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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Penton Media, Inc.
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock $.01 Par Value Per Share
--------------------------------------------------------------------------------
(Title of Class of Securities)
709668 10 7
--------------------------------------------------------------------------------
(CUSIP Number)
Daniel Budde
ABRY Mezzanine Partners, L.P.
c/o ABRY Partners, LLC
111 Huntington Avenue, 30th Floor
Boston, MA 02199
(617) 859-2959
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
COPY TO:
Joshua N. Korff, Esq.
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, NY 10022
212-446-4800
March 19, 2002
--------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section
240.13d-7(b) for other parties to whom copies are to be sent.
---------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
Page 1 of 20 Pages
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
Page 2 of 20 Pages
CUSIP NO. 709668 10 7 Page 3 of 20 Pages
---------------------
----------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ABRY Mezzanine Partners, L.P.
----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [x]
----------------------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
[ ]
----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF None.
SHARES --------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,902,181 (See Item 5)
EACH --------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON WITH None.
--------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,902,181
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
[ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
CUSIP NO. 709668 10 7 Page 4 OF 20 Pages
---------------------
----------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ABRY Mezzanine Investors, L.P.
----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [x]
----------------------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable.
----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
[ ]
----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF None.
SHARES --------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,902,181 (See Item 5)
EACH --------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON WITH None.
--------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
[ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
CUSIP NO. 709668 10 7 Page 5 of 20 Pages
---------------------
----------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ABRY Mezzanine Holdings, LLC
----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [X]
----------------------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable.
----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
[ ]
----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF None.
SHARES --------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,902,181 (See Item 5)
EACH --------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON WITH None.
--------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
[ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
CUSIP NO. 709668 10 7 Page 6 of 20 Pages
---------------------
----------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Royce Yudkoff
----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [x]
----------------------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable.
----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
[ ]
----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF None.
SHARES --------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 4,902,181 (See Item 5)
EACH --------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON WITH None.
--------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,902,181 (See Item 5)
-----------------------------------------------------------------------------
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
[ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
ITEM 1. SECURITY AND ISSUER.
The class of equity security to which this statement relates is the
common stock, par value $.01 per share (the "COMMON STOCK"), of Penton Media,
Inc., a Delaware corporation (the "ISSUER"). The name and address of the
principal executive offices of the Issuer are Penton Media, Inc., 1300 East
Ninth Street, Cleveland, Ohio 44114.
ITEM 2. IDENTITY AND BACKGROUND.
This statement (the "STATEMENT") is being jointly filed by each of the
following persons pursuant to Rule 13d-1(k) promulgated by the Securities and
Exchange Commission (the "COMMISSION") pursuant to Section 13 of the Securities
Exchange Act of 1934 as amended (the "EXCHANGE ACT"):
(i) ABRY Mezzanine Partners, L.P., a Delaware limited partnership
("ABRY PARTNERS"), by virtue of its indirect beneficial ownership of the shares
of the Common Stock covered by this Statement;
(ii) ABRY Mezzanine Investors, L.P, a Delaware limited partnership
("ABRY INVESTORS"), by virtue of it being the general partner of ABRY Partners;
(iv) ABRY Mezzanine Holdings, LLC, a Delaware limited liability company
("ABRY HOLDINGS"), by virtue of it being the general partner of ABRY Investors;
and
(iv) Royce Yudkoff, an individual resident of the State of
Massachusetts ("YUDKOFF"), by virtue of being the controlling member of ABRY
Holdings.
ABRY Partners, ABRY Investors, ABRY Holdings, and Yudkoff are sometimes
referred to herein individually as a "REPORTING PERSON" and collectively as the
"REPORTING PERSONS." ABRY Partners, ABRY Investors, and ABRY Holdings are
sometimes referred to herein collectively as the "ABRY ENTITIES."
Information with respect to each of the Reporting Persons is given
solely by such Reporting Person, and no Reporting Person assumes responsibility
for the accuracy or completeness of information given by another Reporting
Person. By their signature on this Statement, each of the Reporting Persons
agrees that this Statement is filed on behalf of such Reporting Person.
The Reporting Persons may be deemed to constitute a "group" for
purposes of Section 13(d)(3) of the Act. The Reporting Persons and the other
parties to the Purchase Agreement (as defined in Item 4) may also be deemed to
constitute a "group" for purposes of Section 13(d)(3) of the Exchange Act. The
Reporting Persons expressly disclaim that they have agreed to act as a group
other than as described in this Statement.
Certain information required by this Item 2 concerning the directors,
executive officers and controlling persons of the ABRY Entities are set forth on
Schedule A attached hereto, which is incorporated herein by reference.
