-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PBmim79DsgObIUxup5c0+Im5xsOMdrcVy0ikbl52dgM3/gOF0y0pxiJB7wK7A5ro kR8RfV6ROJLzccuWRZ00JQ== 0000950142-02-000323.txt : 20020415 0000950142-02-000323.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950142-02-000323 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020328 GROUP MEMBERS: SANDLER CAPITAL MANAGEMENT GROUP MEMBERS: SANDLER CAPITAL PARTNERS V FTE, L.P. GROUP MEMBERS: SANDLER CAPITAL PARTNERS V GERMANY, L.P. GROUP MEMBERS: SANDLER CAPITAL PARTNERS V, L.P. GROUP MEMBERS: SANDLER INVESTMENT PARTNERS, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PENTON MEDIA INC CENTRAL INDEX KEY: 0001062441 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 362875386 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-54477 FILM NUMBER: 02591608 BUSINESS ADDRESS: STREET 1: 1300 EAST NINTH STREET CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2166967000 MAIL ADDRESS: STREET 1: 1300 EAST NINTH STREET CITY: CLEVELAND STATE: OH ZIP: 44114 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SANDLER CAPITAL MANAGEMENT CENTRAL INDEX KEY: 0001000742 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 112792496 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: 45TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2127548100 MAIL ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: 45TH FL CITY: NEW YORK STATE: NY ZIP: 10153 SC 13D 1 sc13d-penton.txt SCHEDULE 13D ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. __)* ----------------------- PENTON MEDIA, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 709668 10 7 (CUSIP Number) STACEY W. SEEWALD C/O SANDLER CAPITAL MANAGEMENT 767 FIFTH AVENUE, 45TH FLOOR NEW YORK, NY 10153 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) ----------------------- with a copy to: DOUGLAS A. CIFU PAUL, WEISS, RIFKIND, WHARTON & GARRISON 1285 AVENUE OF THE AMERICAS NEW YORK, NY 10019 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 which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 1(f) or 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 Rule 13d-1(a) 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. 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 ("Act") 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). ================================================================================ - ----------------------------- ----------------------------- 709668 10 7 Page 2 of 33 - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sandler Capital Management - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC, OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- NUMBER OF ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING 2,451,091 PERSON ------------------------------------------------ WITH 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,451,091 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,451,091 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.13% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 3 of 33 - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sandler Investment Partners, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC, OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- NUMBER OF ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING 2,451,091 PERSON ------------------------------------------------ WITH 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,451,091 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,451,091 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.13% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 4 of 33 - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sandler Capital Partners V, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC, OO - -------------------------------------------------------------------------------- 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 1,748,281 NUMBER OF ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING -0- PERSON ------------------------------------------------ WITH 9 SOLE DISPOSITIVE POWER 1,748,281 ------------------------------------------------ 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,748,281 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.19% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 5 of 33 - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sandler Capital Partners V FTE, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC, OO - -------------------------------------------------------------------------------- 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 638,591 NUMBER OF ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING -0- PERSON ------------------------------------------------ WITH 9 SOLE DISPOSITIVE POWER 638,591 ------------------------------------------------ 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 638,591 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.96% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 6 of 33 - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sandler Capital Partners V Germany, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC, OO - -------------------------------------------------------------------------------- 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 64,219 NUMBER OF ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING -0- PERSON ------------------------------------------------ WITH 9 SOLE DISPOSITIVE POWER 64,219 ------------------------------------------------ 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 64,219 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.20% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 7 of 33 ITEM 1. SECURITY AND ISSUER. The class of equity securities to which this Schedule 13D (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 is being filed by a group, as defined in Rule 13d-5 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, by each of the following persons: (i) Sandler Capital Partners V, L.P., a Delaware limited partnership, ("SANDLER V"), by virtue of its beneficial ownership of 1,748,281 shares of the Common Stock covered by this Statement; (ii) Sandler Capital Partners V FTE, L.P., a Delaware limited partnership, ("SANDLER V FTE"), by virtue of its beneficial ownership of 638,591 shares of the Common Stock covered by this Statement; (iii) Sandler Capital Partners V Germany, L.P., a Delaware limited partnership, ("SANDLER V GERMANY," and together with Sandler V and Sandler V FTE, the "SANDLER V PARTNERSHIPS"), by virtue of its beneficial ownership of 64,219 shares of the Common Stock covered by this Statement; (iv) Sandler Investment Partners, L.P., a Delaware limited partnership ("SIP"), by virtue of it being the general partner of each of the Sandler V Partnerships; and (v) Sandler Capital Management, a registered investment advisor and a New York general partnership ("SCM"), by virtue of it being the general partner of SIP. The Sandler V Partnerships, SIP and SCM are sometimes referred to herein collectively as the "REPORTING Persons." Each of the Reporting Persons is engaged in acquiring, holding and disposing of interests in various companies for investment purposes. There are eleven general partners of SCM (the "GENERAL PARTNERS"). The General Partners are MJDM Corp., Four JK Corp., ALCR Corp., ARH Corp., TERPSI Corp., SERF Corp., RAK SCM Corp., RF SCM Corp., SAM SCM Corp., DRP SCM Corp. and WAB SCM Corp., each of which is a New York corporation with a business address of 767 Fifth Avenue, 45th Floor, New York, New York 10153. The attached SCHEDULE A sets forth the controlling persons, the executive officers and the directors of each of the General Partners, and contains the following information with respect to each such person: (i) name, (ii) citizenship, and (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted. None of the Reporting Persons and to the best of each of the Reporting Person's knowledge, none of the persons named in SCHEDULE A hereto, has during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. - ----------------------------- ----------------------------- 709668 10 7 Page 8 of 33 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The source of funds for the purchase of the securities that are the subject of this filing was contributions from partners of the Sandler V Partnerships. The information set forth in Item 4 of this Statement 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. and the Sandler V Partnerships (collectively the "Investors"). 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 2 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 4 hereto. On March 28, 2002, pursuant to the Purchase Agreement the Issuer completed the sale of an additional 10,000 shares of Preferred Stock and Warrants to purchase 320,000 shares of Common Stock (the "FINAL CLOSING"). At the Initial Closing, Sandler V, Sandler V FTE and Sandler V Germany acquired 8,559 shares of Preferred Stock, 3,126 shares of Preferred Stock and 315 shares of Preferred Stock, respectively, and Warrants to purchase 273,888 shares of Common Stock, Warrants to purchase 100,032 shares of Common Stock and Warrants to purchase 10,080 shares of Common Stock, respectively. At the Final Closing, Sandler V, Sandler V FTE and Sandler V Germany purchased an additional 2,140 shares of Preferred Stock, 782 shares of Preferred Stock and 78 shares of Preferred Stock convertible, respectively, and additional Warrants to purchase 68,480 shares Common Stock, 25,024 shares Common Stock, and 2,496 shares Common Stock, respectively. By virtue of their potential status as a "group" for purposes of Rule 13d-5, each of the Reporting Persons and the Investors may be deemed to have shared voting and dispositive power over the shares owned by other members. Except to the extent explicitly set forth herein, 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. 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: - ----------------------------- ----------------------------- 709668 10 7 Page 9 of 33 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 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; - ----------------------------- ----------------------------- 709668 10 7 Page 10 of 33 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 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. - ---------- Subject to certain conditions discussed specified under the heading "Limitations on the Investors' Right to Convert, Exercise or Sell" below, 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; - ----------------------------- ----------------------------- 709668 10 7 Page 11 of 33 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 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 obtained 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 - ----------------------------- ----------------------------- 709668 10 7 Page 12 of 33 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. 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 - ----------------------------- ----------------------------- 709668 10 7 Page 13 of 33 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 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 - ----------------------------- ----------------------------- 709668 10 7 Page 14 of 33 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 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; - ----------------------------- ----------------------------- 709668 10 7 Page 15 of 33 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. 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. - ---------------------------------------------------------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 16 of 33 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. REGISTRATION RIGHTS. - ------------------- - ----------------------------- ----------------------------- 709668 10 7 Page 17 of 33 The agreements regarding the Preferred Stock provide that the Issuer will file a shelf registration statement with the Securities and Exchange Commission (the "Commission") 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 Commission 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 5 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 6 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: o The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; o An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; o A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; o 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; o Any material change in the present capitalization or dividend policy of the Issuer; o Any other material change in the Issuer's business or corporate structure; o 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; o 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; o A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or o Any action similar to any of those enumerated above. - ----------------------------- ----------------------------- 709668 10 7 Page 18 of 33 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. The foregoing summaries of the Certificate of Designations of the Preferred Stock, the Rights Agreement, the Warrant, the Purchase Agreement and the Registration Rights Agreement, are qualified in their entirety by reference to Exhibits 2 through 6 to this Statement which are hereby incorporated herein be reference. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) As of the date hereof, each of Sandler V, Sandler V FTE and Sandler V Germany owns of record 10,699 shares of Preferred Stock convertible into 1,405,913 shares of Common Stock, 3,908 shares of Preferred Stock convertible into 513,535 shares of Common Stock and 393 shares of Preferred Stock convertible into 51,643 shares of Common Stock, respectively, or 4.22%, 1.58% and 0.16%, respectively, of the Issuer's issued and outstanding shares of Common Stock. As of the date hereof, each of Sandler V, Sandler V FTE and Sandler V Germany owns of record Warrants to purchase 342,368 shares of Common Stock, Warrants to purchase 125,056 shares of Common Stock and Warrants to purchase 12,576 shares of Common Stock, respectively, or 1.06%, 0.39% and 0.04% respectively, of the Issuer's issued and outstanding shares of Common Stock. Assuming full conversion of the Preferred Stock and Warrants that were acquired pursuant to the Purchase Agreement, each of Sandler V, Sandler V FTE and Sandler V Germany may be deemed to beneficially own 1,748,281 shares of Common Stock, 638,591 shares of Common Stock and 64,219 shares of Common Stock, respectively, or 5.19%, 1.96% and 0.20%, respectively. By virtue of the fact that SCM is the general partner of SIP and that SIP is the general partner of each of Sandler V, Sandler V FTE and Sandler V Germany, SCM and SIP may be deemed to share voting power and the power to direct the disposition of the shares of Common Stock, as converted, which are beneficially owned by the Sandler V Partnerships. Accordingly, as of the date hereof, SCM and SIP may be deemed to own beneficially an aggregate of 2,451,091 shares of Common Stock or 7.13% of the Issuer's outstanding Common Stock. (b) Sandler V has the sole power to direct the vote and the sole power to direct the disposition of the 1,748,281 shares of Common Stock that may be deemed to be owned beneficially by it. Sandler V FTE has the sole power to direct the vote and the sole power to direct the disposition of the 638,591 shares of Common Stock that may be deemed to be owned beneficially by it. Sandler V Germany has the sole power to direct the vote and the sole power to direct the disposition of the 64,219 shares of Common Stock that may be deemed to be owned beneficially by it. Each of SCM and SIP has the shared power to direct the vote and the shared power to direct the disposition of the 2,451,091 shares of Common Stock that may be deemed to be owned beneficially by each of them. (c) Except as set forth herein, to the knowledge of the Reporting Persons with respect to the persons named in response to paragraph (a), none of the persons named in response to paragraph (a) has effected any transactions in shares of Common Stock during the past 60 days. (d) No person other than the persons listed is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any securities owned by any member of the group. - ----------------------------- ----------------------------- 709668 10 7 Page 19 of 33 (e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT TO THE ISSUER. Except for the agreements described above or in response to Items 3 and 4 of this Statement, 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 Statement, 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. - ----------------------------- ----------------------------- 709668 10 7 Page 20 of 33 ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. Exhibit 1 -- Schedule 13D Joint Filing Agreement, dated March 28, 2002, by and among Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P., Sandler Capital Partners V Germany, L.P., Sandler Investment Partners, L.P. and Sandler Capital Management. Exhibit 2 -- 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. Exhibit 3 -- Certificate of Designations, Preferences and Rights of the Series B Convertible Preferred Stock of Penton Media, Inc. Exhibit 4 -- Form of Warrant to purchase common stock of Penton Media, Inc. Exhibit 5 -- Registration Rights Agreement, dated March 19, 2002, between Penton Media, Inc. and the Investors. Exhibit 6 -- Amendment No. 1, dated as of March 18, 2002, to the Rights Agreement, by and between Penton Media, Inc. and National City Bank, as successor Rights Agent. - ----------------------------- ----------------------------- 709668 10 7 Page 21 of 33 SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated as of March 28, 2002. SANDLER CAPITAL MANAGEMENT By: MJDM Corp., a general partner By: /s/ Moira Mitchell ----------------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V, L.P. By: Sandler Investment Partners, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V FTE, L.P. By: Sandler Investment Partners, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V GERMANY, L.P. By: Sandler Investment Partners, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President - ----------------------------- ----------------------------- 709668 10 7 Page 22 of 33 SANDLER INVESTMENT PARTNERS, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell ------------------------------------------- Name: Moira Mitchell Title: President - ----------------------------- ----------------------------- 709668 10 7 Page 23 of 33 SCHEDULE A The following Schedule sets forth the controlling persons, the executive officers and the directors of each of the General Partners, and contains the following information with respect to each such person: (i) name, (ii) citizenship, and (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted. MJDM CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Michael Marocco, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President, Treasurer and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 24 of 33 FOUR JK CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER John Kornreich, Majority Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President, Treasurer and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, Director United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 - ----------------------------- ----------------------------- 709668 10 7 Page 25 of 33 ALCR CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Andrew Sandler, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Ellen O'Keefe, Treasurer and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Ricky Sandler, Director United States Investments Eminence Partners LLC, Investment Management 20 Park Avenue Suite 3300 New York, New York 10166 - ----------------------------- ----------------------------- 709668 10 7 Page 26 of 33 ARH CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Harvey Sandler, Majority Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Jeffrey M. Levine, President United States Chief Financial Officer Sandler Enterprises, Investment Services 1555 North Park Drive Suite 101 Weston, Florida 33329 Moira Mitchell, Treasurer and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Ricky Sandler, Director United States Investments Eminence Partners LLC, Investment Management 20 Park Avenue Suite 3300 New York, New York 10166 - ----------------------------- ----------------------------- 709668 10 7 Page 27 of 33 SERF CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Douglas Schimmel, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 28 of 33 TERPSI CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Hannah Stone, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 29 of 33 RF SCM CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Robert Fowler, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 30 of 33 RAK SCM CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Richard Keller, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 31 of 33 DRP SCM CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER David Powers, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 32 of 33 SAM SCM CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER Samantha McCuen, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, President United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Kathy Rose, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 - ----------------------------- ----------------------------- 709668 10 7 Page 33 of 33 WAB SCM CORP. NAME/POSITION CITIZENSHIP PRESENT OCCUPATION OR EMPLOYMENT AND NAME, PRINCIPAL BUSINESS AND ADDRESS OF EMPLOYER William Bianco, Sole Shareholder and Controlling Person United States Managing Director Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Stacey Seewald, President United States Vice President Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Moira Mitchell, Vice President and Secretary United States Administrative Sandler Capital Management, Investment Advisor 767 Fifth Avenue New York, New York 10153 Michael Todres, Director United States Accountant Todres and Rubin LLP, Accounting 400 Post Avenue Suite 205 Westbury, New York 11590 EX-99 3 ex1sc13d-penton.txt EXHIBIT 1 EXHIBIT 1 to SCHEDULE 13D EXHIBIT 1 SCHEDULE 13D JOINT FILING AGREEMENT In accordance with Rule 13d-1 under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the securities of Penton Media, Inc. and that this Agreement be filed as an Exhibit to such statement on Schedule 13D. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement effective as of the 28th of March, 2002. SANDLER CAPITAL MANAGEMENT By: MJDM Corp., a general partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V, L.P. By: Sandler Investment Partners, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell ------------------------------ Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V FTE, L.P. By: Sandler Investment Partners, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell ------------------------------ Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V GERMANY, L.P. By: Sandler Investment Partners, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell ------------------------------- Name: Moira Mitchell Title: President SANDLER INVESTMENT PARTNERS, L.P. By: Sandler Capital Management By: MJDM Corp., a general partner By: /s/ Moira Mitchell ----------------------------------- Name: Moira Mitchell Title: President EX-99 4 ex2sc13d-penton.txt EXHIBIT 2 EXHIBIT 2 to SCHEDULE 13D EXECUTION COPY PENTON MEDIA, INC. AMENDED AND RESTATED SERIES B CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF MARCH 18, 2002 TABLE OF CONTENTS PAGE ---- ARTICLE I DEFINITIONS..........................................................1 1.1 Definitions; Interpretation..................................1 ARTICLE II ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS..................10 2.1 Number of Shares, Warrants and Purchase Price...............10 ARTICLE III CLOSING; CLOSING DELIVERIES.......................................11 3.1 Initial Closing.............................................11 3.2 Final Closing...............................................11 3.3 Payment for and Delivery of Preferred Shares and Warrants...11 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................12 4.1 Existence; Qualification; Subsidiaries......................12 4.2 Authorization, Noncontravention and Enforceability; Issuance of Shares..........................................12 4.3 Capitalization..............................................13 4.4 Private Sale; Voting Agreements.............................13 4.5 SEC Reports; Financial Statements...........................14 4.6 Absence of Certain Changes..................................15 4.7 Litigation..................................................16 4.8 Licenses, Compliance with Law, Other Agreements, Etc........16 4.9 Third-Party Approvals.......................................16 4.10 Disclosure..................................................17 4.11 Tangible Assets.............................................17 4.12 Inventory...................................................17 4.13 Owned Real Property.........................................17 4.14 Real Property Leases........................................17 4.15 Agreements..................................................17 4.16 Intellectual Property.......................................18 4.17 Employees...................................................18 4.18 ERISA; Employee Benefits....................................18 4.19 Environment, Health and Safety..............................19 4.20 Transactions With Affiliates................................19 4.21 Taxes.......................................................19 4.22 Other Investors.............................................20 4.23 Seniority...................................................20 4.24 Investment Company..........................................20 4.25 Certain Fees................................................20 4.26 Form S-3 Eligibility........................................20 4.27 Listing and Maintenance Requirements Compliance.............20 4.28 Registration Rights.........................................20 -i- ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS....................21 5.1 Authorization and Enforceability............................21 5.2 Government Approvals........................................21 ARTICLE VI COMPLIANCE WITH SECURITIES LAWS....................................21 6.1 Investment Intent of the Purchasers.........................21 6.2 Status of Series B Shares and Warrants......................21 6.3 Sophistication and Financial Condition of Purchasers........21 6.4 Transfer of Series B Shares, Warrants and Conversion Shares.22 ARTICLE VII PRE-CLOSING COVENANTS OF THE COMPANY..............................23 7.1 Access......................................................23 7.2 Conduct of the Company and its Subsidiaries.................23 7.3 Further Action..............................................23 7.4 Notice of Certain Efforts...................................23 7.5 Confidentiality.............................................24 7.6 No Solicitation.............................................24 7.7 Preparation of the Proxy Statement; Stockholders Meeting....24 7.8 Approval by the Company's Stockholders......................25 ARTICLE VIII CONDITIONS PRECEDENT.............................................25 8.1 Conditions to Obligations of the Purchasers at Initial Closing..........................................25 8.2 Conditions to Obligations of the Purchasers at the Final Closing........................................28 8.3 Conditions to Obligations of the Company....................28 ARTICLE IX COVENANTS..........................................................29 9.1 Restricted Actions..........................................29 9.2 Required Actions............................................31 9.3 Stockholder Approval........................................33 9.4 Information Rights..........................................33 9.5 Access Rights...............................................35 9.6 Restrictions on Conversion/Exercise/Transfers...............35 9.7 Election of Series B Directors..............................36 9.8 Covenant Regarding Stock Option Plans.......................37 9.9 Sale of the Company.........................................37 9.10 Observer Rights.............................................39 ARTICLE X TERMINATION.........................................................39 10.1 Termination.................................................39 10.2 Effect of Termination.......................................40 ARTICLE XI SURVIVAL...........................................................40 11.1 Survival....................................................40 -ii- ARTICLE XII INDEMNIFICATION...................................................40 12.1 Indemnification.............................................40 ARTICLE XIII GENERAL PROVISIONS...............................................41 13.1 Public Announcements........................................41 13.2 Successors and Assigns......................................42 13.3 Entire Agreement............................................42 13.4 Notices.....................................................42 13.5 Closing Fee; Purchasers' Fees and Expenses..................43 13.6 Amendment and Waiver........................................44 13.7 Counterparts................................................44 13.8 Headings....................................................44 13.9 Specific Performance........................................44 13.10 Remedies Cumulative.........................................45 13.11 GOVERNING LAW...............................................45 13.12 JURISDICTION, WAIVER OF JURY TRIAL, ETC.....................45 13.13 No Third Party Beneficiaries................................45 13.14 Severability................................................46 13.15 Time of the Essence; Computation of Time....................46 Schedule 4.1 Existence, Qualifications, Subsidiaries Schedule 4.2 Noncontravention Schedule 4.3 Capitalization Schedule 4.6 Absence of Certain Changes Schedule 4.7 Litigation Schedule 4.9 Third-Party Approvals Schedule 4.11 Tangible Assets Schedule 4.13 Owned Real Property Schedule 4.15 Agreements Schedule 4.16 Intellectual Property Schedule 4.21 Taxes Schedule 4.22 Other Investors Schedule 4.28 Registration Rights Exhibit A Series B Preferred Stock Certificate of Designations Exhibit B Registration Rights Agreement Exhibit C Warrant Exhibit D Certificate of Incorporation and Bylaws of Company Exhibit E Credit Agreement Exhibit F Indenture Exhibit G Offering Circular -iii- AMENDED AND RESTATED SERIES B CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT This AMENDED AND RESTATED SERIES B CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this "AGREEMENT") is dated as of March 18, 2002 among Penton Media, Inc., a Delaware corporation (the "Company"), ABRY Mezzanine Partners L.P., a Delaware limited partnership ("ABRY"), ABACUS MASTER FUND, LTD. ("ABACUS" and together with ABRY, the "ABRY PARTIES"), Sandler Capital Partners V, L.P., a Delaware limited partnership ("SANDLER V"), Sandler Capital Partners V FTE, L.P., a Delaware limited partnership ("SANDLER V FTE"), and Sandler Capital Partners V Germany, L.P., a Delaware limited partnership ("SANDLER V GERMANY" and together with Sandler V and Sandler V FTE, "SANDLER"). The ABRY Parties and Sandler are sometimes referred to herein, collectively, as the "PURCHASERS" and each individually as, a "PURCHASER"). On March 10, 2002, the parties hereto entered into the Series B Convertible Preferred Stock and Warrant Purchase Agreement (the "ORIGINAL AGREEMENT") which the parties hereto wish to amend and restate in its entirety. The Purchasers desire to purchase from the Company, and the Company desires to sell and issue to the Purchasers, 50,000 shares of the Company's Series B Convertible Preferred Stock, par value $.01 per share (the "SERIES B PREFERRED STOCK"), and warrants to purchase shares of the Company's common stock, par value $.01 per share (including any associated Rights, as defined in and issued pursuant to the Rights Agreement, dated as of June 9, 2000, by and between the Company and Harris Trust and Savings Bank, as Rights Agent (the "RIGHTS Plan"), the "COMMON STOCK"). In consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINITIONS; INTERPRETATION. (a) For purposes of this Agreement, the following terms have the indicated meanings: "AFFILIATE" of a person means any other person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such person. "AMENDMENTS" has the meaning set forth in Section 8.1(g)(ii) hereof. "APPLICABLE SHARE MINIMUM" has the meaning set forth in the Series B Preferred Stock Certificate of Designations. "APPROVAL DATE" has the meaning set forth in Section 9.3. "BOARD OF DIRECTORS" means the board of directors of the Company. "CAUSE" has the meaning set forth in Section 9.7 hereof. "CLOSINGS" AND "CLOSING" have the meanings set forth in Section 3.2 hereof. "CLOSING DATE" and "CLOSING DATES" have the meanings set forth in Section 3.2 hereof. "CLOSING FEE" has the meaning set forth in Section 13.5 hereof. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMON STOCK" has the meaning set forth in the recitals hereof. "COMPETING TRANSACTION" has the meaning set forth in Section 7.6 hereof. "COMPANY" has the meaning set forth in the preamble hereof. "COMPANY REPORTS" has the meaning set forth in Section 4.5(a) hereof. "COMPANY REPORTS FINANCIAL STATEMENTS" has the meaning set forth in Section 4.5(b) hereof. "CONSOLIDATED SUBSIDIARY" means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which are consolidated for financial statement reporting purposes with the financial statements of such Person in accordance with GAAP. "CONSOLIDATED TOTAL ASSETS " means, as of any date of determination, the total assets of the Company and its Consolidated Subsidiaries as would be set forth in a consolidated balance sheet of the Company and its Consolidated Subsidiaries dated as of such date of determination and prepared in accordance with GAAP applied on a basis consistent with the Company's historical accounting practices. "CONVERSION AMOUNT" has the meaning set forth in Section 9.6(a) hereof. "CONVERSION/EXERCISE NOTICE" has the meanings set forth in Section 9.6(a) hereof. "CONVERSION SHARES" means shares of Common Stock issued or issuable upon conversion of the Series B Preferred Stock. "CO-SALE NOTICE" has the meaning set forth in Section 9.6(c) hereof. "CREDIT AGREEMENT" means the Amended and Restated Credit Agreement, dated as of March 8, 2002, by and among Penton Media, Inc., as borrower, the lenders party thereto, as lenders, Bank of America, N.A., as syndication agent, Bank One, N.A., and Fleet Bank National Association, as co-documentation agents, and The Bank of New York, as administrative agent, -2- as amended, restated, renewed, extended, restructured, supplemented, or modified from time to time, in accordance with the terms of this Agreement. A copy of the Credit Agreement as in effect on the date hereof is attached hereto as EXHIBIT E. "EBITDA" has the meaning set forth in, and for purposes of this Agreement shall be calculated in accordance with, the Credit Agreement in effect on the date hereof. "ELECTION NOTICE" has the meaning set forth in Section 9.6(b) hereof. "ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or by-products, asbestos, polychlorinated biphenyls, noise or radiation. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXECUTIVE LOAN PROGRAM" means (i) the Company's "Executive Loan Program," pursuant to which the Company loaned funds to certain executives of the Company for the purpose of allowing such executives to purchase shares of Common Stock, and (ii) any and all promissory notes and amendments thereto, employment agreements and amendments thereto, deferred share agreements and any and all other documents, whether entered into prior to or after the date of the Original Agreement, that evidence the loan of such funds or pertain in any way to the repayment of such loans (including providing a source of funds contemplated to be used for such repayment). "EVENT OF NONCOMPLIANCE" has the meaning set forth in Section 8A of the Series B Preferred Stock Certificate of Designations. "EXCLUSIVITY PERIOD" has the meanings set forth in Section 7.6 hereof. "FINAL CLOSING " has the meaning set forth in Section 3.2 hereof. "FINAL CLOSING DATE" has the meaning set forth in Section 3.2 hereof. "FINANCIAL OFFICER" means the chief financial officer, principal accounting officer, treasurer or controller of the Company. "FINANCIAL STATEMENTS" has the meaning set forth in Section 4.5(b) hereof. -3- "GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied. "GOVERNMENTAL AGENCY" means any federal, state, local, foreign or other governmental agency, instrumentality, commission, authority, board or body and the NYSE. "INDEBTEDNESS" of any Person means, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all obligations of such Person upon which interest charges are customarily paid (including, without limitation, margin debt), (iv) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (v) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the Ordinary Course of Business), (vi) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (vii) all guarantees by such Person of Indebtedness of others, (viii) all capital lease obligations of such Person, (ix) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (x) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances, (xi) the principal balance outstanding under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product of the Borrower or any Subsidiary where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP, and (xii) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted (e.g., take-or-pay obligations) or similar obligations. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. "INDEMNIFIED LIABILITIES" has the meaning set forth in Section 12.1(a) hereof. "INDEMNITEES" has the meaning set forth in Section 12.1(a) hereof. "INDENTURE" means that certain Indenture, dated as of June 28, 2001, by and among Penton Media, Inc. as Issuer, the Subsidiary Guarantors therein, and the Bank of New York as Trustee, with respect to the 10.375% $185,000,000 Senior Subordinated Notes due June 15, 2011, as amended, restated, renewed, extended, restructured, supplemented, or modified from time to time, in accordance with the terms of this Agreement. A copy of the Indenture as in effect on the date hereof is attached hereto as EXHIBIT F. "INITIAL CLOSING " has the meaning set forth in Section 3.1 hereof. "INITIAL CLOSING DATE" has the meaning set forth in Section 3.1 hereof. "INITIATING HOLDERS" has the meaning set forth in Section 9.9(a) hereof. -4- "INTELLECTUAL PROPERTY" means all patents, patent applications and inventions; all trademarks, service marks, trade dress, trade names and corporate names and all goodwill associated therewith; all registered copyrights; all registrations, applications and renewals for any of the foregoing; all trade secrets, know-how, technical and computer data, documentation and software, financial, business and marketing plans, customer and supplier lists and all other intellectual property rights; and all copies and tangible embodiments of the foregoing. "INVESTMENT" has the meaning assigned to such term in the Indenture as in effect on the date hereof. "INVESTMENT BANK" has the meaning set forth in Section 9.9(a) hereof. "IRS" means the Internal Revenue Service. "KNOWLEDGE" or "KNOW" when used with respect to the Company means the actual knowledge of the Company's executive officers after reasonable investigation. "LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. "LEVERAGE RATIO" means, as of any date of determination, the quotient obtained by dividing (x) Net Indebtedness as of such date of determination, by (y) EBITDA for the 12 month period ending on the last day of the fiscal quarter for which the most recent financial statements have been delivered to the Purchasers pursuant to Section 9.4. "LIQUIDATION VALUE" has the meaning set forth in the Series B Certificate of Designations. