Pier 1 2009 Annual Report Download - page 129

The affirmative vote of a majority of the outstanding shares of common stock entitled to vote is
required to approve the amendment of the Certificate of Incorporation of Pier 1 Imports, Inc. to
reduce the par value of Pier 1 Imports’ common stock from $1.00 per share to $0.001 per share. If a
proxy card is signed and returned but no direction is made, the persons named in your proxy will vote
your shares ‘‘FOR’’ this proposal. Any shares not voted (whether by abstention or otherwise) will have
the same effect as a vote ‘‘AGAINST’’ this proposal.
The board of directors has declared it advisable and unanimously recommends a vote ‘‘FOR’’
approval of the amendment of the Certificate of Incorporation of Pier 1 Imports, Inc. to reduce the
par value of Pier 1 Imports’ common stock from $1.00 per share to $0.001 per share.
ITEM 4—Proposal to Approve an Amendment of the Certificate of Incorporation of Pier 1
Imports, Inc. to Increase the Authorized Number of Pier 1 Imports’ Shares of Preferred
Stock from 5,000,000 Shares to 20,000,000 Shares, to Shorten the Description of the
Authority of the Board of Directors to Issue Such Shares, and to Eliminate the Terms and
Provisions of the Formula Rate Preferred Stock Currently Set Forth in the Certificate of
Incorporation
The board of directors has unanimously adopted a resolution seeking shareholder approval to
amend Pier 1 Imports’ Certificate of Incorporation to increase the authorized number of shares of
preferred stock that we have authority to issue from 5,000,000 shares to 20,000,000 shares and to
submit this amendment for shareholder approval. The board of directors also authorized an
amendment to amend and restate the board of directors’ authority to issue such shares and to
eliminate the terms and provisions of the Formula Rate Preferred Stock currently set forth in the
Certificate of Incorporation.
The purpose for increasing the number of authorized shares of preferred stock is to give Pier 1
Imports the flexibility to take advantage of various business opportunities, including financings, raising
additional capital, and other corporate purposes.
The preferred stock will enable Pier 1 Imports, at the option of the board of directors, to issue
series of preferred shares in a manner calculated to take advantage of financing techniques that may
provide a lower effective cost of capital to Pier 1 Imports. The availability of ‘‘blank check’’ preferred
shares for issuance in the future will give Pier 1 Imports greater flexibility and permit such shares to be
issued without the expense and delay of a special meeting of shareholders.
We presently have 5,000,000 shares of preferred stock authorized for issuance in our Certificate of
Incorporation. The board of directors has the authority to divide these preferred shares into series, to
designate each series, to fix and determine separately for each series any one or more relative rights
and preferences, priorities, and limitations, and to issue shares of any series without further shareholder
approval.
On or about July 2, 1987, all 5,000,000 authorized shares of our preferred stock were designated as
the $.25 Preferred Stock and issued in a private placement. On October 29, 1987, we amended our
Certificate of Incorporation to reclassify the 5,000,000 outstanding shares of the $.25 Preferred Stock as
the Formula Rate Preferred Stock. On September 18, 1991, all outstanding shares of the Formula Rate
Preferred Stock were redeemed in accordance with their terms. Under Delaware law, these 5,000,000
shares could not be reissued, except as Formula Rate Preferred Stock. The proposed amendment will
eliminate all references to the Formula Rate Preferred Stock in the Certificate of Incorporation,
thereby returning the shares to the status of authorized but unissued shares of preferred stock that can
be issued pursuant to the board of directors’ blank check authority.
Pursuant to our Certificate of Incorporation, the board of directors is authorized, without
shareholder approval, to issue preferred shares on the terms that the board of directors determines in
its sole discretion. For example, the board of directors will be able to determine the voting rights,
dividend or distribution rate, dates for payment of dividends or distributions, whether dividends are
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