1
EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS OF
KIRKLAND'S INC.
ARTICLE I
OFFICES
Section 1. The principal office of Kirkland's, Inc. (the
"Corporation"), is 805 North Parkway, Jackson, Tennessee 38305. The principal
office may be changed at any time upon a resolution adopted by the Board of
Directors of the Corporation (the "Board of Directors"). The Corporation may
have offices and places of business at such other places within or without the
State of Tennessee as shall be determined by the Board of Directors.
Section 2. The registered office of the Corporation for any
particular state may be, but need not be, identical with the principal office of
the Corporation in that state, and the address of the registered office may be
changed from time to time by appropriate resolution of the Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 1. Meetings. All meetings of shareholders shall be
held either in the principal office of the Corporation or at any other place
within or without the City of Jackson, Tennessee, as designated by the Board of
Directors.
Section 2. Annual Meeting. The annual meeting of the
shareholders shall be held on the second Tuesday in May of each year or such
other date, in any particular year, designated by the Board of Directors, for
the purpose of electing directors and for the transaction of any other business
authorized to be transacted by the shareholders. If the appointed day is a legal
holiday the meeting shall be held at the same time on the next succeeding day
not a holiday. In the event that the annual meeting is committed by oversight or
otherwise on the date herein provided for, the Board of Directors shall cause a
meeting in lieu thereof to be held as soon thereafter as conveniently may be,
and any business transacted or elections held at such meeting shall be as valid
as if transacted or held at the annual meeting. Such subsequent meeting shall be
called in the same manner as provided for the annual shareholders meeting.
Section 3. Special Meetings. Special meetings of shareholders
may be called at any time, but only by the chairman of the Board of Directors
(the "Chairman of the Board"), the president of the Corporation (the
"President"), or upon a resolution adopted by or affirmative vote of a majority
of the Board of Directors, and not by the shareholders.
Section 4. Notice Of Meetings. Notice of all shareholders'
meetings stating the time, place and the objects for which such meetings are
called shall be given by the Chairman of the Board, the President or any
vice-president (a "Vice-President") or the Secretary (the
2
"Secretary") or any assistant secretary (an "Assistant Secretary") of the
Corporation to each shareholder of record entitled to vote at such meeting not
less than ten (10) days or more than two (2) months prior to the date of the
meeting by written notice delivered personally, mailed or delivered via
overnight courier to each shareholder. If delivered personally, such notice
shall be deemed to be delivered when received. If mailed or delivered via
overnight courier service, such notice shall be deemed to be delivered when
deposited in the United States Mail in a sealed envelope with postage thereon
prepaid, or deposited with the overnight courier service, as the case may be,
addressed to the shareholder at his address as it appears on the stock record
books of the Corporation, unless he shall have filed with the Secretary a
written request that notice intended for him be mailed to some other address, in
which case it shall be mailed to the address designated in such request.
Any meeting at which all shareholders entitled to vote have
waived or at any time shall waive notice shall be a legal meeting for the
transaction of business, notwithstanding that notice has not been given as
herein before provided. The waiver must be in writing, signed by the shareholder
entitled to the notice, and be delivered to the Corporation for inclusion in the
minutes or filing with the corporate records.
Section 5. Notice for Nominations and Proposals.
5.1. Annual Meetings. Nominations for the election of
directors and proposals for any new business to be taken up at any annual
meeting of shareholders may be made by the Board of Directors or, as provided in
this bylaw, by any shareholder of the Corporation entitled to vote generally in
the election of directors, subject to the rights of the holders of preferred
stock, if applicable. In order for a shareholder of the Corporation to make any
such nominations and/or proposals, he shall give notice thereof in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
Secretary so that it is received at least 120 calendar days in advance of the
month and day the Corporation's proxy statement to shareholders was mailed to
shareholders the preceding year, or, if the Corporation's common stock is not
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), not
fewer than 90 days nor more than 120 days prior to any such meeting; provided,
however, that if notice or public disclosure of the meeting is effected fewer
than 40 calendar days before the meeting, such written notice from the
shareholder shall be delivered or mailed, as prescribed, to the Secretary not
later than the close of the 10th calendar day following the day on which notice
of the meeting was mailed to shareholders. Each such notice given by a
shareholder with respect to nominations for the election of directors shall set
forth (i) the name, age, business address and, if known, residence address of
each nominee proposed in such notice, (ii) the principal occupation or
employment of each such nominee, and (iii) the number of shares of stock of the
Corporation which are beneficially owned by each such nominee. As to any other
business that the shareholder proposes to bring before the meeting, such notice
shall set forth (i) a brief description of the business desired to be brought
before the meeting, (ii) the reasons for conducting such business at the meeting
and any material interest in such business of such shareholder and (iii) the
beneficial owner, if any, on whose behalf the proposal is made. As to
-2-
3
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, such notice shall set forth (i) the
name and address of such shareholder, as it appears on the Corporation's books,
and of such beneficial owner and (ii) the class and number of shares of the
Corporation which are owned beneficially and of record by such shareholder and
such beneficial owner.
5.2. Special Meetings. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of shareholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (i) by or at the direction of the Board of
Directors or (ii) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any shareholder of the
Corporation who is a shareholder of record at the time of giving of notice
provided for in this bylaw, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this bylaw. In the event the
Corporation calls a special meeting of shareholders for the purpose of electing
one or more directors to the Board of Directors, any such shareholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting for inclusion in
the shareholder's notice required by Section 5.1 of these Bylaws if such
nomination shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the close of business on the 90th
day prior to such special meeting and not later than the close of business on
the later of the 60th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
shareholder's notice as described above.
