2K Sports 2009 Annual Report Download - page 95

Convertible Notes
In June 2009, we issued $138,000 aggregate principal amount of 4.375% convertible senior notes due 2014
(‘‘Convertible Notes’’). The issuance of the Convertible Notes included $18,000 related to the exercise of
an over-allotment option by the underwriters. Interest on the Convertible Notes is payable semi-annually
in arrears on June 1st and December 1st of each year, commencing on December 1, 2009. The Convertible
Notes mature on June 1, 2014, unless earlier redeemed or repurchased by the Company or converted.
The Convertible Notes are convertible at an initial conversion rate of 93.6768 shares of our common stock
per $1 principal amount of Convertible Notes (representing an initial conversion price of approximately
$10.675 per share of common stock for a total of approximately 12,927,000 underlying conversion shares)
subject to adjustment in certain circumstances. Holders may convert the Convertible Notes at their option
prior to the close of business on the business day immediately preceding December 1, 2013 only under the
following circumstances: (1) during any fiscal quarter commencing after July 31, 2009, if the last reported
sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of
30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or
equal to 130% of the applicable conversion price on each applicable trading day; (2) during the five
business day period after any 10 consecutive trading day period (the ‘‘measurement period’’) in which the
trading price per $1 principal amount of Convertible Notes for each day of that measurement period was
less than 98% of the product of the last reported sale price of our common stock and the applicable
conversion rate on each such day; (3) if we call the Convertible Notes for redemption, at any time prior to
the close of business on the third scheduled trading day prior to the redemption date; or (4) upon the
occurrence of specified corporate events. On and after December 1, 2013 until the close of business on the
third scheduled trading day immediately preceding the maturity date, holders may convert their
Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, the
Convertible Notes may be settled, at our election, in cash, shares of our common stock, or a combination
of cash and shares of the Company’s common stock.
At any time on or after June 5, 2012, the Company may redeem all of the outstanding Convertible Notes
for cash, but only if the last reported sale of our common stock for 20 or more trading days in a period of
30 consecutive trading days ending on the trading day prior to the date we provide notice of redemption to
holders of the Convertible Notes exceeds 150% of the conversion price in effect on each such trading day.
The redemption price will equal 100% of the principal amount of the Convertible Notes to be redeemed,
plus all accrued and unpaid interest (including additional interest, if any) to, but excluding, the redemption
date.
Upon the occurrence of certain fundamental changes involving the Company, holders of the Convertible
Notes may require us to purchase all or a portion of their Convertible Notes for cash at a price equal to
100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest (including
additional interest, if any) to, but excluding, the fundamental change purchase date.
The indenture governing the Convertible Notes contains customary terms, covenants and events of default.
If an event of default (as defined therein) occurs and is continuing, the Trustee by notice to the Company,
or the holders of at least 25% in aggregate principal amount of the Convertible Notes then outstanding by
notice to the Company and the Trustee, may, and the Trustee at the request of such holders shall, declare
100% of the principal of and accrued and unpaid interest (including additional interest, if any) on all the
Convertible Notes to be due and payable. In the case of an event of default arising out of certain
bankruptcy events, 100% of the principal of and accrued and unpaid interest (including additional interest,
if any), on the Convertible Notes will automatically become due and payable immediately. As of
October 31, 2009, we were in compliance with all covenants and requirements outlined in the indenture
governing the Convertible Notes.
The Convertible Notes are senior unsecured obligations and rank senior in right of payment to our existing
and future indebtedness that may be expressly subordinated in right of payment to the Convertible Notes;
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