Document:

Unassociated Document

    Exhibit
      10.4

    

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (“Agreement”)
      dated
      December 29, 2005 and effective as of December 29, 2005 (the “Effective
      Date”),
      between Cape Coastal Trading Corporation, a Delaware corporation, with its
      principal place of business located at 8550 West Bryn Mawr, Suite 200, Chicago,
      Illinois 60631 its affiliates, subsidiaries, successors and assigns (the
“Company”)
      and
      Timothy E. Takesue, an individual residing in Geneva, Illinois (the
“Executive”).

     

    1. Employment
      Period.
      As of
      the Effective Date, the Company shall employ the Executive, and the Executive
      agrees to be employed by Company in the positions of Executive Vice President
      of
      Merchandising in accordance with the terms and subject to the conditions of
      this
      Agreement, commencing on the Effective Date and terminating on the day which
      is
      the second anniversary of the Effective Date, unless terminated in accordance
      with the provisions of Section 11, in which case the provisions of Section
      11
      shall control (the “Term”).
      Upon
      expiration of the Term and thereafter, it shall automatically renew itself
      and
      continue in full force and effect from year to year unless written notice of
      election not to renew, or written notice of election to modify any provision
      of
      this Agreement, is given by one party, and received by the other not later
      than
      60 days prior to the expiration of this Agreement or any extension
      hereto.

    

    The
      Executive affirms that, except as otherwise set forth herein, no obligation
      exists between the Executive and any other entity which would prevent or impede
      the Executive’s immediate and full performance of every obligation of this
      Agreement.

     

    2. Position
      and Duties.
      During
      the Term of the Executive’s employment hereunder, the Executive shall continue
      to serve in, and assume duties and responsibilities consistent with, the
      position of Executive Vice President of Merchandising. The Executive agrees
      to
      devote his working
      time, as
      set
      forth in Section 4 hereof, utilizing his skill, energy and best business efforts
      on behalf of the Company. Notwithstanding anything to the contrary contained
      herein, upon written notice to the Board of Directors the Executive may hold
      officer and non-executive director positions (or the equivalent position) in
      or
      at other entities not inconsistent with the best interests of the Company so
      long as the Board of Directors has not provided Executive written notice that
      it
      has determined that such activities will interfere with his ability to perform
      his duties and responsibilities hereunder. 

     

    3. No
      Conflicts.
      The
      Executive covenants and agrees that for so long as he is employed by the
      Company, he shall inform the Company of each and every business opportunity
      related to the business of the Company of which he becomes aware, and that
      he
      will not, directly or indirectly, exploit any such opportunity for his own
      account, nor will he render any services to any other person or business,
      acquire any interest of any type in any other business (except for an ownership
      interest of not more than 1% of a publicly traded entity) or engage in any
      activities that conflict with the Company’s best interests or which is in
      competition with the Company. 

     

    4. Days/Hours
      of Work and Work Week.
      The
      Executive shall normally work 5 days per week and his hours of work shall be
      appropriate to the nature of the Executive’s duties and responsibilities with
      the Company, it being recognized that such duties and responsibilities require
      flexibility in the Executive’s work schedule. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5. Employment
      Location.
      The
      locus of the Executive’s employment with the Company shall be the Company’s
      principal executive office which is currently located at 8550 West Bryn Mawr,
      Suite 200, Chicago, Illinois 60631. 

     

    6. Compensation.

     

    (a) Base
      Salary.
      During
      the first 12 months of the Term, the Company shall pay, and the Executive agrees
      to accept, in consideration for the Executive’s services hereunder, an annual
      salary of $250,000, less all applicable taxes and other appropriate deductions.
      On the first anniversary of the Effective Date, the Executives annual salary
      shall increase to $275,000. The
      Company’s Board of Directors (the “Board”)
      shall
      annually review the Executive’s base salary to determine whether such salary
      should be increased and the amount of any such increase shall be within the
      Board’s sole discretion. 

     

    (b) Annual
      Performance Bonus.
      During
      the Term of this Agreement, the Executive
      shall be entitled to an annual performance bonus with a targeted amount equal
      to
      50% of the Executive’s annual base salary and a maximum payout in an amount not
      to exceed 100% of the Executive’s annual base salary
      (or
pro-rata
      portion
      thereof in the case of a period of less than 12 months)
      based on
      an evaluation conducted by the Board of the
      Executive’s performance and the operating performance of the Company during the
      fiscal year to which the performance bonus pertains based on established target
      performance as follows: 70% corporate financial targets, 30% individual
      leadership goals, and self-funding above financial targets. Each annual
      performance bonus shall be paid by the Company to the Executive promptly
after
      the
      first meeting of the Board following the previous calendar year,
      but
      in no case later than March 30th of each year. The Company will deliver a more
      detailed formal written plan document within 45-days of the Effective Date
      setting forth the final terms and conditions of the Annual Performance Bonus
      for
      the first year of this Agreement.

     

    7. Business
      Expenses.
      During
      the Term of this Agreement, the Executive shall be entitled to payment or
      reimbursement of any and all reasonable expenses paid or incurred by him in
      connection with and related to the performance of his duties and
      responsibilities hereunder for the Company. All requests by the Executive for
      payment of
      reimbursement of such expenses shall be supported by appropriate invoices,
      vouchers, receipts or such other supporting documentation in such form and
      containing such information as the Company may from time to time reasonably
      require, evidencing that the Executive, in fact, incurred or paid said
      expenses.

     

    8. Vacation.
      During
      the Term of this Agreement, the Executive shall be entitled to accrue 20
      vacation days per year. The Executive shall be entitled to carry over any
      accrued, unused vacation days from year to year not to exceed a carryover of
      10
      vacation days per year.

     

    9. Equity
      Compensation.

    

    (a) Incentive
      Plan.
      By the
      Effective Date, the Company plans to have received all requisite approvals
      required to adopt a new equity incentive plan (the “Plan”).
      Within 45 days of the date on which the Plan is adopted, the Company will
      provide a copy of the Plan to the Executive. 

    

    (b) Stock
      Options.
      After
      the adoption of the Plan and subject to approval of the Board of Directors,
      the
      Company shall issue to the Executive a stock option to acquire 500,000 shares
      of
      the Company’s common stock (the “Common
      Stock”)
      under
      the Plan at an exercise price equal to the fair market value of the Common
      Stock
      as of the date of grant. The stock option granted pursuant to this Section
      and
      each subsequent grant of options to the Executive during the Term shall be
      evidenced by a written stock option agreement.

    

    
      
        
        

      

      
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    (c) Vesting
      and Exercise.
      The
      stock option to be granted pursuant to this Section shall vest and become
      exercisable as follows: 1/3 upon the second anniversary of the grant date,
      1/3
      upon the third anniversary of the grant date and 1/3 on the fourth anniversary
      of the grant date. Subsequent stock options granted to the Executive shall
      vest
      pursuant to the terms and conditions of the Plan.

     

    10.
      Other Benefits. During the Term of this Agreement, the
      Executive shall be eligible to participate in incentive, savings, retirement
      (401(k)), and welfare benefit plans, including, without limitation, health,
      medical, dental, vision, life (including accidental death and dismemberment)
      and
      disability insurance plans (collectively, “Benefit Plans”), in
      substantially the same manner and at substantially the same levels as the
      Company makes such opportunities available to the Company's executive
      employees.

    

    11. Termination
      of Employment.

     

    (a) Death.
      In the
      event that, during the Term of this Agreement, the Executive dies, this
      Agreement and the Executive’s employment with the Company shall automatically
      terminate and the Company shall have no further obligations to the Executive
      or
      his heirs, administrators or executors with respect to compensation and benefits
      accruing thereafter, except for the obligation to pay the Executive’s heirs,
      administrators or executors any earned but unpaid base salary, unpaid
pro
      rata
      annual
      bonus and unused vacation days accrued through the date of death, including
      any
      carryover days. The Company shall deduct, from all payments made hereunder,
      all
      applicable taxes, including income tax, FICA and FUTA, and other appropriate
      deductions.

