EXHIBIT 10.14
STOCK OPTION AGREEMENT UNDER THE
KIRKLAND'S, INC. 1996 EXECUTIVE INCENTIVE
AND NON-QUALIFIED STOCK OPTION PLAN
(AS AMENDED THROUGH APRIL 17, 2002)
THIS STOCK OPTION AGREEMENT ("Agreement") was originally made and
entered into as of June 12, 1996, by and among KIRKLAND'S, INC. ("Kirkland's")
(the "Company"), and CARL KIRKLAND (referred to individually as the "Optionee"),
and is hereby amended and restated as of April 17, 2002.
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Stock Option
Agreement ("Original Agreement") under the Kirkland's, Inc. 1996 Executive
Incentive and Non-Qualified Stock Option Plan dated June 11, 1996 ("Original
Agreement"), pursuant to which on June 12, 1996 (the "Grant Date"), the Company
granted to the Optionee an option to purchase shares of the Company's voting
common stock, each with a par value $0.01 (the "Common Stock").
WHEREAS, the Company and certain companies which were affiliated with
the Company (the "Affiliates") have reorganized their corporate structure by
merger of the Affiliates into a newly formed wholly-owned subsidiary of
Kirkland's (the "Merger").
WHEREAS, the Original Agreement provided for the option to purchase 2%
of the fully diluted Common Stock, and the parties desire to fix the number of
share subject to the option evidenced hereby.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound, the parties, subject to the
terms and conditions set forth herein, agree as follows:
1. Confirmation of Grant of Option. Subject to the terms and conditions
set forth herein, the Company confirms that the Option granted to the Optionee
pursuant to the Original Agreement represents by 3,950 shares of Common Stock in
the Company (the "Shares"). The Company and the Optionee agree that the Original
Agreement, as amended and restated, represents only the Option to purchase
shares of Common Stock as described in the preceding sentence, and no longer
represents the option or right to purchase a stated percentage of the fully
diluted outstanding Common Stock and no longer represents the option or right to
purchase shares of common stock of the Affiliates.
2. Nature of the Option. The Option is intended to be an "incentive
stock option," as that term is described by Section 422 of the Internal Revenue
Code of 1986, as amended.
3. Exercise Price. The exercise price shall be forty-five cents ($0.45)
per Share. Payment of the aggregate exercise price shall entitle the Optionee to
receive the Aggregate Number of shares of Common Stock.
4. Exercise of Option. The Option shall be exercisable during its term
only in accordance with the terms and provisions of this Agreement as follows:
a. Right to Exercise. The Option shall vest and be exercisable as
follows:
(i) The Option shall become 100% vested 24 hours prior to the
closing of an Asset Sale, Public Offering, or Stock Sale, provided that such
vesting shall occur only if Optionee shall have been employed by the Company at
anytime within the three (3) month period prior to such event, or, if within the
twelve (12) months prior to such event, Optionee shall have died or become
disabled while employed by the Company. If not exercised at or in connection
with such closing of the Asset Sale, Public Offering or Stock Sale, the Option
shall terminate immediately following such closing; provided that if all
Shareholders do not sell their Common Stock in the Public Offering or Stock
Sale, the Option will remain exercisable in accordance with the terms of the
option Plan.
(ii) The Option shall be exercisable in whole and not in part.
(iii) The Option may be terminated at any time by agreement
between the Optionee and the Company.
(iv) The Option shall terminate upon the closing of an initial
public offering of Common Stock that does not qualify as a Public Offering as
defined herein.
(v) If not sooner vested or terminated, the Option shall become
100% vested on the eighth (8th) anniversary of the Grant Date.
b. Method of Exercise. The Option shall be exercisable by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which this option is being exercised and such other
representations and agreements as to the optionee's investment intent with
respect to such interest as may be required by the Company hereunder. Such
written notice shall be signed by the optionee and shall be delivered in person
or by certified mail to the Chairman of the Board or such other person as may be
designated by the Board. The written notice shall be accompanied by payment of
the purchase price. Payment of the purchase price shall be by check or such
other consideration or method of payment as may be authorized by the Board.
c. Restrictions on Exercise. The Option may not be exercised if the
issuance of Shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other laws or regulations. As a
condition to the exercise of the Option, the Company may require the Optionee to
enter into a Stock Purchase Agreement and to make any representation and
warranty to the Company as may be required by or advisable under any applicable
law or regulation or as may be reasonably requested by the Board.
d. Shareholders Agreement. The shares of Common Stock purchased upon
exercise of the Option shall be subject to the terms and conditions of the
Shareholders Agreement.
