-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MBLhZZW6VFMlcdDhu5w6yun76BGYSr8R5bodeNqoOmyCLsZLIgQpQe8LTRztuPd/ JsmuBLiR9GSG4L5c2udXMw== 0000950135-02-003395.txt : 20020723 0000950135-02-003395.hdr.sgml : 20020723 20020723085315 ACCESSION NUMBER: 0000950135-02-003395 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20020723 GROUP MEMBERS: ADVENT DIRECT INVESTMENT PROGRAM LIMITED PARTNERSHIP GROUP MEMBERS: ADVENT INTERNATIONAL LIMITED PARTNERSHIP GROUP MEMBERS: ADVENT PARTNERS LIMITED PARTNERSHIP GROUP MEMBERS: GLOBAL PRIVATE EQUITY II LIMITED PARTNERSHIP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KIRKLANDS INC CENTRAL INDEX KEY: 0001056285 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 621287151 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-78385 FILM NUMBER: 02708137 BUSINESS ADDRESS: STREET 1: 805 NORTH PKWY CITY: JACKSON STATE: TN ZIP: 38305 BUSINESS PHONE: 9016882444 MAIL ADDRESS: STREET 1: 805 NORTH PKWY CITY: JACKSON STATE: TN ZIP: 38305 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ADVENT INTERNATIONAL CORP/MA CENTRAL INDEX KEY: 0001034196 IRS NUMBER: 042840139 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 75 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6179519400 MAIL ADDRESS: STREET 1: 75 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 SC 13D 1 b43791aisc13d.txt KIRKLANDS INC. CUSIP NO. 497498105 Schedule 13D Page 1 of 12 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13D-102) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULES 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(a) (AMENDMENT NO. __________)(1) Kirkland's Inc. - -------------------------------------------------------------------------------- (Name of issuer) Common Stock, par value $0.01 - -------------------------------------------------------------------------------- (Title of class of securities) 497498105 - -------------------------------------------------------------------------------- (CUSIP number) Janet L. Hennessy, Vice President 617-951-9447 C/o Advent International Corporation, 75 State Street, 29th Floor Boston, MA 02109 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 10, 2002 - -------------------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box:. |_| Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 1 Pages) - -------------------------------- (1)The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO. 497498105 Schedule 13D Page 2 of 12 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Advent International Corporation - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source of Funds WC - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 6,306,407 -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER None -------------------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH REPORTING PERSON 6,306,407 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,306,407 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) %33.4 - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO, IA - -------------------------------------------------------------------------------- SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 497498105 Schedule 13D Page 3 of 12 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Advent International Limited Partnership - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source of Funds WC - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 6,147,359 -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER None -------------------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH REPORTING PERSON 6,147,359 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,147,359 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) %32.6 - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 497498105 Schedule 13D Page 4 of 12 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Global Private Equity II Limited Partnership - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source of Funds WC - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 4,637,770 -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER None -------------------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH REPORTING PERSON 4,637,770 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,637,770 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) %24.6 - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 497498105 Schedule 13D Page 5 of 12 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Advent Direct Investment Program Limited Partnership - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source of Funds WC - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bermuda - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 1,509,589 -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER None -------------------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH REPORTING PERSON 1,509,589 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,509,589 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) %8.0 - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 497498105 Schedule 13D Page 6 of 12 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Advent Partners Limited Partnership - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source of Funds WC - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 159,048 -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER None -------------------------------------------------- OWNED BY 9 SOLE DISPOSITIVE POWER EACH REPORTING PERSON 159,048 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 159,048 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) %0.8 - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 497498105 Schedule 13D Page 7 of 12 ITEM 1. SECURITY AND ISSUER (a) (b) This statement on Schedule 13D relates to the Reporting Persons' (as defined in Item 2 below) beneficial ownership interest in Kirkland's Inc. a Tennessee corporation (the "Corporation"). The address of the principal executive office of the Corporation is 805 North Parkway, Jackson Tennessee 38305. ITEM 2. IDENTITY AND BACKGROUND (a) (b) (c) (f) This statement is being filed by the following entities: (1) Advent International Corporation, a Delaware corporation; (2) Advent International Limited Partnership, a Delaware limited partnership; (3) Global Private Equity II Limited Partnership, a Delaware limited partnership; (4) Advent Direct Investment Program Limited Partnership, a Bermuda limited partnership; (5) Advent Partners Limited Partnership, a Delaware limited partnership; Advent International Corporation is a Delaware corporation with its principal and business address at 75 State Street, Boston, Massachusetts 02109. Advent International Corporation is an investment advisory firm. Advent International Corporation is the General Partner of advent Partners LP and Advent International Limited Partnership, which is in turn the general partner of Global Private Equity II Limited Partnership and Advent Direct Investment Limited Partnership. The principal business of Advent International Corporation is private equity investments. The principal business of each of Global Private Equity II Limited Partnership, Advent Direct Investment Program Limited Partnership is to provide risk capital for, and make investments in the securities of, privately held and other businesses. The persons serving as directors and executive officers of Advent International Corporation are set forth on Schedule A hereto. The entities listed in subparagraph (1) through (5) above are herein collectively referred to as the "Reporting Persons" and individually as a "Reporting Person." The principal business address of all of the Reporting Persons is c/o Advent International Corporation, 75 State, Boston, MA 02109. (d) (e) During the last five years, none of the Reporting Persons nor any person listed on Schedule A has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the last five years, none of the Reporting Persons nor any person listed on Schedule A has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violations with respect to such laws. CUSIP NO. 497498105 Schedule 13D Page 8 of 12 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The Reporting Persons acquired Class A Preferred Stock and Common Stock of the Corporation for an aggregate price of 19,780,000 on June 13, 1996. The source of the funds used to purchase shares was derived from the working capital of the Reporting Persons. The Reporting Persons acquired Warrants to Purchase Common Stock at $0.01, at a price of $7,159 on July 9, 1999. On August 8, 2000 the reporting persons acquired Class D Preferred Stock, Common Stock and Warrants to purchase Common Stock at $0.01 for an aggregate price of $7,190,003. In conjunction with the Corporations Initial Public Offering, shares of the Class A Preferred Stock were redeemed for cash at the closing of the offering. The remainder of the Class A Preferred Stock and the Class D Preferred Stock was converted to Common Stock. The Common Stock was automatically converted to Common Stock. The Warrants were exercised for Common Stock at the time of the offering, in accordance with the net exercise provision. ITEM 4. PURPOSE OF TRANSACTION. The Reporting Persons acquired the securities of the Corporation strictly for investment purposes. The Reporting Persons intend to periodically review their investment in the Corporation. Depending upon future evaluations of the business prospects of the Corporation and upon other developments, including, but not limited to, general economic and business conditions and market conditions, the Reporting Persons may determine to increase or decrease their equity interest in the Corporation by acquiring additional Securities, or by disposing of all or a portion of the Securities now held. The Reporting Persons have certain registration rights with respect to the Common Stock of the Corporation as outlined in the Amended and Restated Registration Rights Agreement dated April 15, 2002. CUSIP NO. 497498105 Schedule 13D Page 9 of 12 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The following table sets forth the aggregate number and percentage (based upon the number of shares of Common Stock outstanding as of July 10, 2002 of the Common Stock beneficially owned by each Reporting Person named in Item 2 of this statement. The aggregate number and percentage of the Common Stock beneficially owned by each Reporting Person is calculated in accordance with Rule 13d-3.
