Turbosonic Technolgoies, Inc. - Exhibit 4.2 - Filed by
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Exhibit 4.2 

REGISTRATION RIGHTS AGREEMENT 

Registration Rights Agreement
(the “Agreement”), dated as of July 11, 2011, by and between TurboSonic
Technologies, Inc., a corporation organized under the laws of Delaware, USA (the
“Company”), and Dutchess Opportunity Fund, II, LP, a Delaware limited
partnership (the “Investor”).

Whereas, in connection
with the Investment Agreement by and between the Company and the Investor of
this date (the “Investment Agreement”), the Company has agreed to issue
and sell to the Investor up to 8,000,000 shares of the Company’s Common Stock,
$0.10 par value per share (the “Common Stock”), to be purchased pursuant
to the terms and subject to the conditions set forth in the Investment
Agreement; and

Whereas, to induce the
Investor to execute and deliver the Investment Agreement, the Company has agreed
to provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933 Act”), and applicable state securities
laws, with respect to the shares of Common Stock issuable pursuant to the
Investment Agreement.

Now therefore, in consideration
of the foregoing promises and the mutual covenants contained hereinafter and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as follows:

Section 1.     DEFINITIONS. 

As used in this Agreement, the
following terms shall have the following meanings:

“Execution Date” means the date
of this Agreement set forth above.

“Person” means a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

“Principal Market” shall
mean Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the
Nasdaq Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board or
the OTC Markets Group, whichever is the principal market on which the Common
Stock of the Company is listed or quoted.

“Register,”
“Registered,” and “Registration” refer to the Registration
effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis (“Rule
415”), and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the
“SEC”).

“Registrable Securities”
means (i) the shares of Common Stock issued or issuable pursuant to the
Investment Agreement, and (ii) any shares of capital stock issued or issuable
with respect to such shares of Common Stock, if any, as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise,
which have not been (x) included in the Registration Statement that has been
declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the 1933 Act.




“Registration Statement”
means the registration statement or statements of the Company filed under the
1933 Act covering the Registrable Securities.

All capitalized terms used in
this Agreement and not otherwise defined herein shall have the same meaning
ascribed to them as in the Investment Agreement.

Section 2.     REGISTRATION.

(a) Subject to Section
3(g), the Company shall, within twenty-one (21) days after the date of this
Agreement, file with the SEC the Registration Statement or Registration
Statements (as is necessary) on Form S-1 (or, if such form is unavailable for
such a registration, on such other form as is available for such registration),
covering the resale of all of the Registrable Securities, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated under the
1933 Act, such Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon stock splits,
stock dividends or similar transactions. The Company shall initially register
for resale 8,000,000 shares of Common Stock, except to the extent that the SEC
requires the share amount to be reduced as a condition of effectiveness.

(b) Intentionally Omitted. 

(c) The Company agrees not
to include any other securities in the Registration Statement covering the
Registrable Securities without the Investor’s prior written consent which the
Investor may withhold in its sole discretion. Furthermore, the Company agrees
that it will not file any other Registration Statement for other securities,
until thirty calendar days after the Registration Statement for the Registrable
Securities is declared effective by the SEC.

Section 3.     RELATED OBLIGATIONS.

At such time as the Company is
obligated to prepare and file the Registration Statement with the SEC pursuant
to Section 2(a), the Company shall have the following obligations with
respect to the Registration Statement:

(a) The Company shall use
all commercially reasonable efforts to cause such Registration Statement
relating to the Registrable Securities to become effective within ninety (90)
days after the date that the Registration Statement is filed and shall keep such
Registration Statement effective until the earlier to occur of the date on which
(A) the Registrable Securities may be sold by the Investor without registration
by reason of Rule 144 under the 1933 Act or any successor or other rule of
similar effect; (B) the Investor shall have sold all the Registrable Securities;
or (C) the Company has no right to sell any additional shares of Common Stock
under the Investment Agreement (the “Registration Period”). The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading. The Company shall use all commercially
reasonable efforts to respond to all SEC comments within ten (10) business days
from receipt of such comments by the Company. The Company shall use all
commercially reasonable efforts to cause the Registration Statement relating to
the Registrable Securities to become effective no later than five (5) business days after notice from the SEC
that the Registration Statement may be declared effective. The Investor agrees
to provide all information which it is required by law to provide to the
Company, including the intended method of disposition of the Registrable
Securities, and the Company’s obligations set forth above shall be conditioned
on the receipt of such information.

