Exhibit 10.5

 

SEPARATION AND GENERAL RELEASE AGREEMENT

 

This Separation and General Release Agreement (the “Agreement”) is made by and
between Cache, Inc., a Florida corporation, having its principal place of
business at 1440 Broadway, New York, New York 10036 (“Cache” or the “Company”),
and Thomas E. Reinckens (“Reinckens” or the “Executive”) (collectively, “the
parties”).

 

WHEREAS, the Executive was employed by Cache pursuant to an Employment
Agreement, dated as of February 24, 2012 (the “Employment Agreement”); and

 

WHEREAS, the Executive received notice that his employment with Cache would be
terminated; and

 

WHEREAS, the Executive has certain post-employment obligations to Cache,
including with respect to confidential information, non-competition,
non-solicitation, cooperation, and non-disparagement, as expressly set forth in
Sections 7, 8, and 9 of the Employment Agreement; and

 

WHEREAS, the parties desire to resolve any and all issues between them with
respect to the Executive’s employment at the Company and his termination from
such employment; and

 

WHEREAS, the parties desire to have no further obligations to each other, except
as specifically provided herein.

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is
acknowledged hereby, and in consideration of the mutual covenants and
undertakings set forth herein, the parties agree as follows:

 

1.                                      Termination.

 

(a)                                 The parties acknowledge and agree that the
Executive’s employment with Cache shall terminate, pursuant to Section 5.0 of
the Employment Agreement (Termination with Compensation) and without Cause,
effective February 5, 2013 (the “Termination Date”).  Cache shall pay the
Employee, within thirty (30) calendar days of the Termination Date:  (i) any
accrued but unused vacation, (ii) his earned but unpaid salary through and
including the Termination Date; and (iii) a lump sum payment in the amount of
$49,315, representing thirty (30) calendar days’ of his salary, in lieu of
notice.

 

(b)                                 The Executive hereby resigns from any and
all positions or board memberships he may hold with Cache, including from his
position as President and Chief Executive Officer of the Company, and Chairman
of the Board of Directors of the Company, effective on the Termination Date. 
The Executive agrees to execute and deliver to the Company any documents, or to
take any other necessary steps, to effectuate such resignations. Such
resignations shall continue to be effective regardless of whether this Agreement
remains in effect or this Agreement is revoked by the Executive in accordance
with Paragraph 15 of this Agreement.

 

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2.                                      Consideration.

 

(a)                                 In exchange for and in consideration of the
covenants and promises contained herein, including the Employee’s release of all
claims against Cache and the Released Parties as set forth in this Agreement:

 

(i)                                     The Company will provide the Executive
with continuing payments of his salary (at the rate of $600,000 per year), in
accordance with Cache’s payroll practices, for the period beginning February 6,
2013 and ending February 23, 2015 (the “Severance Period”) (the “Severance
Payments”); provided, however, that:

 

(A)                               Such Severance Payments shall be reduced, with
immediate effect, by the amount of any compensation that the Executive receives
from Employment during the Severance Period.  For purposes of this Paragraph,
“Employment” shall mean any position or arrangement wherein the Executive
receives compensation for any services rendered (whether as an employee,
independent contractor, consultant or otherwise).  The Executive agrees that,
immediately upon his acceptance of Employment (and, in no event, later than
seven (7) calendar days after such acceptance), he will notify Cache, in
writing, of such Employment and the compensation associated with such
Employment, so that Cache may reduce the Severance Payments to be made to
Executive.  For the avoidance of doubt, all forms of compensation received by
the Executive from Employment, including any salary, draw, commissions, bonuses
and benefits, will be considered in determining the reduction of the Executive’s
Severance Payments.

 

(B)                               In the event that the Executive dies during
the Severance Period, Cache will have no further liability or obligation to
Executive, his executor, administrators, heirs, assigns or any other persons
claiming under or through him as of the date of the Executive’s death for the
Severance Payments.

