Exhibit 10.7

 

Execution Copy

 

CACHE, INC.

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

THIS AGREEMENT (the “Agreement”) is made effective as of February 5, 2013, (the
“Grant Date”), between Cache, Inc. a Florida corporation (the “Company”), and
Jay Margolis (the “Executive”):

 

RECITALS:

 

WHEREAS, the Board (as defined below) has determined that it would be in the
best interests of the Company and its shareholders to grant the option provided
for herein to the Executive pursuant to the terms set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:

 

1.                                      Definitions.

 

(a)                                 “Board” shall mean the Board of Directors of
the Company.

 

(b)                                 “Cause” has the meaning given to such term
in the Employment Agreement.

 

(c)                                  “Code” means the Internal Revenue Code of
1986, as amended, or any successor statute thereto.

 

(d)                                 “Committee” means the Board or a committee
designated by the Board.

 

(e)                                  “Disability” has the meaning given to such
term in the Employment Agreement.

 

(f)                                   “Employment Agreement” shall mean the
employment agreement between the Executive and the Company, dated as of
February 5, 2013, as may be amended from time to time.

 

(g)                                  “Market Price” shall mean the price per
Share as of the close of business on any such applicable day.

 

(h)                                 “Person” means any natural person,
corporation, partnership, joint venture or enterprise, limited liability
company, unincorporated association, trust, estate, governmental entity or other
entity or organization, and shall include the successor (by merger or otherwise)
of any entity or organization.

 

(i)                                     “Shares” shall mean shares of common
stock of the Company.

 

2.                                      Grant of the Option.  The Company hereby
grants to the Executive the right and option (the “Option”) to purchase, on the
terms and conditions hereinafter set forth, all

 

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or any part of an aggregate of 1,000,000 Shares, subject to adjustment as set
forth herein.  The purchase price of the Shares subject to the Option shall be
$3.34 per Share (the “Option Price”).  The Option is intended to be a
non-qualified stock option, and is not intended to be treated as an option that
complies with Section 422 of the Code.

 

3.                                      Vesting.

 

(a)                                 The Option shall vest with respect to
one-third (1/3rd) of the Option on the first anniversary of the Grant Date and
with respect to an additional one-third (1/3rd) of the Option on each of the
next two (2) anniversaries thereafter (each such anniversary, a “Time Vesting
Date”), subject to the Executive’s continued employment with the Company on each
Time Vesting Date.

 

(b)                                 Termination of Employment.

 

(i)                                     If the Executive’s employment with the
Company is terminated by the Company without Cause, the Option shall become
immediately exercisable with respect to all of the shares subject to such Option
and shall remain exercisable for the period set forth in Section 4(a).

 

(ii)                                  If the Executive’s employment with the
Company is terminated (x) by the Executive for any reason or (y) due to death or
Disability, the Option shall, to the extent not then vested, be forfeited by the
Executive without consideration and the Vested Portion of the Option shall
remain exercisable for the period set forth in Section 4(a).

 

(iii)                               If the Executive’s employment with the
Company is terminated by the Company for Cause the unvested portion of the
Option and the Vested Portion shall be forfeited.

 

(c)                                  Change in Control.  The Option shall, to
the extent not previously terminated or forfeited, become immediately
exercisable with respect to all of the shares subject to such Option immediately
prior to a Change in Control.  “Change in Control” shall mean the occurrence of
one (1) or more of the following three (3) events:  (i) any person becomes a
beneficial owner (as such term is defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) directly or indirectly of
securities representing more than fifty percent (50%) of the total number of
votes that may be cast for the election of directors of the Company; (ii) within
two (2) years after a merger, consolidation, liquidation or sale of assets
involving the Company, or a contested election of a Company director, or any
combination of the foregoing, the individuals who were directors of the Company
immediately prior thereto shall cease to constitute a majority of the Board; or
(iii) within two (2) years after a tender offer or exchange offer for voting
securities of the Company, the individuals who were directors of the Company
immediately prior thereto shall cease to constitute a majority of the Board.

 

Notwithstanding the foregoing, the Committee, in its discretion, may determine
that, upon the occurrence of a Change in Control of the Company, the Option
shall terminate within a specified number of days after notice to the Executive,
and/or the Option may be cancelled and in consideration for such cancellation
the Executive shall receive, with respect to each share subject to the Option,
an amount equal to the excess, if any, of the fair market value

 

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(as determined by the Committee) of such share immediately prior to the
occurrence of such Change in Control over the Option Price; such amount to be
payable in cash, in one or more kinds of stock or property (including the stock
or property, if any, payable in the transaction) or in a combination thereof, as
the Committee, in its discretion, shall determine; provided, that if the Option
Price equals or exceeds the fair market value (as determined by the Committee)
of such Share immediately prior to the occurrence of such Change in Control,
then the Option may be cancelled without the payment of consideration.