5.3. General. Only such persons who are nominated by a
shareholder in accordance with the procedures set forth in this bylaw shall be
eligible to serve as directors and only such business shall be conducted at a
meeting of shareholders as shall have been brought before the meeting in
accordance with the procedures set forth in this bylaw. Except as otherwise
provided by law, the charter of the Corporation (the "Charter") or these Bylaws,
the Chairman of the Board shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this bylaw and, if any proposed nomination or business is not in compliance with
this bylaw, to declare that such defective proposal or nomination shall be
disregarded.
5.4. Public Announcement. For purposes of this bylaw,
"public announcement" shall mean disclosure in a press release reported by the
Dow Jones News Service, Associated Press or comparable national news service or
in a document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
-3-
4
5.5. Non-Exclusivity. Notwithstanding the foregoing
provisions of this Section 5, in the event the Common Stock of the Corporation
is registered under the Exchange Act, a shareholder shall also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this bylaw. Nothing in this
Section 5 shall be deemed to affect any rights (i) of shareholders to request
inclusion of proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred
Stock to elect directors under specified circumstances.
Section 6. Quorum. Except as may be otherwise provided by law,
a majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. In the event that a majority of the outstanding shares are
represented at any meeting, action on a matter is approved if the votes cast
favoring the action exceed the votes cast opposing the action, unless the
question is one upon which by express provision of law or of the Charter or of
these Bylaws a larger or different vote is required, in which case such express
provision shall govern and control the decision of each question. If a quorum of
the shares entitled to vote shall fail to be obtained at any meeting, or in the
event of any other proper business purpose, the chair of the meeting or the
holders of a majority of the shares present, in person or by proxy, may adjourn
the meeting to another place, date or time by announcement to shareholders
present in person at the meeting and no other notice of such place, date or time
need be given.
Section 7. Organization. At every meeting of the shareholders
the Chairman of the Board, or, in his absence, the President, or in the absence
of the Chairman of the Board and the President, a director or an officer of the
Corporation designated by the Board shall act as chairman. The Secretary, or, in
his absence, an Assistant Secretary, shall act as secretary at all meetings of
the shareholders. In the absence from any such meeting of the Secretary and any
Assistant Secretary, the chairman may appoint any person to act as secretary of
the meeting.
Section 8. Closing of Transfer Books or Fixing of Record Date.
For the purpose of determining the shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer book shall be closed for a stated period not to exceed
in any case thirty days. If the stock transfer book shall be closed for the
purpose of determining shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than thirty (30) days and not less than ten (10) days prior to the date on
which the particular action requiring such determination of shareholders is to
be taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend,
-4-
5
the date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof.
Section 9. Voting Lists. The officer or agent having charge of
the stock transfer books for common shares of the Corporation shall make
available, within two (2) business days after notice of a meeting is given, a
complete list of the shareholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each shareholder, which list, for a period beginning
within two (2) business days after notice of such meeting is given, shall be
kept on file at the registered office of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall be kept open at the time and place of the meeting and be subject to the
inspection of any shareholder during the entire time of the meeting. In the
event of any challenge to the right of any person to vote at the meeting, the
presiding officer at such meeting may rely on said list as proper evidence of
the right of parties to vote at such meeting.
Section 10. Proxies. Shareholders of record who are entitled
to vote may vote at any meeting either in person or by written proxy, which
shall be filed with the secretary of the meeting before being voted. Such proxy
shall entitle the holders thereof to vote at any adjournment of such meeting,
but shall not be valid after the final adjournment thereof. No proxy shall be
valid after the expiration of eleven months from the date of its execution
unless the shareholder executing it shall have specified therein the length of
time it is to continue in force, which shall be for some limited period. A proxy
is revocable by the shareholder unless it conspicuously states that it is
irrevocable and the appointment of the proxy is coupled with an interest.
Section 11. Voting of Shares. Except as otherwise provided in
the Charter or these Bylaws, each share of Common Stock shall have all voting
rights accorded to holders of Common Stock pursuant to the Tennessee Business
Corporation Act, at the rate of one vote per share.
Section 12. Informal Action by Shareholders. Any action
required to be taken at a meeting of the shareholders, or any other action which
may be taken at a meeting of the shareholders, may be taken without a meeting if
all shareholders entitled to vote on the action consent to taking such action
without a meeting. If all shareholders entitled to vote on the action consent to
taking such action without a meeting, then the affirmative vote of the number of
shares that would be necessary to authorize such action at a meeting is the act
of the shareholders.
The action must be evidenced by one or more written consents
describing the action taken, signed by each shareholder entitled to vote on the
action, indicating each signing
-5-
6
shareholder's vote or abstention on the action, and delivered to the Corporation
for inclusion in the minutes or filing with the corporate records.
Section 13. Business and Order of Business. At each meeting of
the shareholders such business may be transacted as may properly be brought
before such meeting, except as otherwise provided by law or in these Bylaws. The
order of business at all meetings of the shareholders shall be as determined by
the Chairman, unless otherwise determined by a majority in interest of the
shareholders present in person or by proxy at such meeting and entitled to vote
thereat.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Number. The number of directors of the Corporation
shall be such number, neither fewer than three nor more than fifteen (exclusive
of directors, if any, to be elected by holders of Preferred Stock of the
Corporation, voting separately as a class), as determined by a majority vote of
the Board of Directors. The Board of Directors has the power to fix or change
the number of directors, including an increase or decrease in the number of
directors, from time to time as established by a majority vote of the Board of
Directors. A director need not be a shareholder or a resident of the state of
Tennessee.
Section 2. Powers of Directors. The Board of Directors shall
have the entire management of the business of the Corporation. In the management
and control of the property, business and affairs of the Corporation, the Board
of Directors is hereby vested with all the powers possessed by the Corporation
itself, so far as this delegation of authority is not inconsistent with the laws
of the State of Tennessee, with the Charter, or with these Bylaws. The Board of
Directors shall have the power to determine what constitutes net earnings,
profits, and surplus, respectively, what amount shall be reserved for working
capital and to establish reserves for any other proper purpose, and what amount
shall be declared as dividends, and such determination by the Board of Directors
shall be final and conclusive. The Board of Directors shall have the power to
declare dividends for and on behalf of the Corporation, which dividends may
include or consist of stock dividends.
