Document:

TurboSonic Technologies Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

Exhibit 10.1

INTELLECTUAL PROPERTY LICENSE AGREEMENT

This INTELLECTUAL PROPERTY
LICENSE AGREEMENT (“Agreement”) is entered into as of October 10, 2012
(the “Effective Date”) by and between MEGTEC Systems, Inc., a Delaware
corporation with principal offices located at 830 Prosper Road, DePere,
Wisconsin 54115, U.S.A., and its direct, wholly-owned subsidiaries
(collectively, “Licensee”), and TurboSonic Technologies Inc., a Delaware
corporation and TurboSonic Inc. and their direct wholly-owned subsidiaries c/o
TurboSonic Inc. with principal offices located at 550 Parkside Drive, Suite A14,
Waterloo, Ontario, Canada N2L5V4 (collectively, “Licensor”). Licensee and
Licensor shall be referred to collectively as the “Parties” and individually as
“Party.” 

WHEREAS, Licensor owns or has
obtained rights to intellectual property related to the production, marketing,
sale, use, and maintenance of products and systems using Licensor's air
pollution control and liquid atomization technologies;

WHEREAS, Licensor and Licensee
have concurrently with the execution and delivery of this Agreement entered into
an Agreement and Plan of Merger (the “Merger Agreement”);

WHEREAS, Licensee has
concurrently with the execution and delivery of this Agreement and the Merger
Agreement made available to Licensor interim financing in the form of a Second
Lien Secured Promissory Note having a stated principal amount of $1,000,000.00
(the “Note”);

WHEREAS, as a condition of
Licensee making such interim financing available to Licensor, under certain
circumstances, Licensor shall grant certain intellectual property rights to
Licensee;

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:

1.              Additional Definitions. The following terms shall
have the meanings defined below. The singular of each defined term includes the
plural form, and the plural form of each defined term includes the singular
form, unless the context of use clearly indicates otherwise.

1.1             "Grant Date" means the first date upon which one or more of the following
occurs: (a) termination of the Merger Agreement; (b) a change in recommendation
by Licensor's board with respect to the transactions contemplated by the Merger
Agreement; (c) a Triggering Event, as defined in Section 1of the Note; or (d) an
Event of Default, as defined in Section 10 of the Note. 

1.2             “Field of Use” means use in industrial, commercial and institutional
applications and explicitly excludes Electricity Generation Units (EGA) which
are defined as any fossil fuel fired combustion units of more than 25 megawatts
that serves a generator that produces electricity for sale.

1.3             “Licensed Intellectual Property” means, collectively, the copyrights in
the Licensed Works, the Licensed Marks, and the Licensed Technology.

-1-

1.4             “Licensed Marks” means all registered and common law trademarks and
service marks owned by Licensor as of the Effective Date, including without
limitation all word trademarks, all design trademarks, and all word and design
combination trademarks. An incomplete list of such trademarks includes the
registered word mark TURBOSOX, and the common law word marks SONICKLEAN,
SONICORE, and SONICOOL. For the avoidance of doubt, the Licensed Marks do not
include any trademarks or service marks licensed to Licensor by a third party
and listed in the attached Appendix A of Unlicensed Marks.

1.5             “Licensed Product” means any product produced, marketed, used, offered
for sale and/or sold by Licensee that incorporates the Licensed Technology or
that is produced using the Licensed Technology. 

1.6             “Category I Licensed Product” means any product produced, marketed, used,
offered for sale and/or sold by Licensor that incorporates the Category I
Licensed Technology or that is produced using the Category I Licensed
Technology.

1.7             “Category II Licensed Product” means any product produced, marketed,
used, offered for sale and/or sold by Licensor that incorporates the Category II
Licensed Technology or that is produced using the Category II Licensed
Technology.

1.8             “Licensed Technology” means, collectively, the Category I Licensed
Technology and the Category II Licensed Technology.

1.9             “Category I Licensed Technology” means all technology-related
intellectual property related to Licensor’s air pollution control and liquid
atomization technologies that is owned by Licensor or licensed to Licensor by a
third party as of the Grant Date, including without limitation all patents and
patent applications, any patents that may later issue from the patent
applications, and all trade secrets, proprietary processes, technical
information, financial information, brand positioning and marketing strategies,
new product information, designs, drawings, models, protocols, and related
know-how. An incomplete list of such patents includes U.S Patent No. 6,416,725,
issued on July 9, 2002; U.S Patent No. 6,579,506, issued on June 17, 2003; U.S
Patent No. 7,160,348, issued on January 9, 2007; U.S Patent No. 7,160,358,
issued on January 9, 2007; U.S Patent No. 7,402,196, issued on July 22, 2008;
U.S Patent No. 7,758,828, issued on July 20, 2010; and U.S Patent No. 8,092,576,
issued on January 10, 2012. An incomplete list of such patent applications
includes International Application No. PCT/CA2008/000752, filed on April 23,
2008; International Application No. PCT/CA2008/001157, filed on June 18, 2008;
and International Application No. PCT/CA2010/000377, filed on March 16, 2010.
Notwithstanding the foregoing, the Category I Licensed Technology specifically
excludes (a) any intellectual property licensed to Licensor by a third party
wherein the license agreement granting the license does not permit Licensor to
grant sublicensees; (b) any intellectual property that requires the consent of a
third party before rights to it are sublicensed or otherwise granted; (c) any
intellectual property disclosed in a published patent that is expired; and (d)
any Category II Licensed Technology. A list of technology-related intellectual
property excluded under Section 1.9 (a) and (b) is provided in Appendix B. For
the avoidance of doubt, unless indicated in Appendix B as excluded, no intellectual property
subject to the 1999 License Agreement is deemed excluded under Section 1.9 (a)
and (b).

-2-

1.10            “Category II Licensed Technology” means all technology-related
intellectual property related to Licensor’s air pollution control and liquid
atomization technologies and similar technologies that is acquired by Licensor
during the five-year period following the Grant Date, including without
limitation, and improvements in the Category I Licensed Technology, that is
selected as Category II Licensed Technology by Licensee. Notwithstanding the
foregoing, the Category II Licensed Technology specifically excludes (a) any
intellectual property licensed to Licensor by a third party wherein the license
agreement granting the license does not permit Licensor to grant sublicenses;
(b) any intellectual property that requires the consent of a third party before
rights to it are sublicensed or otherwise granted; and (c) any intellectual
property disclosed in a published patent that is expired. A list of
technology-related intellectual property excluded under Section 1.10 (a) and (b)
is provided in Appendix C. For the avoidance of doubt, unelss indicated in
Appendix C as excluded, no intellectual property subject to the 1999 License
Agreement is deemed excluded under Section 1.10 (a) and (b).

1.11            “Licensed Works” means all materials to which Licensor owns the copyright
that may facilitate the use of the Licensed Technology or the incorporation of
the Licensed Technology into the Licensed Product, including without limitation
any associated software, technical manuals, drawings, models, or other written
materials, whether in paper, three dimensional, or electronic form.

1.12            “Net Sales” means Licensee’s gross sales of Licensed Product, less
shipping and handling costs charged to the customer, returned product credits,
and sales and similar taxes paid to Licensee by Licensee’s customer on the sale
to such customer. 

1.13            “Territory” means the United States of America and its territories and
possessions, China, and India. 

1.14            “Territory I” means China and India. 

1.15            “Territory II” means the United States of America and its
territories.

1.16            “1999 License Agreement” means the license agreement between TurboSonic
Technologies, Inc. and TurboSonic Inc., an executed copy and amendment thereto
is attached hereto as Appendix D.