 

(d)                                 At any time, the portion of the Option,
which has become vested and exercisable as described above, is hereinafter
referred to as the “Vested Portion”.

 

4.                                      Exercise of Option.

 

(a)                                 Period of Exercise.  Subject to the
provisions of this Agreement, the Executive may exercise all or any part of the
Vested Portion of the Option at any time prior to the earliest to occur of:

 

(i)                                     the tenth anniversary of the Grant Date;

 

(ii)                                  three (3) years following the date of the
Executive’s termination of employment due to death;

 

(iii)                               ninety (90) days following the date of the
Executive’s (x) termination of employment by the Company or any of its
subsidiaries without Cause (other than by reason of death or Disability) or
(y) termination by the Executive of his or her employment for any reason; and

 

(iv)                              upon the Executive’s termination of employment
by the Company or any of its subsidiaries for Cause (any applicable date, the
“Expiration Date”).

 

Following the applicable Expiration Date, the Vested Portion shall be cancelled
immediately, automatically, and without consideration of further action.

 

(b)                                 Method of Exercise.

 

(i)                                     Subject to Section 4(a), the Vested
Portion of the Option may be exercised by delivering to the Company at its
principal office written notice of intent to so exercise.  The Option may be
exercised in whole or in part, with respect to whole Shares only.  Shares
purchased upon the exercise of the Option shall be paid for at the time of
purchase.  Such payments shall be made in cash or, in the discretion of the
Committee, (i) through the delivery of Shares already owned by the Executive,
(ii) having the Company withhold from Shares otherwise deliverable to the
Executive, or (iii) a combination of any of the foregoing, in accordance with
procedures to be established by the Committee.  Any Shares so delivered shall be
valued at their Market Price on the date of exercise.  Upon receipt of notice of
exercise and payment in accordance with procedures to be established by the
Committee, the Company or its agent shall deliver to the Executive exercising
the Option (or his or her designee) a certificate for such Shares.

 

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(ii)                                  Notwithstanding any other provision of
this Agreement to the contrary, the Option may not be exercised prior to the
completion of any registration or qualification of the Option or the Shares
under applicable state and federal securities or other laws, or under any ruling
or regulation of any governmental body or national securities exchange that the
Committee shall in its sole discretion determine to be necessary or advisable.

 

(iii)                               Upon the Company’s determination that the
Option has been validly exercised as to any of the Shares, the Company shall
issue certificates in the Executive’s name for such Shares, not later than ten
(10) business days following such determination.  However, the Company shall not
be liable to the Executive for damages relating to any delays in issuing the
certificates to him, any loss of the certificates, or any mistakes or errors in
the issuance of the certificates or in the certificates themselves.

 

(iv)                              In the event of the Executive’s death, the
Vested Portion of the Option shall remain exercisable by the Executive’s
executor or administrator, or the person or persons to whom the Executive’s
rights under this Agreement shall pass by will or by the laws of descent and
distribution as the case may be, to the extent set forth in Section 4(a).  Any
heir or legatee of the Executive shall take rights herein granted subject to the
terms and conditions hereof.

 

5.                                      Adjustments in Event of Change in Common
Stock.  In the event of any change in the outstanding Shares after the Grant
Date by reason of any Share dividend or split, reorganization, recapitalization,
merger, consolidation, spin-off, combination, combination or transaction or
exchange of Shares or other corporate exchange, or any distribution to
shareholders of Shares other than regular cash dividends or any transaction
similar to the foregoing, the Committee in its sole discretion and without
liability to any person shall make such substitution or adjustment, if any, as
it deems to be equitable, as to (i) the number or kind of Shares or other
securities issued or reserved for issuance pursuant to the Option, (ii) the
Option Price and/or (iii) any other affected terms of the Option.

 

6.                                      Interpretations.  The Committee shall
have the sole discretionary authority to interpret the terms of the Agreement
and make any other factual determinations which it believes to be necessary and
advisable for the administration of this Agreement.  All actions taken and
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Company and the Executive.

 

7.                                      Rights of a Stockholder.  The Executive
shall have no rights as a stockholder with respect to any Shares issuable or
transferable upon exercise of the Option until the date a stock certificate is
issued to the Executive representing such Shares.  Except as otherwise expressly
provided in the Agreement, no adjustment shall be made for cash dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.

