EXHIBIT 4.2
THE EXECUTIVE NONQUALIFIED EXCESS PLAN (SM)
ADOPTION AGREEMENT
FOR PLANS EFFECTIVE AFTER OCTOBER 3, 2004
THIS AGREEMENT is made the 4th day of February, 2005 by KIRKLAND'S,
INC. (the "Employer"), having its principal office at 805 N. PARKWAY, JACKSON,
TN 38305 and EXECUTIVE BENEFIT SERVICES, INC. (the "Provider"), having its
principal office at 4140 ParkLake Avenue, Suite 500, Raleigh, North Carolina
27612.
WITNESSETH:
WHEREAS, the Provider has established The Executive Nonqualified
Excess Plan (SM) (the "Plan"); and
WHEREAS, the Employer desires to adopt the Plan as an unfunded,
nonqualified deferred compensation plan; and
WHEREAS, the Employer has been advised by the Provider to obtain
legal and tax advice from its professional advisors before adopting the Plan,
and that the Provider disclaims all liability for the legal and tax consequences
which result from the elections made by the Employer in this Adoption Agreement;
NOW, THEREFORE, the Employer hereby adopts the Plan in accordance
with the terms and conditions set forth in this Adoption Agreement:
ARTICLE I
Terms used in this Adoption Agreement shall have the same meaning as
in the Plan, unless some other meaning is expressly herein set forth. The
Employer hereby represents and warrants that the Plan has been adopted by the
Employer upon proper authorization and the Employer hereby elects to adopt the
Plan for the benefit of its Participants as referred to in the Plan. By the
execution of this Adoption Agreement, the Employer hereby agrees to be bound by
the terms of the Plan.
This Adoption Agreement may only be used in connection with The
Executive Nonqualified Excess Plan (SM). The Provider will inform the Employer
of any amendments to the Plan or of the discontinuance or abandonment of the
Plan. For questions concerning the Plan, the Employer may call the Provider at
(919) 833-1042
(C) 10/2004 EXECUTIVE BENEFIT SERVICES, INC.
ARTICLE II
The Employer hereby makes the following designations or elections for the
purpose of the Plan:
2.6 COMMITTEE: The duties of the Committee set forth in the Plan shall be
satisfied by:
[XX] (a) The administrative committee of at least three individuals
appointed by the Board to serve at the pleasure of the Board.
[ ] (b) Employer.
[ ] (c) Other (specify): _______________________________________.
2.7 COMPENSATION: The "Compensation" of a Participant shall mean all of a
Participant's:
[XX] (a) Base salary.
[XX] (b) Service Bonus.
[ ] (c) Performance-Based Compensation earned in a period of 12 months
or more.
[ ] (d) Commissions.
[ ] (e) Compensation received as an Independent Contractor reportable
on Form 1099.
[ ] (f) Other: ______________________________________________.
2.8 CREDITING DATE: The Deferred Compensation Account of a Participant shall
be credited with the amount of any Salary Deferral Credits to such account
at the time designated below:
[ ] (a) The last business day of each Plan Year.
[ ] (b) The last business day of each calendar quarter during the Plan
Year.
[ ] (c) The last business day of each month during the Plan Year.
[ ] (d) The last business day of each payroll period during the Plan
Year.
[ ] (e) Each pay day as reported by the Employer.
[XX] (f) Any business day on which Salary Deferral Credits are received
by the Provider.
[ ] (g) Other: ______________________________________________.
-2-
2.12 EFFECTIVE DATE:
[XX] (a) This is a newly-established Plan, and the Effective Date
of the Plan is MARCH 1, 2005.
[ ] (b) This is an amendment and restatement of a plan named
__________________ with an effective date of ________________.
The Effective Date of this amended and restated Plan is
___________.
This is amendment number _____.
2.18 NORMAL RETIREMENT AGE: The Normal Retirement Age of a Participant shall
be:
[XX] (a) Age 65.
[ ] (b) The later of age ____ or the ______ anniversary of the
participation commencement date. The participation
commencement date is the first day of the first Plan Year in
which the Participant commenced participation in the Plan.
[XX] (c) Other: THE COMPLETION OF 10 YEARS OF SERVICE & ATTAINMENT
OF AGE 55.
2.20 PARTICIPATING EMPLOYER(s): As of the Effective Date, the following
Participating Employer(s) are parties to the Plan:
Name of Employer Address Telephone No. EIN
- ---------------- ------- ------------- ---
Kirkland's, Inc. 805 North Parkway
Jackson, TN 38305 (731) 668-2444 62-1287151
Kirkland's Stores, Inc. 805 North Parkway (731) 668-2444 62-1804982
Jackson, TN 38305
2.22 PLAN: The name of the Plan as applied to the Employer is: THE EXECUTIVE
NONQUALIFIED EXCESS PLAN OF KIRKLAND'S INC.
2.23 PLAN ADMINISTRATOR: The Plan Administrator shall be:
[XX] (a) Committee.