 

The Severance Payments shall begin within thirty (30) calendar days after the
Effective Date; provided, however, that the first of any such Severance Payments
shall include any amounts that would have been paid to Executive, during the
period between Executive’s Termination Date and the date such first payment is
made, in the normal course of events on the Company’s normal payroll schedule
had the Executive not separated from service at the beginning of the Severance
Period. The intent of this provision is to ensure that payments shall continue
to be made as nearly as possible on the same schedule of payments as would have
been applicable had there been no requirement for the Executive to execute this
Agreement.

 

(ii)                                  To the extent permitted under the
Company’s medical and dental insurance plan(s), the Executive shall continue to
be eligible for coverage under the Company’s group medical and dental insurance
plan(s), which are generally made available to its senior executive officers,
through the duration of the Severance Period, subject to the eligibility and
contribution requirements, enrollment criteria and the other terms and
conditions of such plans, and Cache will pay the full premiums for such
coverage.  Cache reserves the right to modify, amend and eliminate any such
plans, in its sole and absolute discretion; provided, however, that:

 

(A)                               Such eligibility and payments shall cease upon
the Executive becoming eligible for alternative medical and dental insurance
coverage through Employment.

 

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The Executive must notify Cache within seven (7) calendar days after the date
Executive becomes covered by another group health or dental insurance plan
during the Severance Period.

 

(B)                               Nothing in this Agreement shall be construed
as an agreement to fund or contribute to the Executive’s medical or dental
insurance premiums, whether under COBRA or otherwise, after the expiration of
the Severance Period.

 

(C)                               Notwithstanding anything to the contrary in
this Paragraph 2(a)(ii), if Cache determines, in its sole discretion, that the
provision of coverage pursuant to this Paragraph 2(a)(ii) shall be
discriminatory under Section 105(h) of the Internal Revenue Code, Cache may
cease such coverage (and accompanying payments) and provide, in lieu of
coverage, a lump sum payment to the Executive in the amount that Cache would
have paid on his behalf for such coverage.

 

(iii)                               The Executive shall be permitted to retain
both the Hewlett Packard desktop computer and Apple iPhone issued to him by
Cache, and Cache shall, as soon as administratively practicable, transfer the
telephone number for the iPhone to the Executive; provided, however, that the
Executive shall permit Cache to remove any Confidential Information (as defined
in the Employment Agreement) from such devices.

 

(iv)                              The Executive shall be permitted to access his
Cache e-mail account (treinckens@cache.com) for sixty (60) calendar days after
the Termination Date, subject to Cache’s policies and procedures governing the
use of company e-mail.

 

(b)                                 The Executive acknowledges and agrees that
unless he enters into this Agreement, he would not otherwise be entitled to
receive the consideration set forth in Paragraph 2(a).  The Executive further
acknowledges and agrees that he shall not receive, and is not entitled to
receive, any other payments or benefits from Cache or the Released Parties,
except as set forth in Paragraph 2(a) of this Agreement.  The Executive
acknowledges and agrees that the consideration set forth in Paragraphs 1 and
2(a) of this Agreement constitute full accord and satisfaction for all amounts
due and owing to the Executive, including all salary, wages, incentive
compensation, paid time off, reimbursements or other payments or benefits which
may have been due and owing to the Executive.

 

(c)                                  Cache shall deduct and withhold from all
compensation and benefits under this Agreement all social security and other
federal, state and local taxes and charges which currently are or which
hereafter may be required by law to be so deducted and withheld.

 

3.                                      Options/Shares.

 

(a)                                 The Executive acknowledges and agrees that,
as of the Termination Date, he had a total of 400,000 vested stock options (the
“Vested Options”).  The Executive further acknowledges that, in accordance with
Cache’s 2008 Stock Option and Performance Incentive Plan (the “Stock Option
Plan”) and the applicable Stock Option Agreements, he must exercise the Vested
Options within thirty (30) calendar days of the Termination Date (the
“Expiration Date”) and that any portion of the Vested Options that has not been
exercised by the Expiration Date shall terminate immediately and automatically
and, as of such time, the Executive shall have no further rights with respect
thereto.