    

    (b) Disability. In
      the
      event that, during the Term of this Agreement, the Executive shall be prevented
      from performing his duties and responsibilities hereunder to the full extent
      required by the Company by reason of Disability, as defined below, this
      Agreement and the Executive’s employment with the Company shall automatically
      terminate and the Company shall have no further obligations to the Executive
      or
      his heirs, administrators or executors with respect to compensation and benefits
      accruing thereafter, except for the obligation to pay the Executor’s heirs,
      administrators or executors any earned but unpaid base salary, unpaid
pro
      rata
      annual
      bonus and unused vacation days accrued through the date of Disability, including
      any carryover days. The Company shall deduct, from all payments made hereunder,
      all applicable taxes, including income tax, FICA and FUTA, and other appropriate
      deductions through
      the last date of the Executive’s employment with the Company. For purposes of
      this Agreement, “Disability”
shall
      mean a physical or mental disability that, in the Board’s discretion, based upon
      the medical opinions of two qualified physicians specializing in the area or
      areas of the Executive’s affliction, one of whom shall be chosen by the Board
      and one of whom shall be chosen by the Executive, prevents the performance
      by
      the Executive, with or without reasonable accommodation, of his duties and
      responsibilities hereunder for a continuous period of not less than six
      consecutive months. 

    

    
      
        
        

      

      
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    (c) Cause.

    

    (i) At
      any
      time during the Term of this Agreement, the Company may terminate this Agreement
      and the Executive’s employment hereunder for Cause. For purposes of this
      Agreement, “Cause”
shall
      mean:
      (a)
the
      willful and continued failure of the Executive to substantially perform his
      duties to and responsibilities for the Company (other than any such failure
      resulting from a Disability); (b) the
      conviction of, or plea of guilty or nolo
      contendere
      to a
      felony; or (c) fraud,
      dishonesty, competition with the Company, unauthorized use of any of the
      Company’s or any subsidiary’s trade secrets or confidential
      information, a
      material breach of the Company’s policies or codes of conduct, a willful or
      material breach of any agreement between the Executive and the Company,
      including this Agreement, or gross misconduct which is materially and
      demonstratively injurious to the Company. 

     

    (ii) Termination
      of the Executive for Cause shall be made by delivery to the Executive of written
      notice from the Board specifying the basis of the Executive’s termination is for
      Cause, describing the conduct or circumstances justifying termination for Cause,
      and indicating that the Board has found that such conduct or circumstances
      has
      occurred and warrants the Executive’s termination of employment for Cause. Upon
      receipt of such demand or notice, the Executive, shall be entitled to appear
      before the Board for the purpose of demonstrating that the conduct indicated
      does not exist or that breach of 11(c)(i)(A) has been cured. After such
      appearance, the Board shall make a final determination on the existence of
      a
      basis warranting Executive’s termination for Cause. No termination for Cause
      will be final until the Board has reached such a determination. 

     

    (iii) Upon
      termination of Executive’s employment for Cause, the Company shall have no
      further obligations or liability to the Executive or his heirs, administrators
      or executors with respect to compensation and benefits thereafter, except for
      the obligation to pay the Executive any earned but unpaid base salary through
      the Executive’s last day of employment with the Company. The Company shall
      deduct, from all payments made hereunder, all applicable taxes, including income
      tax, FICA and FUTA, and other appropriate deductions.

     

    (d) Good
      Reason.

     

    (i) At
      any
      time during the Term of this Agreement, subject to the conditions set forth
      in
      Section 11(d)(iii) below, the Executive may terminate this Agreement and the
      Executive’s employment with the Company for Good Reason. For purposes of this
      Agreement, Good
      Reason
      shall
      mean the occurrence, without the Executive’s consent, of any of the following
      events: (A) the
      assignment of duties and responsibilities that are inconsistent with and reflect
      a substantial diminution in the duties and responsibilities assumed by the
      Executive on the Effective Date; (B) a
      Change
      of Control (as defined in Section 11(d)(ii) herein below) that results in the
      termination of the Executive’s employment with the Company or a material adverse
      change in the Executive’s duties and responsibilities or, as applicable, in
      connection with which the successor does not agree to assume, or is not deemed
      to assume by operation of law, the Company’s obligations under this Agreement;
      (C) a material breach of this Agreement by the Company; (D) a relocation of
      the
      Company’s principal executive offices to a location that is greater than 50
      miles from its current location; or (E) a reduction in the Executive’s base
      salary or a material reduction in other benefits, as described in Section 10(a),
      other than reductions generally applicable to executives of the Company.

    

    (ii) For
      purposes of this Agreement, “Change
      of Control”
means:
      (A) any sale, lease, exchange or other transfer (in one transaction or a series
      of related transactions) of all, or substantially all, of the assets of the
      Company other than any sale, lease, exchange or other transfer to any company
      where the Company owns, directly or indirectly, 100 percent of the outstanding
      voting securities of such company after any such transfer; (B) any person or
      persons (as such term is used in Section 13(d) of the Exchange Act of 1934,
      as
      amended), other than the holders of voting securities of the Company as of
      the
      Effective Date, shall acquire or become the beneficial owner (within the meaning
      of Rule 13d-3 under the Exchange Act) whether directly, indirectly, beneficially
      or of record, of 51% or more of outstanding voting securities of the Company;
      or
      (C) consummation by any entity, person, or group (including any affiliate
      thereof, other than the Company) of a tender offer or exchange offer where
      the
      offeree acquires more than 51% of the then outstanding voting securities of
      the
      Company.

    

    
      
        
        

      

      
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    (iii) The
      Executive shall be entitled to terminate this Agreement for Good Reason if
      Executive has delivered to the Company written notice of his intention to
      terminate this Agreement for Good Reason promptly, and in no event longer than
      5
      business days, after either the date on which the Executive (A) receives written
      notice from the Company of the occurrence of an event within the meaning of
      Good
      Reason under Section 11(d)(i) or (B) obtains actual knowledge of the occurrence
      of an event within the meaning of Good Reason under Section 11(d)(i) and which
      provides, in reasonable detail, the circumstances of the occurrence of the
      event; provided, however, that the Executive shall not be entitled to terminate
      this Agreement for Good Cause if the Company eliminates such event or
      circumstances within 10 days of the Company’s receipt of the written notice
      described in this Section. 

     

    (iv) In
      the
      event that Executive terminates this Agreement for Good Reason, the Company
      shall pay or provide to the Executive (or, following his death, to the
      Executive’s heirs, administrators or executors)
      any
      earned but unpaid base salary, unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company, including any carryover days. In addition, the
      Company shall pay Executive in 24 equal semi-monthly installments as severance
      an amount equal to the Executive’s annual base salary on the date of the
      termination of this Agreement in
      accordance with the Company’s standard payroll schedule less all applicable
      taxes and other appropriate deductions and adjustments pursuant to the Company’s
      employee compensation policies in effect on such date and provided
      the Executive agrees to execute the Company’s standard separation and release
      agreement and Executive
      shall receive for a period of 12 months following the date of termination,
      coverage, at the Company’s expense, under the Benefits Plans; provided, however,
      that continued coverage shall be canceled or reduced to the extent of any
      comparable benefit coverage offered to the Executive by a subsequent employer
      or
      other person or entity for which the Executive performs services, including
      but
      not limited to consulting services. The Company shall deduct, from all payments
      made hereunder, all applicable taxes, including income tax, FICA and FUTA,
      and
      other appropriate deductions. 

     

    (e) Without
      Cause.

     

    (i) By
      The Executive.
      At any
      time during the Term of this Agreement, the Executive shall be entitled to
      terminate this Agreement without Cause by providing 30 days prior written notice
      of such intent to terminate to the Company. Upon termination by the Executive
      of
      this Agreement pursuant to this Section, the Company shall have no further
      obligations to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay the Executive (or, following his death, to the Executive’s heirs,
      administrators or executors) any earned but unpaid base salary, pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company. The Company shall deduct, from all payments made
      hereunder, all applicable taxes, including income tax, FICA and FUTA, and other
      appropriate deductions.