2.              Limited Exclusive Technology License Grant. Subject
to the terms and conditions of this Agreement, Licensor hereby grants to
Licensee, and Licensee accepts, a perpetual, non-transferable, non-sublicensable
right to use the Licensed Technology to make, have made, use, have used, sell,
offer to sell, export, import, and/or distribute Licensed Product solely for the
Field of Use within (and only within) the Territory, commencing on the Grant
Date. For absence of doubt, this license grant excludes (a) the right to export
the Licensed Product from any jurisdiction that is not in the Territory, or the
right to export any Licensed Product from the Territory to any jurisdiction that
is not in the Territory; (b) the right to import the Licensed Product into a
jurisdiction that is not in the Territory; and/or (c) import any Licensed
Product into the Territory from a jurisdiction that is not in the
Territory. Furthermore, this license grant expressly excludes the right to sell,
offer to sell or distribute any Licensed Products to any person or entity that
Licensee knows or has reason to know will engage in any of the activities listed
in clauses (a) through (c) immediately preceding, and Licensee will exercise
reasonable commercial efforts to ensure that its customers do not engage in any
of the activities listed in such clauses (a) through (c). Within Territory I,
this license grant shall be exclusive, even as against Licensor. Within
Territory II, the license grant shall be exclusive except as against Licensor.
Licensor reserves all rights to the Licensed Technology not specifically granted
to Licensee. Without limiting the preceding sentence, (i) Licensor reserves the
right to use the Licensed Technology to make, have made, use, have used, sell,
offer to sell, and/or distribute Licensed Product for the Field of Use within
Territory II in connection with its own products or services, regardless of
whether such products or services exist as of the Grant Date or are developed
thereafter, and (ii). Licensor further reserves the right to export Licensed
Product for the Field of Use from Territory II to a jurisdiction outside of the
Territory, and to import Licensed Product for the Field of Use into Territory II
from a jurisdiction outside of the Territory. For absence of doubt, under this
license grant, Licensor may not export Licensed Product for the Field of Use
from Territory I or import Licensed Product for the Field of Use into Territory
I. Licensee may not change or alter the Licensed Technology without Licensor's
prior written consent, which will not be unreasonably withheld. For the
avoidance of doubt, Licensee shall have no rights to or under the Licensed
Technology until the Grant Date.

-3-

3.              Limited Non-Exclusive Trademark License Grant.
Subject to the terms and conditions of this Agreement, Licensor hereby
grants to Licensee, and Licensee accepts, the perpetual, non-exclusive,
non-transferable, non-sublicensable right to use or have used the Licensed Marks
in the Territory, solely on or in connection with the manufacture, marketing,
sale, distribution, and/or commercialization of Licensed Product, the post-sale
support, servicing and repair of Licensed Product, and the marketing and
advertising relating thereto, commencing on the Grant Date. All uses of the
Licensed Marks by Licensee must be approved by Licensor in advance in writing,
and such approval shall not be unreasonably withheld. Notwithstanding the
foregoing, Licensee may disclose that Licensed Product are produced, marketed,
and/or sold pursuant to a license granted by Licensor without obtaining
Licensor's prior written permission. For the avoidance of doubt, Licensee shall
have no rights to or under the Licensed Marks until the Grant Date.

4.              Limited Non-Exclusive Copyright License Grant. Subject to the terms and conditions of this Agreement, Licensor hereby
grants to Licensee, and Licensee accepts, the perpetual, non-exclusive,
non-transferable, non-sublicensable right to reproduce and distribute the
Licensed Works in the Territory solely for use in connection with the
manufacture, marketing, sale, distribution, and/or commercialization of Licensed
Product, and for customer support relating thereto, commencing on the Grant
Date. Licensee shall not use, copy, distribute or display the Licensed Works for
any other purpose. For the avoidance of doubt, Licensee shall have no right to
or under the Licensed Works until the Grant Date.

5.              Joint Sales and Marketing Program. Beginning promptly
after the Grant Date but no later than 120 days after the Effective Date, the
Parties shall diligently and in good faith work together and develop a joint
sales and marketing plan and program covering the United States of America and
its territories and possessions.

-4-

6.              Licensor as Preferred Seller/Service Provider.
Beginning on the Grant Date and for a period of two (2) years thereafter,
Licensee shall purchase from Licensor, on a first priority basis and at
Licensor's most favored prices in effect from time to time, Licensor's
proprietary components and associated design engineering and drafting services
for the Licensed Product. For each year of the Term thereafter, Licensee shall
use its commercially reasonable best efforts to purchase from Licensor, on a
first priority basis and at Licensor's most favored prices in effect from time
to time, Licensor's proprietary components and associated design engineering and
drafting services for the Licensed Product, provided they are competitive or
superior to other U.S. and Canadian vendors' similar products and services in
terms of price, quality, and availability.

7.              Ownership of Licensed Intellectual Property. Licensee
acknowledges that Licensor is the owner of the Licensed Intellectual Property,
and that the use of the Licensed Marks, as well as any good will established by
that use, will inure to the exclusive benefit of Licensor. 

8.              Quality Control. Licensee recognizes that the
Licensed Marks enjoy a reputation for distinguished quality and that Licensee
must, therefore, maintain such quality in Licensed Product that it
commercializes. Licensed Product shall be at least equal in quality to the
products produced by Licensor. If Licensee makes any material change to any
Licensed Product or to any of the Licensed Technology, the change must be
approved in advance by Licensor, such approval not to be unreasonably withheld.
Subject to the confidentiality provisions of Section 18 of this Agreement,
Licensor shall have the right, upon reasonable notice to Licensee, to inspect
Licensed Product being sold by Licensee and Licensee’s use of the Licensed
Technology as well as the manufacturing methods used to make Licensed Product,
in order to ensure that the Licensed Product is of equal quality to the products
produced by Licensor.

9.              Obligation to Maintain Licensed Intellectual Property.
After the Effective Date, Licensor is obligated to maintain the owned
Licensed Intellectual Property issued or registered in the Territory as of the
date hereof, including without limitation filing in a timely fashion all
necessary trademark registration declarations, paying all necessary declaration
filing fees and trademark renewal fees, paying all required patent maintenance
fees, and maintaining trade secrets and proprietary or confidential information.
Should Licensor wish to forego the above-listed obligations to maintain any of
the owned Licensed Intellectual Property in the Territory, Licensor shall
provide Licensee with written notice sixty (60) days before the obligation to
maintain would be foregone and allow Licensee, at Licensee’s cost and sole
discretion, to secure Licensor’s ownership rights in the Territory in the owned
Licensed Intellectual Property identified in writing by the Licensor by
undertaking the obligation to maintain the Licensed Intellectual Property in the
Territory. After the Grant Date, Licensor shall provide Licensee written notice
within ten (10) days of the commencement of any administrative or legal
proceedings challenging the validity or ownership of the owned Licensed
Intellectual Property, and shall give Licensee the opportunity to provide
non-binding input regarding such proceedings.

10.             Right to Review Licensed Intellectual Property.
After the Effective Date, Licensor shall keep commercially reasonable
records regarding the Licensed Intellectual Property. Subject to the
confidentiality obligations of Section 18 of this Agreement, after the Grant
Date, at Licensee’s expense and upon sixty (60) days written notice to Licensor,
Licensee (or Licensee’s attorney) may review Licensor’s records pertaining
to the Licensed Intellectual Property, at Licensor’s facility. Such review shall
not occur more than once per calendar year. 

-5-

11.             Term and Termination.

11.1            Term. The term of this Agreement shall begin on the Effective Date and
shall continue until all of the Licensed Technology is expired or until the
earlier termination of this Agreement in accordance with this Section 11 (the
“Term”).

