Exhibit 10.3

 

Cache, Inc.
1440 Broadway

New York, New York 10018

 

February 5, 2013

 

Mr. Andrew Saul

c/o Saul Partners, LP

9 West 57th Street

New York, NY 10019

 

Re:          Cache, Inc. — Voting, Standstill and Indemnification Letter
Agreement

 

Dear Mr. Saul:

 

Reference is made to that certain Investment Agreement, dated as of the date
hereof (the “Investment Agreement”), among Cache, Inc., a Florida corporation
(the “Company”), MFP Partners, L.P., a Delaware limited partnership (“MFP”),
Mill Road Capital, L.P., a Delaware limited partnership (“Mill Road”), and Jay
Margolis, an individual resident of the State of New York (“Margolis”, and,
together with MFP and Mill Road, each an “Investor” and collectively, the
“Investors”).  Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to such terms in the Investment Agreement.

 

Pursuant to the Investment Agreement, the Company has agreed to conduct a rights
offering (the “Rights Offering”) by distributing, at no charge, to each holder
of record (as of a certain record date) of shares of common stock, par value
$0.01 per share (the “Common Stock”) of the Company, 0.374 transferable rights
(the “Rights”), for each share of Common Stock held by such shareholder, to
purchase shares of Common Stock which Rights, if exercised in full, will provide
gross proceeds to the Company of $8.0 million.  In addition, pursuant to the
Investment Agreement, the Investors have agreed to purchase shares of Common
Stock from the Company and to provide a backstop commitment assuring that the
Company receives gross proceeds in the Rights Offering of $8.0 million, upon the
terms and subject to the conditions set forth therein.

 

In consideration of the Investors’ willingness to provide the backstop
commitment to the Rights Offering, thereby benefiting the Company and you, as a
shareholder of the Company, you hereby agree and acknowledge as follows:

 

(1)   Voting Agreement.  You shall vote any and all Shares held directly or
indirectly by you (and cause all Shares held by any of your Affiliates to be
voted) in favor of the issuance and sale of Shares in the Rights Offering and
the issuance and sale of Shares to the Investors pursuant to the Investment
Agreement at any special meeting of the Company’s shareholders to consider and
vote upon such matters, or at any adjournment, postponement, or continuation of
any such meeting.  Any such vote shall be cast in accordance with such
procedures relating thereto so as to ensure that it is duly counted for purposes
of determining that a quorum is present and for purposes of recording the
results of such vote.  You agree not to enter into any agreement or commitment
with any Person the effect of which would be inconsistent with or violative of
the provisions and agreements contained in this letter agreement.

 

(2)   Standstill.  For the period commencing on the date hereof until the date
which is the earlier of (i) two (2) trading days following the Closing Date and
(ii)  thirty (30) days following  the Termination Date (the “Standstill
Period”), neither you nor any of your controlled Affiliates shall, without the
prior written consent of the Company, voluntarily or involuntarily, directly or
indirectly, through the transfer of interests in controlled Affiliates or
otherwise, offer, sell, assign, transfer, grant a participation or security
interest in, pledge, encumber or otherwise dispose of (whether by operation of
law or otherwise) (“Transfer”) any Shares (in whole or in part), or attempt to
consummate any such transactions, or, directly or indirectly, enter into, or
cause any Shares to become subject to, any option, warrant, purchase right or
other contract or commitment that could require you to Transfer your Shares.  In
addition, during the Standstill Period, neither you nor any of your controlled
Affiliates shall, directly or indirectly, propose, or solicit, support or
encourage any other Person in connection with, or make any public statement
supporting, or vote any of your

 

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Shares in favor of, any merger, tender offer or similar business combination, or
any liquidation, recapitalization, or solicitation of proxies, in each case,
with respect to the Company, except that nothing herein shall prohibit you from
fulfilling your obligation pursuant to Section (1) above to vote your Shares in
favor of the issuance and sale of Shares in the Rights Offering and pursuant to
the transactions contemplated by the Investment Agreement. Nothing contained
herein shall be interpreted so as to preclude you from selling or transferring
any Rights.