 

8.                                      No Right to Continued Employment.  The
granting of the Option evidenced hereby and this Agreement shall impose no
obligation on the Company or any affiliate to continue the employment of the
Executive and shall not lessen or affect the Company’s or its affiliate’s right
to terminate the employment of the Executive for any reason at any time.

 

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9.                                      Legend on Certificates.  The
certificates representing the Shares purchased by exercise of the Option shall
be subject to such stop transfer orders and other restrictions as the Committee
may deem advisable under this Agreement or the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which such Shares are listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

 

10.                               Transferability.  Except as permitted by the
Committee, the Option may not be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Executive otherwise than by will or
by the laws of descent and distribution, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any affiliate; provided that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.  No such permitted transfer
of the Option to heirs or legatees of the Executive shall be effective to bind
the Company unless the Committee shall have been furnished with written notice
thereof and a copy of such evidence as the Committee may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions hereof.  During the Executive’s
lifetime, the Option is exercisable only by the Executive.

 

11.                               Withholding.  The Executive may be required to
pay to the Company or any affiliate and the Company shall have the right and is
hereby authorized to withhold, any applicable withholding taxes in respect of
the Option, its exercise or any payment or transfer under or with respect to the
Option and to take such other action as may be necessary in the opinion of the
Committee to satisfy all obligations for the payment of such withholding taxes.

 

12.                               Securities Laws.  Upon the acquisition of any
Shares pursuant to the exercise of the Option, the Executive will make or enter
into such written representations, warranties and agreements as the Committee
may reasonably request in order to comply with applicable securities laws or
with this Agreement.

 

13.                               Notices.  Any notice necessary under this
Agreement shall be addressed to the Company in care of its Secretary at the
principal office of the Company and to the Executive at the address appearing in
the personnel records of the Company for the Executive or to either party at
such other address as either party hereto may hereafter designate in writing to
the other.  Any such notice shall be deemed effective upon receipt thereof by
the addressee.

 

14.                               Nature of Payments.  This Agreement is in
consideration of services performed or to be performed for the Company or any
subsidiary, division or business unit of the Company.  Any income or gain
realized pursuant to this Agreement shall constitute a special incentive payment
to the Executive and shall not be taken into account, to the extent permissible
under applicable law, as compensation for purposes of any of the employee
benefit plans of the Company or any subsidiary except as may be determined by
the Committee or by the Board or board of directors of the applicable
subsidiary.

 

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15.                               Compliance with Section 409A of the Code. 
This Agreement is intended to comply and be exempt from Section 409A of the Code
and shall be administered in a manner that is intended to comply with
Section 409A of the Code and shall be construed and interpreted in accordance
with such intent.  To the extent that an award or the payment, settlement or
deferral thereof is subject to Section 409A of the Code, the award shall be
granted, paid, settled or deferred in a manner that will comply with
Section 409A of the Code, including regulations or other guidance issued with
respect thereto, except as otherwise determined by the Committee.  Any provision
of this Agreement that would cause the grant of an award or the payment,
settlement or deferral thereof to fail to satisfy Section 409A of the Code shall
be amended to comply with Section 409A of the Code on a timely basis, which may
be made on a retroactive basis, in accordance with regulations and other
guidance issued under Section 409A of the Code.

 

16.                               Amendment.  No provisions of this Agreement
may be amended, modified, waived or discharged except as otherwise provided in
this Agreement or agreed to in writing by the Executive and the Company.  The
failure of a party to insist upon strict adherence to any term of this Agreement
on any occasion shall not be considered a waiver thereof or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement.

 

17.                               Severability.  In the event that any provision
in this Agreement shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining parts of the Agreement,
and the Agreement shall not be construed and enforced as if the illegal or
invalid provision had not been included.

 

18.                               Choice of Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAWS.

 

19.                               Waiver of Jury Trial.  THE PARTIES HEREBY
WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR THE VALIDITY, INTERPRETATION OR ENFORCEMENT HEREOF.  THE
PARTIES AGREE THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS
AGREEMENT AND WOULD NOT ENTER INTO THIS AGREEMENT IF THIS SECTION WERE NOT
PART OF THIS AGREEMENT.

 

**Signature Page Follows**

 

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20.                               Signature in Counterparts.  This Agreement may
be signed in counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

 

CACHE, INC.

 

 

 

 

 

By:

/s/ Margaret Feeney

 

 

Name: Margaret Feeney

 

 

Title: EVP and CFO

 

 

 

 

Agreed and acknowledged as

 

of the date first above written:

 

 

 

/s/ Jay Margolis

 

 

Name: Jay Margolis

 

 

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