The principal business of each of the ABRY Entities is to make
investments in common and preferred stock and other interests in business
organizations, domestic or foreign, with the principal objective of appreciation
of capital invested. The address of the principal business and principal office
of each of the ABRY Entities and Yudkoff is c/o ABRY Partners, LLC., 111
Huntington Avenue, 30th Floor, Boston, MA 02199.
During the past five years, none of the Reporting Persons nor, to the
best knowledge of the Reporting Persons, any of the persons listed on Schedule A
attached hereto, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the past five years, none of the
Reporting Persons nor, to the best knowledge of the Reporting Persons, any of
the persons listed on Schedule A attached hereto, was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activity
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Page 7 of 20 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
ABRY Partners and ABACUS acquired beneficial ownership of the
securities that are the subject of this filing with working capital in the
ordinary course of business.
The information set forth in Item 4 of this Schedule 13D is hereby
incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION.
On March 19, 2002, pursuant to the Amended and Restated Series B
Convertible Preferred Stock and Warrant Purchase Agreement (the "PURCHASE
AGREEMENT") the Issuer completed the sale of 40,000 shares of its Series B
Convertible Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"),
and warrants (the "WARRANTS") to purchase 1,280,000 shares of the Issuer's
Common Stock, for $40 million (the "INITIAL CLOSING") in a private placement to
ABRY Partners, ABACUS Master Fund, Ltd. ("ABACUS"), Sandler Capital Partners V,
L.P. ("SANDLER V"), Sandler Capital Partners V FTE, L.P. ("SANDLER V FTE") and
Sandler Capital Partners V Germany, L.P. (SANDLER V GERMANY" and together with
Sandler V and Sandler V FTE, "SANDLER"). ABRY, ABACUS and Sandler are sometimes
referred to herein as the "INVESTORS" and collectively as an "INVESTOR". The
net proceeds from the sale of the Preferred Stock and Warrants were used to
repay indebtedness. The Purchase Agreement is set forth as EXHIBIT 6 hereto.
The Preferred Stock is governed by the Series B Convertible Preferred Stock
Certificate of Designations (the "CERTIFICATE OF DESIGNATIONS"), set forth as
EXHIBIT 3 hereto. The Warrants are governed by the terms and conditions
substantially similar to those contained in the form of Warrant ("FORM OF
WARRANT"), set forth as EXHIBIT 5 hereto.
ABRY Partners acquired 28,000 shares of Preferred Stock and 896,000
Warrants at the Initial Closing. A closing of the sale to the Investors of an
additional 10,000 shares of Preferred Stock and Warrants to purchase 320,000
shares of Common Stock (the "FINAL CLOSING") occurred on March 28, 2002. ABRY
Partners purchased an additional 2,000 shares of Preferred Stock and 64,000
Warrants at the Final Closing.
By virtue of their potential status as a "group" for purposes of Rule
13d-5, each of the Reporting Persons and each of the Investors may be deemed to
have shared voting and dispositive power over the shares owned by other members.
Neither the filing of this Statement nor any of its contents shall be deemed to
constitute an admission that any Reporting Person or any of the Investors are
the beneficial owner of any Common Stock referred to in this Statement for the
purposes of Section 13(d) of the Act or for any other purpose, and such
beneficial ownership is expressly disclaimed.
PREFERRED STOCK
---------------
The following is a description of the material terms of the Preferred
Stock and Warrants:
Liquidation Preference.
----------------------
Upon the Issuer's liquidation, dissolution or winding up, each holder
of Preferred Stock will be entitled to be paid in cash, before any distribution
or payment is made on the Issuer's Common Stock, an amount per share equal to
the greater of:
o the liquidation value of such share, as described below, plus
accrued and unpaid dividends,
o the amount that the holder would be entitled to receive in
connection with a liquidation event had such holder converted
the Preferred Stock into shares of the Issuer's Common Stock
immediately prior to such liquidation event, and
Page 8 of 20 Pages
o the product of the number of shares of Common Stock into which
such share is convertible immediately prior to the liquidation
event and the applicable minimum share price, as described in
"Redemption" below, as of the date of such liquidation event.
For purposes of calculating the number of shares of Common Stock into
which shares of Preferred Stock are convertible in the event of a liquidation,
dissolution or winding up, because no actual conversion occurs, the limitations
with respect to conversion discussed under the heading "Limitations on the
Investors' Right to Convert, Exercise, Vote or Sell" are not applicable.
The initial liquidation value per share of the Preferred Stock is
$1,000. If the Preferred Stock is not converted or redeemed prior to March 19,
2008, the liquidation value per share will increase to $4,570 if stockholder
approval of the issuance of the Common Stock and exercise of the Warrants and an
increase in the number of authorized shares of Common Stock in the Issuer's
charter (the "STOCKHOLDER APPROVAL") has been obtained as of such date or $9,140
if such approval has not been obtained. In the event of a change of control,
unless a holder of the Preferred Stock requires the Issuer to redeem its shares
as described below, such holder may require the Issuer to make a payment on its
Preferred Stock at the liquidation preference, subject to the Issuer's
satisfaction of the Issuer's obligations under the indentures governing the 10
3/8% senior subordinated notes and any notes issued under the Issuer's recently
announced bond offering.