     

    
      
        
        

      

      
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    (ii) By
      The Company.
      At any
      time during the Term of this Agreement, the Company shall be entitled to
      terminate this Agreement without Cause by providing 30 days prior written notice
      of such intent to the Executive. Upon termination by the Company of this
      Agreement without Cause, the Company shall pay or provide to the Executive
      (or,
      following his death, to the Executive’s heirs, administrators or executors): any
      earned but unpaid base salary, unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company, including any carryover days. In addition, so
      long
      as Executive has not and does not violate the provisions of Sections 12, 13
      and
      14 of this Agreement, the Company shall pay or provide to the Executive as
      severance in 24 equal semi-monthly installments an amount equal to the
      Executive’s annual base salary on the date of the termination of this Agreement
in
      accordance with the Company’s standard payroll schedule less all applicable
      taxes and other appropriate deductions and adjustments pursuant to the Company’s
      employee compensation policies in effect on such date and provided
      the Executive agrees to execute the Company’s standard separation and release
      agreement and Executive shall receive for a period of 12 months following the
      date of termination, payment or reimbursement, at the Company’s expense, of
      Executive’s COBRA rights under the Benefits Plans (if Executive elects COBRA
      continuation); provided, however, that such continued benefit plan coverage
      shall be canceled or reduced to the extent of any comparable benefit coverage
      offered to the Executive by a subsequent employer or other person or entity
      for
      which the Executive performs services, including but not limited to consulting
      services. The Company shall deduct, from all payments made hereunder, all
      applicable taxes, including income tax, FICA and FUTA, and other appropriate
      deductions. 

     

    12. Confidential
      Information.
      

     

    (a) The
      Executive expressly acknowledges that, in the performance of his duties and
      responsibilities with the Company, he has been exposed, and will be exposed,
      to
      the trade secrets, business and/or financial secrets and confidential and
      proprietary information of the Company, its affiliates and/or its clients or
      customers (“Confidential
      Information”).
      The
      term “Confidential
      Information”
      includes, without limitation, information or material that has actual or
      potential commercial value to the Company, its affiliates and/or its clients
      or
      customers and is not generally known to and is not readily ascertainable by
      proper means to persons outside the Company, its affiliates and/or its clients
      or customers.

     

    (b) Except
      as
      authorized in writing by the Board, during the performance of the Executive’s
      duties and responsibilities for the Company and until such time as any such
      Confidential Information becomes generally known to and readily ascertainable
      by
      proper means to persons outside the Company, its affiliates and/or its clients
      or customers,
      the
      Executive agrees to keep strictly confidential and not use for his personal
      benefit or the benefit to any other person or entity the Confidential
      Information, whether or not prepared or developed by the Executive. Confidential
      Information includes, without limitation, the following, whether or not
      expressed in a document or medium, regardless of the form in which it is
      communicated, and whether or not marked “trade secret” or “confidential” or any
      similar legend: (i) lists
      of
      and/or information concerning customers, suppliers, employees, consultants,
      and/or co-venturers of the Company, its affiliates or its clients or customers;
      (ii) information
      submitted by customers, suppliers, employees, consultants and/or co-venturers
      of
      the Company, its affiliates and/or its clients or customers; (iii) information
      concerning the business of the Company, its affiliates and/or its clients or
      customers, including, without limitation, cost information, profits, sales
      information, prices, accounting, unpublished financial information, business
      plans or proposals, markets and marketing methods, advertising and marketing
      strategies, administrative procedures and manuals, the terms and conditions
      of
      the Company’s contracts and trademarks and patents under consideration,
      distribution channels, franchises, investors, sponsors and advertisers; (iv)
      technical
      information concerning products and services of the Company, its affiliates
      and/or its clients or customers, including, without limitation, product data
      and
      specifications, diagrams, flow charts, know how, processes, designs, formulae,
      inventions and product development; (v) lists
      of
      and/or information concerning applicants, candidates or other prospects for
      employment, independent contractor or consultant positions at or with any actual
      or prospective customer or client of Company and/or its affiliates,
      any and
      all confidential processes, inventions or methods of conducting business of
      the
      Company, its affiliates and/or its clients or customers; (vi) any
      and
      all versions of proprietary computer software (including source and object
      code), hardware, firmware, code, discs, tapes, data listings and documentation
      of the Company, its affiliates and/or its clients or customers; (vii)
any
      other
      information disclosed to the Executive by, or which the Executive obtained
      under
      a duty of confidence from, the Company, its affiliates and/or its clients or
      customers; (viii) all
      other
      information concerning the Company not generally known to the public which,
      if
      misused or disclosed, could reasonably be expected to adversely affect the
      business of the Company, its affiliates and/or its clients or customers.
      Confidential Information shall not include (i) information which is in the
      public domain or which enters the public domain without the fault of Executive,
      (ii) information which was in the possession of Executive in written or other
      documentary form prior to the time of disclosure by the Company to Executive,
      and (iii) information which is required by Executive to be disclosed in legal
      proceedings, including pursuant to subpoena or court order.

     

    
      
        
        

      

      
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    (c) The
      Executive affirms that he does not possess and will not rely upon the protected
      trade secrets or confidential or proprietary information of his prior
      employer(s) in providing services to the Company.

     

    (d) In
      the
      event that the Executive’s employment with the Company terminates for any
      reason, the Executive shall deliver forthwith to the Company any and all
      originals and copies of Confidential Information.

     

    13. Ownership
      and Assignment of Inventions. 

    

    (a) The
      Executive acknowledges that, in connection with his duties and responsibilities
      relating to his employment with the Company, he and/or other employees of the
      Company working with him, without him or under his supervision, may create,
      conceive of, make, prepare, work on or contribute to the creation of, or may
      be
      asked by the Company or its affiliates to create, conceive of, make, prepare,
      work on or contribute to the creation of, without limitation, lists, business
      diaries, business address books (except
      for business addresses and business address books not related to the Company),
      documentation, ideas, concepts, inventions, designs, works of authorship,
      computer programs, audio/visual works, developments, proposals, works for hire
      or other materials to the extent that any of the same relate to any actual
      or
      reasonably anticipated Business of the Company (as such phrase is defined in
      paragraph 14(a) hereof) or any of the Company’s affiliates (“Inventions”).
      Executive expressly acknowledges that all of his activities and efforts relating
      to any Inventions, whether or not performed during his or the Company’s regular
      business hours, are within the scope of his employment with the Company and
      that
      the Company owns all right, title and interest in and to all Inventions,
      including, to the extent that they exist, all intellectual property rights
      thereto, including, without limitation, copyrights, patents and trademarks
      in
      and to all Inventions. The Executive also acknowledges and agrees that the
      Company owns and is entitled to sole ownership of all rights and proceeds to
      all
      Inventions.

     

    (b) The
      Executive expressly acknowledges and agrees to assign to the Company, and hereby
      assigns to the Company, all of the Executive’s right, title and interest in and
      to all Inventions, including, to the extent they exist, all intellectual
      property rights thereto, including, without limitation, copyrights, patents
      and
      trademarks in and to all Inventions.

     

    (c) In
      connection with all Inventions, the Executive agrees to disclose any Invention
      promptly to the Company and to no other person or entity. The Executive further
      agrees to execute promptly, at the Company’s request, specific written
      assignments of the Executive’s right, title and interest in any Inventions, and
      do anything else reasonably necessary to enable the Company to secure or obtain
      a copyright, patent, trademark or other form of protection in or for any
      Invention in the United States or other countries.

    

    (d) The
      Executive acknowledges that all rights, waivers, releases and/or assignments
      granted in this Section by the Executive are freely assignable by the Company
      and are made for the benefit of the Company and its Affiliates, subsidiaries,
      licensees, successors and assigns.

    

    
      
        
        

      

      
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    14. Non-Competition
      And Non-Solicitation.
      

