Document:

<PAGE>
                                                                    Exhibit 10.6

                 AMENDED AND RESTATED 2003 SHARE INCENTIVE PLAN
                       OF SUNSET FINANCIAL RESOURCES, INC.

                        INCENTIVE STOCK OPTION AGREEMENT

         Date of Grant:       March 22, 2004

         Name of Optionee:    John Bert Watson

         Number of Shares:    23,076

         Price Per Share:     $13.00, at least 100% of the Fair Market Value per
                              share of a share of Common Stock of Sunset
                              Financial Resources, Inc., as of the date of
                              grant, as determined in accordance with the terms
                              of the Amended and Restated 2003 Share Incentive
                              Plan of Sunset Financial Resources, Inc. (the
                              "Plan").

         Sunset Financial Resources, Inc., a Maryland corporation (the
"Company"), hereby grants to the above-named Optionee (the "Optionee") an option
(the "Option") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.001 par value (the "Stock"), of
the Company set forth above pursuant to the Amended and Restated 2003 Share
Incentive Plan of Sunset Financial Resources, Inc. (the "Plan"). THIS OPTION IS
INTENDED TO CONSTITUTE AN "INCENTIVE STOCK OPTION" WITHIN THE MEANING OF SECTION
422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

         1.       TERMS. The terms and conditions of the Option granted hereby,
to the extent not controlled by the terms and conditions contained in the Plan,
are as follows:

                  a.       PRICE. The price at which each share of Stock subject
to this Option may be purchased shall be the price set forth above, subject to
any adjustments that may be made pursuant to the terms of the Plan.

                  b.       EXERCISE AND VESTING. This Option may be exercised
only to the extent that such Option is vested in accordance with the following
table:

<TABLE>
<CAPTION>
                                        May Be Purchased
                           ---------------------------------------------
Number of Shares             Not Before                      Not After
----------------           --------------                 --------------
<S>                        <C>                            <C>
     7,692                 March 22, 2005                 March 22, 2014
     7,692                 March 22, 2006                 March 22, 2014
     7,692                 March 22, 2007                 March 22, 2014
</TABLE>

<PAGE>

Subject to the preceding vesting schedule, this Option may be exercised in whole
or in part. Except as set forth in Paragraphs 5, 6 and 7 hereof, (i) the
Optionee may not exercise this Option unless at the time of exercise he has been
in the employ of the Company and/or an Affiliate of the Company continuously
since the date of the grant of this Option, and (ii) the unvested portion of
this Option shall terminate and be forfeited immediately on the date the
Optionee ceases to be a full-time employee of the Company. This Option shall be
exercisable during the lifetime of the Optionee only by him or his guardian or
legal representative. Neither the Optionee nor any person exercising this Option
pursuant to Paragraph 6 hereof may exercise this Option for a fraction of a
share.

         2.       EXERCISE AND PAYMENT.

                  a.       MANNER OF EXERCISE. The Optionee (or his
representative, guardian, devisee or heir, as applicable) may exercise any
portion of this Option that has become exercisable in accordance with the terms
hereof as to all or any of the shares of Stock by giving written notice of
exercise to the Company, in form satisfactory to the Board, specifying the
number of shares to be purchased and accompanying such notice with payment of
the full purchase price therefor in (i) lawful United States currency or (ii)
partially or entirely in whole shares of Stock of the Company owned or held by
the Optionee for a period of six (6) months prior to the date of exercise, which
has a Fair Market Value per share (as defined in the Plan) equal to the Option
price for such number of shares as of the close of business on the immediately
preceding business day, with the balance, if any, to be paid in cash. This
Option may not be exercised for less than fifty (50) shares of Stock or the
number of shares of Stock remaining subject to this Option, whichever is
smaller. The election shall state the address to which dividends, notices,
reports, etc. are to be sent, and shall contain the Optionee's social security
number. Only one (1) certificate evidencing the Stock will be issued unless the
Optionee otherwise requests in writing. Shares of Stock purchased upon exercise
of the Option will be issued in the name of the Optionee. The Optionee shall not
be entitled to any rights and privileges as a shareholder of the Company in
respect of any shares of Stock covered by this Option until such shares of Stock
shall have been paid for in full and issued to the Optionee.

                  b.       PAYMENT. Payment shall be in cash, or by certified or
cashier's check payable to the order of the Company, free from all collection
charges, by delivery of shares of Stock already owned by the Optionee and having
a fair market value equal to the aggregate Option Price, by a combination of
cash and shares of Stock. Options shall be deemed to have been exercised on the
first date upon which the Company receives the notice of exercise, payment of
the purchase price and all other documents, information and amounts required in
respect of such exercise by the Plan or this Agreement.