Dividends.
---------
From the date of issuance until March 19, 2008, the dividends on the
Preferred Stock will accrue daily on the sum of the then applicable liquidation
value and the accrued dividends thereon at an annual rate of 7% per annum
unless, at any time during such period, the Stockholder Approval has been
obtained. The dividend rate will decrease to 5% per annum upon receipt of the
Stockholder Approval. The dividend rate will decrease to 5% per annum
retroactive to the date of issuance of the Preferred Stock, to the extent of any
Preferred Stock still outstanding, if the Issuer obtains the Stockholder
Approval by September 19, 2002. Otherwise, the reduced dividend will only apply
from and after the date such approval is obtained. From and after March 19,
2008, the dividends will accrue at a rate of 15% per annum.
Dividends are payable semi-annually in cash only if declared by the
Issuer's Board of Directors and approved by no less than 75% of the Preferred
Stock then outstanding. The provisions of the Issuer's debt instruments limit
the Issuer's ability to pay dividends in cash and the Issuer has no present
intention to pay cash dividends on the Preferred Stock.
Upon the occurrence of certain triggering events, the dividend rate
increases by one percentage point, with further one percentage point increases
per quarter up to a maximum increase of five percentage points if any such event
is continuing. The triggering events include:
o failure to pay the liquidation preference or any cash
dividends, to the extent declared, when due;
o failure to comply with specified covenants and obligations
contained in the Certificate of Designations or Purchase
Agreement;
o failure to comply with the other covenants and obligations
contained in the Certificate of Designations or Purchase
Agreement and such failure is not cured within 90 days;
o any representation or warranty in the Purchase Agreement is
proven to be false or incorrect in any material respect;
o any default that results in the acceleration of indebtedness,
where the principal amount of such indebtedness, when added to
the principal amount of all other indebtedness then in
default, exceeds $5.0 million or final judgments for the
payment of money aggregating more than $1.0
Page 9 of 20 Pages
million (net of insurance proceeds) are entered against the
Issuer and are not discharged, dismissed, or stayed pending
appeal within 90 days after entry; and
o the Issuer initiates or consents to proceedings under any
applicable bankruptcy, insolvency, composition, or other
similar laws or make a conveyance or assignment for the
benefit of the Issuer's creditors generally or any holders of
any lien takes possession of, or a receiver, administrator, or
other similar officer is appointed for, all or substantially
all of the Issuer's properties, assets or revenues and is not
discharged within 90 days.
Conversion.
----------
Each share of Preferred Stock is convertible at any time at the
holder's option into the number of shares of the Issuer's Common Stock computed
by multiplying the number of shares of Preferred Stock to be converted by the
liquidation value, plus accrued but unpaid dividends, divided by the conversion
price. The conversion price for the Preferred Stock initially will be $7.61,
subject to certain anti-dilution adjustments described in the immediately
following paragraph.
Adjustments will be made to the conversion price if dilutive events
specified in the Certificate of Designations for the Preferred Stock occur
before the conversion of the Preferred Stock. These events include stock splits,
stock dividends and sales of Common Stock or securities convertible into Common
Stock at prices lower than either the conversion price of the Preferred Stock or
the volume weighted average closing share price of the Issuer's Common Stock for
the preceding 30 trading days. If any of these events occur, the maximum number
of shares of Common Stock issuable upon conversion of the Preferred Stock would
increase.
The conversion price of the Preferred Stock will not be adjusted for an
issuance of Common Stock regardless of the sales price:
o related to the granting of Common Stock or options to purchase
Common Stock to the Issuer's employees pursuant to the
Issuer's stock option plans or the exercise of currently
outstanding options;
o upon conversion of the Preferred Stock;
o upon exercise of the Warrants;
o in certain situations, for consideration other than cash;
o subject to certain limits, to a bank or similar financial
institution in connection with a loan or other indebtedness
for borrowed money; or
o pursuant to an underwritten offering but only if the sale
price is greater than the conversion price then in effect.
If the Issuer does not obtain the Stockholder Approval on or prior to
June 28, 2002, the conversion price will be automatically reduced by 20%.
Thereafter, until the Issuer obtains such approval, every 90 days the conversion
price will be reduced by 20% of the conversion price then in effect. In no event
will the conversion price reduction related to the failure to timely obtain the
Stockholder Approval exceed 50% of the conversion price that would have been in
effect had the Issuer not failed to obtain the Stockholder Approval, and upon
the Issuer's receipt of the Stockholder Approval, the conversion price will be
readjusted as if no adjustments for failure to timely obtain the Stockholder
Approval had occurred.
