NONQUALIFIED STOCK OPTION AGREEMENT

CAPE COASTAL TRADING CORPORATION
2005 EQUITY INCENTIVE PLAN

THIS AGREEMENT, made effective as of this ____ day of _____________, 20__ (the
“Issue Date”), by and between Cape Coastal Trading Corporation, a Delaware
corporation (the “Company”), and ______________________ (“Participant”).

W I T N E S S E T H:

WHEREAS, Participant on the date hereof is an employee, director or consultant
of the Company or one of its Affiliates; and

WHEREAS, the Company wishes to grant an incentive stock option to Participant to
purchase shares of the Company’s Common Stock pursuant to the Company’s 2005
Equity Incentive Plan (the “Plan”); and

WHEREAS, the Administrator of the Plan has authorized the grant of an incentive
stock option to Participant and has determined that, as of the effective date of
this Agreement, the fair market value of the Company’s Common Stock is $______
per share;

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

1.     Grant of Option. The Company hereby grants to Participant on the date set
forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of ________________________
(__________) shares of Common Stock at a per share price of $______ the terms
and conditions set forth herein, and subject to adjustment pursuant to Section
12 of the Plan. This Option is not intended to be an incentive stock option
within the meaning of Section 422, or any successor provision, of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder.

2.     Duration and Exercisability.

a.     General. The term during which this Option may be exercised shall
terminate on ______________________, 20__ (the “Expiration Date”), except as
otherwise provided in Paragraphs 2(b) through 2(e) below. This Option shall
become exercisable according to the following schedule:

 
 

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Vesting Date
 
Percentage/Number of Shares
                 

Once the Option becomes exercisable to the extent of any of the aggregate number
of shares specified in Paragraph 1, Participant may continue to exercise this
Option with respect to such shares under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If Participant
does not purchase upon an exercise of this Option the full number of shares
which Participant is then entitled to purchase, Participant may purchase upon
any subsequent exercise prior to this Option’s termination such previously
unpurchased shares in addition to those Participant is otherwise entitled to
purchase.
 
b.     Termination of Relationship (other than Termination for Cause, Disability
or Death). If Participant ceases to be [an employee] [a consultant] [a director]
of the Company or any Affiliate for any reason other than disability or death,
this Option shall completely terminate on the earlier of (i) the close of
business on the three-month anniversary of the date of termination of
Participant’s relationship, and (ii) the Expiration Date of this Option stated
in Paragraph 2(a) above. In such period following such termination of
Participant’s relationship, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding the date on
which Participant’s relationship with the Company or Subsidiary has terminated,
but had not previously been exercised. To the extent this Option was not
exercisable upon the termination of such relationship, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(b), all
rights of Participant under this Option shall be forfeited.

c.     Termination of Relationship for Cause. If Participant’s relationship with
the Company or any Affiliate is terminated for “cause,” the unexercised portion
of this Option shall immediately expire, and all rights of Participant under
this Option shall be forfeited. Solely for purposes of this Paragraph 2(c),
“cause” shall mean (i) Participant being charged with a felony or convicted of
any criminal misdemeanor or more serious act; (ii) any intentional and/or
willful act of fraud or dishonesty by Participant related to or connected with
Participant’s employment by the Company or any of its Affiliates; (iii) the
willful and/or continued failure, neglect or refusal by Participant to perform
his or her employment duties with the Company or any of its Affiliates, (iv) a
material violation of the Company’s or an Affiliate’s policies or codes of
conduct; or (v) the willful and/or material breach by Participant of any
agreement between Participant and the Company or any of its Affiliates,
including but not limited to an employment agreement or a noncompetition
agreement.

d.    Disability. If Participant ceases to be [an employee] [a consultant] [a
director] of the Company or any Affiliate because of disability (as defined in
Code Section 22(e), or any successor provision), this Option shall completely
terminate on the earlier of (i) the close of business on the twelve-month
anniversary of the date of termination of Participant’s relationship, and
(ii) the Expiration Date of this Option stated in Paragraph 2(a) above. In such
period following such termination of Participant’s relationship, this Option
shall be exercisable only to the extent the Option was exercisable on the
vesting date immediately preceding the date on which Participant’s relationship
with the Company or Subsidiary has terminated, but had not previously been
exercised. To the extent this Option was not exercisable upon the termination of
such relationship, or if Participant does not exercise the Option within the
time specified in this Paragraph 2(c), all rights of Participant under this
Option shall be forfeited.

