executive and the Company. The parties hereto will direct the
         Accounting Firm to submit its determination and detailed supporting
         calculations to both the Company and the Executive within 30 calendar
         days after the Executive's termination date, and any such other time or
         times as may be requested by the Company or the Executive. If the
         Accounting Firm determines that any Excise Tax is payable by the
         Executive, the Company will pay the required Gross-Up Payment to the
         Executive within five business days after receipt of such determination
         and calculations with respect to any payment to the Executive. If the
         Accounting Firm determines that no Excise Tax is payable by the
         Executive, it will, at the same time as it makes such determination,
         furnish the Company and the Executive an opinion that the Executive has
         substantial authority not to report any Excise Tax on the Executive's
         federal, state or local income or other tax return. As a result of the
         uncertainty in the application of Section 4999 of the Code (or any
         successor provision thereto) and the possibility of similar uncertainty
         regarding applicable state or local tax law at the time of any
         determination by the Accounting Firm hereunder, it is possible that
         Gross-Up Payments which will not have been made by the Company should
         have been made (an "Underpayment"), consistent with the calculations
         required to be made hereunder. In the event that the Company exhausts
         or fails to pursue its remedies pursuant to Section 8(e)(vi) and the
         Executive thereafter is required to make a payment of any Excise Tax,
         the parties will direct the Accounting Firm to determine the amount of
         the Underpayment that has occurred and to submit its determination and
         detailed supporting calculations to both the Company and the Executive
         as promptly as possible. Any such Underpayment will be promptly paid by
         the Company to, or for the benefit of, the Executive within five
         business days after receipt of such determination and calculations.

                  (iii) The Company and the Executive will each provide the
         Accounting Firm access to and copies of any books, records and
         documents in the possession of the Company or the Executive, as the
         case may be, reasonably requested by the Accounting Firm, and otherwise
         cooperate with the Accounting Firm in connection with the preparation
         of and issuance of the determinations and calculations contemplated by
         Section 8(e)(ii). Any determination by the Accounting Firm as to the
         amount of the Gross-Up Payment will be binding upon the Company and the
         Executive.

                  (iv) The federal, state and local income or other tax returns
         filed by the Executive will be prepared and filed on a consistent basis
         with the determination of the Accounting Firm with respect to the
         Excise Tax payable by the Executive. The

                                       10
<PAGE>

         Executive will make proper payment of the amount of any Excise Payment
         and, at the request of the Company, provide to the Company true and
         correct copies (with any amendments) of the Executive's federal tax
         return as filed with the Internal Revenue Service and corresponding
         state and local tax returns, if relevant, as filed with the applicable
         taxing authority, and such other documents reasonably requested by the
         Company evidencing such payment. If, prior to the filing of the
         Executive's federal income tax return, or corresponding state or local
         tax return, if relevant, the Accounting Firm determines that the amount
         of the Gross-Up Payment should be reduced, the Executive will within
         five business days pay to the Company the amount of such reduction.

                  (v) The fees and expenses of the Accounting Firm for its
         services in connection with the determinations and calculations
         contemplated herein will be borne by the Company. If such fees and
         expenses are initially paid by the Executive, the Company will
         reimburse the Executive the full amount of such fees and expenses
         within five business days after receipt from the Executive of a
         statement therefor and reasonable evidence of the Executive's payment
         thereof.

                  (vi) The Executive will notify the Company in writing of any
         claim by the Internal Revenue Service or any other taxing authority
         that, if successful, would require the payment by the Company of a
         Gross-Up Payment. Such notification will be given as promptly as
         practicable but no later than 10 business days after the Executive
         actually receives notice of such claim and the Executive will further
         apprise the Company of the nature of such claim and the date on which
         such claim is requested to be paid (in each case, to the extent known
         by the Executive). The Executive will not pay such claim prior to the
         earlier of (x) the expiration of the 30-calendar day period following
         the date on which the Executive gives such notice to the Company and
         (y) the date that any payment of amount with respect to such claim is
         due. If the Company notifies the Executive in writing prior to the
         expiration of such period that it desires to contest such claim, the
         Executive will:

                  (A)      provide the Company with any written records or
                           documents in the Executive's possession relating to
                           such claim reasonably requested by the Company;

                  (B)      take such action in connection with contesting such
                           claim as the Company may reasonably request in
                           writing from time to time, including without
                           limitation accepting legal representation with
                           respect to such claim by an attorney competent in
                           respect of the subject matter and reasonably selected
                           by the Company;

                  (C)      cooperate with the Company in good faith in order
                           effectively to contest such claim; and

                  (D)      permit the Company to participate in any proceedings
                           relating to such claims;

                                       11
<PAGE>

               provided, however, that the Company will bear and pay directly
all costs and expenses (including interest and penalties) incurred in connection
with such contest and will indemnify and hold harmless the Executive, on an
after-tax basis, from and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing
provisions of this Section 8(e), the Company will control all proceedings taken
in connection with the contest of any claim contemplated by this Section
8(e)(vi) and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that the Executive may
participate therein at the Executive's own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive will prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction, and in one or more appellate courts, as the Company may
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and sue for a refund, the Company will advance the amount of
such payment to the Executive on an interest-free basis and will indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; provided, further, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount if claimed to be due is
limited solely to such contested amount. The Company's control of any such
contested claim will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive will be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

                  (vii) If, after the receipt by the Executive of an amount
         advanced by the Company pursuant to Section 8(e)(vi), the Executive
         receives any refund with respect to such claim, the Executive will
         (subject to the Company's complying with the requirements of Section
         8(e)(vi)) pay to the Company the amount of such refund (together with
         any interest paid or credited thereon after taxes applicable thereto)
         within 30 calendar days after such receipt and the Company's
         satisfaction of all accrued obligations under this Agreement. If, after
         the receipt by the Executive of any amount advanced by the Company
         pursuant to Section 8(e)(vi), a determination is made that the
         Executive will not be entitled to any refund with respect to such claim
         and the Company does not notify the Executive in writing of its intent
         to contest such determination prior to the expiration of 30 calendar
         days after such determination, then such advance will be forgiven and
         will not be required to be repaid and the amount of any such advance
         will offset, to the extent thereof, the amount of Gross-Up Payment
         required to be paid by the Company to the Executive pursuant to this
         Section 8(e).

                  (viii) Notwithstanding any other provision of this Agreement,
         the Company shall pay to the Executive an amount equal to the Base
         Salary upon the occurrence of: (x) the Expiration Date; and (y) any
         failure for any reason of the Expiration Date to be automatically
         extended by one additional year as prescribed by Section 3 of this
         Agreement.

                                       12
<PAGE>

               (f) Nature of Payments. The amounts due under this Section 8 are
in the nature of severance payments considered to be reasonable by the Company
and are not in the nature of a penalty. Such amounts are in full satisfaction of
all claims that the Executive may have in respect of his employment by the
Company or its affiliates and are provided as the sole and exclusive benefits to
be provided to the Executive in respect of his termination of Employment from
the Company. Notwithstanding any other provisions herein, it shall be a
condition precedent to the Company making any payments pursuant to this Section
8 that the Executive has executed and delivered to the Company the release
contemplated pursuant to Section 12.

               (g) No Mitigation or Set-Off. The Executive will not be required
to mitigate the amount of any payment provided for in this Agreement by seeking
other employment. There will be no right of set-off or counterclaim in respect
of any claim, debt of obligation against any payment to or benefit for the
Executive provided for in this Agreement, except as expressly provided herein.

         9. Confidentiality and Non-Competition.

               (a) Confidentiality.

                  (i) During the Employment Term the Company agrees to provide
         the Executive with access to Confidential Information.

                  (ii) The Executive acknowledges that the Confidential
         Information is valuable and proprietary to the Company or to third
         parties that have entrusted the Company and/or its subsidiaries with
         such Confidential Information. The Executive agrees, except as required
         for the Executive to fulfill his duties hereunder, that the Executive
         shall not use, publish, disseminate or otherwise disclose any
         Confidential Information, no matter when learned or accessed, without
         the prior written consent of the Company.