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the business, assets, condition (financial or otherwise), results of operations, cash flows, prospects, or properties of the Company and its Subsidiaries taken as a whole. "MOST RECENT BALANCE SHEET DATE" has the meaning set forth in Section 4.6 hereof. "NET INDEBTEDNESS" means, as of any date of determination, the sum of: (x) the total Indebtedness of the Company and its Consolidated Subsidiaries as would be set forth in a consolidated balance sheet of the Company and its Consolidated Subsidiaries dated as of such date of determination and prepared in accordance with GAAP applied on a basis consistent with the Company's historical accounting practices LESS the total cash and cash equivalents set forth on such consolidated balance sheet to the extent such cash and cash equivalents exceed $5 million, and (y) without duplication, the aggregate Liquidation Value (PLUS the aggregate Unpaid Dividends) of the Series B Shares then outstanding determined as of such date of determination. "NEW INDENTURE" means that certain Indenture, to be entered into by and among Penton Media, Inc. as Issuer, the Subsidiary Guarantors therein, and U.S. National Bank Association as Trustee, with respect to the Senior Notes, as amended, restated, renewed, -5- extended, restructured, supplemented, or modified from time to time, in accordance with the terms of this Agreement. "NYSE" means The New York Stock Exchange. "OFFERING CIRCULAR" means the Preliminary Confidential Offering Circular pursuant to which the Senior Notes shall be issued, a copy of which is attached hereto as EXHIBIT G "ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent with past practice (including with respect to quantity, quality and frequency). "ORIGINAL AGREEMENT" has the meaning set forth in the preamble hereof. "PERMITTED AFFILIATE TRANSACTION" means any Affiliate Transaction (as defined in Section 9.1(e)) (i) entered into by the Company or any of its Subsidiaries in the Ordinary Course of Business as part of a customary employment relationship, (ii) entered into pursuant to any Stock Option Plan, or (iii) entered into pursuant to the Executive Loan Program. "PERMITTED INVESTMENT" has the meaning assigned to such term in the Indenture as in effect on the date hereof. "PERMITTED LIEN" means: (1) Liens existing on the Closing Date and securing indebtedness of the Company and its Subsidiaries to the extent such indebtedness is disclosed on the Most Recent Balance Sheet Date or incurred since such date in the Ordinary Course of Business, including, without limitation, Liens securing the indebtedness of the Company and its Subsidiaries under the Credit Agreement, the guarantees thereof and any hedging agreements entered into between the Company and any Person which, at the time of the entry thereof, is a lender (or an Affiliate thereof) under the Credit Agreement; (2) Liens imposed by governmental authorities for taxes, assessments or other charges not yet subject to penalty or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP; (3) statutory liens of carriers, warehousemen, mechanics, material men, landlords, repairmen or other like Liens arising by operation of law in the Ordinary Course of Business; PROVIDED, that (A) the underlying obligations are not overdue for a period of more than 60 days, or (B) such Liens are being contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP; (4) Liens securing the performance of bids, trade contracts (other than borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the Ordinary Course of Business; -6- (5) easements, rights-of-way, zoning, similar restrictions and other similar encumbrances or minor imperfections of title which, in the aggregate, do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or any of its Subsidiaries) or interfere with the ordinary conduct of the business of the Company and any of its Subsidiaries taken as a whole; (6) Liens arising by operation of law in connection with judgments, only to the extent, for an amount and for a period not resulting in an Event of Default, (as defined in the Indenture as in effect on the date hereof), under the Indenture with respect thereto; (7) pledges or deposits made in the Ordinary Course of Business in connection with workers' compensation, unemployment insurance and other types of social security legislation; (8) Liens securing indebtedness of a Person existing at the time such Person becomes a Subsidiary or is merged with or into the Company or a Subsidiary or Liens securing Indebtedness incurred in connection with an Acquisition (as defined in the Indenture as in effect on the date hereof); provided, that such Liens were in existence prior to the date of such acquisition, merger or consolidation, were not incurred in anticipation thereof, and do not extend to any other assets; (9) leases or subleases granted to other Persons in the Ordinary Course of Business not materially interfering with the conduct of the business of the Company or any of its Subsidiaries or materially detracting from the value of the relative assets of the Company or any Subsidiary; (10) Liens arising from precautionary Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company or any of its Subsidiaries in the Ordinary Course of Business; and (11) Liens securing any Refinancing Indebtedness (as defined in the Indenture as in effect on the date hereof) incurred to refinance any Indebtedness that was previously so secured. "PERSON" or "PERSON" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "PLAN" means any employee benefit plan (as defined in Section 3(3) of ERISA), subject to Title IV of ERISA or the minimum funding requirements of Section 412 of the Code, maintained or contributed to by the Company or any Subsidiary at any time during the 5-calendar years immediately preceding the date of the Original Agreement. "PROXY STATEMENT " has the meaning set forth in Section 7.7(c) hereof. "PRIOR REGISTRATION AGREEMENTS" has the meaning set forth in Section 4.21 hereof. -7- "PROPOSED SELLER" has the meaning set forth in Section 9.6(b) hereof. "PROPOSED TRANSFEROR(S)" has the meaning set forth in Section 9.6(c) hereof. "PUBLIC SALE" means any sale pursuant to a registration under Section 5 of the Securities Act or any sale pursuant to Rule 144 of the Securities Act. "PURCHASER" and "PURCHASERS" have the meaning set forth in the preamble hereof. "PURCHASE PRICE" has the meaning set forth in Section 2.1 hereof. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement between the Company and the Purchasers in the form of EXHIBIT B hereto. "RELATED DOCUMENTS" means all documents and instruments to be executed or adopted by the Company in connection herewith, including the Series B Preferred Stock Certificate of Designations, the certificates evidencing the Series B Shares, the Warrants, the Registration Rights Agreement, the Resignation Agreements and the Amendments. "RESIGNATION AGREEMENTS" means, collectively, the letter agreements entered into among the Purchasers, the Company and not less than four (4) existing members of the Board of Directors (other than the Series B Directors), pursuant to which such directors agree to resign from the Board of Directors promptly upon the Purchasers' request at a time when the Purchasers are entitled to make such request pursuant to Sections 8B(ii), 8B(iii) and/or 8B(iv) of the Series B Preferred Stock Certificate of Designations. "RESTRICTED INVESTMENT" has the meaning assigned to such term in the Indenture as in effect on the date hereof. "RESTRICTED PARTIES" and "RESTRICTED PARTY" have the meanings set forth in Section 7.6 hereof. "RESTRICTED PAYMENT" has the meaning assigned to such term in the Indenture as in effect on the date hereof. "RIGHTS PLAN" has the meaning set forth in the first recital hereof. "SALE NOTICE" has the meaning set forth in Section 9.6(b) hereof. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SELLER" AND "SELLERS" have the meanings set forth in Section 9.6(b) hereof. "SENIOR NOTES" means the Senior Secured Notes Due 2007 of the Company being offered pursuant to the Offering Circular. -8- "SERIES B DIRECTORS" has the meaning set forth in Section 8.1(h). "SERIES B LIQUIDATION PREFERENCE" has the meaning set forth in the Series B Preferred Stock Certificate of Designations. "SERIES B PREFERRED STOCK CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations designating the rights and preferences of the Series B Preferred Stock adopted by the Board of Directors and attended as EXHIBIT A hereto. "SERIES B PREFERRED STOCK" has the meanings set forth in the recitals hereof. "SERIES B SHARES" has the meaning set forth in Section 2.1 hereof. "SHARE ISSUANCE APPROVAL" has the meaning set forth in Section 9.3 hereof. "STOCK OPTION PLAN" means any capital stock plan for the benefit of the Company's officers, employees or directors which has been or is approved (prior to the date of the Original Agreement or thereafter) by the Board of Directors or a committee thereof that has the authority to administer any such plan, including, without limitation, the Company's 1998 Equity and Performance Incentive Plan, the Company's 1998 Director Stock Option Plan, the Company's Management Stock Purchase Plan and the Company's Employee Stock Purchase Plan. "STOCKHOLDER APPROVAL" has the meaning set forth in Section 9.3 hereof. "STOCKHOLDER MEETING" has the meaning set forth in Section 7.7(c) hereof. "SUBSIDIARY" means any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by the Company or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by the Company. For purposes hereof, the Company shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if the Company, directly or indirectly, is allocated a majority of partnership, limited liability company, association or other business entity gains or losses, or is or controls the managing director or general partner of such partnership, limited liability company, association or other business entity. "TAX" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code ss.59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. -9- "TAX RETURNS" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "TRANSFER NOTICE" has the meaning set forth in Section 9.6(c) hereof. "UNPAID DIVIDENDS " means, with respect to any Series B Share, as of any date of determination, the accumulated dividends and accrued and unpaid but not yet accumulated dividends that have accumulated or accrued on such Series B Share in accordance with Section 2 of the Series B Preferred Certificate of Designations from the date of issuance of such Series B Share through and including such date of determination. "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that does not own any capital stock of, or own or hold any Lien on any property of, the Company or any other Subsidiary of the Company and that, at the time of determination, shall be an "Unrestricted Subsidiary" as designated by the Board of Directors in accordance with the Indenture (as in effect on the date hereof), it being agreed that the Company shall deliver to the Purchasers a copy of all documentation delivered to the trustee under the Indenture in order to give effect to such designation as and when such documentation is delivered to the trustee. "WARRANTS" has the meaning set forth in Section 3.2 hereof. "WARRANT SHARES" has the meaning set forth in Section 4.2(a) hereof. "2001 AUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section 4.5(b) hereof. (b) The words "HEREIN", "HEREOF" and "HEREUNDER" refer to this Agreement as a whole and not to any particular article, section or other subdivision of this Agreement. ARTICLE II ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS 2.1 NUMBER OF SHARES, WARRANTS AND PURCHASE PRICE. On the terms and subject to the conditions of this Agreement, at the Closings, the Company shall issue and sell to the Purchasers, and the Purchasers shall, severally and not jointly, purchase from the Company, in the aggregate, (i) 50,000 shares of Series B Preferred Stock (the "SERIES B SHARES"), and (ii) warrants to purchase 1,600,000 shares of Common Stock on the terms and subject to the conditions set forth therein, for an aggregate purchase price of $50,000,000 (the "PURCHASE Price"). The number of Series B Shares and Warrants to be purchased by each Purchaser at each Closing, and the portion of the Purchase Price to be paid in exchange therefore, shall be as specified on SCHEDULE 1 hereto. The parties agree that for tax and accounting purposes, as of the Closing Date the aggregate value of the Warrants is $1,600,000. -10- ARTICLE III CLOSING; CLOSING DELIVERIES 3.1 INITIAL CLOSING. Unless this Agreement shall have terminated pursuant to Article X, and subject to the satisfaction or waiver of the closing conditions for the Initial Closing set forth in Article VIII, the initial closing of the transactions contemplated hereby (the "INITIAL CLOSING") shall take place at the offices of Kirkland & Ellis, New York, New York at 10:00 a.m. on the third (3rd) Business Day after all of the conditions to the Initial Closing set forth in Article VIII (other than those that will be satisfied by the delivery of documents or tender of payment at the Initial Closing) are either satisfied or duly waived, or at such other time, place and/or date as shall be agreed upon by the parties hereto. The date upon which the Initial Closing occurs is referred to herein as the "INITIAL CLOSING DATE." 3.2 FINAL CLOSING. Unless this Agreement shall have been terminated prior to the Initial Closing, and subject to the satisfaction or waiver of the closing conditions for the Final Closing set forth in Article VIII on or prior to the Final Closing Date, the final closing of the transactions contemplated hereby (the "FINAL CLOSING") shall take place at 10:00 a.m. on the earlier to occur of (i) the 30th day after the Initial Closing Date and (ii) the date on which the Company closes the sale of the Senior Notes (such earlier date the "FINAL CLOSING DATE") at the offices of Kirkland & Ellis, New York, New York or at such other time, place and/or date as shall be agreed upon by the parties hereto. The Initial Closing and the Final Closing are sometimes referred to herein, collectively, as the "CLOSINGS" and each individually as a "CLOSING." The Initial Closing Date and the Final Closing Date are sometimes referred to herein, collectively, as the "CLOSING DATES" and each individually as a "CLOSING DATE." 3.3 PAYMENT FOR AND DELIVERY OF PREFERRED SHARES AND WARRANTS. At each Closing, the Company shall issue and deliver to each Purchaser (i) a stock certificate duly executed and registered in the name of such Purchaser evidencing ownership of the number of Series B Shares to be purchased by such Purchaser at such Closing as set forth opposite such Purchaser's name on SCHEDULE 1 hereto, and (ii) a warrant, in substantially the form attached as EXHIBIT C hereto, duly executed in favor of such Purchaser evidencing ownership of that number of warrants described in Section 2.1(ii) to be purchased by such Purchaser at such Closing as set forth opposite such Purchaser's name on SCHEDULE 1 hereto, in each case against payment by such Purchaser of the portion of the Purchase Price to be paid by such Purchaser at such Closing as set forth opposite such Purchaser's name on SCHEDULE 1 hereto by wire transfer of immediately-available funds to the account designated by the Company. The warrants issued to the Purchasers at the Closings pursuant to this Section 3.2, together with any common stock purchase warrant issued in substitution or exchange thereof, are referred to hereinafter as the "WARRANTS." -11- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to each Purchaser as follows: 4.1 EXISTENCE; QUALIFICATION; SUBSIDIARIES. The Company and each Subsidiary that is a corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has full corporate power and authority to conduct its business and own and operate its properties as now conducted, owned and operated. The copies of the Certificate of Incorporation and By-Laws of the Company and all amendments thereto are attached hereto as EXHIBIT D and are true, correct and complete copies of such documents. The Company and each Subsidiary of the Company is licensed or qualified as a foreign corporation and is in good standing in all jurisdictions where such Person is required to be so licensed or qualified, except where the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect. SCHEDULE 4.1 lists all Subsidiaries of the Company and their respective jurisdictions of incorporation. Except as set forth on SCHEDULE 4.1, the Company has no Subsidiaries and owns no capital stock or other securities of, and has not made any other investment in, any other entity. All of the issued shares of capital stock of each Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all Liens other than Liens securing the obligations under the Credit Agreement. 4.2 AUTHORIZATION, NONCONTRAVENTION AND ENFORCEABILITY; ISSUANCE OF SHARES. (a) The Company has full power and authority and has taken all required corporate and other action necessary to permit it to execute and deliver this Agreement and the Related Documents and to carry out the terms hereof and thereof and (other than receipt of the Stockholder Approval, which the Company shall seek to obtain in accordance with Section 9.3) to issue and deliver the Series B Shares, the Conversion Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants (the "WARRANT SHARES"), and none of such actions will (i) violate or conflict with any provision of the Certificate of Incorporation of the Company, the By-Laws of the Company or of any applicable law, regulation, order, judgment or decree or rule of the stock exchange where the Common Stock is listed, (ii) except as set forth on SCHEDULE 4.2, result in the breach of or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under any agreement, instrument or understanding to which the Company is a party or by which it is bound or by which it will become bound as a result of the transaction contemplated by this Agreement other than any such breach or default that would not have a Material Adverse Effect, or (iii) result in or constitute a "change in control" under any agreement, instrument or understanding to which the Company is a party or by which it is bound (other than the Stock Option Plans) or by which it will become bound as a result of the transaction contemplated by this Agreement. This Agreement and the Related Documents each constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general application related to the enforcement of creditor's rights generally and except as rights to indemnity thereunder may be limited by applicable federal securities laws. -12- (b) The Series B Shares have been duly authorized and, when issued and delivered in accordance with this Agreement, will be validly issued, fully paid and nonassessable, and will be free of any Liens (other than any restrictions on transfer under state and/or federal securities laws). The Warrants have been duly authorized and, when issued and delivered in accordance with this Agreement, will be validly issued and will be free of any Liens (other than any restrictions on transfer under state and/or federal securities laws). Subject to receipt of the Share Issuance Approval, when issued, the Conversion Shares and the Warrant Shares will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any Liens (other than any restrictions on transfer under state and/or federal securities laws). Subject to receipt of the Share Issuance Approval, the Conversion Shares and the Warrant Shares have been duly reserved for issuance upon conversion of the Series B Shares or exercise of the Warrants, as the case may be. Neither the issuance and delivery of the Series B Shares or Warrants nor the issuance and delivery of any Conversion Shares or Warrant Shares is subject to any preemptive right of any stockholder of the Company or to any right of first refusal or other similar right in favor of any Person which has not been waived. 4.3 CAPITALIZATION. As of the Closing, and upon the acceptance for filing of the Series B Preferred Stock Certificate of Designations, the authorized capital stock of the Company shall consist of: (i) 60,000,000 shares of Common Stock, of which 31,910,325 shares are outstanding, 22,133,373 shares are reserved for issuance upon conversion of the Series B Preferred Stock and exercise of the Warrants, 5,916,872 shares are reserved for issuance in connection with equity awards granted or permitted to be granted pursuant to the Stock Option Plans or upon the exercise of stock options granted or permitted to be granted pursuant to the Stock Option Plans, and 39,430 shares are held in treasury; and (ii) 2,000,000 shares of preferred stock, par value $0.01 per share, of which 600,000 shares are designated Series A Junior Preferred Stock and 50,000 shares are designated as Series B Preferred Stock. At the time of the Closing, all of the outstanding capital stock will be validly issued, fully paid and nonassessable and will have been issued in compliance with all applicable securities laws (including the provisions of the Securities Act and the rules and regulations promulgated thereunder). Except pursuant to a Stock Option Plan or as set forth on SCHEDULE 4.3, as of the Closing, neither the Company nor any of its Subsidiaries has granted or issued any options, convertible securities, warrants, calls, pledges, transfer restrictions (except restrictions imposed by federal and state securities laws), Liens, rights of first offer, rights of first refusal, antidilution provisions or commitments of any character relating to any issued or unissued shares of capital stock of the Company other than as contemplated in this Agreement and the Related Documents. 4.4 PRIVATE SALE; VOTING AGREEMENTS. (a) The Company has not violated any applicable federal or state securities laws in connection with the offer, sale and issuance of any of its capital stock. Assuming the accuracy of the Purchasers' representations contained herein, neither the offer, sale and issuance of the Series B Shares and Warrants hereunder nor the issuance and delivery of any Conversion Shares or Warrant Shares (assuming that the Warrant Shares are issued to the Purchasers) requires registration under the Securities Act or any state securities laws. -13- (b) To the Company's knowledge, there are no agreements obligating any of its stockholders to vote as directed by another Person or any proxies granted by any stockholder other than proxies submitted in connection with the Company's annual meeting of stockholders. 4.5 SEC REPORTS; FINANCIAL STATEMENTS. (a) The Company has filed all forms, reports and documents required to be filed by it with the SEC and has heretofore made available to the Purchasers (other than preliminary materials), in the form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended December 31, 1998, December 31, 1999 and December 31, 2000, respectively, (ii) all proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since January 1, 1999, and (iii) all other forms, reports and other registration statements filed by the Company with the SEC after January 1, 1998 and before the Closing Date, including, without limitation, the Form 10-Q for the quarter ended September 30, 2001, when filed (the forms, reports and other documents referred to in clauses (i), (ii) and (iii) above, together with any amendments or supplements thereto filed before the Closing Date and the Offering Circular, being referred to herein, collectively, as the "COMPANY REPORTS"). The Company Reports (i) were prepared, in all material respects, in accordance with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary is required to file any form, report or other document with the SEC. (b) Each of the financial statements (including, in each case, any notes thereto) contained in the Company Reports (the "COMPANY REPORTS FINANCIAL STATEMENTS") and the financial statements (including any notes thereto) required to be delivered to each Purchaser by the Company pursuant to Section 8.1(i)(viii) (the "2001 AUDITED FINANCIAL STATEMENTS" and, together with the Company Reports Financial Statements, the "FINANCIAL STATEMENTS") complies (or, in the case of the 2001 Audited Financial Statements, will comply) as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto and was prepared (or, in the case of the 2001 Audited Financial Statements, will be prepared) in all material respects in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X promulgated by the SEC) and each fairly presented (or, in the case of the 2001 Audited Financial Statements, will fairly present) in all material respects (subject to, in the case of the unaudited statements, to normal, recurring audit adjustments, none of which are material) the consolidated financial position, results of operations, stockholders' equity and cash flows of the Company and the Consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein. As of the dates of the Financial Statements, the Company had (or, in the case of the 2001 Audited Financial Statements, will have) no obligation, indebtedness or liability (whether accrued, absolute, contingent or otherwise, known or unknown, and whether due or to become due), which was not (or, in the case of the 2001 Audited Financial Statements, will not be) reflected or reserved against in the balance sheets or the notes thereto which are (or, in the case of the 2001 Audited Financial Statements, will be) part of the Financial Statements, except -14- for those incurred in the Ordinary Course of Business and which (or, in the case of the 2001 Audited Financial Statements, will be) are fully reflected on the Company's books of account and which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.6 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 4.6, since September 30, 2001 (the "MOST RECENT BALANCE SHEET DATE"), neither the Company nor any Subsidiary has: (a) incurred any liabilities other than current liabilities incurred, or obligations under contracts entered into, in the Ordinary Course of Business and for individual amounts not greater than $500,000; (b) paid, discharged or satisfied any claim, Lien or liability, other than any claim, Lien or Liability (A) reflected or reserved against on the balance sheet contained in the Financial Statements as of the Most Recent Balance Sheet Date (the "CURRENT BALANCE SHEET") and paid, discharged or satisfied in the Ordinary Course of Business or (B) incurred since the Most Recent Balance Sheet Date and paid, discharged or satisfied, in each case in the Ordinary Course of Business; (c) sold, leased, assigned or otherwise transferred any of its assets, tangible or intangible (other than sales of inventory in the Ordinary Course of Business and use of supplies in the Ordinary Course of Business); (d) permitted any of its assets, tangible or intangible, to become subject to any Lien (other than any Permitted Lien); (e) written off as uncollectible any accounts receivable other than (i) in the Ordinary Course of Business, or (ii) for amounts not greater than $50,000; (f) terminated or amended or suffered the termination or amendment of, other than in the Ordinary Course of Business, or failed to perform in all material respects all of its obligations or suffered or permitted any material default to exist under, any material agreement, license or permit; (g) suffered any damage, destruction or loss of tangible property (whether or not covered by insurance) which in the aggregate exceeds $100,000; (h) made any loan (other than intercompany advances) to any other Person (other than (i) advances to employees in the Ordinary Course of Business which do not exceed $5,000 individually or $25,000 in the aggregate, or (ii) loans made under the Company's Executive Loan Program; (i) canceled, waived or released any debt, claim or right in an amount or having a value exceeding $50,000; (j) other than a Permitted Affiliate Transaction, paid any amount to or entered into any agreement, arrangement or transaction with any Affiliate (including its officers, -15- directors and employees) outside the Ordinary Course of Business and which was not approved by a majority of the Company's disinterested directors; (k) declared, set aside, or paid any dividend or distribution with respect to its capital stock or redeemed, purchased or otherwise acquired any of its capital stock, other than pursuant to the Executive Loan Program; (l) other than in the Ordinary Course of Business, granted any increase in the compensation of any officer or employee or made any other change in employment terms of any officer or employee; (m) made any change in any method of accounting or accounting practice; (n) suffered or caused any other occurrence, event or transaction which, individually or together with each other occurrence, event or transaction, has had or could reasonably be expected to have a Material Adverse Effect; or (o) agreed, in writing or otherwise, to any of the foregoing. 4.7 LITIGATION. Except as set forth in SCHEDULE 4.7, as of the date of this Agreement and as of the date of the Original Agreement, no claim, suit, proceeding or investigation is pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any officer or director thereof or the Company's and the Subsidiaries' business which if decided adversely to any such person could have a Material Adverse Effect. 4.8 LICENSES, COMPLIANCE WITH LAW, OTHER AGREEMENTS, ETC. The Company and each Subsidiary have all material franchises, permits, licenses and other rights to allow it to conduct its business and is not in violation in any material respects of any order or decree of any court, or of any law, order or regulation of any Governmental Agency, or of the provisions of any material contract or agreement to which it is a party or by which it is bound, and neither this Agreement nor the Related Documents nor the transactions contemplated hereby or thereby will result in any such violation, except where the failure to have any such franchise, permit or license or any such violation would not in the aggregate be expected to have a Material Adverse Effect. The Company and each Subsidiary's businesses have been conducted in all material respects in compliance with all federal, state and local laws, ordinances, rules and regulations, except where such violations, defaults or noncompliance would not in the aggregate have a Material Adverse Effect. 4.9 THIRD-PARTY APPROVALS. Assuming the accuracy of the representations and warranties of the Purchasers contained in this Agreement, except as set forth on Schedule 4.9, the Company is not required to obtain any order, consent, approval or authorization of, or to make any declaration or filing with, any Governmental Agency or other third party (including under any state securities or "blue sky" laws) in connection with the execution and delivery of this Agreement or the Related Documents, or the consummation of the transactions contemplated hereby or thereby to occur on the Closing Date, except for (i) filings on Form D under the Securities Act, and (ii) any consents, approvals or authorizations the failure to obtain which would not in the aggregate have a Material Adverse Effect. -16- 4.10 DISCLOSURE. This Agreement, together with all exhibits and schedules hereto, and the agreements, certificates and other documents furnished to the Purchasers by the Company and its Subsidiaries in connection with the transactions contemplated under this Agreement, do not contain any untrue statement of a material fact or, as supplemented by the Company Reports filed by the Company on or after January 1, 2001 through the date of this Agreement, omit to state a material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading. 4.11 TANGIBLE ASSETS. The Company and its Subsidiaries own or lease all tangible assets used or reasonably necessary in connection with the conduct of its business. Other than the Liens imposed pursuant to the Credit Agreement, all material tangible assets are free from any Liens (other than Permitted Liens), are free from any material defects, have been maintained in accordance with normal industry practice and any regulatory standard or procedure to which such assets are subject, are in good operating condition and repair in all material respects (subject to normal wear and tear) and are suitable in all material respects for the purposes for which such assets are used or proposed to be used, other than Liens, defects and wear and tear which in the aggregate would not be expected to have a Material Adverse Effect. 4.12 INVENTORY. All inventory of the Company and its Subsidiaries, whether reflected on the Current Balance Sheet or otherwise, consists of a quality and quantity usable or salable in the Ordinary Course of Business, subject to the reserves set forth on the Current Balance Sheet and subject to normal rates of defect or obsolescence not inconsistent with the Company's historical experience. 4.13 OWNED REAL PROPERTY. Except as set forth on Schedule 4.13, the Company and its Subsidiaries own no real property. 4.14 REAL PROPERTY LEASES. There exists no event of default (nor, to the Company's knowledge, any event which with notice or lapse of time would constitute an event of default) with respect to the Company, any Subsidiary and, to the Company's knowledge, with respect to any other party thereto under any agreement pursuant to which the Company is the lessee or lessor of any real property, except for such defaults and defects in enforceability as would not in the aggregate be expected to have a Material Adverse Effect, and all such agreements are in full force and effect and enforceable against the lessor or lessee in accordance with their terms except for such defaults and defects in enforceability as would not in the aggregate be expected to have a Material Adverse Effect. 4.15 AGREEMENTS. Except as set forth in SCHEDULE 4.15, neither the Company nor any Subsidiary is in default, nor to the knowledge of the Company is there any basis for a valid claim of default, and to the Company's knowledge no event has occurred which, with notice or lapse of time, would constitute a default, under any agreement, arrangement or understanding to which the Company or any Subsidiary is a party, and to the knowledge of the Company no other Person is in default under any such agreement, in each case other than defaults which in the aggregate would not be expected to have a Material -17- Adverse Effect. Additionally, neither the Company nor any Subsidiary is party to any agreement the performance of which in accordance with its terms (including any termination provision thereof) would be expected to have a Material Adverse Effect (which term, for the purposes of this sentence only, shall not include the prospects of the Company and its Subsidiaries taken as a whole). 4.16 INTELLECTUAL PROPERTY. SCHEDULE 4.16 sets forth a complete list of (i) all patented or registered Intellectual Property owned by the Company, and all applications to register or patent any such Company Intellectual Property; and (ii) all trade names and material unregistered trademarks used by the Company in connection with its business. The Company owns and possesses all right, title and interest in and to, or has a valid and enforceable license to use, the Intellectual Property necessary for the operation of its business as currently conducted and as currently proposed to be conducted, and no claim by any third party contesting the validity, enforceability, use or ownership of such Intellectual Property has been made or, to the knowledge of the Company, is threatened. To the Company's knowledge, the Company has not infringed or misappropriated the Intellectual Property of any third party. 4.17 EMPLOYEES. Since the Most Recent Balance Sheet Date, no key employees and no group of employees has terminated, or to the knowledge of the Company plans to terminate, employment with the Company or any Subsidiary, as applicable. The Company is not a party to or bound by any collective bargaining agreement, nor has it experienced any strike, material grievance, material claim of unfair labor practice or other collective bargaining dispute. To the knowledge of the Company there is no organizational effort being made or threatened by or on behalf of any labor union with respect to its employees. To the Company's knowledge, the Company has not committed any unfair labor practice or materially violated any federal, state or local law or regulation regulating employers or the terms and conditions of its employees' employment, including laws regulating employee wages and hours, employment discrimination, employee civil rights, equal employment opportunity and employment of foreign nationals, except for such violations as would not in the aggregate be expected to have a Material Adverse Effect. 4.18 ERISA; EMPLOYEE BENEFITS. Each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service or has timely filed for a favorable determination letter from the Internal Revenue Service and no event has occurred since the date of the last determination letter that could reasonably be expected to materially adversely affect the qualified status of such Plan. Except for events or circumstances that would not have a Material Adverse Effect, each Plan is in full force and effect and has been administered in accordance with its terms and is and has been, and each plan administrator and fiduciary of a Plan is acting and has been acting, in compliance with all applicable requirements of the Code and ERISA (including the funding, reporting and disclosure and prohibited transaction provisions thereof) and other applicable laws, regulations and rulings in connection with each such Plan. No Plan has been terminated or partially terminated. The Company has no Plan which is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA. The Company or one of its Subsidiaries has made, accrued or provided for all contributions required under each Plan. To the knowledge of the Company, no event has occurred or is reasonably expected to occur with respect to any employee pension benefit plan of the Company or any member of the Company's controlled group (within the meaning of Section 414 of the Code), which could reasonably be expected to directly or indirectly result in any material liability (other than liability arising in the Ordinary Course of Business) to the Company or any member of its controlled group pursuant to Title IV of ERISA -18- or Section 412 of the Code. No Plan has incurred an "accumulated funding deficiency" within the meaning of Section 412 of the Code or Section 302 of ERISA. 