In addition, if the Issuer fails to comply with specific covenants
contained in the Purchase Agreement, the conversion price of the Preferred Stock
will be reduced by $0.76 (adjusted for stock splits and similar transactions).
The conversion price will readjust to what it would have been absent such breach
(to the extent of any shares of
Page 10 of 20 Pages
Preferred Stock still outstanding) once the breach is cured. In addition, no
such reduction to the conversion price will be made at any time that
representatives of the Investors constitute a majority of the Board of
Directors.
Finally, if the Issuer's leverage ratio (as defined in the Purchase
Agreement) exceeds 7.5 to 1.0 for any quarterly period beginning on December 31,
2002, and such leverage ratio remains in excess of 7.5 to 1.0 for a period of 90
days, the conversion price of the Preferred Stock will be reduced by $0.76
(adjusted for stock splits and similar transactions). Thereafter, until the
leverage ratio reduces below 7.5 to 1.0, every 90 days the conversion price will
be reduced by another $0.76 (adjusted for stock splits and similar
transactions), subject to a maximum reduction not to exceed $3.80 (adjusted for
stock splits and similar transactions). The conversion price will readjust to
what it would have been absent such event (to the extent of any shares of
Preferred Stock still outstanding) once the leverage ratio reduces below 7.5 to
1.0. In addition, no such reduction to the conversion price will be made at any
time that representatives of the Investors constitute a majority of the Board of
Directors.
The Issuer may require the holders to convert the Preferred Stock into
Common Stock at any time provided that:
o no triggering event, as described in "Dividends" above or
"Registration Rights" below, has occurred and is continuing
and the Issuer has received the Stockholder Approval;
o the proposed conversion would not occur within 30 days of any
period during which trading by the Issuer's officers or
directors is restricted by the Issuer's policies or within 90
days of another conversion at the Issuer's option;
o the volume weighted average closing share price of the
Issuer's Common Stock for the preceding 30 trading days is
equal to or greater than the applicable minimum share price,
as set forth below;
o the aggregate number of shares of the Issuer's Common Stock
issued upon conversion of the Preferred Stock at the Issuer's
election during any period of 12 consecutive weeks does not
exceed 15% of the aggregate volume of the Issuer's shares
traded on the New York Stock Exchange during the 12 week
period ended on the Saturday immediately preceding the notice
date; and
o the aggregate number of shares of Preferred Stock converted at
any one time does not exceed the sum of 12,500 (adjusted for
stock splits and similar transactions).
The conversion rights with respect to the Preferred Stock discussed
immediately above are subject to certain limitations which are discussed under
the heading "Limitations on the Investors' Right to Convert, Exercise, Vote or
Sell" below.
Redemption.
----------
The Issuer may redeem the Preferred Stock at any time, in whole or in
part, provided that the redemption price is equal to the amount the holders of
Preferred Stock would receive on an as-converted basis (without regard to any
limitations on conversion) assuming a Common Stock share price equal to the
greater of the volume weighted average closing share price of the Issuer's
Common Stock for the preceding 30 trading days and the applicable minimum share
price derived from the following schedule:
If being redeemed prior to the third anniversary $15.18
If being redeemed after the third, but before the fourth anniversary $17.51
If being redeemed after the fourth, but before the fifth anniversary $19.31
If being redeemed after the fifth, but before the sixth anniversary $23.26
In the event of a change of control, any holder of Preferred Stock may
require the Issuer to redeem all of its Preferred Stock at the redemption price
determined above.
Page 11 of 20 Pages
Board Representation.
--------------------
The Preferred Stock entitles the holders thereof initially to three
board seats. On March 19, 2008, the holders of a majority of the Preferred Stock
then outstanding, if any, will be entitled to appoint one less than a minimum
majority of the Board of Directors. However, at such time as the holders of
Preferred Stock cease to hold shares of Preferred Stock having an aggregate
liquidation preference of at least $25 million, they will lose the right to
appoint the director for one of these three board seats. At such time as the
holders of Preferred Stock cease to hold shares of Preferred Stock having an
aggregate liquidation preference of at least $10 million and such holders'
beneficial ownership of the Issuer's Preferred Stock and Common Stock
constitutes less than 5% of the aggregate voting power of the Issuer's voting
securities, the holders of Preferred Stock will no longer have the right to
appoint any directors to the Board of Directors.