         3.       THE PLAN AND THE COMMITTEE. It is understood that the Plan is
incorporated herein by reference and made a part of this Agreement as if fully
set forth herein. The Plan shall control in the event there shall be any
conflict between the Plan and this Agreement, and it shall control as to any
matters not contained in this Agreement. Terms used in this Agreement which are
defined in the Plan shall have the same meanings in this Agreement as are
assigned to such terms in the Plan. The Committee shall have authority to make
constructions of this Agreement, and to correct any defect or supply any
omission or reconcile any inconsistency in this Agreement, and to prescribe
rules and regulations relating to the administration of this Option and other
Options granted under the Plan.

                                       2

<PAGE>

         4.       WITHHOLDING TAX. Prior to the exercise of this Option, and as
a condition to the Company's obligation to deliver shares upon such exercise, or
in connection with any disposition of shares acquired pursuant to such exercise,
the holder of this Option shall make arrangements satisfactory to the Company
for the payment of any applicable federal or other withholding taxes payable as
a result thereof, which the Optionee may elect to satisfy by instructing the
Company to retain a sufficient number of shares of Stock to cover the amount
required to be withheld.

         5.       TERMINATION OF EMPLOYMENT OR RELATIONSHIP. If Optionee's
employment relationship with the Company shall be terminated for any reason
prior to the expiration or earlier termination of this Option, then (except as
provided in Sections 6 and 7 below) all rights of such Optionee under this
Agreement shall terminate and shall be forfeited effective as of the date of
such termination of employment. If Optionee's employment with the Company shall
terminate for any reason other than due to Optionee becoming Disabled, or for
death, then Optionee shall be entitled to exercise the option (to the extent
vested) for a period of thirty (30) days following the date of such termination.
Following such thirty (30)-day period, all rights of such Optionee under this
Agreement shall terminate and shall be forfeited.

         6.       DEATH OR DISABILITY. In the event of termination of employment
by reason of Optionee becoming Disabled or the death of the Optionee while he is
an employee of the Company or an Affiliate of the Company, this Option shall be
fully exercisable (whether or not exercisable on the date of his death or
termination of employment by reason of becoming Disabled) at any time prior to
the expiration date of this Option or within twelve (12) months after the date
of death or becoming Disabled, as applicable, or termination of employment,
whichever is the shorter period, by Optionee, the person or persons specified in
the Optionee's will or, if the Optionee shall have failed to make specific
provision in his will for such exercise or shall have died intestate, or in the
case of becoming Disabled, when appropriate, by the Optionee's guardian or legal
representative.

         7.       ACCELERATION OF VESTING. If a Change in Control (as defined in
the Plan) of the Company occurs prior to March 22, 2014, then all or any part of
this Option not theretofore vested shall become immediately vested and be fully
exercisable as of the date of the Change in Control (the "Acceleration Date").
The Optionee shall have 90 days following the Acceleration Date to exercise this
Option (or the date specified in Section 1(b) if the exercise period would
otherwise expire sooner).

         8.       COMPLIANCE WITH LAWS. Each exercise of this Option shall, at
the election of the Committee, be contingent upon receipt by the Company from
the holder of this Option of such written representations concerning his
intentions with regard to retention or disposition of the shares of Stock being
acquired by exercise of this Option and/or such written covenants and agreements
as to the manner of disposal of such shares as, in the opinion of the Committee,
may be necessary to ensure that any disposition by such holder will not involve
a violation of the Securities Act of 1933, as amended, or any similar or
superseding statute or statutes, or any other applicable statute or regulation,
as then in effect. This Option shall be subject to the requirement that if at
any time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares of Stock subject to this Option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of the issuance or delivery of shares of Stock hereunder, this Option
may not be exercised

                                       3

<PAGE>

unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Committee.

         9.       RIGHTS AS A SHAREHOLDER. Neither the Optionee nor his guardian
or legal representatives shall be or have any of the rights or privileges of a
shareholder of the Company in respect of any of the shares of Stock deliverable
upon the exercise of this Option unless and until certificates representing such
shares shall have been issued and delivered.

         10.      NO RIGHT OF EMPLOYMENT. Neither the granting of this Option,
the exercise of any part hereof, nor any provision of the Plan or this Agreement
shall constitute or be evidence of any understanding, express or implied, on the
part of the Company or any Affiliate of the Company to employ the Optionee for
any specified period.