11.2            
Termination.

11.2.1           Either Party may terminate this Agreement in the event a Party materially
breaches this Agreement, and then only if, upon receipt by the breaching Party
of thirty (30) days prior written notice of intent to terminate, the breaching
Party fails to cure such breach prior to the expiration of the notice period.
Such right of termination shall not be in lieu of other remedies such as
specific performance that may be available to the non-breaching Party.

11.2.2           Licensor may terminate this Agreement, at any time within thirty (30) days after
the Grant Date, upon five (5) days prior written notice to Licensee and payment
to Licensee of an amount equal to $1,000,000 plus the amount of interest on the
Note that was due upon the Grant Date plus the amount of interest accrued from
the Grant Date to the date Licensee makes the payment set forth in this Section
11.2.2.

12.              Initial License Fee, Royalties, Payment, Prepaid
Royalty.

12.1            Initial License Fee. Upon the Grant Date, Licensee shall pay to Licensor
the Initial License Fee by wire transfer of immediately available funds to an
account designated by Licensor. The Initial License Fee means a non-refundable
one-time license fee (the “Initial License Fee”) in an amount equal to
$1,000,000. The Initial License Fee may be paid by offsetting such against the
principal amount of the Note outstanding as of the Grant Date, if any, payable
on the Grant Date. 

12.2            
Royalty. In addition to the Initial License Fee, (a) for the five year
period following the Grant Date, Licensee shall pay to Licensor an ongoing
Royalty at a rate of three percent (3%) of the Net Sales on Licensee’s sales of
Category I Licensed Product and (b) for the five year period commencing on the
date that technology is selected by Licensee for inclusion in Category II
Licensed Technology, Licensee shall pay to Licensor an additional ongoing
Royalty on Net Sales of Category II Licensed Products to be negotiated between
the Parties at the time of Licensee’s selection of the technology for inclusion
in Category II Licensed Technology, with the negotiated Royalty not to exceed
(3%) of the Net Collections on Licensee sales of the Category II Licensed
Product. For the avoidance of doubt, Licensee must pay the royalty set forth in
clause (a) plus the royalty set forth in clause (b) of this Section 12.2 if the
Category II Licensed Product is also a Category I Licensed Product. Unless and
until Licensee and Licensor agree upon a royalty for the Category II Licensed
Products, Licensee shall have no right or license with respect Category II
Licensed Technology. Licensee shall not be
entitled to any credit or deduction against Royalties for the payment of the
Initial License Fee. The Royalty may be changed at any time by mutual written
agreement of the Parties. After the five year period following the Grant Date, a
revised Royalty shall be mutually negotiated in good faith by the Parties. For
absence of doubt, no Royalty shall be due on services sold by Licensee related
to the Licensed Technology or Licensed Product. Nor shall any Royalty be due on
the sales of articles that Licensee may make and/or sell that do not incorporate
the Licensed Technology and that are not sold in connection with the Licensed
Marks.

-6-

12.3            Minimum Royalties. For the two year period following the Grant Date, no
minimum Royalties need be paid by Licensee to Licensor. During each successive
one-year period beginning on the second anniversary of the Grant Date and on
each anniversary thereafter, the minimum Royalty payable to Licensor shall be
$250,000.00 (the "Minimum Royalty"). Licensee's failure to pay the Minimum
Royalty for a given one-year period in which it is due shall not constitute a
breach of this Agreement. However, upon Licensee's failure to pay the Minimum
Royalty for a given one-year period in which it is due, Licensor may provide
written notice to Licensee of its failure to pay the Minimum Royalty and
indicating the amount by which the Minimum Royalties exceeded Licensee's total
Royalty payments for the year (the "Shortfall"). Without limiting any other
rights or remedies of Licensor under this Agreement, if Licensee fails to pay
Licensor the Shortfall amount within sixty (60) days of receiving Licensor's
written notice, the technology license grant in Section 2 of this Agreement
shall convert to a non-exclusive license. Nothing contained in this Section 12.3
shall be deemed to limit or impair in any respect Licensor’s right to receive
the full amount of Royalties payable pursuant to Section 12.2.

12.4            Payments. On a calendar quarterly basis, Licensee shall pay the
Royalties, if any, that are owed to Licensor under Section 12.2, which are
earned within the calendar quarter. Licensee shall make any such payment to
Licensor within forty five (45) days of the end of the calendar quarter and
within sixty (60) days of the end of the calendar year, and shall include a
Royalty report with such payment setting forth in detail how the Royalty payment
was calculated, including how Licensee’s Net Sales were determined. The report
shall be verified by an officer of Licensee. For the avoidance of doubt, MEGTEC
Systems, Inc. shall be responsible for making all the payments due to Licensor
under this Agreement, even if the sale on which the Royalty is based is made by
such a subsidiary and even if export of royalties from the Territory is
restricted.

12.5            
Currency. All amounts owed to Licensor pursuant to this Agreement shall
be paid to Licensor in U.S. dollars at the address for Licensor provided in
Section 19 of this Agreement. 

13.             Records and Review. Licensee shall keep records,
during the Term and for two (2) years after this Agreement terminates or
expires, to verify the accuracy of any Royalties. Subject to the confidentiality
obligations of Section 18 of this Agreement, at Licensor’s expense and upon
sixty (60) days written notice to Licensee, Licensor (or Licensor’s attorney or
certified public accountant) may audit all books and records pertaining to this
Agreement, at Licensee’s facility, for the purpose of verifying the accuracy of
any Royalty. Such audit shall not occur more than once per calendar year.
Licensee shall pay for the costs of such audit if the audit reveals an underpayment of more than $25,000 or 5% of total
Royalties due during the period that is subject to the audit, whichever is
higher.

-7-

14.             Warranties. Licensor warrants that (a) Licensor owns
the Licensed Intellectual Property and any associated good will; provided,
however, that Licensor makes no representation or warranty pursuant to this
clause (a) in respect of any Licensed Intellectual Property that is licensed to
Licensor by a third party; (b) Licensor has no knowledge of any third party
rights that are infringed by the Licensed Intellectual Property or of any legal
or administrative challenge to the ownership or validity of the Licensed
Intellectual Property; (c) Licensor has the authority to enter into this
Agreement and no further approvals are required; and (d) the rights granted
herein shall not conflict with any rights granted by Licensor to any third
parties. 

15.             Indemnification. After the Grant Date, Licensor
shall indemnify, defend, and hold harmless Licensee, its officers and employees,
from and against any and all claims, damages, liabilities, costs and expenses,
including reasonable attorney's fees (collectively, “Damages”), arising out of
(i) third party claims of intellectual property infringement arising from
Licensee's use of the Licensed Intellectual Property in accordance with this
Agreement and (ii) third party claims of personal injury or property damage
arising from Licensed Technology purchased from Licensor or a products liability
claim arising from a Licensed Product designed and supplied by Licensor;
provided, that Licensor’s aggregate liability pursuant to this Section 15 shall
not exceed the sum of the Initial License Fee and Royalties actually received by
Licensor pursuant to this Agreement. Licensee shall indemnify, defend, and hold
harmless Licensor, its officers and employees, from and against any and all
claims, damages, liabilities, costs, and expenses, including reasonable
attorney's fees, arising out of third party claims of personal injury or
property damage arising from Licensee's negligence or misuse of the Licensed
Technology or a products liability claim arising from a Licensed Product not
designed by Licensor.

16.             Limitation of Liability.

16.1            Liability Disclaimer. LICENSOR SHALL NOT BE LIABLE TO LICENSEE FOR ANY
EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES ARISING FROM OR RELATED TO ITS
PERFORMANCE UNDER OR BREACH OF THIS AGREEMENT OR ANY PROVISION THEREOF. For
absence of doubt, this liability limitation shall not affect Licensor's
Indemnification obligations under Section 15 of this Agreement.

