Form of Amended and Restated Pledge Agreement



 
Exhibit 4.2 
  
 FORM OF 
 AMENDED AND RESTATED PLEDGE AGREEMENT 
  
 THIS AMENDED AND RESTATED PLEDGE AGREEMENT (this “Pledge
Agreement”) dated as of August     , 2005 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 collateral 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 $250 million revolving credit facility has been established in
favor of School Specialty, Inc., a Wisconsin corporation (the “Borrower”), pursuant to the Amended and Restated Credit Agreement (as amended, modified, supplemented and extended from time to time, the “Revolver Credit
Agreement”) dated as of April 11, 2003 among the Borrower, the guarantors identified therein, the lenders identified therein and Bank of America, N.A., as administrative agent; 
  
 WHEREAS, a $100 million term loan facility has been established in favor of the Borrower pursuant to the Term Loan Credit
Agreement (as amended, modified, supplemented and extended from time to time, the “Term Loan 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,
pursuant to that Intercreditor and Collateral Agency Agreement (as amended, modified, supplemented or extended, the “Intercreditor Agreement”) dated as of the date hereof among the Revolver Agent, on behalf of itself and the
Revolver Lenders, and the Term Loan Agent, on behalf of itself and the Term Loan Lenders, the parties thereto have appointed the Collateral Agent as agent for purposes of (a) perfecting a security interest in the Pledged Collateral (as defined
below) and (b) exercising such other actions and rights with respect to the Pledged Collateral provided to the Collateral Agent thereunder and hereunder; and 
  
 WHEREAS, this Pledge Agreement is given in amendment to, restatement of and substitution for the Amended and Restated Pledge Agreement dated as of April
11, 2003 among the Grantors and Bank of America, N.A., as administrative agent for the holders of the secured obligations referenced therein. 
  
 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 assigned to such terms in the Intercreditor 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: 
  
 “Capital Stock” means (i) in the case of a
corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person. 
  
 “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board, consistently applied and as in effect from time to time. 
  
 “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

  
 “Lien” means any mortgage,
pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing). 
  
 “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, (i) all Obligations (as such term is defined under the Revolver Credit Agreement), (ii) all Obligations (as such term is defined under the Term Loan Credit Agreement) and (iii) all costs and expenses
incurred in connection with enforcement and collection of the obligations described in the foregoing clauses (i) and (ii), 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 
  

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 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 Financing Documents, 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. 
  
 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. 
  

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 (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. 
  
 (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 Liens permitted under the Financing Documents. 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). 
  

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 (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 Liens permitted under the Financing Documents, 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 Financing 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 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 Financing Documents. 
  
 (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. 
  

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 (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, pursuant to the Intercreditor Agreement,
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 greater of (a) the default rate specified in the Revolver Credit Agreement for Base Rate Loans and (b) the default rate specified in the Term Loan Credit Agreement
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 Financing 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]. 
  
 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 Financing 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 and without notice, the Collateral Agent, at the direction of the Majority Secured Parties or in its own discretion in accordance with the terms of the
Intercreditor Agreement, may sell or otherwise dispose of or realize upon the Pledged Collateral, or any part thereof, in one or more parcels, at public or private sale, at any exchange or broker’s board or elsewhere, at such price or prices
and on such other terms as the Collateral Agent may 
  

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 deem commercially reasonable, for cash, credit or for future delivery or otherwise in accordance with applicable law. To
the extent permitted by law, any holder of the Secured Obligations may in such event, bid for the purchase of such securities. Each Pledgor agrees that, to the extent notice of sale shall be required by law and has not been waived by such Pledgor,
any requirement of reasonable notice shall be met if notice, specifying the place of any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to such Pledgor, in accordance with the
notice provisions of Section 16 hereof at least ten days before the time of such sale. The Collateral Agent shall not be obligated to make any sale of Pledged Collateral of such Pledgor regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. 
  
 (c) Private Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the Collateral Agent may deem it impracticable to effect a public sale of all or any part of the Pledged Shares or any of the securities constituting Pledged Collateral and that the
Collateral Agent may, therefore, determine to make one or more private sales of any such Pledged Collateral to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms that might have been
obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to delay sale of any such
Pledged Collateral for the period of time necessary to permit the issuer of such Pledged Collateral to register such Pledged Collateral for public sale under the Securities Act. Each Pledgor further acknowledges and agrees that any offer to sell
such Pledged Collateral that has been (i) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such offer may be advertised without
prior registration under the Securities Act), or (ii) made privately in the manner described above shall be deemed to involve a “public sale” under the UCC, notwithstanding that such sale may not constitute a “public offering”
under the Securities Act, and the Collateral Agent may, in such event, bid for the purchase of such Pledged Collateral. 
  