Section 3. Regular Meetings of the Board. Immediately after
the annual election of directors, the newly elected directors may meet at the
same place for the purpose of organization, the election of corporate officers
and the transaction of other business; if a quorum of the directors be then
present no prior notice of such meeting shall be required. Other regular
meetings of the Board of Directors shall be held at such times and places as the
Board of Directors by resolution may determine and specify, and if so determined
no notice thereof need be given, provided that, unless all the directors are
present at the meeting at which said resolution is passed, the first meeting
held pursuant to said resolution shall not be held for at least five (5) days
following the date on which the resolution is passed.
-6-
7
Section 4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place whenever called by the Chairman of
the Board, the President, or any Vice-President or the Secretary, or by written
request of at least two directors, notice thereof being given to each director
by the Secretary or other officer calling the meeting, or they may be held at
any time without formal notice provided all of the directors are present or
those not present shall at any time waive or have waived notice thereof.
Section 5. Notice. Notice of any special meetings shall be
given at least two (2) days previously thereto by written notice delivered
personally, by mail, by telegram, by overnight courier service, or by facsimile.
If mailed, such notice shall be mailed to each director at his business address
no less than five (5) days previously thereto, and shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. If notice
be delivered via overnight courier service, such notice shall be deemed to be
delivered when deposited with the overnight courier service. If notice be given
by facsimile, such notice shall be deemed to be delivered when information of
the transmission is received.
Section 6. Quorum. A majority of the members of the Board of
Directors, as constituted for the time being, shall constitute a quorum for the
transaction of business, but a lesser number may adjourn any meeting and the
meeting may be held as adjourned without further notice. If a quorum is present
when a vote is taken, the affirmative vote of a majority of the directors
present is the act of the Board of Directors, except as otherwise provided by
law or by these Bylaws. The fact that a director has an interest in a matter to
be voted on by the meeting shall not prevent his being counted for purposes of a
quorum.
Section 7. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 8. Informal Action by Directors. Any action required
to be taken at a meeting of the Board of Directors, or any other action which
may be taken at a meeting of the Board of Directors, may be taken without a
meeting if all directors consent to taking such action without a meeting. If all
directors consent to taking such action without a meeting, the affirmative vote
of the [majority of the directors] [the number of directors that would be
necessary to authorize or take such action at a meeting] is the act of the Board
of Directors. The action must be evidenced by one or more written consents
describing the action taken, signed by each director, indicating each signing
director's vote or abstention on the action, and shall be included in the
minutes or filed with the corporate records reflecting the action taken.
-7-
8
Section 9. Meetings by any Form of Communication. The Board of
Directors shall have the power to permit any and all directors to participate in
a regular or special meeting by, or conduct the meeting through the use of any
means of communication by which all directors participating may simultaneously
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
Section 10. Organization. At each meeting of the Board of
Directors, the Chairman of the Board, or, in his absence, the Chief Executive
Officer of the Corporation (the "Chief Executive Officer'), or, in the absence
of the Chairman of the Board and the Chief Executive Officer, the President, or
in the absence of the Chairman of the Board, the Chief Executive Officer and the
President, a director or an officer of the Corporation designated by the Board
of Directors shall act as chairman. The Secretary, or, in the Secretary's
absence, any person appointed by the chairman, shall act as secretary of the
meeting.
Section 11. Removal. No director of the Corporation may be
removed at any time unless for cause. Upon finding of cause as determined by a
majority of the Board of Directors (excluding the director which is the subject
of removal), the director may be removed only upon the affirmative vote of the
holders of at least 80% of outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (the "Voting
Power"), considered for this purpose as one class, except as otherwise required
by law.
Section 12. Vacancy. Unless the Board of Directors otherwise
determines, and subject to the rights of the holders of any series of Preferred
Stock, newly created directorships resulting from any increase in the authorized
number of directors or any vacancies on the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office or other
cause may be filled only by a majority vote of the directors then in office,
though less than a quorum, and shall not be filled by the shareholders unless
there are no directors remaining on the Board of Directors. Any director so
chosen (a "vacancy director") shall be a director of the same class as the
director whose vacancy he or she fills. Such vacancy director shall hold office
until the next annual meeting of shareholders and until his or her successor
shall have been elected and qualified. The shareholders shall thereupon elect a
director to fill the vacancy having been temporarily filled by the vacancy
director, which individual may include the incumbent vacancy director. The
director so elected shall be a director of the same class as the vacancy
director and shall serve until the annual meeting of shareholders at which the
term of office of such class expires and until such director's successor shall
have been duly elected and qualified.
Section 13. Resignations. A director may resign at any time by
delivering written notice to the Board of Directors, the Chairman of the Board
or the President. Resignation is effective when the notice is delivered, unless
the notice specifies a later effective date.
Section 14. Compensation. By resolution of the Board of
Directors, the directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors. No
-8-
9
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES.
Section 1. Appointment and Powers. The Board of Directors may,
by resolution passed by a majority of the whole Board of Directors, create one
or more committees, each committee to consist of two or more directors of the
Corporation, which, to the extent provided in said resolution or in these Bylaws
and not inconsistent with Section 48-18-206 of the Tennessee Business
Corporation Act, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
The Board of Directors may, by resolution passed by a majority of the whole
Board of Directors, abolish any such committee.
Section 2. Term of Office and Vacancies. Each member of a
committee shall continue in office until a director to succeed him shall have
been elected and shall have qualified, or until he ceases to be a director or
until he shall have resigned or shall have been removed in the manner
hereinafter provided. Any vacancy in a committee shall be filled by the vote of
a majority of the whole Board of Directors at any regular or special meeting
thereof.