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5. Anti-Dilution Adjustments to Aggregate Number.
Under certain conditions, the Aggregate Number is subject to adjustment
as set forth herein. The Aggregate Number shall be subject to adjustment from
time to time as follows and thereafter as adjusted shall be deemed to be the
Aggregate Number hereunder.
a. In case at any time or from time to time after April 17, 2002
the Company shall:
(i) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Common Stock;
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then the Aggregate Number in effect immediately prior thereto shall be adjusted
so that the Optionee shall thereafter be entitled to receive, upon exercise of
the Option, the number of shares of Common Stock that such holder would have
been entitled to receive after the occurrence of such event had the Option been
exercised immediately prior to the occurrence of such event.
b. In case at any time or from time to time after April 17, 2002
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any dividend or other distribution
(collectively, a "Distribution") of:
(i) cash (other than dividends payable out of earnings or any
surplus legally available, for the payment of dividends under the laws of the
state of incorporation of the Company),
(ii) any evidences of its indebtedness, any shares of its
capital stock (other than additional shares of Common Stock or Convertible
Securities) or any other securities or property of any nature whatsoever (other
than cash), or
(iii) any options or warrants or other rights to subscribe for
or purchase any of the following: any evidences of its indebtedness (other than
Convertible Securities), any shares of its capital stock (other than additional
shares of Common Stock or Convertible Securities) or any other securities or
property of any nature whatsoever,
then the Optionee shall be entitled to receive upon the exercise of the Option
at any time on or after the taking of such record the number of shares of Common
Stock to be received upon exercise of the option determined as stated herein
and, in addition and without further payment, the cash, stock, securities, other
property, options, warrants and/or other rights to which the optionee would have
been entitled by way of the Distribution and subsequent dividends and
distributions if such holder (x) had exercised the Option immediately prior to
such Distribution, and (y) had retained the Distribution in respect of the
Common Stock and all subsequent
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dividends and distributions of any nature whatsoever in respect of any stock or
securities paid as dividends and distributions and originating directly or
indirectly from such Common Stock. A reclassification of the Common Stock into
shares of Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of the Common Stock of such shares of
such other class of stock within the meaning of this paragraph (b) and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such event
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of paragraph (a) of this
Section 5.
c. In case at any time or from time to time after April 17, 2002
and prior to a public offering of Common Stock, the Company shall (except as
hereinafter provided) issue or sell any additional shares of Common Stock at a
price per share which is less than the Fair Market Value Per Share, then the
Aggregate Number in effect immediately prior thereto shall be adjusted
immediately so that the Aggregate Number thereafter shall be an amount equal to
the product of (x) the percentage represented by the fraction, the numerator of
which is such Aggregate Number in effect immediately prior to such issuance or
sale and the denominator of which is the total outstanding shares of Fully
Diluted Common Stock (as calculated immediately before such issuance or sale)
and (y) the total number of shares of Fully Diluted Common Stock (as calculated
immediately after such issuance or sale). The provisions of this paragraph (c)
shall not apply to any issuance of additional shares of Common Stock for which
an adjustment is provided under Section 5(a). No adjustment of the Aggregate
Number shall be made under this Section 5(c) upon the issuance of any additional
shares of Common Stock which are issued pursuant to the exercise of any Options
or Warrants, or upon exercise of any warrants or other, subscription or purchase
rights if an adjustment shall previously have been made (or if no adjustment
shall have been required) upon issuance of such warrants or other rights
pursuant to Section 5(d).
