Pledge And Security Agreement

PLEDGE AND SECURITY AGREEMENT
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THIS PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT"), dated as of this 26th day of January, 2005, is made by Adsero Corp., a Delaware corporation ("PLEDGOR"), having an office at 2085 Hurontario Street, Mississauga, Ontario, Canada L5A 4G1, to and for the benefit of Barrington Bank International Limited, a Bahamian banking company, having an office at Cumberland House, PO Box N3036, 2nd Floor, Nassau, Bahamas (hereinafter, "SECURED PARTY").


W I T N E S S E T H:
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WHEREAS, Secured Party, as lender, and Teckn-O-Laser Company, a Nova Scotia unlimited liability company ("BORROWER") are among the parties to that certain Loan Agreement dated as of the date hereof (as the same may be amended, restated, supplemented or otherwise modified, the "LOAN AGREEMENT"), pursuant to which, inter alia, Secured Party is lending Cdn.$2,000,000 to Borrower;


WHEREAS, Pledgor is among the parties providing Secured Party with that certain joint and several Guaranty dated as of the date hereof (the "Guaranty") as security for the timely performance by Borrower of its obligations under the Loan Agreement;


WHEREAS, upon the completion of the transactions described in that certain Funding and Payoff Agreement dated as of the date hereof by and among, inter alia, Pledgor and Secured Party, Pledgor will indirectly own a majority interest in Borrower and will receive significant benefits from Borrower's entering into the Loan Agreement; and


WHEREAS, as a condition to Secured Party's agreement to enter into the Loan Agreement and provide the funding described therein, Secured Party has required that Pledgor pledge the Collateral (as defined below) as security for Pledgor's performance of its obligations under the Guaranty;


NOW, THEREFORE, in consideration of the sum of $10.00 and for other good and valuable consideration received by Pledgor, the receipt and sufficiency of which are hereby acknowledged, Pledgor, intending to be legally bound hereby, covenants and agrees as follows:


1. Certain Definitions. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Loan Agreement. In addition to the words and terms defined in the Loan Agreement and elsewhere in this Agreement, the following words and terms shall have the respective meanings set forth below:


(a) "COLLATERAL" shall mean, collectively, the Ownership
Interests and Proceeds.


(b) "EQUITY HOLDER" means a direct or indirect legal or
beneficial owner of an Equity Interest.


(c) "EQUITY INTEREST" means (i) in the case of a corporation,
shares of stock (and status as a stockholder), (ii) in the case of a
general or limited partnership, a partnership interest (including
status as a partner), (iii) in the case of a limited liability company,
membership units or interests (and status as a member) and (iv) in the
case of any other Person other than an individual, the comparable
interests therein.


(d) "ISSUER" means a Person issuing Equity Interests.


(e) "OWNERSHIP INTEREST" of Pledgor shall mean Pledgor's
Equity Interest, and all other right, title and interest in any Issuer,
including those entities described on Schedule 1(b) (as amended from
time to time), together with (1) all dividends, proceeds, rents,
income, increase, profits and related rights, all sums or distributions
(whether made in cash, tangible or intangible


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property of any kind or character, or otherwise) due or to become due
to Pledgor, including all profits and income, and the accounts thereof,
all surplus and capital, and the accounts thereof, (2) all rights, if
any, in specific property of an Issuer, (3) the rights, if any, but not
the duty, to participate in the management and administration of an
Issuer's business and affairs, to require any information and account
of such Issuer's transactions and all other matters relating to the
business and financial condition of such Issuer, to inspect the books
and records of such Issuer, including federal, state and local income
tax returns, and to receive all allocations of loss, deduction, credit
and other tax benefits allocable to Pledgor from such Issuer, and (4)
any and all other rights, title and interest of Pledgor in each any
such Issuer and under such Issuer's organizational documents, in each
case whether now existing or hereafter acquired or created, together
with all products, proceeds, substitutions and additions of or to any
of the foregoing.


(f) "OBLIGATIONS" shall have the meaning set forth in Section
2 hereof.


(g) "PLEDGOR OBLIGATIONS" shall have the meaning set forth in
Section 2 hereof.


(h) "PROCEEDS" shall mean all consideration received when an
Ownership Interest and/or proceeds thereof are sold, exchanged,
collected or otherwise disposed of, both cash and non-cash, and
(without duplication of the definition of Ownership Interest) all
payments, dividends or distributions paid or payable on account of the
Ownership Interest.