 (d) Retention of Pledged Collateral. To the extent permitted under applicable law, in addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default, the Collateral Agent may, after providing the notices required by Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, accept or retain
all or any portion of the Pledged Collateral in satisfaction of the Secured Obligations. Unless and until the Collateral Agent shall have provided such notices, however, the Collateral Agent shall not be deemed to have accepted or retained any
Pledged Collateral in satisfaction of any Secured Obligations for any reason. 
  
 (e) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Collateral Agent or the holders of the Secured Obligations are legally
entitled, the Pledgors shall be jointly and severally liable for the deficiency, together with interest thereon at the greater of (i) the default rate specified in the Revolver Credit Agreement for Base Rate Loans and (ii) the default rate specified
in the Term Loan Credit Agreement for Base Rate Loans, together with the costs of collection and reasonable attorneys’ fees (including the allocated cost of internal counsel). Any surplus remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Pledgors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto. 
  

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 10. Rights of the Collateral Agent. 
  
 (a) Power of Attorney. In addition to other powers of attorney contained herein, each Pledgor hereby designates and
appoints the Collateral Agent, on behalf of the holders of the Secured Obligations, and each of its designees or agents, as attorney-in-fact of such Pledgor, irrevocably and with power of substitution, with authority to take any or all of the
following actions upon the occurrence and during the continuation of an Event of Default: 
  
 (i) to demand, collect, settle, compromise and adjust, and give discharges and releases concerning the Pledged Collateral, all as the
Collateral Agent may reasonably deem appropriate; 
  
 (ii) to commence and prosecute any actions at any court for the purposes of collecting any of the Pledged Collateral and enforcing any other right in respect thereof; 
  
 (iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge
or release as the Collateral Agent may reasonably deem appropriate; 
  
 (iv) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Pledged Collateral; 
  
 (v) to direct any parties liable for any payment in connection with any of the Pledged Collateral to make
payment of any and all monies due and to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct; 
  
 (vi) to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of
or arising out of any Pledged Collateral; 
  
 (vii) to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Pledged Collateral; 
  
 (viii) to execute and deliver all assignments, conveyances, statements, financing statements, renewal
financing statements, security and pledge agreements, affidavits, notices and other agreements, instruments and documents that the Collateral Agent may reasonably deem appropriate in order to perfect and maintain the security interests and liens
granted in this Pledge Agreement and in order to fully consummate all of the transactions contemplated therein; 
  
 (ix) to exchange any of the Pledged Collateral or other property upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection therewith, deposit any of the Pledged Collateral with any committee, depository, transfer agent, registrar or other designated agency upon such terms as the Collateral Agent may reasonably deem
appropriate; 
  
 (x) to vote for a shareholder
resolution, or to sign an instrument in writing, sanctioning the transfer of any or all of the Pledged Collateral into the name of the Collateral Agent or one or more of the holders of the Secured Obligations or into the name of any transferee to
whom the Pledged Collateral or any part thereof may be sold pursuant to Section 9 hereof; and 
  

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 (xi) to do and perform all such other acts and things as the Collateral Agent may
reasonably deem appropriate or convenient in connection with the Pledged Collateral. 
  
 This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of the Secured Obligations shall remain outstanding and until all of the commitments relating thereto shall have
been terminated. The Collateral Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Collateral Agent in this Pledge Agreement, and shall not be
liable for any failure to do so or any delay in doing so. The Collateral Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Collateral Agent solely to protect, preserve and realize upon its security interest in the Pledged Collateral. 

 
 (b) Assignment by the Collateral Agent. The Collateral Agent, in
accordance with the Intercreditor Agreement, may from time to time assign the Secured Obligations and any portion thereof and/or the Pledged Collateral and any portion thereof, and the assignee shall be entitled to all of the rights and remedies of
the Collateral Agent under this Pledge Agreement in relation thereto. 
  