4.19 ENVIRONMENT, HEALTH AND SAFETY. (a) The Company (as used in this Section 4.19, Company shall include the Company's Subsidiaries) has complied and is in compliance in all material respects with all Environmental and Safety Requirements that are applicable to the Company's business; (b) The Company has not received any written notice, report or other information regarding any liabilities or potential liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to the Company or its facilities and arising under Environmental and Safety Requirements; and (c) The Company has not, either expressly or by operation of law, assumed or undertaken any liability, including without limitation any obligation for corrective or remedial action, of any other Person relating to Environmental and Safety Requirements. 4.20 TRANSACTIONS WITH AFFILIATES. Except for Permitted Affiliate Transactions or as disclosed in the Company Reports filed by the Company on or after January 1, 2001 through the date of this Agreement, neither the Company nor any Subsidiary is party to any agreement, arrangement or transaction with any Affiliate which is material to the Company's and its Subsidiaries business, taken as a whole. 4.21 TAXES. Except as set forth on Schedule 4.21: (a) each of the Company and its Subsidiaries has filed all Tax Returns that it was required to file, and has paid all Taxes shown thereon as owing, except where the failure to file Tax Returns or to pay Taxes would not in the aggregate have a Material Adverse Effect; (b) none of the Company and its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal Tax Return (other than a group the common parent of which is the Company) or (B) has any Liability for the Taxes of any Person (other than any of the Company and its Subsidiaries) under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise; (c) each of the Company and its Subsidiaries has withheld and paid in all material respects all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party; (d) there is no dispute or claim concerning any Tax Liability of any of the Company and its Subsidiaries either (A) claimed or raised by any authority in writing or (B) as to which any of the directors and officers (and employees responsible for Tax matters) of the Company and its Subsidiaries has knowledge based upon personal contact with any agent of such authority and which is material to the Company and its Subsidiaries taken as a whole; and -19- (e) none of the Company and its Subsidiaries has any liability for any Person in connection with Taxes pursuant to the Combination Agreement by and among Penton Media, Inc., D-M Acquisition Corp., Pittway Corporation, Donohue Meehan Publishing Company, William C. Donohue and John J. Meehan, dated as of May 21, 1998 or for any Person pursuant to section 3.13 of such Combination Agreement. 4.22 OTHER INVESTORS. Set forth on SCHEDULE 4.22 is a list of all stockholders of the Company who as of the date hereof and to the Company's knowledge, based upon SEC filings of stockholders, after giving effect to the terms hereof, own more than 5% of the fully diluted common equity of the Company and sets forth such percentage ownership. 4.23 SENIORITY. No class of equity securities of the Company is senior or PARI PASSU to the Series B Preferred Stock in right of payment, whether upon liquidation, dissolution or otherwise. 4.24 INVESTMENT COMPANY. The Company is not, and is not controlled by or under common control with an affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 4.25 CERTAIN FEES. Other than any fees or expenses to be paid in accordance with Section 13.5 and other than fees to be paid to Credit Suisse First Boston (which fees shall not exceed $2,500,000), no fees or commissions will be payable by the Company to any broker, financial advisor, finder, investment banker, or bank with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of any Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company shall indemnify and hold harmless each of the Purchasers, their respective employees, officers, directors, agents and partners, and their respective affiliates (as such term is defined under Rule 405 promulgated under the Securities Act), from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect to any such claimed or existing fees. 4.26 FORM S-3 ELIGIBILITY. As of the date hereof, the Company is eligible to register securities for resale with the SEC on Form S-3 promulgated under the Securities Act. 4.27 LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The Company has not received notice (written or oral) from the NYSE that the Company is not in compliance with the listings or maintenance requirements of such Exchange. Upon conversion of the Series B Shares into shares of Common Stock and upon exercise of the Warrants, all Conversion Shares and Warrant Shares shall be listed on the NYSE. The authorization and issuance of the Series B Shares, the Warrants, the Conversion Shares and the Warrant Shares will not violate the listing or maintenance requirements of the NYSE, subject to receipt of the Share Issuance Approval, which the Company shall seek to obtain in accordance with Section 9.3. 4.28 REGISTRATION RIGHTS. The Company has not granted or agreed to grant to any Person any rights (including "piggy-back" registration rights) to have any securities of the Company registered with the SEC or any other governmental authority, except pursuant to the -20- agreements described on SCHEDULE 4.28 hereto (collectively, the "PRIOR REGISTRATION AGREEMENTS"). ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS Each of the Purchasers hereby represents and warrants, severally and not jointly, to the Company as follows: 5.1 AUTHORIZATION AND ENFORCEABILITY. Such Purchaser has full power and authority and has taken all action necessary to permit it to execute and deliver this Agreement and the other documents and instruments to be executed by it pursuant hereto and to carry out the terms hereof and thereof. This Agreement and such other documents and instruments each constitutes a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general application related to the enforcement of creditor's rights generally and except as rights to indemnity thereunder may be limited by applicable federal securities laws. 5.2 GOVERNMENT APPROVALS. Such Purchaser is not required to obtain any order, consent, approval or authorization of, or to make any declaration or filing with, any Governmental Agency in connection with the execution and delivery of this Agreement and the other documents and instruments to be executed by it pursuant hereto or the consummation of the transactions contemplated hereby and thereby, except for such order, consent, approval, authorization, declaration or filing as which has been or will be obtained or made. ARTICLE VI COMPLIANCE WITH SECURITIES LAWS 6.1 INVESTMENT INTENT OF THE PURCHASERS. Each Purchaser represents and warrants, severally and not jointly, to the Company that it is acquiring the Series B Shares and Warrants set forth opposite its name on SCHEDULE 1 for its own account, with no present intention of selling or otherwise distributing the same to the public. 6.2 STATUS OF SERIES B SHARES AND WARRANTS. Each Purchaser has been informed by the Company that the Series B Shares and Warrants have not been and will not be registered under the Securities Act or under any state securities laws and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering. 6.3 SOPHISTICATION AND FINANCIAL CONDITION OF PURCHASERS. Each Purchaser represents and warrants, severally and not jointly, to the Company that it is an "Accredited Investor" as defined in Regulation D under the Securities Act and that it considers itself to be an experienced and sophisticated investor and to have such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of an investment in the Series B Shares and the Warrants. Each Purchaser has been given access to such information regarding the Company and its Subsidiaries as it has requested and has had the opportunity to obtain additional -21- information as desired and to ask questions and has received answers regarding such information in order to evaluate the merits and the risks inherent in holding the Series B Shares, the Warrants and the Common Stock issuable upon conversion or exercise thereof, as the case may be. The facts set forth in the preceding sentence, shall not affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto, nor shall it affect the Company's indemnification obligations arising under Article XII hereof. 6.4 TRANSFER OF SERIES B SHARES, WARRANTS AND CONVERSION SHARES. (a) Each Purchaser has been informed by the Company and hereby agrees that Series B Shares, Warrants, Conversion Shares and Warrant Shares may be transferred only (i) pursuant to public offerings registered under the Securities Act, (ii) pursuant to Rule 144 promulgated under the Securities Act (or any similar rule then in force), (iii) to an Affiliate of the transferor, or (iv) subject to the conditions set forth in Section 6.4(b), pursuant to any other legally-available means of transfer. (b) In connection with any transfer of any Series B Shares, Warrants, Conversion Shares or Warrant Shares (other than a transfer described in Section 6.4(a)(i), (ii) or (iii)), the holder of such shares shall deliver written notice to the Company describing in reasonable detail the proposed transfer, together with an opinion of counsel (Kirkland & Ellis or such other counsel which, to the Company's reasonable satisfaction, is knowledgeable in securities law matters) to the effect that such transfer may be effected without registration of such shares under the Securities Act. The holder of the Securities being transferred shall not consummate the transfer until (i) the prospective transferee has confirmed to the Company in writing its agreement to be bound by the provisions of this Section 6.4 and Sections 9.6 and 9.7 as if it were a Purchaser, or (ii) such holder shall have delivered to the Company an opinion of such counsel that no subsequent transfer of such Securities shall require registration under the Securities Act. Promptly upon receipt of any opinion described in clause (ii) of the preceding sentence, the Company shall prepare and deliver in connection with the consummation of the proposed transfer, new certificates for the Securities being transferred that do not bear the legend set forth in Section 6.4(c). (c) Except as provided in Section 6.4(b), until transferred pursuant to clauses (a)(i) or (a)(ii) above, each certificate evidencing the ownership of Series B Shares, Warrants, Conversion Shares or Warrant Shares shall be imprinted with a legend substantially in the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON MARCH __, 2002 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES LAW. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN THE SERIES B CONVERTIBLE PREFERRED STOCK and warrant PURCHASE AGREEMENT DATED AS OF MARCH __, 2002 BETWEEN THE COMPANY (THE "COMPANY") AND THE OTHER PARTIES THERETO. THE COMPANY RESERVES THE -22- RIGHT TO REFUSE ANY TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE COMPANY. ARTICLE VII PRE-CLOSING COVENANTS OF THE COMPANY 7.1 ACCESS. From the date hereof until the Closing, the Company shall permit the Purchasers, their respective agents and representatives to have reasonable access to the management personnel, premises, books and records of the Company and its Subsidiaries upon reasonable notice during regular business hours. 7.2 CONDUCT OF THE COMPANY AND ITS SUBSIDIARIES. From the date hereof until the Closing, the Company shall, and the Company shall cause each of its Subsidiaries (other than any Unrestricted Subsidiary), to conduct their respective businesses in the Ordinary Course of Business and to use their reasonable best efforts to preserve intact their business organizations and relationships with third parties, to preserve the goodwill of the suppliers, customers and others having business relations with the Company or such Subsidiaries. Neither the Company nor its Subsidiaries shall (i) take or agree or commit to take any action that would make any representation and warranty set forth in Article III hereof (other than those expressed as being made as at a specific date) inaccurate in any respect at, or as of any time prior to, the Closing, or (ii) omit or agree or commit to omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. 7.3 FURTHER ACTION. The Company shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. The Company agrees, and agrees to cause its Subsidiaries, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement. 7.4 NOTICE OF CERTAIN EFFORTS. The Company shall promptly notify the Purchasers in writing of: (a) any notice or other communication to or from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (b) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (c) the occurrence, or failure to occur, of any event which occurrence or failure would cause any representation and warranty of the Company contained in Article III of this Agreement to be untrue or inaccurate in any material respect (or, in the case of any such -23- representation and warranty qualified by materiality or Material Adverse Effect, to be untrue or inaccurate in any respect) at any time from the date hereof to the Closing Date or that will result in the failure to satisfy any of the conditions specified in Section 8.1. Such notice (i) shall specify the representation or warranty so breached and (ii) will not be deemed to amend the Schedules attached hereto unless so accepted as such by the Purchasers in writing prior to the Closing, in which event such written acceptance shall be deemed to cure the breach of any such representation or warranty and amend and/or supplement the schedule related to such representation or warranty; and (d) any failure of the Company or any of its Subsidiaries to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement. 7.5 CONFIDENTIALITY. The parties hereto agree that the confidentiality agreement dated as of January 25, 2002, between the Company and ABRY (the "CONFIDENTIALITY AGREEMENT") shall continue in full force and effect. 7.6 NO SOLICITATION. Until the earlier of (x) the termination of this Agreement pursuant to Section 10.1 and (y) the Final Closing Date (the period from the date of this Agreement until such earlier date is referred to herein as, the "EXCLUSIVITY PERIOD"): (i) neither the Company and its affiliates nor any of their respective subsidiaries (collectively, the "RESTRICTED PARTIES" and each a "RESTRICTED PARTY") shall, directly or indirectly, initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal that constitutes, or would reasonably be expected to result in, a Competing Transaction (as defined below), or enter into or maintain or continue discussions or negotiate with any person in furtherance of such inquiries or to obtain a Competing Transaction, or agree to or endorse any Competing Transaction, or authorize or permit any of their respective officers, directors, employees, consultants or agents or any investment banker, financial advisor, attorney, accountant or other representative retained by any Restricted Person to take any such action; and (ii) the Company shall notify ABRY and Sandler in writing (as promptly as practicable, but in any event, within two days) if any written or oral request for information or proposal relating to a Competing Transaction is made and shall keep ABRY and Sandler promptly advised of all such requests and proposals, and shall provide ABRY and Sandler with a copy of any such written requests or proposals and a summary of all oral proposals or requests. As used herein, the term "COMPETING TRANSACTION" shall mean the offer or sale of equity or equity-linked securities of the Company to a third party other than (i) the Purchasers or (ii) between the Initial Closing Date and the Final Closing Date, other stockholders of the Company so long as the offer or sale to such other stockholders does not include, individually or in the aggregate, more than 5,000 shares of Series B Preferred Stock and 160,000 Warrants. 7.7 PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS MEETING. (a) As promptly as practicable following the date of this Agreement, the Company shall prepare and file with the SEC a proxy statement relating to the matters set forth in Section 9.3 for which Stockholder Approval is sought (as amended or supplemented from time to time, the "PROXY STATEMENT") and the Company shall use reasonable best efforts to respond -24- as promptly as practicable to any comments of the SEC with respect thereto and to cause the Proxy Statement to be mailed to the Company's stockholders as promptly as practicable following the date of this Agreement. The Company shall promptly notify the Purchasers upon the receipt of any comments from the SEC or its staff or any request from the SEC or its staff for amendments or supplements to the Proxy Statement and shall provide the Purchasers with copies of all correspondence between the Company and its representatives, on the one hand, and the SEC and its staff, on the other hand. Notwithstanding the foregoing, prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, the Company (i) shall provide the Purchasers an opportunity to review and comment on such document or response, (ii) shall include in such document or response all comments reasonably proposed by the Purchasers and (iii) shall not file or mail such document or respond to the SEC prior to receiving the Purchasers' approval, which approval shall not be unreasonably withheld or delayed. (b) If requested by the Company, each Purchaser shall use its commercially reasonable efforts to assist the Company in preparing the Proxy Statement, including, without limitation, providing to the Company any information regarding such Purchaser required to be included therein. (c) The Company shall, as promptly as practicable following the date of this Agreement, establish a record date (which will be as promptly as reasonably practicable following the date of this Agreement) for, duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining the Stockholder Approval sought in accordance with Section 9.3 (the "Stockholders Meeting"). The Company shall, through its Board of Directors, recommend to its stockholders that they adopt this Agreement, and shall include such recommendation in the Proxy Statement. 7.8 APPROVAL BY THE COMPANY'S STOCKHOLDERS. The Board of Directors shall recommend the approval, adoption and authorization of the transactions with the Purchasers, and the Company shall take all reasonable lawful action to solicit such approval, adoption and authorization. No amendment or supplement to the Proxy Statement will be made by the Company without consultation with the Purchasers and each of their legal counsels. ARTICLE VIII CONDITIONS PRECEDENT 8.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS AT INITIAL CLOSING. The obligation of each Purchaser to purchase the Series B Shares and the Warrants at the Initial Closing in accordance with Section 3.3 shall be subject to the satisfaction or waiver by such Purchaser of the following conditions precedent on or prior to the Initial Closing Date: (a) the Series B Preferred Stock Certificate of Designations shall have been filed with the Secretary of State of the State of Delaware and shall be in full force and effect as of the Initial Closing Date and shall not have been modified in any manner since that date; (b) as of the Initial Closing Date there shall be an absence of (i) any general suspension of trading in, or limitation on prices for securities on any national securities exchange -25- or in the over-the-counter market, (ii) the declaration of any banking moratorium or any suspension of payments in respect of banks or any material limitation (whether or not mandatory) on the extension of credit by lending institutions in the United States, or (iii) the commencement or escalation of a war or material armed hostilities or other international or national calamity involving the United States and having an adverse effect on the functioning of the financial markets in the United States; (c) as of the Initial Closing Date the representations and warranties made by the Company in Article IV hereof shall be true and correct in all respects to the extent they are qualified by materiality or Material Adverse Effect, and to the extent not so qualified shall be true and correct in all material respects; (d) the Company shall have complied in all material respects with the covenants set forth in this Agreement that are required to be performed by the Company on or before the Initial Closing Date; (e) as of the Initial Closing Date, the Company shall have received written confirmation from the NYSE that, subject to receipt of the Stockholder Approval (which the Company shall seek to obtain in accordance with Section 9.3), (i) the authorization and issuance of the Series B Shares, the Warrants, the Conversion Shares and the Warrant Shares will not violate any of the stockholder approval or voting rules or any listing or maintenance requirements of the NYSE, and (ii) the NYSE will not object, under Rule 313 of the NYSE Company Guide, to the terms of the Series B Shares as set forth in the Series B Preferred Stock Certificate of Designations; (f) as of the Initial Closing Date, the Company shall have paid the Closing Fee to the Purchasers participating in the Initial Closing and reimbursed ABRY for its transaction expenses, in each case as contemplated under Section 13.5 of this Agreement; (g) as of the Initial Closing Date the Company shall have received all consents and approvals, including, without limitation, Board of Director, governmental and third party consents or approvals, that are required to be obtained in connection with the transactions contemplated under this Agreement and the Related Documents (other than receipt of the Stockholder Approval, which the Company shall seek to obtain in accordance with Section 9.3); (h) three individuals designated by the Purchasers (the "SERIES B DIRECTORS") shall have been duly nominated and elected to serve as members of the Board of Directors, effective as of the Initial Closing Date (it being acknowledged and agreed that none of the Series B Directors shall be compensated for serving as members of the Board of Directors, other than customary expense reimbursement consistent with the Company's policies in respect thereto); and (i) the following documents and items shall have been delivered to each Purchaser at or prior to the Initial Closing: (i) a fully executed copy of the Credit Agreement, satisfactory in form and substance to such Purchaser (which Credit Agreement, without further amendment or modification thereto, shall be in effect on the Initial Closing Date); -26- (ii) fully executed and delivered amendments to each of the Prior Registration Agreements, satisfactory in form and substance to such Purchaser (collectively, the "AMENDMENTS"), which Amendments shall be in effect on the Initial Closing Date without further amendment or modification thereto; (iii) fully executed and delivered Resignation Agreements, satisfactory in form and substance to such Purchaser, which Resignation Agreements shall be in effect on the Closing Date without further amendment or modification thereto; (iv) the written opinion of Jones, Day, Reavis & Pogue, counsel to the Company, dated as of the Initial Closing Date and satisfactory in form and substance to such Purchaser; (v) a counterpart of the Registration Rights Agreement duly executed and delivered by the Company; (vi) certificates evidencing ownership of the Series B Shares and the Warrants purchased by such Purchaser, in each case duly executed and delivered by the Company; (vii) a certificate of a duly authorized officer of the Company dated as of the Initial Closing Date certifying that (A) the closing conditions described in Section 8.1(a) through Section 8.1(h) have been satisfied, and (B) the resolutions of the Board of Directors attached thereto (which resolutions shall have, among other things, (x) authorized all of the transactions contemplated by this Agreement and the Related Documents, approved the Related Documents (including, without limitation, the Series B Preferred Stock Certificate of Designations), (y) duly nominated and elected the Series B Directors to the Board of Directors effective as of the Closing Date, and (z) resolved that (i) the Series B Directors and each other member of the Board of Directors elected by the holders of Series B Shares from time to time in accordance with the terms thereof, if any, shall be "Continuing Directors" as such term is defined in the Indenture and as it will be defined in the New Indenture and (ii) the election of such directors shall not cause a "Change in Control" as such term is defined in the Credit Agreement) were duly adopted and have not been rescinded or amended; (viii) a copy of the consolidated financial statements of the Company and its Consolidated Subsidiaries for the fiscal year ended December 31, 2001, together with the report of the Company's auditors with respect thereto, in each case satisfactory in form and substance to such Purchaser in its sole discretion; (ix) a fully executed amendment to the Rights Plan satisfactory in form and substance to the Purchasers, which amendment shall be in effect on the Initial Closing Date without further amendment or modification thereto; and (x) such other documents relating to the transactions contemplated hereby as the Purchasers may reasonably request; and -27- (j) each other Purchaser shall have funded the portion of the Purchase Price payable by such Purchaser at the Initial Closing in accordance with Section 3.3. 8.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS AT THE FINAL CLOSING. The obligations of each Purchaser to purchase the Series B Shares and the Warrants at the Final Closing in accordance with Section 3.3 shall be subject to the satisfaction or waiver of the following conditions precedent on or prior to the Final Closing Date: (a) the Initial Closing shall have occurred; (b) as of the Final Closing Date neither the Company nor any Subsidiary shall have suffered or caused to have been suffered since September 30, 2001, any occurrence, event or transaction which, individually or together with each other occurrence, event or transaction, shall have had or could reasonably be expected to have had a Material Adverse Effect; (c) as of the Final Closing Date the representations and warranties made by the Company in Article IV hereof shall be true and correct in all respects to the extent they are qualified by materiality or Material Adverse Effect, and to the extent not so qualified shall be true and correct in all material respects; (d) the Company shall have complied in all material respects with the covenants set forth in this Agreement that are required to be performed by the Company on or before the Final Closing Date; (e) each Purchaser shall have received a certificate of a duly authorized officer of the Company dated as of the Final Closing Date certifying that the closing conditions described in Section 8.2(b) through Section 8.2(d) and Section 8.2(h) have been satisfied; (f) each Purchaser shall have received the written opinion of Jones, Day, Reavis & Pogue, counsel to the Company, dated as of the Final Closing Date and satisfactory in form and substance to such Purchaser; (g) each other Purchaser shall have funded the portion of the Purchase Price payable by such Purchaser at the Final Closing in accordance with Section 3.3; and (h) on or prior to the Final Closing Date, the Company shall have amended the Stock Option Plans and not less than 80% of the options, awards or securities granted to the Company's executive officers thereunder as of the Final Closing Date, and such amendments shall provide that the transactions contemplated by this Agreement and the Related Documents shall not constitute a "change of control" under the terms of such plans, options, awards or securities or otherwise result in the acceleration of vesting of any portion of such options, awards or securities. 8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the Company to sell and issue the Series B Shares and the Warrants to any Purchaser at any Closing in accordance with Section 3.3 shall be subject to the delivery by such Purchaser of (i) the Purchase Price payable by such Purchaser at such Closing in accordance with Section 3.3, and (ii) an executed letter agreement pursuant to which each Series B Director nominated by such Purchaser pursuant -28- to Section 9.7 hereof agrees to resign from the Board of Directors at such time as no shares of Preferred Stock remain outstanding. ARTICLE IX COVENANTS 9.1 RESTRICTED ACTIONS. Without the prior written consent of the holders of a majority of the Series B Shares then outstanding, the Company shall not, and shall not permit any Subsidiary (other than an Unrestricted Subsidiary) to, directly or indirectly: (a) use the proceeds from the sale of the Series B Shares and the Warrants hereunder other than (i) to refinance indebtedness of the Company and its Subsidiaries outstanding under the Credit Agreement in accordance with the terms of this Agreement, (ii) to pay the Closing Fee and other fees and expenses associated with the transactions contemplated by this Agreement and the Related Documents, and (iii) for working capital and general corporate purposes; (b) make any Restricted Payment or Restricted Investment unless (i) the Leverage Ratio, as of such time, is less than 6.0 to 1.0, and (ii) such Restricted Payment or Restricted Investment would otherwise be permitted under the terms of the Indenture as in effect on the date hereof after application of a deemed Restricted Payment in an amount equal to the aggregate Liquidation Value of the Series B Shares then outstanding (plus all Unpaid Dividends thereon), in each case other than any transaction under the Executive Loan Program to the extent such transaction is otherwise permitted under the Indenture; (c) except for the execution of the Credit Agreement contemplated by Section 8.1(i)(i) on the date hereof and the execution of the New Indenture having terms not more restrictive than those reflected in the "Description of Notes" set forth in the Offering Circular, enter into any agreement, instrument, arrangement or understanding (or amend or modify the terms of any existing agreement, instrument, arrangement or understanding), including the Indenture, the Credit Agreement and New Indenture, which by its terms would (under any circumstance) (i) modify the definition of "Change of Control," "Continuing Directors" or "Voting Equity Interests" as defined therein or modify any other definition contained therein that effects the meaning of the term "Change of Control" as defined therein, or (ii) restrict the Company's ability to comply with the terms of this Agreement or any of the Related Documents in any respect, including, without limitation, the Company's ability to pay any amount due to the Purchasers under this Agreement or the Series B Preferred Certificate of Designations; PROVIDED, HOWEVER, that this Section 9.1(c) shall not restrict the Company's ability to refinance any Indebtedness outstanding under the Credit Agreement, the Indenture or the New Indenture to the extent that the terms of the applicable refinancing indebtedness are not more restrictive (including with respect to the maturity date thereof) with respect to the Company's ability to pay any amount due to the Purchasers under this Agreement or the Series B Preferred Stock Certificate of Designations than the terms set forth in the Credit Agreement, the Indenture or the New Indenture, as applicable. -29- (d) (x) prior to the 6th anniversary of the Initial Closing Date, sell, lease, transfer or otherwise dispose of any asset of the Company or its Subsidiaries, including the capital stock of any Subsidiary (other than an Unrestricted Subsidiary and other than any pledge of such capital stock to secure Indebtedness of the Company or its Subsidiaries), unless (i) such transaction is conducted in the Ordinary Course of Business, (ii) the aggregate net proceeds received in connection with all of such transactions in any given fiscal year (whether paid in cash or property) does not exceed (A) 5% of the Consolidated Total Assets as of the last day of the prior fiscal year or (B) 5% of EBITDA for the 12 month period ending on the last day of the prior fiscal year, in each case determined in accordance with this Agreement, or (iii) in the case of a transaction involving capital stock of a Subsidiary, such transaction is between the Company or its wholly-owned Subsidiary, on the one hand, and any other wholly-owned Subsidiary of the Company, on the other hand; or (y) from and after the 6th anniversary of the Initial Closing Date, sell, lease, transfer or otherwise dispose of any asset of the Company or its Subsidiaries, including the capital stock of any Subsidiary (other than any pledge of such capital stock to secure Indebtedness of the Company or its Subsidiaries to the extent such pledge was made prior to the 6th anniversary of the Initial Closing Date); (e) (x) prior to the 6th anniversary of the Initial Closing Date, enter into or suffer to exist any contract, agreement, arrangement or transaction with any Affiliate (an "AFFILIATE TRANSACTION"), other than a Permitted Affiliate Transaction, unless such Affiliate Transaction (i) is determined by a majority of the Board of Directors to be fair and reasonable to the Company, and no less favorable to the Company than could have been obtained in an arm's length transaction with a non-Affiliate, and (ii) is approved by a majority of the members of the Board of Directors that are disinterested in such transaction; or (y) from and after the 6th anniversary of the Initial Closing Date, enter into or suffer to exist any Affiliate Transaction; (f) materially alter its principal line of business as conducted on the Closing Date or engage in any business unless such business reasonably related to such principal line of business as conducted on the Closing Date; (g) grant any options to purchase shares of Common Stock or other compensatory equity awards, or securities convertible into or exchangeable for shares of Common Stock, other than options, awards or securities (i) granted pursuant to a Stock Option Plan, (ii) with respect to awards or securities that have an exercise price, having an exercise price equal to or greater than the "Market Value per Share" (as defined in the Company's 1998 Equity and Performance Incentive Plan) of the Common Stock as of the date of such grant, and (iii) accounting for, alone or together with all other options, awards or securities granted under the Stock Option Plans, not more than 15% of the outstanding Common Stock determined as of the day before the Closing Date on a fully diluted, as-if-converted basis; (h) from and after the 6th anniversary of the Initial Closing Date, incur, create, become or be liable in any matter with respect to or permit to exist any Indebtedness other than Indebtedness existing as of such date and Indebtedness incurred thereafter under the revolving credit portion of the Credit Agreement in the Ordinary Course of Business to provide for the Company's working capital needs; -30- (i) from and after the 6th anniversary of the Initial Closing Date, acquire (by merging or consolidating with, or by purchasing an equity interest in or a portion of the assets of, or by any other manner) any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any material assets other than inventory and other assets to be sold or used in the Ordinary Course of Business; (j) from and after the 6th anniversary of the Initial Closing Date, hire or terminate any executive officer of the Company or modify or alter in any way the employment terms relating to any executive officer of the Company or any of its Subsidiaries; or (k) from and after the Stockholders Meeting, nominate a number of directors for election to the Board of Directors (other than as may be required in accordance with the Series B Preferred Stock Certificate of Designations) such that the total number of directors on the Board of Directors would be greater than 12 directors. 