In addition, upon the occurrence of the triggering event described in
the sixth bullet point in "Dividends" above, the holders of a majority of the
Preferred Stock may appoint a minimum majority of the Issuer's Board of
Directors. Upon the occurrence of the triggering events described in the first
and second bullet points in "Dividends" above, the holders of a majority of the
Preferred Stock may appoint one less than a minimum majority of the Board of
Directors. Upon the occurrence of the triggering events described in the third,
fourth and fifth bullet points in "Dividends" above, the holders of a majority
of the Preferred Stock may nominate two additional members to the Issuer's Board
of Directors and, if such triggering events have not been cured or waived prior
to the end of the next succeeding quarter, may appoint one less than a minimum
majority the Issuer's Board of Directors. At such time as the holders of
Preferred Stock cease to hold shares of Preferred Stock having an aggregate
liquidation preference of at least $10 million and such holders' beneficial
ownership of the Issuer's Preferred Stock and Common Stock constitutes less than
5% of the aggregate voting power of the Issuer's voting securities, the holders
of Preferred Stock will no longer have the right to appoint additional directors
upon these events.
The Issuer has also granted the holders of the Preferred Stock the
right to have representatives attend meetings of the Board of Directors until
such time as they no longer own any Preferred Stock, Warrants or shares of
Common Stock issued upon conversion of the Preferred Stock and exercise of the
Warrants.
Voting Rights.
-------------
The holders of the Preferred Stock are entitled to vote on all matters
submitted to the vote of the Issuer's stockholders, voting as a single class
with the common stockholders on an as-converted basis. In addition, the Issuer
may not, without the affirmative vote of the holders of not less than 75% of the
Preferred Stock then outstanding:
o amend, modify, restate, or repeal the Issuer's certificate of
incorporation or bylaws in any way that would alter the rights
of the Preferred Stock or create any new class of capital
stock having rights senior to or on parity with the Preferred
Stock;
o authorize or issue any new or existing class of capital stock
or any security convertible into or exchangeable for, or
having rights to purchase, any shares of the Issuer's stock
having any preference or priority senior to or on parity with
the Preferred Stock;
o increase or decrease the authorized number of shares of
Preferred Stock;
o reclassify the Issuer's capital stock into shares having any
preference or priority senior to or on parity with any
preference or priority of the Preferred Stock;
o pay or declare any dividend on any shares of the Issuer's
capital stock (other than dividends on the Issuer's Common
Stock payable in additional shares of the Issuer's Common
Stock) or apply any of the Issuer's assets to the redemption,
retirement, purchase, or acquisition, directly or indirectly,
of any shares of the Issuer's capital stock, other than
redemptions of the Preferred Stock and
Page 12 of 20 Pages
certain repurchases of shares of common stock from the
Issuer's current or former employees pursuant to contractual
rights; or
o increase the size of the Issuer's Board of Directors to more
than 12 directors, other than as may be required to satisfy
the rights of the Preferred Stock described above.
Covenants.
---------
Without the prior approval of a majority of the holders of the shares
of Preferred Stock then outstanding the Issuer may not:
o use the proceeds from the sale of the Preferred Stock and
Warrants other than to refinance the Issuer's credit facility
and for general corporate purposes;
o make any restricted payment or restricted investment unless
the Issuer's leverage ratio is less than 6.0 to 1.0 and such
restricted payment or restricted investment would otherwise be
permitted under the indenture governing the 10 3/8% senior
subordinated notes after the application of a deemed
restricted payment in an amount equal to the aggregate
liquidation value of the Preferred Stock then outstanding;
o enter into any agreement (or amend or modify the terms of any
existing agreement, including the Issuer's Credit Agreement,
the Indenture or the New Indenture (each as defined in the
Purchase Agreement)), or any refinancing thereof which would
modify the definition of "Change of Control," "Continuing
Directors" or "Voting Equity Interests" (as defined in such
instruments), or restrict the Issuer's ability to comply with
the terms of the Purchase Agreement or any of the Related
Documents (as defined in the Purchase Agreement); provided,
however, that the Issuer may refinance any indebtedness under
the Credit Agreement, the Indenture or the New Indenture so
long as the terms of such refinancing are no more restrictive
(including with respect to maturity) with respect to the
Issuer's ability to pay any amount due to the Investors under
the Purchase Agreement or the Certificate of Designations than
the terms set forth in the Credit Agreement, the Indenture or
New Indenture, as applicable.