16.2            
Liability Limitation. LIABILITY OF LICENSOR TO LICENSEE RELATED TO ITS
PERFORMANCE UNDER OR BREACH OF THIS AGREEMENT OR ANY PROVISION THEREOF SHALL BE
LIMITED TO DIRECT DAMAGES NOT TO EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO
LICENSOR BY LICENSEE UNDER THIS AGREEMENT. For absence of doubt, this liability
limitation shall not affect Licensor's Indemnification obligations under Section
15 of this Agreement. 

-8-

17.             Enforcement of Intellectual Property Rights. After
the Grant Date, each Party shall provide the other Party with prompt written
notice and reasonable evidence of any infringement of the Licensed Technology in
the Territory of which such Party becomes aware. After the Grant Date, Licensor
shall have the right (but not the obligation) to commence suit or other proceedings to stop such infringement, if Licensor determines
under the aggregate factors that such protection makes reasonable business sense
and is otherwise necessary, proper, and justified. Licensor shall have the right
to select the counsel used for any such lawsuit and shall retain the proceeds,
if any, arising from any such lawsuit. Licensor shall keep Licensee informed of
the progress of such lawsuit or other proceedings, and shall give Licensee the
opportunity to provide non-binding input regarding such lawsuit or other
proceedings. Licensee shall cooperate in any reasonable way in any infringement
suit brought by Licensor, including providing any needed information and
documents relating to Licensee’s activities under this Agreement. After the
Grant Date, if Licensor does not file suit or cause the infringement to cease
within six (6) months of the notification thereof, Licensee shall have the right
to sue on behalf of Licensor to attempt to stop such infringement. Licensee
shall then have the right to select the counsel used for any such lawsuit and
shall retain the proceeds, if any, arising from any such lawsuit. Licensor shall
cooperate in any reasonable way in any infringement suit brought by Licensee,
including providing any needed information and documents relating to the
patented invention, the related art, and the prosecution history of the patents
included in the Licensed Technology. Licensee shall keep Licensor informed of
the progress of such lawsuit or other proceedings, and shall give Licensor the
opportunity to provide non-binding input regarding such lawsuit or other
proceedings. Notwithstanding the foregoing, Licensee shall take no action that
it knows or has reason to know may cause damage to the Licensed Technology or
the validity or enforceability thereof or Licensor’s rights therein.

18.             Confidentiality. The Parties acknowledge that under
this Agreement, each Party shall disclose information to the other that may be
confidential in nature including without limitation know-how, financial
information, brand positioning and marketing strategies, new product
information, designs, technical protocols, trade secrets, drawings, and models
(“Confidential Information”). Except as otherwise provided in this Section 18,
the receiving Party shall not, without the prior written consent of the
disclosing Party, disclose to any third party any Confidential Information
received from the disclosing Party. Nor shall any Party disclose to any third
party the business terms of this Agreement (except to its employees,
accountants, lawyers, bankers and financial advisers who agree to keep the terms
confidential and except for purposes of enforcing this Agreement), and the
Parties shall not use any Confidential Information for any purpose other than
their performance under this Agreement or to enforce the terms of this
Agreement. Furthermore, the Parties shall limit their disclosure of Confidential
Information to those employees, contractors, and agents having a need to know of
it. This duty of confidentiality shall not apply to Confidential Information
that the receiving Party can demonstrate through written documentation: (i) is
or becomes part of the public domain through no wrongdoing of the receiving
Party; (ii) the receiving Party can document was known to it prior to the
disclosure thereof by the disclosing Party; or (iii) lawfully becomes known to
the receiving Party through a third party having no duty of confidentiality to
the disclosing Party. The receiving Party's obligations under this Section 18
shall continue with respect to Confidential Information until one of the
exceptions set forth in (i) - (iii) above apply to such Confidential
Information. Nothing in this Section 18 shall preclude the receiving Party from
complying with any validly issued subpoena, document request, deposition notice,
court order, or other legal document seeking the disclosure of Information;
provided, however, that upon receipt of any such document or request, the
receiving Party shall promptly notify the disclosing Party to enable the
disclosing Party to seek a protective order or to move to quash the subpoena or
to otherwise take such action as the disclosing Party deems appropriate to
protect the Information.

-9-

19.             Notice. Any notice required by this Agreement shall
be provided in writing and shall be delivered to the other Party, whether by
hand delivery, certified or registered mail, or professional courier service
(such as FedEx). A notice sent pursuant to this Section 19 shall be deemed given
on the date it was mailed, unless the intended recipient can establish that such
notice was not timely received. Any such notice shall be sent to the following
addresses or subsequent addresses that a recipient notified a sender is his/its
new address:

	Licensee: MEGTEC Systems, Inc. 	Licensor: TurboSonic Technologies Inc.
    
	830 Prosper Road, P.O. Box 5030 	550 Parkside Drive, Suite A14 
	DePere, Wisconsin 54115-5030 	Waterloo, Ontario, Canada N2L5 V4 
	Attn: Mohit Uberoi 	Attn: Edward F. Spink 
	Fax: 920-339-2793 	Fax: 519-885-6992 

20.             Miscellaneous.

20.1            Headings. Section and subsection headings used herein are for reference
and convenience only and shall not be used to interpret this Agreement.

20.2            Severability. In the event any provisions of this Agreement are
held by a court of law to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement shall
not be affected or impaired thereby.

20.3            No Waiver. The failure of either Party to require performance by the
other Party of any provision under this Agreement shall not affect the full
right to require such performance at any time thereafter; nor shall the waiver
by either Party of a breach of any provision of this Agreement be taken or held
to be in waiver of the provision itself.

20.4            Governing Law. This Agreement shall be governed by the laws of the state
of New York, without regard to its conflict of laws principles.

20.5            Complete Agreement. This Agreement constitutes the entire agreement of
the Parties regarding this subject matter and supersedes any and all prior or
contemporaneous oral or written agreements, understandings, negotiations or
discussions between the Parties regarding this subject matter.

20.6            
Amendment. This Agreement may be modified at any time by mutual agreement
of the Parties. Any amendment or other modifications to this Agreement shall be
made in writing duly executed by an authorized representative or agent of each
Party.

20.7            No Assignment. The Parties may neither assign nor transfer this Agreement
or any rights or obligations incurred hereunder, without the prior written
consent of the other Party, which consent shall not be unreasonably withheld,
provided, however, that Licensor shall be able to assign or transfer this
Agreement and/or its rights and obligations to any person or entity that
acquires direct or indirect ownership of, or the right to exercise greater than
50% of the voting power, or at least 50% of the ownership interest representing
either the irrevocable right to name a majority of the members of the governing
body of Licensor or the right to make binding decisions for Licensor.

-10-

20.8            Force Majeure. Neither Party shall be liable hereunder by reason of any
failure or delay in the performance of its obligations hereunder (except for the
payment of money) on account of strikes, shortages, riots, insurrection, fires,
floods, storms, explosions, acts of God, war, governmental actions, labor
conditions, earthquakes, or any other cause which is beyond the reasonable
control of such Party.

20.9            Relationship of the Parties. This Agreement is not intended by the
Parties to, and shall not, constitute or create a joint venture, partnership or
other business organization and neither Party shall be or act as an agent of the
other Party.

[Signatures follow]

-11-

IN WITNESS WHEREOF, the Parties
have executed this Agreement by their duly authorized representatives, to be
effective as of the date stated above.

	LICENSEE: 	 
	MEGTEC SYSTEMS, INC. 	 
	 	 