 

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(b)                                 The parties acknowledge and agree that, as
of the Termination Date, Executive had a total of 143,333 unvested Restricted
Shares.  The parties further acknowledge and agree that: (i) notwithstanding
anything to the contrary in the Stock Option Plan and/or the applicable
Restricted Stock Award Agreements, Executive shall, after the Termination Date,
retain such unvested Restricted Shares through and including the earlier of the
termination date of the Investment Agreement, dated as of February 5, 2013, by
and among Cache, MFP Partners, L.P., and Mill Road Capital, L.P. (the
“Investment Agreement”) (unless terminated to enter into a transaction that
would otherwise result in accelerated vesting of the Restricted Shares, in which
case such period shall extend until the completion or termination of such
transaction) and the completion of the rights offering contemplated by the
Investment Agreement (the “Extended Period”), (ii) during the Extended Period,
the Restricted Shares shall otherwise remain subject to the terms and conditions
of the Stock Option Plan and the applicable Restricted Stock Award Agreements,
including with respect to the lapse of any restrictions in the event of a Change
in Control (as defined in the Stock Option Plan); and (iii) any Restricted
Shares that remain unvested after the Extended Period, shall be immediately
forfeited, and Executive shall have no further rights with respect thereto.  The
parties specifically acknowledge and agree that, other than in connection with a
Change of Control (as defined in the Stock Option Plan), none of the unvested
Restricted Shares shall vest after the Termination Date.

 

4.                                      General Release.

 

In exchange for and in consideration of the covenants and promises contained
herein, the Executive, on behalf of himself and his spouse, domestic partner,
children, agents, assignees, heirs, executors, beneficiaries, legal
representatives and assigns, hereby waives, discharges and releases Cache and
its current and former parents, subsidiaries, divisions, branches, assigns and
affiliated and related companies, and its or their respective predecessors,
successors, employee benefit plans, and present and former directors, officers,
board members, partners, shareholders, fiduciaries, employees, representatives,
agents and attorneys, in their individual and representative capacities
(“Released Parties”) from any and all actions, causes of action, obligations,
liabilities, claims and demands the Executive may have, known or unknown,
contingent or otherwise, and whether specifically mentioned or not, regardless
of when they accrued until the date the Executive signs this Agreement.

 

This is a general release and includes, but is not limited to, the release of:

 

·                                          any claims based on the Executive’s
employment with Cache or the termination of that employment, including, but not
limited to, any claim for wrongful discharge; and

 

·                                          any claims for breach of contract
(express, implied or otherwise), including any claims based on the Employment
Agreement; and

 

·                                          any claims of alleged employment
discrimination, harassment or retaliation on any basis, including age, gender,
disability (or perceived disability), race, color, ethnicity, national origin,
religion, sexual orientation, veteran’s status, whistleblower status or marital
status; and

 

·                                        any claims under Title VII of the Civil
Rights Act of 1964; the Americans With Disabilities Act; the Age Discrimination
in Employment Act; the Family and Medical Leave

 

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Act; the Employee Retirement Income Security Act; the New York State Human
Rights Law; the New York City Human Rights Law; and the New York Labor Law; or
any other federal, state, or local laws or regulations, including any and all
laws or regulations prohibiting employment discrimination, harassment or
retaliation; and

 

·                                          any claims for negligence, defamation
or intentional tort.

 

The Executive agrees that he hereby waives any right that he may have to seek or
to share in any relief, monetary or otherwise, relating to any claim released
herein, whether such claim was initiated by the Executive or not.  The above
release does not include a release of: (a) any rights the Executive may have to
unemployment or workers’ compensation benefits, (b) any rights the Executive may
have under COBRA; (c) any rights the Executive may have under the terms of this
Agreement; (d) any rights which cannot be released by private agreement; (e) any
vested benefits under any ERISA-covered employee benefit plan, or (f) the Vested
Options, the exercise of which shall remain governed by the terms, conditions
and rules of the applicable plans, agreements or certificates and applicable
law.

