Pier 1 2009 Annual Report Download - page 125

form in order to receive cash in lieu of such fractional shares. The ownership of a fractional share
interest will not give the holder any voting, dividend or other rights, except to receive the above-
described cash payment. Pier 1 Imports will be responsible for any brokerage fees or commissions
related to the exchange agent’s selling in the open market shares that would otherwise be fractional
shares.
Shareholders should be aware that, under the escheat or abandoned property laws of various
jurisdictions, sums due for fractional interests that are not timely claimed after the Effective Time may
be required to be paid to the designated agent for each such jurisdiction, unless correspondence has
been received by us or our transfer agent concerning ownership of such funds within the time
permitted in such jurisdiction. Thereafter, if applicable, shareholders otherwise entitled to receive such
funds, but who do not receive them due to, for example, their failure to timely comply with the
exchange agent’s instructions, will have to seek to obtain such funds directly from the state to which
they were paid.
No Appraisal Rights
Under the Delaware General Corporation Law, the shareholders are not entitled to dissenter’s
rights or appraisal rights with respect to the reverse stock split described in this Item 2, and we will not
independently provide the shareholders with any such rights.
Certain Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a general summary of certain U.S. federal income tax consequences of
the reverse stock split that may be relevant to holders of Pier 1 Imports’ common stock that hold such
stock as a capital asset for federal income tax purposes. This summary is based upon the provisions of
the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), Treasury regulations promulgated
thereunder, administrative rulings and judicial decisions as of the date hereof, all of which may change,
possibly with retroactive effect, resulting in U.S. federal income tax consequences that may differ from
those discussed below. This discussion does not address all aspects of federal income taxation that may
be relevant to such holders in light of their particular circumstances or to holders that may be subject
to special tax rules, including, without limitation: (i) holders subject to the alternative minimum tax;
(ii) banks, insurance companies, or other financial institutions; (iii) tax-exempt organizations;
(iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment
trusts; (vi) partnerships (or other flow-through entities for U.S. federal income tax purposes and their
partners or members); (vii) traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings; (viii) U.S. Holders (as defined below) whose ‘‘functional
currency’’ is not the U.S. dollar; (ix) persons holding Pier 1 Imports’ common stock as a position in a
hedging transaction, ‘‘straddle,’’ ‘‘conversion transaction’’ or other risk reduction transaction;
(x) persons who acquire shares of Pier 1 Imports’ common stock in connection with employment or
other performance of services; or (xi) U.S. expatriates. In addition, this summary does not address the
tax consequences arising under the laws of any foreign, state or local jurisdiction and U.S. federal tax
consequences other than federal income taxation. If a partnership (including any entity or arrangement
treated as a partnership for U.S. federal income tax purposes) holds shares of Pier 1 Imports’ common
stock, the tax treatment of a holder that is a partner in the partnership generally will depend upon the
status of the partner and the activities of the partnership.
We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal
Revenue Service (‘‘IRS’’) regarding the United States federal income tax consequences of the reverse
stock split and there can be no assurance the IRS will not challenge the statements and conclusions set
forth in this discussion or that a court would not sustain any such challenge. EACH HOLDER OF
COMMON STOCK SHOULD CONSULT SUCH HOLDER’S TAX ADVISOR WITH RESPECT TO
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