	By: \s\ Gregory R.
      Linn 	 
	(Signature) 	 
	 	 
	Name: Gregory R. Linn 	 
	 	 
	Title: Senior Vice President and Chief Financial Officer	 
	 	 
	Date: October 10, 2010 	 
	 	 
	LICENSOR: 	 
	TURBOSONIC TECHNOLOGIES, INC. 	 
	 	 
	By: \s\ Edward F.
      Spink	 
	(Signature) 	 
	Name: Edward F. Spink 	 
	 	 
	Title: Chief Executive Officer 	 
	 	 
	Date: October 10, 2010 	 
	 	 
	LICENSOR: 	 
	TURBOSONIC, INC. 	 
	 	 
	By: \s\ Edward F.
      Spink	 
	(Signature) 	 
	 	 
	Name: Edward F. Spink 	 
	 	 
	Title: Chief Executive Officer 	 
	 	 
	Date: October 10, 2010 	 

Signature Page to Intellectual Property License AgreementTurboSonic Technologies Inc.: Exhibit 10.2 - Filed by newsfilecorp.com

Exhibit 10.2

SECOND LIEN SECURITY AGREEMENT

THIS SECOND LIEN SECURITY
AGREEMENT (this “Security Agreement”) dated as of October 10, 2012, is by
and between TURBOSONIC TECHNOLOGIES, INC., a Delaware corporation (the
“Debtor”) having its chief executive office at 550 Parkside Drive, Suite
A-14, Waterloo, Ontario, Canada N265V4, and MEGTEC SYSTEMS, INC., a Delaware
corporation (the “Secured Party”).

R E C I T A L S:

A.              WHEREAS, the Debtor is
indebted to the Secured Party pursuant to that certain Second Lien Promissory
Note of the Debtor of even date herewith payable to the order of the Secured
Party in the aggregate principal amount of $1,000,000.00 or the aggregate of
such amounts the Noteholder has disbursed to the Borrower pursuant to such Note,
together with all accrued interest thereon (together with all modifications,
amendments, extensions, substitutions and replacements, the “Note”).

B.              WHEREAS, as a condition
precedent to accept the Note and to commit to make the loan evidenced thereby,
the Secured Party is requiring the Debtor to grant to the Secured Party a
security interest subordinated to the Senior Secured Debt (as hereinafter
defined) in the Collateral (as hereinafter defined).

NOW, THEREFORE, in consideration
of the Recitals, the parties agree as follows:

1. Definitions.              (a)
In addition to terms defined in the Preamble and Recitals above, when used
herein, (i) the terms Account, Account Debtor, Certificated Security, Chattel
Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Financial Assets,
Fixture, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit
Right, Securities Account, Security, Security Entitlement, Supporting
Obligations, and Uncertificated Security have the respective meanings assigned
thereto in the UCC in the State (both as defined below); (ii) capitalized terms
that are not otherwise defined have the respective meanings assigned thereto in
the Note; and (iii) the following terms have the following meanings:

“Collateral” has the
meaning set forth in Section 2 hereof.

“Computer Hardware and
Software” means, with respect to the Debtor, all of the Debtor’s rights
(including rights as licensee and lessee) with respect to: (a) computer and
other electronic data processing hardware, including all integrated computer
systems, central processing units, memory units, display terminals, printers,
features, computer elements, card readers, tape drives, hard and soft disk
drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices, and other related computer hardware; (b) all
software programs designed for use on the computers and electronic data
processing hardware described in clause (a) above, including all operating
system software, utilities, and application programs in whatsoever form (source
code and object code in magnetic tape, disk or hard copy format or any other
listings whatsoever); (c) any firmware associated with any of the foregoing; and (d) any documentation for hardware, software, and firmware
described in clauses (a), (b) and (c) above, including flow charts, logic
diagrams, manuals, specifications, training materials, charts, and pseudo
codes.

“Event of Default” has the
meaning set forth in Section 5. 

“General Intangibles”
means, with respect to the Debtor, all of the Debtor’s “general intangibles” as
defined in the UCC and, in any event, includes all of the Debtor’s licenses,
franchises, tax refund claims, guarantee claims, security interests, and rights
to indemnification.

“Intellectual Property”
means with respect to the Debtor, all of the Debtor’s trade secrets and other
proprietary information; customer lists; trademarks, service marks, business
names, trade names, designs, logos, indicia, and other source or business
identifiers and the goodwill of the business relating thereto and all
registrations or applications for registrations that have heretofore been or may
hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs) and copyright registrations or applications
for registrations that have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights;
inventions (whether or not patentable); patent applications and patents;
industrial designs, industrial design applications and registered industrial
designs; license agreements related to any of the foregoing and income
therefrom; mask works; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, source codes, object codes and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to sue for all past, present, and future infringements of any of the foregoing;
and all common law and other rights throughout the world in and to all of the
foregoing.

“Obligations” means (i)
all of the indebtedness, obligations, and liabilities of the Debtor to the
Secured Party, individually or collectively, whether direct or indirect, joint
or several, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of the Note or this Security Agreement,
and (ii) all other indebtedness, obligations, and liabilities of the Debtor to
the Secured Party, now existing or hereafter arising, including without
limitation any additional advances, notes, or other instruments reflecting any
indebtedness incurred by the Debtor to the Secured Party from and after the date
hereof for additional expenditures incurred by the Secured Party on the Debtor’s
behalf.

“Patent Security
Agreement” means the Patent Security Agreement of even date herewith by and
between the Debtor and the Secured Party, as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance with its
terms.

“Senior Secured Debt”
shall mean all obligations, liabilities, and indebtedness of every nature of
Debtor from time to time owed to HSBC Bank Canada under the credit facility
dated May 12, 2011, together with annual update letter dated June 1, 2012,
including, with out limitation, accrued and unpaid interest and all fees, costs
and expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and from time to time hereafter owing, due or
payable.

“State” means the State of
New York.

2

“Trademark Security
Agreement” means the Trademark Security Agreement of even date herewith by
and between the Debtor and the Secured Party, as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with its terms.

“UCC” means the Uniform
Commercial Code as in effect from time to time.

2. Grant of Security
Interest. As security for the payment and performance in full of all
Obligations, the Debtor pledges, assigns, and grants to the Secured Party a
continuing security interest subordinated to the Senior Secured Debt in and a
lien on all of the Debtor’s right, title, and interest in, to, and under the
following, wherever located, and whether now existing or hereafter arising or
acquired from time to time:

(a) all
Accounts;

(b) all
Chattel Paper, including Electronic Chattel Paper;

(c) all
Computer Hardware and Software and all rights with respect thereto, including
any and all licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights, renewal
rights, and indemnifications, and any substitutions, replacements, additions, or
model conversions of any of the foregoing;

(d) all
Deposit Accounts; 

(e) all
Documents; 

(f) all
Financial Assets; 

(g) all
General Intangibles;

(h) all
Goods (including all its Equipment, Fixtures, and Inventory), together with all
embedded software, accessions, additions, attachments, improvements,
substitutions, and replacements thereto and therefor;

(i) all
Instruments;

(j) all
Intellectual Property;

(k) all
Investment Property (including Commodity Accounts, Commodity Contracts,
Securities (whether Certificated Securities or Uncertificated Securities),
Security Entitlements, and Security Accounts);

(l) all
Letter-of-Credit Rights;

(m) all
money (of every jurisdiction whatsoever);

(n) all
Commercial Tort Claims;

(o) all
Supporting Obligations; and 

(p) to the extent not
included in the foregoing, all other personal assets and property of any kind or
description;

3

together with all books, records, writings, data bases,
information, and other property relating to, used, or useful in connection with,
or evidencing, embodying, incorporating, or referring to any of the foregoing,
all claims and insurance proceeds arising out of the loss, nonconformity, or any
interference with the use of, or any defect or infringement of rights in, or
damage to, any of the foregoing, and all proceeds, products, offspring, rents,
issues, profits, returns, accessions, substitutions, and replacements to, of,
and from, and all distributions on and rights arising out of, any of the
foregoing (collectively, the “Collateral”).