9.2 REQUIRED ACTIONS. For so long as any of the Series B Shares remain outstanding, the Company shall and, where applicable, shall cause each Subsidiary (other than any Unrestricted Subsidiary) to: (a) maintain a Leverage Ratio of not more than 7.5 to 1.0, determined in accordance with this Agreement 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; (b) use its reasonable best efforts to maintain at all times a valid listing for the Common Stock on a national securities exchange or the NYSE; (c) maintain and keep its properties in good repair, working order and condition, and from time to time make all necessary or desirable repairs, renewals and replacements, so that its businesses may be properly and advantageously conducted in all material respects at all times; (d) maintain or cause to be maintained with financially sound and reputable insurers that have a rating of "A" or better as established by Best's Rating Guide (or an equivalent rating with such other publication of a similar nature as shall be in current use), (i) public liability and property damage insurance with respect to their respective businesses and properties against loss or damage of the kinds and in amounts customarily carried or maintained by companies of established reputation engaged in similar businesses, and (ii) directors' and officers' liability insurance providing at least the same coverage and amounts and containing terms and conditions which are not less advantageous in any material respect, in each case than the directors' and officers' liability insurance maintained by the Company as of the Closing Date; (e) pay and discharge when due all tax liabilities, assessments and governmental charges or levies imposed upon its properties or upon the income or profits therefrom (in each case before the same become delinquent and before penalties accrue thereon), unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP, consistently applied, are being maintained by the Company; -31- (f) at all times cause to be done all things necessary to maintain, preserve and renew its corporate existence and all material licenses, authorizations and permits necessary to the conduct of its businesses; PROVIDED, that the Company may liquidate, merge out of existence or otherwise dissolve immaterial Subsidiaries and Unrestricted Subsidiaries; (g) comply with all applicable laws, rules and regulations of all Government Agencies, the violation of which could reasonably be expected to have a Material Adverse Effect; (h) maintain proper books of record and account which present fairly in all material respects its financial condition and results of operations and make provisions on its financial statements for all such proper reserves as in each case are required in accordance with GAAP, consistently applied; (i) reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purposes of issuance upon conversion of the Series B Shares and exercise of the Warrants, such number of shares of Common Stock as are issuable upon the conversion of all outstanding Series B Shares or exercise of the Warrants. All shares of Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all Taxes, liens and charges. The Company shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately transmitted by the Company upon issuance); (j) use its reasonable best efforts to have each individual who will replace an Agreed Director on the Board of Directors execute a resignation agreement in substantially the form executed by the Agreed Directors prior to such individual's nomination and election to serve on the Board of Directors; PROVIDED, that the Company shall not nominate any individual who refuses to execute a resignation agreement; and (k) use its reasonable best efforts to at all times file all reports (including annual reports, quarterly reports and the information, documentation and other reports) required to be filed by the Company under the Exchange Act and Sections 13 and 15 of the rules and regulations adopted by the SEC thereunder, and the Company shall use its reasonable best efforts to file each of such reports on a timely basis, and take such further action as any holder or holders of Securities may reasonably request, all to the extent required to enable such holders to sell Securities pursuant to Rule 144 adopted by the SEC under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC and to enable the Company to register securities with the SEC on Form S-3 or any similar short-form registration statement and upon the filing of each such report deliver a copy thereof to each holder of the Series B Shares (or, if the Company is no longer subject to the requirements of the Exchange Act, provide reports in substantially the same form and at the same times as would be required if it were subject to the Exchange Act). -32- 9.3 STOCKHOLDER APPROVAL. The Company will take all reasonable action necessary in accordance with applicable laws, statutes, rules, regulations, determinations of any arbitrator, court, other Governmental Agency and stock exchange, and its Certificate of Incorporation and By-Laws to convene a meeting of stockholders to be held on or before June 28, 2002 (the "APPROVAL DATE") to obtain the approval and authorization by the Company's stockholders of: (i) the issuance of Common Stock upon conversion of the Series B Preferred Stock; (ii) the issuance of Common Stock upon exercise of the Warrants; (iii) the amendment of the Certificate of Incorporation in order (A) to effect the increase in the number of authorized shares of Common Stock (x) to 435,000,000, if the approvals referred to in clauses (i) and (ii) above are not obtained, or (y) to 155,000,000, if the approvals in clauses (i) and (ii) are obtained, and (B) that the Board of Directors, in its sole discretion, will have the power, right and authority to establish the size of the Board of Directors from time to time; and (iv) such other matters as may be necessary or advisable to consummate the transactions contemplated by this Agreement (such approval by stockholders of the matters described in clauses (i), (ii) and (iii)(A) is referred to herein as the "SHARE ISSUANCE APPROVAL" and such approval by Stockholders of all such matters is herein referred to as the "STOCKHOLDER APPROVAL"). If the Company fails to obtain the Stockholder Approval at such meeting of stockholders, it shall use its reasonable best efforts to obtain the Stockholder Approval at each successive stockholders' meeting until the Stockholder Approval is obtained. 9.4 INFORMATION RIGHTS. The Company shall furnish to each Purchaser: (a) within 90 days after the end of each fiscal year, its Form 10-K containing its audited consolidated balance sheet and related statements of income, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 90 days after the end of each fiscal year, (i) its consolidating balance sheets and related statements of income, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year and (ii) an unaudited income statement for each of the Company's business lines, all certified by one of its Financial Officers as presenting fairly in all material respects the results of operations of the Company on a consolidating basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (c) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, its Form 10-Q containing its consolidated balance sheet and related statements of income, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year; -33- (d) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, (i) its consolidating balance sheet and related statements of income, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year and (ii) an unaudited income statement for each of the Company's business lines, all certified by one of its Financial Officers as presenting fairly in all material respects the results of operations of the Company on a consolidating basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (e) concurrently with any delivery of financial statements under clauses (a) or (c) above, a certificate of a Financial Officer of the Company (i) certifying as to whether an Event of Noncompliance has occurred and, if an Event of Noncompliance has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 9.1(b), 9.1(c), 9.1(d) and 9.2(a) of this Agreement, and (iii) stating whether any change in GAAP or in the application thereof has occurred since the Most Recent Balance Sheet Date and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; (f) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Event of Noncompliance (which certificate may be limited to the extent required by accounting rules or guidelines); (g) by no later than December 31 of each fiscal year, a budget and business plan for the immediately succeeding fiscal year in the form approved by the Company's board of directors, together with a business forecast for such succeeding fiscal year, all in form, scope and detail satisfactory to the Purchasers and on a quarterly basis for each fiscal quarter of such succeeding fiscal year; (h) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Company or any Subsidiary with the SEC, or any Governmental Agency succeeding to any or all of the functions of the SEC, or with any national securities exchange, or distributed by the Company to its stockholders generally, as the case may be; (i) promptly after the same are delivered to the members of the Board of Directors, copies of all business plans and other financial plans relating to the Company and/or its Subsidiaries; and (j) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Company or any Subsidiary, or compliance with the terms of the this Agreement or any Related Document, as such Purchaser may reasonably request. -34- 9.5 ACCESS RIGHTS. The Company shall permit the Purchasers, their respective agents and representatives to have reasonable access to the management personnel, premises, books and records of the Company and its Subsidiaries upon reasonable notice during regular business hours. 9.6 RESTRICTIONS ON CONVERSION/EXERCISE/TRANSFERS. (a) From and after the Initial Closing Date until the date on which the Company receives the Share Issuance Approval, if any Purchaser intends (i) to convert all or any portion of its Series B Shares, or (ii) to exercise all or any portion of its Warrants, then prior to effecting such conversion or exercise such Purchaser shall deliver written notice (a "CONVERSION/EXERCISE NOTICE") of such intention, which could be included as part of any Sale Notice delivered pursuant to Section 9.6(b) below, to each other Purchaser not less than 10 days prior to the date of such proposed conversion or exercise. Such notice shall describe in reasonable detail the number of Series B Shares to be converted or the number of Warrants to be exercised (the "CONVERSION AMOUNT"). Each of the other Purchasers shall be entitled to convert or exercise a ratable and PRO RATA portion of the Conversion Amount (as described below) by delivering written notice of such election to the Purchaser which delivered such Conversion/Exercise Notice within 5 days after delivery of the Conversion/Exercise Notice. Each Purchaser who timely delivers such an election notice shall be entitled to convert or exercise its ratable and PRO RATA portion of the Conversion Amount, based on the number of Series B Shares or Warrants held by such electing Purchaser, as applicable, and the aggregate number of Series B Shares or Warrants held by the Purchaser who delivered the Conversion/Exercise Notice and all other Purchasers who elected to participate in the proposed conversion or exercise. If none of the other Purchasers elects to participate in the proposed conversion or exercise in accordance with this Section 9.6(a), then during the 5 day period beginning on the sixth day after delivery of the Conversion/Exercise Notice, the Purchaser which delivered such notice may convert all of the Series B Shares or exercise all of the Warrants, as applicable, described on the relevant Conversion/Exercise Notice. Thereafter, the conversion of shares of Series B Stock and the exercise of Warrants by such Purchaser shall be subject to the notice requirement set forth in the first sentence of this Section 9.6(a). (b) From and after the Initial Closing Date, if any Purchaser intends (i) to convert all or any portion of its Series B Shares, (ii) to exercise all or any portion of its Warrants, or (iii) to sell all or any of the shares of Common Stock acquired by such Purchaser upon conversion of Series B Shares or exercise of Warrants to one or more third parties in a Public Sale, in each case at a time when the market price of the Common Stock is less than the then Applicable Share Minimum, such Purchaser (the "PROPOSED SELLER") shall deliver written notice (the "SALE NOTICE") of such intention to each other Purchaser not less than 5 days prior to the date of such proposed conversion, exercise or sale. Such Sale Notice shall describe in reasonable detail the terms of such proposed sale, including the then Applicable Share Minimum, the number of Series B Shares to be converted, the number of Warrants to be exercised and the number of shares of Common Stock to be sold (and, in such case, the proposed sale price). Each of the other Purchasers shall be entitled to participate ratably in such exercise or sale (as described below) by delivering written notice of such election (an "ELECTION NOTICE") to the Proposed Seller within 3 days after delivery of the Sale Notice. Each Purchaser who timely delivers an Election Notice shall be entitled (i) to convert its ratable portion of the Series B Shares described -35- in the Sale Notice, based on the number of Series B Shares held by such Purchaser and the aggregate number of Series B Shares held by the Proposed Seller and all Purchasers who elected to participate in the proposed sale (collectively, the "SELLERS" and each a "SELLER"), (ii) to exercise its ratable portion of the Warrants described in the Sale Notice, based on the number of Warrants held by such Purchaser and the aggregate number of Warrants held by the Sellers, and/or (iii) to sell its ratable portion of the shares of Common Stock described in the Sale Notice, based on the number of the shares of Common Stock held by such Purchaser and the aggregate number of the shares of Common Stock held by the Sellers. Any such sale shall be effectuated in one or more coordinated sales executed by a single, mutually acceptable broker, and each sell order issued to such broker shall provide for the pro rata sale of shares of Common Stock held by the Sellers based on the number of shares of Common Stock held by each Seller and the aggregate number of Conversion Shares held by all of the Sellers. If none of the other Purchasers delivers an Exercise Notice to the Proposed Seller in accordance with this Section 9.6(b), then during the 30 day period beginning on the sixth day after delivery of the Sale Notice, the Proposed Seller may convert all of the Series B Shares, exercise all of the Warrants, and sell all of the shares of Common Stock described on the relevant Sale Notice. Thereafter, the conversion of shares of Series B Stock, the exercise of Warrants and the sale of shares of Common Stock by the Proposed Seller shall be subject to the notice requirement set forth in the first sentence of this Section 9.6(b). This Section 9.6(b) shall terminate automatically when either the ABRY Parties, on the one hand, or Sandler, on the other hand, cease to hold 5,000 or more Series B Shares (as may be adjusted to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). (c) From and after the Initial Closing Date, if the ABRY Parties, on the one hand, or Sandler, on the other hand, intend to sell more than 10,000 Series B Shares (as may be adjusted to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect) to one or more third parties in a single transaction or a series of related transactions, such Purchaser(s) (the "PROPOSED TRANSFEROR(S)") shall deliver written notice (the "TRANSFER NOTICE") of such intention to each other Purchaser not less than 10 days prior to the date of such proposed sale. Such Transfer Notice shall describe in reasonable detail the terms of such proposed sale, including the identity of the transferee(s), the type and number of Series B Shares to be sold, the purchase price and the anticipated closing date of such sale. Each of the other Purchasers shall be entitled to participate ratably in such sale (as described below) by delivering written notice of such election (a "CO-SALE NOTICE") to the Proposed Transferor(s) within 5 days after delivery of the Transfer Notice. Each Purchaser who timely delivers a Co-Sale Notice shall be entitled to sell its ratable portion of the Series B Shares described in the Transfer Notice on identical terms as those set forth in the Transfer Notice, based on the number of Series B Shares held by such electing Purchaser and the aggregate number of Series B Shares held by all Purchasers participating in such sale. If none of the other Purchasers delivers a Co-Sale Notice to the Proposed Transferor(s) in accordance with this Section 9.6(c), then during the 30 day period beginning on the sixth day after delivery of the Transfer Notice, the Proposed Transferor(s) may sell all of the Series B Shares described on such Transfer Notice. Thereafter, the sale of Series B Shares by the Proposed Transferor(s) shall be subject to the notice requirement set forth in the first sentence of this Section 9.6(c). 9.7 ELECTION OF SERIES B DIRECTORS. In the election of the Series B Directors pursuant to Section 5B of the Series B Preferred Stock Certificate of Designations, each Purchaser agrees to -36- vote its Series B Shares and to take such other actions necessary or desireable to ensure that the Series B Directors are comprised of at least two (2) nominees of ABRY and one (1) nominee of Sandler. No Series B Director shall be removed from the Board or any committee thereof (with or without Cause) other than at the written request of the Purchaser(s) which have the right to designate such Series B Director hereunder (determined on the basis of a vote or written consent of the relevant Purchaser(s)); PROVIDED, HOWEVER, that the holders of a majority of the Series B Shares may remove any Series B Director for Cause but a replacement Series B Director may only be designated by the Purchaser(s) which have the right to designate such Series B Director hereunder. In the event that any Series B Director designated hereunder for any reason ceases to serve as a member of the Board or any committee thereof during such representative's term of office, the resulting vacancy on the Board or such committee shall be filled by a representative designated by the Purchaser(s) which have the right to designate the director who ceases to serve. For purposes hereof, the term "CAUSE" means, with respect to any Person, (i) the commission of a felony or a crime involving moral turpitude or the commission of any other act or omission by such Person involving dishonesty, disloyalty or fraud with respect to the Company, or (ii) conduct by such Person which brings the Company into substantial public disgrace or disrepute. This Section 9.7 shall terminate automatically upon the earlier to occur of (x) the date on which Sandler, on the one hand, or the ABRY Parties, on the other hand, cease to own Series B Shares having an aggregate Liquidation Value of $3,750,000, and (y) the date on which the Purchasers cease to hold, in the aggregate, at least 25,000 shares of Series B Preferred Stock (subject to adjustment to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). 9.8 COVENANT REGARDING STOCK OPTION PLANS. The Company shall use its commercially reasonable efforts to obtain the amendments described in Section 8.2(h) hereof. From and after the date of the Original Agreement the Company has not, and from and after the date of this Agreement, the Company shall not, grant any options to purchase shares of Common Stock or other compensatory equity awards, or securities convertible into or exchangeable for shares of Common Stock if the transactions contemplated by this Agreement and the Related Documents would constitute a "change of control" under the terms of such options, awards or securities or otherwise result in the acceleration of vesting of any portion of such options, awards or securities. 9.9 SALE OF THE COMPANY. (a) Subject to Section 9.9(d) below, if the Company breaches or fails to perform or observe its obligations arising under Section 9.2(a) hereof and such breach, failure or non-observance continues to exist for four consecutive fiscal quarters, then the holders of a majority of the Series B Shares then outstanding (the "INITIATING HOLDERS") shall have the right to cause the Company to seek a buyer for all of the assets or issued and outstanding capital stock of the Company. The Initiating Holders shall exercise their rights under Section 9.9(a) by delivery of a written notice to the Company and all other Purchasers to such effect, and identifying an investment bank (the "INVESTMENT BANK"), which firm shall be reasonably acceptable to the Board of Directors, to conduct such sale. (b) Upon delivery to the Company of a written notice referred to in Section 9.9(a), the Company and each other party hereto agrees to use their reasonable best efforts to -37- take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable to effect the sale of the Company in accordance with the following provisions (it being understood that no Purchaser shall be required under this Section 9.9 to vote in favor of such sale or to sell their shares of the Company's capital stock pursuant to such sale): (i) The Investment Bank will establish procedures reasonably acceptable to the Initiating Holders to effect an orderly sale of the Company with the objective of achieving the highest practicable value for the stockholders of the Company within a reasonable period of time. The Company agrees to cooperate with the Investment Bank in accordance with such procedures, and agrees to use its reasonable best efforts to reach agreement on the optimum structure and the terms and conditions for the sale of the Company (including whether such sale will be by merger or sale of assets or capital stock) and will retain independent legal counsel of appropriate expertise, reasonably acceptable to the Initiating Holders, to advise the Company on such sale. To the extent permitted by applicable law, the Company agrees to pay all fees and expenses of the Investment Bank and such legal counsel, as well as the fees and expenses of one law firm retained by the Initiating Holders in connection with such sale. (ii) If the sale of the Company is structured as a sale of assets, the Company agrees to execute and deliver or cause to be executed and delivered all documents, certificates, agreements and other writings and to take, or cause to be taken, all such actions as may be necessary or desirable to vest in the purchaser(s) thereof good and marketable title to such assets. (iii) The rights and obligations of the Purchasers under this Section 9.9(b) shall be subject to the following conditions: (A) upon the consummation of any such sale of the capital stock of the Company, each Purchaser will receive consideration in an amount per Series B Share at least equal to the Series B Liquidation Preference in effect from time to time; (B) upon the consummation of any such sale of the capital stock of the Company, all of the Purchasers will receive the same form and amount of consideration per share of capital stock or if any Purchaser is given an option as to the form of consideration to be received, all Purchasers participating therein will be given the same option; and (C) in the case of any such sale of the issued capital stock of the Company, the liability of any Purchaser for misrepresentation or indemnity will not exceed an amount equal to the proceeds received by such Purchaser in such sale (PROVIDED, that in no event shall any Purchaser be required to make any representation or warranty concerning the Company, its Subsidiaries or their respective businesses or to provide any indemnity with respect to the breach of any such representations and warranties). -38- (c) In connection with any sale of the Company conducted pursuant to this Section 9.9, the Company shall take all actions necessary to ensure that the Rights Plan shall not apply to such transaction. (d) Notwithstanding the foregoing, the rights set forth in this Section 9.9 shall not be effective at any time when representatives of the Purchasers constitute a majority of the Board of Directors, whether elected pursuant to Section 5B or Section 8B of the Series B Preferred Stock Certificate of Designations or otherwise. 9.10 OBSERVER RIGHTS. The Company shall give the ABRY Parties and Sandler written notice of each meeting of the Board of Directors (or any of its Subsidiaries' board of directors) and any committees thereof, at the same time and in the same manner as notice is given to the directors of the relevant board and the Company shall permit one representative of the ABRY Parties and one representative of Sandler to attend, as observers, all such meetings; PROVIDED, that in the case of telephonic meetings, such parties need receive only actual notice thereof at the same time and in the same manner as notice is given to the directors of the relevant board and representatives of such parties shall be given the opportunity to listen to such telephonic meetings. Each representative shall be entitled to receive all written materials and other information (including, without limitation, copies of meeting minutes) given to directors of the board in connection with such meetings at the same time such materials and information are given to such directors. The Company shall give written notice of any action by written consent in lieu of a meeting of directors of the Company (or any of its Subsidiaries) to each Purchaser prior to the effective date of such consent describing in reasonable detail the nature and substance of such action. The rights arising under this Section 9.10 shall terminate automatically with respect to any Purchaser that ceases to hold any Preferred Shares, Warrants, Conversion Shares or Warrants Shares. ARTICLE X TERMINATION 10.1 TERMINATION. This Agreement may be terminated at any time prior to the Initial Closing: (a) by ABRY, so long as ABRY is not in material breach of any covenant or agreement set forth in this Agreement, if there has been a material breach by the Company or any of its Subsidiaries of any covenant or agreement of the Company set forth in this Agreement; (b) by Sandler and with respect to Sandler only, so long as Sandler is not in material breach of any covenant or agreement set forth in this Agreement, if, prior to the Initial Closing Date, this Agreement is amended or any provision hereof is waived without the prior written consent of Sandler; (c) by the Company, so long as the Company is not in material breach of any covenant or agreement set forth in this Agreement, if there has been a material breach by the Purchasers of any covenant or agreement of the Purchasers set forth in this Agreement; (d) by mutual written agreement of the Company and ABRY; and -39- (e) by either the Company or ABRY if the Initial Closing shall not have been consummated on or before March 28, 2002. The party or parties desiring to terminate this Agreement pursuant to any of clauses (a) through (e) above shall give written notice of such termination to the other parties. 10.2 EFFECT OF TERMINATION. If this Agreement is terminated as permitted by Section 10.1, this Agreement shall forthwith become void and there shall be no liability or obligation of any party (or any stockholder, partner, director, officer, employee, agent, consultant or representative of such party) to the other parties to this Agreement, except that (i) ARTICLE XIII shall continue in full force and effect, and (ii) nothing herein will relieve any party from liability for any breach of any representation, warranty, agreement or covenant contained herein prior to such termination. ARTICLE XI SURVIVAL 11.1 SURVIVAL. The representations and warranties of the Purchasers and the Company contained herein shall survive the Closing and expire on the date that is 30 days after the date on which the Company files with the SEC its Form 10-K for the fiscal year ending on December 31, 2003; EXCEPT, that (i) the representations and warranties made by the Company in Sections 4.1, 4.2, 4.3, 4.25, 4.26, 4.27 and 4.28 shall survive indefinitely, and (ii) the representations and warranties made by the Company in Section 4.21(e) shall survive for the duration of any applicable statute of limitations (including any extensions thereof). ARTICLE XII INDEMNIFICATION 12.1 INDEMNIFICATION. (a) In consideration of the Purchasers' execution and delivery of this Agreement and acquiring the Series B Shares and Warrants hereunder and in addition to all of the Company's other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Purchasers and all of their respective Affiliates, officers, managers, advisors, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "INDEMNITEES") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses (including, without limitation, costs of suit and all reasonable attorneys' fees and expenses) in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought) or other liabilities, losses or, in the case of clauses (i) and (ii) below (other than any breach of the covenant provided in Section 9.2(a)), diminution in value (the "INDEMNIFIED LIABILITIES"), incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (i) the breach of any representation or warranty contained in this Agreement or in any Related Document, (ii) the breach of any promise, agreement or covenant contained in this Agreement or in any Related Document, or (iii) the execution, delivery, performance or -40- enforcement of this Agreement and any other instrument, document or agreement executed pursuant hereto by any of the Indemnitees. The Company shall reimburse the Indemnitees for the Indemnified Liabilities as such Indemnified Liabilities are incurred. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnitee or any officer, director or controlling Person of such Indemnitee and will survive the transfer of securities. (b) Any Person entitled to indemnification hereunder (i) will give prompt written notice to the Company of any claim with respect to which it seeks indemnification and (ii) if the Indemnified Liability arises from a third party claim, unless in such Indemnitee's reasonable judgment a conflict of interest between the Company and such Indemnitee may exist with respect to such third party claim, will permit the Company to assume the defense of such claim with counsel reasonably satisfactory to the Indemnitee. If such defense is assumed, the Company will not be subject to any liability for any settlement made by the Indemnitee without its consent (but such consent will not be unreasonably withheld). If the Company is not entitled to, or elects not to, assume the defense of a claim hereunder, the Company will not be obligated to pay the fees and expenses of more than one counsel for all Indemnitees with respect to such claim, unless in the reasonable judgment of any Indemnitee a conflict of interest may exist between such Indemnitee and any other of such Indemnitees with respect to such claim. (c) Payments by the Company pursuant to Section 12.1(a) shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment recovered by the Indemnitees from any third party with respect thereto. (d) Notwithstanding anything to the contrary set forth herein, no Indemnitee shall be entitled to be indemnified pursuant to this Article XII for any Indemnified Liability that arises as a result of the Indemnitee's gross negligence or willful misconduct; PROVIDED, HOWEVER, that the Company shall pay the expenses incurred by any such Indemnitee hereunder, as such expenses are incurred, in connection with any proceeding in advance of the final disposition, so long as the Company receives an undertaking by such Indemnitee to repay the full amount advanced if there is a final determination that such Indemnitee failed the standards set forth in above or that such Indemnitee is not entitled to indemnification as provided herein for other reasons; and PROVIDED, FURTHER, that the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such Indemnitee was either grossly negligent or engaged in willful misconduct. ARTICLE XIII GENERAL PROVISIONS 13.1 PUBLIC ANNOUNCEMENTS. Neither the Purchasers nor the Company shall make, or permit any agent or Affiliate to make, any public statements, including, without limitation, any -41- press releases, with respect to this Agreement and the transactions contemplated hereby without the prior written consent of the other, except as may be required by law or the rules of any exchange on which the Company's securities may be listed or any inter-dealer quotation system in which the Company's securities may be authorized to be quoted. The Company and the Purchasers shall jointly agree on the content and substance of all public announcements concerning the transactions contemplated hereby. 13.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, including each subsequent holder of Series B Shares, Warrants, Conversion Shares or Warrant Shares. Except as otherwise specifically provided herein, this Agreement shall not be assignable by any party without the prior written consent of the other parties hereto; PROVIDED, that each Purchaser shall be entitled to assign its rights and obligations under this Agreement to any transferee of Series B Shares or Warrants without the consent of any other party hereto so long as (i) the transfer of such Series B Shares or Warrants to such transferee is made in accordance with Section 6.4 hereof and (ii) such transferee agrees in writing to be bound by the terms of this Agreement. 13.3 ENTIRE AGREEMENT. This Agreement, the Related Documents and the Confidentiality Agreement and each other writing referred to herein or delivered pursuant hereto constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior arrangements or understandings, including, without limitation, the Original Agreement. 13.4 NOTICES. All notices, requests, consents and other communications provided for herein shall be in writing and shall be (i) delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class, registered or certified mail, postage prepaid, or (iv) sent by reputable overnight courier service, fees prepaid, to the recipient at the address or telecopy number set forth below, or such other address or telecopy number as may hereafter be designated in writing by such recipient. Notices shall be deemed given upon personal delivery, seven days following deposit in the mail as set forth above, upon acknowledgment by the receiving telecopier or one day following deposit with an overnight courier service. TO THE COMPANY, TO: ------------------ Penton Media, Inc. 1300 East 9th Street Cleveland, Ohio 44114 Attention: Thomas L. Kemp Facsimile: (216) 696-0836 WITH A COPY, WHICH SHALL NOT CONSTITUTE NOTICE TO THE COMPANY, TO: Jones, Day, Reavis, & Pogue North Point 901 Lakeside Drive Cleveland, Ohio 44114 Attention: Christopher M. Kelly Facsimile No.: (216) 579-0212 -42- TO ANY ABRY PARTY OR THE PURCHASERS, TO: c/o ABRY Partners, LLC 111 Huntington Avenue 30th Floor Boston, Massachusetts 02199 Attn: Dan Budde Peni Garber Facsimile No.: (617) 859-8797 WITH A COPY, WHICH SHALL NOT CONSTITUTE NOTICE TO ABRY OR ANY PURCHASER, TO: Kirkland & Ellis Citigroup Center 153 East 53rd Street New York, NY 10022-4675 Attention: Joshua N. Korff Facsimile No.: (212) 446-4900 TO SANDLER OR THE PURCHASERS, TO: -------------------------------- Sandler Capital Management 767 Fifth Avenue, 45th Floor New York, NY 10153 Attn: Hannah C. Stone Facsimile No.: (212) 826-0280 WITH A COPY, WHICH SHALL NOT CONSTITUTE NOTICE TO SANDLER OR ANY PURCHASER, TO: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Douglas A. Cifu Facsimile No.: (212) 757-3990 or, in each case, to such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. 13.5 CLOSING FEE; PURCHASERS' FEES AND EXPENSES (a) On each Closing Date, in consideration for the services the Purchasers or their Affiliates performed in structuring and arranging the transactions contemplated by this Agreement and the Related Documents, the Company will pay to each Purchaser (or its Affiliate) a transaction fee equal to 1.5% of the portion of the Purchase Price paid by such Purchaser to the Company on such Closing Date (the "CLOSING FEE"), by wire transfer of immediately available funds to an account indicated to the Company by such Purchaser. In addition, on the Initial Closing Date, the Company shall reimburse ABRY (up to a maximum reimbursable amount of $100,000 unless otherwise agreed to by the Company) for (i) the reasonable fees and expenses of Kirkland & Ellis incurred by ABRY in connection with the documentation, negotiation and -43- consummation of the transactions contemplated by this Agreement and the Related Documents, and (ii) all other reasonable fees and out-of-pocket expenses incurred by ABRY in connection with the transactions contemplated hereunder. After the Closings, the Company agrees to reimburse the Purchasers for all reasonable fees and expenses (including reasonable legal fees) incurred in connection with any future amendment to, waiver of or the enforcement by the Purchasers of any of its rights arising under this Agreement or any of the Related Documents, or in connection with the review of the Proxy Statement or any other proxy statement prepared in connection with any meeting of the Company's stockholders at which the Company shall seek to obtain the Stockholder Approval. (b) If this Agreement is terminated by ABRY pursuant to Section 10.1 as a result of (i) a Restricted Party's breach, directly or indirectly, of any of the provisions of Section 7.6 hereof; or (ii) the failure by the Company to issue Series B Shares or Warrants that it is obligated to issue at the Initial Closing pursuant to Section 3.3 hereof, then, in addition to any other remedies or claims any Purchaser may have in law or in equity, the Company shall promptly pay to ABRY an amount equal to $500,000 plus all legal, accounting, investment banking and other fees and expenses incurred by ABRY in connection with the transactions contemplated under this Agreement and the Related Documents (up to a maximum reimbursable amount of $100,000). Any amounts payable under this Section 13.5(b) shall be paid by wire transfer of immediately available funds to the accounts designated to the Company by ABRY. 13.6 AMENDMENT AND WAIVER. No amendment or waiver of any provision of this Agreement shall be effective, unless the same shall be in writing and signed by the Company and the holders of a majority of the Series B Shares outstanding at the time such amendment or waiver is proposed; PROVIDED, that any such amendment or waiver which adversely affects any Purchaser or is prejudicial to such Purchaser relative to the other Purchaser cannot be effected without the prior written consent of such adversely affected or prejudiced Purchaser. No such waiver shall operate as a waiver of, or estoppel with respect to, any subsequent or other failure. No failure by any party to take any action against any breach of this Agreement or default by any other party shall constitute a waiver of such party's right to enforce any provision hereof or to take any such action. 13.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. 13.8 HEADINGS. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement. 13.9 SPECIFIC PERFORMANCE. The Company, on the one hand, and the Purchasers, on the other hand, acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement. It is accordingly agreed that the parties shall be entitled to specific performance and injunctive relief as remedies for any such breach, these remedies being in addition to any of the remedies to which they may be entitled at law or equity. -44- 13.10 REMEDIES CUMULATIVE. Except as otherwise provided herein, the remedies provided herein shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any other remedies against any other party hereto. 13.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE. 13.12 JURISDICTION, WAIVER OF JURY TRIAL, ETC. (a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SERIES B SHARES, WARRANTS, CONVERSION SHARES OR WARRANT SHARES OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 13.4, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. (b) EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE SERIES B SHARES, WARRANTS, CONVERSION SHARES OR WARRANT SHARES OR ANY OF THE OTHER RELATED DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE PURCHASER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE PURCHASER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT PURCHASER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN. 13.13 NO THIRD PARTY BENEFICIARIES. Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the parties hereto and their successors or assigns, any rights or remedies under or by reason of this Agreement. -45- 13.14 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 13.15 TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge or any duty hereunder shall fall upon a Business Day, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding Business Day. * * * * * -46- IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Amended and Restated Series B Convertible Preferred Stock and Warrant Purchase Agreement as of the date first above written. PENTON MEDIA, INC. By: /s/ Preston L. Vice --------------------------------------- Name: Preston L. Vice Title: Senior Vice President and Secretary ABRY MEZZANINE PARTNERS, L.P. By: ABRY Mezzanine Investors, L.P., its general partner By: ABRY Mezzanine Holdings, LLC, its general partner By: /s/ Peni Garber --------------------------------------- Name: Peni Garber Title: Clerk ABACUS MASTER FUND, LTD. By: /s/ Douglas Banks --------------------------------------- Name: Douglas Banks Title: Director SANDLER CAPITAL PARTNERS V, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM, Corp., a General Partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V FTE, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM, Corp., a General Partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V GERMANY, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM, Corp., a General Partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SCHEDULE 1 Allocation of Series B Shares, Warrants and Purchaser Price