         11.      REPRESENTATION OF OPTIONEE. Optionee hereby represents and
warrants to the Company that, if the option is exercised, the shares of Stock
shall be acquired solely for Optionee's own account, for investment purposes
only and not with a view to the distribution or resale thereof. Optionee
understands and acknowledges that (i) the shares of Stock are unregistered and
may not be sold unless they are subsequently registered under the Securities Act
and applicable state securities laws, or unless an exemption from such
registration is available; (ii) the exemption from registration under Rule 144
under the Securities Act may not ever become available; and (iii) the Company is
under no obligation to register the shares of Stock under the Securities Act or
any state securities law or to make Rule 144 (or any other exemption) available.

         12.      NON-TRANSFERABLE. Except pursuant to a will or pursuant to the
laws of descent and distribution, this Agreement, the Options represented hereby
and the rights and privileges conferred hereby may not be transferred, assigned,
pledged or hypothecated or otherwise disposed of in any way and shall not be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this Option, or
any right or privilege conferred hereby, contrary to the provisions hereof, this
Option and the rights and privileges conferred hereby shall immediately become
null and void.

         13.      NOTICE. Every notice or other communication relating to this
Agreement shall be in writing and shall be mailed or delivered to the party for
whom it is intended, in each case properly addressed, if to the Company, at the
address of its principal office, Attention: Chief Executive Officer, or if
mailed or delivered to the Optionee, at the address set forth below his
signature to this Agreement (or at such other address or in care of such other
person as may hereafter be designated in writing by either party to the other).

                                       4

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name by its duly authorized officer on the date first above
written, and the Optionee has hereunto set his hand on such date.

                                       COMPANY:

                                       SUNSET FINANCIAL RESOURCES, INC.

                                       /s/ THOMAS G. MANUEL
                                       -----------------------------------------
                                       Thomas G. Manuel
                                       Secretary and Executive Vice President -
                                       Operations and Compliance

                                       OPTIONEE:

                                       /s/ JOHN BERT WATSON
                                       -----------------------------------------
                                       John Bert Watson
                                       Address:  504 Tivoli Drive
                                                 Jacksonville, Florida  92259

                                       Social Security Number:
                                                              ------------------

                                       5<PAGE>
                                                                    Exhibit 10.7

                 AMENDED AND RESTATED 2003 SHARE INCENTIVE PLAN
                       OF SUNSET FINANCIAL RESOURCES, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT

         Date of Grant:       March 22, 2004

         Name of Optionee:    Rodney E. Bennett

         Number of Shares:    5,000

         Price Per Share:     $13.00, at least 100% of the Fair Market Value per
                              share of a share of Common Stock of Sunset
                              Financial Resources, Inc., as of the date of
                              grant, as determined in accordance with the terms
                              of the Amended and Restated 2003 Share Incentive
                              Plan of Sunset Financial Resources, Inc. (the
                              "Plan").

         Sunset Financial Resources, Inc., a Maryland corporation (the
"Company"), hereby grants to the above-named Optionee (the "Optionee") an option
(the "Option") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.001 par value (the "Stock"), of
the Company set forth above pursuant to the Amended and Restated 2003 Share
Incentive Plan of Sunset Financial Resources, Inc. (the "Plan"). THIS OPTION IS
A "NON-STATUTORY STOCK OPTION" AND IS NOT INTENDED TO CONSTITUTE AN "INCENTIVE
STOCK OPTION" WITHIN THE MEANING OF SECTION 422 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

         1. TERMS. The terms and conditions of the Option granted hereby, to the
extent not controlled by the terms and conditions contained in the Plan, are as
follows:

                  a. PRICE. The price at which each share of Stock subject to
this Option may be purchased shall be the price set forth above, subject to any
adjustments that may be made pursuant to the terms of the Plan.

                  b. EXERCISE AND VESTING. This Option may be exercised only to
the extent that such Option is vested in accordance with the following table:

<TABLE>
<CAPTION>
                                   May Be Purchased
                        ----------------------------------------
Number of Shares          Not Before                Not After
----------------        --------------            --------------
<S>                     <C>                       <C>
      5000              March 22, 2005            March 22, 2014
</TABLE>

Subject to the preceding vesting schedule, this Option may be exercised in whole
or in part. Except as set forth in Paragraphs 5, 6 and 7 hereof, (i) the
Optionee may not exercise this Option unless at
<PAGE>

the time of exercise he is in the employ of the Company and/or an Affiliate of
the Company on the date of exercise, and (ii) the unvested portion of this
Option shall terminate and be forfeited immediately on the date the Optionee
ceases to be a full-time employee of the Company. This Option shall be
exercisable during the lifetime of the Optionee only by him or his guardian or
legal representative. Neither the Optionee nor any person exercising this Option
pursuant to Paragraph 6 hereof may exercise this Option for a fraction of a
share.