 
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e.     Death. In the event of Participant’s death, this Option shall terminate
on the earlier of (i) the close of business on the twelve-month anniversary of
the date of Participant’s death, and (ii) the Expiration Date of this Option
stated in Paragraph 2(a) above. In such period following Participant’s death,
this Option may be exercised by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws
of descent and distribution only to the extent the Option was exercisable on the
vesting date immediately preceding the date of Participant’s death, but had not
previously been exercised. To the extent this Option was not exercisable upon
the date of Participant’s death, or if such person or persons fail to exercise
this Option within the time specified in this Paragraph 2(d), all rights under
this Option shall be forfeited.

3.      Manner of Exercise.

a.     General. The Option may be exercised only by Participant (or other proper
party in the event of death or incapacity), subject to the conditions of the
Plan and subject to such other administrative rules as the Administrator may
deem advisable, by delivering within the Option Period written notice of
exercise to the Company at its principal office. The notice shall state the
number of shares as to which the Option is being exercised and shall be
accompanied by payment in full of the Option price for all shares designated in
the notice. The exercise of the Option shall be deemed effective upon receipt of
such notice by the Company and upon payment that complies with the terms of the
Plan and this Agreement. The Option may be exercised with respect to any number
or all of the shares as to which it can then be exercised and, if partially
exercised, may be so exercised as to the unexercised shares any number of times
during the Option period as provided herein.

b.     Form of Payment. Subject to approval by the Administrator, payment of the
option price by Participant shall be in the form of cash, personal check,
certified check or mature, previously-acquired shares of Common Stock of the
Company, broker-assisted exercise, or any combination thereof; provided,
however, that Participant shall not be permitted to pay the option price in the
form of a broker-assisted exercise or in the form of mature, previously-acquired
shares of Common Stock until after the effective date of an initial public
offering of the Company’s Common Stock; and provided, further, that Participant
shall not be permitted to pay the option price in the form of a broker-assisted
exercise or in the form of mature, previously-acquired shares of Common Stock if
payment in such form will cause the Company to recognize a compensation expense
under generally accepted accounting principles. Any stock tendered as part of
such payment shall be valued at its Fair Market Value as provided in the Plan.
For purposes of this Agreement, “mature, previously-acquired shares of Common
Stock” and “broker-assisted exercise” shall have the meaning set forth in
Section 8 of the Plan. The Administrator may, in its discretion, permit
Participant to tender such mature, previously-acquired shares through the actual
delivery of such shares or through attestation of ownership on such forms as the
Administrator may prescribe.

 
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c.     Stock Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.

4.     Miscellaneous.

a.     Rights as Shareholder. This Agreement shall not confer on Participant any
right with respect to continuance of any relationship with the Company or any of
its Affiliates, nor will it interfere in any way with the right of the Company
to terminate such relationship. Participant shall have no rights as a
shareholder with respect to shares subject to this Option until such shares have
been issued to Participant upon exercise of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such shares are issued, except as provided in Section 12 of
the Plan.

b.     Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
Participant may be required by the Company, as a condition of the effectiveness
of any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Participant’s own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

c.     Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to
Section 12 of the Plan, certain changes in the number or character of the Common
Stock of the Company (through merger, consolidation, exchange, reorganization,
divestiture (including a spin-off), liquidation, recapitalization, stock split,
stock dividend or otherwise) shall result in an adjustment, reduction or
enlargement, as appropriate, in Participant’s rights with respect to any
unexercised portion of the Option (i.e., Participant shall have such
“anti-dilution” rights under the Option with respect to such events, but shall
not have “preemptive” rights).