o prior to the sixth anniversary of the issuance date, sell any
of the Issuer's assets, including the capital stock of the
Issuer's subsidiaries, unless such sale is in the ordinary
course of business, does not exceed 5% of the Issuer's total
assets or EBITDA or, in the case of a sale of the capital
stock of the Issuer's subsidiaries, is between the Issuer or
any of the Issuer's wholly owned subsidiaries and another of
the Issuer's wholly owned subsidiaries;
o prior to the sixth anniversary of the issuance date, enter
into any agreement with any affiliate (other than certain
permitted affiliate transactions), unless such affiliate
transaction is determined by a majority of the Issuer's Board
of Directors to be fair, reasonable and no less favorable to
the Issuer than could have been obtained in an arm's length
transaction with a non-affiliate and is approved by a majority
of the disinterested members of the Issuer's Board of
Directors;
o materially alter the Issuer's principal line of business or
engage in any business unless such business is reasonably
related to the Issuer's principal line of business;
o grant any options to purchase the Issuer's Common Stock or
securities convertible into or exchangeable for shares of the
Issuer's Common Stock, other than options or securities
granted pursuant to a stock option plan having an exercise
price equal to or greater than the market value of the
Issuer's Common Stock on the date of such grant and accounting
for, either individually or in the aggregate, not more than
15% of the Issuer's outstanding Common Stock determined as of
the day before the closing on a fully diluted, as-converted
basis; or
Page 13 of 20 Pages
o from and after the next annual meeting of stockholders,
increase the size of the Issuer's Board of Directors (other
than as may be required to satisfy the rights of the Preferred
Stock described above) to greater than 12 directors.
From and after March 19, 2008, the Issuer may not, without the prior
approval of a majority of the holders of the shares of Preferred Stock then
outstanding:
o sell any of the Issuer's assets, including the capital stock
of the Issuer's subsidiaries;
o enter into any agreement with any affiliate;
o incur or permit to exist any indebtedness other than
indebtedness existing as of such date and indebtedness
incurred thereafter under the revolving credit facility in the
ordinary course of business to provide for the Issuer's
working capital needs;
o acquire (by merging or consolidating with, or by purchasing an
equity interest in or a portion of the assets of) any
business, corporation, other business organization, or
division thereof or otherwise acquire any material assets
(other than inventory or other assets to be sold in the
ordinary course of business); and
o hire or terminate any of the Issuer's executive officers or
modify or alter in any way the employment terms relating to
any of the Issuer's executive officers.
Sales Rights.
------------
In addition, the terms of the Preferred Stock require that the Issuer
maintain a ratio of consolidated net indebtedness, (defined as the total
indebtedness of the Issuer on a consolidated basis, less cash balances in excess
of $5.0 million, plus the accreted value of the Preferred Stock), to EBITDA of
7.5 to 1.0 for the twelve month period ending on the last day of December,
March, June, and September of each year beginning with the period ending on
December 31, 2002. If the Issuer is in violation of this covenant for four
consecutive fiscal quarters, then the holders of a majority of the Preferred
Stock have the right to cause the Issuer to seek a buyer for all of the Issuer's
assets or all of the Issuer's issued and outstanding capital stock. The holders
of Preferred Stock will not have this right if their representatives constitute
a majority of the Board of Directors. However, an Investor's right to sell its
shares of Preferred Stock is subject to certain conditions discussed under the
heading "Limitations on the Investors' Right to Convert, Exercise, Vote or Sell"
below.
Preemptive Rights.
-----------------
Subject to specified limitations, the holders of the Preferred Stock
may participate in all of the Issuer's future issuances of equity securities,
options or rights to acquire equity securities, or any securities convertible or
exchangeable for equity securities.
The Preferred Stock is subject to the terms and conditions of the
Purchase Agreement and the Certificate of Designations. An Investor's ability to
convert or sell its Preferred Stock is subject to certain additional conditions
discussed under the heading "Limitations on the Investors' Right to Convert,
Exercise, Vote or Sell" below. The foregoing description of the Purchase
Agreement and the Certificate of Designations is qualified in its entirety by
reference to the full text of each document.
Warrants.
--------
The initial exercise price of the Warrants is $7.61 per share. The
Warrants are subject to anti-dilution and other adjustments that mirror those
applicable to the Preferred Stock. The Warrants are immediately exercisable and
expire 10 years after issuance.
Page 14 of 20 Pages
The Warrants are subject to the terms and conditions of the Form of
Warrant and the Purchase Agreement. An Investor's ability to exercise or sell
its Warrants is subject to certain additional conditions discussed specified
under the heading "Limitations on the Investors' Right to Convert, Exercise,
Vote or Sell" below. The foregoing description of the Warrants is qualified in
its entirety by reference to the full text of the Form of Warrant and the
Purchase Agreement.
Limitations On the Investors' Right to Convert, Exercise, Vote or Sell.