Section 3. Organization. Unless otherwise provided by the
Board of Directors, each committee shall appoint a chairman. Each committee
shall keep a record of its acts and proceedings and report the same from time to
time to the Board of Directors as the Board of Directors may require.
Section 4. Resignations. Any member of a committee may resign
from the committee at any time by giving written notice to the Chairman of the
Board, the President or the Secretary. Such resignation shall take effect at the
time of the receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. Removal. Any member of a committee may be removed
from the committee with or without cause at any time by resolution passed by a
majority of the whole Board of Directors at any regular or special meeting.
Section 6. Meetings. Regular meetings of each committee, of
which no notice shall be required, shall be held on such days and at such places
as the chairman of the committee shall determine or as shall be fixed by a
resolution passed by a majority of all the members of such committee. Special
meetings of each committee will be called by the Secretary at the request of any
two members of such committee, or in such other manner as may be determined
-9-
10
by the committee. Notice of each special meeting of a committee shall be mailed
to each member thereof at least two days before the meeting or shall be given
personally or by telephone or other electronic transmission at least one day
before the meeting. Every such notice shall state the date, time and place of
the meeting, but need not state the purposes of the meeting. No notice of any
meeting of a committee shall be required to be given to any alternate.
Section 7. Quorum and Manner of Acting. Unless otherwise
provided by resolution of the Board of Directors, a majority of a committee
shall constitute a quorum for the transaction of business and the act of a
majority of those present at a meeting at which a quorum is present shall be the
act of such committee. The members of each committee shall act only as a
committee and the individual members shall have no power as such. Actions taken
at a meeting of any committee shall be reported to the Board of Directors at its
next meeting following such committee meeting; provided that, when the meeting
of the Board of Directors is held within two (2) days after the committee
meeting, such report may be made to the Board of Directors at its second meeting
following such committee meeting.
Section 8. Compensation. Each member of a committee shall be
paid such compensation, if any, as shall be fixed by the Board of Directors.
ARTICLE V
WAIVER OF NOTICE
Whenever any notice is required to be given by these Bylaws,
or the Charter, or any other laws of the State of Tennessee, a waiver thereof in
writing signed by the person or persons entitled to such notice and filed with
the minutes or corporate records, whether before or after the time stated
therein, shall be deemed equivalent thereto. Where the person or persons
entitled to such notice sign the minutes of any shareholders' or directors'
meeting, which minutes contain the statement that said person or persons have
waived notice of the meeting, then such person or persons are deemed to have
waived notice in writing. [A shareholder's attendance at a meeting waives
objection to lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting (or promptly upon the shareholder's
arrival) objects to holding the meeting or transacting business at the meeting,
and also waives objection to consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the meeting notice,
unless the shareholder objects to considering the matter when it is presented. A
director's attendance at or participation in a meeting waives any required
notice to the director of the meeting unless the director at the beginning of
the meeting (or promptly upon the director's arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.]
-10-
11
ARTICLE VI
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer, Chief Operating Officer, one or more Vice Presidents (the number
thereof to be determined by the Board of Directors), and a Secretary, each of
whom shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by the
Board of Directors. Any two or more offices may be held by the same person,
except the offices of President and Secretary.
Section 2. Election and Term of Office. The officers of the
Corporation to be elected by the Board of Directors shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the shareholders. If the election of officers shall not
be held in such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor is duly
elected and is qualified or until his death or until he resigns or is removed in
the manner hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed
by the Board of Directors may be removed by the Board of Directors whenever in
its judgment the best interests of the Corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 4. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the shareholders and the directors. The
Chairman of the Board shall represent the Corporation in all matters involving
the shareholders of the Corporation. He shall also perform such other duties the
Board of Directors may assign to him from time to time.
Section 6. Chief Executive Officer. The Chief Executive
Officer shall in general supervise and control all of the business and affairs
of the Corporation. He shall, in the absence of the Chairman of the Board,
preside at all meetings of the shareholders and of the Board of Directors and
shall enforce the observance of the Bylaws of the Corporation and the rules of
order for the meetings of the Board of Directors and the shareholders. He shall
keep the Board of Directors appropriately informed on the business and affairs
of the Corporation. He may sign, either alone or with the Secretary, an
Assistant Secretary or any other proper officer of the Corporation thereunto
authorized by the Board of Directors, certificates for shares of the
Corporation, any deed, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof
-11-
12
shall be expressly delegated by the Board of Directors or by these Bylaws to
some other officer or agent of the Corporation, or shall be required by law to
be otherwise signed or executed, and in general shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
Section 7. President. The President shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect. He
shall, in the absence of the Chairman of the Board and the Chief Executive
Officer, preside at all meetings of the shareholders and of the Board of
Directors. He may sign, either alone or with any other proper officer, as
necessary, certificates for shares of the Corporation, any deed, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed, and in general shall perform all
duties incident to the office of Chief Executive Officer and such other duties
as may be prescribed by the Board of Directors from time to time.
Section 8. Chief Financial Officer. The Chief Financial
Officer shall arrange for the keeping of adequate records of all assets,
liabilities and transactions of the corporation. He shall provide for the
establishment of internal controls and see that adequate audits are currently
and regularly made. He shall submit to the President, the Chairman of the Board
and the Board of Directors timely statements of the accounts of the corporation
and the financial results of the operations thereof.
Section 9. Chief Operating Officer. The Chief Operating
Officer shall supervise the operation of the Corporation, subject to the
policies and directions of the Board of Directors. He shall provide for the
proper operation of the Corporation and oversee the internal interrelationship
amongst any and all departments of the Corporation. He shall submit to the
President and the Board of Directors timely reports on the operations of the
Corporation.