3. Authorization to
File Financing Statements, Etc. The Debtor hereby irrevocably authorizes the
Secured Party at any time and from time to time to file in any filing office in
any UCC jurisdiction any initial financing statements and amendments thereto
that (a) indicate the Collateral (i) as all assets of the Debtor or words of
similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the UCC of the State or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9 of
the UCC of the State, or such other jurisdiction, for the sufficiency or filing
office acceptance of any financing statement or amendment, including (i) whether
the Debtor is an organization, the type of organization, and any organizational
identification number issued to the Debtor, and (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of real property
to which the Collateral relates. The Debtor agrees to furnish any such
information to the Secured Party promptly upon the Secured Party’s request. The
Debtor hereby irrevocably authorizes the Secured Party at any time and from time
to time to file with the United States Patent and Trademark Office the Patent
Security Agreement, the Trademark Security Agreement, and other documents,
without the signature of the Debtor where permitted by law, and naming the
Debtor as debtor and the Secured Party as a party.

4. Other Actions.
To further the attachment, perfection, and priority of, and the ability of the
Secured Party to enforce, the Secured Party’s security interest in the
Collateral, and without limitation on the Debtor’s other obligations in this
Security Agreement, the Debtor agrees, at the request and option of the Secured
Party and in each case at the Debtor’s sole expense, to take any and all other
actions the Secured Party may determine to be necessary or useful for the
attachment, perfection, and priority of, and the ability of the Secured Party to
enforce, the Secured Party’s subordinated security interest in any and all of
the Collateral, including, without limitation, the following (limited by and
only to the extent not in violation of the Senior Secured Debt):

4.1
Promissory Notes. If the Debtor shall at any time hold or acquire any
promissory notes, the Debtor shall promptly notify the Secured Party and, at the
Secured Party’s request and option, forthwith endorse, assign, and deliver the
same to the Secured Party, accompanied by such instruments of transfer or
assignment duly executed in blank as the Secured Party may from time to time
specify.

4.2
Deposit Accounts. For each deposit account that the Debtor at any
time opens or maintains at a financial institution, the Debtor shall, at the
Secured Party’s request and option, pursuant to an
agreement in form and substance satisfactory to the Secured Party, either (a)
cause the depository bank to agree to comply, without further consent of the
Debtor, at any time with instructions from the Secured Party to such depository
bank directing the disposition of funds from time to time credited to such
deposit account, or (b) arrange for the Secured Party to become the customer of
the depository bank with respect to the deposit account, with the Debtor being
permitted, only with the consent of the Secured Party, to exercise rights to
withdraw funds from such deposit account. The provisions of this Section 4.2
shall not apply to any deposit accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of the Debtor’s salaried employees.

4

4.3
Letter-of-Credit Rights. If the Debtor is at any time a beneficiary
under a letter of credit now or hereafter, the Debtor shall promptly notify the
Secured Party and, at the Secured Party’s request and option, the Debtor shall
pursuant to an agreement in form and substance satisfactory to the Secured
Party, either (i) arrange for the issuer and any confirmer or other nominated
person of such letter of credit to consent to an assignment to the Secured Party
of the proceeds of the letter of credit or (ii) arrange for the Secured Party to
become the transferee beneficiary of the letter of credit, with the Secured
Party agreeing in such case, that the proceeds of the letter to credit are to be
applied to the payment of the Obligations.

4.4
Other Actions as to Any and All Collateral. The Debtor further agrees
to (a) execute, deliver, and, where appropriate, file financing statements and
amendments relating thereto under the UCC, to the extent, if any, that the
Debtor’s signature thereon is required therefor, (b) cause the Secured Party’s
name to be noted as secured party on any certificate of title for a titled good
if such notation is a condition to attachment, perfection, or priority of, or
ability of the Secured Party to enforce, the Secured Party’s subordinated
security interest in such Collateral, (c) comply with any provision of any
statute, regulation, or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection, or
priority of, or ability of the Secured Party to enforce, the Secured Party’s
subordinated security interest in such Collateral; (d) obtain governmental and
other third party waivers, consents, and approvals in form and substance
satisfactory to Secured Party, including, without limitation, any consent of any
licensor, lessor, or other Person obligated on Collateral; (e) obtain waivers
from secured parties and landlords in form and substance satisfactory to the
Secured Party; and (f) take all actions under any earlier versions of the UCC or
under any other law, as reasonably determined by the Secured Party to be
applicable in any relevant UCC or other jurisdiction, including any foreign
jurisdiction.

5. Events of
Default. The following events or conditions shall constitute events of
default (“Event of Default”) under this Security Agreement:

(a) The
occurrence of an “Event of Default” as defined in the Note; or

(b) The
failure of the Debtor to pay when due any installment of the principal of, or
interest on, or other amount due under, any other document, agreement, or
instrument evidencing any other Obligation; or

5

(c) The
failure of the Debtor to comply with any requirement set forth in this Security
Agreement, which is not cured within thirty (30) days after written notice from
the Secured Party to the Debtor; or

(d) The
sale by the Debtor of all or substantially all of its assets in a transaction or
series of transactions to a Person or Persons other than the Secured Party
outside the ordinary course of business;

provided however, that no Event
of Default shall occur hereunder if any such default is waived by the Secured
Party.

6. Representations and
Warranties Concerning the Debtor’s Legal Status. The Debtor represents and
warrants to the Secured Party as follows: (a) the Debtor’s exact legal name is
as indicated on the signature page hereof; (b) the Debtor is a Delaware
corporation; and (c) the address of the Debtor’s chief executive office is as
set forth in the first paragraph of this Security Agreement.

7. Covenants Concerning
the Debtor’s Legal Status. The Debtor covenants with the Secured Party as
follows: (a) without providing at least thirty (30) days’ prior written notice
to the Secured Party, the Debtor will not change its name, its place of business
or, if more than one, its chief executive office, or its mailing address or
organizational identification number if it has one; (b) if the Debtor does not
have an organizational identification number and later obtains one, the Debtor
shall forthwith notify the Secured Party of such organizational identification
number; and (c) the Debtor will not change its type of organization,
jurisdiction of organization, or other legal structure.

8. Representations and
Warranties Concerning Collateral, Etc. The Debtor further represents and
warrants to the Secured Party as follows: (a) except for the Senior Secured
Debt, the Debtor is the owner of the Collateral, free from any right or claim or
any Person or any adverse lien, security interest or other encumbrance except
for liens of record as of the date hereof; and (b) the Debtor holds no
Commercial Tort Claim.

