EMPLOYMENT AGREEMENT





         THIS AGREEMENT (the "Agreement"), made as of the 1st day of June, 2002,

by and between KIRKLAND'S, INC., a Tennessee corporation, (the "Company"), and

REYNOLDS C. FAULKNER ("Executive").



         WHEREAS, Executive is an individual who, by education, training and

experience, is skilled in matters of corporate finance, accounting and

administration; and



         WHEREAS, the Company desires to employ Executive as its Executive Vice

President and Chief Financial Officer and thereby gain the benefit of

Executive's knowledge and experience, and Executive desires to accept such

employment pursuant to the terms of this Agreement.



         NOW THEREFORE, in consideration of these premises and the mutual

promises contained herein, and intending to be legally bound hereby, the parties

agree as follows:



SECTION 1. Definitions.



         1.1. "Annual Bonus" means a bonus payable pursuant to Section 3.2.



         1.2. "Benefits" means the benefits described in Sections 3.4, 3.5 and

3.6.



         1.3. "Board" means the Board of Directors of the Company.



         1.4. "Cause" means the occurrence of any of the following material

violations, as determined in good faith by the Board: (a) Executive's failure,

refusal or inability (other than due to mental or physical disability) to

perform, in any material respect, his duties to the Company, which failure

continues for more than fifteen (15) days after written notice thereof from the

Company, (b) alcohol abuse or use of controlled drugs (other than in accordance

with a physician's prescription), (c) illegal conduct or gross misconduct of

Executive which is materially and demonstrably injurious to the Company, its

affiliates or subsidiaries including, without limitation, fraud, embezzlement,

theft or proven dishonesty in the course of his employment, (d) conviction of a

misdemeanor involving moral turpitude or a felony, or (v) the entry of a plea of

guilty or nolo contendere to a misdemeanor involving moral turpitude or a

felony.



         1.5. "COBRA" means 29 U.S.C. ss.ss. 1161-1169.



         1.6. "Competing Business" means any business primarily engaged in the

retail sale of specialty gifts, decorative accessories or home furnishings, or

any Significant Supplier.



         1.7. "Effective Date" means the date upon which this Agreement is

entered into by the Executive and the Company.



         1.8. "Expiration Date" means the fourth anniversary of the Effective

Date; provided, however, that if written notice not to extend the Term by either

party is not received at least 90 days prior to the fourth anniversary of the

Effective Date (or any subsequent anniversary



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of the Effective Date, if this Agreement is extended pursuant to this Section

1.8), then the Expiration Date will be automatically extended to the next

anniversary of the Effective Date.



         1.9. "Financial Advisory Services" means financial advisory services

other than consulting or advisory services regarding wholesale or retail

purchasing, store location planning, store or display configuration, inventory

control or purchase tracking systems or retail marketing strategy.



         1.10. "Good Reason" means that any of the following has occurred with

respect to the Executive:



                  (a) the assignment to Executive of any duties inconsistent in

any respect with Executive's position (including status, offices, titles and

reporting requirements), authority, duties or responsibilities as contemplated

by Section 2 of this Employment Agreement, or any other action by the Company

which results in a material diminution in such position, authority, duties or

responsibilities;



                  (b) a reduction by the Company in Executive's Annual Salary;

provided, however, that if the salaries of substantially all of the Company's

senior executive officers (including the Company's President and CEO) are

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