2. Security. As security for the full and timely payment and/or performance, as applicable, of the obligations and liabilities of Pledgor under the Guaranty (collectively, the "OBLIGATIONS") and all other obligations of Pledgor contained herein (collectively with the Obligations, the "PLEDGOR OBLIGATIONS") in accordance with the respective terms thereof, Pledgor agrees that Secured Party shall have, and hereby pledges, grants to and creates in favor of Secured Party, a first-priority security interest, under the Uniform Commercial Code as enacted in the State of New York (as amended from time to time, the "CODE"), in and to all of Pledgor's right, title and interest, whether now existing or hereafter arising, created or acquired in, to and under the Collateral. In connection with the granting of such a security interest, Pledgor hereby collaterally assigns, transfers and sets over unto Secured Party all of Pledgor's right, title and interest, whether now existing or hereafter arising, created or acquired in, to and under the Collateral.


3. Limitations on Secured Party's Obligations under the Organizational Documents of Issuer. Pledgor acknowledges and agrees that this Agreement shall not in any way obligate Secured Party Secured Party or any of its successors and assigns to perform any of the now-existing or hereafter accruing obligations of Pledgor under the organizational documents of any Issuer, and Pledgor agrees to perform any and all obligations (including the payment of any and all liabilities or assessments) of Pledgor thereunder, whether heretofore or hereafter accruing or arising, all with the same effect as though this Agreement had not been executed or delivered by Pledgor.


4. Provisions Applicable to the Collateral. The parties agree that, at all times during the term of this Agreement, the following provisions shall be applicable to the Collateral:


(a) Pledgor shall keep accurate and complete books and records
concerning the Collateral owned by it.


(b) Pledgor shall deliver to Secured Party any document,
instrument or security evidencing the Collateral and transfer powers
executed in blank. Secured Party shall have the right to appoint one or
more agents for the purpose of retaining physical possession of the
certificates representing or evidencing the Collateral, which may be
held (in the discretion of Secured Party) in the name of the Pledgor,
endorsed or assigned in blank or in favor of Secured Party, or any
nominee or nominees of Secured Party or any agent appointed by Secured
Party.


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(c) Secured Party shall have the right to review the books and
records of Pledgor pertaining to the Collateral and to copy the same
and make excerpts therefrom during normal business hours and at
reasonable intervals and upon reasonable notice.


(d) Promptly upon request of Secured Party from time to time,
Pledgor shall furnish Secured Party with information concerning the
Collateral as Secured Party may request, including copies of all
notices and communications with respect to each Issuer or its
properties, assets, operations or business which may be sent by Pledgor
to, or received by Pledgor from, such Issuer or any other Equity
Holders of any such Issuer.


(e) Prior to the occurrence of any Event of Default, Pledgor
shall have the right to exercise all voting, consent and other rights
under or pertaining to the Collateral owned by it pursuant to the
organizational documents of the applicable Issuer so long as such
rights are exercised in a manner that does not cause an Event of
Default.


(f) Pledgor shall provide Secured Party with certified copies
of its organizational documents. Pledgor shall not authorize or consent
to any amendment, revision or modification of its organizational
documents or the organizational documents of an Issuer that would
adversely affect Secured Party without first obtaining the written
consent of Secured Party, including any amendment that would (i) remove
any representative of an Issuer from management, (ii) limit, commence
or otherwise change the control and authority of Pledgor over the
management and operation of an Issuer, or (iii) except as expressly
permitted by the Loan Agreement, allow the admission of new or
substitute Equity Holders or the issuance of additional Equity
Interests in any Issuer.


(g) Except as may be permitted under the Loan Agreement,
neither Pledgor, Borrower nor any other Issuer shall permit, without
the prior written consent of Secured Party any other transaction that
would have the effect of diluting Pledgor's Ownership Interest in an
Issuer.


(h) Pledgor shall not wind up, liquidate or dissolve, or enter
into any transaction of reorganization, consolidation, amalgamation or
merger, and shall not cause or consent to any such act by an Issuer.


(i) Pledgor has and shall continue to have good and marketable
title to the Collateral from time to time owned or acquired by it, free
and clear of all Liens, except the security interest granted hereunder
and as permitted under the Loan Agreement. Pledgor shall defend such
title against the claims and demands of all Persons whomsoever.