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(b) The Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with such Registration Statement, which prospectus is to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
to keep such Registration Statement effective during the Registration Period,
and, during such period, comply with the provisions of the 1933 Act with respect
to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the Investor thereof as set forth in such Registration Statement.
In the event the number of shares of Common Stock covered by the Registration
Statement filed pursuant to this Agreement is at any time insufficient to cover
all of the Registrable Securities, the Company shall amend such Registration
Statement, or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover all of the Registrable
Securities, in each case, as soon as practicable, but in any event within thirty
(30) calendar days after the necessity therefor arises (based on the then
Purchase Price of the Common Stock and other relevant factors on which the
Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use commercially
reasonable efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof.

(c) The Company shall make
available to the Investor whose Registrable Securities are included in any
Registration Statement and its legal counsel via the SEC’s EDGAR website or
other electronic means (i) if requested by the Investor, promptly after the same
is prepared and filed with the SEC at least one (1) copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits, the
prospectus included in such Registration Statement (including each preliminary
prospectus) and, with regards to such Registration Statement(s), without charge,
any correspondence by or on behalf of the Company to the SEC or the staff of the
SEC and any correspondence from the SEC or the staff of the SEC to the Company
or its representatives; and (ii) upon the effectiveness of any Registration
Statement, the Company shall make available copies of the prospectus, via EDGAR,
included in such Registration Statement and all amendments and supplements
thereto.

(d) The Company shall use
commercially reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
“blue sky” laws of such states in the United States as the Investor reasonably
requests; (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period; (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or (y) subject itself to general taxation
in any such jurisdiction. The Company shall promptly notify the Investor who
holds Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or “blue sky” laws of
any jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

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(e) As promptly as
practicable after becoming aware of such event, the Company shall notify the
Investor in writing of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(“Registration Default”) and use all diligent efforts to promptly prepare
a supplement or amendment to such Registration Statement and take any other
necessary steps to cure the Registration Default (which, if such Registration
Statement is on Form S-3, may consist of a document to be filed by the Company
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as
defined below) and to be incorporated by reference in the prospectus) to correct
such untrue statement or omission, and make available copies of such supplement
or amendment to the Investor. The Company shall also promptly notify the
Investor (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when the Registration Statement or any
post-effective amendment has become effective; (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or related
prospectus or related information, (iii) of the Company’s reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate, (iv) in the event the Registration Statement is no longer
effective, or (v) if the Registration Statement is stale as a result of the
Company’s failure to timely file requisite financial statements and related
notes thereto or otherwise. If a Registration Default occurs during the period
commencing on the Put Notice Date and ending on the Closing Date, the Company
acknowledges that its failure to cure such a Registration Default within ten
(10) business days will cause the Investor to suffer damages in an amount that
will be difficult to ascertain.

(f) The Company shall use
all commercially reasonable efforts to prevent the issuance of any stop order or
other suspension of effectiveness of the Registration Statement, or the
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to
notify the Investor holding Registrable Securities being sold of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding concerning the effectiveness of the
Registration Statement.