Section 10. The Vice-Presidents. In the absence of the
President or in the event of his death, inability or refusal to act, the
Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated at the time of their election, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President . Any Vice-President
may sign, either alone or with the Secretary or an Assistant Secretary,
certificates for shares of the Corporation any deed, mortgages, bonds, contracts
or other instruments which the Board of Directors has authorized to be executed,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these bylaws to some other officer or
agent of the Corporation, or shall be required by law to be otherwise signed or
executed, and shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
-12-
13
Section 11. The Secretary. The Secretary shall: (a) prepare
and keep the minutes of the shareholders' and of the Board of Directors'
meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these bylaws or as
required by law; (c) be custodian of the corporate records and of the seal (if
any) of the Corporation and see that said seal is affixed to all documents, the
execution of which on behalf of the Corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) sign with the
President or a Vice-President certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general perform all duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 12. Assistant Secretaries. The Assistant Secretaries,
when authorized by the Board of Directors, may sign with the President or a
Vice-President certificates for shares of the Corporation the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Secretaries, in general, shall perform such duties as shall be
assigned to them by the Secretary, or by the President or the Board of
Directors.
Section 13. Registered Agent. The Board of Directors shall
appoint a Registered Agent for the Corporation in accordance with the Tennessee
Business Corporation Act and may pay the agent such compensation from time to
time as it may deem appropriate.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of
the Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority may
be general or confined to specific instances. Notwithstanding the foregoing, the
Corporation shall not make any loan other than a sale on credit in the ordinary
course of business or a life insurance policy loan, either directly or
indirectly, to any director or officer of the Corporation except with the
consent of the holders of a majority of all the outstanding shares owned or
controlled by shareholders other than a shareholder for whose benefit such
action is being taken, or if the Board of Directors determines that the loan
benefits the Corporation and approves the transaction.
Section 3. Checks, Drafts, etc. All checks, drafts, or other
orders for the pavement of money, notes or other evidences of indebtedness
issued in the name of the
-13-
14
Corporation, shall be signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board of
Directors may select.
ARTICLE VIII
SHARES OF STOCK
Section 1. Certificates for Shares. Certificates representing
shares of the Corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the President or
Vice-President and by the Secretary or an Assistant Secretary. The use of
facsimile signatures on any stock certificate of the Corporation is authorized.
All such certificates shall state the name of the Corporation, that it is
organized under the laws of the State of Tennessee, the name of the person to
whom issued, and the number of shares and class of shares that the certificate
represents. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a number of
shares shall have been surrendered and canceled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the Corporation as the Board of Directors may prescribe.
Section 2. Registered Ownership of Shares. The Corporation
shall be entitled to treat the person in whose name any share of its stock is
registered as the owner thereof for all purposes and shall not be bound to
recognize any equitable or other claim to, or interest in, such share on the
part of any other person, whether or not the Corporation shall have notice
thereof, except as expressly provided by applicable law.
Section 3. Transfer of Shares. Shares of stock may be
transferred by delivery of the certificate accompanied either by an assignment
in writing on the back of the certificate or by a written power of attorney to
sell, assign and transfer the same on the books of the Corporation, signed by
the person appearing on the certificate to be the owner of the shares
represented thereby, and shall be transferable on the books of the Corporation
upon surrender thereof so assigned or endorsed. The person registered on the
books of the Corporation as the owner of any shares of stock shall be entitled
to all the rights of ownership with respect to such shares. It shall be the duty
of every shareholder to notify the Corporation of his post office address.
-14-
15
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay dividends on its outstanding shares in the manner and upon
the terms and conditions provided by the Tennessee Business Corporation Act and
by its Charter.
ARTICLE X
FISCAL YEAR
The books of the Corporation shall be on a calendar year basis
and shall begin on the lst day of January and end on the 31st day of December of
each year.
ARTICLE XI
SEAL
This Corporation may or may not have a seal and in any event
the failure to affix a corporate seal to any instrument executed by the
Corporation shall not affect the validity thereof. If a seal is adopted, the
seal of this Corporation shall include the following letters cut or engraved
thereon:
KIRKLAND'S INC.
ARTICLE XII
INDEMNIFICATION
Section 1. Definitions. As used in this Article XII:
(a) "Director" shall mean any individual who is or was
a director of the Corporation, or any individual who, [while a director of the
Corporation], is or was serving at the Corporation's request as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise. A director is considered to be serving an employee benefit plan at
the Corporation's request if the director's duties to the Corporation also
impose duties on or otherwise involves services by the director to the plan or
to participants in or beneficiaries of the plan. "Director" includes, unless the
context requires otherwise, the estate or personal representative of the
director;
(b) "Employee or Agent" shall mean any individual who
is or was an employee or agent of the Corporation [other than a director or
officer of the Corporation], or any individual who, is or was serving at the
Corporation's request as an employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise;
-15-
16
(c) "Expenses" shall include reasonable costs,
disbursements and counsel fees;
(d) "Independent Legal Counsel" means a law firm, or a
member of a law firm, that (i) is experienced in matters of corporation law;
(ii) neither presently is, nor in the past five years has been, retained to
represent the Corporation or the corporate agent claiming indemnification or any
other party to the action, suit, or proceeding giving rise to a claim for
indemnification, in any matter material to the Corporation, the claimant or any
such other party; and (iii) would not, under applicable standards of
professional conduct then prevailing, have a conflict of interest in
representing either the Corporation or such corporate agent in an action to
determine the Corporation's or such person's rights under this Article XII;
(e) "Liability" shall mean any obligation to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expenses incurred with
respect to a proceeding;
(f) "Officer" shall mean any individual who is or was
an officer of the Corporation, or any individual who is or was serving at the
Corporation's request as an employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise; and
(g) "Proceeding" shall mean any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal.