(j) Pledgor shall not, without the prior written consent of
Secured Party, directly or indirectly (except as expressly permitted by
the Loan Agreement): (i) borrow against the Collateral owned by it
other than pursuant to the Loan Documents, (ii) create, incur, assume
or suffer to exist any Lien with respect to any of the Collateral owned
by it, except the security interest granted hereunder, (iii) sell,
transfer, assign or otherwise dispose of any of the Collateral owned by
it, (iv) permit any direct or indirect sale, transfer, assignment or
other disposition of any Equity Interest in an Issuer or in any Equity
Holder of an Issuer or permit the admission of new or substitute Equity
Holders in an Issuer or in any Equity Holder of an Issuer, (v) permit
any levy or attachment to be made against any of the Collateral owned
by it except any levy or attachment relating to the Loan Documents, or
(vi) permit any financing statement to be on file with respect to any
of the Collateral owned by it, except financing statements in favor of
Secured Party.


(k) Pledgor shall faithfully preserve and protect Secured
Party's security interest in the Collateral owned by it and shall, at
its own cost and expense, cause said security interest to be perfected
and to continue to be perfected, and for such purpose Pledgor shall
from time to time at the request of Secured Party execute and file or
record, or cause to be filed or recorded, or


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authorize the filing and recording of, such instruments, documents and
notices, including financing statements, amendments and continuation
statements with respect thereto, as Secured Party may deem necessary or
advisable from time to time in order to perfect and to continue as
perfected said security interest. Pledgor shall do all such other acts
and things and execute and deliver all such other instruments and
documents, including further security agreements, pledges and
assignments, as Secured Party may deem necessary or advisable from time
to time in order to perfect, preserve and continue as perfected the
priority of said security interest as a security interest in the
Collateral prior to the rights of all other Persons therein or thereto
(subject to liens permitted under the Loan Agreement). Pledgor,
Borrower and each other Issuer that from time to time may execute an
acknowledgement in the form attached hereto hereby agree that Borrower
and each such other Issuer shall follow all good faith instructions of
Secured Party with respect to the Collateral, including with respect to
the delivery of Proceeds and/or the sale, transfer, assignment,
conveyance or other disposition of the Collateral, and that this
provision is intended to cede "CONTROL" of the Collateral for purposes
of the Code to the extent that the term "control" applies to collateral
of the same type as the Collateral.


(l) Pledgor does hereby irrevocably constitute and appoint
Secured Party its true and lawful attorney, coupled with the interest
created hereby, with full power of substitution, for it and in its
name, place and stead, to ask, demand, collect, receive, receipt for,
sue for, compound and give acquittance for any and all sums or
properties that may be or become due, payable or distributable in
connection with or with respect to the Collateral owned by it, with
full power to settle, adjust or compromise any claim thereunder or
therefor as fully as Pledgor could do, and to endorse or sign the name
of Pledgor on all negotiable instruments and any other commercial paper
given in payment or in part payment thereof, and all documents of
satisfaction, discharge or receipt required or requested in connection
therewith, and in its discretion to file any claim or take any other
action or proceeding, either in its own name or in the name of Pledgor,
or otherwise, that Secured Party may deem necessary or appropriate to
collect or otherwise realize upon any and all of such Collateral, or
which may be necessary or appropriate to protect and preserve the
right, title and interest of Secured Party in and to such Collateral
and the security intended to be afforded hereby.


5. Representations and Warranties. In addition to, and not in diminution of, the representations and warranties related to Pledgor that are set forth in the Loan Agreement and the Guaranty, all of which are hereby incorporated herein by reference, Pledgor hereby represents and warrants to Secured Party as follows:


(a) Pledgor has good, valid and marketable title to the
Collateral set forth on Schedule 1(b) as being owned by Pledgor, free
and clear of all Liens (other than liens permitted under the Loan
Agreement). Schedule 1(b) hereto is true, correct and complete in all
respects.


(b) This Agreement and the pledge and delivery of the
Collateral to Secured Party, together with stock powers or other
instruments executed in blank, creates a duly perfected security
interest in the Collateral owned by Pledgor in Secured Party's favor
and no financing statement, mortgage or security agreement covering any
of the Collateral other than in respect of Secured Party is on file in
any public office, other than those covering Permitted Liens.


(c) ...