    

    (a) The
      Executive agrees and acknowledges that the Confidential Information that the
      Executive has already received and will receive are valuable to the Company,
      its
      affiliates and/or its clients or customers, and
      that
      its protection and maintenance constitutes a legitimate business interest of
      Company, its
      affiliates and/or its clients or customers
      to be
      protected by the non-competition restrictions set forth herein. The Executive
      agrees and acknowledges that the non-competition restrictions set forth herein
      are reasonable and necessary and do not impose undue hardship or burdens on
      the
      Executive. The Executive also acknowledges that the products and services
      developed or provided by the Company, its
      affiliates and/or its clients or customers
      are or
      are intended to be sold, provided, licensed and/or distributed to customers
      and
      clients in and throughout the United States (the “Geographic
      Boundary”),
      and
      that the Geographic Boundary, scope of prohibited competition, and time duration
      set forth in the non-competition restrictions set forth below are reasonable
      and
      necessary to maintain the value of the Confidential Information of, and to
      protect the goodwill and other legitimate business interests of, the Company,
      its
      affiliates and/or its clients or customers.
      The
      Executive also acknowledges that the business of the Company is the offering
      through its online marketplace of high quality new, overstock, close-out and
      refurbished brand name consumer merchandise (the “Business
      of the Company”).

    

    (b) The
      Executive hereby agrees and covenants that he shall not, directly or indirectly,
      in any capacity whatsoever, including, without limitation, as an employee,
      employer, consultant, principal, partner, shareholder, officer, director or
      any
      other individual or representative capacity (other than a holder of less than
      one percent (1%) of the outstanding voting shares of any publicly held company),
      or whether on the Executive’s own behalf or on behalf of any other person or
      entity or otherwise howsoever, during the Executive’s employment with the
      Company and for a period of one year following the termination of this Agreement
      for any reason, in the Geographic Boundary:

    

    (i) Engage,
      own, manage, operate, control, be employed by, consult for, participate in,
      or
      be connected in any manner with the ownership, management, operation or control
      of any business in competition with the Business of the Company; 

    

    (ii) Solicit,
      persuade or induce any Customer: to terminate, reduce or refrain from renewing,
      extending, or entering into contractual or other relationships with the Company
      or to become a customer of or enter into any contractual or other relationship
      with any other individual, person or entity for the purpose of purchasing
      competitive products or services; or

    

    
      
        
        

      

      
        -
          8 -

        
          

        

      

      
        
        

      

    

    (iii) Recruit,
      hire, induce, contact, divert or solicit, or attempt to recruit, induce,
      contact, divert or solicit, any employee of the Company to leave the employment
      thereof, whether or not any such employee is party to an employment agreement.
      

    

    15. Indemnification.
      The
      Company hereby covenants and agrees to indemnify the Executive to the fullest
      extent permitted by law and to hold the Executive harmless fully, completely,
      and absolutely against and in any respects to any and all actions, suits,
      proceedings, claims, demands, judgments, costs, expenses (including attorneys’
fees), losses, and damages resulting from the Executive’s good faith performance
      of his job duties pursuant to this Agreement. The Company also hereby agrees
      to
      cover the Executive under a directors’ and officers’ liability insurance policy
      at all times while an employee and for the applicable statute of limitations
      after termination hereof, with such coverage no less favorable than that given
      to other executive employees of the Company.

    

    16. Notice.
      For
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement or contemplated hereby shall be in writing and shall be deemed
      to
      have been duly given when personally delivered, delivered by a nationally
      recognized overnight delivery service or when mailed United States Certified
      or
      registered mail, return receipt requested, postage prepaid, and addressed as
      follows:

     

    If
      to the
      Company: 

    

    Cape
      Coastal Trading Corporation

    8550
      West
      Bryn Mawr

    Suite
      200

    Chicago,
      Illinois 60631

    

    If
      to the
      Executive:

    Timothy
      E. Takesue

    
      c/o
        Cape
        Coastal Trading Corporation

      8550
        West
        Bryn Mawr

      Suite
        200

      Chicago,
        Illinois 60631

    

     

    17. Miscellaneous.

     

    (a) Telephones,
      stationery, postage, e-mail, the internet and other resources made available
      to
      the Executive by the Company, are solely for the furtherance of the Company’s
      business.

     

    (b) All
      issues and disputes concerning, relating to or arising out of this Agreement
      and
      from the Executive’s employment by the Company, including, without limitation,
      the construction and interpretation of this Agreement, shall be governed by
      and
      construed in accordance with the internal laws of the State of Illinois, without
      giving effect to that State’s principles of conflicts of law. The Executive
      hereby consents to jurisdiction in the courts of Illinois.

     

    (c) The
      Parties agree that any provision of this Agreement deemed unenforceable or
      invalid may be reformed to permit enforcement of the objectionable provision
      to
      the fullest permissible extent. Any provision of this Agreement deemed
      unenforceable after modification shall be deemed stricken from this Agreement,
      with the remainder of the Agreement being given its full force and
      effect.

     

    (d) The
      Company shall be entitled to equitable relief, including injunctive relief
      and
      specific performance as against the Executive, for the Executive’s threatened or
      actual breach of Sections 12, 13 and 14 of this Agreement, as money damages
      for
      a breach thereof would be incapable of precise estimation, uncertain, and an
      insufficient remedy for an actual or threatened breach of Sections 12, 13 and
      14
      of this Agreement. The Parties agree that any pursuit of equitable relief in
      respect of Sections 12, 13 and 14 of this Agreement shall have no effect
      whatsoever regarding the continued viability and enforceability of Section
      16 of
      this Agreement. 

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

    

    (e) Any
      waiver or inaction by the Company or the Executive for any breach of this
      Agreement shall not be deemed a waiver of any subsequent breach of this
      Agreement.

     

    (f) The
      Parties independently have made all inquiries regarding the qualifications
      and
      business affairs of the other which either party deems necessary. The Executive
      affirms that he fully understands this Agreement’s meaning and legally binding
      effect. Each party has participated fully and equally in the negotiation and
      drafting of this Agreement. 

     

    (g) The
      Executive’s obligations under this Agreement are personal in nature and may not
      be assigned by the Executive to any other person or entity. This
      Agreement shall be enforceable by the
      Company
      and its
      parents, affiliates, successors and assigns.

     

    (h) This
      instrument constitutes the entire Agreement between the Parties regarding its
      subject matter. When signed by all Parties, this Agreement supersedes and
      nullifies all prior or contemporaneous conversations, negotiations, or
      agreements, oral and written, regarding the subject matter of this Agreement.
      In
      any future construction of this Agreement, this Agreement should be given its
      plain meaning. This Agreement may be amended only by a writing signed by the
      Parties.

     

    (i) This
      Agreement may be executed in counterparts, a counterpart transmitted via
      facsimile, and all executed counterparts, when taken together, shall constitute
      sufficient proof of the Parties’ entry into this Agreement. The Parties agree to
      execute any further or future documents which may be necessary to allow the
      full
      performance of this Agreement. This Agreement contains headings for ease of
      reference. The headings have no independent meaning.

    

    [SIGNATURE
      PAGE FOLLOWS]

    

    

    
      
        
        

      

      
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          10 -

        
          

        

      

      
        
        

      

    

    THE
      EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
      AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF. THIS
      AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
      PARTIES.

    

    

    UNDERSTOOD,
      AGREED, AND ACCEPTED:

    

    
      

      

      
        	EXECUTIVE	 	COMPANY
	 	 	 	 	 
	Timothy E. Takesue	 	Cape Coastal Trading
                Corporation
	 	 	 	 	 
	/s/
                Timothy E. Takesue	 	By:	/s/
                Robert H. Tomlinson, Jr. 
	 	 	 	Name:  	Robert
                H. Tomlinson, Jr. 
	 	 	 	Title: 	President
&
CEO  
	 	 	 	 	 
	 	 	 	 	 
	Date:
                 December
                29, 2005 	 	Date:
                	December
                29, 2005 

      

            

         

    

     

    

     

    
      
        
        

      

      
        -
          11 -Unassociated Document

    

      Exhibit
        10.5

      

      EMPLOYMENT
        AGREEMENT

      

      

      THIS
        EMPLOYMENT AGREEMENT (“Agreement”)
        dated
        December 29, 2005 and effective as of December 29, 2005 (the “Effective
        Date”),
        between Cape Coastal Trading Corporation, a Delaware corporation, with its
        principal place of business located at 8550 West Bryn Mawr, Suite 200, Chicago,
        Illinois 60631 its affiliates, subsidiaries, successors and assigns (the
        “Company”)
        and
        Anthony Priore, an individual residing in Highland Park, Illinois (the
“Executive”).