Number of Shares ------------------------------------- Percentage Under of Shares Reporting Person Common Warrants Total Outstanding - -------------------------------------------------------- --------------------------------------------------- Global Private Equity II Limited Partnership (1) 4,637,770 0 4,637,770 24.6% Advent Direct Investment Program Limited Partnership (1) 1,509,589 0 1,509,589 8.0% Advent International Limited Partnership (1) 6,147,359 0 6,147,359 32.6% --------- --------- ----- Advent Partners Limited Partnership (2) 159,048 0 159,048 0.8% --------- --------- ----- Advent International Corporation (1), (2) 6,306,407 0 6,306,407 33.4% ========= ========= ===== Total Group 6,306,407 0 6,306,407 33.4% ========= ========= =====
(1) Advent International Corporation ("AIC") is the General Partner of Advent International Limited Partnership ("AILP") which in turn is the General Partner of the indicated Reporting Persons. As such, AIC has the sole power to vote and dispose of the securities owned by the indicated Reporting Persons. The beneficial ownership of AIC and AILP derive from such power. (2) AIC is the General Partner of the indicated Reporting Person. As such, AIC has the sole power to vote and dispose of the securities of APLP. The beneficial ownership of AIC derives from such power. (b) Each of the Reporting Persons listed in the table set forth above has sole voting and dispositive power over the Common Stock beneficially owned by it as indicated above. (c)(d) (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. See Item 4. CUSIP NO. 497498105 Schedule 13D Page 10 of 12 ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. Exhibit A: Amended and Restated Registration Rights Agreement dated April 15, 2002. (THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK) CUSIP NO. 497498105 Schedule 13D Page 11 of 12 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 19, 2002 Global Private Equity II Limited Partnership Advent Direct Investment Program Limited Partnership By: Advent International Limited Partnership, General Partner By: Advent International Corporation, General Partner By: Janet L. Hennessy, Vice President* Advent Partners Limited Partnership By: Advent International Corporation, General Partner By: Janet L. Hennessy, Vice President* ADVENT INTERNATIONAL CORPORATION By: Janet L. Hennessy, Vice President* *For all of the above: - --------------------------------- Janet L. Hennessy, Vice President - -------------- CUSIP NO. 497498105 Schedule 13D Page 12 of 12 SCHEDULE A The name and present principal occupation of each executive officer and director of Advent International Corporation is set forth below. The business address of each executive officer and director of Advent International Corporation is c/o Advent International Corporation, 75 State Street, Boston, Massachusetts 02109. All of the persons listed below are United States citizens. I. Advent International Corporation
Position with Principal Advent International Occupation Name Corporation (if different) ---- ----------- -------------- Peter A. Brooke Chairman Douglas R. Brown Chief Executive Officer President Director Thomas H. Lauer Senior Vice President Chief Financial Officer Assistant Secretary Janet L. Hennessy Vice President Assistant Secretary Mark Hoffman Director Chief Executive Officer of Hamilton Lunn Limited Frank Savage Director Senior Vice President of Equitable Life Assurance Society Vice Chairman of Equitable Capital Management Corp. David W. Watson Secretary Attorney
EX-99.A 3 b43791aiexv99wa.txt AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT Exhibit 99.A ------------------------------------------------------------- AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT among KIRKLAND'S, INC. AND THE OTHER PARTIES SPECIFIED HEREIN ------------------------------------------------------------- Dated as of April 15, 2002 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the "Agreement") amends and restates a Registration Rights Agreement dated as of June 12, 1996, and is made as of the 15th day of April, 2002, by and among - KIRKLAND HOLDINGS L.L.C., a Delaware limited liability company ("Holdings"), - KIRKLAND'S INC., a corporation incorporated under Tennessee law ("Kirkland's"), - SSM VENTURE PARTNERS, L.P. - JOSEPH R. HYDE, III - JOHNSTON C. ADAMS, JR. - JOHN H. PONTIUS - CT/KIRKLAND EQUITY PARTNERS, L.P., - R-H CAPITAL PARTNERS, L.P., - TCW/KIRKLAND EQUITY PARTNERS, L.P., - CAPITAL RESOURCE LENDERS II, L.P. ("CRL"), - ALLIED CAPITAL CORPORATION ("Allied"), - CAPITAL TRUST INVESTMENTS, LTD. ("Capital Trust"), - THE MARLBOROUGH CAPITAL INVESTMENT FUND, L.P. ("Marlborough" and together with CRL, Allied and Capital Trust, the "Mezzanine Warrant Holders"), - GLOBAL PRIVATE EQUITY II LIMITED PARTNERSHIP, - ADVENT DIRECT INVESTMENT PROGRAM LIMITED PARTNERSHIP, - ADVENT PARTNERS LIMITED PARTNERSHIP, - CARL KIRKLAND, - ROBERT KIRKLAND, - ROBERT ALDERSON, - THE AMY KATHERINE ALDERSON TRUST, (the "AKA Trust"), - THE ALLISON LEIGH ALDERSON TRUST (the "ALA Trust"), - THE CARL T. KIRKLAND GRANTOR RETAINED ANNUITY TRUST 2001-1 (the "CTK GRAT"), and - STEVEN COLLINS (Carl Kirkland, Robert Kirkland, Robert Alderson, the AKA Trust, the ALA Trust, the CTK GRAT and Steven Collins being herein referred to collectively as the "Individual Investors"). WHEREAS, on June 12, 1996, Holdings, the Company, and those companies then affiliated with the Company (the "Affiliated Companies") and certain other parties consummated the transactions contemplated by a Recapitalization Agreement, dated as of April 26, 1996 (the "Recapitalization Agreement"), which, among other things, included the issuance by the Company and the Affiliated Companies of shares of Class A Preferred Stock, Class B Preferred Stock and Class C Preferred Stock in accordance with the terms of the Recapitalization Agreement. Capitalized terms used but not defined herein have the meanings set forth in the Recapitalization Agreement; WHEREAS, in connection with the Company's execution of the Senior Subordinated Note and Warrant Purchase Agreement dated on or about June 12, 1996 (the "Mezzanine Purchase Agreement"), pursuant to which the Mezzanine Warrant Holders have loaned a total of $20,000,000 in subordinated debt to the Company and the Affiliated Companies, the Mezzanine Warrant Holders received warrants to purchase shares of Common Stock ("Mezzanine Warrants" and the shares subject to the Mezzanine Warrants, the "Mezzanine Warrant Shares"); and WHEREAS, in connection with the transactions contemplated by the Recapitalization Agreement, the Company granted options to purchase shares (the "Option Shares") of Common Stock to Carl Kirkland and Robert Alderson; and WHEREAS, as an inducement to completion of the transactions contemplated by the Recapitalization Agreement and the Mezzanine Purchase Agreement, the Company and the Affiliated Companies provided on June 12, 1996 certain registration rights pursuant to the terms of the Registration Rights Agreement dated as of June 12, 1996 (the "Original Registration Rights Agreement"); and WHEREAS, in connection with the consummation of the transactions contemplated by the sixth amendment to that credit agreement between the Company, the Affiliated Companies, BankBoston, N.A. and the other lenders specified therein dated on or about July 7, 1999, the Company and the Affiliated Companies issued to certain investors warrants to purchase shares of Common Stock (the "1999 Warrants", and the shares subject to the 1999 Warrants the "1999 Warrant Shares"); WHEREAS, on or about December 31, 1999, (i) the Affiliated Companies merged with and into Kirkland's Stores, Inc., a wholly owned subsidiary of the Company (the "Merger"), (ii) pursuant to the Merger; the Mezzanine Warrants and the 1999 Warrants became exercisable only with respect to shares of Common Stock of the Company; -2- WHEREAS, in connection with the consummation of the transactions contemplated by a Securities Purchase Agreement dated on or about August 8, 2000 (the "Purchase Agreement"), the Company issued to the purchasers specified in the Purchase Agreement additional shares of Common Stock, shares of Class D Preferred Stock and warrants to purchase shares of Common Stock (the "2000 Warrants," and together with the 1999 Warrants and the Mezzanine Warrants, the "Warrants," and the shares subject to the 2000 Warrants (the "2000 Warrant Shares"), together with the Mezzanine Warrant Shares and the 1999 Warrant Shares, the "Warrant Shares"); and WHEREAS, the Company desires to hereby amend and restate the Original Registration Rights Agreement, as amended, to incorporate the Class D Preferred Stock, the 1999 Warrant Shares, the 2000 Warrant Shares and otherwise reflect the Company's current capital structure. NOW THEREFORE, in consideration of the premises and the mutual terms and provisions hereof, the parties hereto hereby agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the following respective meanings: (a) "Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute enacted hereafter, and the rules and regulations of the commission thereunder, all as the same shall be in effect from time to