 

5.                                      Denial of Wrongdoing.  It is agreed and
understood between the parties that nothing contained in this Agreement, nor the
fact that the Executive has been paid any remuneration under it, shall be
construed, considered or deemed to be an admission of liability or wrongdoing by
Cache or the Released Parties.  The parties further acknowledge that Cache
denies any liability, committing any wrongdoing or violating any legal duty with
respect to the Executive, including with respect to his employment or his
termination from that employment.

 

6.                                      Use in Litigation.  The terms of this
Agreement, including all related facts, circumstances, statements and documents,
shall not be admissible or submitted as evidence in any litigation, in any
forum, for any purpose, other than to secure enforcement of the terms and
conditions of this Agreement, or as may otherwise be required by law.

 

7.                                      The Executive’s Continuing Obligations.

 

(a)                                 Return of Property.  The Executive hereby
acknowledges and agrees to adhere to his continuing contractual and legal
obligations to Cache with respect to the return of the Company’s property,
including all Confidential Information (as defined in the Employment Agreement),
and including as expressly set forth in Section 6.0 of the Employment
Agreement.  Further, the Executive represents and warrants that, as of the date
he signs this Agreement: (i) he has returned to Cache all such property (and any
copies thereof), except for his Cache issued computer and cell phone (pursuant
to Paragraph 2(a)(iii) hereof), including, but not limited to, all
identification cards, keys, credit cards, documents, computers, cell phones, and
disks, as well as all materials containing Confidential Information, in any
form; and (ii) he has destroyed any Confidential Information on his personal
computer or any other personal electronic device in his possession, custody or
control.

 

(b)                                 Confidential Information.  The Executive
hereby acknowledges and agrees to adhere to his continuing contractual and legal
obligations to Cache with respect to the nondisclosure and nonuse of
Confidential Information (as defined in the Employment Agreement), including as
expressly set forth in Section 7.1 of the Employment Agreement.

 

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(c)                                  Non-Competition.  The Executive hereby
acknowledges and agrees to adhere to his continuing contractual and legal
obligations to Cache with respect to non-competition, as expressly set forth in
Section 7.2 of the Employment Agreement.

 

(d)                                 Non-Solicitation.  The Executive hereby
acknowledges and agrees to adhere to his continuing contractual and legal
obligations to Cache with respect to non-solicitation, as expressly set forth in
Section 7.3 of the Employment Agreement.

 

(e)                                  Cooperation. The Executive hereby
acknowledges and agrees to adhere to his continuing contractual and legal
obligations to Cache with respect to cooperation, as expressly set forth in
Section 8.0 of the Employment Agreement.

 

(f)                                   Non-Disparagement.  The Executive hereby
acknowledges and agrees to adhere to his continuing contractual and legal
obligations to Cache with respect to non-disparagement, as expressly set forth
in Section 9.0 of the Employment Agreement.

 

(g)                                  Acknowledgment.  The Executive acknowledges
that: (i) it is in Cache’s legitimate business interest to restrict certain of
the Employee’s activities after the termination of his employment with Cache,
(ii) that the provisions in Paragraph 7 of this Agreement are reasonable and
properly required for the adequate protection of the legitimate business
interests of the Company, and that such provisions will not substantially impair
the Executive’s ability to earn a livelihood, nor will such provisions cause the
Executive undue hardship, (iii) the covenants in Paragraph 7 hereof, and the
Executive’s promise to comply with such covenants, are a material inducement for
Cache to enter into this Agreement, and (iv) the injury to Cache from the
Executive’s breach of the covenants in Paragraph 7 cannot be remedied solely by
the recovery of monetary damages and would result in irreparable injury to
Cache.