d. In case at any time or from time to time after April 17, 2002
and prior to an initial public offering of Common Stock, the Company shall
(except as hereinafter provided) take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution of, or shall
in any manner issue or sell, any warrants or other rights to subscribe for or
purchase (x) any shares of Common Stock or (y) any Convertible Securities,
whether or not the rights to subscribe, purchase, exchange or convert thereunder
are immediately exercisable, at a purchase price per share of Common Stock which
is less than the Fair Market Value Per Share, then the Aggregate Number in
effect immediately prior thereto shall be adjusted immediately so that the
Aggregate Number thereafter shall be an amount equal to the product of (x) the
percentage represented by the fraction, the numerator of which is such Aggregate
Number in effect immediately prior to such distribution, issuance or sale and
the denominator of which is the total outstanding shares of Fully Diluted Common
Stock (as calculated immediately before such distribution, issuance or sale) and
(y) the total number of shares of Fully Diluted Common Stock outstanding (as
calculated immediately after such issuance or sale).
e. In case at any time or from time to time after April 17, 2002
and prior to an initial public offering of Common Stock, the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or
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shall in any manner issue or sell, Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, at an
exercise price per share of Common Stock which is less than the Fair Market
Value Per Share, then the Aggregate Number in effect immediately prior thereto
shall be adjusted immediately so that the Aggregate Number thereafter shall be
an amount equal to the product of (x) the percentage represented by the
fraction, the numerator of which is such Aggregate Number in effect prior to
such issuance or sale and the denominator of which is the total outstanding
shares of Fully Diluted Common Stock (as calculated immediately before such
issuance or sale) and (y) the total number of shares of Fully Diluted Common
Stock outstanding (as calculated immediately after such issuance or sale). No
adjustment of the Aggregate Number shall be made under this Section 5(e) upon
the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights if an
adjustment shall previously have been made or if no such adjustment shall have
been required upon the issuance of such warrants or other rights pursuant to
Section 5(e).
f. Upon the expiration or termination of any of the Warrants, the
Aggregate Number in effect prior to the expiration or termination of any such
Warrants shall be adjusted immediately so that the Aggregate Number in effect
immediately after such expiration or termination shall be an amount equal to the
product of (x) the percentage represented by the fraction, the numerator of
which is such Aggregate Number in effect prior to such expiration or termination
and the denominator of which is the total outstanding shares of Fully Diluted
Common Stock (as calculated immediately before such expiration or termination)
and (y) the total number of shares of Fully Diluted Common Stock outstanding (as
calculated immediately after such expiration or termination).
g. The following provisions shall be applicable to the making of
adjustments of the Aggregate Number hereinbefore provided for in this Section 5:
(i) The sale or other disposition of any issued shares of Common
Stock owned or held by or for the account of the Company (also referred to as
treasury stock) shall be deemed an issuance thereof for purposes of this
Section 5.
(ii) The adjustments required by the preceding paragraphs of
this Section 5 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except as expressly provided herein. For
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.
(iii) In computing adjustments under this Section 5, fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth (.001) of a share and shall be aggregated until they equal one
whole share.
(iv) If the Company shall take a record of the holders of the
Common Stock for the purpose of entitling them to receive a dividend,
distribution, warrant or subscription or purchase rights under Sections 5(a)
through 5(e) hereof, but abandon its plan to pay or deliver such dividend,
distribution, warrants, subscription or purchase rights, then no
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adjustment shall be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and annulled.
(v) Notwithstanding anything herein to the contrary, no
adjustment shall be made to the Aggregate Number as a result of the issuance of
(A) options similar to the Option granted pursuant to similar option agreements
dated June 12, 1996 of the Company and other management shareholders of the
Company, or (B) shares of Common Stock issued upon exercise of such other
similar options, or (C) shares of Common Stock issued upon exercise of the
Warrants.
(vi) Upon the expiration or termination of any of the warrants
or other rights or options referred to in Section 5(d) above or the Convertible
Securities referred to in Section 5(e) above, the Aggregate Number after the
expiration or termination of any such warrants, rights, options or Convertible
Securities, the issuance of which caused an adjustment to the Aggregate Number,
shall be readjusted to such Aggregate Number as would have been obtained had the
adjustment made upon the issuance of such warrants, rights, options or
Convertible Securities, been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the exercise of such
warrants, options or rights, upon the conversion or exchange of such securities
or upon the exercise of the options or rights related to such securities and
subsequent conversion or exchange thereof.