 

(3)   Due Authorization; Enforceability.  You have the requisite capacity to
enter into this letter agreement and to perform your obligations hereunder. 
This letter agreement has been duly authorized, executed and delivered by you
and constitutes your valid and binding obligation, enforceable against you in
accordance with its terms subject to (i) bankruptcy, insolvency, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally, and (ii) general principles of equity (regardless
of whether considered in a proceeding at law or in equity).

 

(4)   Shares.  As of the date hereof, you are the beneficial owner of the number
of shares of Common Stock set forth below your signature to this letter
agreement and you have the sole power to vote (or cause to be voted) and dispose
of such Shares.  You have good and valid title to your Shares, free and clear of
any and all restrictions of any nature or kind whatsoever, other than those
created by this letter agreement and by applicable law.

 

(5)   Board of Directors.  You agree that you will not stand for re-election at
the 2013 annual meeting of the Board of Directors of the Company, provided, that
the 2013 annual meeting is held following the Closing Date.

 

(6)   Indemnification.    You agree to personally indemnify and hold harmless
each Investor and each Affiliated Purchaser, their respective Affiliates
(including the Company following the Closing Date) and their respective
officers, directors, members, managers, partners, employees, agents, advisors
and controlling persons (each, an “Indemnified Person”) from and against any and
all losses, claims, damages, and liabilities, whether joint or several, and all
amounts paid in settlement and reasonable expenses (“Losses”) resulting from,
relating to, or arising out of any breach or inaccuracy in the representations
and warranties made by the Company set forth in Section 3(o)(iii) of the
Investment Agreement and you shall reimburse such Indemnified Persons for any
reasonable legal fees and expenses or other out-of-pocket expenses incurred in
connection with investigating, responding to or defending any of the foregoing. 
Your obligations under this Section 6 are primary and unconditional obligations
and in no event shall any Indemnified Person be required to proceed against the
Company or any other person pursuant to the Investment Agreement or otherwise.
Notwithstanding any other provision hereof, the aggregate amount of your
personal liability pursuant to this Section (6) shall not exceed the net
proceeds from the sale of shares of Common Stock beneficially owned by you on
the date hereof; provided, that. if there are any indemnifiable Losses and no
shares have been sold, such Losses shall be satisfied by the delivery of shares
of Common Stock to the Indemnified Person (valued at the then market price, as
mutually determined).  To the extent that you sell any such shares of Common
Stock during the Indemnification Period (as defined below), the proceeds thereof
shall be placed into a mutually acceptable escrow until the end of the
Indemnification Period to satisfy any obligations that may arise under this
Section 6 (subject to release prior to such date to the extent necessary to
satisfy any obligations that arise under this Section 6).

 

Your obligations under this letter agreement, other than in Sections (2),
(5) and (6) above, will terminate on the earlier of the date which is the
Closing Date and the Termination Date.  Your obligations under Section (2) of
this letter agreement will terminate on the date which is the earlier of (i) two
(2) trading days following the Closing Date and (ii) thirty (30) days following
the Termination Date.  Your obligation under Section (5) of this letter
agreement shall survive until the earlier of the satisfaction of such obligation
and the Termination Date.  Your obligation under Section (6) of this letter
agreement shall survive until the earlier of (i) the first anniversary of the
Closing Date and (ii) the Termination Date (the “Indemnification Period”).  This
letter agreement is intended to bind and inure to the benefit of the parties and
their respective successors, assigns, heirs, executors, administrators and
representatives.  Each of the Investors shall be a third-party beneficiary to
this letter agreement, entitled to enforce this agreement against you as though
each such Investor were a party to this letter agreement.  This letter agreement
shall be governed by the internal laws of the State of New York, without regard
to the conflict of laws principles thereof.

 

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You hereby agree to be bound by the terms and provisions of this letter
agreement as of the date first above written.

 

 

CACHE, INC.

 

 

 

By:

/s/ Margaret Feeney

 

Name:

Margaret Feeney

 

Title:

EVP and CFO

 

 

Acknowledged and Agreed as of the date hereof,

 

 

 

/s/ Andrew Saul

 

Andrew Saul

 

 

 

Number of Shares beneficially held: 1,699,334

 

 

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