 (c) The Collateral Agent’s Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Pledged Collateral while being held by the Collateral Agent hereunder, the Collateral Agent shall have no duty
or liability to preserve rights pertaining thereto, it being understood and agreed that the Pledgors shall be responsible for preservation of all rights in the Pledged Collateral, and the Collateral Agent shall be relieved of all responsibility for
the Pledged Collateral upon surrendering it or tendering the surrender of it to the Pledgors. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that
the Collateral Agent shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not the Collateral Agent has
or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any of the Pledged Collateral. 
  
 (d) Voting Rights in Respect of the Pledged Collateral. 
  
 (i) So long as no Event of Default shall have occurred and
be continuing, to the extent permitted by law, each Pledgor may exercise any and all voting and other consensual rights pertaining to the Pledged Collateral of such Pledgor or any part thereof for any purpose not inconsistent with the terms of this
Pledge Agreement or the Financing Documents; and 
  
 (ii) Upon the occurrence and during the continuance of an Event of Default, all rights of a Pledgor to exercise the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to paragraph (i) of this
subsection shall cease and all such rights shall thereupon become vested in the Collateral Agent, which shall then have the sole right to exercise such voting and other consensual rights. 
  

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 (e) Dividend Rights in Respect of the Pledged Collateral. 
  
 (i) So long as no Event of Default shall have occurred and
be continuing and subject to Section 4(b) hereof, each Pledgor may receive and retain any and all dividends (other than stock dividends and other dividends constituting Pledged Collateral addressed hereinabove) or interest paid in respect of the
Pledged Collateral to the extent they are allowed under the Financing Documents. 
  
 (ii) Upon the occurrence and during the continuance of an Event of Default: 
  
 (A) all rights of a Pledgor to receive the dividends and interest payments that it would otherwise be
authorized to receive and retain pursuant to paragraph (i) of this subsection shall cease and all such rights shall thereupon be vested in the Collateral Agent, which shall then have the sole right to receive and hold as Pledged Collateral such
dividends and interest payments; and 
  
 (B) all
dividends and interest payments that are received by a Pledgor contrary to the provisions of paragraph (A) of this subsection shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of
such Pledgor, and shall be forthwith paid over to the Collateral Agent as Pledged Collateral in the exact form received, to be held by the Collateral Agent as Pledged Collateral and as further collateral security for the Secured Obligations.

  
 (f) Release of Pledged Collateral. If the Collateral
Agent releases any of the Pledged Collateral from this Pledge Agreement or substitutes any of the Pledged Collateral for other Pledged Collateral such release or substitution shall not alter, vary or diminish in any way the force, effect, lien,
pledge or security interest of this Pledge Agreement as to any Pledged Collateral not expressly released or substituted, and this Pledge Agreement shall continue as a first priority lien on all Pledged Collateral not expressly released or
substituted. 
  
 11. Rights of Majority Secured Parties.
All rights of the Collateral Agent hereunder, if not exercised by the Collateral Agent, may be exercised by the Majority Secured Parties. 
  
 12. Application of Proceeds. Upon the occurrence and during the continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Pledged Collateral, when received by the Collateral Agent or any of the holders of the Secured Obligations in cash or its equivalent, will be applied in reduction of the Secured Obligations in the order set forth
in the Intercreditor Agreement or other document relating to the Secured Obligations, and each Pledgor irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that the Collateral Agent shall
have the continuing and exclusive right to apply and reapply any and all such payments and proceeds in the order set forth in the Intercreditor Agreement, notwithstanding any entry to the contrary upon any of its books and records. 
  
 13. Continuing Agreement. 
  
 (a) This Pledge Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated (other than any obligations with respect to the indemnities and the
representations and warranties set forth in the Financing Documents). Upon such payment and termination, this Pledge Agreement shall be automatically terminated and the Collateral Agent and the holders of the Secured Obligations shall, upon the
request and at the expense of the Pledgors, forthwith release all of its liens and security interests hereunder and shall execute and deliver 
  

 10 








 all UCC termination statements and/or other documents reasonably requested by the Pledgors evidencing such termination.
Notwithstanding the foregoing, all releases and indemnities provided hereunder shall survive termination of this Pledge Agreement. 
  
 (b) This Pledge Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part,
of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Collateral Agent or any holder of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including, without limitation,
attorneys’ fees, the allocated cost of internal counsel and disbursements) incurred by the Collateral Agent or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the
Secured Obligations. 
  