[ ] (b) Employer.
[ ] (c) Other:___________________________________________________.
2.24 PLAN YEAR: The Plan Year shall end each year on the last day of the
month of DECEMBER.
-3-
2.33 TRUST:
[XX] (a) The Employer DOES DESIRE to establish a "rabbi" trust for
the purpose of setting aside assets of the Employer
contributed thereto for the payment of benefits under the
Plan.
[ ] (b) The Employer DOES NOT DESIRE to establish a "rabbi"
trust for the purpose of setting aside assets of the Employer
contributed thereto for the payment of benefits under the
Plan.
[ ] (c) The Employer desires to establish a "rabbi" trust for
the purpose of setting aside assets of the Employer
contributed thereto for the payment of benefits under the Plan
UPON THE OCCURRENCE OF A CHANGE IN CONTROL.
4.1 SALARY DEFERRAL CREDITS: A Participant may elect to have his
Compensation (as selected in Section 2.7 of this Adoption Agreement)
deferred within the annual limits below by the following percentage or
amount as designated in writing to the Committee:
[XX] (a) Base salary:
minimum deferral: $__________ or 0%
maximum deferral: $__________ or 80%
[XX] (b) Service Bonus:
minimum deferral: $__________ or 0%
maximum deferral: $__________ or 95%
[ ] (c) Performance-Based Compensation:
minimum deferral: $__________ or __________%
maximum deferral: $__________ or __________%
[ ] (d) Other: __________________________________________________.
minimum deferral: $__________ or __________%
maximum deferral: $__________ or __________%
[ ] (e) Salary deferral credits not allowed.
-4-
4.2 EMPLOYER CREDITS: The Employer will make Employer Credits in the
following manner:
[XX] (a) EMPLOYER MATCHING CREDITS: The Employer may make matching
credits to the Deferred Compensation Account of each
Participant in an amount determined as follows:
[ ] (i) An amount determined each Plan Year by the Employer.
[XX] (ii) Other: 50% OF THE FIRST 6% OF THE PARTICIPANT'S
COMPENSATION, WHICH IS ELECTED AS A SALARY DEFERRAL
CREDIT AND OFFSET WITH 401(k), NOT TO EXCEED THE
TOTAL MATCH ALLOWABLE UNDER THE 401(k).
[ ] (b) EMPLOYER PROFIT SHARING CREDITS: The Employer may make
profit sharing credits to the Deferred Compensation Account of
each Active Participant in an amount determined as follows:
[ ] (i) An amount determined each Plan Year by the
Employer.
[ ] (ii) Other: _________________________________________.
[ ] (c) Other:____________________________________
[ ] (d) Employer Credits not allowed.
5.3 DEATH OF A PARTICIPANT: If the Participant dies while in Service, the
Employer shall pay a benefit to the Beneficiary in an amount equal to
the vested balance in the Deferred Compensation Account of the
Participant determined as of the date payments to the Beneficiary
commence, plus:
[ ] (a) An amount to be determined by the Committee.
[ ] (b) Other: _______________________________________________.
[XX] (c) No additional benefits.
-5-
5.4 IN-SERVICE WITHDRAWALS: In-service withdrawals may be made from the Plan:
[XX] (a) Yes, with respect to:
[ ] Salary Deferral Credits only.
[ ] Vested Employer Credits only.
[XX] Salary Deferral and Vested Employer Credits.
In-service withdrawals may be made in the following manner:
[XX] Single lump sum payment.
[XX] Installment payments over no more than 5 years.
[ ] (b) No in-service withdrawals.
5.5 EDUCATION WITHDRAWALS: Education withdrawals may be made from the Plan:
[XX] (a) Yes, with respect to:
[ ] Salary Deferral Credits only.
[ ] Vested Employer Credits only.
[XX] Salary Deferral and Vested Employer Credits.
Education withdrawals may be made in the following manner:
[XX] Single lump sum payment.
[XX] Installment payments over no more than 6 years.
[ ] (b) No education withdrawals.
5.6 CHANGE IN CONTROL: Distributions are permitted upon a Change in Control:
[XX] (a) Yes.
[ ] (b) No.
6.1 PAYMENT OPTIONS: Any benefit payable under the Plan upon a Qualifying
Distribution Event may be made to the Participant or his Beneficiary (as
applicable) in any of the following payment forms, as selected by the
Participant in the Salary Deferral Agreement:
[XX] (a) A lump sum in cash as soon as practicable following the date of
the Qualifying Distribution Event.
[XX] (b) Approximately equal annual installments over a term certain
as elected by the Participant upon his entry into the Plan
not to exceed 10 years.
[ ] (c) Other: __________________________________________________.
-6-
7. VESTING: An Active Participant shall be fully vested in the Employer
Credits made to the Deferred Compensation Account upon first to occur of
the following events:
[ ] (a) Normal Retirement Age
[XX] (b) Death
[XX] (c) Disability
[XX] (d) Change in Control
[ ] (e) Other: __________________________________________.
