Exhibit 4.3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this “
Pledge Agreement ”) dated as of February 1, 2006
is by and among the parties identified as “Pledgors” on
the signature pages hereto and such other parties as may become
Pledgors hereunder after the date hereof (individually a “
Pledgor ”, and collectively the “
Pledgors ”) and BANK OF AMERICA, N.A., as
administrative agent (in such capacity, the “ Collateral
Agent ”) for the holders of the Secured Obligations
referenced below.
W I T N E S S E T H
WHEREAS, a $350 million credit
facility has been established in favor of School Specialty, Inc., a
Wisconsin corporation (the “ Borrower ”),
pursuant to the terms of that Amended and Restated Credit Agreement
(as amended, modified, supplemented and extended from time to time,
the “ Credit Agreement ”) dated as of the date
hereof among the Borrower, the Guarantors identified therein, the
Lenders identified therein and Bank of America, N.A., as
administrative agent;
WHEREAS, this Pledge Agreement is
required under the terms of the Credit Agreement; and
WHEREAS, this Pledge Agreement is
given in amendment to, restatement of and substitution for the
Amended and Restated Pledge Agreement dated as of August 31,
2005 among the Pledgors and Bank of America, N.A., as collateral
agent.
NOW, THEREFORE, in consideration of
these premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions .
(a) Capitalized terms used herein
and not otherwise defined herein shall have the meanings provided
in the Credit Agreement.
(b) As used herein, the following
terms shall have the meanings assigned thereto in the Uniform
Commercial Code in effect in the State of North Carolina on the
date hereof: Accession, Financial Asset, Proceeds and
Security.
(c) As used herein, the following
terms shall have the meanings set forth below:
“ Pledged Collateral
” has the meaning provided in Section 2
hereof.
“ Pledged Shares
” has the meaning provided in Section 2
hereof.
“ Secured Obligations
” means, without duplication, all of the Obligations and all
costs and expenses incurred in connection with enforcement and
collection of the Obligations, including reasonable
attorneys’ fees and the allocated cost of internal
counsel.
“ UCC ” means the
Uniform Commercial Code.
2. Pledge and Grant of Security
Interest . To secure the prompt payment and performance in full
when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Pledgor
hereby grants, pledges and assigns to the Collateral Agent, for the
benefit of the holders of the Secured Obligations, a continuing
security interest in, and a right to set-off against, any and all
right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “ Pledged Collateral
”):
(a) Pledged Shares .
(i) One hundred percent (100%) (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding Capital
Stock owned by such Pledgor of each Domestic Subsidiary set forth
on Schedule 2(a) attached hereto and (ii) sixty-five
percent (65%) (or, if less, the full amount owned by such
Pledgor) of the issued and outstanding shares of Capital Stock
entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) (“ Voting Equity ”)
and one hundred percent (100%) (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding Capital Stock
not entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) (“ Non-Voting Equity
”) owned by such Pledgor of each Foreign Subsidiary set forth
on Schedule 2(a) attached hereto, in each case together with
the certificates (or other agreements or instruments), if any,
representing such Capital Stock, and all options and other rights,
contractual or otherwise, with respect thereto (collectively,
together with the Capital Stock described in Section 2(b) and
2(c) below, the “ Pledged Shares ”), including,
but not limited to, the following:
(A) all shares, securities,
membership interests or other equity interests representing a
dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged
Shares, or resulting from a stock split, revision, reclassification
or other exchange therefor, and any subscriptions, warrants, rights
or options issued to the holder of, or otherwise in respect of, the
Pledged Shares; and
(B) without affecting the
obligations of the Pledgors under any provision prohibiting such
action hereunder or under the Credit Agreement, in the event of any
consolidation or merger involving the issuer of any Pledged Shares
and in which such issuer is not the surviving entity, all Capital
Stock of the successor entity formed by or resulting from such
consolidation or merger.
(b) Additional Shares .
(i) One hundred percent (100%) (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding Capital
Stock owned by such Pledgor of any Person that hereafter becomes a
Domestic Subsidiary and (ii) sixty-five percent
(65%) (or, if less, the full amount owned by such Pledgor) of
the Voting Equity and one hundred percent (100%) (or, if less,
the full amount owned by such Pledgor) of the Non-Voting Equity
owned by such Pledgor of any Person that hereafter becomes a
Foreign Subsidiary, including, without limitation, the certificates
(or other agreements or instruments) representing such Capital
Stock.
(c) Accessions and Proceeds .