      

      1. Employment
        Period.
        As of
        the Effective Date, the Company shall employ the Executive, and the Executive
        agrees to be employed by Company in the position of Chief Marketing Officer
        in
        accordance with the terms and subject to the conditions of this Agreement,
        commencing on the Effective Date and terminating on the day which is the
        second
        anniversary of the Effective Date unless terminated in accordance with the
        provisions of Section 11, in which case the provisions of Section 11 shall
        control (the “Term”).
        

      

      The
        Executive affirms that, except as otherwise set forth herein, no obligation
        exists between the Executive and any other entity which would prevent or
        impede
        the Executive’s immediate and full performance of every obligation of this
        Agreement.

       

      2. Position
        and Duties.
        During
        the Term of the Executive’s employment hereunder, the Executive shall continue
        to serve in, and assume duties and responsibilities consistent with, the
        position of Chief Marketing Officer. The Executive agrees to devote
        his working
        time, as
        set
        forth in Section 4 hereof, utilizing his skill, energy and best business
        efforts
        on behalf of the Company. Notwithstanding anything to the contrary contained
        herein, upon written notice to the Board of Directors the Executive may hold
        officer and non-executive director positions (or the equivalent position)
        in or
        at other entities not inconsistent with the best interests of the Company
        so
        long as the Board of Directors has not provided Executive written notice
        that it
        has determined that such activities will interfere with his ability to perform
        his duties and responsibilities hereunder. 

       

      3. No
        Conflicts.
        The
        Executive covenants and agrees that for so long as he is employed by the
        Company, he shall inform the Company of each and every business opportunity
        related to the business of the Company of which he becomes aware, and that
        he
        will not, directly or indirectly, exploit any such opportunity for his own
        account, nor will he render any services to any other person or business,
        acquire any interest of any type in any other business (except for an ownership
        interest of not more than 1% of a publicly traded entity) or engage in any
        activities that conflict with the Company’s best interests or which is in
        competition with the Company. 

       

      4. Days/Hours
        of Work and Work Week.
        The
        Executive shall normally work 5 days per week and his hours of work shall
        be
        appropriate to the nature of the Executive’s duties and responsibilities with
        the Company, it being recognized that such duties and responsibilities require
        flexibility in the Executive’s work schedule. 

       

      5. Employment
        Location.
        The
        locus of the Executive’s employment with the Company shall be the Company’s
        principal executive office which is currently located at 8550 West Bryn Mawr,
        Suite 200, Chicago, Illinois 60631. 

       

      6. Compensation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (a) Base
        Salary.
        During
        the first 12 months of the Term, the Company shall pay, and the Executive
        agrees
        to accept, in consideration for the Executive’s services hereunder, an annual
        salary of $190,000.00, less all applicable taxes and other appropriate
        deductions. On the first anniversary of the Effective Date, the Executives
        annual salary shall increase to $210,000.00. The
        Company’s Chief Executive Officer (the “CEO”)
        shall
        annually review the Executive’s base salary to determine whether such salary
        should be increased and the amount of any such increase shall be within the
        CEO’s sole discretion. 

       

      (b) Annual
        Performance Bonus.
        During
        the Term of this Agreement, the Executive
        shall be entitled to an annual performance bonus with a targeted amount equal
        to
        30% of the Executive’s annual base salary and a maximum payout in an amount not
        to exceed 60% of the Executive’s annual base salary
        (or
pro-rata
        portion
        thereof in the case of a period of less than 12 months)
        based on
        an evaluation conducted by the Board of the
        Executive’s performance and the operating performance of the Company during the
        fiscal year to which the performance bonus pertains based on established
        target
        performance as follows 70% corporate financial targets, 30% individual
        leadership goals, and self-funding above financial targets. Each annual
        performance bonus shall be paid by the Company to the Executive promptly
        after
        the
        first meeting of the Board following the previous calendar year,
        but
        in no case later than March 30th of each year. The Company will deliver a
        more
        detailed formal written plan document within 45-days of the Effective Date
        setting forth the final terms and conditions of the Annual Performance Bonus
        for
        the first year of this Agreement.

       

      7. Business
        Expenses.
        During
        the Term of this Agreement, the Executive shall be entitled to payment or
        reimbursement of any and all reasonable expenses paid or incurred by him
        in
        connection with and related to the performance of his duties and
        responsibilities hereunder for the Company. All requests by the Executive
        for
        payment of
        reimbursement of such expenses shall be supported by appropriate invoices,
        vouchers, receipts or such other supporting documentation in such form and
        containing such information as the Company may from time to time reasonably
        require, evidencing that the Executive, in fact, incurred or paid said
        expenses.

       

      8. Vacation.
        During
        the Term of this Agreement, the Executive shall be entitled to accrue 20
        personal and vacation days per year. The Executive shall be entitled to carry
        over 40 hours of accrued, unused vacation time from year to year.

       

      9. Equity
        Compensation.

      

      (a) Incentive
        Plan.
        By the
        Effective Date, the Company plans to have received all requisite approvals
        required to adopt a new equity incentive plan (the “Plan”).
        Within 45 days of the date on which the Plan is adopted, the Company will
        provide a copy of the Plan to the Executive. 

      

      (b) Stock
        Options.
        After
        the adoption of the Plan and subject to approval of the Board of Directors,
        the
        Company shall issue to the Executive a stock option to acquire 150,000 shares
        of
        the Company’s common stock (the “Common
        Stock”)
        under
        the Plan at an exercise price equal to the fair market value of the Common
        Stock
        as of the date of grant. The stock option granted pursuant to this Section
        and
        each subsequent grant of options to the Executive during the Term shall be
        evidenced by a written stock option agreement.

      

      (c) Vesting
        and Exercise.
        The
        stock option to be granted pursuant to this Section shall vest and become
        exercisable as follows: 1/4 upon the first anniversary of the grant date,
        and
        1/4 upon the second, third, and fourth anniversaries of the grant date.
        Subsequent stock options granted to the Executive shall vest pursuant to
        the
        terms and conditions of the Plan.

       

      
        
          
          

        

        
          -
            2 -

          
            

          

        

        
          
          

        

         

        
          10.
            Other Benefits. During the Term of this Agreement, the
            Executive shall be eligible to participate in incentive, savings, retirement
            (401(k)), and welfare benefit plans, including, without limitation, health,
            medical, dental, vision, life (including accidental death and dismemberment)
            and
            disability insurance plans (collectively, “Benefit Plans”), in
            substantially the same manner and at substantially the same levels as
            the
            Company makes such opportunities available to the Company's executive
            employees.

        

         

        11. Termination
          of Employment.

      

       

      (a) Death.
        In the
        event that, during the Term of this Agreement, the Executive dies, this
        Agreement and the Executive’s employment with the Company shall automatically
        terminate and the Company shall have no further obligations to the Executive
        or
        his heirs, administrators or executors with respect to compensation and benefits
        accruing thereafter, except for the obligation to pay the Executive’s heirs,
        administrators or executors any earned but unpaid base salary, unpaid
pro
        rata
        annual
        bonus and unused vacation days accrued through the date of death, including
        any
        carryover days. The Company shall deduct, from all payments made hereunder,
        all
        applicable taxes, including income tax, FICA and FUTA, and other appropriate
        deductions.