- ------------------------------------------------------------------------------------------------------------------------- PURCHASER INITIAL INITIAL INITIAL FINAL FINAL FINAL CLOSING CLOSING CLOSING CLOSING CLOSING CLOSING SERIES B WARRANTS PURCHASE PRICE SERIES B WARRANTS PURCHASE SHARES SHARES PRICE - ------------------------------------------------------------------------------------------------------------------------- ABRY Mezzanine Partners, L.P. 28,000 896,000 $28,000,000 2,000 64,000 $2,000,000 - ------------------------------------------------------------------------------------------------------------------------- ABACUS Master Fund, Ltd. - - 5,000 160,000 $5,000,000 - ------------------------------------------------------------------------------------------------------------------------- Sandler Capital Partners V, L.P. 8,559 273,888 $8,559,000 2,140 68,480 $2,140,000 - ------------------------------------------------------------------------------------------------------------------------- Sandler Capital Partners V FTE, L.P. 3,126 100,032 3,126,000 782 25,024 $782,000 - ------------------------------------------------------------------------------------------------------------------------- Sandler Capital Partners V Germany, L.P. 315 10,080 315,000 78 2,496 $78,000 - ------------------------------------------------------------------------------------------------------------------------- TOTAL 40,000 1,280,000 $40,000,000 10,000 320,000 $10,000,000 - -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- PURCHASER TOTAL SERIES TOTAL TOTAL B SHARES WARRANTS PURCHASE PRICE - -------------------------------------------------------------------------------- ABRY Mezzanine Partners, L.P. 30,000 960,000 $30,000,000 - -------------------------------------------------------------------------------- ABACUS Master Fund, Ltd. 5,000 160,000 $5,000,000 - -------------------------------------------------------------------------------- Sandler Capital Partners V, L.P. 10,699 342,368 $10,699,000 - -------------------------------------------------------------------------------- Sandler Capital Partners V FTE, L.P. 3,908 125,056 $3,908,000 - -------------------------------------------------------------------------------- Sandler Capital Partners V Germany, L.P. 393 12,576 $393,000 - -------------------------------------------------------------------------------- TOTAL 50,000 1,600,000 $50,000,000 - -------------------------------------------------------------------------------- EXHIBIT A Series B Preferred Stock Certificate of Designations (see attached) EXHIBIT B Registration Rights Agreement (see attached) EXHIBIT C Form of Warrants (see attached) EXHIBIT D Certificate of Incorporation and Bylaws (see attached) EXHIBIT E Credit Agreement (see attached) EXHIBIT F Indenture (see attached) EXHIBIT G Offering Circular EX-99 5 ex3sc13d-penton.txt EXHIBIT 3 EXHIBIT 3 to SCHEDULE 13D CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK OF PENTON MEDIA, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware PENTON MEDIA, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "CORPORATION"), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY: That pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Corporation's Restated Certificate of Incorporation, the said Board of Directors as of March 7, 2002, adopted the following resolution creating a series of 50,000 shares of Preferred Stock designated as "Series B Convertible Preferred Stock": RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of the Certificate of Incorporation, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares thereof and the voting and other powers, preferences and relative, participating, optional or other rights of the shares of such series and the qualifications, limitations and restrictions thereof are as follows: Section 1. DESIGNATION AND NUMBER OF SHARES. The designation of the series of Preferred Stock authorized hereby shall be "Series B Convertible Preferred Stock" (the "SERIES B PREFERRED STOCK"). The maximum number of shares of Series B Preferred Stock shall be 50,000 shares. Section 2. DIVIDENDS. 2A. GENERAL OBLIGATION. When and as declared by the Corporation's Board of Directors (the "BOARD OF DIRECTORS") and to the extent permitted under the General Corporation Law of the State of Delaware, the Corporation shall pay preferential dividends to the holders of the Series B Preferred Stock as provided in this SECTION 2. Subject to SECTION 8B(I) and except as otherwise provided herein, dividends on each share of Series B Preferred Stock (a "SHARE") shall accrue, whether or not declared or paid, on a daily basis at the Dividend Rate on the sum of (x) the Liquidation Value thereof and (y) all dividends that have accumulated thereon in accordance with SECTION 2B below, from and including the date of issuance of such Share to and including the date on which (i) the Liquidation Value of such Share (plus all Unpaid Dividends thereon) is paid to the holder thereof, (ii) such Share is converted into Common Stock as provided herein, or (iii) such Share is redeemed as provided herein. Such dividends shall accrue whether or not they have been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and such dividends shall be cumulative such that all accrued and unpaid dividends shall be fully paid or declared with funds irrevocably set apart for payment before any dividends, distributions, redemptions or other payments may be made with respect to any Junior Securities. Such dividends (to the extent declared) shall be payable in cash, semi-annually in arrears on the last day of June and December of each year beginning June 30, 2002, and if such date is not a Business Day, then on the next succeeding Business Day (the "DIVIDEND REFERENCE DATES"). The date on which the Corporation initially issues any Share shall be deemed to be its "date of issuance" regardless of the number of times transfer of such Share is made on the stock records maintained by or for the Corporation and regardless of the number of certificates which may be issued to evidence such Share. 2B. DIVIDEND REFERENCE DATES. For purposes of clarity, to the extent not paid on a Dividend Reference Date, all dividends which have accrued on each Share outstanding during the six-month period (or other period in the case of the initial Dividend Reference Date) ending upon each such Dividend Reference Date shall be accumulated and shall remain accumulated dividends with respect to such Share until paid to the holder thereof. 2C. DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series B Preferred Stock, such payment shall be distributed PRO RATA among the holders thereof based upon the aggregate Unpaid Dividends on the Shares held by each such holder. 2D. PARTICIPATING DIVIDENDS. In the event that the Corporation declares or pays any dividends upon the Common Stock (whether payable in cash, securities or other property) other than dividends payable solely in shares of Common Stock, the Corporation shall also declare and pay to the holders of the Series B Preferred Stock at the same time that it declares and pays such dividends to the holders of the Common Stock, the dividends which would have been declared and paid with respect to the Common Stock issuable upon conversion of the Series B Preferred Stock had all of the outstanding Series B Preferred Stock been converted (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) immediately prior to the record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined. Section 3. LIQUIDATION. 3A. PRIORITY OF SERIES B PREFERRED STOCK UPON LIQUIDATION. Upon any liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary) (a "LIQUIDATION EVENT"), each holder of Series B Preferred Stock shall be entitled to be paid in cash, before any distribution or payment is made upon any Junior Securities, an amount (the "SERIES B LIQUIDATION PREFERENCE") per Share equal to the greater of (x) the Liquidation Value of such Share (plus all Unpaid Dividends thereon), (y) the amount to which such holder would be entitled to receive in connection with the applicable Liquidation Event had such holder converted such Share into shares of Common Stock in accordance with the terms hereof (without actually requiring such Share to be so converted and without regard to any limitation on conversion set forth herein or otherwise) immediately prior to such Liquidation Event, and (z) the product of (i) the number of shares of Common Stock into which such Share shall be convertible in accordance with the terms hereof (without actually requiring such Share to be so converted and without regard to any limitation on conversion set forth herein or otherwise) immediately prior to such Liquidation Event and (ii) the Applicable Share Minimum as of the date of such Liquidation Event. If upon any such Liquidation Event, the Corporation's assets to be distributed among the 2 holders of the Series B Preferred Stock are insufficient to permit payment to such holders of the aggregate amount which they are entitled to be paid under this SECTION 3A, then the entire assets available to be distributed to the Corporation's stockholders shall be distributed PRO RATA among such holders based upon the aggregate Series B Liquidation Preference of the Series B Preferred Stock held by each such holder. Not less than 60 days prior to the payment date stated therein, the Corporation shall mail written notice of any such Liquidation Event to each record holder of Series B Preferred Stock, setting forth in reasonable detail the amount of proceeds to be paid with respect to each Share and each share of Common Stock in connection with such Liquidation Event. 3B. CHANGE OF CONTROL. In connection with any Change of Control transaction, unless a holder of Shares then outstanding elects to cause the Corporation to redeem the Series B Preferred Stock of such holder in accordance with SECTION 4B below, the consideration to be paid to such holder of the Corporation's capital stock in connection with such transaction shall be allocated such that such holder of Shares receives the amounts to which it would be entitled pursuant to SECTION 3A above as if such Change of Control transaction were a "Liquidation Event"; PROVIDED, HOWEVER, that no such payment shall be effected until the 11th day after the Change of Control Purchase Date and such payment shall be subject to the terms and conditions of the Indenture and the New Indenture. The Corporation shall not approve, adopt or enter into any agreement or arrangement relating to a Change of Control (or amend or modify any such agreement) if such agreement or arrangement (or the effect of any such amendment or modification thereto) does not allocate the consideration to be paid in connection with such transaction in accordance with the immediately preceding sentence and SECTION 4B below. Section 4. REDEMPTION. 4A. OPTIONAL REDEMPTION. The Corporation may elect at any time to redeem all or any portion of the Series B Preferred Stock then outstanding PRO RATA among the holders thereof at a redemption price in cash per Share (the "SERIES B REDEMPTION PRICE") equal to the product of (A) the number of shares of Common Stock into which such Share shall be convertible in accordance with the terms hereof (without actually requiring such Share to be so converted and without regard to any limitation on conversion set forth herein or otherwise) on the Redemption Date, and (B) the greater of (x) the Market Price of the Common Stock and (y) the Applicable Share Minimum, in each case determined as of the applicable Redemption Date. The Corporation may exercise its election to redeem the Series B Preferred Stock under this SECTION 4A by sending written notice to each record holder of Shares, notifying such holder of (i) the redemption to be effected, specifying the number of Shares to be redeemed from each holder, (ii) the amount of the Series B Redemption Price (including a reasonably detailed calculation thereof) and the aggregate Series B Redemption Price to be paid to such holder, (iii) the date on which such redemption shall be effected (which date shall be not more than three (3) Business Days after the date on which such notice is sent), and (iv) the place at which payment may be obtained and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, the certificate or certificates representing such holder's Shares. In case fewer than the total number of Shares represented by any certificate are redeemed, a new certificate representing the number of unredeemed Shares shall be issued to the holder thereof without cost to such holder within three (3) Business Days after surrender of the certificate representing the redeemed Shares. 3 4B. REDEMPTION IN CONNECTION WITH CHANGE OF CONTROL. In connection with any Change of Control transaction, each holder of Shares then outstanding may elect to cause the Corporation to redeem all, but not less than all, of the Series B Preferred Stock of such holder then outstanding at a redemption price in cash per Share equal to the Series B Redemption Price. Such holder may exercise its election under this SECTION 4B by sending written notice thereof to the Corporation not less than ten (10) Business Days prior to the scheduled closing date of the applicable Change of Control transaction. Within five (5) days after receipt of such written notice, the Corporation shall give written notice of such request to all holders of Series B Preferred Stock, and such notice shall include the information described in clauses (i) through (iv) of SECTION 4A above; PROVIDED, HOWEVER, that in the case of redemption under this SECTION 4B, the date on which such redemption shall be effected shall be the 11th day after the Change of Control Purchase Date and the payment of the Series B Redemption Price shall be subject to the terms and conditions of the Indenture and the New Indenture. 4C. SCHEDULED REDEMPTION. On the 10th anniversary of the Original Date of Issuance (the "SCHEDULED REDEMPTION DATE"), the Corporation shall redeem all of the Series B Preferred Stock then outstanding, if any, at a redemption price in cash per Share (the "SCHEDULED REDEMPTION PRICE") equal to the greater of (A) the Liquidation Value of such Share (plus all Unpaid Dividends thereon) and (B) the Series B Redemption Price. The Corporation shall effectuate the redemption of the Shares pursuant to this SECTION 4C by sending written notice to each record holder of Shares not less than 10 Business Days prior to the Scheduled Redemption Date, notifying such holder of (i) the redemption to be effected, specifying the number of Shares to be redeemed from each holder, (ii) the amount of the Scheduled Redemption Price (including a reasonably detailed calculation thereof) and the aggregate Scheduled Redemption Price to be paid to such holder, (iii) the date on which such redemption shall be effected (which date shall be the Scheduled Redemption Date), and (iv) the place at which payment may be obtained and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, the certificate or certificates representing such holder's Shares. In case fewer than the total number of Shares represented by any certificate are redeemed, a new certificate representing the number of unredeemed Shares shall be issued to the holder thereof without cost to such holder within three (3) Business Days after surrender of the certificate representing the redeemed Shares. 4D. REDEMPTION PAYMENTS. For each Share which is to be redeemed hereunder, the Corporation shall be obligated on the applicable Redemption Date to pay to the holder thereof (upon surrender by such holder at the Corporation's principal office of the certificate representing such Share) a cash amount in immediately available funds equal to (i) in the case of a redemption under either of SECTION 4A or SECTION 4B above, the Series B Redemption Price or (ii) in the case of a redemption under SECTION 4C above, the Scheduled Redemption Price (as applicable, the "REDEMPTION PRICE"). If the Corporation's funds that are legally available for redemption of Shares on any Redemption Date are insufficient to pay the aggregate Redemption Price for the total number of Shares to be redeemed on such date, those funds which are legally available shall be used to redeem the maximum possible number of Shares PRO RATA among the holders of the Shares based upon the aggregate Redemption Price of the Shares held by such holders. At any time thereafter when additional funds of the Corporation are legally available for the redemption of Shares, such funds shall immediately be used to pay the balance of the Redemption Price for 4 the Shares which the Corporation has become obligated to redeem on any Redemption Date but which it has not redeemed. 4E. DIVIDENDS AFTER REDEMPTION DATE. No Share shall be entitled to any dividends accruing after the date on which the Redemption Price of such Share is paid in full to the holder of such Share. On such date, all rights of the holder of such Share shall cease, and such Share shall no longer be deemed to be issued and outstanding. 4F. REDEEMED OR OTHERWISE ACQUIRED SHARES. Any Shares which are redeemed or otherwise acquired by the Corporation shall be canceled and retired to authorized but unissued shares and shall not be reissued, sold or transferred. 4G. OTHER REDEMPTIONS OR ACQUISITIONS. The Corporation shall not, nor shall it permit any Subsidiary to, redeem or otherwise acquire any Shares, except as expressly authorized herein. Section 5. VOTING RIGHTS. 5A. VOTING WITH COMMON STOCK. The holders of the Series B Preferred Stock shall be entitled to notice of all meetings of stockholders as and when such notice is provided to the holders of the Common Stock, and except as provided below in this SECTION 5A or in SECTION 5B and SECTION 5C or as otherwise required by applicable law, the holders of the Series B Preferred Stock shall be entitled to vote on all matters (including the election of directors) submitted to the stockholders for a vote together with the holders of the Common Stock voting together as a single class with each share of Common Stock entitled to one vote per share and each Share of Series B Preferred Stock entitled to one vote for each share of Common Stock issuable upon conversion of the Series B Preferred Stock pursuant to SECTION 6 hereof as of the record date for such vote or, if no record date is specified, as of the date of such vote. Notwithstanding the foregoing: (i) if the Common Stock is listed on The New York Stock Exchange, until the Corporation receives the Share Issuance Approval, the holders of the Series B Preferred Stock may only vote pursuant to this SECTION 5A to the extent that the aggregate number of votes such holders are entitled to cast in respect of their shares of Series B Preferred Stock and Common Stock (to the extent such Common Stock was acquired by such holders upon conversion of Series B Preferred Stock or upon the exercise of any Warrants) does not exceed 6,378,874 votes (as may be adjusted to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect) (the "NYSE CAP"); and (ii) so long as any indebtedness remains outstanding under the Indenture or the New Indenture, the aggregate number of votes that any holder of Series B Preferred Stock is entitled to vote pursuant to this SECTION 5A shall not exceed the Change of Control Cap (as defined below); PROVIDED, that in the event that the Change of Control Cap is equal to or less than zero, then such holder shall not be entitled to cast any votes pursuant to this SECTION 5A. As used herein, the term "CHANGE OF CONTROL CAP" means with respect to any holder of Series B Preferred Stock the quotient obtained by dividing (A) the difference between (x) the product of 35% and the aggregate votes of the aggregate Voting Equity Interests of the Corporation (other than any shares of Series B Preferred Stock held by such holder or shares of Common Stock issuable pursuant to SECTION 6 upon conversion of Series B Preferred Stock held by such holder) and (y) the aggregate number of shares of Common Stock and other Voting Equity Interests held by such holder (other than any shares of Series B Preferred Stock held by such holder or shares of Common Stock issuable pursuant to SECTION 6 upon conversion of Series B Preferred Stock held by such holder) by (B) .65. The Change of Control Cap shall be calculated as of the record date of the applicable vote or, if no record date is specified, as of the date of such vote. Any Group of holders of Series B 5 Preferred Stock shall be considered one holder for purposes of the Change of Control Cap; PROVIDED, that the aggregate number of votes to which each holder of Series B Preferred Stock, in the case of the NYSE Cap, or each member of any such Group, in the case of the Change of Control Cap, is entitled to vote pursuant to this SECTION 5A shall be determined by multiplying: (x) the aggregate number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) held by such holder or such member of such Group, as the case may be, pursuant to SECTION 6 as of the record date of the applicable vote or, if no record date is specified, as of the date of such vote, by (y) a fraction (which for the purposes of this SECTION 5A shall not exceed 1.0), (i) the numerator of which equals the number of votes entitled to be cast pursuant to this SECTION 5A after application, if any, of the NYSE Cap and/or the Change of Control Cap by all holders of Series B Preferred Stock, in the case of the NYSE Cap, or by all members of such Group, in the case of the Change of Control Cap, and (ii) the denominator of which equals the number of votes which such holders, in the case of the NYSE Cap, or Group, in the case of the Change of Control Cap, would have been entitled to cast pursuant to this SECTION 5A but for the application, if any, of the NYSE Cap and/or the Change of Control Cap (and without regard to any limitation on conversion set forth herein or otherwise). Prior to any vote or meeting at which the holders of the Series B Preferred Stock are entitled to vote pursuant to this SECTION 5A, the Corporation shall provide to such holders a calculation of the aggregate number of votes entitled to be cast at such meeting. 5B. ELECTION OF DIRECTORS. Subject to SECTION 5B(IV) below, at all times the Board of Directors shall include the directors elected by the holders of the Series B Preferred Stock pursuant to this Section 5. (i) In addition to the special rights arising under SECTION 8B and subject to SECTION 5B(IV) below, from the Original Date of Issuance until the 6th anniversary of the Original Date of Issuance, in the election of members of the Board of Directors, the holders of the outstanding Shares, voting separately as a single class to the exclusion of all other classes or series of the Corporation's capital stock and with each Share entitled to one vote, shall be entitled to nominate and elect a total of three (3) individuals to serve as members of the Board of Directors. (ii) In addition to the special rights arising under SECTION 8B and subject to SECTION 5B(IV) below, from and after the 6th anniversary of the Original Date of Issuance, in the election of members of the Board of Directors, the holders of the outstanding Shares, voting separately as a single class to the exclusion of all other classes or series of the Corporation's 6 capital stock and with each Share entitled to one vote, shall be entitled to nominate and elect that number of individuals to serve as members of the Board of Directors which, together with the number of directors then elected to the Board of Directors by the holders of the Series B Preferred Stock, shall constitute one less than a minimum majority of the Board of Directors. (iii) Each director nominated and elected by the holders of the Series B Preferred Stock in accordance with this SECTION 5B shall serve on the Board of Directors for a term of office to expire at the third succeeding annual meeting of stockholders after such director's election. Each such director shall serve until such director's successor is duly elected by the holders of the Shares or such director resigns, dies, becomes disqualified or is removed from office by such holders. If the holders of the Shares, for any reason fail to nominate and elect anyone to fill any such directorship, such position shall remain vacant until such time as the holders of the Shares nominate and elect a director to fill such position and shall not be filled by resolution or vote of the Board of Directors or the Corporation's other stockholders. The right of the holders of Series B Preferred Stock to elect members of the Board of Directors may be exercised (i) at any special meeting of the holders of the Series B Preferred Stock, (ii) at any annual or other special meeting of stockholders, and (iii) to the extent and in the manner permitted by applicable law, pursuant to a written consent in lieu of a meeting of stockholders. At any meeting or at any adjournment thereof at which the holders of Series B Preferred Stock elect directors pursuant to this SECTION 5B, the presence, in person or by proxy, of the holders of a majority of the Shares then outstanding shall be required to constitute a quorum for the election or removal of any director pursuant to this SECTION 5B. The vote of a majority of such quorum shall be required to elect or remove any such director. (iv) Notwithstanding the foregoing: (i) at such time as the holders of Series B Preferred Stock cease to hold shares of Series B Preferred Stock having an aggregate Series B Liquidation Preference of at least $25,000,000, the number of directors such holders are then entitled to nominate and elect under SECTION 5B(I) above shall be reduced by one; and (ii) at such time as the holders of Series B Preferred Stock cease to hold shares of Series B Preferred Stock having an aggregate Series B Liquidation Preference of at least $10,000,000, and the outstanding shares of Series B Preferred Stock and Common Stock then Beneficially Owned by such holders constitutes less than 5% of the aggregate votes of the aggregate Voting Equity Interests of the Corporation, such holders shall not be entitled to nominate or elect any directors under SECTION 5B(I) or SECTION 5B(II). 5C. SPECIAL VOTING RIGHTS. In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or consent in lieu of a meeting of the holders of not less than 75% of the Shares then outstanding: (i) amend, modify, restate or repeal (by merger, consolidation or otherwise) any provision of, or add to (by merger, consolidation or otherwise) the certificate of incorporation or bylaws of the Corporation in any manner which would alter or change the rights, preferences or privileges of the Series B Preferred Stock or create any new class or series of capital stock having rights, preferences or privileges senior to or on parity with the Series B Preferred Stock; 7 (ii) authorize or issue (by merger, consolidation or otherwise) any new or existing class or series of capital stock having any preference or priority as to the payment of dividends or the distribution of assets upon a Liquidation Event, Organic Change or Change of Control superior to or on parity with any such preference or priority of the Series B Preferred Stock, or authorize or issue (by merger, consolidation or otherwise) shares of stock of any class or any bonds, debentures, notes or other obligations convertible into or exchangeable for, or having rights to purchase, any shares of stock of the Corporation having any preference or priority as to the payment of dividends or the distribution of assets upon a Liquidation Event, Organic Change or Change of Control senior to or on parity with any such preference or priority of the Series B Preferred Stock; (iii) increase or decrease the authorized number of shares of the Series B Preferred Stock; (iv) reclassify (by merger, consolidation or otherwise) any capital stock into shares having any preference or priority as to the payment of dividends or the distribution of assets upon a Liquidation Event, Organic Change or Change of Control senior to or on parity with any such preference or priority of the Series B Preferred Stock; (v) pay or declare any dividend or distribution on any shares of its capital stock (other than dividends on the Common Stock payable in additional shares of Common Stock) or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through subsidiaries or otherwise, of any shares of its capital stock (other than (A) redemptions, retirements, purchases or acquisitions of the Series B Preferred Stock in accordance with the terms of this certificate of designations, (B) the repurchase of shares of Common Stock from former employees of the Corporation who acquired such shares directly from the Corporation, if each such purchase is made pursuant to contractual rights held by the Corporation relating to the termination of employment of such former employee and the purchase price does not exceed the original issue price paid by such former employee to the Corporation for such shares and (C) the acquisition of Common Stock in connection with a reduction of the principal or interest payable to the Corporation under the terms of the promissory notes entered into under the Corporation's Executive Loan Program (as defined in the Purchase Agreement); or (vi) increase the size of the Board of Directors to more than 12 directors, other than as may be required pursuant to SECTION 8B(II), (III) or (IV) hereof. Section 6. CONVERSION; EXCHANGE. 6A. CONVERSION PROCEDURE. (i) Subject to the terms of this SECTION 6 and SECTION 8B below, at any time and from time to time any holder of Series B Preferred Stock may convert all or any portion of the Series B Preferred Stock (including any fraction of a Share) held by such holder into a number of shares of Common Stock computed by multiplying the number of Shares to be converted by the Liquidation Value (plus all Unpaid Dividends thereon) and dividing the result by the Conversion Price then in effect. Notwithstanding the foregoing: (i) so long as any indebtedness remains outstanding under the Indenture or the New Indenture, no holder of Series 8 B Preferred Stock may convert any Shares to the extent that after giving effect to such conversion any such holder or a Group of such holders would be entitled to direct the votes with respect to in excess of 35% of the aggregate votes of the aggregate Voting Equity Interests (as defined in the Indenture) of the Corporation; and (ii) so long as the Common Stock is listed on The New York Stock Exchange, until the Corporation receives the Share Issuance Approval, no holder of Series B Preferred Stock shall convert any Shares to the extent that after giving effect to such conversion the aggregate number of shares of Common Stock acquired by the holders of Shares from and after the Original Date of Issuance as a result of the conversion of Series B Preferred Stock or the exercise of Warrants would exceed 6,378,874 shares of the Common Stock (as may be adjusted to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). (ii) Except as otherwise provided herein, each conversion of Series B Preferred Stock shall be deemed to have been effected as of the close of business on the date on which the certificate or certificates representing the Series B Preferred Stock to be converted have been surrendered for conversion at the principal office of the Corporation. At the time any such conversion has been effected, the rights of the holder of the Shares converted as a holder of Series B Preferred Stock shall cease and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. (iii) The conversion rights of any Share subject to redemption or exchange hereunder shall terminate on the date of redemption for such Share unless the Corporation has failed to pay to the holder thereof the Redemption Price for such Share. (iv) Notwithstanding any other provision hereof, if a conversion of Series B Preferred Stock is to be made in connection with an Organic Change, a Change of Control or such other transaction affecting the Corporation, the conversion of any Shares of Series B Preferred Stock may, at the election of the holder thereof, be conditioned upon the consummation of such transaction, in which case such conversion shall not be deemed to be effective until such transaction has been consummated. (v) As soon as possible after a conversion has been effected (but in any event within three (3) Business Days), the Corporation shall deliver to the converting holder: (a) a certificate or certificates representing the number of shares of Common Stock issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified; (b) a certificate representing any shares of Series B Preferred Stock which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted. (vi) The issuance of certificates for shares of Common Stock upon conversion of Series B Preferred Stock shall be made without charge to the holders of such Series B Preferred Stock for any issuance tax in respect thereof if issued in the name of such holder or 9 other cost incurred by the Corporation in connection with such conversion and the related issuance of shares of Common Stock. Upon conversion of each Share, the Corporation shall take all such actions as are necessary in order to insure that the Common Stock issuable with respect to such conversion shall be validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof. (vii) The Corporation shall not close its books against the transfer of Series B Preferred Stock or of Common Stock issued or issuable upon conversion of Series B Preferred Stock in any manner which interferes with the timely conversion of Series B Preferred Stock. The Corporation shall assist and cooperate with any holder of Shares required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion of Shares hereunder (including, without limitation, making any filings required to be made by the Corporation). (viii) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the Series B Preferred Stock, such number of shares of Common Stock issuable upon the conversion of all outstanding Series B Preferred Stock. All shares of Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges. The Corporation shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series B Preferred Stock. (ix) If the shares of Common Stock issuable by reason of conversion of Series B Preferred Stock are convertible into or exchangeable for any other stock or securities of the Corporation, the Corporation shall, at the converting holder's option, upon surrender of the Shares to be converted by such holder as provided herein together with any notice, statement or payment required to effect such conversion or exchange of Common Stock, deliver to such holder or as otherwise specified by such holder a certificate or certificates representing the stock or securities into which the shares of Common Stock issuable by reason of such conversion are so convertible or exchangeable, registered in such name or names and in such denomination or denominations as such holder has specified. 6B. CONVERSION PRICE. (i) In order to prevent dilution of the conversion rights granted under this SECTION 6B, the Conversion Price shall be subject to adjustment from time to time pursuant to this SECTION 6B. (ii) If and whenever after the Original Date of Issuance of the Series B Preferred Stock, the Corporation issues or sells, or in accordance with SECTION 6C is deemed to have issued or sold, any share of Common Stock for a consideration per share less than (x) the 10 Market Price of the Common Stock at such time or (y) the Conversion Price in effect immediately prior to such time (the greater of such amounts being referred to herein as, the "ADJUSTMENT MULTIPLIER"), then immediately upon such issue or sale or deemed issue or sale, the Conversion Price shall be reduced to the Conversion Price determined by multiplying (x) the Conversion Price in effect immediately prior to such issue or sale by (y) the quotient obtained by dividing (i) the sum of (A) the product determined by multiplying the Adjustment Multiplier by the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus (B) the consideration, if any, received by the Corporation upon such issue or sale, by (ii) the product determined by multiplying the Adjustment Multiplier by the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale. (iii) Notwithstanding the foregoing, there shall be no adjustment to the Conversion Price hereunder with respect to a Permitted Issuance (other than a Permitted Issuance of the type described in clause (vi) of the definition thereof if the price per share in such issuance is less than the Conversion Price in effect immediately prior to such issuance). 