         2. EXERCISE AND PAYMENT.

                  a. MANNER OF EXERCISE. The Optionee (or his representative,
guardian, devisee or heir, as applicable) may exercise any portion of this
Option that has become exercisable in accordance with the terms hereof as to all
or any of the shares of Stock by giving written notice of exercise to the
Company, in form satisfactory to the Board, specifying the number of shares to
be purchased and accompanying such notice with payment of the full purchase
price therefor in (i) lawful United States currency or (ii) partially or
entirely in whole shares of Stock of the Company owned or held by the Optionee
for a period of six (6) months prior to the date of exercise, which has a Fair
Market Value per share (as defined in the Plan) equal to the Option price for
such number of shares as of the close of business on the immediately preceding
business day, with the balance, if any, to be paid in cash. This Option may not
be exercised for less than fifty (50) shares of Stock or the number of shares of
Stock remaining subject to this Option, whichever is smaller. The election shall
state the address to which dividends, notices, reports, etc. are to be sent, and
shall contain the Optionee's social security number. Only one (1) certificate
evidencing the Stock will be issued unless the Optionee otherwise requests in
writing. Shares of Stock purchased upon exercise of the Option will be issued in
the name of the Optionee. The Optionee shall not be entitled to any rights and
privileges as a shareholder of the Company in respect of any shares of Stock
covered by this Option until such shares of Stock shall have been paid for in
full and issued to the Optionee.

                  b. PAYMENT. Payment shall be in cash, or by certified or
cashier's check payable to the order of the Company, free from all collection
charges, by delivery of shares of Stock already owned by the Optionee and having
a fair market value equal to the aggregate Option Price, by a combination of
cash and shares of Stock. Options shall be deemed to have been exercised on the
first date upon which the Company receives the notice of exercise, payment of
the purchase price and all other documents, information and amounts required in
respect of such exercise by the Plan or this Agreement.

         3. THE PLAN AND THE COMMITTEE. It is understood that the Plan is
incorporated herein by reference and made a part of this Agreement as if fully
set forth herein. The Plan shall control in the event there shall be any
conflict between the Plan and this Agreement, and it shall control as to any
matters not contained in this Agreement. Terms used in this Agreement which are
defined in the Plan shall have the same meanings in this Agreement as are
assigned to such terms in the Plan. The Committee shall have authority to make
constructions of this Agreement, and to correct any defect or supply any
omission or reconcile any inconsistency in this Agreement, and to prescribe
rules and regulations relating to the administration of this Option and other
Options granted under the Plan.

                                       2

<PAGE>

         4. WITHHOLDING TAX. Prior to the exercise of this Option, and as a
condition to the Company's obligation to deliver shares upon such exercise, or
in connection with any disposition of shares acquired pursuant to such exercise,
the holder of this Option shall make arrangements satisfactory to the Company
for the payment of any applicable federal or other withholding taxes payable as
a result thereof, which the Optionee may elect to satisfy by instructing the
Company to retain a sufficient number of shares of Stock to cover the amount
required to be withheld.

         5. TERMINATION OF EMPLOYMENT OR RELATIONSHIP. If Optionee's employment
relationship with the Company shall be terminated for any reason prior to the
expiration or earlier termination of this Option, then (except as provided in
Section 6 and 7 below) all rights of such Optionee under this Agreement shall
terminate and shall be forfeited effective as of the date of such termination of
employment. If Optionee's employment with the Company shall terminate for any
reason other than due to Optionee becoming Disabled, or for death, then Optionee
shall be entitled to exercise the option (to the extent vested) for a period of
thirty (30) days following the date of such termination. Following such thirty
(30)-day period, all rights of such Optionee under this Agreement shall
terminate and shall be forfeited.