      

      (b) Disability.
        In
        the
        event that, during the Term of this Agreement, the Executive shall be prevented
        from performing his duties and responsibilities hereunder to the full extent
        required by the Company by reason of Disability, as defined below, this
        Agreement and the Executive’s employment with the Company shall automatically
        terminate and the Company shall have no further obligations to the Executive
        or
        his heirs, administrators or executors with respect to compensation and benefits
        accruing thereafter, except for the obligation to pay the Executor’s heirs,
        administrators or executors any earned but unpaid base salary, unpaid
pro
        rata
        annual
        bonus and unused vacation days accrued through the date of Disability, including
        any carryover days. The Company shall deduct, from all payments made hereunder,
        all applicable taxes, including income tax, FICA and FUTA, and other appropriate
        deductions through
        the last date of the Executive’s employment with the Company. For purposes of
        this Agreement, “Disability”
shall
        mean a physical or mental disability that, in the Board’s discretion, based upon
        the medical opinions of two qualified physicians specializing in the area
        or
        areas of the Executive’s affliction, one of whom shall be chosen by the Board
        and one of whom shall be chosen by the Executive, prevents the performance
        by
        the Executive, with or without reasonable accommodation, of his duties and
        responsibilities hereunder for a continuous period of not less than six
        consecutive months. 

      

      (c) Cause.

      

      (i) At
        any
        time during the Term of this Agreement, the Company may terminate this Agreement
        and the Executive’s employment hereunder for Cause. For purposes of this
        Agreement, “Cause”
shall
        mean:
        (a)
the
        willful and continued failure of the Executive to substantially perform his
        duties to and responsibilities for the Company (other than any such failure
        resulting from a Disability); (b) the
        conviction of, or plea of guilty or nolo
        contendere
        to a
        felony; or (c) fraud,
        dishonesty, competition with the Company, unauthorized use of any of the
        Company’s or any subsidiary’s trade secrets or confidential
        information, a
        material breach of the Company’s policies or codes of conduct, a willful or
        material breach of any agreement between the Executive and the Company including
        this Agreement, or gross misconduct which is materially and demonstratively
        injurious to the Company. 

       

      (ii) Termination
        of the Executive for Cause shall be made by delivery to the Executive of
        written
        notice from the Board specifying the basis of the Executive’s termination is for
        Cause, describing the conduct or circumstances justifying termination for
        Cause,
        and indicating that the Board has found that such conduct or circumstances
        has
        occurred and warrants the Executive’s termination of employment for Cause. Upon
        receipt of such demand or notice, the Executive, shall be entitled to appear
        before the CEO for the purpose of demonstrating that the conduct indicated
        does
        not exist or that breach of 11(c)(i)(A) has been cured. After such appearance,
        the CEO shall make a final determination on the existence of a basis warranting
        Executive’s termination for Cause. No termination for Cause will be final until
        the CEO has reached such a determination. 

       

      
        
          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

      (iii) Upon
        termination of Executive’s employment for Cause, the Company shall have no
        further obligations or liability to the Executive or his heirs, administrators
        or executors with respect to compensation and benefits thereafter, except
        for
        the obligation to pay the Executive any earned but unpaid base salary through
        the Executive’s last day of employment with the Company. The Company shall
        deduct, from all payments made hereunder, all applicable taxes, including
        income
        tax, FICA and FUTA, and other appropriate deductions.

       

      (d) Good
        Reason.

       

      (i) At
        any
        time during the Term of this Agreement, subject to the conditions set forth
        in
        Section 11(d)(iii) below, the Executive may terminate this Agreement and
        the
        Executive’s employment with the Company for Good Reason. For purposes of this
        Agreement, Good
        Reason
        shall
        mean the occurrence, without the Executive’s consent, of any of the following
        events: (A) the assignment of duties and responsibilities that are inconsistent
        with and reflect a substantial diminution in the duties and responsibilities
        assumed by the Executive on the Effective Date; (B) a Change of Control (as
        defined in Section 11(d)(ii) herein below) that results in the termination
        of
        the Executive’s employment with the Company or a material adverse change in the
        Executive’s duties and responsibilities or, as applicable, in connection with
        which the successor does not agree to assume, or is not deemed to assume
        by
        operation of law, the Company’s obligations under this Agreement; (C) a material
        breach of this Agreement by the Company; (D) a relocation of the Company’s
        principal executive offices to a location that is greater than 50 miles from
        its
        current location; or (E) a reduction in the Executive’s base salary or a
        material reduction in other benefits, as described in Section 10(a), other
        than
        reductions generally applicable to executives of the Company. 

      

      (ii) For
        purposes of this Agreement, “Change
        of Control”
means:
        (A) any sale, lease, exchange or other transfer (in one transaction or a
        series
        of related transactions) of all, or substantially all, of the assets of the
        Company other than any sale, lease, exchange or other transfer to any company
        where the Company owns, directly or indirectly, 100 percent of the outstanding
        voting securities of such company after any such transfer; (B) any person
        or
        persons (as such term is used in Section 13(d) of the Exchange Act of 1934,
        as
        amended), other than the holders of voting securities of the Company as of
        the
        Effective Date, shall acquire or become the beneficial owner (within the
        meaning
        of Rule 13d-3 under the Exchange Act) whether directly, indirectly, beneficially
        or of record, of 51% or more of outstanding voting securities of the Company;
        or
        (C) consummation by any entity, person, or group (including any affiliate
        thereof, other than the Company) of a tender offer or exchange offer where
        the
        offeree acquires more than 51% of the then outstanding voting securities
        of the
        Company.

      

      (iii) The
        Executive shall be entitled to terminate this Agreement for Good Reason if
        Executive has delivered to the Company written notice of his intention to
        terminate this Agreement for Good Reason promptly, and in no event longer
        than 5
        business days, after either the date on which the Executive (A) receives
        written
        notice from the Company of the occurrence of an event within the meaning
        of Good
        Reason under Section 11(d)(i) or (B) obtains actual knowledge of the occurrence
        of an event within the meaning of Good Reason under Section 11(d)(i) and
        which
        provides, in reasonable detail, the circumstances of the occurrence of the
        event; provided, however, that the Executive shall not be entitled to terminate
        this Agreement for Good Cause if the Company eliminates such event or
        circumstances within 10 days of the Company’s receipt of the written notice
        described in this Section. 

       

      
        
          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

      (iv) In
        the
        event that Executive terminates this Agreement for Good Reason, the Company
        shall pay or provide to the Executive (or, following his death, to the
        Executive’s heirs, administrators or executors)
        any
        earned but unpaid base salary, unpaid pro
        rata
        annual
        bonus and unused vacation days accrued through the Executive’s last day of
        employment with the Company, including any carryover days. In addition, the
        Company shall pay Executive in 12 equal semi-monthly installments as severance
        an amount equal to 50% of the Executive’s annual base salary on the date of the
        termination of this Agreement in
        accordance with the Company’s standard payroll schedule less all applicable
        taxes and other appropriate deductions and adjustments pursuant to the Company’s
        employee compensation policies in effect on such date and provided
        the Executive agrees to execute the Company’s standard separation and release
        agreement and Executive
        shall receive for a period of 6 months following the date of termination,
        coverage, at the Company’s expense, under the Benefits Plans; provided, however,
        that such continued benefit plan coverage shall be canceled or reduced to
        the
        extent of any comparable benefit coverage offered to the Executive by a
        subsequent employer or other person or entity for which the Executive performs
        services, including but not limited to consulting services. The Company shall
        deduct, from all payments made hereunder, all applicable taxes, including
        income
        tax, FICA and FUTA, and other appropriate deductions. 

       

      (e) Without
        Cause.

       

      (i) By
        The Executive.
        At any
        time during the Term of this Agreement, the Executive shall be entitled to
        terminate this Agreement without Cause by providing 30 days prior written
        notice
        of such intent to terminate to the Company. Upon termination by the Executive
        of
        this Agreement pursuant to this Section, the Company shall have no further
        obligations to the Executive or his heirs, administrators or executors with
        respect to compensation and benefits thereafter, except for the obligation
        to
        pay the Executive (or, following his death, to the Executive’s heirs,
        administrators or executors) any earned but unpaid base salary, pro
        rata
        annual
        bonus and unused vacation days accrued through the Executive’s last day of
        employment with the Company. The Company shall deduct, from all payments
        made
        hereunder, all applicable taxes, including income tax, FICA and FUTA, and
        other
        appropriate deductions.