All Accessions and all Proceeds of any and all of the
foregoing.
Without limiting the generality of
the foregoing, it is hereby specifically understood and agreed that
a Pledgor may from time to time hereafter deliver additional
Capital Stock to the Collateral Agent as collateral security for
the Secured Obligations. Upon delivery to the Collateral Agent,
such additional Capital Stock shall be deemed to be part of the
Pledged Collateral of such Pledgor and shall be subject to the
terms of this Pledge Agreement whether or not Schedule 2(a)
is amended to refer to such additional Capital Stock.
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3. Security for Secured
Obligations . The security interest created hereby in the
Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the Secured Obligations.
4. Delivery of the Pledged
Collateral . Each Pledgor hereby agrees that:
(a) Certificates and
Indorsements . Each Pledgor shall deliver to the Collateral
Agent (i) simultaneously with or prior to the execution and
delivery of this Pledge Agreement, all certificates representing
the Pledged Shares of such Pledgor and (ii) promptly upon the
receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral of a
Pledgor. Prior to delivery to the Collateral Agent, all such
certificates and instruments constituting Pledged Collateral of a
Pledgor shall be held in trust by such Pledgor for the benefit of
the Collateral Agent pursuant hereto. All such certificates shall
be delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment
in blank, substantially in the form provided in Schedule
4(a) attached hereto.
(b) Additional Securities .
If such Pledgor shall receive by virtue of its being or having been
the owner of any Pledged Collateral, any (i) certificate,
including without limitation, any certificate representing a
dividend or distribution in connection with any increase or
reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares or other equity interests, stock
splits, spin-off or split-off, promissory notes or other
instruments; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or
otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a partial
or total liquidation, dissolution or reduction of capital, capital
surplus or paid-in surplus, then such Pledgor shall receive such
certificate, instrument, option, right or distribution in trust for
the benefit of the Collateral Agent, shall segregate it from such
Pledgor’s other property and shall deliver it forthwith to
the Collateral Agent in the exact form received together with any
necessary endorsement and/or appropriate stock power duly executed
in blank, substantially in the form provided in Schedule
4(a) , to be held by the Collateral Agent as Pledged Collateral
and as further collateral security for the Secured
Obligations.
(c) Financing Statements .
Each Pledgor authorizes the Collateral Agent to file one or more
financing statements (with collateral descriptions broader and/or
less specific than the description of the Collateral contained
herein) disclosing the Collateral Agent’s security interest
in the Pledged Collateral. Each Pledgor agrees to execute and
deliver to the Collateral Agent such financing statements and other
filings as may be reasonably requested by the Collateral Agent in
order to perfect and protect the security interest created hereby
in the Pledged Collateral of such Pledgor.
5. Representations and
Warranties . Each Pledgor hereby represents and warrants to the
Collateral Agent, for the benefit of the holders of the Secured
Obligations, that so long as any of the Secured Obligations remains
outstanding and until all of the commitments relating thereto have
been terminated:
(a) Authorization of Pledged
Shares . The Pledged Shares are duly authorized and validly
issued, are fully paid and, subject to Section 180.0622 of the
Wisconsin General Statutes in the case of the Pledged Shares in any
Subsidiary formed under the laws of the State of Wisconsin,
nonassessable and are not subject to the preemptive rights of any
Person.
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(b) Title . Each Pledgor has
good and indefeasible title to the Pledged Collateral of such
Pledgor and is the legal and beneficial owner of such Pledged
Collateral free and clear of any Lien, other than Permitted Liens.
There exists no “adverse claim” within the meaning of
Section 8-102 of the UCC with respect to the Pledged Shares of
such Pledgor.
(c) Exercising of Rights .
The exercise by the Collateral Agent of its rights and remedies
hereunder will not violate any law or governmental regulation or
any material contractual restriction binding on or affecting a
Pledgor or any of its property.
(d) Pledgor’s Authority
. No authorization, approval or action by, and no notice or filing
with any Governmental Authority or with the issuer of any Pledged
Stock is required either (i) for the pledge made by a Pledgor
or for the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement (except as have been already obtained) or
(ii) for the exercise by the Collateral Agent or the holders
of the Secured Obligations of their rights and remedies hereunder
(except as may be required by laws affecting the offering and sale
of securities).