(g) The Company shall
permit the Investor and one (1) legal counsel, designated by the Investor, to
review and comment upon the Registration Statement and all amendments and
supplements thereto at least one (1) calendar day prior to their filing with the
SEC. However, any postponement of a filing of a Registration Statement or any
postponement of a request for acceleration or any postponement of the effective
date or effectiveness of a Registration Statement by written request of the
Investor (collectively, the "Investor's Delay") shall not act to trigger
any penalty of any kind, or any cash amount due or any in-kind amount due the
Investor from the Company under any and all agreements of any nature or kind
between the Company and the Investor. The event(s) of an Investor's Delay shall
act to suspend all obligations of any kind or nature of the Company under any and all agreements of
any nature or kind between the Company and the Investor.

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(h) Intentionally Omitted. 

(i) The Company shall hold
in confidence and not make any disclosure of information concerning the Investor
unless (i) disclosure of such information is necessary to comply with federal or
state securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement, or (v) the Investor has consented to such disclosure. The Company
agrees that it shall, upon learning that disclosure of such information
concerning the Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to the
Investor and allow the Investor, at the Investor’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
covering such information.

(j) The Company shall use
all commercially reasonable efforts to maintain designation and quotation of all
the Registrable Securities covered by any Registration Statement on the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(j).

(k) Intentionally Omitted. 

(l) The Company shall
provide a transfer agent for all the Registrable Securities not later than the
effective date of the first Registration Statement filed pursuant hereto.

(m) If requested by the
Investor, the Company shall (i) as soon as reasonably practical incorporate in a
prospectus supplement or post-effective amendment such information as the
Investor reasonably determines should be included therein relating to the sale
and distribution of Registrable Securities, including, without limitation,
information with respect to the offering of the Registrable Securities to be
sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as reasonably possible after
being notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by the Investor.

(n) The Company shall use
all commercially reasonable efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
facilitate the disposition of such Registrable Securities.

(o) The Company shall
otherwise use all commercially reasonable efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration
hereunder.

(p) Within one (1)
business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver to the transfer agent for such Registrable Securities, with copies to
the Investor, a written notification that such Registration Statement has been
declared effective by the SEC.

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Section 4.     OBLIGATIONS OF THE
INVESTOR.

(a) At least five (5)
calendar days prior to the first anticipated filing date of the Registration
Statement the Company shall notify the Investor in writing of the information
the Company requires from the Investor for the Registration Statement. 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 and the Investor agrees to furnish to the Company that information
regarding itself, the Registrable Securities and the intended method of
disposition of the Registrable Securities as shall reasonably be required to
effect the registration of the resale of such Registrable Securities and the
Investor shall execute such documents in connection with such registration as
the Company may reasonably request. The Investor covenants and agrees that, in
connection with any sale of Registrable Securities by it pursuant to the
Registration Statement, it shall comply with the “Plan of Distribution” section
of the then current prospectus relating to such Registration Statement.

(b) The Investor, by its
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 Registration Statement hereunder.

(c) The Investor agrees
that, upon receipt of written notice from the Company of the happening of any
event of the kind described in Section 3(f) or the first sentence of
Section 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering the
resale of such Registrable Securities until the Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or
the first sentence of Section 3(e).

Section 5.     EXPENSES OF
REGISTRATION.

All reasonable expenses, other
than underwriting discounts and commissions and other than as set forth in the
Investment Agreement, incurred in connection with registrations including
comments, filings or qualifications pursuant to Section 2 and Section
3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.

Section 6.     INDEMNIFICATION.

In the event any Registrable
Securities are included in the Registration Statement under this Agreement:

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(a) To the fullest extent
permitted by law, the Company, under this Agreement, will, and hereby does,
indemnify, hold harmless and defend the Investor, the directors, officers,
partners, employees, counsel, agents, representatives of, and each Person, if
any, who controls, the Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the “1934 Act”) (each, an
“Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts
paid in settlement or expenses, joint or several (collectively,
“Claims”), incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party thereto
(“Indemnified Damages”), to which any of them may become subject insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in the Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction in which the Investor has requested in writing that the Company
register or qualify the Shares (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus for the offer of the Registrable Securities (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to the Registration Statement (the matters in
the foregoing clauses (i) through (iii) being, collectively,
“Violations”). Subject to the restrictions set forth in Section
6(c) the Company shall reimburse each Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i)
shall not apply to a Claim arising out of or based upon a Violation which is due
to the inclusion in the Registration Statement of the information furnished to
the Company by any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not be available to the extent such Claim is
based on (A) a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company; (B) the Indemnified Person’s use
of an incorrect prospectus despite being promptly advised in advance by the
Company in writing not to use such incorrect prospectus; (C) the manner of sale
of the Registrable Securities by the Investor or of the Investor’s failure to
register as a dealer under applicable securities laws; (D) any omission of the
Investor to notify the Company of any material fact that should be stated in the
Registration Statement or prospectus relating to the Investor or the manner of
sale; and (E) any amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably delayed, conditioned or withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the resale of the Registrable
Securities by the Investor pursuant to the Registration Statement; and (iii)
shall not be available to the extent the Claim arises out of the gross
negligence or willful misconduct of the Indemnified Person.

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(b) In connection with any
Registration Statement in which the Investor is participating, the Investor
agrees to severally and jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, officers, employees, counsel, agents and
representatives and each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation is due to (i) the
inclusion in the Registration Statement of the written information furnished to the Company by the
Investor expressly for use in connection with such Registration Statement; (ii)
a failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company or the Investor’s use of an incorrect prospectus
despite being timely advised by the Company in writing not to use such incorrect
prospectus; (iii) the Investor’s failure to register as a dealer under
applicable securities laws; (iv) the Investor’s gross negligence or willful
misconduct; or (v) any omission of the Investor to notify the Company of any
material fact that should be stated in the Registration Statement or prospectus
relating to the Investor or the manner of sale; and, subject to Section
6(c), the Investor will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section
6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Investor, which
consent shall not be unreasonably delayed, conditioned or withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the resale of
the Registrable Securities by the Investor pursuant to the Registration
Statement.

(c) Promptly after receipt
by an Indemnified Person or Indemnified Party under this Section 6 of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party, as
the case may be; provided, however, that an Indemnified Person or Indemnified
Party, as the case may be, shall have the right to retain its own counsel with
the fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the Indemnified Person or Indemnified
Party, the representation by counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding. The
indemnifying party shall pay for only one (1) separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such counsel
shall be selected by the Investor, if the Investor is entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding affected without
its written consent; provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim. Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to
the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action.

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(d) The indemnity
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnified Party or Indemnified Person against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.

Section 7.     CONTRIBUTION.

To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted
by law; provided, however, that: (i) no contribution shall be made under
circumstances where the indemnifying party would not have been liable for
indemnification under the fault standards set forth in Section 6; (ii) no
seller of Registrable Securities guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

Section 8.     REPORTS UNDER THE 1934
ACT.

With a view to making available
to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without registration
(“Rule 144”), provided that the Investor holds any Registrable Securities
which are eligible for resale under Rule 144 and such information is necessary
in order for the Investor to sell such Securities pursuant to Rule 144, the
Company agrees to:

(a) make and keep public
information available, as those terms are understood and defined in Rule
144;

(b) file with the SEC in a
timely manner all reports and other documents required of the Company under the
1933 Act and the 1934 Act so long as the Company remains subject to such
requirements (it being understood that nothing herein shall limit the Company’s
obligations under Section 5(c) of the Investment Agreement) and the filing of
such reports and other documents is required for the applicable provisions of
Rule 144; and

(c) furnish to the
Investor, promptly upon request, (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144, the 1933 Act and the
1934 Act applicable to the Company, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144 without
registration.

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Section 9.     NO ASSIGNMENT OF REGISTRATION
RIGHTS.