                  (iii) All Confidential Information shall be the exclusive
         property of the Company and the Executive shall have no rights in or to
         the Confidential Information upon any termination of this Agreement or
         his employment with the Company. Upon the termination of the
         Executive's employment, the Executive shall immediately deliver to the
         Company all plans, designs, drawings, specifications, listings,
         manuals, records, notebooks and similar repositories of or documents
         containing Confidential Information, including all copies, then in the
         Executive's possession or control, whether prepared by the Executive or
         others. Upon such termination the Executive shall retain no copies of
         any such documents.

                  (iv) The provisions of this Section 9(a) shall survive the
         termination of this Agreement indefinitely.

               (b) Restriction on Competitive Employment.

                                       13
<PAGE>

                  (i) In consideration of the numerous mutual promises contained
         in this Agreement, including, without limitation, those involving the
         Confidential Information, compensation, termination and arbitration,
         and in order to protect the Confidential Information and to reduce the
         likelihood of irreparable damage that would occur in the event such
         information is provided to or used by a competitor of the Company,
         during the Employment Term and, for a period of six months following
         the Termination Date in the case of a (x) termination by the Company
         for Cause, (y) a termination due to Disability or (z) a termination by
         the Executive other than for Good Reason (the "Non-Competition
         Period"), absent the Company's prior written approval, the Executive
         shall not, as an owner, part-owner, shareholder, partner, director,
         trust manager, trustee, principal, agent, employee, consultant, member,
         contractor or otherwise, within the United States, directly or
         indirectly engage or participate in activities relating to, or render
         services to or invest in any firm or business engaged or about to
         become engaged in, the Business.

                  (ii) Notwithstanding the foregoing, the Executive may make
         passive investments in an enterprise engaged in the Business, the
         shares of ownership of which are publicly traded, if the Executive's
         investment constitutes less than 2% of the total equity of such
         enterprise.

                  (iii) If, during any period within the Non-Competition Period,
         the Executive is not in compliance with the terms of this Section 9(b),
         the Company shall be entitled to, among other remedies, compliance by
         the Executive with the terms of this Section 9(b) for an additional
         period equal to the period of such noncompliance. For purposes of this
         Agreement, the term "Non-Competition Period" shall also include this
         additional period. The Executive hereby acknowledges that the
         geographic boundaries, scope of prohibited activities and the time
         duration of the provisions of this Section 9(b) are reasonable and are
         no broader than are necessary to protect the legitimate business
         interests of the Company.

                  (iv) The provisions of this Section 9(b) shall survive the
         termination of the Executive's employment for the duration of the
         Non-Competition Period.

                  (v) The Company and the Executive agree and stipulate that the
         agreements and covenants not to compete contained in this Section 9(b)
         are fair and reasonable in light of all of the facts and circumstances
         of the relationship between the Executive and the Company; however, the
         Executive and the Company are aware that in certain circumstances
         courts have refused to enforce certain terms of agreements not to
         compete. Therefore, in furtherance of, and not in derogation of the
         provisions of this Section 9(b), the Company and the Executive agree
         that in the event a court should decline to enforce any provision of
         this Section 9(b), that this Section 9(b) shall be deemed to be
         modified or reformed to restrict the Executive's competition with the
         Company or its affiliates to the maximum extent, as to time, geography
         and business scope, that the court shall find enforceable; provided,
         however, in no event shall the provisions of this Section 9(b) be
         deemed to be more restrictive to the Executive than those contained
         herein.

                                       14
<PAGE>

               (c) Inducement/Enticement. In order to prevent the Executive from
violating the provisions of Section 9(b), during the Employment Term and, in the
case of (x) a termination by the Company for Cause, (y) a termination due to
Disability or (z) a termination by the Executive other than for Good Reason,
during the Non-Competition Period, the Executive shall not, directly or
indirectly:

                  (i) induce, or attempt to induce, any employees or agents of,
         or consultants of or to, the Company or any subsidiary of the Company
         to do anything from which the Executive is restricted by reason of
         Sections 9(a) or (b); or

                  (ii) offer or aid others to offer employment to or recruit or
         solicit anyone who is an employee or agent of, or consultant of or to,
         the Company or a subsidiary of the Company at the time of termination
         of the Executive, unless such person's employment was terminated by the
         Company or any such subsidiary.