Section 2. General. Except as provided in Section 4 of this
Article XII, the Corporation shall indemnify any director or officer who is made
a party to any proceeding because the individual is or was a director or officer
against liability incurred in the proceeding if:
(a) the following standards are met:
(i) the individual's conduct was in good faith;
(ii) the individual reasonably believed,
(A) in the case of conduct in the
individual's official capacity with the Corporation, that the individual's
conduct was in the best interest of the Corporation; and
(B) in all other cases, that the
individual's conduct was at least not opposed to the best interests of the
Corporation; and
-16-
17
(iii) in the case of any criminal proceeding, the
individual had no reasonable cause to believe the individual's conduct was
unlawful;
For purposes of Section 2(a)(ii)(B) hereof, with respect to an employee benefit
plan maintained by the Corporation, the individual shall be deemed to have
reasonably believed that the individual's conduct was not opposed to the best
interests of the Corporation if such conduct was for a purpose the individual
reasonably believed was in the interests of the participants in and
beneficiaries of the plan; and
(b) the individual was wholly successful, on the merits
or otherwise, in the defense of any proceedings to which the individual was a
party because that individual is or was a director or officer of the
Corporation.
Section 3. Termination of Proceedings. The termination of any
action or proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent shall not, of itself, create a presumption
that the director or officer (i) did not act in good faith and in a manner that
the individual reasonably believed to be in, or not opposed to, the best
interests of the Corporation and (ii) with respect to any criminal proceeding,
had reasonable cause to believe that the individual's conduct was unlawful.
Section 4. Limitations. The Corporation shall not indemnify a
director or officer in connection with a proceeding by or in the right of the
Corporation in which such individual was adjudged liable to the Corporation or
in connection with any other proceeding charging improper personal benefit to
the individual, whether or not involving action in the individual's official
capacity, in which the individual was adjudged liable on the basis that personal
benefit was improperly received by such individual.
Section 5. Expenses. The Corporation shall pay for or
reimburse the reasonable expenses incurred by a director or officer who is a
party to a proceeding in advance of final disposition of the proceeding if:
(i) the director or officer furnishes the
Corporation a written affirmation of his good faith belief that he has met the
standard of conduct set forth in Section 2 of this Article XII;
(ii) the director or officer furnishes the
Corporation a written undertaking, executed personally or on his behalf, to
repay the advance if it is ultimately determined that he is not entitled to
indemnification; and
(iii) a determination is made that the facts then
known to those making the determination would not preclude indemnification under
this Article XII.
-17-
18
Section 6. Determination and Authorization of Indemnification.
The Corporation may not indemnify a director or officer under Section 2 of this
Article XII unless authorized in the specific case after a determination has
been made that indemnification of the director or officer is permissible in the
circumstances because he has met the standard set forth in Section 2 of this
Article XII and is in accordance with the Procedures for Submission and
Determination of Claims for Indemnification set forth in the Appendix to these
Bylaws. The determination shall be made:
(i) By the Board of Directors by majority vote of a
quorum consisting of directors not at the time parties to the proceeding;
(ii) If a quorum cannot be obtained under Section
6(i) of this Article XII, by majority vote of a committee duly designated by the
Board of Directors (in which designation directors who are parties may
participate), consisting solely of two or more directors not at the time parties
to the proceeding;
(iii) By independent legal counsel:
(A) Selected by the Board of Directors or
its committee in the manner prescribed in Section 6(i) or Section 6(ii) of this
Article XII; or
(B) If a quorum of the Board of Directors
cannot be obtained under Section 6(i) and a committee cannot be designated under
Section 6(ii) of this Article XII, selected by majority vote of the full Board
of Directors (in which directors who are parties may participate); or
(iv) By the shareholders, but shares owned by or
voted under the control of directors who are at the time parties to the
proceeding may not be voted on the determination.
Section 7. Determination and Authorization of Expenses
Authorization of indemnification and evaluation that indemnification is
permissible as to reasonableness of expenses under Section 5 of this Article XII
shall be made in the same manner as the determination that indemnification is
permissible, except that, if the determination is made by independent legal
counsel, authorization of indemnification and evaluation as to reasonableness of
expenses shall be made by those entitled under Section 6(iii) of this Article
XII to select counsel.
Section 8. Employees and Agents. The Corporation may indemnify
and advance expenses to an employee or agent of the Corporation to the same
extent as a director or officer under Section 2 of this Article XII, subject to
the determination and authorization of indemnification procedures set forth in
Section 6 of this Article XII and in the Appendix to these Bylaws.
-18-
19
Section 9. Applicability. The indemnification and advancement
of expenses granted pursuant to this Article XII shall not be deemed exclusive
of any other rights to which a director, officer, employee or agent seeking
indemnification or advancement of expenses may be entitled, whether contained in
the Charter or Bylaws of the Corporation, or authorized in a resolution of
shareholders, a resolution of directors, or an agreement providing for such
indemnification, to the extent permitted by applicable law.
Section 10. Intent and Interpretation. It is the intention of
this Article XII to provide for indemnification of directors and officers to the
fullest extent permitted by the Tennessee Business Corporation Act, and this
Article XII shall be interpreted accordingly. If this Article XII or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director,
officer, employee, and agent of the Corporation as to costs, charges, and
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any proceeding, including an action by or in the
right of the Corporation, to the full extent permitted by any applicable portion
of this Article XII that shall not have been invalidated and to the full extent
permitted by applicable law. If the Tennessee Business Corporation Act is
amended or other Tennessee law is enacted to permit further or additional
indemnification of a director, officer, employee or agent of the Corporation
beyond that provided in this Article XII, then the Corporation shall be
permitted to indemnify such director, officer, employee or agent to the fullest
extent permitted by the Tennessee Business Corporation Act, as so amended, or by
such other Tennessee law.