time. (b) "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Act. (c) "Common Stock" shall mean (i) the common stock, par value $.01 of each of the Company and/or any successor Company, and (ii) any other capital stock of any class or classes (however designated) of the Company, authorized on or after the date hereof, the holders of which shall have the right, without limitation as to amount per share, either to all or to a share of the balance of current dividends and liquidating distributions after the payment of dividends and distributions on any shares entitled to preference in the payment thereof, and the holders of which shall ordinarily, in the absence of contingencies, be entitled to vote for the election of a majority of directors of the Company (even though the right so to vote has been suspended by the happening of such a contingency), and (iii) any other securities into which or for which any of the securities described in (i) or (ii) above may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. (d) "Company" shall mean Kirkland's, Inc. or any successor by merger or similar corporate consolidation thereto. (e) "Counterpart" shall mean a counterpart to this Agreement in the form of EXHIBIT A hereto, pursuant to the execution of which a Person shall become bound by all of the terms and conditions to this Agreement. (f) "Demand Piggybacker" shall have the meaning set forth in Section 2(c) hereof. -3- (g) "Demand Registration" shall mean a Non-Mezzanine Demand Registration or a Mezzanine Demand Registration. (h) "Holder" shall mean each of the Shareholders if such Shareholder holds Registrable Securities and any other person holding Registrable Securities or such other securities to whom these registration rights have been transferred pursuant to Section 12 of this Agreement; PROVIDED, HOWEVER, that any person who acquires any of the Registrable Securities in a distribution pursuant to a registration statement filed by the Company under the Act or pursuant to a sale under Rule 144 under the Act shall not be considered a Holder. (i) "Management Investors" shall mean Carl Kirkland and Robert Alderson, the AKA Trust, the ALA Trust and the CTK GRAT. (j) "Mezzanine Demand Registration" shall have the meaning set forth in Section 2(a) hereof. (k) "Mezzanine Warrant Stock" shall mean, as of the applicable date of determination, shares of Common Stock then issued or issuable to the Mezzanine Warrant Holders upon exercise of the Mezzanine Warrants, assuming the maximum potential exercise of the Mezzanine Warrants as of such date of determination. (l) "Non-Mezzanine Demand Registration" shall have the meaning set forth in Section 2(b) hereof. (m) "Person" shall mean an individual, partnership, corporation, limited liability company, limited liability partnership, trust, joint venture, unincorporated association, or other entity or association. (n) "Piggyback Registration" shall have the meaning set forth in Section 3. (o) "Preferred Stock" shall mean shares of the Class A Preferred Stock, Class B Preferred Stock and Class D Preferred Stock of the Company from time to time outstanding. (p) "Public Offering" shall mean an underwritten public offering of Common Stock registered pursuant to the Act resulting in gross proceeds to the Company of at least Thirty Million Dollars ($30,000,000). (q) The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Act and the declaration or ordering of effectiveness of such registration statement by the Commission. (r) "Registered Holder" shall mean, with respect to a registration statement, each Holder of Registrable Securities covered by such registration statement. (s) "Registered Securities" shall mean, with respect to a registration statement, the Registrable Securities covered by such registration statement. -4- (t) "Registrable Securities" shall mean (i) shares of Common Stock held by the Shareholders from time to time and shall include Warrant Shares, provided the warrants under which the Warrant Shares may be purchased are exercised no later than the effective date of any registration with respect to which the Holder of such warrants (A) demanded a Demand Registration, (B) is a Demand Piggybacker, or (C) requested a Piggyback Registration as to the Common Stock issuable upon exercise of such Warrants, (ii) shares of Common Stock acquired by any Shareholder other than pursuant to a registration, either from any other shareholder of the Company in compliance with the terms of the Shareholders Agreement, or directly from the Company, and (iii) securities issued or received in respect of, or in exchange or in substitution for any of the foregoing, including, but not limited to, those arising from a stock dividend, stock split, reclassification, reorganization, merger, consolidation/ sale of assets or other exchange of securities. (u) "Shareholder" shall mean any Person who holds, from time to time, any Common Stock, Preferred Stock or Warrants, and who is or who becomes a party to this Agreement pursuant to the terms hereof. (v) "Shareholders Agreement" shall mean that certain Amended and Restated Shareholders Agreement dated as of the date hereof and among the parties hereto, as amended from time to time. (w) "1934 Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute enacted hereafter, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. 2. DEMAND REGISTRATIONS. The Holders may make a demand for registration of Common Stock as provided in this Section 2 at any time. (a) MEZZANINE DEMAND. If the Company shall receive a written request from Mezzanine Warrant Holders holding more than sixty-six and two-thirds percent (66.67%) of the Mezzanine Warrant Stock (determined without taking into account any shares of Common Stock previously sold to the public in a public offering) that the Company file a registration statement under the Act covering the registration for the offer and sale of all or part of the Mezzanine Warrant Stock (determined without taking into account any shares of Common Stock previously sold to the public in a public offering) (a "Mezzanine Demand Registration"), then the Company shall promptly notify in writing all other Holders of Registrable Securities (including other Mezzanine Warrant Holders) (a "Company Mezzanine Demand Notice"). (b) OTHER DEMAND. If the Company shall receive a written request from Holders of more than fifty percent (50%) of the Registrable Securities other than the Mezzanine Warrant Stock, that the Company file a registration statement under the Act covering the registration for the offer and sale of all or part of such Holders' Registrable Securities (a "Non-Mezzanine Demand Registration"), then the Company shall promptly notify in writing all other Holders of Registrable Securities (including the Mezzanine Warrant Holders) of such request (the "Company Non-Mezzanine Demand Notice"). Upon receipt of the Company Non-Mezzanine Demand Notice, the Mezzanine Warrant Holders holding more than sixty-six and two-thirds percent (66.67%) of the Mezzanine Warrant Stock (determined without taking into account any shares of Common Stock previously sold to the public in a public offering) shall be -5- entitled to render such demand for a Non-Mezzanine Demand Registration ineffective, null and void by making a demand for registration under subsection (a) of this Section 2 for a Mezzanine Demand Registration within thirty (30) days after the Company Non-Mezzanine Demand Notice is given. In such event, (i) the preempted Non-Mezzanine Demand Registration shall be treated for all purposes, including for purposes of Section 2(d) hereof, as if it had never been made, (ii) the Company shall give a Company Mezzanine Demand Notice to other Holders contemplated by Section 2(a) (with all notices previously given by other Holders in connection with such Non-Mezzanine Demand Registration pursuant to Section 2(c) being void), and (iii) Holders other than the Mezzanine Warrant Holders shall not be entitled to make a demand under this Section 2(b) until the Mezzanine Demand Registration shall have been completed or abandoned and all waiting periods required by this Agreement shall have been complied with. (c) PROCEDURE. Each request for a Mezzanine Demand Registration or a Non-Mezzanine Demand Registration shall specify the number of shares of Registrable Securities requested to be sold. Within thirty (30) calendar days after a Company Mezzanine Demand Notice or Company Non-Mezzanine Demand Notice has been given, any other Holder (a "Demand Piggybacker") may give written notice to the Company of its intent to include its Registrable Securities in the registration (including without limitation any Holder whose demand is preempted under Section 2(b) above). As soon as practicable after the expiration of such thirty (30) day period, the Company shall cause all Registrable Securities that Holders have requested be registered to be registered under the Act, subject to the limitations contained in this Agreement. (d) NUMBER OF DEMANDS. Subject to the provisions of Section 8 below, a demand (i) may not be made unless the reasonably anticipated price to the public of such public offering would exceed Five Million Dollars ($5,000,000), (ii) may be made under Section 2(a) hereof a total of one (1) time and (iii) may be made under Section 2(b) hereof a total of two (2) times. An effective Demand Registration will not count as a Demand Registration for purposes of the preceding sentence if (a) the Holders whose Registrable Securities are to be included in such registration have not registered for sale at least seventy percent (70%) of the Registrable Securities requested to be registered in the registration statement for such registration by such Holders, or (b) the Holders have withdrawn their request for Demand Registration and have paid all fees and