 

8.                                      Cache’s Continuing Obligations.

 

(a)                                 Cooperation. The Company hereby acknowledges
and agrees to adhere to its continuing contractual and legal obligations to the
Executive with respect to cooperation, as expressly set forth in Section 8.0 of
the Employment Agreement.

 

(b)                                 Non-Disparagement.  The Company hereby
acknowledges and agrees to adhere to its continuing contractual and legal
obligations to the Executive with respect to non-disparagement, as expressly set
forth in Section 9.0 of the Employment Agreement.

 

9.                                      Survival; Reasonableness.  The parties
acknowledge and agree that Sections 3.5, 6, 7, 8, 9, 10, 11 and 12 of the
Employment Agreement survive the termination of his employment and remain
binding.

 

10.                               Choice of Law and Forum.  This Agreement shall
in all respects be interpreted, enforced and governed in accordance with and
pursuant to the laws of New York, without regard to its conflicts of law
principles.  Any and all disputes, claims, or causes of action between the
Executive and the Company arising out of, concerning, or relating to the
Executive’s employment with Cache, the termination of such employment, or this
Agreement shall be submitted exclusively to a federal or state court in the
State of New York, County of New York, and the parties hereby submit to the
exclusive jurisdiction of such courts and waive any claim of an inconvenient
forum.

 

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11.                               Entire Agreement.  The Executive acknowledges
and agrees that this Agreement reflects the entire agreement between the parties
regarding the subject matter hereof and fully supersedes any and all prior
agreements and understandings between the parties hereto, including the
Employment Agreement, except as set forth above.  There is no other agreement
except as stated herein.  The Executive acknowledges that the Company has made
no promises to him other than those contained in this Agreement.

 

12.                               Modification.  This Agreement may not be
changed unless the change is in writing and signed by the Executive and the
Chairman of the Compensation Committee of Cache’s Board of Directors, or his/her
authorized designee.

 

13.                               General Provisions.  The failure of any party
to insist on strict adherence to any term hereof on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term hereof.  The language and all
parts of this Agreement shall in all cases be construed as a whole according to
its fair meaning, and not strictly for or against any of the parties, regardless
of who drafted it.  Paragraph headings contained in this Agreement are for
convenience of reference only, are not to be considered a part of this
Agreement, and shall not affect the interpretation of any provision hereof. 
This Agreement may be signed in counterparts, and may be delivered by facsimile
or electronic mail.  The invalidity of any provision of this Agreement shall not
affect the validity of any other provision hereof.

 

14.                               Review Period.  The Executive understands that
Cache has given him a reasonable period of twenty-one (21) calendar days, after
the date he receives it, to review and consider this Agreement before signing
it.  The Executive further understands that he may use as much of this period as
he wishes prior to signing this Agreement.  The Executive acknowledges and
agrees that he must sign and return the original Agreement to Cache, c/o
Chairman, Compensation Committee, 1440 Broadway, 5th Floor, New York, New York
10018, no later than twenty-one (21) calendar days after being provided with
this Agreement and that, if he fails to do so, the entire Agreement shall be
null and void and the parties shall have no obligations under the Agreement to
one another.  The Executive acknowledges that, to the extent that he decides to
sign this Agreement prior to the expiration of the above period, such decision
was knowing and voluntary on his part.  The parties agree that any changes to
this Agreement, whether material or immaterial, do not restart the running of
the twenty-one-day period.

 

15.                               Revocation Period.  The Executive may revoke
this Agreement within seven (7) calendar days of the date on which he signs it
(the “Revocation Period”) by delivering a written notice of revocation to Cache,
c/o Chairman, Compensation Committee, 1440 Broadway, 5th Floor, New York, New
York 10018, no later than the close of business on the seventh day after the
Executive signs this Agreement. This Agreement shall not be effective or
enforceable and no payments will be made hereunder until the Executive has
signed and returned this Agreement to the Company within the review period set
forth above and the Revocation Period has expired without the Executive
exercising his revocation right (the “Effective Date”).  Any revocation by
Executive shall have no effect on the resignations set forth in Section 1(b) of
this Agreement, which shall continue in full force and effect thereafter.