                  In the case of (x) a termination by the Company for Cause, (y)
a termination due to Disability or (z) a termination by the Executive other than
for Good Reason, the provisions of this Section 9(c) shall survive the
termination of the Executive's employment for the duration of the
Non-Competition Period.

               (d) Injunctive Relief. The Executive acknowledges that a breach
of any of the agreements contained in this Section 9 will give rise to
irreparable injury to the Company, inadequately compensable in damages.
Accordingly, the Company shall be entitled to injunctive relief to prevent or
cure breaches or threatened breaches of the provisions of this Section 9 and to
enforce specific performance of the terms and provisions hereof in any court of
competent jurisdiction, in addition to any other legal or equitable remedies
that may be available. The Executive further acknowledges and agrees that in the
event of the termination of this Agreement, his experience and capabilities are
such that he can obtain employment in business activities that are of a
different or noncompeting nature with his activities as an employee of the
Company and that the enforcement of a remedy hereunder by way of injunction
shall not prevent the Executive from earning a reasonable livelihood. The
Executive further acknowledges and agrees that the covenants contained herein
are necessary for the protection of the Company's legitimate business interests
and are reasonable in scope and content. The Executive also acknowledges that
the Company would not enter into this Agreement or agree to provide him with
access to its Confidential Information without the Executive's promises
contained in this Section 9.

         10. Remedies for the Company. The termination of this Agreement by the
Company for Cause shall not be deemed to be a waiver by the Company of any
breach by the Executive of this Agreement or any other obligation owed the
Company, and, notwithstanding such a termination, the Executive shall be liable
for all damages attributable to such a breach.

         11. Remedies for the Executive.

               (a) The termination of this Agreement by the Executive for Good
Reason shall not be deemed to be a waiver by the Executive of any breach by the
Company of this

                                       15
<PAGE>

Agreement or any other obligation owed the Executive, and, notwithstanding such
a termination, the Company shall be liable for all damages attributable to such
a breach.

               (b) In the event that the Executive is terminated for Cause and
it is ultimately determined that the Company lacked Cause, (i) the termination
shall be treated as a termination other than for Cause; (ii) the Executive shall
have the right to seek remedy for a breach of this Agreement by the Company,
including, but not limited to, any other such damages as may be suffered and/or
incurred by the Executive, the Executive's costs incurred during the dispute and
reasonable attorneys' fees in connection with such dispute; and (iii) the
Executive shall receive all Severance Benefits.

         12. Full Satisfaction; Waiver and Release. As a condition to receiving
the payments and benefits described in Section 8, the Executive and the Company
shall execute a document in form reasonably acceptable to them, releasing and
waiving any and all claims, causes of actions and the like against the other
party and its respective successors, subsidiaries, affiliates, shareholders,
officers, directors, managers, agents and employees, regarding all matters
relating to the Executive's service as an employee of the Company, its
subsidiaries or any of their affiliates and the termination of such
relationship. Such claims include, without limitation, any claims arising under
the Age Discrimination in Employment Act of 1967, as amended; Title VII of the
Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended;
the Equal Pay Act of 1962; the American Disabilities Act of 1990; the Family
Medical Leave Act, as amended; the Employee Retirement Income Security Act of
1974, as amended; or any other federal, state or local statute or ordinance, but
exclude any claims that arise out of an asserted breach of the terms of this
Agreement and any benefits payable to the Executive under the Company's benefit
plans, practices and programs in which he participates.

         13. No Waiver. No waiver or non-action by either party with respect to
any breach by the other party of any provision of this Agreement, nor the waiver
or non-action with respect to the provisions of any similar agreement with other
employees or the breach thereof, shall be deemed or construed to be a waiver of
any succeeding breach of such provision, or as a waiver of the provision itself.

         14. Invalid Provisions. Should any portion of this Agreement be
adjusted or held invalid, unenforceable or void, such holding shall not have the
effect of invalidating or voiding the remainder of this Agreement and the
parties hereby agree that the portion so held invalid, unenforceable, or void
shall, if possible, be deemed amended or reduced in scope, or otherwise be
stricken from this Agreement, to the extent required for the purposes of
validity and enforcement thereof.