(vii) For purposes of Sections 5(c), (d) and (e) hereof, the
date as of which the applicable Fair Market Value Per Share shall be computed
shall be the date of actual issuance of such additional shares of Common Stock,
warrants or Convertible Securities, as applicable.
(viii) The consideration for any additional shares of Common
Stock issuable pursuant to any options, warrants or other rights to subscribe
for or purchase the same shall be the consideration received or receivable by
the Company for issuing such options, warrants or other rights, plus the
additional consideration payable to the Company upon the exercise of such
options, warrants or other rights. The consideration for any additional shares
of Common Stock issuable pursuant to the terms of any Convertible Securities;
shall be the consideration received or receivable by the Company for issuing any
options, warrants or other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to the Company in respect of
the subscription for or purchase of such Convertible Securities, plus the
additional consideration, if any, payable to the Company upon the exercise of
the right of conversion, exercise or exchange of such Convertible Securities. In
case of the issuance at any time of any additional shares of Common Stock or
Convertible Securities in payment or satisfaction of any dividend upon any class
of stock other than Common Stock, the Company shall be deemed to have received
for such additional shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or satisfied.
h. If any event occurs as to which the other provisions of this
Section 5 are not strictly applicable but the lack of any provision for the
exercise of the rights of a holder of options would not fairly protect the
purchase rights of such holder in accordance with the essential intent and
principles of such provisions, or, if strictly applicable, would not fairly
protect the conversion rights of such holder in accordance with the essential
intent and principles
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of such provisions, then the Company shall appoint a firm of independent
certified public accountants in the United States (which may be the regular
auditors of the Company) of recognized national standing in the United States,
which shall give their opinion as to the adjustments, if any, necessary to
preserve, without dilution, on a basis consistent with the essential intent and
principles established in the other provisions of this Section 5, the exercise
rights of the Optionee. Upon receipt of such opinion, the Company shall
forthwith make the adjustments described therein.
i. Within forty-five (45) days after the end of each fiscal quarter
during which an event occurred that resulted in an adjustment pursuant to this
Section 5, and at any time upon the request of the Optionee, the Company shall
cause to be promptly mailed to the optionee by first-class mail, postage
prepaid, notice of each adjustment or adjustments to the Aggregate Number
effected since the date of the last such notice and a certificate of Kirkland's
Chief Financial Officer or, in the case of any such notice delivered within
forty-five (45) days after the end of a fiscal year, a firm of independent
public accountants in the United States selected by the Company (who may be the
regular accountants employed by the Company), in each case, setting forth the
Aggregate Number after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made. The fees
and expenses of such accountants shall be paid by the Company.
j. The occurrence of a single event shall not trigger an adjustment
of the Aggregate Number under more than one paragraph of this Section 5.
k. The expiration or other termination of any of the Warrants shall
trigger an adjustment to the Aggregate Number so that the Aggregate Number after
such adjustment is the same as it would have been had the initial Aggregate
Number set forth in Section 1 hereof been calculated without taking such expired
or terminated Warrants into account.
l. No adjustment shall be made to the Aggregate Number upon issuance
of Employee Options, Warrants or Contingent Warrants, or the issuance of Common
Stock upon exercise thereof.
m. Notwithstanding any provision. to the contrary herein, any
combination or consolidation of the Company or any transfer of shares permitted
under Section 2 of the Stockholders Agreement, in either case, which does not
materially alter the aggregate ultimate ownership of the Company shall not
constitute an Asset Sale or Stock Sale as defined in Section 9 hereof. In the
event of any such combination or consolidation, this Option shall be exercisable
into the same number of shares of Common Stock of such combined or consolidated
Company as the number of shares of Common Stock of the Company into which it was
exercisable immediately prior to such combination or consolidation.
