Document:

kirk-ex42_400.htm

 

Exhibit 4.2

 

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

As of January 29, 2022, Kirkland’s, Inc. has only common stock registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Description of Common Stock

The following description of our Common Stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Amended and Restated Charter (the “Charter”) and our Amended and Restated Bylaws (the “Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage you to read our Charter, our Bylaws and the applicable provisions of Tennessee Business Corporation Act, Title 48 of the Tennessee Code Annotated, for additional information.

Authorized Capital Shares

Our authorized capital shares consist of 100,000,000 shares of common stock, without par value (“Common Stock”), and 10,000,000 shares of series preferred stock (“Preferred Stock”). The outstanding shares of our Common Stock are fully paid and nonassessable.

Voting Rights

Holders of Common Stock are entitled to one vote per share on all matters voted on by the shareholders, including the election of directors.  Our Common Stock does not have cumulative voting rights.

Dividend Rights

Subject to the rights of holders of outstanding shares of Preferred Stock, if any, the holders of Common Stock are entitled to receive dividends, if any, as may be declared from time to time by the Board of Directors in its discretion out of funds legally available for the payment of dividends.

Liquidation Rights

Subject to any preferential rights of outstanding shares of Preferred Stock, holders of Common Stock will share ratably in all assets legally available for distribution to our shareholders in the event of dissolution.

Other Rights and Preferences

Our Common Stock has no sinking fund or redemption provisions or preemptive, conversion or exchange rights. Holders of Common Stock may act by unanimous written consent.

Listing

The Common Stock is traded on The Nasdaq Stock Market LLC under the trading symbol “KIRK.”  The transfer agent and registrar for our common stock is Broadridge Corporate Issuer Solutions, Inc.

 

Preferred Stock

Pursuant to the Charter, our Board of Directors is empowered, without any approval of our holders of Common Stock, to issue shares of Preferred Stock in one or more classes or series, to establish the number of shares in each series, and to fix the voting powers, designations, powers, preferences and relative participating, optional or other rights, of each such class or series, and any qualifications, limitations or restrictions thereof.  Because our Board 

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of Directors will have the power to establish the preferences and rights of each class or series of preferred stock, it may afford the holders of any series of Preferred Stock preferences, powers and rights senior to the rights of holders of shares of our Common Stock, which could have the effect of delaying, deferring or preventing a change in control of us.

Currently, there are no shares of our Preferred Stock issued and outstanding. 

Anti-Takeover Effect of Certain Provisions of the Charter and Bylaws

Certain provisions of the Charter and Bylaws, described below, as well as the ability of our Board of Directors to issue shares of Preferred Stock and set voting rights, preferences and other terms of the Preferred Stock, could delay, defer or prevent a transaction or a change in control in us that might involve a premium for the holders of our Common Stock or might otherwise not be in their best interests.  Among other things, our Charter provides for a classified Board of Directors, which means that the Board is divided into three classes with Directors serving staggered three-year terms.  This could delay a change in control of our Board of Directors.  In addition, both our Charter and Bylaws contain supermajority voting requirements to amend certain provisions of these documents dealing with, among other things, special shareholder meetings, directors, and amendments.

Anti-Takeover Effect of Tennessee Law  

We are subject to the Tennessee Business Combination Act, which regulates corporate acquisitions.  In general, this Act prohibits a resident Tennessee corporation from engaging in a business combination with an interested shareholder for a period of five years following the date the person became an interested shareholder, unless the Board of Directors approved the transaction in which the shareholder became an interested shareholder prior to the date the interested shareholder attained such status or unless other conditions are met.  

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Exhibit 10.16 

Kirkland’s, Inc. (the “Company”) 

Summary of Named Executive Officer Compensation 

  

 

Salary. The following table sets forth the 2022 and 2021 annual base salaries provided to the Company’s Chief Executive Officer, Chief Financial Officer and the next other most highly compensated executive officer to be named in the Company’s proxy statement to be filed in connection with the 2022 annual meeting of stockholders (the “Named Executive Officers”).

 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
  
	
2022 Salary
	
 
	
  
	
2021 Salary
	
 

	
Steven C. Woodward

     President, Chief Executive Officer and Director
	
  
	
$
	
750,000 
	
 
	
  
	
$
	
750,000 
	
 

	
Nicole A. Strain

     Chief Operating Officer and Chief Financial Officer
	
  
	
$
	
400,000 
	
 
	
  
	
$
	
400,000 
	
 

	
Michael A. Holland

     Senior Vice President and Chief Technology Officer
	
  
	
$
	
386,250 
	
 
	
  
	
$
	
375,000 
	
 