d.     Shares Reserved. The Company shall at all times during the option period
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.

e.     Withholding Taxes. In order to permit the Company to comply with all
applicable federal or state income tax laws or regulations, the Company may take
such action as it deems appropriate to insure that, if necessary, all applicable
federal and state payroll, income or other taxes are withheld from any amounts
payable by the Company to Participant. If the Company is unable to withhold such
federal and state taxes, for whatever reason, Participant hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. Participant may, subject to the
approval and discretion of the Administrator or such administrative rules it may
deem advisable, to assure compliance with Rule 16b-3 of any successor provision,
as then in effect of the General Rules and Regulations under the Securities and
Exchange Act of 1934, if applicable, elect to have all or a portion of such tax
withholding obligations satisfied by delivering shares of the Company’s Common
Stock having a Fair Market Value equal to such obligations.

 
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f.     Nontransferability. During the lifetime of Participant, the accrued
Option shall be exercisable only by Participant or by the Participant’s guardian
or other legal representative, and shall not be assignable or transferable by
Participant, in whole or in part, other than by will or by the laws of descent
and distribution.

g.     2005 Equity Incentive Plan. The Option evidenced by this Agreement is
granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan.
The Plan governs this Option and, in the event of any questions as to the
construction of this Agreement or in the event of a conflict between the Plan
and this Agreement, the Plan shall govern, except as the Plan otherwise
provides.

h.     Lockup Period Limitation. Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of its
Common Stock in compliance with the Securities Act of 1933, as amended, and that
the underwriter(s) seek to impose restrictions under which certain shareholders
may not sell or contract to sell or grant any option to buy or otherwise dispose
of part or all of their stock purchase rights of the underlying Common Stock,
Participant hereby agrees that for a period not to exceed 180 days from the
prospectus, Participant will not sell or contract to sell or grant an option to
buy or otherwise dispose of this option or any of the underlying shares of
Common Stock without the prior written consent of the underwriter(s) or its
representative(s).

i.     Blue Sky Limitation. Notwithstanding anything in this Agreement to the
contrary, in the event the Company makes any public offering of its securities
and determines, in its sole discretion, that it is necessary to reduce the
number of issued but unexercised stock purchase rights so as to comply with any
state securities or Blue Sky law limitations with respect thereto, the Board of
Directors of the Company shall (i) accelerate the exercisability of this Option
and the date on which this Option must be exercised, provided that the Company
gives Participant 15 days’ prior written notice of such acceleration, and (ii)
cancel any portion of this Option or any other option granted to Participant
pursuant to the Plan which is not exercised prior to or contemporaneously with
such public offering. Notice shall be deemed given when delivered personally or
when deposited in the United States mail, first class postage prepaid and
addressed to Participant at the address of Participant on file with the Company.

j.     Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 12 of
the Plan occurs and Participant is an “affiliate” of the Company or any
Affiliate (as defined in applicable legal and accounting principles) at the time
of such transaction, Participant will comply with all requirements of Rule 145
of the Securities Act of 1933, as amended, and the requirements of such other
legal or accounting principles, and will execute any documents necessary to
ensure such compliance.

 
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k.     Stock Legend. The Administrator may require that the certificates for any
shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors) shall bear an appropriate legend to reflect the
restrictions of Paragraphs 4(b), 4(h) and 4(i) of this Agreement.

   l.     Scope of Agreement; Amendment. This Agreement shall bind and inure to
the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by
Paragraph 2 or Paragraph 4(f) above. Notwithstanding anything in this Agreement
or the Plan to the contrary, the Company expressly reserves the right to amend
this Agreement without Participant’s consent to the extent necessary or
desirable to comply with Code Section 409A, and the regulations, notices and
other guidance of general applicability issued thereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.

 

     CAPE COASTAL TRADING CORPORATION         By:     Its:              
Participant

 
 
 
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