       

      (ii) By
        The Company.
        At any
        time during the Term of this Agreement, the Company shall be entitled to
        terminate this Agreement without Cause by providing 30 days prior written
        notice
        of such intent to the Executive. Upon termination by the Company of this
        Agreement without Cause, the Company shall pay or provide to the Executive
        (or,
        following his death, to the Executive’s heirs, administrators or executors): any
        earned but unpaid base salary, unpaid pro
        rata
        annual
        bonus and unused vacation days accrued through the Executive’s last day of
        employment with the Company, including any carryover days. In addition, so
        long
        as Executive has not and does not violate the provisions of Sections 12,
        13 and
        14 of this Agreement, the Company shall pay or provide to the Executive as
        severance in 12 equal semi-monthly installments an amount equal to 50% of
        the
        Executive’s annual base salary on the date of the termination of this Agreement
in
        accordance with the Company’s standard payroll schedule less all applicable
        taxes and other appropriate deductions and adjustments pursuant to the Company’s
        employee compensation policies in effect on such date and provided
        the Executive agrees to execute the Company’s standard separation and release
        agreement and Executive shall receive for a period of 6 months following
        the
        date of termination, payment or reimbursement, at the Company’s expense, of
        Executive’s COBRA rights under the Benefits Plans (if Executive elects COBRA
        continuation); provided, however, that such continued benefit plan coverage
        shall be canceled or reduced to the extent of any comparable benefit coverage
        offered to the Executive by a subsequent employer or other person or entity
        for
        which the Executive performs services, including but not limited to consulting
        services. The Company shall deduct, from all payments made hereunder, all
        applicable taxes, including income tax, FICA and FUTA, and other appropriate
        deductions. 

       

      
        
          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

      12. Confidential
        Information.
        

       

      (a) The
        Executive expressly acknowledges that, in the performance of his duties and
        responsibilities with the Company, he has been exposed, and will be exposed,
        to
        the trade secrets, business and/or financial secrets and confidential and
        proprietary information of the Company, its affiliates and/or its clients
        or
        customers (“Confidential
        Information”).
        The
        term “Confidential Information” includes, without limitation, information or
        material that has actual or potential commercial value to the Company, its
        affiliates and/or its clients or customers and is not generally known to
        and is
        not readily ascertainable by proper means to persons outside the Company,
        its
        affiliates and/or its clients or customers.

       

      (b) Except
        as
        authorized in writing by the Board, during the performance of the Executive’s
        duties and responsibilities for the Company and until such time as any such
        Confidential Information becomes generally known to and readily ascertainable
        by
        proper means to persons outside the Company, its affiliates and/or its clients
        or customers,
        the
        Executive agrees to keep strictly confidential and not use for his personal
        benefit or the benefit to any other person or entity the Confidential
        Information, whether or not prepared or developed by the Executive. Confidential
        Information includes, without limitation, the following, whether or not
        expressed in a document or medium, regardless of the form in which it is
        communicated, and whether or not marked “trade secret” or “confidential” or any
        similar legend: (i) lists
        of
        and/or information concerning customers, suppliers, employees, consultants,
        and/or co-venturers of the Company, its affiliates or its clients or customers;
        (ii) information
        submitted by customers, suppliers, employees, consultants and/or co-venturers
        of
        the Company, its affiliates and/or its clients or customers; (iii) information
        concerning the business of the Company, its affiliates and/or its clients
        or
        customers, including, without limitation, cost information, profits, sales
        information, prices, accounting, unpublished financial information, business
        plans or proposals, markets and marketing methods, advertising and marketing
        strategies, administrative procedures and manuals, the terms and conditions
        of
        the Company’s contracts and trademarks and patents under consideration,
        distribution channels, franchises, investors, sponsors and advertisers; (iv)
        technical
        information concerning products and services of the Company, its affiliates
        and/or its clients or customers, including, without limitation, product data
        and
        specifications, diagrams, flow charts, know how, processes, designs, formulae,
        inventions and product development; (v) lists
        of
        and/or information concerning applicants, candidates or other prospects for
        employment, independent contractor or consultant positions at or with any
        actual
        or prospective customer or client of Company and/or its affiliates,
        any and
        all confidential processes, inventions or methods of conducting business
        of the
        Company, its affiliates and/or its clients or customers; (vi) any
        and
        all versions of proprietary computer software (including source and object
        code), hardware, firmware, code, discs, tapes, data listings and documentation
        of the Company, its affiliates and/or its clients or customers; (vii)
any
        other
        information disclosed to the Executive by, or which the Executive obtained
        under
        a duty of confidence from, the Company, its affiliates and/or its clients
        or
        customers; (viii) all
        other
        information concerning the Company not generally known to the public which,
        if
        misused or disclosed, could reasonably be expected to adversely affect the
        business of the Company, its affiliates and/or its clients or customers.
        Confidential Information shall not include (i) information which is in the
        public domain or which enters the public domain without the fault of Executive,
        (ii) information which was in the possession of Executive in written or other
        documentary form prior to the time of disclosure by the Company to Executive,
        and (iii) information which is required by Executive to be disclosed in legal
        proceedings, including pursuant to subpoena or court order.

       

      
        
          
          

        

        
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      (c) The
        Executive affirms that he does not possess and will not rely upon the protected
        trade secrets or confidential or proprietary information of his prior
        employer(s) in providing services to the Company.

       

      (d) In
        the
        event that the Executive’s employment with the Company terminates for any
        reason, the Executive shall deliver forthwith to the Company any and all
        originals and copies of Confidential Information.

       

      13. Ownership
        and Assignment of Inventions. 

      

      (a) The
        Executive acknowledges that, in connection with his duties and responsibilities
        relating to his employment with the Company, he and/or other employees of
        the
        Company working with him, without him or under his supervision, may create,
        conceive of, make, prepare, work on or contribute to the creation of, or
        may be
        asked by the Company or its affiliates to create, conceive of, make, prepare,
        work on or contribute to the creation of, without limitation, lists, business
        diaries, business address books (except
        for business addresses and business address books not related to the Company),
        documentation, ideas, concepts, inventions, designs, works of authorship,
        computer programs, audio/visual works, developments, proposals, works for
        hire
        or other materials to the extent that any of the same relate to any actual
        or
        reasonably anticipated Business of the Company (as such phrase is defined
        in
        paragraph 14(a) hereof) or any of the Company’s affiliates (“Inventions”).
        Executive expressly acknowledges that all of his activities and efforts relating
        to any Inventions, whether or not performed during his or the Company’s regular
        business hours, are within the scope of his employment with the Company and
        that
        the Company owns all right, title and interest in and to all Inventions,
        including, to the extent that they exist, all intellectual property rights
        thereto, including, without limitation, copyrights, patents and trademarks
        in
        and to all Inventions. The Executive also acknowledges and agrees that the
        Company owns and is entitled to sole ownership of all rights and proceeds
        to all
        Inventions.

      (b) The
        Executive expressly acknowledges and agrees to assign to the Company, and
        hereby
        assigns to the Company, all of the Executive’s right, title and interest in and
        to all Inventions, including, to the extent they exist, all intellectual
        property rights thereto, including, without limitation, copyrights, patents
        and
        trademarks in and to all Inventions.

       

      (c) In
        connection with all Inventions, the Executive agrees to disclose any Invention
        promptly to the Company and to no other person or entity. The Executive further
        agrees to execute promptly, at the Company’s request, specific written
        assignments of the Executive’s right, title and interest in any Inventions, and
        do anything else reasonably necessary to enable the Company to secure or
        obtain
        a copyright, patent, trademark or other form of protection in or for any
        Invention in the United States or other countries.

      

      (d) The
        Executive acknowledges that all rights, waivers, releases and/or assignments
        granted in this Section by the Executive are freely assignable by the Company
        and are made for the benefit of the Company and its Affiliates, subsidiaries,
        licensees, successors and assigns.