expenses as provided in Section 8 hereof. (e) DELAY OF REGISTRATION. If at the time of any request to register Registrable Securities pursuant to Section 2(a) or (b) the Company is preparing or within thirty (30) days thereafter commences to prepare a registration statement for a public offering (other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of the Commission is applicable) which in fact is filed and becomes effective within (90) days after the request, or is engaged in any activity which, in the good faith determination of the Company's Board of Directors, would be adversely affected by the requested registration to the material detriment of the Company, then the Company may at its option direct that such request be delayed for a period not in excess of four (4) months from the date of such request to register Registrable Securities, such right to delay a request to be exercised by the Company not more than once in any one (1) year period. Nothing in this Section 2(e) shall preclude a holder of Registrable Securities from enjoying registration rights which it might otherwise possess under Section 3 hereof. -6- 3. PIGGYBACK REGISTRATION. Subject to Section 9, if at any time the Company proposes to register any of its equity securities under the Act, either for its own account or for the account of others (unless already covered by Section 2 hereof) or pursuant to a request under Section 4 hereof, in connection with the public offering of such equity securities solely for cash, on a registration form that would also permit the registration of Registrable Securities (other than registration statement on Form S-8 or any successor form, or a registration in connection with any stock option, stock purchase or other benefit plan or for the purpose of offering such securities to another business entity or the shareholders of such entity in connection with the acquisition of assets or shares of capital stock, respectively, of such entity), the Company shall, each such time, promptly give each Holder written notice of such proposal (a "Piggyback Registration Notice"). Within thirty (30) days after the Piggyback Registration Notice is given, the Holders shall give notice as to the number of shares of Registrable Securities, if any, which such Holders request be registered simultaneously with such registration by the Company ("Piggyback Registration"). The Company shall use its best efforts to include any Registrable Securities in such registration statement (or in a separate registration statement concurrently filed) which the Holders thereof request to be so included and to cause such registration statement to become effective with respect to such Registrable Securities in accordance with the registration procedures set forth in Section 5 hereof. Notwithstanding the foregoing, if at any time after giving written notice of its intention to register equity securities and before the effectiveness of the registration statement filed in connection with such registration, the Company determines for any reason either not to effect such registration or to delay such registration, the Company may, at its election, by delivery of prior written notice to each Holder, (i) in the case of a determination not to effect registration, relieve itself of its obligation to register the Registrable Securities in connection with such registration or (ii) in the case of a determination to delay registration, delay the registration of such Registrable Securities for the same period as the delay in the registration of such other equity securities. Each Holder requesting inclusion in a registration pursuant to this Section 3 may, at any time before the effective date of the registration statement relating to such registration, revoke such request by delivering written notice of such revocation to the Company (which notice shall be effective only upon receipt by the Company, notwithstanding the provisions of Section 18 hereof); PROVIDED, HOWEVER, that if the Company, in consultation with its financial and legal advisors, determines that such revocation would require a recirculation of the prospectus contained in the registration statement, then such Holder shall have no right to revoke its request. 4. REGISTRATIONS ON FORMS S-2 AND S-3. After the conclusion by the Company of an initial public offering of its Common Stock (which for purposes hereof shall include any Registrable Securities sold pursuant to Section 2 above) pursuant to a registration under the Act, at such time as the Company shall have qualified for the use of Forms S-2 and/or S-3 (as the case may be), or any similar form or forms promulgated by the Commission, the Holders of Registrable Securities shall each have the right to request an unlimited number of registrations on Form S-2 and/or Form S-3 (as the case may be). Any such request shall be in writing, shall specify the Registrable Securities intended to be sold or disposed of by the Holders thereof, shall state the intended method of disposition of such Registrable Securities by the Holder(s) requesting such registration and shall relate to Registrable Securities (i) in an amount exceeding two percent (2%) of all shares of Common Stock then outstanding, or (ii) having proposed gross cash offering proceeds (prior to deduction of underwriters commissions and expenses, if any) of Two Million Dollars ($2,000,000) or more for all Registrable Securities to be included, on the basis of a reasonable (in light of the current market price) proposed per share -7- offering price. The Company shall be obligated to effect such registration or registrations on Form S-2 or Form S-3 (as the case may be) as soon as practicable after receipt of such a request; PROVIDED, HOWEVER, that the Company shall not be obligated to effect the filing of a registration pursuant to this Section 4 (i) during the period starting with the date ninety (90) days prior to the Company's estimated date of filing of, and ending on a date one hundred eighty (180) days following the effective date of, a registration statement pertaining to a public offering of Common Stock for the account of the Company, provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective and that, in the good faith judgment of the Company's underwriter for an underwritten offering or of the Company's Board of Directors for any other offering, an offering pursuant to such a registration statement would interfere in any material respect with the successful marketing (including pricing) of the Common Stock to be included in the Company's proposed registration statement, or (ii) if the Company's Board of Directors shall determine in good faith that such filing will interfere in any material respect with a pending or contemplated financing, merger, sale or assets, recapitalization or other similar corporate action of the Company. In the event the Company's obligations are abated pursuant to the foregoing PROVISO, and if any of the Holders on whose behalf the requested registration statement would be filed and who were unable to have all of the Registrable Securities included in the Company's registration statement pursuant to Section 3 then want such registration statement to be filed, the Company shall file such registration statement as promptly as practicable following (x) one hundred eighty (180) days after the effective date of the registration statement with respect to the offering referred to in clause (i) above, or (y) the date on which the transactions referred to in clause (ii) above shall have been completed or abandoned as the case may be); PROVIDED FURTHER, HOWEVER, that the Company shall not be obligated to file and cause to become effective (a) more than two (2) registrations on Forms S-2 and/or S-3 in any one twelve (12) month period or (b) any registration on Form S-2 and/or S-3 within six (6) months after the effective date of any previous registration statement filed under Section 2 or Section 3, with respect to which all Holders who had requested the inclusion of any such shares in a registration statement were entitled to include in such registration statement all Registrable Securities requested to be included therein. No registration pursuant to this Section 4 shall count as a Demand Registration pursuant to Section 2. 5. OBLIGATION OF THE COMPANY. Whenever required under this Agreement to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the Commission a registration statement covering such Registrable Securities and use its best efforts to cause such registration statement to be declared effective by the Commission and to keep such registration effective until the earlier of (i) the date when all Registrable Securities covered by the registration statement have been sold or (ii) in the case of a registration under Section 2 or 3 hereof, nine (9) months after the effective date of the registration statement or prospectus or any amendments or supplements thereto, or (iii) in the case of a shelf registration, the applicable period permitted under the Act. The Company will furnish to each Holder of Registrable Securities covered by such registration statement and the underwriters, if any, copies of all such documents proposed to be filed (excluding exhibits, unless any such person shall specifically request exhibits), which documents will be subject to the review (for a reasonable period of time in light of all facts and circumstances) of each Holder and the underwriters, and the Company will not file such -8- registration statement or any amendment thereto or any prospectus or any supplement thereto including any documents incorporated by reference therein) with the Commission if (i) the Holders of a majority of the Registrable Securities covered by such registration statement or the underwriters, if any, shall reasonably object to such