----------------------------------------------------------------------
Pursuant to the Purchase Agreement, Certificate of Designations and the
Form of Warrant, an Investor's rights to convert its shares of Preferred Stock,
exercise its Warrants, or sell shares of its Common Stock acquired pursuant to
any conversion or exercise are subject certain limitations, including:
o Until the Stockholder Approval is obtained and so long as the
Issuer's stock is listed on the New York Stock Exchange, the
holders of Preferred Stock and Warrants (so long as the
Purchase Agreement is in effect) may not convert their
Preferred Stock or exercise their Warrants, into more than an
aggregate of 19.99% of the Issuer's Common Stock outstanding
as of March 18, 2002, or 6,378,874 shares of Common Stock. The
Investors and any other holder of Preferred Stock or Warrants
are similarly limited to an aggregate of 19.99% of the voting
power outstanding as of March 18, 2002 with respect to such
Preferred Stock or Warrants.
o So long as any of the notes under the Indenture or the New
Indenture (as defined in the Certificate of Designations) are
outstanding, no holder of Preferred Stock or Warrants may
convert or exercise its Warrants or Preferred Stock which,
after giving effect to such conversion or exercise, would
entitle either the Investors collectively and any other
holders (or "Group" of holders as defined in Section 11 of the
Certificate of Designations) of Preferred Stock or Warrants
(so long as the Purchase Agreement is in effect) to direct the
votes with respect to an excess of 35% of the aggregate voting
equity interests (as defined in the indentures governing such
notes). Collectively, the Investors and any other holder of
Preferred Stock or Warrants are similarly limited to 35% the
aggregate voting power outstanding.
o Until the Stockholder Approval is obtained, if any Investor
intends to convert its Preferred Stock or exercise its
Warrants, the Investor must notify the other Investors of such
intention. The other Investors may then elect to participate
on a PRO RATA basis in such conversion or exercise, based on
the number of shares of Preferred Stock or Warrants held by
the Investor(s) electing to participate in such conversion or
exercise.
o If any Investor elects to convert its Preferred Stock, elects
to exercise its Warrants or elects to sell any shares of
Common Stock acquired through such conversion or exercise to
one or more third parties when the market price of the Common
Stock is below the applicable prices listed on the schedule
set forth under "Redemption" above, the Investor must notify
each of the other Investors of such intention. The other
Investors may then elect to participate, on a PRO RATA basis,
in such conversion, exercise or sale based on the number of
shares of Preferred Stock, Warrants, or shares of Common
Stock, respectively, held by the Investor(s) electing to
participate in such conversion, exercise or sale.
o If either of ABRY Partners or ABACUS on the one hand, or
Sandler on the other hand, intend to sell more than 10,000
shares of Preferred Stock (as may be adjusted to reflect any
stock split, stock dividend, reclassification or similar
transaction) to one or more third parties, the party intending
such a sale must notify the other Investors of such intention.
Upon receipt of such notice, the other Investors may then
elect to participate, on identical terms and on a PRO RATA
basis, in such sale based on the number of shares of Preferred
Stock held by the Investor(s) electing to participate in such
sale.
Page 15 of 20 Pages
Registration Rights.
-------------------
The agreements regarding the Preferred Stock provide that the Issuer
will file a shelf registration statement with the SEC covering the Common Stock
issued or issuable upon conversion of the Preferred Stock and exercise of the
Warrants within 45 days after closing of the issuance and use the Issuer's
reasonable best efforts to have the registration statement declared effective by
the SEC as soon as possible, but in any event within 90 days after closing. If
the registration statement is not filed within 45 days after the closing of the
issuance, is not declared effective within 90 days of filing, or ceases to be
effective at any time prior to the sale of all of the Common Stock covered by
that registration statement, the dividend rate will increase by one percentage
point. These rights are governed by the terms and conditions of the Registration
Rights Agreement, set forth as EXHIBIT 7 hereto. The foregoing description of
the Registration Rights Agreement is qualified in its entirety by reference to
the full text of the Registration Rights Agreement.
Rights Agreement Amendment.
--------------------------
On March 7, 2002, the Board of Directors of the Issuer approved
Amendment No. 1, dated as of March 18, 2002, to the Rights Agreement, dated as
of June 9, 2002 (the "RIGHTS AGREEMENT"), by and between the Issuer and National
City Bank, as successor Rights Agent. This amendment made the provisions of the
Rights Agreement inapplicable to the transactions contemplated by the Purchase
Agreement. The foregoing description of this amendment is qualified in its
entirety by reference to the full text of the amendment, a copy of which is set
forth as EXHIBIT 4 hereto and incorporated herein by reference.
Except as set forth in the preceding paragraphs, as of the date hereof,
the Reporting Persons do not have any plan or proposal that relates to or would
result in:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present Board of Directors or management of
the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Act; or
(j) Any action similar to any of those enumerated above.
Page 16 of 20 Pages
Notwithstanding the foregoing, the Reporting Persons reserve the right
to effect any such actions as any of them may deem necessary or appropriate in
the future.
The information set forth in Item 3 of this Schedule 13D is hereby
incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of March 28, 2002, ABRY Partners owns 30,000 shares of
Preferred Stock and 960,000 Warrants. Assuming conversion of
all of the shares of Preferred Stock and Warrants acquired
pursuant to the Purchase Agreement, the Reporting Persons may
be deemed to indirectly beneficially own an aggregate of
4,902,181 shares of Common Stock, or approximately 13.3% of
the Common Stock outstanding.