Section 11. Insurance. The Corporation may purchase and
maintain insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the Corporation, or who, while a director, officer,
employee, or agent of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, against liability asserted against
or incurred by the individual in that capacity or arising from the individual's
status as a director, officer, employee, or agent, whether or not the
Corporation would have power to indemnify him against the same liability under
applicable state law.
ARTICLE XIII
AMENDMENTS
The Board of Directors is expressly authorized to repeal,
alter, amend or rescind these Bylaws of the Corporation by vote of a majority of
the Board of Directors at a legal meeting held in accordance with these Bylaws.
Notwithstanding any other provision of the Charter or these Bylaws (and
notwithstanding some lesser percentage may be specified by law), the Bylaws
shall be repealed, altered, amended or rescinded by the shareholders of the
-19-
20
Corporation only by affirmative vote of at least 80 % of the outstanding shares
of capital stock of the Corporation entitled to vote generally, considered for
this purpose as one class.
ATTEST:
-------------------------------------
Name:
Title:
-20-
21
APPENDIX
PROCEDURES FOR SUBMISSION AND
DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE XII OF THE BYLAWS.
Section 1. Purpose. The Procedures for Submission and
Determination of Claims for Indemnification Pursuant to Article XII of the
Bylaws (the "Procedures") are to implement the provisions of Article XII of the
Bylaws of the Corporation (the "Bylaws") in compliance with the requirements of
Section 6 of Article XII.
Section 2. Definitions. For purposes of these Procedures:
(a) All terms that are defined in Section 1 of Article
XII of the Bylaws shall have the meanings ascribed to them therein when used in
these Procedures unless otherwise defined herein.
(b) "Change of control" shall mean:
(i) the acquisition in one or more transactions by
any "Person" (as the term person is used for
purposes of Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "Exchange
Act")) of "Beneficial ownership" (within the
meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty-five percent (25%) or
more of the combined voting power of the
Corporation's then outstanding voting
securities (the "Voting Securities"), provided
that for purposes of this clause (i) Voting
Securities acquired directly from the
Corporation by any Person shall be excluded
from the determination of such Person's
Beneficial ownership of Voting Securities (but
such Voting Securities shall be included in
the calculation of the total number of Voting
Securities then outstanding); or
(ii) approval by shareholders of the Corporation
of:
(A) a merger, reorganization or consolidation
involving the Corporation if the
shareholders of the Corporation
immediately before such merger,
reorganization or consolidation do not or
will not own directly or indirectly
immediately following such merger,
reorganization or consolidation, more
than fifty percent (50%) of the combined
voting
A-1
22
power of the outstanding voting
securities of the Corporation resulting
from or surviving such merger,
reorganization or consolidation in
substantially the same proportion as
their ownership of the Voting Securities
outstanding immediately before such
merger, reorganization or consolidation;
or
(B) a complete liquidation or dissolution of
the Corporation; or
(C) an agreement for the sale or other
disposition of all or substantially all
of the assets of the Corporation; or
(iii) acceptance by shareholders of the Corporation
of shares in a share exchange if the
shareholders of the Corporation immediately
before such share exchange do not or will not
own directly or indirectly immediately
following such share exchange more than fifty
percent (50%) of the combined voting power of
the outstanding voting securities of the
entity with which the shareholders effect
such share exchange in substantially the same
proportion as their ownership of the Voting
Securities outstanding immediately before
such share exchange.
Section 3. Submission and Determination of Claims.
(a) To obtain indemnification or advancement of
expenses under [Section 2, Section 5 or Section 8 of] Article XII of the Bylaws,
a corporate agent shall submit to the Secretary of the Corporation a written
request therefor, including therein or therewith such documentation and
information as is reasonably available to the corporate agent and is reasonably
necessary to permit a determination as to whether and what extent the Corporate
agent is entitled to indemnification or advancement of expenses, as the case may
be. The Secretary shall, promptly upon receipt of a request for indemnification,
advise the Board of Directors thereof in writing if a determination in
accordance with Section 6 of Article XII of the Bylaws is required.
(b) Upon written request by an corporate agent for
indemnification pursuant to Section 3(a) hereof, a determination with respect to
the corporate agent's entitlement thereto in the specific case, if required by
the Bylaws, shall be made in accordance with Section 6 of Article XII of the
Bylaws, and, if it is so determined that the corporate agent is entitled to
A-2
23
indemnification, payment to the corporate agent shall be made within ten days
after such determination. The corporate agent shall cooperate with the person,
persons or entity making such determination, with respect to the corporate
agent's entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to the corporate agent and reasonably necessary to
such determination.