filing or (ii) information in such registration statement or prospectus concerning a particular Registered Holder is inaccurate. (b) Prepare and file with the Commission such amendments and post-effective amendments to such registration statement as may be necessary to keep such registration statement effective until the earlier of the dates referred to in clauses (i) and (ii) of Section 5(a) hereof and to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement, and cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed with the commission pursuant to Rule 424 under the Act. (c) Furnish to the Registered Holders such number of copies of such registration statement, each amendment thereto, the prospectus included in such registration statement (including each preliminary prospectus), each supplement thereto and such other documents, as they may reasonably request in order to facilitate the disposition of Registered Securities owned by them. (d) Use its best efforts to register and qualify the Registered Securities under such other securities laws of such jurisdictions as shall be reasonably requested by any Registered Holder and do any and all other acts and things which may be reasonably necessary or advisable to enable each Registered Holder to consummate the disposition of the Registered Securities owned by such Holder in such jurisdictions; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify generally to transact business in any such states or jurisdictions; and provided further that (anything in this Agreement to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the Registered Securities shall be qualified shall require that expenses incurred in connection with the qualification of the Registered Securities in that jurisdiction be borne by selling shareholders, then such expenses shall be payable by the Registered Holders pro rata, to the extent required by such jurisdiction. (e) Promptly notify each Registered Holder at any time when a prospectus is required to be delivered under the Act relating to the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading and, at the request of any such Holder, the Company will promptly prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registered Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading. (f) Make available for inspection by any Registered Holder, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such Registered Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the officers, directors, employees and independent accountants of the Company to supply all information reasonably requested by any such Registered Holder, underwriter, attorney, -9- accountant or agent in connection with such registration statement, which information shall be subject to reasonable restrictions concerning confidentiality and nondisclosure. (g) Promptly notify the Registered Holders and the underwriters, if any, of the following events and (if requested by any such person) confirm such notification in writing and provide copies of any relevant documents relating to: (1) the filing of the prospectus or any prospectus supplement and the registration statement and any amendment or post-effective amendment thereto and, with respect to the registration statement and any amendment or post-effective amendment thereto, the declaration of the effectiveness of such documents, (2) any comment letters from or requests by the Commission for amendments or supplements to the registration statement or the prospectus or for additional information, (3) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose and (4) the receipt by the Company of any notification with respect to the suspension of the qualification of the Registered Securities for sale in any jurisdiction or the initiation or threat of initiation of any proceeding for such purpose. (h) Make every reasonable effort to prevent the entry of any order suspending the effectiveness of the registration statement and obtain the withdrawal of any such order, if entered. (i) If reasonably requested by any underwriter or a Registered Holder in connection with any underwritten offering, incorporate in a prospectus supplement or post-effective amendment such information as the underwriters and the Holders of a majority of the Registered Securities agree should be included therein relating to the sale of the Registered Securities, including, without limitation, information with respect to the number of Registered Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and any other terms of the underwritten offering of the Registered Securities to be sold in such offering, and make all required filings of such prospectus supplement or Post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment. (j) Cooperate with the Registered Holders and the underwriters, if any, to facilitate the timely preparation and delivery of certificates evidencing Registered Securities and not bearing any restrictive legends, and enable such Registered securities to be in such lots and registered in such names as the underwriters may request at least two (2) business days prior to any delivery of Registered Securities to the underwriters. (k) Provide a transfer agent, registrar and CUSIP number for all Registrable Securities not later than the effective date of the registration statement. (l) Prior to the effectiveness of the registration statement and any post-effective amendment thereto and at each closing of any underwritten offering, (i) make such representations and warranties to the Registered Holders and the underwriters, if any, with respect to the Registered Securities and the registration statement as are customarily made by issuers to underwriters in primary underwritten offerings; (ii) obtain opinions of counsel to the Company and updates thereof (which opinions shall be reasonably satisfactory to the underwriters, if any, and to the Holders of a majority of the Registered Securities) addressed to -10- each Registered Holder and the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters or their counsel; (iii) obtain "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the Registered Holders and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters by underwriters in connection with primary underwritten offerings; and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority of the Registered Securities being sold and by the underwriters, if any, to evidence compliance with clause (i) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. (m) Enter into such agreements and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of such Registered Securities and in such connection, in the case of an underwritten offering, enter into an underwriting agreement or other similar agreement in form, scope and substance as is customary in underwritten offerings which underwriting agreement shall set forth in full the indemnification provisions and procedures of Section 13 hereof with respect to all parties to be indemnified pursuant to said Section. The above shall be done at each closing under such underwriting or similar agreement or as and to the extent required thereunder. (n) Use its best efforts to cause all Registered Securities included in such registration statement to be listed, by the date of first sale of Registered Securities pursuant to such registration statement, on each securities exchange on which shares of Common Stock are then listed or proposed by the Company to be listed, if any. (o) Provide such reasonable assistance in the marketing of the Registered Securities as is customary of issuers in public offerings (including participation by its senior management in "road shows"), subject to reasonable time and expense constraints. (p) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders earnings statements satisfying the provisions of Section 11(a) of the Act, no later than forty-five (45) days after the end of any twelve (12) month period (i) commencing at the end of any fiscal quarter in which Registered Securities are sold to underwriters in a firm or best efforts underwritten offering, or (ii) if not sold to underwriters in such an offering, beginning with the first day of the first fiscal quarter of the Company commencing after the effective date of the registration statement. 6. FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the Holders shall furnish to the Company such information regarding them, the Registrable Securities held by them, and the intended method of disposition of such Registrable Securities as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company. 7. SUSPENSION OF DISPOSITION OF REGISTRABLE SECURITIES. Each Registered Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(e) or 5(g)(3) or (4) hereof, such Registered Holder will -11- forthwith discontinue disposition of Registered Securities until such Registered Holder's receipt of copies of a supplemented or amended prospectus contemplated by Section 5(e) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus, and, if so directed by the Company, such Registered Holder will deliver to the Company (at the expense of the company) all copies, other than permanent file copies then in such Registered Holder's possession, of the prospectus covering such Registered Securities at the time of receipt of such notice. In the event the Company shall give any such notice, the time period mentioned in Section 5(a) hereof shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 5(e) or 5(g)(3) or (4) hereof to and including the date when each Registered Holder shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(e) hereof or the Advice. 