9. Covenants Concerning
Collateral, Etc. The Debtor further covenants with the Secured Party as
follows: (a) the Collateral will be kept in the locations listed on Schedule
9.1 ; (b) except for the security interest herein granted and liens existing
on or prior to the date hereof and Permitted Liens (as defined in the Note), the
Debtor shall be the owner of or have other rights in the Collateral free from
any right or claim of any other Person, lien, security interest, license, or
other encumbrance, and the Debtor shall defend the same against all claims and
demands of all Persons at any time claiming the same or any interests therein
adverse to the Secured Party; (c) none of the Account Debtors or other Persons
obligated on any of the Collateral is a Governmental Entity covered by the
Federal Assignment of Claims Act or like federal, state, or local statute or
rule in respect of such Collateral; (d) the Debtor shall not pledge, mortgage,
or create any right of any Person in or claim by any Person to the Collateral,
or any security interest, lien, license, or encumbrance in the Collateral in
favor of any Person, other than pursuant to the Senior Secured Debt documents
and to the Secured Party; (e) the Debtor will keep the Collateral in good order
and repair and will not use the same in violation of law or any policy of
insurance thereon; (f) maintain, protect, and not permit to lapse or to become abandoned or licensed any Intellectual Property and not settle
or compromise any pending or future litigation or administrative proceeding with
respect to such Intellectual Property; (g) the Debtor will permit the Secured
Party, or its designees, to inspect the Collateral at any reasonable time,
wherever located; (h) the Debtor will deliver to the Secured Party promptly at
the Secured Party’s request from time to time additional copies of any or all of
such papers or writings, and such other information with respect to any of the
Collateral and such other writings as the Secured Party may in its sole
discretion deem to be necessary or effectual to evidence the loan under the Note
or the Secured Party’s subordinated security interest in the Collateral; (i) the
Debtor will pay promptly when due all taxes, assessments, governmental charges,
and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Security
Agreement; and (j) the Debtor will not sell or otherwise dispose, or offer to
sell or otherwise dispose, of the Collateral or any interest therein except for
(1) sales and leases of Inventory in the ordinary course of business and (2) so
long as no Event of Default has occurred and is continuing, sales or other
dispositions of obsolescent items of equipment consistent with past
practices.

6

10.
Insurance.

10.1
Maintenance of Insurance. The Debtor will maintain with financially
sound and reputable insurers insurance with respect to its properties and
business against such casualties and contingencies as shall be in accordance
with the general business practices of Debtor on the date hereof. Such insurance
shall be in such amounts, contain such terms, be in such forms and be for such
periods as may be reasonably satisfactory to the Secured Party.

10.2
Continuation of Insurance. Upon request of the Secured Party, all
policies of insurance shall provide for at least thirty (30) days’ prior written
cancellation notice to the Secured Party. In the event of failure by the Debtor
to provide and maintain insurance as herein provided, the Secured Party may, at
its option, provide such insurance and charge the amount thereof to the Debtor.
The Debtor shall furnish the Secured Party with certificates of insurance and
policies evidencing compliance with the foregoing insurance provision.

11.
Collateral Protection Expenses; Preservation of Collateral.

11.1
Expenses Incurred by the Secured Party. In the Secured Party’s sole
discretion, if the Debtor fails to do so, the Secured Party may discharge taxes
and other encumbrances at any time levied or placed on any of the Collateral,
maintain any of the Collateral, make repairs thereto and pay any necessary
filing fees or insurance premiums. The Debtor agrees to reimburse the Secured
Party on demand for all expenditures so made. The Secured Party shall have no
obligation to the Debtor to make any such expenditures, nor shall the making
thereof be construed as the waiver or cure of any default or Event of
Default.

11.2
The Secured Party’s Obligations and Duties. The Secured Party’s sole
duty with respect to the custody, safe keeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC of the State or
otherwise, shall be to deal with such Collateral in the same manner
as the Secured Party deals with similar property for its own account.

7

12. Securities.
Subject to the terms of the Senior Secured Debt documents, the Secured Party may
at any time following and during the continuance of an Event of Default, at its
option, transfer to itself or any nominee any Securities constituting
Collateral, receive any income thereon, and hold such income as additional
Collateral or apply it to the Obligations.

13. Notification to
Account Debtors and Other Persons Obligated on Collateral. Subject to
Section 5(c) of this Security Agreement and subject to the Debtor’s
obligations under the Senior Secured Debt documents, if an Event of Default
shall have occurred and be continuing, the Debtor shall, at the request and
option of the Secured Party, notify Account Debtors and other Persons obligated
on any of the Collateral of the security interest of the Secured Party in any
Account, Chattel Paper, General Intangible, Instrument or other Collateral and
that payment thereof is to be made directly to the Secured Party or to any
financial institution designated by the Secured Party as the Secured Party’s
agent therefor, and the Secured Party may itself, if an Event of Default shall
have occurred and be continuing, without notice to or demand upon the Debtor, so
notify Account Debtors and other Persons obligated on Collateral. After the
making of such a request or the giving of any such notification, the Debtor
shall hold any proceeds of collection of Accounts, Chattel Paper, General
Intangibles, Instruments, and other Collateral received by the Debtor as trustee
for the Secured Party without commingling the same with other funds of the
Debtor and shall turn the same over to the Secured Party in the identical form
received, together with any necessary endorsements or assignments.

14. Power of Attorney.

(a)
Appointment and Powers of the Secured Party. The Debtor hereby
irrevocably constitutes and appoints the Secured Party and any agent thereof,
with full power of substitution, as its true and lawful attorneys-in-fact with
full irrevocable power and authority in the place and stead of the Debtor or in
the Secured Party’s own name, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute any
and all documents and instruments that may be necessary or useful to accomplish
the purposes of this Security Agreement. To the extent that the Debtor’s
authorization given in Section 3 hereof is not sufficient, to file such
financing statements with respect hereto, with or without the Debtor’s
signature, or a photocopy of this Security Agreement in substitution for a
financing statement, as the Secured Party may deem appropriate and to execute in
the Debtor’s name such financing statements and amendments thereto and
continuation statements which may require the Debtor’s signature.

14.2
Ratification by the Debtor. To the extent permitted by law, the
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and is irrevocable.

14.3
No Duty on the Secured Party. The powers conferred upon the Secured
Party hereunder are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such
powers. The Secured Party shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its agents shall be responsible to the Debtor for any act or failure to
act, except for the Secured Party’s own willful misconduct.

8

15. Rights and
Remedies. If an Event of Default shall have occurred and be continuing, the
Secured Party, without any other notice to or demand upon the Debtor shall have
in any jurisdiction in which enforcement hereof is sought, in addition to all
other rights and remedies, the rights and remedies of a secured party under the
UCC of the State and any additional rights and remedies which may be provided to
a secured party in any jurisdiction in which Collateral is located, including,
without limitation, the right to take possession of the Collateral, and for that
purpose the Secured Party may, so far as the Debtor can give authority therefor,
enter upon any premises on which the Collateral may be situated and remove the
same therefrom. The Secured Party may in its sole discretion require the Debtor
to assemble all or any part of the Collateral at such location or locations
within the jurisdiction(s) of the Debtor’s principal office(s) or at such other
locations as the Secured Party may reasonably designate, but only to the extent
that such actions will not breach or violate the Debtor’s obligations under the
Senior Secured Debt documents. Unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Secured Party shall give to the Debtor at least ten (10) days’ prior
written notice of the time and place of any public sale of Collateral or of the
time after which any private sale or any other intended disposition is to be
made. The Debtor hereby acknowledges that ten (10) days’ prior written notice of
such sale or sales shall be reasonable notice. In addition, the Debtor waives
any and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Secured Party’s rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.