(c) If entitlement to indemnification is to be made by
independent legal counsel pursuant to Section 6(iii) of Article XII of the
Bylaws such counsel shall be selected as provided in this Section 3(c). If a
change of control shall not have occurred, the independent legal counsel shall
be selected by the Board of Directors as set forth in Section 6(iii) of Article
XII of the Bylaws, and the Corporation shall give written notice to the
corporate agent advising the corporate agent of the identity of the independent
legal counsel so selected. If a change of control shall have occurred, the
independent legal counsel shall be selected by the corporate agent (unless the
corporate agent shall request that such selection be made by the Board of
Directors, in which event the immediately preceding sentence shall apply), and
the corporate agent shall give written notice to the Corporation advising it of
the identity of the independent legal counsel so selected. In either event, the
corporate agent or the Corporation, as the case may be, may, within seven days
after such written notice of selection shall have been given, deliver to the
Corporation or to the corporate agent, as the case may be, a written objection
to such selection. Such objection may be asserted only on the ground that the
independent legal counsel so selected does not meet the requirements of
"independent legal counsel" as defined in Section 1 of Article XII of the
Bylaws, and the objection shall set forth with particularity the factual basis
of such assertion. If such written objection is made, the independent legal
counsel so selected may not serve as independent legal counsel unless and until
a court has determined that such objection is without merit. If, within twenty
days after the next regularly scheduled Board of Directors meeting following
submission by the corporate agent of a written request for indemnification
pursuant to Section 3(a) hereof, no independent legal counsel shall have been
selected and not objected to, either the Corporation or the corporate agent may
petition the [SPECIFY COURT] Court of the State of Tennessee or other court of
competent jurisdiction for resolution of any objection which shall have been
made by the Corporation or the corporate agent to the other's selection of
independent legal counsel and/or for the appointment as independent legal
counsel of a person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection is favorably
resolved or the person so appointed shall act as independent legal counsel under
Section 6(iii) of Article XII of the Bylaws. The Corporation shall pay any and
all reasonable fees and expenses (including without limitation any advance
retainers reasonably required by counsel) of independent legal counsel incurred
by such independent legal counsel in connection with acting pursuant to Section
6(iii) of Article XII of the Bylaws, and the Corporation shall pay all
reasonable fees and expenses (including without limitation any advance retainers
reasonably required by counsel) incident to the procedures of Section 6(iii) of
Article XII of the Bylaws and this Section 3(c), regardless of the manner in
which independent legal counsel was selected or appointed. Upon the delivery of
A-3
24
its opinion pursuant to Section 6(iii) of Article XII of the Bylaws or, if
earlier, the due commencement of any judicial proceeding or arbitration pursuant
to Section 4(a)(3) of these Procedures, independent legal counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
(d) If a change of control shall have occurred, in
making a determination with respect to entitlement to indemnification under the
Bylaws, the person, persons or entity making such determination shall presume
that an corporate agent is entitled to indemnification under the Bylaws if the
corporate agent has submitted a request for indemnification in accordance with
Section 3(a) hereof, and the Corporation shall have the burden of proof to
overcome that presumption in connection with the making by any person, persons
or entity of any determination contrary to that presumption.
Section 4. Review and Enforcement of Determination.
(a) In the event that (1) advancement of expenses is
not timely made pursuant to Section 5 of Article XII of the Bylaws, (2) payment
of indemnification is not made pursuant to Section 2 of Article XII of the
Bylaws within ten days after receipt by the Corporation of written request
therefor, (3) a determination is made pursuant to Section 6 of Article XII of
the Bylaws that a corporate agent is not entitled to indemnification under the
Bylaws, (4) the determination of entitlement to indemnification is to be made by
independent legal counsel pursuant to Section 6(iii) of Article XII of the
Bylaws and such determination shall not have been made and delivered in a
written opinion within ninety days after receipt by the Corporation of the
written request for indemnification, or (5) payment of indemnification is not
made within ten days after a determination has been made pursuant to Section 6
of Article XII of the Bylaws that a corporate agent is entitled to
indemnification, the corporate agent shall be entitled to an adjudication in an
appropriate court of the State of Tennessee, or in any other court of competent
jurisdiction, of the corporate agent's entitlement to such indemnification or
advancement of expenses. Alternatively, the corporate agent, at his or her
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. The corporate
agent shall commence such proceeding seeking an adjudication or an award in
arbitration within one year following the date on which the corporate agent
first has the right to commence such proceeding pursuant to this Section 4(a).
The Corporation shall not oppose the corporate agent's right to seek any such
adjudication or award in arbitration.
(b) In the event that a determination shall have been
made pursuant to Section 6 of Article XII of the Bylaws that a corporate agent
is not entitled to indemnification, any judicial proceeding or arbitration
commenced pursuant to this Section 4 shall be conducted in all respects as a de
novo trial, or arbitration, on the merits and the corporate agent shall not be
prejudiced by reason of that adverse determination. If a change of control shall
have occurred, the Corporation shall have the burden of proving in any judicial
proceeding or arbitration
A-4
25
commenced pursuant to this Section 4 that the corporate agent is not entitled to
indemnification or advancement of expenses, as the case may be.
(c) If a determination shall have been made or deemed
to have been made pursuant to Section 6 of Article XII of the Bylaws that a
corporate agent is entitled to indemnification, the Corporation shall be bound
by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 4, absent (1) a misstatement or omission of a material
fact in connection with the corporate agent's request for indemnification, or
(2) a prohibition of such indemnification under applicable law.
(d) The Corporation shall be precluded from asserting
in any judicial proceeding or arbitration commenced pursuant to this Section 4
that the procedures and presumptions of these Procedures are not valid, binding
and enforceable, and shall stipulate in any such judicial proceeding or
arbitration that the Corporation is bound by all the provisions of these
Procedures.
(e) In the event that a corporate agent, pursuant to
this Section 4, seeks to enforce the corporate agent's rights under, or to
recover damages for breach of, Article XII of the Bylaws or these Procedures in
a judicial proceeding or arbitration, the Corporate agent shall be entitled to
recover from the Corporation, and shall be indemnified by the Corporation
against, any and all expenses [(of the types described in the definition of
expenses in Section 1 of Article XII of the Bylaws)] actually and reasonably
incurred in such judicial proceeding or arbitration, but only if the corporate
agent prevails therein. If it shall be determined in such judicial proceeding or
arbitration that the corporate agent is entitled to receive part but not all of
the indemnification or advancement of expenses sought, the expenses incurred by
the corporate agent in connection with such judicial proceeding or arbitration
shall be appropriately prorated.
Section 5. AMENDMENTS. These Procedures may be amended at any
time and from time to time in the same manner as any bylaw of the Corporation in
accordance with the Amended and Restated Charter of the Corporation and the
Bylaws; provided, however, that notwithstanding any amendment, alteration or
repeal of these Procedures or any provision hereof, any corporate agent shall be
entitled to utilize these Procedures with respect to any claim for
indemnification arising out of any action taken or omitted prior to such
amendment, alteration or repeal except to the extent otherwise required by law.
A-5