(e) Security
Interest/Priority . This Pledge Agreement creates a valid
security interest in favor of the Collateral Agent for the benefit
of the holders of the Secured Obligations, in the Pledged
Collateral. The taking of possession by the Collateral Agent of the
certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will
perfect and establish the first priority of the Collateral
Agent’s security interest in the Pledged Shares and, when
properly perfected by filing or registration, in all other Pledged
Collateral represented by such Pledged Shares and instruments
securing the Secured Obligations. Except as set forth in this
Section 5(e), no action is necessary to perfect or otherwise
protect such security interest.
(f) Partnership and Membership
Interests . Except as previously disclosed to the Collateral
Agent, none of the Pledged Shares consisting of partnership or
limited liability company interests (i) is dealt in or traded
on a securities exchange or in a securities market, (ii) by
its terms expressly provides that it is a security governed by
Article 8 of the UCC, (iii) is an investment company security,
(iv) is held in a securities account or (v) constitutes a
Security or a Financial Asset.
6. Covenants . Each Pledgor
hereby covenants, that so long as any of the Secured Obligations
remains outstanding and until all of the commitments relating
thereto have been terminated, such Pledgor shall:
(a) Defense of Title .
Warrant and defend title to and ownership of the Pledged Collateral
of such Pledgor at its own expense against the claims and demands
of all other parties claiming an interest therein, keep the Pledged
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of
Pledged Collateral of such Pledgor or any interest therein, except
as permitted under the Credit Agreement and the other Loan
Documents.
(b) Further Assurances .
Promptly execute and deliver at its expense all further instruments
and documents and take all further action that may be necessary and
desirable or that
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the Collateral Agent may reasonably
request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor
(including, without limitation, any and all action necessary to
satisfy the Collateral Agent that the Collateral Agent has obtained
a first priority perfected security interest in all Pledged
Collateral); (ii) enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder in respect of the Pledged
Collateral of such Pledgor; and (iii) otherwise effect the
purposes of this Pledge Agreement, including, without limitation
and if requested by the Collateral Agent, delivering to the
Collateral Agent irrevocable proxies in respect of the Pledged
Collateral of such Pledgor.
(c) Amendments . Not make or
consent to any amendment or other modification or waiver with
respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect
to any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit
Agreement.
(d) Compliance with Securities
Laws . File all reports and other information now or hereafter
required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or
foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
(e) Issuance or Acquisition of
Capital Stock . Not, without executing and delivering, or
causing to be executed and delivered, to the Collateral Agent such
agreements, documents and instruments as the Collateral Agent may
require, issue or acquire any Capital Stock consisting of an
interest in a partnership or a limited liability company that
(i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that
it is a security governed by Article 8 of the UCC, (iii) is an
investment company security, (iv) is held in a securities
account or (v) constitutes a Security or a Financial
Asset.
7. Advances by Holders of the
Secured Obligations . On failure of any Pledgor to perform any
of the covenants and agreements contained herein, the Collateral
Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Collateral
Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance
premiums, the payment of any taxes, a payment to obtain a release
of a Lien or potential Lien, expenditures made in defending against
any adverse claim and all other expenditures that the Collateral
Agent or the holders of the Secured Obligations may make for the
protection of the security hereof or may be compelled to make by
operation of law. All such sums and amounts so expended shall be
repayable by the Pledgors on a joint and several basis promptly
upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the
date said amounts are expended at the Default Rate for Base Rate
Loans. No such performance of any covenant or agreement by the
Collateral Agent or the holders of the Secured Obligations on
behalf of any Pledgor, and no such advance or expenditure therefor,
shall relieve the Pledgors of any default under the terms of this
Pledge Agreement, the other Loan Documents or any other documents
relating to the Secured Obligations. The holders of the Secured
Obligations may make any payment hereby authorized in accordance
with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or
into the validity of any tax assessment, sale, forfeiture, tax
lien, title or claim except to the extent such payment is being
contested in good faith by a Pledgor in appropriate proceedings and
against which adequate reserves are being maintained in accordance
with GAAP.
8. [ Reserved ].
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9. Remedies .
(a) General Remedies . Upon
the occurrence of an Event of Default and during the continuation
thereof, the Collateral Agent and the holders of the Secured
Obligations shall have, in addition to the rights and remedies
provided herein, in the Loan Documents, in any other documents
relating to the Secured Obligations, or by law (including, without
limitation, levy of attachment and garnishment), the rights and
remedies of a secured party under the UCC of the jurisdiction
applicable to the affected Pledged Collateral.
(b) Sale of Pledged
Collateral . Upon the occurrence of an Event of Default and
during the continuation thereof, without limiting the generality of
this Section 9 a