      

      14. Non-Competition
        And Non-Solicitation.
        

      

      (a) The
        Executive agrees and acknowledges that the Confidential Information that
        the
        Executive has already received and will receive are valuable to the Company,
        its
        affiliates and/or its clients or customers, and
        that
        its protection and maintenance constitutes a legitimate business interest
        of
        Company, its
        affiliates and/or its clients or customers
        to be
        protected by the non-competition restrictions set forth herein. The Executive
        agrees and acknowledges that the non-competition restrictions set forth herein
        are reasonable and necessary and do not impose undue hardship or burdens
        on the
        Executive. The Executive also acknowledges that the products and services
        developed or provided by the Company, its
        affiliates and/or its clients or customers
        are or
        are intended to be sold, provided, licensed and/or distributed to customers
        and
        clients in and throughout the United States (the “Geographic
        Boundary”),
        and
        that the Geographic Boundary, scope of prohibited competition, and time duration
        set forth in the non-competition restrictions set forth below are reasonable
        and
        necessary to maintain the value of the Confidential Information of, and to
        protect the goodwill and other legitimate business interests of, the Company,
        its
        affiliates and/or its clients or customers.
        The
        Executive also acknowledges that the business of the Company is the offering
        through its online marketplace of high quality new, overstock, close-out
        and
        refurbished brand name consumer merchandise (the “Business of the
        Company”).

      

      
        
          
          

        

        
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      (b) The
        Executive hereby agrees and covenants that he shall not, directly or indirectly,
        in any capacity whatsoever, including, without limitation, as an employee,
        employer, consultant, principal, partner, shareholder, officer, director
        or any
        other individual or representative capacity (other than a holder of less
        than
        one percent (1%) of the outstanding voting shares of any publicly held company),
        or whether on the Executive’s own behalf or on behalf of any other person or
        entity or otherwise howsoever, during the Executive’s employment with the
        Company and for a period of one year following the termination of this Agreement
        for any reason, in the Geographic Boundary:

      

      (i) Engage,
        own, manage, operate, control, be employed by, consult for, participate in,
        or
        be connected in any manner with the ownership, management, operation or control
        of any business in competition with the Business of the Company; 

      

      (ii) Solicit,
        persuade or induce any Customer: to terminate, reduce or refrain from renewing,
        extending, or entering into contractual or other relationships with the Company
        or to become a customer of or enter into any contractual or other relationship
        with any other individual, person or entity for the purpose of purchasing
        competitive products or services; or

      

      (iii) Recruit,
        hire, induce, contact, divert or solicit, or attempt to recruit, induce,
        contact, divert or solicit, any employee of the Company to leave the employment
        thereof, whether or not any such employee is party to an employment agreement.
        

      

      15. Indemnification.
        The
        Company hereby covenants and agrees to indemnify the Executive to the fullest
        extent permitted by law and to hold the Executive harmless fully, completely,
        and absolutely against and in any respects to any and all actions, suits,
        proceedings, claims, demands, judgments, costs, expenses (including attorneys’
fees), losses, and damages resulting from the Executive’s good faith performance
        of his job duties pursuant to this Agreement. The Company also hereby agrees
        to
        cover the Executive under a directors’ and officers’ liability insurance policy
        at all times while an employee and for the applicable statute of limitations
        after termination hereof, with such coverage no less favorable than that
        given
        to other executive employees of the Company.

       

      16. Notice.
        For
        purposes of this Agreement, notices and all other communications provided
        for in
        this Agreement or contemplated hereby shall be in writing and shall be deemed
        to
        have been duly given when personally delivered, delivered by a nationally
        recognized overnight delivery service or when mailed United States Certified
        or
        registered mail, return receipt requested, postage prepaid, and addressed
        as
        follows:

       

      
        
          
          

        

        
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            8 -

          
            

          

        

        
          
          

        

      

      If
        to the
        Company: 

      

      Cape
        Coastal Trading Corporation

      8550
        West
        Bryn Mawr

      Suite
        200

      Chicago,
        Illinois 60631

      

      If
        to the
        Executive:

      Anthony
        Priore

      
        c/o
          Cape
          Coastal Trading Corporation

        8550
          West
          Bryn Mawr

        Suite
          200

        Chicago,
          Illinois 60631

      

      

      17. Miscellaneous.

       

      (a) Telephones,
        stationery, postage, e-mail, the internet and other resources made available
        to
        the Executive by the Company, are solely for the furtherance of the Company’s
        business.

       

      (b) All
        issues and disputes concerning, relating to or arising out of this Agreement
        and
        from the Executive’s employment by the Company, including, without limitation,
        the construction and interpretation of this Agreement, shall be governed
        by and
        construed in accordance with the internal laws of the State of Illinois,
        without
        giving effect to that State’s principles of conflicts of law. The Executive
        hereby consents to jurisdiction in the courts of Illinois.

       

      (c) The
        Parties agree that any provision of this Agreement deemed unenforceable or
        invalid may be reformed to permit enforcement of the objectionable provision
        to
        the fullest permissible extent. Any provision of this Agreement deemed
        unenforceable after modification shall be deemed stricken from this Agreement,
        with the remainder of the Agreement being given its full force and
        effect.

       

      (d) The
        Company shall be entitled to equitable relief, including injunctive relief
        and
        specific performance as against the Executive, for the Executive’s threatened or
        actual breach of Sections 12, 13 and 14 of this Agreement, as money damages
        for
        a breach thereof would be incapable of precise estimation, uncertain, and
        an
        insufficient remedy for an actual or threatened breach of Sections 12, 13
        and 14
        of this Agreement. The Parties agree that any pursuit of equitable relief
        in
        respect of Sections 12, 13 and 14 of this Agreement shall have no effect
        whatsoever regarding the continued viability and enforceability of Section
        16 of
        this Agreement. 

       

      (e) Any
        waiver or inaction by the Company or the Executive for any breach of this
        Agreement shall not be deemed a waiver of any subsequent breach of this
        Agreement.

       

      (f) The
        Parties independently have made all inquiries regarding the qualifications
        and
        business affairs of the other which either party deems necessary. The Executive
        affirms that he fully understands this Agreement’s meaning and legally binding
        effect. Each party has participated fully and equally in the negotiation
        and
        drafting of this Agreement. 

       

      (g) The
        Executive’s obligations under this Agreement are personal in nature and may not
        be assigned by the Executive to any other person or entity. This
        Agreement shall be enforceable by the
        Company
        and its
        parents, affiliates, successors and assigns.

       

      
        
          
          

        

        
          -
            9 -

          
            

          

        

        
          
          

        

      

      (h) This
        instrument constitutes the entire Agreement between the Parties regarding
        its
        subject matter. When signed by all Parties, this Agreement supersedes and
        nullifies all prior or contemporaneous conversations, negotiations, or
        agreements, oral and written, regarding the subject matter of this Agreement.
        In
        any future construction of this Agreement, this Agreement should be given
        its
        plain meaning. This Agreement may be amended only by a writing signed by
        the
        Parties.

       

      (i) This
        Agreement may be executed in counterparts, a counterpart transmitted via
        facsimile, and all executed counterparts, when taken together, shall constitute
        sufficient proof of the Parties’ entry into this Agreement. The Parties agree to
        execute any further or future documents which may be necessary to allow the
        full
        performance of this Agreement. This Agreement contains headings for ease
        of
        reference. The headings have no independent meaning.

      

      [SIGNATURE
        PAGE FOLLOWS]

      

      
        
          
          

        

        
          -
            10 -

          
            

          

        

        
          
          

        

      

      

      THE
        EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
        AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF. THIS
        AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
        PARTIES.

      

      

      UNDERSTOOD,
        AGREED, AND ACCEPTED:

      

       

    

    
      	EXECUTIVE	 	COMPANY
	 	 	 	 	 
	Anthony Priore	 	Cape Coastal Trading
              Corporation
	 	 	 	 	 
	/s/
              Anthony Priore	 	By:	/s/
              Robert H. Tomlinson, Jr. 
	 	 	 	Name:  	Robert
              H. Tomlinson, Jr. 
	 	 	 	Title: 	President
&
CEO  
	 	 	 	 	 
	 	 	 	 	 
	Date:
               December
              29, 2005 	 	Date:
              	December
              29, 2005 

    

          

       

    
      
        
        

      

      
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          11 -

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