Non-Equity Incentive Plan Compensation. The Company pays annual non-equity incentive compensation under its Amended and Restated 2002 Equity Incentive Plan. For fiscal 2021, the Company’s performance goal was structured such that for named executive officers, 100% payout of the applicable target bonus is attained upon achieving 100% of the Company’s designated EBIT goal, which corresponds to operating income (loss) on the Company’s financial statements prepared in accordance with generally accepted accounting principles, with threshold bonus (50% of target payout) attained upon achievement of 75% of the EBIT goal and maximum bonus (200% target payout) attained upon achieving 125% of the Company EBIT goal. The Company did not meet the minimum 75% of EBIT goal for fiscal 2021; however, based on the Board approval of a discretionary minimum bonus, bonuses were paid to Named Executive Officers in fiscal 2022 for fiscal 2021 pursuant to the Company’s non-equity incentive compensation plan under the Company’s Amended and Restated 2002 Equity Incentive Plan as follows:

 

	
 
	
Fiscal 2021
Bonus Amount
	
 

	
Steven C. Woodward
	
$
	
375,000 
	
 

	
Nicole A. Strain
	
$
	
120,000 
	
 

	
Michael A. Holland
	
$
	
93,750 
	
 

For fiscal 2022, the Company’s performance goal is structured such that for named executive officers, 100% payout of the applicable target bonus is attained upon achieving 100% of the Company’s designated EBIT goal, with threshold bonus (50% of target payout) attained upon achievement of 85% of the EBIT goal and maximum bonus (200% target payout) attained upon achieving 130% of the Company EBIT goal. The following table sets forth the fiscal 2022 bonus targets as a percentage of 2022 base salary set for the Named Executive Officers: 

  

	
 
	
  
	
Threshold
	
 
	
 
	
Target
	
 
	
 
	
Maximum
	
 

	
Steven C. Woodward
	
  
	
 
	
50 
	
% 
	
 
	
 
	
100 
	
% 
	
 
	
 
	
200 
	
% 

	
Nicole A. Strain
	
  
	
 
	
40 
	
% 
	
 
	
 
	
80 
	
% 
	
 
	
 
	
160 
	
% 

	
Michael A. Holland
	
  
	
 
	
25 
	
% 
	
 
	
 
	
50
	
% 
	
 
	
 
	
100 
	
% 

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Equity Based Incentives. The Company awards equity incentive compensation under its Amended and Restated 2002 Equity Incentive Plan to Named Executive Officers. On March 23, 2022, the Named Executive Officers were granted the following awards of time-based vesting restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”):

  

	
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RSUs1
	
 
	
  
	
PSUs2
	
 

	
Steven C. Woodward
	
  
	
 
	
41,630 
	
  
	
  
	
 
	
41,630 
	
  

	
Nicole A. Strain
	
  
	
 
	
17,762
	
  
	
  
	
 
	
17,762
	
  

	
Michael A. Holland
	
  
	
 
	
10,291
	
  
	
  
	
 
	
10,291
	
  

  

1RSUs vest 1/3rd annually over three years.

2PSUs have a three-year cumulative performance period (fiscal 2022, 2023 and 2024) and cliff vest at the end of fiscal 2024 based on actual 3-year cumulative EBITDA in relation to targeted 3-year cumulative EBITDA. The 3-year targeted EBITDA for this grant will be set at a later date. Between 50% and 200% of the targeted PSUs listed in the table above could vest or none at all if the minimum performance measure is not met. If the Company’s stock over or under performs the shareholder return performance modifier by more than or less than 25% over the same 3-year cumulative period, then the earned shares are adjusted up or down by 20%.

The Company also granted a special equity award to Mr. Woodward and Ms. Strain on March 23, 2022 consisting of additional RSUs and PSUs in the following table:

	
 
	
  
	

RSUs1
	
 
	
  
	
PSUs2

	
Steven C. Woodward
	
  
	
 
	
33,304 
	
  
	
  
	
 
	
33,304

	
Nicole A. Strain
	
  
	
 
	
13,322
	
  
	
  
	
 
	
13,322

1RSUs cliff vest in three years.

2 PSUs have a three-year cumulative performance period (fiscal 2022, 2023 and 2024) and cliff vest at the end of fiscal 2024 based on actual 3-year cumulative EBITDA in relation to targeted 3-year cumulative EBITDA. The 3-year targeted EBITDA for this grant will be set at a later date. Between 50% and 200% of the targeted PSUs listed in the table above could vest or none at all if the minimum performance measure is not met. If the Company’s stock over or under performs the shareholder return performance modifier by more than or less than 25% over the same 3-year cumulative period, then the earned shares are adjusted up or down by 20%.

 

Additional Information. The foregoing information is summary in nature. Additional information regarding the compensation of Named Executive Officers may be provided in the Company’s filings with the SEC, including the proxy statement to be filed in connection with the 2022 annual meeting of stockholders.

 

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