         15. Successor and Assigns. Neither the Executive nor the Company may
assign its rights, duties, or obligations hereunder without consent of the
other.

         16. Survival. The provisions of Sections 9 and 22 of this Agreement
shall survive the Executive's termination of employment. Other provisions of
this Agreement shall survive any termination of the Executive's employment to
the extent necessary to ensure the preservation of each party's respective
rights and obligations.

                                       16
<PAGE>

         17. Prior Agreements. This Agreement incorporates the entire agreement
between both parties with respect to the subject matter hereof and supersedes
all other prior agreements (oral or written), documents or other instruments
with respect to the matters covered herein.

         18. Governing Law. This Agreement shall be governed by, and interpreted
in accordance with the internal substantive laws of the State of Florida,
without giving effect to the principles of conflicts of law. Each party hereto
hereby irrevocably submits itself to the exclusive personal jurisdiction of the
Federal and State courts sitting in the State of Florida, and hereby waives any
claims it may have as to inconvenient forum.

         19. No Oral Modifications. This Agreement may not be changed or
terminated orally, and no change, termination or waiver of this Agreement or of
any of the provisions herein contained shall be binding unless made in writing
and signed by both parties, and, in the case of the Company, by a person
designated by the Board or any committee thereof. Without limiting the
foregoing, any change or changes, from time to time, in the Executive's salary
or duties or both shall not be, nor be deemed to be, a change, termination or
waiver of this Agreement or of any of the provisions herein contained.

         20. Notices. All notices and other communications required or permitted
hereunder shall be made in writing, and shall be deemed properly given if
delivered personally, mailed by certified mail, postage prepaid and return
receipt requested, sent by facsimile, or sent by Express Mail or Federal Express
or other nationally recognized express delivery service, as follows:

               If to the Company:

               Sunset Financial Resources, Inc.
               4231 Walnut Bend
               Jacksonville, Florida  32257
               Attention:  Chairman of the Board

               If to the Executive:

               Byron Boston

               1597 Palm Springs Drive
               Vienna, Virginia  22182

               With a copy to:

               Frederick W. Chockley III
               Baker & Hostetler LLP
               1050 Connecticut Avenue, N.W.
               Suite 1100
               Washington, D.C.  20036

               Notice given by hand, Express Mail, Federal Express, or other
such express delivery service shall be effective upon actual receipt. Notice
given by facsimile transmission

                                       17
<PAGE>

shall be effective upon actual receipt during the recipient's customary business
hours, or at the beginning of the recipient's next business day after receipt if
not received during the recipient's customary business hours. All notices sent
by facsimile transmission shall be confirmed promptly after transmission in
writing by certified mail or personal delivery.

               Any party may change any address to which notice shall be given
to it by giving notice as provided above of such change in address.

         21. Executive's Representation and Warranties. The Executive represents
and warrants that he is legally free to make and perform this Agreement, that he
has no obligation to any other person or entity that would affect or conflict
with any of his obligations hereunder, and that the complete performance of his
obligations hereunder will not violate any law, regulation, order, or decree of
any governmental or jurisdictional body or contract by which he is bound.

         22. Entire Agreement. The parties expressly agree that this Agreement
is contractual in nature and not a mere recital, and that it contains all the
terms and conditions of the agreement between the parties with respect to the
matters set forth herein. All prior negotiations, agreements, arrangements,
understandings and statements between the parties relating to the matters set
forth herein that have occurred at any time or contemporaneously with the
execution of this Agreement are superseded and merged into this completely
integrated Agreement. The Recitals set forth above shall be deemed to be part of
this Agreement.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                       18
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                  THE COMPANY:

                                  SUNSET FINANCIAL RESOURCES, INC.,
                                  a Maryland corporation

                                  By:   /s/ JOHN BERT WATSON
                                        ---------------------------------------
                                        John Bert Watson
                                        President and Chief Executive Officer

                                  THE EXECUTIVE:

                                  BYRON BOSTON

                                  /s/ BYRON BOSTON
                                  ---------------------------------------------

                                       19

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