6. Investment Representations. Unless the Shares have been registered
under the Act, in connection with the acquisition of this Option, the Optionee
represents and warrants as follows:
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a. The Optionee is acquiring this Option, and upon exercise of this
option, he will be acquiring the Shares for investment for his own account, not
as a nominee or agent, and not with a view to, or for resale in connection with,
any distribution thereof, except as may be specifically contemplated and
disclosed in the context of the Asset Sale, Public Offering or Stock Sale which
triggers exercisability of the Option.
b. The Optionee has a preexisting business or personal relationship
with the Companies and by reason of his business or financial experience, has,
and could reasonably be assumed to have, the capacity to protect his interests
in connection with the acquisition of this Option and the Shares.
7. Non-Transferability of Option. This Option may not be sold, pledged
(except pursuant to the Management Pledge Agreement executed by Optionee in
favor of The First National Bank of Boston, as Administrative Agent and dated on
or about June 12, 1996, or any other senior secured loan facility of the
Company), assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution, and may be exercised during the
lifetime of the Optionee only by such optionee or, in the event of his
disability by his personal representative. Subject to the foregoing, the terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the optionee.
8. Ability to Restructure. The existence of the Option shall not affect
in any way the right or power of the Company or its Shareholders to make or
authorize any or all adjustments, recapitalizations, organizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
9. Definitions. Terms not otherwise defined in this Agreement shall have
the following respective meanings:
a. "Act" means the Securities Act of 1933, as amended.
b. "Aggregate Number" means the number of shares of Common Stock
issuable by the Company upon exercise of the Option (whether or not then
vested), as such number may be adjusted from time to time pursuant to Section 5
hereof. The initial Aggregate Number is the number of Shares identified in
Section 1 hereof.
c. "Asset Sale" means the sale of all or a majority in value of the
Company, assets and the subsequent liquidation or dissolution of the Company, if
as a result of such events, the Shareholders shall have realized a Rate of
Return of at least thirty-five (35%) percent on their Equity, after taking into
account the amount and timing of all capital contributions (and distributions)
to (from) the Company by (to) the Shareholders.
d. "Board" means the Board of Directors of Kirkland's.
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e. "Contingent Warrants" means warrants for up to three and one-half
percent (3.5%) of the Common Stock issued to the holders of the Mezzanine Debt
(as defined in the Recapitalization Agreement) and exercisable only if certain
conditions (as set forth therein) occur.
f. "Convertible Securities" means securities convertible into or
exchangeable for shares of Common Stock.
g. "Employee Options" means Options to purchase Common Stock granted
pursuant to the Option Plan.
h. "Equity" means all initial capital contributed to the Company by
the Shareholders as of the date hereof, including in the form of continuing
ownership, as well as subsequent capital contributions by the Shareholders. For
all purposes hereof (i) the Equity shall be considered to have a value of
Forty-Five Million Dollars ($45,000,000) as of the date hereof, (ii) shares of
capital stock shall be valued without regard to voting rights, and (iii) Class C
Preferred Stock shall not be considered Equity.
i. "Fair Market Value Per Share" means the fair market value per
share of Common Stock (which shall be determined without regard to voting
rights) as determined by the Board or the Option Committee of the Board.
j. "Fully Diluted Common Stock" means shares of Common Stock assuming
exercise of the Management Options and all of the Warrants, and conversion,
exercise or exchange of all other securities then outstanding and convertible,
exercisable or exchangeable into shares of Common Stock.
k. "Option Plan" shall mean the Kirkland's Inc. 1996 Executive
Incentive and Non-Qualified Stock Option Plan.
l. "Management Letter" means that certain letter agreement among
Optionee and the Company dated June 12, 1996, and relating to employment of
optionee by the Company, as the same may have been previously amended or may be
amended hereafter.
m. "Management Options" means this option and all similar options
granted to the other Management Shareholders (as such term is defined in the
Recapitalization Agreement), as the same may have been previously amended or may
be amended hereafter.
n. "Person" shall mean an individual, a sole proprietorship, a
corporation, a partnership, a joint venture, an association, a trust, or any
other entity or organization, including a government or a political subdivision,
agency or instrumentality thereof.
o. "Public Offering" means the sale of shares of the Company's
capital stock in a registered underwritten public offering, if the Shareholders
then realize (or are treated as realizing pursuant to the definition of "Rate of
Return") a Rate of Return of at least thirty-five percent (35%) on their Equity,
after taking into account the amount and timing of all capital contributions
(and distributions) to (from) the Companies by (to) the Shareholders.