(b) By virtue of their potential status as a "group" for purposes
of Rule 13d-5, each of the members of the Reporting Group and
the Investors may be deemed to have shared voting and
dispositive power over the shares owned by other members.
Neither the filing of this Statement nor any of its contents
shall be deemed to constitute an admission that any Reporting
Person or any of the Investors are the beneficial owner of any
Common Stock referred to in this Statement for the purposes of
Section 13(d) of the Act or for any other purpose, and such
beneficial ownership is expressly disclaimed.
(c) Except for the transactions described herein, there have been
no other transactions in the securities of the Issuer effected
by the Reporting Persons in the last 60 days.
(d) Except as stated within Item 4 and Item 5 of this Statement,
to the knowledge of the Reporting Persons, only the Reporting
Persons have the right to receive or the power to direct the
receipt of dividends from, or proceeds from the sale of, the
shares of Common Stock of the Issuer reported by this
statement.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except for the agreements described above or in response to Items 3 and
4 of this Schedule 13D, which are hereby incorporated herein by reference, to
the best knowledge of the Reporting Persons, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) between the
persons enumerated in Item 2 of this Schedule 13D, and any other person, with
respect to any securities of the Issuer, including, but not limited to, transfer
or voting of any of the securities, finder's fees, joint ventures, loan or
option agreements, puts or calls, guarantees of profits, divisions of profits or
loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 -- Schedule 13D Joint Filing Agreement, dated March
28, 2002, by and among ABRY Mezzanine Partners, L.P.,
ABRY Mezzanine Investors, L.P., ABRY Mezzanine
Holdings, LLC, and Royce Yudkoff.
Exhibit 2 -- Limited Power of Attorney dated March 27, 2002.
Exhibit 3 -- Certificate of Designations, Preferences and
Rights of the Series B Convertible Preferred Stock of
Penton Media, Inc. filed as Exhibit 3.1 to the
Issuer's current report on form 8-K dated March 19,
2002 is hereby incorporated by reference herein.
Page 17 of 20 Pages
Exhibit 4 -- Amendment No. 1, dated as of March 18, 2002, to
the Rights Agreement, by and between Penton and
National City Bank, as successor Rights Agent filed
as Exhibit 4.2 to the Issuer's current report on form
8-K dated March 19, 2002 is hereby incorporated by
reference herein.
Exhibit 5 -- Form of Warrant to purchase common stock of
Penton Media, Inc. filed as Exhibit 4.1 to the
Issuer's current report on form 8-K dated March 19,
2002 is hereby incorporated by reference herein.
Exhibit 6 -- Amended and Restated Series B Convertible
Preferred Stock and Warrant Purchase Agreement, dated
as of March 18, 2002, among Penton Media, Inc. and
the investors listed on Schedule 1 attached thereto
(the "INVESTORS") filed as Exhibit 10.1 to the
Issuer's current report on form 8-K dated March 19,
2002 is hereby incorporated by reference herein.
Exhibit 7 -- Registration Rights Agreement, dated March 19,
2002, between Penton Media, Inc. and the Investors
(the "INVESTORS"), filed as Exhibit 10.2 to the
Issuer's current report on form 8-K dated March 19,
2002 is hereby incorporated by reference herein.
Page 18 of 20 Pages
Schedule A
----------
The following table sets forth the names, addresses and principal
occupations of the executive officers, directors and principal stockholders of
ABRY Mezzanine Holdings, LLC. Each such person is a citizen of the United
States.
Directors and Officers of ABRY Mezzanine Holdings, LLC
------------------------------------------------------
Name, Principal Occupation, Citizenship Business Address
(United States, unless otherwise indicated)
Royce Yudkoff, Sole Member and c/o ABRY Partners, LLC
Director 111 Huntington Avenue, 30th Floor
Boston, MA 02199
Peni Garber, Vice President and Clerk c/o ABRY Partners, LLC
111 Huntington Avenue, 30th Floor
Boston, MA 02199
Daniel Budde, Vice President c/o ABRY Partners, LLC
111 Huntington Avenue, 30th Floor
Boston, MA 02199
Page 19 of 20 Pages
SIGNATURES
----------
After reasonable inquiry and to the best of each of the undersigned's
knowledge and belief, each of the undersigned certify that the information set
forth in this statement is true, complete and correct.
Date: March 28, 2002
ABRY MEZZANINE PARTNERS, L.P.
ABRY MEZZANINE INVESTORS, L.P.
ABRY MEZZANINE HOLDINGS, LLC
ROYCE YUDKOFF
By: /S/ Daniel Budde
---------------------------------------------
Name: Daniel Budde
Title: Attorney-in-fact for each of the Reporting Persons
Page 20 of 20 Pages