 

16.                               Section 409A Compliance.  This Agreement is
intended to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and will be interpreted in

 

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a manner intended to comply with Section 409A of the Code.  Notwithstanding
anything herein to the contrary, (a) if at the time of Executive’s termination
of employment with Cache he is a “specified employee” as defined in Section 409A
of the Code (and any related regulations or other pronouncements thereunder) and
the deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such termination of employment is necessary in order to
prevent any accelerated or additional tax under Section 409A of the Code, then
Cache will defer the commencement of the payment of any such payments or
benefits hereunder (without any reduction in such payments or benefits
ultimately paid or provided) until the date that is six (6) months following the
termination of employment with Cache (or the earliest date as is permitted under
Section 409A of the Code) and (b) if any other payments of money or other
benefits due to the Executive hereunder could cause the application of an
accelerated or additional tax under Section 409A of the Code, such payments or
other benefits shall be deferred if deferral will make such payment or other
benefits compliant under Section 409A of the Code, or otherwise such payment or
other benefits shall be restructured, to the extent possible, in a manner,
determined by the Company, that does not cause such an accelerated or additional
tax.  To the extent any reimbursements or in-kind benefits due under this
Agreement constitute “deferred compensation” under Section 409A of the Code, any
such reimbursements or in-kind benefits shall be paid in a manner consistent
with Treas. Reg. Section 1.409A-3(i)(1)(iv).  Each payment made under this
Agreement shall be designated as a “separate payment” within the meaning of
Section 409A of the Code.  All payments to be made upon a termination of
employment under this Agreement may only be made upon a “separation from
service” within the meaning of such term under Section 409A of the Code.

 

17.                               Arbitration.  The parties agree that any and
all disputes between the Executive and the Company arising out of, relating to
or concerning this Agreement shall be submitted exclusively to confidential,
final and binding arbitration before the American Arbitration Association.  The
parties hereby agree to arbitrate any disputes, in New York, New York, under the
American Arbitration Association’s Employment Arbitration Rules, and both
parties specifically consent to personal jurisdiction in such forum.  Each party
shall pay its own expenses of arbitration and the expenses of the arbitrator
shall be equally shared by the parties to the arbitration.  Nothing herein shall
prevent the Company from seeking and obtaining injunctive relief from a court
with respect to any violation or potential violation of any of the provisions of
Paragraph 7 of this Agreement.  The parties specifically waive their respective
right to a trial by jury for any dispute or controversy arising out of, relating
to or concerning this Agreement.

 

18.                               Legal Counsel.  The Executive is hereby
advised of his right to consult with an attorney before signing this Agreement,
which includes a general release and a jury trial waiver.  The Executive hereby
acknowledges his right to consult with an attorney and understands that whether
or not he does so is his decision.

 

THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE MUST SIGN THIS AGREEMENT AND
RETURN IT TO CACHE NO LATER THAN TWENTY-ONE (21) CALENDAR DAYS AFTER THE DATE HE
RECEIVES IT IN ORDER FOR IT TO BE EFFECTIVE.

 

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THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT,
UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT OF HIS OWN FREE WILL,
WITHOUT DURESS OR COERCION, AFTER DUE CONSIDERATION OF ITS TERMS AND CONDITIONS.

 

CACHE, INC.   

THOMAS E. REINCKENS 

 

 

 

 

By:

/s/ Margaret Feeney

 

By:

/s/ Thomas E. Reinckens

Name:

Margaret Feeney

 

Date:

February 5, 2013

Title:

EVP and CFO

 

 

Date:

February 5, 2013

 

 

 

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