16. Standards for
Exercising Rights and Remedies. To the extent that applicable law imposes
duties on the Secured Party to exercise remedies in a commercially reasonable
manner, the Debtor acknowledges and agrees that it is not commercially
unreasonable for the Secured Party: (a) to fail to incur expenses reasonably
deemed significant by the Secured Party to prepare Collateral for disposition or
otherwise to fail to complete raw material or work in process into finished
goods or other finished products for disposition; (b) to fail to obtain third
party consents for access to Collateral to be disposed of, or to obtain or, if
not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of; (c) to fail to exercise collection remedies against Account Debtors
or other Persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral; (d) to exercise
collection remedies against Account Debtors and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists; (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature; (f) to contact other Persons, whether or not in the
same business as the Debtor, for expressions of interest in acquiring all or any
portion of the Collateral; (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature; (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and sellers of assets; (i) to
dispose of assets in wholesale rather than retail markets; (j) to disclaim
disposition warranties; (k) to purchase insurance or credit enhancements to
insure the Secured Party against risks of loss, collection, or disposition of
Collateral or to provide to the Secured Party a guaranteed return from the
collection or disposition of Collateral; or (l) to the extent deemed appropriate
by the Secured Party, to obtain the services of other brokers, investment
bankers, consultants, and other professionals to assist the Secured Party in the
collection or disposition of any of the Collateral. The Debtor acknowledges that
the purpose of this Section 16 is to provide non-exhaustive indications
of what actions or omissions by the Secured Party would fulfill the Secured
Party’s duties under the UCC or other law of the State or any other relevant
jurisdiction in the Secured Party’s exercise of remedies against the Collateral
and that other actions or omissions by the Secured Party shall not be deemed to
fail to fulfill such duties solely on account of not being indicated in this
Section 16. Without limitation upon the foregoing, nothing contained in
this Section 16 shall be construed to grant any rights to the Debtor or
to impose any duties on the Secured Party that would not have been granted or
imposed by this Security Agreement or by applicable law in the absence of this
Section 16.

9

17. No Waiver by the
Secured Party, Etc. The Secured Party shall not be deemed to have waived any
of its rights or remedies in respect of the Obligations or the Collateral unless
such waiver shall be in writing and signed by the Secured Party. No delay or
omission on the part of the Secured Party in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or remedy.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion. All rights and remedies of the Secured
Party with respect to the Obligations or the Collateral, whether evidenced
hereby or by any other instrument or papers, shall be cumulative and may be
exercised singularly, alternatively, successively, or concurrently at such time
or at such times as the Secured Party deems expedient.

18. Suretyship Waivers
by the Debtor. The Debtor waives demand, notice, protest, notice of
acceptance of this Security Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both the
Obligations and the Collateral, the Debtor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of, or failure to perfect any security
interest in any Collateral, to the addition or release of any party or Person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising, or adjusting of any thereof, all in such
manner and at such time or times as the Secured Party may deem advisable. The
Secured Party shall have no duty as to the collection or protection of the
Collateral or any income therefrom, the preservation of rights against prior
parties, or the preservation of any rights pertaining thereto beyond the safe
custody thereof as set forth in Section 11 hereof. The Debtor further
waives any and all other suretyship defenses.

19. Marshalling.
The Secured Party shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or
arising. To the extent that it lawfully may, the Debtor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Secured Party’s rights and
remedies under this Security Agreement or under any other instrument creating or
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, the Debtor hereby
irrevocably waives the benefits of all such laws.

10

20. Proceeds of
Dispositions; Expenses. The Debtor shall pay to the Secured Party on demand
any and all expenses, including reasonable attorneys’ fees and disbursements,
incurred or paid by the Secured Party in protecting, preserving or enforcing the
Secured Party’s rights and remedies under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the
residue of any proceeds of collection or sale or other disposition of the
Collateral shall, to the extent actually received in cash, be applied to the
payment of all indebtedness owed by the Debtor under the Note. Upon the final
payment and satisfaction in full of all of the Obligations and after making any
payments required by Sections 9-608(1)(a)(3) or 9-615(1)(c) of the UCC of the
State, any excess shall be returned to the Debtor. In the absence of final
payment and satisfaction in full of all of the Obligations, and the Debtor shall
remain liable for any deficiency.

21. Overdue
Amounts. Until paid, all amounts due and payable by the Debtor hereunder
shall be a debt secured by the Collateral and shall bear, whether before or
after judgment, interest at the rate for overdue principal set forth in the
Note.

22.
Indemnification. The Debtor shall indemnify, defend, and hold the
Secured Party harmless of and from any claim brought or threatened against the
Secured Party by the Debtor, any guarantor or endorser of the Obligations, or
any other Person (as well as from attorneys’ reasonable fees and expenses in
connection therewith) on account of the Secured Party’s relationship with the
Debtor, or any guarantor or endorser of the Obligations (each of which may be
defended, compromised, settled, or pursued by the Secured Party with counsel of
the Secured Party’s election, but at the expense of the Debtor), except for any
claim arising out of the willful misconduct of the Secured Party. Such
indemnification shall survive payment of the Obligations, and/or any
termination, release, or discharge executed by the Secured Party in favor of the
Debtor.

23. Costs and
Expenses. The Debtor shall pay to the Secured Party any and all costs and
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements, court costs, litigation and other expenses) incurred or paid by
the Secured Party in establishing, maintaining, protecting, or enforcing any of
the Secured Party’s rights or the Obligations, including, without limitation,
any and all such costs and expenses incurred or paid by the Secured Party in
defending the Secured Party’s security interest in, title or right to the
Collateral or in collecting or attempting to collect or enforcing or attempting
to enforce payment of the Collateral.

24. Governing Law;
Consent to Jurisdiction. This Security Agreement is intended to take effect
as a sealed instrument and shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made and wholly
performed within that state. The Debtor agrees that any action or claim arising out
of, or any dispute in connection with, this Security Agreement, any rights,
remedies, obligations, or duties hereunder, or the performance or enforcement
hereof or thereof, may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York and consents
to the exclusive jurisdiction of such court and to service of process in any
such suit being made upon the Debtor by mail at the address specified in the
first paragraph of this Security Agreement. The Debtor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.

11

25. Waiver of Jury
Trial. THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS SECURITY
AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF, AND AGREES NOT TO SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT
BE, OR HAS NOT BEEN WAIVED. Except as prohibited by law, the Debtor waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Debtor (a)
certifies that neither the Secured Party nor any representative, agent, or
attorney of the Secured Party has represented, expressly or otherwise, that the
Secured Party would not, in the event of litigation, seek to enforce the
foregoing waivers or other waivers contained in this Security Agreement, and (b)
acknowledges that, in extending credit evidenced by the Note, the Secured Party
is relying upon, among other things, the waivers and certifications contained in
this Section 25.

26. Miscellaneous.
This Security Agreement may be executed in counterparts, each of which shall
constitute an original, but all taken together shall constitute a single
contract. The headings of each Section of this Security Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Security Agreement and all rights and obligations hereunder shall be binding
upon the Debtor and its respective successors and assigns, and shall inure to
the benefit of the Secured Party and its successors and assigns. If any term of
this Security Agreement shall be held to be invalid, illegal, or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby, and
this Security Agreement shall be construed and be enforceable as if such
invalid, illegal or unenforceable term had not been included herein. The Debtor
acknowledges receipt of a copy of this Security Agreement.

[Signatures follow]

12

IN WITNESS WHEREOF, intending to
be legally bound, the Debtor and the Secured Party have caused this Security
Agreement to be effective as of the date first above written above.

	 	TURBOSONIC TECHNOLOGIES, INC., 
	 	as the Debtor 
	 	  
	 	  
	 	By:
      \s\ Edward F. Spink 
	 	Name: Edward F. Spink 
	 	Title: Chief Executive Officer

Signature Page to Second Lien Security Agreement

	 	MEGTEC SYSTEMS, INC., 
	 	as the Secured Party 
	 	  
	 	  
	 	By:
      \s\ Gregory R. Linn 
	 	             Gregory
      R. Linn 
	 	             Senior
      Vice President and Chief Financial 
	 	             Officer
    

Signature Page to Second Lien Security Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}]]