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p. "Rate of Return" shall mean the internal rate of return for the
investment by the Shareholders in the Equity. Rate of Return shall be calculated
based on the following: (i) in the context of an Asset Sale, the distributions
to the Shareholders resulting from the Asset Sale; (ii) in the context of a
Public Offering, the amount that would be realized by the Shareholders if all
Shareholders then sold their Common Stock and Class A Preferred Stock and Class
B Preferred Stock and realized (A) for their Common Stock the price per share at
which Common Stock is sold in the Public Offering (before commissions but after
other transaction expenses), and (B) for their Class A Preferred Stock or Class
B Preferred Stock, its aggregate stated value plus all accrued and unpaid
dividends; and (iii) in the context of a Stock Sale, the amount actually
realized by the Shareholders in the Stock Sale, or the amount that would be
realized if (A) all Shareholders were selling Common Stock at the same price per
share of Common Stock as the selling Shareholders realize in the Stock Sale
(before commissions but after other transaction expenses), and (B) all
Shareholders were selling Class A Preferred Stock and Class B Preferred Stock.
for its aggregate stated value plus all accrued and unpaid dividends.
q. "Recapitalization Agreement" means the Recapitalization Agreement
among the Company, Kirkland Holdings L.L.C., the Optionee and the other
management shareholders of the Company dated June 12, 1996, as the same may have
been previously amended or may be amended hereafter.
r. "Shareholders" means the holders of Common Stock from time to time
outstanding.
s. "Shareholders Agreement" means that certain Shareholders Agreement
dated June 12, 1996 among the Company and certain holders of its capital stock
and warrants to purchase Common Stock, as the same may have been previously
amended or may be amended hereafter.
t. "Stock Sale" means the acquisition of more than fifty percent
(50%) of the outstanding shares of common stock of the Company by a Person or
group of Persons (other than non-cash sales or exchanges of Common Stock among
the Shareholders of the Company), if as a result of such event, the Shareholders
would have realized (or be treated as having realized pursuant to the definition
of "Rate of Return") a Rate of Return of at least thirty-five (35%) percent on
their Equity, after taking into account the amount and timing of all capital
contributions (and distributions) to (from) the Company by (to) the
Shareholders.
u. "Warrants" means the warrants for ten percent (10%) of the Common
Stock issued to the holders of the Mezzanine Debt (as defined in the
Recapitalization Agreement) on June 12, 1996.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Tennessee.
11. Entire Agreement. This Agreement, together with the Management
Letter and the Recapitalization Agreement, and the other exhibits attached
thereto or hereto, represents the entire agreement between the parties.
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12. Amendment. This Agreement may only amended by a writing signed by
each of the parties hereto.
13. Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and (i) sent by overnight courier, (ii)
mailed by certified or registered mail, return receipt requested or (iii) sent
by telecopier, addressed to the addresses of the parties set forth herein (and,
in the case of the Company, with a copy to Pepper Hamilton LLP, 3000 Two Logan
Square, 18th and Arch Streets, Philadelphia, PA 19103, Attention: Robert A.
Friedel, Esquire); or to such other address as either party may from time to
time duly specify by notice given to the other party in the manner specified
above.
14. Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions 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 of this Agreement. Any waiver must be in writing.
[SPACE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by their duly authorized representative, and the Optionee has hereunto
affixed his hand and seal, the 17th day of April 2002.
/s/ Carl Kirkland
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CARL KIRKLAND
ATTEST: KIRKLAND'S, INC.
By: /s/ Lowell Pugh By: /s/ Robert Alderson
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Lowell Pugh Robert Alderson
Secretary Chief Executive Officer
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