This Agreement and the rights,
agreements or obligations hereunder may not be assigned, by operation of law,
merger or otherwise, and without the prior written consent of the other party
hereto, and any purported assignment by a party without prior written consent of
the other party will be null and void and not binding on such other party.
Subject to the preceding sentence, all of the terms, agreements, covenants,
representations, warranties and conditions of this Agreement are binding upon,
and inure to the benefit of and are enforceable by, the parties and their
respective successors and assigns. 

Section 10.    AMENDMENT OF REGISTRATION
RIGHTS.

The provisions of this Agreement
may be amended only with the written consent of the Company and the
Investor.

Section 11.    MISCELLANEOUS.

(a) Any notices or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or
email with the signed document attached in PDF format (provided a confirmation
of transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

If to the Company:

TurboSonic Technologies Inc. 
550 Parkside Drive 
Suite
A-14 
Waterloo, ON N2L 5V4 
Canada 
Attention: Edward F. Spink

Telephone: (519) 885-5513 
Facsimile: (519) 885-6992 

With a copy to: 

SNR Denton US LLP 
2 World Financial Center 
New York, NY
10281 
Attention: Ira Roxland 
Telephone: (212) 768-6700 
Facsimile:
(212) 768-6800 

If to the Investor:

Dutchess Opportunity Fund, II, LP 
50 Commonwealth Ave,
Suite 2 
Boston, MA 02116

Telephone: (617) 301-4700 
Facsimile: (617) 249-0947 

10 




Each party shall provide five (5)
business days prior notice to the other party of any change in address, phone
number, facsimile number ore-mail address.

(b) Failure of any party
to exercise any right or remedy under this Agreement or otherwise, or delay by a
party in exercising such right or remedy, shall not operate as a waiver
thereof.

(c) This Agreement and the
Investment Agreement constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein.

(d) This Agreement and the
Investment Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.

(e) The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. Whenever required by the context of this Agreement,
the singular shall include the plural and masculine shall include the feminine.
This Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if all the parties had prepared the same.

(f) This Agreement may be
executed in two or more identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission or by e-mail delivery of a PDF format of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.

(g) Each party shall do
and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

(h) In case any provision
of this Agreement is held by a court of competent jurisdiction to be excessive
in scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of
this Agreement will not in any way be affected or impaired thereby.

11 




Section 12.    DISPUTES SUBJECT TO ARBITRATION
GOVERNED BY NEW YORK LAW.

All disputes arising under this
agreement shall be governed by and interpreted in accordance with the laws of
the State of New York, without regard to principles of conflict of laws. The
parties to this agreement will submit all disputes arising under this agreement
to arbitration in Boston, Massachusetts before a single arbitrator of the
American Arbitration Association (“AAA”). The arbitrator shall be
selected by application of the rules of the AAA, or by mutual agreement of the
parties, except that such arbitrator shall be an attorney admitted to practice law in the Commonwealth of Massachusetts. No party to
this agreement will challenge the jurisdiction or venue provisions as provided
in this section. Nothing contained herein shall prevent the party from obtaining
an injunction.

*.*.* 

12 




SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT 

Your signature on this Signature
Page evidences your agreement to be bound by the terms and conditions of the
Investment Agreement and the Registration Rights Agreement as of the date first
written above.

The undersigned signatory hereby
certifies that he has read and understands the Registration Rights Agreement,
and the representations made by the undersigned in this Registration Rights
Agreement are true and accurate, and agrees to be bound by its terms.

DUTCHESS OPPORTUNITY FUND, II, LP,

By: /s/Douglas H. Leighton                   
 
       Douglas H. Leighton 
       Managing
Member of: 
       Dutchess Capital Management, II, LLC
       General Partner
to:
       Dutchess Opportunity Fund, II, LP

TURBOSONIC TECHNOLOGIES, INC. 

By: /s/Edward F. Spink                          
 
       Edward F. Spink 
       Chief Executive
Officer 

 

Signature Page to Registration Rights Agreement