8. EXPENSES OF REGISTRATION. (a) Except as provided in Section 8(b) through 8(d) hereof, all expenses incurred in connection with a registration pursuant to Sections 2, 3 or 4 (excluding underwriters' discounts and commissions), including, without limitation all registration and qualification fees, fees and disbursements of counsel for the Company, and, the reasonable fees and disbursements of one (1) counsel chosen by the Registered Holders owning a majority of the Registered Securities (or by the Registered Holders owning a majority of the Mezzanine Warrant Stock constituting Registered Securities in the case of a Mezzanine Demand Registration) shall be borne by the Company. (b) If a registration proceeding is begun under Section 2 but subsequently withdrawn at the request of the Registered Holders owning a majority of the Registered Securities (or at the request of Registered Holders owning a majority of the Mezzanine Warrant Stock constituting Registered Securities in the case of a Mezzanine Demand Registration) such Registered Holders shall have the option (exercisable by Registered Holders owning a majority of the Registered Securities, or a majority of the Mezzanine Warrant Stock constituting Registered Securities in the case of a Mezzanine Demand Registration) of either (i) reserving their right to such Demand Registration pursuant to Section 2, in which case the Registered Holders will pay all expenses of such registration proceeding, or (ii) waiving their right to one (1) Demand Registration under Section 2 (Section 2(a) if the registration proceeding originated with a demand under Section 2(a) hereof), in which case the Company will pay the expenses of such registration proceeding. (c) Registered Holders may withdraw a request made within forty-five (45) days after the end of the fiscal year if the audited financial statements of the Company for such year and at such year-end materially and adversely differ from the financial information furnished to such Holders by the Company at the time of their request, in which event such Registered Holders shall not be required to pay any of the expenses of such withdrawn registration and such withdrawn registration shall be treated for all purposes of this Agreement, including without limitation Section 2(d) hereof, as if it had never occurred. (d) All expenses incurred in connection with a registration which are, under this Section 8, to be borne by Registered Holders shall be borne pro rata by the Registered -12- Holders on the basis of the number of such Holder's Registered Securities (or Registrable Securities proposed to be registered, as the case may be); PROVIDED, however, that if any such cost or expense is attributable solely to one Registered Holder and does not constitute a normal cost or expense of such a registration, such cost or expense shall be allocated to and borne by that Registered Holder. 9. UNDERWRITING REQUIREMENTS: PRIORITIES. (a) (i) With respect to a Mezzanine Demand Registration pursuant to Section 2(a), the Registered Holders owning a majority of the Mezzanine Warrant Stock included in the registration shall have the right to select the investment banker(s) and manager(s), if any, to administer such registration, subject to the approval of the Company, which will not be unreasonably withheld. With respect to a Non-Mezzanine Demand Registration pursuant to Section 2(b), the Registered Holders owning a majority of the Registered Securities shall have the right to select the investment banker(s) and manager(s) to administer such registration, subject to the approval of the Company, which will not be unreasonably withheld. (ii) The Registered Holders owning a majority of the Registered Securities included in any registration under Section 4 shall have the right to select the investment banker(s) and manager(s), if any, to administer the offering, if any, subject to the approval of the Company, which will not be unreasonably withheld. (iii) The Company will have the right to select the investment banker(s) and manager(s), if any, to administer any offering to which Section 3 hereof is applicable. (b) (i) if a registration under Section 2(a) hereof is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities requested to be registered by the Mezzanine Warrant Holders and Demand Piggybackers exceeds the number of shares which can be sold at the desired price in such offering, the Company will include in such registration (i) first, the Mezzanine Warrant Stock demanded to be registered under Section 2 (a) and the Mezzanine Warrant Stock held by Demand Piggybackers (pro rata among the Holders thereof based on the number of shares of Mezzanine Warrant Stock such Holders have requested to be registered), and (ii) second, Registrable Securities other than Mezzanine Warrant Stock owned by Demand Piggybackers (pro rata among the Holders thereof on the basis of the number of Registrable Securities such Holders have requested to be registered); provided that, such aggregate Registered Securities shall not exceed the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold at the desired price. (ii) If a registration under Section 2(b) hereof is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of shares of Common Stock requested to be registered exceeds the number of shares which can be sold at the desired price in such offering, then the Company will include in such registration Registrable Securities owned by Holders requesting registration of Registrable Securities with respect to such registration pro rata among such Holders on the basis of the number of Registrable Securities such Holders have requested to be registered; provided -13- that, such aggregate Registered Securities shall not exceed the number of Registrable Securities requested to be included therein which in the opinion of such underwriters can be sold at the desired price. (iii) If a registration under Section 3 hereof is an underwritten registration and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold at the desired price in such offering, the Company will include in such registration (i) first, the securities the Company proposes to sell; (ii) second, the Registrable Securities held by the Holders (other than Management Investors) requesting to be included in such registration pursuant to Section 3 hereof (pro rata among the respective Holders thereof on the basis of the number of Registered Securities such Holders have requested to be registered); and (iii) third, the Registrable Securities held by the Management Investors requesting to be included in such registration pursuant to Section 3 hereof (pro rata among such Management Investors on the basis of the number of Registered Securities such Management Investors have requested to be registered). (iv) If a registration under Section 4 hereof is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities requested to be registered exceeds the number of shares which can be sold at the desired price in such offering, the Company will include in such registration the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold at the desired price. Registrable Securities held by the Holders requesting to be included in such registration shall be included pro rata among the respective Holders thereof on the basis of the number of Registrable Securities such Holders have requested to be registered. (c) Notwithstanding the priorities set forth in Section 9(b), in the event Individual Investors request registration of Registrable Securities under Sections 2(a) (as Demand Piggybackers), 2(b), 3 or 4 hereof, such Individual Investors, or any one of them, shall be given priority over all other holders of Registrable Securities (other than Mezzanine Warrant Holders) to the extent such priority is necessary to allow such Individual Investors to sell enough Registrable Securities to qualify any redemption of other Company securities from such Individual Investor occurring simultaneously with (or part of a series of related transactions with) such offering for sale or exchange treatment under Section 302(b)(2) of the Internal Revenue Code of 1986, as amended; PROVIDED THAT the priority provided by this subparagraph (c) shall not extend to Registrable Securities which constitute more than one and one-half percent (1.5%) of the outstanding Common Stock of the Company at the time of (and measured prior to) such redemption (the "Priority Inversion Percent"); and PROVIDED FURTHER, THAT the rights provided to Individual Investors pursuant to this subparagraph (c) may be terminated by Holdings if Holdings shall, or shall cause the Company to, purchase the Priority Inversion Percent from the Individual Investor and thereby reduce the number of Individual Investors' Registrable Securities requested to be registered. (d) In the case of a non-underwritten Demand Registration, the priorities provided in Section 9(b)(i) or (ii) shall apply in the event the number of shares salable (in the opinion of the Board of Directors) is less than the total number of Registrable Securities sought to be registered. -14- (e) No Holder may participate in any underwritten registration hereunder unless such Holder (i) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. (f) The Company shall not grant registration rights to any person which impair in any way the priorities for inclusion in a registration set forth in this Section 9, including, without limitation, by providing any such person with higher priority than or equal priority to that provided to the Parties herein with regard to any registration statement filed by be Company, whether upon such person's demand or otherwise. In addition, in any demand registration rights granted to any such person, the Company shall provide that such demand registration rights shall be subject to a right of the Mezzanine Warrant Holders to render such a demand thereunder ineffective by making demand for registration under Section 2(a) of this Agreement in accordance with the procedures set forth in Section 2(b) hereof. Notwithstanding anything to the contrary contained in this paragraph (f), nothing in this paragraph (f) shall restrict the Company's ability to register on Form S-8 (or any successor form) shares issuable upon exercise of options which may be granted pursuant to any Stock Option Plan adopted by the Company after the date hereof, providing for the issuance of shares of Common Stock to certain employees of the Company. 