6C. EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Conversion Price under SECTION 6B, the following shall be applicable: (i) Issuance of Rights or Options. If the Corporation in any manner grants or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than (x) the Market Price of the Common Stock determined as of the time of the granting or sale of such Options or (y) the Conversion Price in effect immediately prior to such time, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting or sale of such Options for such price per share. For purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the granting or sale of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Conversion Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (ii) Issuance of Convertible Securities. If the Corporation in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the greater of (x) the Market Price of the Common Stock determined as of the time of such issue or sale or (y) the Conversion Price in 11 effect immediately prior to such time, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Conversion Price had been or are to be made pursuant to other provisions of this SECTION 6, no further adjustment of the Conversion Price shall be made by reason of such issue or sale. (iii) Change in Option Price or Conversion Rate. If, in the case of Options and Convertible Securities issued on or after the Original Date of Issuance, the purchase price provided for in any such Options, the additional consideration, if any, payable upon the conversion or exchange of any such Convertible Securities or the rate at which any such Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be immediately adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold; PROVIDED, that if such adjustment would result in an increase of the Conversion Price then in effect, such adjustment shall not be effective until 30 days after written notice thereof has been given by the Corporation to all holders of the Series B Preferred Stock. For purposes of SECTION 6C, if the terms of any Option or Convertible Security which was outstanding as of the Original Date of Issuance are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; PROVIDED, that no such change shall at any time cause the Conversion Price hereunder to be increased. (iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Conversion Price then in effect hereunder shall be adjusted immediately to the Conversion Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued; PROVIDED, that if such expiration or termination would result in an increase in the Conversion Price then in effect, such increase shall not be effective until 30 days after written notice thereof has been given to all holders of the Series B Preferred Stock. For purposes of SECTION 6C, the expiration or termination of any Option or Convertible Security which was outstanding as of the Original Date of Issuance shall not cause the Conversion Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or 12 Convertible Security caused it to be deemed to have been issued after the Original Date of Issuance. (v) Calculation of Consideration Received. If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor (net of discounts, commissions and related expenses). If any Common Stock, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Corporation shall be the Market Price thereof as of the date of receipt. If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Option or Convertible Security, as the case may be. The fair value of any consideration other than cash and securities shall be determined jointly by the Corporation and the holders of a majority of the outstanding Series B Preferred Stock. If such parties are unable to reach agreement within a reasonable period of time, the fair value of such consideration shall be determined by an independent appraiser experienced in valuing such type of consideration jointly selected by the Corporation and the holders of a majority of the outstanding Series B Preferred Stock. The determination of such appraiser shall be final and binding upon the parties, and the fees and expenses of such appraiser shall be borne by the Corporation. (vi) Integrated Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Corporation, together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties thereto, the consideration for the Option shall be the Market Price thereof. (vii) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock. (viii) Record Date. If the Corporation takes a record of the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. 6D. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series B 13 Preferred Stock thereafter surrendered for conversion (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of the events described above, had such share of Series B Preferred Stock been converted (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) immediately prior to the occurrence of such event. If the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series B Preferred Stock thereafter surrendered for conversion (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of the events described above, had such share of Series B Preferred Stock been converted (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) immediately prior to the occurrence of such event. 6E. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Corporation's assets or other transaction, in each case which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, is referred to herein as an "ORGANIC CHANGE". Prior to the consummation of any Organic Change (other than an Organic Change that is also a Change in Control), the Corporation shall make appropriate provisions (in form and substance satisfactory to the holders of a majority of the Series B Preferred Stock then outstanding) to insure that each of the holders of Series B Preferred Stock shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such holder's Series B Preferred Stock, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had converted its Series B Preferred Stock (without actually requiring such Series B Preferred Stock to be so converted and without regard to any limitation on conversion set forth herein or otherwise) immediately prior to such Organic Change. In each such case, the Corporation shall also make appropriate provisions (in form and substance satisfactory to the holders of a majority of the Series B Preferred Stock then outstanding) to insure that the provisions of this SECTION 6 and SECTION 7 below shall thereafter be applicable to the Series B Preferred Stock (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Corporation, an immediate adjustment of the Conversion Price to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the number of shares of Common Stock acquirable and receivable upon conversion of Series B Preferred Stock , if the value so reflected is less than the Conversion Price in effect immediately prior to such consolidation, merger or sale). The Corporation shall not effect any such consolidation, merger 14 or sale, unless prior to the consummation thereof, the successor entity (if other than the Corporation) resulting from consolidation or merger or the entity purchasing such assets assumes by written instrument (in form and substance satisfactory to the holders of a majority of the Series B Preferred Stock then outstanding), the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. 6F. CERTAIN DISTRIBUTIONS. In case the Corporation shall at any time or from time to time, prior to conversion of shares of Series B Preferred Stock, distribute to all holders of shares of the Common Stock (including any such distribution made in connection with a merger or consolidation in which the Corporation is the resulting or surviving Person and the Common Stock is not changed or exchanged), cash, evidences of indebtedness of the Corporation or another issuer, securities of the Corporation or another issuer or other assets (excluding cash dividends in which holders of shares of Series B Preferred Stock participate, in the manner provided in SECTION 2, dividends payable in shares of Common Stock for which adjustment is made under another paragraph of this SECTION 6 and any distribution in connection with a Permitted Issuance), or rights or warrants to subscribe for or purchase of any of the foregoing, then, and in each such case, the Conversion Price then in effect shall be adjusted (and any other appropriate actions shall be taken by the Corporation) by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction (x) the numerator of which shall be the Market Price of the Common Stock immediately prior to the date of distribution less the then fair market value (as determined by the Board of Directors in the exercise of their fiduciary duties) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights or warrants applicable to one share of Common Stock and (y) the denominator of which shall be the Market Price of the Common Stock immediately prior to the date of distribution (but such fraction shall not be greater than one); PROVIDED, HOWEVER, that no adjustment shall be made with respect to any distribution of rights or warrants to subscribe for or purchase securities of the Corporation if the holder of shares of Series B Preferred Stock would otherwise be entitled to receive such rights or warrants upon conversion at any time of shares of Series B Preferred Stock into Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively to a date immediately following the close of business on the record date for the determination of stockholders entitled to receive such distribution. 6G. CERTAIN EVENTS. If any event occurs of the type contemplated by the provisions of this SECTION 6 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board of Directors shall make an appropriate adjustment in the Conversion Price so as to protect the rights of the holders of Series B Preferred Stock; PROVIDED, that no such adjustment shall increase the Conversion Price as otherwise determined pursuant to this SECTION 6 or decrease the number of shares of Common Stock issuable upon conversion of each Share of Series B Preferred Stock. 15 6H. NOTICES. (i) Immediately upon any adjustment of the Conversion Price, the Corporation shall give written notice thereof to all holders of Series B Preferred Stock, setting forth in reasonable detail and certifying the calculation of such adjustment. (ii) The Corporation shall give written notice to all holders of Series B Preferred Stock at least twenty (20) days prior to the date on which the Corporation closes its books or takes a record (a) with respect to any dividend or distribution upon Common Stock, (b) with respect to any PRO RATA subscription offer to holders of Common Stock, or (c) for determining rights to vote with respect to any Change of Control Organic Change or Liquidation Event. (iii) The Corporation shall also give written notice to the holders of Series B Preferred Stock at least twenty (20) days prior to the date on which any Organic Change or Change of Control shall take place. 6I. CONVERSION AT ELECTION OF CORPORATION. Subject to the restrictions set forth below, at any time and from time to time the Corporation may elect to require holders of Series B Preferred Stock to convert shares of Series B Preferred Stock into shares of Common Stock at the then applicable Conversion Price. The Corporation may exercise its election to convert shares of Series B Preferred Stock pursuant to this SECTION 6I by sending written notice of such conversion to all holders of Shares at least three (3) Business Days prior to the consummation of such conversion; PROVIDED, HOWEVER, that: (A) the Corporation shall not deliver a notice of conversion pursuant to this SECTION 6I and no conversion of Shares may occur pursuant to this SECTION 6I at any time when (i) an Event of Noncompliance has occurred and is continuing, (ii) the proposed conversion would occur within 30 days of any period during which the trading in shares of Common Stock by the Corporation's officers or directors is restricted by the Corporation's policies or within 90 days of another notice delivered by the Corporation pursuant to this SECTION 6I, (iii) the Market Price is less than the Applicable Share Minimum, or (iv) the aggregate number of shares of Common Stock previously issued pursuant to this SECTION 6I during any period of 12 consecutive weeks (when aggregated with the Shares proposed to be converted) would exceed 15% of the aggregate volume of shares of Common Stock traded on The New York Stock Exchange during the 12 week period ended on the Saturday immediately preceding such time; and (B) no single election to convert shares of Series B Preferred Stock pursuant to this SECTION 6I shall be made with respect to a number of shares of Series B Preferred Stock in excess of the sum of (i) 10,000 plus (ii) 25% of the number of Shares, if any, issued after the Original Issuance Date outstanding (in each case as the same may be adjusted to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). Each conversion of Shares pursuant to this SECTION 6H shall be made PRO RATA among the holders of the Shares based upon the number of Shares then held by each such holder. Section 7. PURCHASE RIGHTS. If the Corporation issues any shares of Common Stock, Options, Convertible Securities, other equity securities or securities containing options or rights to acquire any equity securities or any securities convertible or exchangeable for equity securities, in each case after the date hereof (other than a Permitted Issuance) to any Person (the 16 "OFFEREE"), such issuance (the "OFFER") will be subject to the right of first offer and participation rights set forth in SECTION 7A and SECTION 7B below. 7A. PREFERRED STOCK ISSUANCES. If the securities to be issued in the Offer include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer such securities (the "PREFERRED OFFERED SECURITIES") to the holders of Shares by delivery of written notice to such holders not less than 30 days prior to the date of the proposed issuance. Such notice shall disclose in reasonable detail the proposed terms (including price terms) and conditions of the Offer (the "PREFERRED OFFER NOTICE"). Each holder of Shares shall have the right to purchase its ratable portion of the Preferred Offered Securities (determined by dividing the number of Shares held by such holder by the total number of Shares then outstanding) on the terms as set forth in the Preferred Offer Notice, by delivery of written notice to the Corporation of such election within 15 days after delivery of the Preferred Issuance Notice (the "PREFERRED ELECTION NOTICE"). If any holder of Shares has elected to purchase any Preferred Offered Securities, the sale of such securities shall be consummated as soon as practical after the delivery of the Preferred Election Notice (but in any event not later than the date on which the proposed issuance is scheduled to close). If the holders of Shares elect to purchase less than all of the Preferred Offered Securities as described above, the Corporation may issue such remaining Preferred Offered Securities to the Offeree at the same price and on the same terms as set forth in the Preferred Issuance Notice during the 45-day period beginning from the date on which the Preferred Election Notice has been delivered to the Corporation. Any Preferred Offered Securities not issued within such 45-day period will be subject to this SECTION 7A upon subsequent issuance. 7B. OTHER ISSUANCES. If the securities to be issued pursuant to the Offer do not include any class or series of preferred stock of the Corporation whether by liquidation, dividend or voting rights, the Corporation shall offer to sell to each holder of Shares a number of such securities (the "OFFERED SECURITIES") so that such holder's Ownership Ratio immediately after the issuance of such securities would be equal to such holder's Ownership Ratio immediately prior to such issuance of securities. The Corporation shall give each holder of Shares at least 30 days prior written notice of any proposed issuance, which notice shall disclose in reasonable detail the proposed terms and conditions of such issuance (the "ISSUANCE NOTICE"). Each holder of Shares shall be entitled to purchase its ratable portion of the Offered Securities at the same price, on the same terms, and at the same time as the securities are issued to the Offeree by delivery of written notice to the Corporation of such election within 15 days after delivery of the Issuance Notice (the "ELECTION NOTICE"); PROVIDED, that if more than one type of security is proposed to be issued, such holder shall, if it exercises its rights pursuant to this SECTION 7B, purchase such securities in the same ratio to be issued to the Offeree. If any holder of Shares has elected to purchase any Offered Securities, the sale of such securities shall be consummated as soon as practical after the delivery of the Election Notice (but in any event not later than the date on which the proposed issuance is scheduled to close). Section 8. EVENTS OF NONCOMPLIANCE. 8A. DEFINITION. An Event of Noncompliance shall have occurred if: 17 (i) (A) the Corporation fails to pay in full in cash any cash dividends (to the extent declared), Series B Liquidation Preference or Series B Redemption Price (or any amount owing under SECTION 3B, SECTION 4B, SECTION 4C or Section 4D or otherwise herein) to the holders of the Series B Preferred Stock as and when required to be paid hereunder and such failure continues for more than five (5) Business Days, (B) the Corporation breaches or otherwise fails to perform or observe in any material respect any covenant or agreement set forth in SECTION 5C(v) hereof, or (C) breaches or otherwise fails to perform or observe in any material respect any covenant or agreement set forth in Section 9.1(b), 9.1(c) or 9.1(d) of the Purchase Agreement; (ii) the Corporation breaches or otherwise fails to perform or observe in any material respect any other covenant or agreement set forth herein or in the Purchase Agreement (including, without limitation, Section 9.2(a) thereof), other than those covenants and agreements that are referred to in SECTION 8A(I) above which shall be governed by the terms of SECTION 8A(I), and such breach or failure is not cured within 90 days from the first date on which a responsible officer of the Corporation has knowledge of such breach or failure; (iii) any representation or warranty made by the Corporation in the Purchase Agreement or in any certificate furnished in connection therewith ceases to be true in any material respect (or, to the extent such representation or warranty is qualified by materiality or Material Adverse Effect (as defined in the Purchase Agreement), in any respect) as of the date made; (iv) any (x) default which results in the acceleration of any indebtedness, where the principal amount of such indebtedness, when added to the principal amount of all other indebtedness of the Corporation then in default, exceeds $5,000,000, or (y) a judgment or judgments for the payment of more than $1,000,000 in the aggregate (net of any portion of such judgment or judgements paid by the Corporation's insurance carrier) is or are entered against the Corporation and such judgment or judgments is or are not discharged or dismissed or stayed pending appeal within 90 days after entry; (v) the Corporation or any material Subsidiary makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; or an order, judgment or decree is entered adjudicating the Corporation or any material Subsidiary bankrupt or insolvent; or any order for relief with respect to the Corporation or any material Subsidiary is entered under the Federal Bankruptcy Code; or the Corporation or any material Subsidiary petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Corporation or any material Subsidiary or of any substantial part of the assets of the Corporation or any material Subsidiary, or commences any proceeding (other than a proceeding for the voluntary liquidation and dissolution of a Subsidiary) relating to the Corporation or any material Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or any such petition or application is filed, or any such proceeding is commenced, against the Corporation or any material Subsidiary and either (a) the Corporation or any such Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein or (b) such petition, application or proceeding is not dismissed within 90 days; 18 (vi) the shelf registration statement to be filed with the Securities and Exchange Commission in accordance with the terms of the Registration Agreement (i) is not filed within 45 days of the Original Date of Issuance, or (ii) is not declared effective within 90 days of the filing thereof, or such registration statement ceases to be effective at any time prior to the sale of all of the Registrable Securities (as defined in the Registration Rights Agreement) thereunder; or (vii) the Corporation does not obtain the Share Issuance Approval on or prior to June 28, 2002 (it being understood that an Event of Noncompliance of the type described in this SECTION 8A(VII) shall be deemed cured upon the subsequent receipt of the Share Issuance Approval). 8B. CONSEQUENCES OF EVENTS OF NONCOMPLIANCE. (i) If an Event of Noncompliance has occurred, other than an Event of Noncompliance of the type described in SECTION 8A(VII), the Dividend Rate on the Series B Preferred Stock shall increase immediately by an increment of 1%. Thereafter, other than in the case of an Event of Noncompliance of the type described in SECTION 8A(VI) and SECTION 8A(VII), until such time as no Event of Noncompliance exists or such event has been waived in writing by the holders of a majority of the Shares then outstanding, the Dividend Rate shall increase automatically at the end of each succeeding 90-day period by an additional increment of 1% (but in no event shall the Dividend Rate be increased pursuant to this sentence by more than 5%). Any increase of the Dividend Rate resulting from the operation of this paragraph shall terminate as of the close of business on the date on which no Event of Noncompliance exists, subject to subsequent increases pursuant to this paragraph. (ii) If (x) any Event of Noncompliance of the type described in SECTION 8A(I) has occurred or (y) any Event of Noncompliance of the type described in SECTION 8A(II) through SECTION 8A(IV) has occurred and, in the case of this clause (y), such Event of Noncompliance has not been cured on or prior to the last day of the Corporation's next successive fiscal quarter, then such number of Agreed Directors as described below shall immediately resign from the Board of Directors and the holders of a majority of the Series B Preferred Stock then outstanding shall have the special right, voting separately as a single class (with each Share being entitled to one vote) and to the exclusion of all other classes of the Corporation's stock, to elect individuals to fill such vacancies, to remove any individuals elected to such directorships and to fill any subsequent vacancies in such directorships. The number of Agreed Directors required to resign pursuant to the preceding sentence shall be the number required such that the number of directors then elected to the Board of Directors by the holders of the Series B Preferred Stock (including any directors elected pursuant to the preceding sentence) shall constitute one less than a minimum majority of the Board of Directors. In the event that any one or more of the Agreed Directors fail to resign from the Board of Directors as contemplated above (regardless of the reason or reasons therefor), the number of directors constituting the Board of Directors shall be increased by such number which, together with the number of directors then elected to the Board of Directors by the holders of the Series B Preferred Stock (including any directors elected pursuant to the first sentence of this SECTION 8A(II)) shall constitute one less than a minimum majority of the Board of Directors, and the holders of a majority of the Series B Preferred Stock then outstanding, shall have the special right, voting separately as a single class (with each Share 19 being entitled to one vote) and to the exclusion of all other classes of the Corporation's stock, to elect individuals to fill such newly created directorships, to remove any individuals elected to such directorships and to fill any subsequent vacancies in such directorships. The special rights described in this SECTION 8B(II) shall continue until such time as there is no longer any Event of Noncompliance in existence that gives rise to the right of the holders of the Series B Preferred Stock to elect such directors, at which time such special right shall terminate subject to revesting upon the occurrence and continuation of any Event of Noncompliance which gives rise to such special right hereunder. Notwithstanding the foregoing, the remedies set forth in this SECTION 8B(II) shall not be effective at any time when the holders of the Series B Preferred Stock cease to hold shares of Series B Preferred Stock having an aggregate Series B Liquidation Preference of at least $10,000,000, and the outstanding shares of Series B Preferred Stock and Common Stock then Beneficially Owned by such holders constitutes less than 5% of the aggregate votes of the aggregate Voting Equity Interests of the Corporation. (iii) If any Event of Noncompliance of the type described in SECTION 8A(II) through SECTION 8A(IV) has occurred, then two (2) of the Agreed Directors shall immediately resign from the Board of Directors and the holders of a majority of the Series B Preferred Stock then outstanding shall have the special right, voting separately as a single class (with each Share being entitled to one vote) and to the exclusion of all other classes of the Corporation's stock, to elect individuals to fill such vacancies, to remove any individuals elected to such directorships and to fill any subsequent vacancies in such directorships. In the event that neither one nor two of the Agreed Directors resign from the Board of Directors as contemplated above (regardless of the reason or reasons therefor), the number of directors constituting the Board of Directors shall be increased by one or two directors, as the case may be, and the holders of a majority of the Series B Preferred Stock then outstanding, shall have the special right, voting separately as a single class (with each Share being entitled to one vote) and to the exclusion of all other classes of the Corporation's stock, to elect individuals to fill such newly created directorships, to remove any individuals elected to such directorships and to fill any subsequent vacancies in such directorships. The special rights described in this SECTION 8B(III) shall continue until such time as there is no longer any Event of Noncompliance in existence that gives rise to the right of the holders of the Series B Preferred Stock to elect such directors, at which time such special right shall terminate subject to revesting upon the occurrence and continuation of any Event of Noncompliance which gives rise to such special right hereunder; PROVIDED, that if such Event of Noncompliance has not been cured on or prior to the last day of the Corporation's next successive fiscal quarter, such special right shall terminate as of such date and the right described in SECTION 8B(II) above shall govern. Notwithstanding the foregoing, the remedies set forth in this SECTION 8B(III) shall not be effective at any time when the holders of the Series B Preferred Stock cease to hold shares of Series B Preferred Stock having an aggregate Series B Liquidation Preference of at least $10,000,000, and the outstanding shares of Series B Preferred Stock and Common Stock then Beneficially Owned by such holders constitutes less than 5% of the aggregate votes of the aggregate Voting Equity Interests of the Corporation. (iv) If any Event of Noncompliance of the type described in SECTION 8A(V) has occurred, then each of the Agreed Directors shall immediately resign from the Board of Directors and the holders of a majority of the Series B Preferred Stock then outstanding shall have the special right, voting separately as a single class (with each Share being entitled to one vote) and to the exclusion of all other classes of the Corporation's stock, to elect individuals to 20 fill such vacancies, to remove any individuals elected to such directorships and to fill any subsequent vacancies in such directorships. In the event that any one or more of the Agreed Directors fail to resign from the Board of Directors as contemplated above (regardless of the reason or reasons therefor), or if the total number of Agreed Directors together with the number of directors then elected to the Board of Directors by the holders of the Series B Preferred Stock (not taking into account any directors elected pursuant to the preceding sentence) does not constitute a majority of the Board of Directors, then the number of directors constituting the Board of Directors shall be increased by such number which, together with the number of directors then elected to the Board of Directors by the holders of the Series B Preferred Stock (including any directors elected pursuant to the preceding sentence) shall constitute a minimum majority of the Board of Directors, and the holders of a majority of the Series B Preferred Stock then outstanding shall have the special right, voting separately as a single class (with each Share being entitled to one vote) and to the exclusion of all other classes of the Corporation's stock, to elect individuals to fill such newly created directorships, to remove any individuals elected to such directorships and to fill any subsequent vacancies in such directorships. The special rights described in this SECTION 8B(IV) shall continue until such time as there is no longer any Event of Noncompliance in existence that gives rise to the right of the holders of the Series B Preferred Stock to elect such directors, at which time such special right shall terminate subject to revesting upon the occurrence and continuation of any Event of Noncompliance which gives rise to such special right hereunder. Notwithstanding the foregoing, the remedies set forth in this SECTION 8B(IV) shall not be effective at any time when the holders of the Series B Preferred Stock cease to hold shares of Series B Preferred Stock having an aggregate Series B Liquidation Preference of at least $10,000,000, and the outstanding shares of Series B Preferred Stock and Common Stock then Beneficially Owned by such holders constitutes less than 5% of the aggregate votes of the aggregate Voting Equity Interests of the Corporation. (v) If an Event of Noncompliance of the type described in SECTION 8A(VII) occurs, the Conversion Price of the Series B Preferred Stock shall be reduced immediately by 20% of the Conversion Price in effect immediately prior to such adjustment. Thereafter, until the Corporation obtains the Share Issuance Approval, every 90 days the Conversion Price shall be reduced immediately by 20% of the Conversion Price in effect immediately prior to such adjustment (subject to a maximum reduction under this SECTION 8B(V) not to exceed 50% of the Conversion Price that would have been in effect as of such date had the adjustments provided for in this SECTION 8B(V) not occurred). Upon receipt of the Share Issuance Approval, the Conversion Price in effect immediately prior to such receipt shall be readjusted to the Conversion Price that would have been in effect as of such receipt had the adjustments provided for in this SECTION 8B(V) not occurred and taking into account for purposes of such readjustment any other adjustments to the Conversion Price that would have been made during the continuation of the Event of Noncompliance which triggered the adjustments provided for in this SECTION 8B(V) had the adjustments provided for in this SECTION 8B(V) not occurred. In the event that the Conversion Price is required to be adjusted pursuant to this SECTION 8B(V) and at the same time an adjustment to the Conversion Price is required to be made under SECTION 8B(VI) and/or SECTION 8B(VII) below, then the adjustment required to be made under this SECTION 8B(V) shall be made after giving effect to the adjustment required under SECTION 8B(VI) and/or SECTION 8B(VII). 21 (vi) If an Event of Noncompliance of the type described in SECTION 8A(I)(C) occurs, the Conversion Price of the Series B Preferred Stock shall be reduced immediately by $.76 (subject to adjustment to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). At such time as such Event of Noncompliance is no longer in existence, the Conversion Price in effect immediately prior to such time shall be readjusted to the Conversion Price that would have been in effect as of such time had the adjustments provided for in this SECTION 8B(VI) not occurred and taking into account for purposes of such readjustment any other adjustments to the Conversion Price that would have been made during the continuation of the Event of Noncompliance which triggered the adjustments provided for in this SECTION 8B(VI) had the adjustments provided for in this SECTION 8B(VI) not occurred. In the event that the Conversion Price is required to be adjusted pursuant to this SECTION 8B(VI) and at the same time an adjustment to the Conversion Price is required to be made under SECTION 8B(V) above, then the adjustment required to be made under this SECTION 8B(VI) shall be made before giving effect to the adjustment required under SECTION 8B(V). Notwithstanding the foregoing, no reduction of the Conversion Price pursuant to this SECTION 8B(VI) shall be made at any time when representatives of holders of the Series B Preferred Stock constitute a majority of the Board of Directors, whether elected pursuant to SECTION 5B, this SECTION 8B or otherwise. Notwithstanding the foregoing, in no event will the Conversion Price be reduced below $.01. (vii) If an Event of Noncompliance of the type described in SECTION 8A(II) occurs as a result of the Corporation's breach or failure to perform or observe its obligations arising under Section 9.2(a) of the Purchase Agreement, the Conversion Price of the Series B Preferred Stock shall be reduced immediately by $.76 (subject to adjustment to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). Thereafter, until the such Event of Noncompliance is no longer in existence, every 90 days the Conversion Price shall be reduced immediately by $.76 (subject to adjustment to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect), subject to a maximum reduction under this SECTION 8B(VII) not to exceed $3.80 (also subject to adjustment to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). At such time as such Event of Noncompliance is no longer in existence, the Conversion Price in effect immediately prior to such time shall be readjusted to the Conversion Price that would have been in effect as of such time had the adjustments provided for in this SECTION 8B(VII) not occurred and taking into account for purposes of such readjustment any other adjustments to the Conversion Price that would have been made during the continuation of the Event of Noncompliance which triggered the adjustments provided for in this SECTION 8B(VII) had the adjustment provided for in this SECTION 8B(VII) not occurred. In the event that the Conversion Price is required to be adjusted pursuant to this SECTION 8B(VII) and at the same time an adjustment to the Conversion Price is required to be made under SECTION 8B(V) above, then the adjustment required to be made under this SECTION 8B(VII) shall be made before giving effect to the adjustment required under SECTION 8B(V). Notwithstanding the foregoing, no reduction of the Conversion Price pursuant to this SECTION 8B(VII) shall be made at any time when representatives of holders of the Series B Preferred Stock constitute a majority of the Board of Directors, whether elected pursuant to SECTION 5B, this SECTION 8B or otherwise. Notwithstanding the foregoing, in no event will the Conversion Price be reduced below $.01. (viii) If any Event of Noncompliance exists, each holder of Series B Preferred Stock shall also have any other rights which such holder is entitled to at any time under the 22 Purchase Agreement, any other contract or agreement and any other rights which such holder may have pursuant to applicable law. 8C. ELECTION PROCEDURES. (i) The special rights of the holders of the Series B Preferred Stock to elect members of the Board of Directors pursuant to SECTION 8B(II), (III) or (IV) may be exercised at (x) a special meeting called pursuant to this SECTION 8C, (y) at any annual or other special meeting of stockholders, and (z) to the extent and in the manner permitted by applicable law, pursuant to a written consent in lieu of a meeting of stockholders. (ii) At any time when such rights have vested in the holders of Series B Preferred Stock, a proper officer of the Corporation shall, upon the written request of the holder of at least 10% of the Preferred Stock then outstanding, addressed to the secretary of the Corporation, call a special meeting of the holders of Series B Preferred Stock for the purpose of electing directors pursuant to SECTION 8B. Such meeting shall be held at the earliest legally permissible date at the principal office of the Corporation, or at such other place designated by the holders of at least 10% of the Preferred Stock then outstanding. If such meeting has not been called by a proper officer of the Corporation within 5 days after personal service of such written request upon the secretary of the Corporation or within 10 days after mailing the same to the secretary of the Corporation at its principal office, then the holders of at least 10% of the Series B Preferred Stock then outstanding may designate in writing one of their number to call such meeting at the expense of the Corporation, and such meeting may be called by such Person so designated upon the notice required for annual meetings of stockholders and shall be held at the Corporation's principal office, or at such other place designated by the holders of at least 10% of the Preferred Stock then outstanding. Any holder of Preferred Stock so designated shall be given access to the stock record books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to this paragraph. (iii) At any meeting or at any adjournment thereof at which the holders of Series B Preferred Stock have the special right to elect directors pursuant to SECTION 8B, the presence, in person or by proxy, of the holders of a majority of the Preferred Stock then outstanding shall be required to constitute a quorum for the election or removal of any director by the holders of the Series B Preferred Stock exercising such special right. The vote of a majority of such quorum shall be required to elect or remove any such director. (iv) Any director so elected by the holders of Preferred Stock shall continue to serve as a director until the expiration of the lesser of (a) a period of six months following the date on which there is no longer any Event of Noncompliance in existence that gave rise to the special right to elect such director or (b) the remaining period of the full term for which such director has been elected. After the expiration of such six-month period or when the full term for which such director has been elected ceases (provided that the special right to elect directors has terminated), as the case may be, the number of directors constituting the Board of Directors of the Corporation shall decrease to such number as constituted the whole Board of Directors of the Corporation immediately prior to the occurrence of the Event or Events of Noncompliance giving rise to the special right to elect directors. 23 Section 9. REGISTRATION OF TRANSFER. The Corporation shall keep at its principal office a register for the registration of Series B Preferred Stock. Upon the surrender of any certificate representing Series B Preferred Stock at such place, the Corporation shall, at the request of the record holder of such certificate, execute and deliver (at the Corporation's expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of Shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of Shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate, and dividends shall accrue on the Series B Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such Series B Preferred Stock represented by the surrendered certificate. Section 10. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing Shares of Series B Preferred Stock , and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of Shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on the Series B Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate. Section 11. DEFINITIONS. "ABACUS" means ABACUS Master Fund, Ltd. "ADJUSTMENT MULTIPLIER" has the meaning set forth in SECTION 6B(II). "AGREED DIRECTORS" means each member of the Board of Directors who has entered into a letter agreement with ABRY Mezzanine Partners, L.P., ABACUS and Sandler, dated as of the Original Date of Issuance, pursuant to which such director has agreed to resign from the Board of Directors upon the occurrence of certain events and circumstances set forth therein. "APPLICABLE SHARE MINIMUM" means, (i) $15.18 if the applicable date of determination occurs prior to the third anniversary of the Original Date of Issuance, (ii) $17.51 if the applicable date of determination occurs after the third but prior to the fourth anniversary of the Original Date of Issuance, (iii) $19.31 if the applicable date of determination occurs after the fourth but prior to the fifth anniversary of the Original Date of Issuance, and (iv) $23.26 if the applicable date of determination occurs after the fifth, but prior to the sixth anniversary of the Original Date of Issuance, in each case subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalizations or other transaction having a similar effect. "BENEFICIALLY OWN" has the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the Securities Exchange Act of 1934, as amended. 