         6. DEATH OR DISABILITY. In the event of termination of employment by
reason of Optionee becoming Disabled or the death of the Optionee while he is an
employee of the Company or an Affiliate of the Company, this Option shall be
fully exercisable (whether or not exercisable on the date of his death or
termination of employment by reason of becoming Disabled) at any time prior to
the expiration date of this Option or within twelve (12) months after the date
of death or becoming Disabled, as applicable, or termination of employment,
whichever is the shorter period, by Optionee, the person or persons specified in
the Optionee's will or, if the Optionee shall have failed to make specific
provision in his will for such exercise or shall have died intestate, or in the
case of becoming Disabled, when appropriate, by the Optionee's guardian or legal
representative.

         7. ACCELERATION OF VESTING. If a Change in Control (as defined in the
Plan) of the Company occurs prior to March 22, 2014, then all or any part of
this Option not theretofore vested shall become immediately vested and be fully
exercisable as of the date of the Change in Control (the "Acceleration Date").
The Optionee shall have 90 days following the Acceleration Date to exercise this
Option (or the date specified in Section 1(b) if the exercise period would
otherwise expire sooner).

         8. COMPLIANCE WITH LAWS. Each exercise of this Option shall, at the
election of the Committee, be contingent upon receipt by the Company from the
holder of this Option of such written representations concerning his intentions
with regard to retention or disposition of the shares of Stock being acquired by
exercise of this Option and/or such written covenants and agreements as to the
manner of disposal of such shares as, in the opinion of the Committee, may be
necessary to ensure that any disposition by such holder will not involve a
violation of the Securities Act of 1933, as amended, or any similar or
superseding statute or statutes, or any other applicable statute or regulation,
as then in effect. This Option shall be subject to the requirement that if at
any time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares of Stock subject to this Option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of the issuance or delivery of shares of Stock hereunder, this Option
may not be exercised

                                       3
<PAGE>

unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Committee.

         9. RIGHTS AS A SHAREHOLDER. Neither the Optionee nor his guardian or
legal representatives shall be or have any of the rights or privileges of a
shareholder of the Company in respect of any of the shares of Stock deliverable
upon the exercise of this Option unless and until certificates representing such
shares shall have been issued and delivered.

         10. NO RIGHT OF EMPLOYMENT. Neither the granting of this Option, the
exercise of any part hereof, nor any provision of the Plan or this Agreement
shall constitute or be evidence of any understanding, express or implied, on the
part of the Company or any Affiliate of the Company to employ the Optionee for
any specified period.

         11. REPRESENTATION OF OPTIONEE. Optionee hereby represents and warrants
to the Company that, if the option is exercised, the shares of Stock shall be
acquired solely for Optionee's own account, for investment purposes only and not
with a view to the distribution or resale thereof. Optionee understands and
acknowledges that (i) the shares of Stock are unregistered and may not be sold
unless they are subsequently registered under the Securities Act and applicable
state securities laws, or unless an exemption from such registration is
available; (ii) the exemption from registration under Rule 144 under the
Securities Act may not ever become available; and (iii) the Company is under no
obligation to register the shares of Stock under the Securities Act or any state
securities law or to make Rule 144 (or any other exemption) available.

         12. NON-TRANSFERABLE. Except pursuant to a will or pursuant to the laws
of descent and distribution, this Agreement, the Options represented hereby and
the rights and privileges conferred hereby may not be transferred, assigned,
pledged or hypothecated or otherwise disposed of in any way and shall not be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this Option, or
any right or privilege conferred hereby, contrary to the provisions hereof, this
Option and the rights and privileges conferred hereby shall immediately become
null and void.

         13. NOTICE. Every notice or other communication relating to this
Agreement shall be in writing and shall be mailed or delivered to the party for
whom it is intended, in each case properly addressed, if to the Company, at the
address of its principal office, Attention: Chief Executive Officer, or if
mailed or delivered to the Optionee, at the address set forth below his
signature to this Agreement (or at such other address or in care of such other
person as may hereafter be designated in writing by either party to the other).

                                       4

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name by its duly authorized officer on the date first above
written, and the Optionee has hereunto set his hand on such date.

                                 COMPANY:

                                 SUNSET FINANCIAL RESOURCES, INC.

                                 /s/ JOHN BERT WATSON
                                 -----------------------------------------------
                                 John Bert Watson
                                 Chairman, President and Chief Executive Officer

                                 OPTIONEE:

                                 /s/ RODNEY E. BENNETT
                                 -----------------------------------------------
                                 Rodney E. Bennett
                                 Address:     Rt. 2, Box 3536
                                              Folkston, Georgia  31537

                                 Social Security Number:
                                                        ------------------------

                                       5

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