[XX] (f) Satisfaction of the vesting requirement specified below:
[XX] EMPLOYER MATCHING CREDITS:
[ ] (i) Immediate 100% vesting.
[ ] (ii) 100% vesting after [ ] Years of Service.
[ ] (iii) 100% vesting at age [ ].
[XX] (iv) Number of Years Vested
of Service Percentage
---------------------- ----------
Less than 1 0 %
1 0 %
2 20 %
3 40 %
4 60 %
5 80 %
6 100 %
7 _____%
8 _____%
9 _____%
10 or more _____%
For this purpose, Years of Service of a Participant shall be
calculated from the date designated below:
[XX] (1) First Day of Service.
(2) Effective Date of the Plan Participation.
(3) Each Crediting Date. Under this option (3), each
Employer Credit shall vest based on the Years of
Service of a Participant from the Crediting Date
on which each Employer Matching Credit is made to
his or her Deferred Compensation Account.
Notwithstanding the vesting schedule elected
above, all Employer Matching Credits to the
Deferred Compensation Account shall be 100%
vested upon the following event(s): _____________
_____________________________________________.
-7-
[ ] EMPLOYER PROFIT SHARING CREDITS:
[ ] (i) Immediate 100% vesting.
[ ] (ii) 100% vesting after [ ] Years of Service.
[ ] (iii) 100% vesting at age [ ].
[ ] (iv) Number of Years Vested
of Service Percentage
--------------- ----------
Less than 1 _____%
1 _____%
2 _____%
3 _____%
4 _____%
5 _____%
6 _____%
7 _____%
8 _____%
9 _____%
10 or more _____%
For this purpose, Years of Service of a Participant shall be
calculated from the date designated below:
[ ] (1) First Day of Service.
[ ] (2) Effective Date of the Plan Participation.
[ ] (3) Each Crediting Date. Under this option (3), each
Employer Credit shall vest based on the Years of
Service of a Participant from the Crediting Date
on which each Employer Profit Sharing Credit is
made to his or her Deferred Compensation Account.
Notwithstanding the vesting schedule elected
above, all Employer Profit Sharing Credits to the
Deferred Compensation Account shall be 100%
vested upon the following event(s):
_________________________________________________
_________________________________________________
-8-
[ ] OTHER EMPLOYER CREDITS:
[ ] (i) Immediate 100% vesting.
[ ] (ii) 100% vesting after [ ] Years of Service.
[ ] (iii) 100% vesting at age [ ].
[ ] (iv) Number of Years Vested
of Service Percentage
--------------- ----------
Less than 1 _____%
1 _____%
2 _____%
3 _____%
4 _____%
5 _____%
6 _____%
7 _____%
8 _____%
9 _____%
10 or more _____%
For this purpose, Years of Service of a Participant shall be
calculated from the date designated below:
[ ] (1) First Day of Service.
[ ] (2) Effective Date of the Plan Participation.
[ ] (3) Each Crediting Date. Under this option (3), each
Employer Credit shall vest based on the Years of
Service of a Participant from the Crediting Date
on which each Employer Profit Sharing Credit is
made to his or her Deferred Compensation Account.
Notwithstanding the vesting schedule elected
above, all Employer Profit Sharing Credits to the
Deferred Compensation Account shall be 100%
vested upon the following event(s): _____________
_____________________________________________
14. AMENDMENT AND TERMINATION OF PLAN: Notwithstanding any provision in this
Adoption Agreement or the Plan to the contrary, Section _____ of the Plan
shall be amended to read as provided in attached Exhibit ____.
17.9 CONSTRUCTION: The provisions of the Plan and Trust (if any) shall be
construed and enforced according to the laws of the State of Tennessee,
except to the extent that such laws are superseded by ERISA.
-9-
IN WITNESS WHEREOF, this Agreement has been executed as of the day
and year first above stated.
KIRKLAND'S INC.
Name of Employer
By: /s/ Lowell Pugh
-----------------------------
Authorized Person
NOTE: EXECUTION OF THIS ADOPTION AGREEMENT CREATES A LEGAL LIABILITY OF THE
EMPLOYER WITH SIGNIFICANT TAX CONSEQUENCES TO THE EMPLOYER AND PARTICIPANTS. THE
EMPLOYER SHOULD OBTAIN LEGAL AND TAX ADVICE FROM ITS PROFESSIONAL ADVISORS
BEFORE ADOPTING THE PLAN. THE PROVIDER DISCLAIMS ALL LIABILITY FOR THE LEGAL AND
TAX CONSEQUENCES WHICH RESULT FROM THE ELECTIONS MADE BY THE EMPLOYER IN THIS
ADOPTION AGREEMENT.
-10-
The Plan is adopted by the following Participating Employers:
KIRKLAND'S STORES, INC.
Name of Employer
By: /s/ Lowell Pugh
-----------------------------
Authorized Person
-11-