 14. Amendments and Waivers. This
Pledge Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except by a written instrument executed by the Pledgors and the Collateral Agent; provided, however, that (i) the
Collateral Agent may not enter into any such amendment, waiver, supplement or modification without the prior written consent of the Majority Secured Parties and (ii) the Collateral Agent may not enter into an amendment or other modification of this
Section 14 without the prior written consent of all the Secured Parties. 
  
 15. Successors in Interest. This Pledge Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Pledgor, its successors and assigns, and shall inure, together with
the rights and remedies of the Collateral Agent and the holders of the Secured Obligations hereunder, to the benefit of the Collateral Agent and the holders of the Secured Obligations and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or delegate its duties hereunder without the prior written consent of the Majority Secured Parties. To the fullest extent permitted by law, each Pledgor hereby releases the Collateral Agent
and each holder of the Secured Obligations, and their respective successors and assigns, from any liability for any act or omission relating to this Pledge Agreement or the Collateral, except for any liability arising from the gross negligence or
willful misconduct of the Collateral Agent or such holder, or their respective officers, employees or agents. 
  
 16. Notices. All notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such
written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, specified for such Person on Schedule 1 hereto or to such other address, facsimile
number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt
by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered. 
  
 17. Counterparts. This Pledge Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Pledge Agreement to produce or account for more
than one such counterpart. 
  

 11 








 18. Headings. The headings of the sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any provision of this Pledge Agreement. 
  
 19. Governing Law; Submission to Jurisdiction; Venue. 
  
 (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE COLLATERAL AGENT AND EACH HOLDER OF THE SECURED OBLIGATIONS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 
  
 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT OR ANY OTHER FINANCING DOCUMENT MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NORTH CAROLINA SITTING IN CHARLOTTE, NORTH CAROLINA OR OF THE UNITED STATES FOR THE WESTERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS PLEDGE AGREEMENT, EACH PLEDGOR AND THE COLLATERAL AGENT CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH PLEDGOR AND THE COLLATERAL AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS PLEDGE AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PLEDGOR AND THE
COLLATERAL AGENT WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 
  
 20. Waiver of Right to Trial by Jury. 
  
 EACH PARTY TO THIS PLEDGE AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
PLEDGE AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS PLEDGE AGREEMENT OR ANY OTHER FINANCING DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY 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 ANY PARTY TO THIS PLEDGE AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

  
 21. Severability. If any provision of this Pledge
Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions. 
  

 12 








 22. Entirety. This Pledge Agreement, the other Financing Documents and the other documents
relating to the Secured Obligations represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the
Financing Documents, any other documents relating to the Secured Obligations, or the transactions contemplated herein and therein. 
  
 23. Survival. All representations and warranties of the Pledgors hereunder shall survive the execution and delivery of this Pledge Agreement, the
other Financing Documents and the other documents relating to the Secured Obligations, the delivery of any promissory notes delivered thereunder and the extension of credit thereunder or in connection therewith. 
  
 24. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Pledged Collateral (including, without limitation, real and other personal property owned by a Pledgor), or by a guarantee, endorsement or property of any other Person, then the Collateral
Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of any Event of Default, and the Collateral Agent shall have the right, in its sole discretion, to determine which rights, security,
liens, security interests or remedies the Collateral Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights
of the Collateral Agent or the holders of the Secured Obligations under this Pledge Agreement, under any of the other Financing Documents or under any other document relating to the Secured Obligations. 
  
 25. Joint and Several Obligations of Pledgors. 
  
 (a) Each of the Pledgors is accepting joint and several liability hereunder
in consideration of the financial accommodation to be provided by the holders of the Secured Obligations, for the mutual benefit, directly and indirectly, of each of the Pledgors and in consideration of the undertakings of each of the Pledgors to
accept joint and several liability for the obligations of each of them. 
  
 (b) Each of the Pledgors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Pledgors with respect to the payment and performance
of all of the Secured Obligations arising under this Pledge Agreement, the other Financing Documents and any other documents relating to the Secured Obligations, it being the intention of the parties hereto that all the Secured Obligations shall be
the joint and several obligations of each of the Pledgors without preferences or distinction among them. 
  
 [Signature Pages Follow] 
  

 13 








 Each of the parties hereto has caused a counterpart of this Pledge Agreement to be duly executed and
delivered as of the date first above written. 
  