24 "BUSINESS DAY" means any day other than a Saturday, Sunday, or any day on which banks in New York City are authorized or obligated by applicable law to close. "CHANGE OF CONTROL" means: (i) any sale, transfer, conveyance or other disposition (other than by way of merger or consolidation) of all or substantially all of the Corporation's assets, on a consolidated basis, in one transaction or a series of related transactions, to any Person (including any group that is deemed to be a Person); (ii) the consummation of any transaction involving the Corporation, including, without limitation, any merger or consolidation, whereby any Person (including any group that is deemed to be a Person ) is or becomes the "beneficial owner," directly or indirectly, of more than 35% of the aggregate voting equity securities of the Corporation or the surviving entity or entities of such transaction if other than the Corporation; (iii) the Continuing Directors cease for any reason to constitute a majority of the members of the Board of Directors then in office; or (iv) the Corporation adopts a plan of liquidation. "CHANGE OF CONTROL CAP" has the meaning set forth in SECTION 5A. "CHANGE OF CONTROL PURCHASE DATE" means the date on which any Notes tendered in the offer required by SECTION 10.1 of the Indenture are repurchased by the Corporation, which date shall not be later than the 35th Business Day after the consummation of a Change of Control transaction. "COMMON STOCK" means, collectively, the Corporation's Common Stock, par value $.01 per share (including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of June 9, 2000, by and between the Corporation and Harris Trust and Savings Bank, as Rights Agent), and any capital stock of any class of the Corporation hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Corporation. "COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to SECTIONS 6C(I) and 6C(II) hereof whether or not the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock. "CONTINUING DIRECTORS" means during any period of 12 consecutive months, individuals who at the beginning of any such 12-month period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Corporation was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, including new directors designated in or provided for in an agreement regarding the merger, consolidation or sale, transfer or other conveyance, of all or substantially all of the assets of the Corporation, if such agreement was approved by a vote of such majority of directors). "CONVERSION PRICE" of any Share shall be equal to: (i) $7.61 from the Original Date of Issuance until the day immediately preceding the 6th anniversary of the Original Date of 25 Issuance, as may be adjusted pursuant to SECTION 6 and SECTION 8B; and (ii) from and after the 6th anniversary of the Original Date of Issuance, the lesser of (x) the Conversion Price in effect pursuant to clause (i) above as of the day immediately preceding the 6th anniversary of the Original Date of Issuance, as the same may be adjusted pursuant to SECTION 6 and SECTION 8B, and (y) the greater of (A) 90% of the Market Price of the Common Stock as of the relevant conversion date and (B) $4.50, as the same may be adjusted pursuant to SECTION 6 and SECTION 8B. "CONVERTIBLE SECURITIES" means any stock or securities directly or indirectly convertible into or exchangeable for Common Stock. "CORPORATION" means Penton Media, Inc., a Delaware corporation. "DIVIDEND RATE" of any Share shall be equal to: (i) a rate of 7.0% PER ANNUM from the Original Date of Issuance until the day immediately preceding the 6th anniversary of the Original Date of Issuance (unless at any time during such period the Corporation shall have received the Share Issuance Approval, in which case (x) if the Share Issuance Approval is received on or prior to the 6th month anniversary of the Original Date of Issuance, the "Dividend Rate" shall be equal to a rate of 5.0% PER ANNUM adjusted retroactively to the Original Date of Issuance, or (y) if the Share Issuance Approval is received after the 6th month anniversary of the Original Date of Issuance, the "Dividend Rate" shall be equal to a rate of 5.0% PER ANNUM from and after the date on which the Corporation received the Share Issuance Approval through the end of such period); and (ii) 15% from and after the 6th anniversary of the Original Date of Issuance, in each case subject to adjustment pursuant to SECTION 8B(I). "DIVIDEND REFERENCE DATE" has the meaning set forth in SECTION 2A. "ELECTION NOTICE" has the meaning set forth in SECTION 7B. "EVENT OF NONCOMPLIANCE" means the events described in SECTION 8A. "GROUP" has the meaning set forth in Rule 13d-5 promulgated under the Securities Exchange Act of 1934, as amended; PROVIDED, that until the termination of the Purchase Agreement, all holders of Series B Preferred Stock shall be deemed to be a member of a Group for purposes of SECTION 5A and SECTION 6A(I) hereof unless such holders unanimously agree in writing otherwise. "INDENTURE" means the Indenture, dated as of June 28, 2001, by and among Penton Media, Inc. as Issuer, the Subsidiary Guarantors therein, and the Bank of New York as Trustee, with respect to the 10.375% $185,000,000 Senior Subordinated Notes due June 15, 2011 as amended or supplemented from time to time in accordance with the terms thereof and in accordance with the terms of the Purchase Agreement. "JUNIOR SECURITIES" means any capital stock or other equity securities of the Corporation, except for the Series B Preferred Stock. "LIQUIDATION EVENT" has the meaning set forth in SECTION 3A. 26 "LIQUIDATION VALUE" of any Share shall be equal to (i) from the Original Date of Issuance until the day immediately preceding the 6th anniversary of the Original Date of Issuance, $1,000.00, and (ii) from and after the 6th anniversary of the Original Date of Issuance, $4,570, unless the Corporation has not received the Share Issuance Approval as of such date, in which case the "Liquidation Value" of such Shares shall be $9,140, in each case as the same may be adjusted to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect. "MARKET PRICE" of any security means the average of the closing prices of such security's sales on all securities exchanges on which such security may at the time be listed, or, if there has been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case (i) averaged over a period of 30 days consisting of the day as of which "Market Price" is being determined and the 29 consecutive Business Days prior to such day, and (ii) averaged on a volume-weighted basis based on the trading volume for each such Business Day. If at any time such security is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the "Market Price" shall be the fair value thereof determined jointly by the Corporation and the holders of a majority of the Series B Preferred Stock. If such parties are unable to reach agreement within a reasonable period of time, such fair value shall be determined by an independent appraiser experienced in valuing securities jointly selected by the Corporation and the holders of a majority of the Series B Preferred Stock. The determination of such appraiser shall be final and binding upon the parties, and the Corporation shall pay the fees and expenses of such appraiser. "NEW INDENTURE" has the meaning set forth in the Purchase Agreement. "NOTES" means, collectively (i) the Initial Notes as defined in the Indenture in effect as of the date hereof, (ii) the Exchange Notes as defined in the Indenture in effect as of the date hereof, and (iii) the Additional Notes as defined in the Indenture in effect as of the date hereof. "NYSE CAP" has the meaning set forth in SECTION 5A. "OFFER" has the meaning set forth in SECTION 7. "OFFEREE" has the meaning set forth in SECTION 7. "OFFER NOTICE" has the meaning set forth in SECTION 7B. "OFFERED SECURITIES" has the meaning set forth in SECTION 7B. "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "ORGANIC CHANGE" has the meaning set forth in SECTION 6E. 27 "ORIGINAL DATE OF ISSUANCE" means March 19, 2002. "OWNERSHIP RATIO" means, as to any Person at any time of determination, the percentage obtained by dividing the amount of shares of Common Stock held by such Person on a fully diluted, as-if-converted basis at such time by the aggregate amount of shares of Common Stock outstanding fully diluted, as-if-converted basis at such time (without regard to any limitation on conversion set forth herein or otherwise). "PERMITTED ISSUANCE" means (i) the issuance or granting of Common Stock (including restricted, deferred or performance shares), Options or Convertible Securities to employees of the Corporation and its Subsidiaries or the exercise thereof pursuant to a Stock Option Plan, to the extent the aggregate Common Stock, Options or Convertible Securities issued or granted pursuant to this clause (i) do not exceed 15% of the Common Stock Deemed Outstanding on the day before the Original Date of Issuance (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect), (ii) the issuance of Common Stock hereunder, (iii) the issuance of Common Stock upon the exercise of the Warrants, (iv) the issuance of Common Stock by the Corporation for consideration other than cash pursuant to a consummated merger, consolidation, acquisition, or similar business combination, so long as (A) such issuance was approved by a majority of the Preferred Directors or (B) the aggregate Common Stock, Options or Convertible Securities issued or granted pursuant to this clause (iv) and the following clause (v) does not exceed 5% of the Common Stock Deemed Outstanding on the day before the Original Date of Issuance (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect), (v) the issuance of Common Stock pursuant to any securities issued to a bank or other similar financial institution in connection with a loan or other indebtedness for borrowed money (PROVIDED, that the Board of Directors has approved the issuance of such securities and loan or other indebtedness), to the extent the aggregate Common Stock, Options or Convertible Securities issued or granted pursuant to this clause (v) and the preceding clause (iv) does not exceed 5% of the Common Stock Deemed Outstanding on the day before the Original Date of Issuance (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect)); or (vi) the issuance of Common Stock by the Corporation pursuant to an underwritten offering registered with the Securities and Exchange Commission. "PERSON" or "PERSON" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "PREFERRED DIRECTORS" means the member of the Board of Directors elected by the holders of the Series B Shares pursuant to SECTION 5B. "PREFERRED ELECTION NOTICE" has the meaning set forth in SECTION 8A. "PREFERRED OFFER NOTICE" has the meaning set forth in SECTION 8A. "PREFERRED OFFER SECURITIES" has the meaning set forth in SECTION 8A. 28 "PURCHASE AGREEMENT" means the Amended and Restated Series B Convertible Preferred Stock and Warrant Purchase Agreement, dated as of March 18, 2002, by and between the Corporation, ABRY Mezzanine Partners, L.P., ABACUS and Sandler, as such agreement may from time to time be amended in accordance with its terms. "REDEMPTION DATE" means any date on which shares of Series B Preferred Stock are scheduled to be redeemed pursuant to any of SECTIONS 4A, SECTION 4B or SECTION 4C. "REDEMPTION PRICE" has the meaning set forth in SECTION 4D. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement dated as of Original Date of Issuance, by and between the Corporation, ABRY Mezzanine Partners, L.P., ABACUS and Sandler, as such agreement may from time to time be amended in accordance with its terms. "SANDLER" has the meaning set forth in the Purchase Agreement. "SCHEDULED REDEMPTION DATE" has the meaning set forth in SECTION 4C. "SCHEDULED REDEMPTION PRICE" has the meaning set forth in SECTION 4C. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SERIES B LIQUIDATION PREFERENCE" has the meaning set forth in SECTION 3A. "SERIES B REDEMPTION PRICE" has the meaning set forth in SECTION 4A. "SHARE" has the meaning set forth in SECTION 2A. "SHARE ISSUANCE APPROVAL" has the meaning set forth in the Purchase Agreement. "STOCK OPTION PLAN" means any stock option plan for the benefit of the Corporation's officers, employees or directors which has been approved by the Board of Directors (or a committee thereof that has the authority to administer any such plan), including, without limitation, the Corporation's 1998 Equity and Performance Incentive Plan, the Corporation's 1998 Director Stock Option Plan, the Corporation's Management Stock Purchase Plan and the Corporation's Employee Stock Purchase Plan. "SUBSIDIARY" means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability 29 company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the managing general partner of such limited liability company, partnership, association or other business entity. "UNPAID DIVIDENDS" means with respect to each Share (i) as of any date of determination prior to the 6th anniversary of the Original Date of Issuance, all accumulated dividends and accrued and unpaid but not yet accumulated dividends thereon from and including the date of issuance of such Share to and including such date of determination, and (ii) as of any date of determination on or after the 6th anniversary of the Original Date of Issuance, all accumulated dividends and accrued and unpaid but not yet accumulated dividends thereon that have accumulated and accrued solely from and including the 6th anniversary of the Original Date of Issuance to and including such date of determination. "VOTING EQUITY INTERESTS" has the meaning set forth in the Indenture. "WARRANTS" means the warrants to purchase shares of Common Stock issued under the Purchase Agreement. Section 12. AMENDMENT AND WAIVER. No amendment, modification or waiver of any provision hereof shall be binding or effective without the prior written consent of the holders of at least 75% of the Series B Preferred Stock outstanding at the time such action is taken; EXCEPT, that the holders of a majority of the outstanding Series B Preferred Stock may waive the application of any of the provisions set forth in SECTION 8B, other than SECTION 8B(V), (VI) or (VII) which shall require the approval of holders of at least 75% of the Series B Preferred Stock. Section 13. NOTICES. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Corporation, at its principal executive offices and (ii) to any stockholder, at such holder's address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder). * * * * 30 IN WITNESS WHEREOF, the undersigned has executed this Certificate and does affirm the foregoing as of this 18th day of March, 2002. PENTON MEDIA, INC. By: /s/ Preston L. Vice --------------------------------------- Name: Preston L. Vice Title: Senior Vice President and Secretary 31 EX-99 6 ex4sc13d-penton.txt EXHIBIT 4 EXHIBIT 4 to SCHEDULE 13D EXECUTION COPY This Warrant was originally issued on March 18, 2002, and such issuance was not registered under the Securities Act of 1933, as amended. The transfer of this Warrant and the securities obtainable upon exercise hereof is subject to the conditions on transfer specified in the Series B Convertible Preferred Stock and Warrant Purchase Agreement, dated as of March 10, 2002 (as amended and modified from time to time), between the issuer hereof (the "COMPANY") and the initial holder hereof, and the Company reserves the right to refuse the transfer of such security until such conditions have been fulfilled with respect to such transfer. Upon written request, a copy of such conditions shall be furnished by the Company to the holder hereof without charge. PENTON MEDIA, INC. STOCK PURCHASE WARRANT ---------------------- Date of Issuance: March 18, 2002 Certificate No. [_________________] FOR VALUE RECEIVED, Penton Media, Inc., a Delaware corporation (the "COMPANY"), hereby grants to [___________________________] or its registered assigns (the "REGISTERED HOLDER") the right to purchase from the Company [_____] shares of the Company's Common Stock at a price per share of $7.61 (as adjusted from time to time hereunder, the "EXERCISE PRICE"). This Warrant is one of several warrants (collectively, the "WARRANTS") issued by the Company to certain investors (the "INVESTORS") pursuant to the Series B Convertible Preferred Stock and Warrant Purchase Agreement, dated as of March 10, 2002 (the "PURCHASE AGREEMENT"). Certain capitalized terms used herein are defined in SECTION 5 hereof. The amount and kind of securities obtainable pursuant to the rights granted hereunder and the purchase price for such securities are subject to adjustment pursuant to the provisions contained in this Warrant. This Warrant is subject to the following provisions: Section 1. EXERCISE OF WARRANT. 1A. EXERCISE PERIOD. The Registered Holder may exercise, in whole or in part (but not as to a fractional share of Common Stock), the purchase rights represented by this Warrant at any time and from time to time after the Date of Issuance to and including the 10th anniversary thereof (the "EXERCISE PERIOD"). Notwithstanding the foregoing, (i) so long as any indebtedness remains outstanding under the Indenture or the New Indenture, this Warrant may be exercised only to the extent that after giving effect to such exercise, the Registered Holder or any Group of which such Registered Holder is a member would not be entitled to direct the votes with respect to in excess of 35% of the aggregate votes of the aggregate Voting Equity Interests (as defined in the Indenture) of the Company; and (ii) so long as the Common Stock is listed on The New York Stock Exchange, until the Company receives the Share Issuance Approval, this Warrant may be exercised only to the extent that after giving effect to such exercise the aggregate number of shares of Common Stock acquired by the Investors from and after the Date of Issuance as a result of the conversion of the Company's Series B Convertible Preferred Stock, par value $.01 per share, and exercise of Warrants would not exceed 6,378,874 shares of the Common Stock (as may be adjusted to reflect any stock split, stock dividend, reclassification or other transaction having a similar effect). The Company shall give the Registered Holder written notice of the expiration of the rights hereunder at least 30 days but not more than 90 days prior to the end of the Exercise Period. 1B. EXERCISE PROCEDURE. (i) This Warrant shall be deemed to have been exercised when the Company has received all of the following items (the "EXERCISE TIME"): (a) a completed Exercise Agreement, as described in SECTION 1C below, executed by the Person exercising all or part of the purchase rights represented by this Warrant (the "PURCHASER"); (b) this Warrant; (c) if this Warrant is not registered in the name of the Purchaser, an Assignment or Assignments in the form set forth in EXHIBIT II hereto evidencing the assignment of this Warrant to the Purchaser, in which case the Registered Holder shall have complied with the provisions set forth in SECTION 7 hereof; and (d) either (1) a check payable to the Company in an amount equal to the product of the Exercise Price multiplied by the number of shares of Common Stock being purchased upon such exercise (the "AGGREGATE EXERCISE PRICE"), or (2) a written notice to the Company that the Purchaser is exercising the Warrant (or a portion thereof) by authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant which when multiplied by the Market Price of the Common Stock is equal to the Aggregate Exercise Price (and such withheld shares shall no longer be issuable under this Warrant). (ii) Certificates for shares of Common Stock purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within five Business Days after the date of the Exercise Time. Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the rights formerly represented by this Warrant which have not expired or been exercised and shall within such five-day period, deliver such new Warrant to the Person designated for delivery in the Exercise Agreement. -2- (iii) The Common Stock issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the record holder of such Common Stock at the Exercise Time. (iv) The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof if issued to the Registered Holder or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. (v) The Company shall not close its books against the transfer of this Warrant or of any share of Common Stock issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant. The Company shall from time to time take all such action as may be necessary to assure that the par value per share of the unissued Common Stock acquirable upon exercise of this Warrant is at all times equal to or less than the Exercise Price then in effect. (vi) The Company shall assist and cooperate with any Registered Holder or Purchaser required to make any governmental filings or obtain any governmental approvals prior to or in connection with any exercise of this Warrant (including, without limitation, making any filings required to be made by the Company). (vii) Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. (viii) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock issuable upon the exercise of all outstanding Warrants. All shares of Common Stock which are so issuable shall, when issued against payment of the Aggregate Exercise Price therefor, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges. The Company shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). The Company shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the Warrants. 1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the Exercise Agreement shall be substantially in the form set forth in EXHIBIT I hereto, except that if the shares of Common Stock are not to be issued in the name of the Person in whose name this Warrant is registered, the Exercise Agreement shall also state the name of the Person to whom the certificates -3- for the shares of Common Stock are to be issued, and if the number of shares of Common Stock to be issued does not include all the shares of Common Stock purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the rights hereunder is to be delivered. Such Exercise Agreement shall be dated the actual date of execution thereof. 1D. FRACTIONAL SHARES. If a fractional share of Common Stock would, but for the provisions of SECTION 1A, be issuable upon exercise of the rights represented by this Warrant, the Company shall, unless prohibited by any agreement to which the Company is a party, within five Business Days after the date of the Exercise Time, deliver to the Purchaser a check payable to the Purchaser in lieu of such fractional share in an amount equal to the difference between Market Price of such fractional share as of the date of the Exercise Time and the Exercise Price of such fractional share. Section 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In order to prevent dilution of the rights granted under this Warrant, the Exercise Price shall be subject to adjustment from time to time as provided in this SECTION 2, and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this SECTION 2. 2A. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE OF COMMON STOCK. (i) If and whenever after the Date of Issuance of this Warrant, the Company issues or sells, or in accordance with SECTION 2B is deemed to have issued or sold, any share of Common Stock for a consideration per share less than (x) the Market Price of the Common Stock at such time or (y) the Exercise Price in effect immediately prior to such time (the greater of such amounts being referred to herein as, the "ADJUSTMENT MULTIPLIER"), then immediately upon such issue or sale or deemed issue or sale, the Exercise Price shall be reduced to the Exercise Price determined by multiplying (x) the Exercise Price in effect immediately prior to such issue or sale by (y) the quotient obtained by dividing (i) the sum of (A) the product determined by multiplying the Adjustment Multiplier by the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus (B) the consideration, if any, received by the Company upon such issue or sale, by (ii) the product determined by multiplying the Adjustment Multiplier by the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale. Upon each such adjustment of the Exercise Price hereunder, the number of shares of Common acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. (ii) Notwithstanding the foregoing, there shall be no adjustment to the Exercise Price or the number of shares of Common Stock obtainable upon exercise of this Warrant with respect to a Permitted Issuance (other than a Permitted Issuance of the type described in clause (vi) of the definition thereof if the price per share in such issuance is less than the Exercise Price in effect immediately prior to such issuance). 2B. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Exercise Price under SECTION 2A, the following shall be applicable: -4- (i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any manner grants or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than (x) the Market Price of the Common Stock determined as of the time of the granting or sale of such Options or (y) the Exercise Price in effect immediately prior to such time, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Options for such price per share. For purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Exercise Price or the number of shares of Common Stock issuable hereunder shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the greater of (x) the Market Price of the Common Stock determined as of the time of such issue or sale or (y) the Exercise Price in effect immediately prior to such time, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Company the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Exercise Price or the number of shares of Common Stock issuable hereunder shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Exercise Price or the number of shares of Common Stock issuable hereunder had been or are to be made pursuant to other provisions of this SECTION 2, no further adjustment of the Exercise Price or the number of shares of Common Stock issuable hereunder shall be made by reason of such issue or sale. (iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If, in the case of Options and Convertible Securities issued on or after the Date of Issuance, the purchase price provided for in any such Options, the additional consideration, if any, payable upon the conversion or exchange of any such Convertible Securities or the rate at which any such Convertible Securities are convertible into -5- or exchangeable for Common Stock changes at any time, the Exercise Price in effect at the time of such change shall be immediately adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold, and the number of shares of Common Stock issuable hereunder shall be correspondingly adjusted; PROVIDED, that if such adjustment would result in an increase of the Exercise Price then in effect, such adjustment shall not be effective until 30 days after written notice thereof has been given by the Company to all holders of the Warrants. For purposes of SECTION 2B, if the terms of any Option or Convertible Security which was outstanding as of the Date of Issuance are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; PROVIDED, that no such change shall at any time cause the Exercise Price hereunder to be increased or the number of shares of Common Stock issuable hereunder to be decreased. (iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE SECURITIES. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Exercise Price then in effect hereunder shall be adjusted immediately to the Exercise Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued, and the number of shares of Common Stock issuable hereunder shall be correspondingly adjusted; PROVIDED, that if such expiration or termination would result in an increase in the Exercise Price then in effect (and a corresponding decrease in the number of shares Common Stock issuable hereunder), such increase (and corresponding decrease) shall not be effective until 30 days after written notice thereof has been given to all holders of the Warrants. For purposes of SECTION 2B, the expiration or termination of any Option or Convertible Security which was outstanding as of the Date of Issuance shall not cause the Exercise Price or the number of shares Common Stock issuable hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed to have been issued after the Date of Issuance. (v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor (net of discounts, commissions and related expenses). If any Common Stock, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company shall be the Market Price thereof as of the date of receipt. If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Option or Convertible Security, as the case may be. The fair value of any consideration other than cash and securities shall be determined jointly by the Company and the Registered Holder. If such parties are unable to reach agreement within a reasonable period of time, the fair value of such consideration shall be determined by an independent appraiser experienced in valuing such type of consideration jointly selected by the Company and the Registered Holder. The determination of such appraiser shall be final and binding upon the parties, and the fees and expenses of such appraiser shall be borne by the Company. -6- (vi) INTEGRATED TRANSACTIONS. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties thereto, the consideration for the Option shall be the Market Price thereof. (vii) TREASURY SHARES. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock. (viii) RECORD DATE. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. 2C. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately increased (and any other appropriate actions shall be taken by the Company) so that the holder of any Warrant thereafter surrendered for exercise (without actually requiring this Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant or otherwise) shall be entitled to receive the number of shares of Common Stock or other securities of the Company that such holder would have owned or would have been entitled to receive upon or by reason of the events described above, had such Warrant been exercised immediately (without actually requiring this Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant or otherwise) prior to the occurrence of such event. If the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant (without actually requiring this Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant or otherwise) shall be proportionately decreased (and any other appropriate actions shall be taken by the Company) so that the holder of any Warrant thereafter surrendered for exercise shall be entitled to receive the number of shares of Common Stock or other securities of the Company that such holder would have owned or would have been entitled to receive upon or by reason of the events described above, had such Warrant been exercised immediately (without actually requiring this Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant or otherwise) prior to the occurrence of such event. 2D. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets or other transaction, in each case which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, is referred to herein as -7- an "ORGANIC CHANGE." Prior to the consummation of any Organic Change, the Company shall make appropriate provisions (in form and substance satisfactory to the Registered Holder) to insure that each of the holders of the Warrants shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such holder's Warrant, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had exercised its Warrant (without actually requiring this Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant or otherwise) immediately prior to such Organic Change. In each such case, the Company shall also make appropriate provisions (in form and substance satisfactory to the Registered Holder) to insure that the provisions of this SECTION 2 and SECTIONS 3 and 4 hereof shall thereafter be applicable to the Warrants (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Exercise Price to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the number of shares of Common Stock acquirable and receivable upon exercise of the Warrants, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger or sale). The Company shall not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes by written instrument (in form and substance satisfactory to the Registered Holder), the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. 2E. CERTAIN DISTRIBUTIONS. In case the Company shall at any time or from time to time, prior to exercise of this Warrant, distribute to all holders of shares of the Common Stock (including any such distribution made in connection with a merger or consolidation in which the Company is the resulting or surviving Person and the Common Stock is not changed or exchanged) cash, evidences of indebtedness of the Company or another issuer, securities of the Company or another issuer or other assets (excluding dividends payable in shares of Common Stock for which adjustment is made under another paragraph of this SECTION 2, any distribution in connection with a Permitted Issuance and any Liquidating Dividend) or rights or warrants to subscribe for or purchase of any of the foregoing, then, and in each such case, the Exercise Price then in effect shall be adjusted (and any other appropriate actions shall be taken by the Company) by multiplying the Exercise Price in effect immediately prior to the date of such distribution by a fraction (x) the numerator of which shall be the Market Price of the Common Stock immediately prior to the date of distribution less the then fair market value (as determined by the Board of Directors in the exercise of their fiduciary duties) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights or warrants applicable to one share of Common Stock and (y) the denominator of which shall be the Market Price of the Common Stock immediately prior to the date of distribution (but such fraction shall not be greater than one); PROVIDED, however, that no adjustment shall be made with respect to any distribution of rights or warrants to subscribe for or purchase securities of the Company if the holder of this Warrant would otherwise be entitled to receive such rights or warrants upon exercise at any time of Warrants into Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively to a date immediately following the close of business on the record date for the determination of stockholders entitled to receive such distribution. -8- 2F. EVENT OF NONCOMPLIANCE. If an Event of Noncompliance of the type described in Section 8A(vii) of the Series B Preferred Stock Certificate of Designations occurs, the Exercise Price of the Warrants shall be reduced immediately by 20% of the Exercise Price in effect immediately prior to such adjustment and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately increased. Thereafter, until the Corporation obtains the Share Issuance Approval, every 90 days the Exercise Price shall be reduced immediately by 20% of the Exercise Price in effect immediately prior to such adjustment (subject to a maximum reduction not to exceed 50% of the Exercise Price that would have been in effect as of the such date had the adjustments provided for in this SECTION 2F not occurred) and the number of shares of Common Stock obtainable upon exercise of this Warrant shall again be proportionately increased. Upon receipt of the Share Issuance Approval, the Exercise Price in effect immediately prior to such event shall be readjusted to be the Exercise Price that would have been in effect as of the such date had the adjustments provided for in this SECTION 2F not occurred and taking into account for purposes of this readjustment any other adjustments to the Exercise Price that would have been made during the continuation of the Event of Noncompliance which triggered the adjustments provided for in this SECTION 2F had the adjustments provided for in this SECTION 2F not occurred; and the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately adjusted. 2G. CERTAIN EVENTS. If any event occurs of the type contemplated by the provisions of this SECTION 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors shall make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrants; provided that no such adjustment shall increase the Exercise Price as otherwise determined pursuant to this SECTION 2 or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this SECTION 2. 2H. NOTICES. (i) Immediately upon any adjustment of the Exercise Price, the Company shall give written notice thereof to the Registered Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. (ii) The Company shall give written notice to the Registered Holder at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, dissolution or liquidation. (iii) The Company shall also give written notice to the Registered Holders at least 20 days prior to the date on which any Organic Change, dissolution or liquidation shall take place. Section 3. LIQUIDATING DIVIDENDS. If the Company declares or pays a dividend upon the Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in accordance with generally accepted accounting principles, consistently applied) except for a stock dividend payable in shares of Common Stock (a "LIQUIDATING DIVIDEND"), then the Company shall pay to the Registered Holder of this Warrant at the time of payment thereof the Liquidating Dividend which would have been paid to such Registered Holder on the Common Stock had this Warrant been -9- fully exercised (without actually requiring this Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant or otherwise) immediately prior to the date on which a record is taken for such Liquidating Dividend, or, if no record is taken, the date as of which the record holders of Common Stock entitled to such dividends are to be determined. Section 4. PURCHASE RIGHTS. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the Registered holder of this Warrant shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. Section 5. DEFINITIONS. The following terms have meanings set forth below: "BUSINESS DAY" means any day other than a Saturday, Sunday, or any day on which banks in New York City are authorized or obligated by applicable law to close. "COMMON STOCK" means, collectively, the Company's Common Stock, par value $.01 per share (including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of June 9, 2000, by and between the Company and Harris Trust and Savings Bank, as Rights Agent), and any capital stock of any class of the Company hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company. "COMMON STOCK DEEMED OUTSTANDING" means at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to SECTIONS 2B(I) and 2B(II) hereof whether or not the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock. "CONVERTIBLE SECURITIES" means any stock or securities (directly or indirectly) convertible into or exchangeable for Common Stock. "EVENT OF NONCOMPLIANCE" has the meaning set forth in Section 8A of the Series B Preferred Stock Certificate of Designations. "GROUP" has the meaning set forth in Rule 13d-5 promulgated under the Securities Exchange Act of 1934, as amended; PROVIDED, that until the termination of the Purchase Agreement, all holders of Warrants shall be deemed to be a member of a Group for purposes of SECTION 1A hereof unless such holders unanimously agree in writing otherwise. "INDENTURE" has the meaning set forth in the Purchase Agreement. "MARKET PRICE" of any security means the average of the closing prices of such security's sales on all securities exchanges on which such security may at the time be listed, or, if -10- there has been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case (i) averaged over a period of 30 days consisting of the day as of which "Market Price" is being determined and the 29 consecutive Business Days prior to such day, and (ii) averaged on a volume-weighted basis based on the trading volume for each such Business Day. If at any time such security is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the "Market Price" shall be the fair value thereof determined jointly by the Company and the Registered Holder. If such parties are unable to reach agreement within a reasonable period of time, such fair value shall be determined by an independent appraiser experienced in valuing securities jointly selected by the Company and the Registered Holder. The determination of such appraiser shall be final and binding upon the parties, and the Company shall pay the fees and expenses of such appraiser. "NEW INDENTURE" has the meaning set forth in the Purchase Agreement. "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "PERMITTED ISSUANCE" means (i) the issuance or granting of Common Stock (including restricted, deferred or performance shares), Options or Convertible Securities to employees of the Company and its Subsidiaries or the exercise thereof pursuant to a Stock Option Plan, to the extent the aggregate Common Stock, Options or Convertible Securities issued or granted pursuant to this clause (i) do not exceed 15% of the Common Stock Deemed Outstanding on the day before the Date of Issuance (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect), (ii) the issuance of Common Stock pursuant to the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock, (iii) the issuance of Common Stock upon the exercise of the Warrants, (iv) the issuance of Common Stock by the Company for consideration other than cash pursuant to a consummated merger, consolidation, acquisition, or similar business combination, so long as (A) such issuance was approved by a majority of the Preferred Directors or (B) the aggregate Common Stock, Options or Convertible Securities issued or granted pursuant to this clause (iv) and the following clause (v) does not exceed 5% of the Common Stock Deemed Outstanding on the day before the Date of Issuance (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect), (v) the issuance of Common Stock pursuant to any securities issued to a bank or other similar financial institution in connection with a loan or other indebtedness for borrowed money (provided, that the Board of Directors has approved the issuance of such securities and loan or other indebtedness), to the extent the aggregate Common Stock, Options or Convertible Securities issued or granted pursuant to this clause (v) and the preceding clause (iv) does not exceed 5% of the Common Stock Deemed Outstanding on the day before the Date of Issuance (subject to adjustment to reflect any stock split, stock dividend, reclassification, recapitalization or other transaction having a similar effect)); or (vi) the issuance of Common Stock by the Corporation pursuant to an underwritten offering registered with the Securities and Exchange Commission. -11- "PERSON" or "PERSON" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "PREFERRED DIRECTORS" means the members of the Board of Directors elected by the holders of the Series B Convertible Preferred Stock pursuant to Section 5B of the Series B Preferred Stock Certificate of Designations. "SERIES B PREFERRED STOCK CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations designating the rights and preferences of the Series B Preferred Stock adopted by the Board of Directors "SHARE ISSUANCE APPROVAL" has the meaning set forth in Section 9.3 of the Purchase Agreement. Other capitalized terms used in this Warrant but not defined herein shall have the meanings set forth in the Purchase Agreement. Section 6. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Common Stock, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such holder for the Exercise Price of Common Stock acquirable by exercise hereof or as a stockholder of the Company. Section 7. WARRANT TRANSFERABLE. Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Registered Holder, upon surrender of this Warrant with a properly executed Assignment (in the form of EXHIBIT II hereto) at the principal office of the Company. Section 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Warrants shall represent such portion of such rights as is designated by the Registered Holder at the time of such surrender. The date the Company initially issues this Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the number of times new certificates representing the unexpired and unexercised rights formerly represented by this Warrant shall be issued. All Warrants representing portions of the rights hereunder are referred to herein as the "Warrants." Section 9. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing the Warrant, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like -12- kind representing the number of Warrants of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. Section 10. NOTICES. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Company, at its principal executive offices and (ii) to any Registered Holder, at such holder's address as it appears in the stock records of the Company (unless otherwise indicated by any such holder). Section 11. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Registered Holder of this Warrant. Section 12. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The corporation laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its Stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal law of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. * * * * * * -13- IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated the Date of Issuance hereof. PENTON MEDIA, INC. By_________________________ Its________________________ [Corporate Seal] Attest: ______________________________ Title: ______________________ -14- EXHIBIT I EXERCISE AGREEMENT ------------------ To: Dated: The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No. [_____]), hereby agrees to subscribe for the purchase of ______ shares of the Common Stock covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant. Signature ____________________ Address ______________________ -15- EXHIBIT II ASSIGNMENT ---------- FOR VALUE RECEIVED, ______________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. [_____]) with respect to the number of shares of the Common Stock covered thereby set forth below, unto: NAMES OF ASSIGNEE ADDRESS NO. OF SHARES - ----------------- ------- ------------- Signature ____________________ ____________________ Witness ____________________ -16- EX-99 7 ex5sc13d-penton.txt EXHIBIT 5 EXHIBIT 5 to SCHEDULE 13D EXECUTION COPY REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is dated as of March 19, 2002, and made by and between Penton Media, Inc., a Delaware corporation (the "COMPANY"), ABRY Mezzanine Partners L.P., a Delaware limited partnership ("ABRY"), Abacus Master Fund, Ltd. ("ABACUS" and together with ABRY, the "ABRY PARTIES"), Sandler Capital Partners V, L.P., a Delaware limited partnership ("SANDLER V"), Sandler Capital Partners V FTE, L.P., a Delaware limited partnership ("SANDLER V FTE"), and Sandler Capital Partners V Germany, L.P., a Delaware limited partnership ("SANDLER V GERMANY" and together with Sandler V and Sandler V FTE, "SANDLER"). Capitalized terms used but not otherwise defined herein shall have the meaning set forth in Section 1 hereof. WHEREAS, each of the ABRY Parties and Sandler have acquired shares of the Company's Series B Preferred Stock and Warrants to purchase Common Stock pursuant to that certain Amended and Restated Series B Convertible Preferred Stock and Warrant Purchase Agreement, dated as March 18, 2002, by and among the Company, the ABRY Parties and Sandler (as amended, restated or modified from time to time, the "PURCHASE AGREEMENT"); NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. DEFINITIONS. As used herein, the following terms shall have the following meanings. "AFFILIATE" shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "COMMON STOCK" means the Company's common stock, par value $.01 per share (including any associated Right, as defined in and issued pursuant to the Rights Agreement, dated as of June 9, 2000, by and between the Company and Harris Trust and Savings Bank, as Rights Agent), and any other securities issuable with respect thereto by way of stock split, stock dividend or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. "CONVERSION SHARES" has the meaning set forth in the Purchase Agreement. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "NASDAQ" has the meaning set forth in Section 4(d) of this Agreement. "PERSON" means an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "PIGGYBACK REGISTRATION" has the meaning set forth in Section 3(a) of this Agreement. "REGISTRATION EXPENSES" means all expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, stock exchange listing fees, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company. "REGISTRABLE SECURITIES" means (i) the Conversion Shares issued or issuable upon conversion of the Series B Preferred Stock, (ii) the Warrant Shares issued or issuable upon exercise of the Warrants and (iii) any shares of capital stock issued or issuable with respect to the Conversion Shares, the Series B Preferred Stock, the Warrant Shares or the Warrants as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on conversions of the Series B Preferred Stock or the exercises of the Warrants. Notwithstanding the foregoing, any Registrable Securities sold pursuant to a registered offering as provided by Section 2 or 3 of this Agreement or pursuant to Rule 144 under the Securities Act shall no longer be considered Registrable Securities. For the purposes of this Agreement, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire directly or indirectly such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. "RULE 144" means Rule 144 under the Securities Act (or any similar rule then in force). "SEC" means the Securities and Exchange Commission or any successor entity. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SERIES B PREFERRED STOCK" has the meaning set forth in the Purchase Agreement. "SHELF REGISTRATION" means a registration of any or all of the Registrable Securities pursuant to Rule 415 of the Securities Act. "TAKEDOWN" has the meaning set forth in Section 2(b) of this Agreement. "WARRANT SHARES" has the meaning set forth in the Purchase Agreement. "WARRANTS" has the meaning set forth in the Purchase Agreement. 2. SHELF REGISTRATIONS. 2 (a) SHELF REGISTRATION. Within 45 days after the date hereof, the Company shall file with the SEC a registration statement on Form S-3 under the Securities Act for the Shelf Registration pursuant which any or all of the Registrable Securities may be sold. The Company shall use its reasonable best efforts to cause the Shelf Registration to be declared effective under the Securities Act as soon as practical after filing (but in no event later than 90 days after the date hereof) and, once effective, the Company shall cause such Shelf Registration to remain effective until the earlier to occur of (i) the date on which all Registrable Securities have been sold pursuant to the Shelf Registration and (ii) the date as of which there are no longer any Registrable Securities in existence. (b) TAKEDOWN. If holders of a majority of Registrable Securities notify the Company in writing that they intend to effect the sale of 25% or more of the Registrable Securities held by such holders pursuant to the Shelf Registration (a "TAKEDOWN"), the Company and each holder of Registrable Securities shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for its equity securities, during the 90-day period beginning on the date such notice of a Takedown is received. Within ten (10) days after receipt of any request for a Takedown, the Company will give written notice of such requested registration to all other holders of Registrable Securities and will include (subject to the provisions of this Agreement) in such registration, all Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten (10) business days after the receipt of the Company's notice. If a Takedown is an underwritten offering, (i) the Company shall promptly amend the Shelf Registration to include any information reasonably requested to be included therein by the underwriters or holders of Registrable Securities, and (ii) the holders of the Registrable Securities may also request that the Company register any other shares of Common Stock that they hold at the time of the Takedown; PROVIDED, however, that such shares of Common Stock shall not be considered Registrable Securities for purposes of this Agreement. (c) PRIORITY. If in connection with any Takedown, the managing underwriters (selected in accordance with clause (d) below) advise the Company that, in its opinion, the inclusion of any other securities other than Registrable Securities in the Takedown would adversely affect the marketability of the offering, then no such securities shall be permitted to be included. Additionally, if in connection with such an offering, the number of Registrable Securities and other securities (if any) requested to be included in such Takedown exceeds the number of Registrable Securities and other securities which can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include in such Takedown (i) first, the Registrable Securities requested to be included in such Takedown (including, for the avoidance of doubt, the Registrable Securities requested to be included in such Takedown within ten (10) business days after the receipt of the Company's notice as set forth in the penultimate sentence of Section 2(b)), pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder, and (ii) second, other securities requested to be included in such Takedown to the extent permitted hereunder. (d) SELECTION OF UNDERWRITERS. The holders of a majority of the Registrable Securities requested to be included in a Takedown shall have the right to retain and select an investment banker and manager to administer the Shelf Registration and any Takedown pursuant thereto. In addition to the provisions set forth in Section 5 below, all expenses incurred in connection with 3 the management of the Shelf Registration (whether incurred by the Company or the holders of the Registrable Securities) shall be borne by the Company (including out-of-pocket fees and expenses but excluding underwriting discounts and commissions). (e) OTHER REGISTRATION RIGHTS. Except as provided in this Agreement, the Company will not (i) grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of the holders of a majority of the Registrable Securities, or (ii) amend, modify or restate any existing agreement or arrangements pursuant to which the Company has previously granted any such rights. (f) ELIGIBILITY. The Company represents and warrants that it is, and covenants that it will use its reasonable best efforts to remain at all times while there are any Registrable Securities outstanding, eligible to use Form S-3 under the Securities Act. 3. PIGGYBACK REGISTRATIONS. (a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any of its Common Stock under the Securities Act (other than pursuant to a registration statement on Form S-8 or S-4 or any similar form or in connection with a registration the primary purpose of which is to register debt securities (i.e., in connection with a so-called "equity kicker")) and a registration form to be used may be used for the registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within twenty (20) days after the receipt of the Company's notice. (b) PIGGYBACK EXPENSES. In addition to the provisions set forth in Section 5 below, all the Registration Expenses of the holders of Registrable Securities in all Piggyback Registrations will be paid by the Company. (c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, the Company will include in such registration all securities requested to be included in such registration; provided, that if the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration PRO RATA among the holders of such Registrable Securities on the basis of the number of shares of Registrable Securities owned by each such holder, and (iii) third, other securities, if any, requested to be included in such registration. (d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities other than Registrable Securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which 4 can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares of Registrable Securities owned by each such holder (ii) second, the securities requested to be included therein by the holders requesting such registration, and (iii) third, other securities requested to be included in such registration not covered by clause (i) or (ii) above. (e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an underwritten offering, and such offering includes Registrable Securities, then the investment banker(s) and manager(s) for the offering will be selected by, in the case of a primary registration, the Company, and in the case of a secondary registration, the holders of a majority of the Registrable Securities. (f) OTHER REGISTRATIONS. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to this Section 3, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Forms S-4 or S-8 or any successor forms), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least three months has elapsed from the effective date of such previous registration. 4. REGISTRATION PROCEDURES. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement (including pursuant to the Shelf Registration), the Company will use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible (or within such specific time period as may otherwise be specified): (a) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (b) register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process (i.e., service of process which is not limited solely to securities law violations) in any such jurisdiction); (c) notify each seller of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an 5 untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company will promptly prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading; (d) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be quoted on the NASDAQ stock market ("NASDAQ") and, if quoted on the NASDAQ, use its reasonable best efforts to secure designation of all such Registrable Securities covered by such registration statement as a "National Market System security" within the meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure NASDAQ authorization for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with the National Association of Securities Dealers; (e) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (f) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares); (g) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; (h) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; (i) permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; 6 (j) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such registration statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly to obtain the withdrawal of such order; (k) use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; and (l) obtain a "cold comfort" letter from the Company's independent public accountants and a legal opinion from Company's counsel in customary form and covering such matters of the type customarily covered by such documents as the holders of a majority of the Registrable Securities being sold reasonably request. If any such registration statement or comparable statement refers to any holder by name or otherwise as the holder of any securities of the Company and if, in its sole and exclusive judgment, such holder is or might be deemed to be a controlling person of the Company, such holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such holder and presented to the Company in writing, to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of the Company's securities covered thereby and that such holding does not imply that such holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such holder by name or otherwise is not required by the Securities Act or any similar Federal statute then in force, the deletion of the reference to such holder; PROVIDED, that with respect to this clause (ii) such holder shall furnish to the Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company. 5. REGISTRATION EXPENSES. (a) All Registration Expenses of any Shelf Registration and Piggyback Registration will be borne by the Company. (b) In connection with each Piggyback Registration and each Shelf Registration, the Company will reimburse the holders of Registrable Securities covered by such registration for the reasonable fees and disbursements of one counsel (which shall be Kirkland & Ellis or such other counsel chosen by the holders of a majority of the Registrable Securities initially requesting such registration.) 6. INDEMNIFICATION. (a) The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers and directors, and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment 7 thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such holder, director, officer or controlling person for any legal or other expenses reasonably incurred by such holder, director, officer or controlling person in connection with the investigation or defense of such loss, claim, damage, liability or expense, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will severally, and not jointly and severally, indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including, without limitation, amounts paid to indemnify others) resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such holder; provided, that the obligation to indemnify will be individual to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. (d) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of 8 securities. The Company also agrees to make such provisions, as are reasonably requested by any indemnified party, for contribution to such party in the event the Company's indemnification is unavailable for any reason. 7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all customary questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided, that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such holder, such holder's Registrable Securities and such holder's intended method of distribution. 8. RULE 144 REPORTING. With a view to making available to the holders of Registrable Securities the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to: (a) make and keep current public information available, within the meaning of Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after it has become subject to the reporting requirements of the Exchange Act; (b) file with the SEC, in a timely manner, all reports and other documents required of the Company under the Securities Act and Exchange Act (after it has become subject to such reporting requirements); and (c) so long as any party hereto owns any Registrable Securities, furnish to such party forthwith upon request, a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time commencing 90 days after the effective date of the first registration filed by the Company for an offering of its securities to the general public), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as such Person may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration. 9. OBLIGATIONS OF THE HOLDERS OF REGISTRABLE SECURITIES. (a) At least two business days prior to the first anticipated filing date of a Shelf Registration, the Company shall notify each holder of a Registrable Security in writing of the information the Company requires from each such holder if such holder elects to have any of such holder's Registrable Securities included in such Shelf Registration. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular holder that such holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, and any changes 9 in any such information that would require an amendment or supplement to any such registration, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. To the extent that any holder of Registrable Securities fails to timely provide such information, the Company shall not be subject to any penalties hereunder or under the Purchase Agreement for the period of time that such holder has failed to timely provide such information. (b) Each holder of Registrable Securities, by such holder's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Shelf Registration hereunder, unless such holder has notified the Company in writing of such holder's election to exclude all of such holder's Registrable Securities from such Shelf Registration. (c) Each holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(c) or Section 4(j), such holder will immediately discontinue disposition of Registrable Securities pursuant to any Shelf Registration(s) covering such Registrable Securities until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(c) or Section 4(j) or receipt of notice that no supplement or amendment is required. (d) Each holder of Registrable Securities agrees that, upon request of the Company, such holder will immediately discontinue disposition of the Registrable Securities pursuant to any Shelf Registration covering such Registrable Securities during any period not to exceed one 90-day period within any one 12-month period the Company requires in connection with an underwritten public offering. In addition, each holder of Registrable Securities agrees that such holder will enter into a standstill or lock-up agreement with respect to any underwritten public offering so long as (i) such agreement is required by the managing underwriter in connection with such underwritten public offering, (ii) the term of such agreement does not exceed 90 days, (iii) all of the Company's executive officers, directors and 5% stockholders (other than institutional stockholders) are required by such managing underwriter to enter into identical standstill or lockup agreements, and (iv) the continued effectiveness of such agreement is conditioned upon the continued effectiveness of all of the agreements described in the preceding clause (iii). 10. NOTICES. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient. Such notices, demands and other communications will be sent to the address indicated below: TO THE COMPANY, TO: Penton Media, Inc. 1300 East 9th Street Cleveland, Ohio 44114 Attention: Thomas L. Kemp Facsimile: (216) 696-0836 10 WITH A COPY, WHICH SHALL NOT CONSTITUTE NOTICE TO THE COMPANY, TO: Jones, Day, Reavis, & Pogue North Point 901 Lakeside Drive Cleveland, Ohio 44114 Attention: Christopher M. Kelly, Esq. Facsimile No.: (216) 579-0212 TO ANY ABRY PARTY OR TO THE HOLDERS OF REGISTRABLE SECURITIES, TO:: c/o ABRY Partners, LLC 111 Huntington Avenue 30th Floor Boston, Massachusetts 02199 Attn: Dan Budde Peni Garber Facsimile No.: (617) 859-8797 WITH A COPY, WHICH SHALL NOT CONSTITUTE NOTICE TO ABRY, TO: Kirkland & Ellis Citigroup Center 153 East 53rd Street New York, NY 10022-4675 Attention: Joshua N. Korff Facsimile No.: (212) 446-4900 TO SANDLER OR TO THE HOLDERS OF REGISTRABLE SECURITIES, TO: Sandler Capital Management 767 Fifth Avenue, 45th Floor New York, NY 10153 Attn: Hannah C. Stone Facsimile No.: (212) 826-0280 WITH A COPY, WHICH SHALL NOT CONSTITUTE NOTICE TO SANDLER, TO: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Douglas A. Cifu Facsimile No.: (212) 757-3990 or, in each case, to such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. 11. MISCELLANEOUS. 11 (a) NO INCONSISTENT AGREEMENTS. The Company will not enter into any agreement which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. (b) REMEDIES. Any Person having rights under any provision of this Agreement will be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. (c) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and holders of a 75% of the Registrable Securities. (d) WAIVER OF JURY TRIAL. The parties to this Agreement each hereby waives, to the fullest extent permitted by law, any right to trial by jury of any claim, demand, action, or cause of action (i) arising under this Agreement or (ii) in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the transactions related hereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity, or otherwise. The parties to this Agreement each hereby agrees and consents that any such claim, demand, action, or cause of action shall be decided by court trial without a jury and that the parties to this Agreement may file an original counterpart of a copy of this Agreement with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury. (e) SUCCESSORS AND ASSIGNS. Subject to the following sentence, all covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of holders of Registrable Securities are also for the benefit of, and enforceable by, any transferee of Registrable Securities if: (i) such holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within ten days after such assignment; (ii) the Company is, within ten days after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (iv) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement. (f) SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will 12 be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. (g) COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement. (h) DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. (I) GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OR CHOICE OF LAW OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION WHICH WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. (j) TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge or any duty hereunder shall fall upon a Saturday, Sunday, or any date on which banks in New York City, New York are authorized to be closed, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular business day. * * * * * 13 IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first above written. PENTON MEDIA, INC. By: /s/ Preston L. Vice --------------------------------------- Name: Preston L. Vice Title: Senior Vice President ABRY MEZZANINE PARTNERS, L.P. By: ABRY Mezzanine Investors, L.P., its general partner By: ABRY Mezzanine Holdings, LLC, its general partner By: /s/ Peni Garber --------------------------------------- Name: Peni Garber Title: Clerk ABACUS MASTER FUND, LTD. By: /s/ Douglas Banks --------------------------------------- Name: Douglas Banks Title: Director 14 SANDLER CAPITAL PARTNERS V, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM, Corp., a General Partner By: /s/ Kathleen Rose --------------------------------------- Name: Kathleen Rose Title: SANDLER CAPITAL PARTNERS V FTE, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM, Corp., a General Partner By: /s/ Kathleen Rose --------------------------------------- Name: Kathleen Rose Title: SANDLER CAPITAL PARTNERS V GERMANY, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM, Corp., a General Partner By: /s/ Kathleen Rose --------------------------------------- Name: Kathleen Rose Title: 15 EX-99 8 ex6sc13d-penton.txt EXHIBIT 6 EXHIBIT 6 to SCHEDULE 13D [Letterhead of Penton Media, Inc.] March 18, 2002 National City Bank Corporate Trust Administration 629 Euclid Avenue, Suite 635 Cleveland, Ohio 44114 Attention: Laura Kress Re: AMENDMENT NO. 1 TO RIGHTS AGREEMENT Ladies and Gentlemen: Pursuant to Section 27 of the Rights Agreement (the "Rights Agreement"), dated as of June 9, 2000, between Penton Media, Inc. (the "Company"), and National City Bank, as successor rights agent to Harris Trust and Savings Bank, the Company, by resolution adopted by its Directors, hereby amends the Rights Agreement as follows: 1. Section 1(a) of the Rights Agreement is hereby amended by adding the following paragraphs to the end of Section 1(a): "Notwithstanding the foregoing, no Investor (as defined in Section 1 (gg)), or any Affiliate or Associate of an Investor, shall become an Acquiring Person solely as a result of the approval, execution or delivery of the Purchase Agreement (as defined in Section 1(ii)) or the Ancillary Documents (as defined in Section 1(dd)) or the consummation of the transactions contemplated by any of them, including without limitation the issuance of the Series B Preferred Stock (as defined in Section 1(ll)) or the Warrants (as defined in Section 1 (mm)) or the conversion of the Series B Preferred Stock or the exercise of the Warrants, in each case, in accordance with the terms thereof, unless and until such time as (i) the Investor, or any Affiliate or Associate of the Investor, thereafter becomes the Beneficial Owner of additional Common Shares other than as a result of the conversion of the Series B Preferred Stock, exercise of the Warrants, acquisitions of equity securities directly from the Company or a stock dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (ii) any other Person who is the Beneficial Owner of Common Shares representing 1% or more of the then-outstanding Common Shares thereafter becomes an Affiliate or Associate of an Investor. In addition, notwithstanding the foregoing, any Person that acquires securities from an Investor (each a "Permitted Transferee"), pursuant to a transfer of securities permitted by Section 6.4 of the Purchase Agreement, (such a transfer, an "Exempt Transfer"), shall not become an Acquiring Person solely as a result of the Exempt Transfer, unless and until such time as (i) such Permitted Transferee or any Affiliate or Associate of such Permitted Transferee thereafter becomes the Beneficial Owner of additional Common Shares other than as a result of an Exempt Transfer, conversion of the Series B Preferred Stock, exercise of the Warrants, acquisitions of equity securities directly from the Company or National City Bank March 18, 2002 Page 2 as the result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (ii) any other Person who is the Beneficial Owner of Common Shares representing 1% or more of the then-outstanding Common Shares thereafter becomes an Affiliate or Associate of such Permitted Transferee." 2. Section 1(b) of the Rights Agreement is hereby amended by adding the following proviso to the end thereof: "PROVIDED FURTHER, HOWEVER, that no Investor will be deemed to be an Affiliate or Associate of another Investor solely because of any agreement contained in, or provision of, the Purchase Agreement, the Certificate of Designations or the Warrants" 3. Section 1(c) of the Rights Agreement is hereby amended by adding the following at the end of the first proviso and before the second proviso of such Section: "or (C) with respect to any Investor, if such beneficial ownership arises solely as a result of any agreement contained in, or provision of, the Purchase Agreement, the Certificate of Designations or the Warrants" 4. Section 1 of the Rights Agreement is hereby amended by adding the following Subsections (dd), (ee), (ff), (gg), (hh), (ii), (jj), (kk), (ll) and (mm): (dd) "Ancillary Documents" means the Registration Rights Agreement, the Warrants, the Certificate of Designations and all other contracts, agreements, schedules, certificates and other documents delivered pursuant to or in connection with the Purchase Agreement by any party thereto at or prior to the closing of the transactions contemplated thereby. (ee) "Certificate of Designations" means the Company's Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock designating the rights and preferences of the Series B Preferred Stock. (ff) "Exempt Transfer" has the meaning set forth in Section 1(a). (gg) "Investor" means any of ABRY Mezzanine Partners, L.P., ABACUS Master Fund, Ltd., Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P., or Sandler Capital Partners V Germany, L.P. (hh) "Permitted Transferee" has the meaning set forth in Section 1(a). (ii) "Purchase Agreement" means the Amended and Restated Series B Convertible Preferred Stock and Warrant Purchase Agreement, dated as of March 18, 2002, by and among the Company and the Investors. (jj) "Registration Rights Agreement" means the Registration Rights Agreement by and among the Company and the Investors to be entered into pursuant to the terms of the Purchase Agreement. National City Bank March 18, 2002 Page 3 (ll) "Series B Preferred Stock" means the Company's Series B Convertible Preferred Stock, par value $.01 per share. (mm) "Warrants" means the warrants to purchase Common Stock issued to the Investors pursuant to the terms of the Purchase Agreement. 5. The Rights Agreement shall not otherwise be supplemented or amended by virtue of this Amendment No. 1 to the Rights Agreement, but shall remain in full force and effect. 6. Capitalized terms used without other definition in this Amendment No. 1 to the Rights Agreement shall be used as defined in the Rights Agreement. 7. This Amendment No. 1 to the Rights Agreement shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and to be performed entirely within Delaware. 8. This Amendment No. 1 to the Rights Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 9. This Amendment No. 1 to the Rights Agreement shall be effective as of, and immediately prior to, the execution and delivery of the Purchase Agreement, and all references to the Rights Agreement shall, from and after such time, be deemed to be references to the Rights Agreement as amended hereby. 10. Exhibits B and C to the Rights Agreement shall be deemed amended in a manner consistent with this Amendment No. 1 to the Rights Agreement. Very truly yours, PENTON MEDIA, INC. By: /s/ Preston L. Vice --------------------------------------- Name: Preston L. Vice Title: Senior Vice President Accepted and Agreed to as of the effective time specified above. NATIONAL CITY BANK By: _______________________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----