10. RULE 144. (a) The Company shall not be obligated under Section 2, 3 or 4 hereof to register or include in any registration statement Registrable Securities that any Holder has requested to be registered if the Company shall furnish such Holder with a written opinion of counsel to the Company, which opinion shall be reasonably satisfactory to such Holder, that all Registrable Securities that such Holder holds may be publicly offered, sold and distributed within a single ninety (90) day period without registration under the Act pursuant to Rule 144 promulgated by the Commission under the Act; PROVIDED, HOWEVER, that the provisions of this Section 10(a) shall not apply if such Holder requesting registration shall provide to the Company written advice from a refutable investment banker reasonably satisfactory to such Holder and the Company, that the per share price reasonably likely to be attainable in a sale under Rule 144 (net of expenses of such sale) is not substantially as great as the per share price reasonably likely to be attainable pursuant to a Registration under the applicable section. The cost of obtaining a letter from an investment banker containing such advice shall be borne by the Company. (b) At such time as the Company becomes subject to the reporting requirements of the 1934 Act, the Company will file the reports required to be filed by it under the Act and the 1934 Act and the rules and regulations adopted by the Commission thereunder, and will use its best efforts to take such further action as any Holder of Registrable Securities may reasonably deem to be necessary, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Act within the limitation of the exemptions provided by (i) Rule 144 under the Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such information and requirements. -15- 11. LOCKUP AGREEMENT. (a) All Holders agree that, upon the request of and to the extent required by the underwriter(s) managing (i) an initial underwritten public offering of Common Stock, or (ii) any other registration of Common Stock at the time of which such Holder is a Restricted Holder (as defined in this section 11(a)), such Holders will not sell, make any short sale of, pledge, grant any option for the purchase of or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters), as the case may be, during the seven (7) days prior to, and during the one hundred twenty (120) day period beginning on, the effective date of such registration as the Company or the underwriters) may specify. For purposes of this section 11(a), "Restricted Holder" shall mean any Holder who beneficially owns (within the meaning of Rule 13d-3 of the 1934 Act or any successor rule) five percent (5%) or more of the Common Stock ("5% Holder"), any director or officer of the Company (without regard to his or her level of ownership of Common Stock), or any Holder whose Registrable Securities are being included in the registration (without regard to the amount of Registrable Securities being registered). Any lockup imposed on Holders pursuant to clause (i) of this Section 11(a) shall be imposed on all Holders and any lockup imposed on Restricted Holders pursuant to clause (ii) of this Section 11(a) shall be imposed on all Restricted Holders. (b) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven (7) days prior to and during the one hundred twenty (120) day period beginning on the effective date of any registration statement related to an registered underwritten public offering pursuant to which Registrable Securities are to be sold (except as part of such underwritten registration or pursuant to registrations on Form S-8 or any successor form), unless the underwriters) managing the registered public offering otherwise agree, and (ii) to use its best efforts to cause each holder of at least five percent (5%) (on a fully-diluted basis) of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, in either case purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any sale or distribution of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree. 12. TRANSFER OF REGISTRATION RIGHTS. Provided that the Company is given written notice by the Holder at the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which the rights under this Agreement are being assigned, the registration rights under this Agreement may be transferred in whole or in part in connection with the transfer of Registrable Securities. Notwithstanding the foregoing, if such transfer is subject to covenants, agreements or other undertakings restricting transferability thereof the registration rights under this Agreement shall not be transferred in connection with such transfer unless such transfer complies with all such covenants, agreements and other undertakings. In all cases, such registration rights shall not be transferred unless the transferee thereof executes a counterpart signature page, agreeing the assume and be bound by the obligations imposed upon Holders pursuant to this Agreement. 13. INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under this Agreement: -16- (a) To the full extent permitted by law, the Company will and hereby does (i) indemnify and hold harmless each Holder, each director, officer, partner, employee, or agent of or for such Holder, any underwriter (as defined in the Act) for such Holder, and each person, if any, who controls such Holder or underwriter within the meaning of the Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Act and applicable state securities laws insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein in light of the circumstances under which it was made or necessary to make the statements therein not misleading, or arise out of any violation by the company of any securities law, rule or regulation applicable to the Company and relating to action or inaction required of the company in connection with any such registration; and (ii) will reimburse each such person or entity for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 13(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed) nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or an alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus, or amendments or supplements thereto in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by or on behalf of any such Holder, underwriter or controlling person. (b) To the full extent permitted by law, each Holder requesting or joining in a registration under this Agreement will and hereby does (i) indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, and any Underwriter (as defined in the Act) for the Company, each other holder and each person, if any, who controls such other Holder within the meaning of Section 15 of the Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, controlling person, other Holder or underwriter may become subject, under the Act and applicable state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and (ii) reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, other Holder, controlling person or underwriter attributable to investigating or defending any loss, claim, damage, liability or action -17- indemnified by such Holder pursuant to clause (i); PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 13(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld or delayed). In no event shall the liability of any Registered Holder be greater than the dollar amount of the proceeds received by such Registered Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Promptly after receipt by an indemnified party under this Section 13 of notice of the commencement of any action or knowledge of a claim that would, if asserted, give rise to a claim for indemnity hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 13, notify the indemnifying party in writing of the commencement thereof or knowledge thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. The failure to notify an indemnifying party promptly of the commencement of any such action or of the knowledge of any such claim, if prejudicial to any material extent to his ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 13 to the extent so prejudiced, but the omission so to notify the indemnifying party will not relieve him of any liability that he may have to any indemnified party otherwise than under this Section 13. (d) If the indemnification provided for in this Section 13 is for any reason, other than pursuant to the terms thereof, held to be unavailable to an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying and indemnified parties from the offering of Common Stock. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or otherwise results in a materially inequitable result (as determined by the Board of Directors of the Company in its reasonable discretion), then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the indemnifying and indemnified parties in connection with the statements) or omissions) which resulted in such losses, claims, damages, liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by a party shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by such party bears to the total net proceeds from the offering received by all parties. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the Company or a Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by PRO RATA allocation or by any other method of allocation take into account the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or -18- liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No Person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Act shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 14. REMEDIES. In addition to being entitled to exercise all rights provided in this Agreement as well as all rights granted by law, including recovery of damages, each Holder of Registrable Securities will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees not to raise the defense in any action for specific performance that a remedy at law would be adequate. 15. SUBSEQUENT ISSUANCES BY THE COMPANY. If the Board of Directors of the Company determines that any Person hereafter issued hereafter issued any Common Stock, Preferred Stock or Warrants by the Company should become a party to this Agreement, then the execution of a Counterpart to this Agreement by such Person shall result in such Person being deemed to be a Shareholder hereunder for all purposes of this Agreement. 16. AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of all of the Holders; PROVIDED, HOWEVER, that any such waiver or consent will be effective against any Holder actually executing a written waiver or consent whether or not other Holders of the outstanding Registrable Securities grant such waiver or consent. 17. FILING NOTICES AND COPIES. The Company shall provide to each Holder of Registrable Securities such number of copies of any registration statement, amendment thereto (including post-effective amendments) or other report, document or notice that is filed with the Securities and Exchange Commission or other authority under the securities laws, as may be reasonably requested by such Holder of Registrable Securities. In addition, the Company shall provide prior notice to any Holder of Registrable Securities of any such filing of a registration statement or amendment thereto, provided that the foregoing notice provision shall not shorten any other advance notice provision contained in this Agreement. 18. NOTICES. All notices and other communications hereunder shall be in writing and shall be given to the person either personally or by sending a copy thereof by first class or express mail, postage prepaid, or by telegram (with messenger service specified), telex or TWX (with answerback received) or courier services, charges prepaid, or by telecopier, to such party's address (or to such party's telex, TWX, telecopier or telephone number). If the notice is sent by mail, it shall be deemed to have been given to the person entitled thereto five (5) business days after being deposited in the United States mail, and if the notice is sent by telegraph or courier services, it shall be deemed to have been given to the person entitled thereto one (1) business day after deposited with a telegraph office or courier service for delivery to that person or, in the case of telex, TWX, or telecopy when dispatched. -19- If to Holdings, to: Kirkland Holdings L.L.C. 75 State Street Boston, MA 02109 Attention: David M. Mussafer Telecopy No.: (617) 951-0568 With a copy to: Pepper Hamilton LLP 3000 Two Logan Square Philadelphia, PA 19103 Attention: Robert A. Friedel, Esq. Telecopy No.: (215) 981-4750 If to the Management Investors or the Company, to: Kirkland's, Inc. P.O. Box 7222 Jackson, TN 38303-7222 Attention: Robert Alderson Telecopy No.: (731) 664-9345 With a copy to: Baker, Donelson, Bearman & Caldwell 20th Floor First Tennessee Building 165 Madison Avenue Memphis, TN 38103 Attention: Robert Walker, Esq. Telecopy No.: (901) 577-2303 If to Robert Kirkland, to: Robert Kirkland 760 Sanders Chapel Road Union City, Tennessee 38261 Telecopy No.: (731) 885-7850 With a copy to: Warner Law Firm PLC 308 West Church Street Union City, Tennessee 38261 Attention: John L. Warner, Jr., Esquire Telecopy No.: (731) 885-2440 -20- If to Mezzanine Warrant Holders, to: Capital Resource Lenders II, L.P. 85 Merrimac Street Suite 200 Boston, MA 02114 Attention: Alexander S. McGrath Telecopy No.: (617) 723-9819 Allied Capital Corporation 1666 K Street, N.W. Suite 901 Washington, D.C. 20006 Attention: Susan Gallagher Telecopy No.: (202) 659-2053 The Marlborough Capital Investment Fund, L.P. 399 Boylston Street Boston, MA 02116 Attention: Margaret Laroix Telecopy No.: (617)421-9631 Capital Trust Investments, Ltd. 575 Fifth Avenue, 40th Floor New York, NY 10017 Attention: John P. Oswald Telecopy No.: (212) 490-6950 With a copy to: Testa, Hurwitz & Thibeault, LLP High Street Tower 125 High Street Boston, MA 02110 Attention: Andrew E. Taylor, Jr., Esquire Telecopy No.: (617) 248-7100 If to any other party hereto, to the address of record as most recently provided to the Company. Upon request by any party hereto, the Company agrees to provide address and telecopier information for any other party for the purpose of providing a notice in accordance with this Section 18. Notice of any change in any such address shall also be given in the manner set forth above. Whenever the giving of notice is required, the giving of such notice may be waived by the party entitled to receive such notice. 19. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed -21- shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 20. HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 21. GOVERNING LAW. This Agreement shall be governed by and construes in accordance with the laws of the State of Delaware. 22. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained imp herein shall not be affected or impaired thereby. 23. Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 24. PARTIES BENEFITED. Nothing in this Agreement, express or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities. 25. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns including, without limitation, subsequent Holders of Registrable Securities agreeing to be bound by all and the terms and conditions of this Agreement. IN WITNESS WHEREOF, this Amended and Restated Registration Rights Agreement has been executed as of the date and year first above written. KIRKLAND HOLDINGS L.L.C. By: ------------------------------------ Name: Title: KIRKLAND'S, INC. By: ----------------------------------- Name: Title: -22- [This page intentionally left blank.] -23- SSM VENTURE PARTNERS, L.P. By: ---------------------------------- Name: Title: ---------------------------------- JOSEPH R. HYDE, III ---------------------------------- JOHNSTON C. ADAMS, JR. ---------------------------------- JOHN H. PONTIUS -24- CT/KIRKLAND EQUITY PARTNERS, L.P. By: ---------------------------------- Name: Title: R-H CAPITAL PARTNERS, L.P. By: ---------------------------------- Name: Title: TCW/KIRKLAND EQUITY PARTNERS, L.P. By: ---------------------------------- Name: Title: -25- CAPITAL RESOURCE LENDERS II, L.P., by CAPITAL RESOURCE PARTNERS II, L.P., its General Partner By: ---------------------------------- Name: Title: ALLIED CAPITAL CORPORATION By: ---------------------------------- Name: Title: THE MARLBOROUGH CAPITAL INVESTMENT FUND, L.P., by MARLBOROUGH CAPITAL MANAGEMENT, L.P., its general partner By: --------------------------------------- Margaret Lanoix, its authorized partner CAPITAL TRUST INVESTMENTS, LTD. By: ---------------------------------- Name: Title: -26- GLOBAL PRIVATE EQUITY II LIMITED PARTNERSHIP By: ---------------------------------- Name: Title: ADVENT DIRECT INVESTMENT PROGRAM LIMITED PARTNERSHIP By: ---------------------------------- Name: Title: ADVENT PARTNERS LIMITED PARTNERSHIP By: ---------------------------------- Name: Title: -27- -------------------------------------- CARL KIRKLAND -------------------------------------- ROBERT KIRKLAND -------------------------------------- ROBERT ALDERSON THE AMY KATHERINE ALDERSON TRUST By: ---------------------------------- Name: Title: THE ALLISON LEIGH ALDERSON TRUST By: ---------------------------------- Name: Title: THE CARL T. KIRKLAND GRANTOR RETAINED ANNUITY TRUST 2001-1 By: ---------------------------------- Name: Title: -------------------------------------- STEVEN COLLINS -28- EXHIBIT A COUNTERPART ----------- THIS INSTRUMENT forms part of the Amended and Restated Registration Rights Agreement (the "Agreement") made as of the 1st day of April 2002, among Kirkland Holdings L.L.C., Kirkland's Inc., SSM Venture Partners, L.P., Joseph R. Hyde, III, Johnston C. Adams, Jr., John H. Pontius, CT/Kirkland Equity Partners, L.P., R-H Capital Partners, L.P., TCW/Kirkland Equity Partners, L.P., Capital Resource Lenders II, L.P., Allied Capital Corporation, The Marlborough Capital Investment Fund, L.P., Capital Trust Investments, Ltd., Global Private Equity II Limited Partnership, Advent Direct Investment Program Limited Partnership, Advent Partners Limited Partnership, Carl Kirkland, Robert Kirkland, Robert Alderson, The Amy Katherine Alderson Trust, The Allison Leigh Alderson Trust, The Carl T. Kirkland Grantor Retained Annuity Trust 2001-1 and Steven Collins, and any additional Shareholders of the Company (as defined in the Agreement), from time to time, which Agreement permits execution by counterpart. The undersigned hereby acknowledges having received a copy of the said Agreement (which is annexed hereto as Schedule I) and having read the said Agreement in its entirety, and for good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, hereby agrees that the terms and conditions of the said Agreement shall be binding upon the undersigned as a Shareholder and such terms and conditions shall enure to the benefit of and be binding upon the undersigned and its successors and permitted assigns. IN WITNESS WHEREOF, the undersigned has executed this instrument this ____ day of ___________, 200_ . --------------------------------- (Signature of Shareholder) --------------------------------- (Name in block letters) -29- -----END PRIVACY-ENHANCED MESSAGE-----