					
	PLEDGORS:                                    
        	  	 SCHOOL SPECIALTY, INC.,
 a Wisconsin
corporation

			
	 	  	By:	 	  


	 	  	Name:	 	Mary M. Kabacinski
	 	  	Title:	 	Chief Financial Officer
		
	PLEDGORS:	  	 CHILDCRAFT EDUCATION CORP.,
 a New
York corporation

	 	  	 CLASSROOMDIRECT.COM, LLC,
 a Delaware
limited liability company

	 	  	 BIRD-IN-HAND WOODWORKS, INC.,
 a New
Jersey corporation

	 	  	 SPORTIME, LLC,
 a Delaware limited
liability company

	 	  	 GLOBAL VIDEO, LLC,
 a Wisconsin
limited liability company

	 	  	 PREMIER AGENDAS, INC.,
 a
Washington corporation
 FREY SCIENTIFIC, INC.,
 a Delaware
corporation
 AMALGAMATED WIDGETS, INC.,
 a Wisconsin
corporation
 SAX ARTS & CRAFTS, INC.,
 a Delaware
corporation
 CALIFONE INTERNATIONAL, INC.,
 a Delaware
corporation

	 	  
	 	  
	 	  
	 	  
			
	 	  	By:	 	  


	 	  	Name:	 	Mary M. Kabacinski
	 	  	Title:	 	Treasurer

  
 Accepted and agreed to as of the date
first above written. 
  

			
	 BANK OF AMERICA, N.A.,
 as Collateral
Agent

		
	By:	 	  


	Name:	 	 
	Title:	 	 








 Schedule 1 
  

Notice Addresses 
  

	1.	Pledgors: 

  
 c/o School Specialty, Inc. 
 W6316 Design Drive 
 Greenville, Wisconsin 54942 
 Attention:        Mary M. Kabacinski 
 Telephone:      920-882-5852

 Facsimile:       920-882-5863 
  

	2.	Collateral Agent: 

  
 Bank of America, N.A., as Collateral Agent 
 1455 Market St 
 CA5-701-05-19 
 San Francisco, CA 94103 
 Attention:        Anthea Del Bianco 
 Telephone:      415.436.2776 
 Facsimile:       415.503.5101 







 Schedule 2(a) 
  
 Pledged Stock 
  

									
	 Pledgor

	  	 Issuer

	  	 Number of
 Shares

	  	 Certificate
 Number

	  	Percentage
Ownership Pledged


	 School Specialty, Inc.
	  	ClassroomDirect.com, LLC	  	1	  	1	  	100%
	 School Specialty, Inc.
	  	Childcraft Education Corp.	  	1,000	  	1	  	100%
	 School Specialty, Inc.
	  	Sportime, LLC	  	N/A	  	N/A	  	100%
	 School Specialty, Inc.
	  	Global Video, LLC	  	100	  	1	  	100%
	 School Specialty, Inc.
	  	New School, Inc.	  	100	  	1	  	100%
	 School Specialty, Inc.
	  	Frey Scientific, Inc.	  	100	  	1	  	100%
	 School Specialty, Inc.
	  	Premier Agendas, Inc.	  	11,200	  	52	  	100%
	 School Specialty, Inc.
	  	Premier School Agendas, Ltd.	  	65	  	11AC	  	65%
	 School Specialty, Inc.
	  	Amalgamated Widgets, Inc.	  	100	  	1	  	100%
	 School Specialty, Inc.
	  	Sax Arts & Crafts, Inc.	  	100	  	1	  	100%
	 Childcraft Education Corp.
	  	Bird-in-Hand Woodworks, Inc.	  	5	  	2	  	100%








 Schedule 4(a) 
  
 Form of Irrevocable Stock Power 
  
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to 
  
 the following shares of capital stock of
                                        ,
a                          corporation: 
  

			
	 Number of Shares

	 	 Certificate Number



  
 and irrevocably appoints
                                        
                     its agent and attorney-in-fact to transfer all or any part of such capital stock and to take all necessary and appropriate
action to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him. The effectiveness of a transfer pursuant to this stock power shall be subject to any and all transfer restrictions
referenced on the face of the certificates evidencing such interest or in the certificate of incorporation or bylaws of the subject corporation, to the extent they may from time to time exist. 
  

			
	[HOLDER]
		
	By:	 	  


	Name:	 	 
	Title: