Document:

TurboSonic Technologies Inc.: Exhibit 10.3 - Filed by newsfilecorp.com

Exhibit 10.3

TRADEMARK SECURITY AGREEMENT

THIS TRADEMARK SECURITY AGREEMENT
(this “Agreement”) dated as of October 10, 2012, is by and between
TURBOSONIC TECHNOLOGIES, INC., a Delaware corporation (the “Debtor”), and
MEGTEC SYSTEMS, INC., a Delaware corporation (the “Secured Party”).

This Agreement is executed
pursuant to the terms of (a) the Promissory Note of even date herewith (as
amended, restated, supplemented, or otherwise modified from time to time, the
“Note”) executed by the Debtor in favor of the Secured Party, and (b) the
Second Lien Security Agreement of even date herewith (as amended, restated,
supplemented, or otherwise modified from time to time, the “Security
Agreement”) executed by the Debtor in favor of the Secured Party.
Capitalized terms used herein but not defined herein shall have the meaning
assigned to them in the Note or the Security Agreement, as applicable.

NOW, THEREFORE, for good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the Debtor hereby grants to the Secured Party a security interest
junior to the Senior Secured Debt in all of the Debtor’s right, title, and
interest in, to, and under the following, whether presently existing or
hereafter arising or acquired:

(i)              all
trademarks and all of the goodwill of the business connected with the use of,
and symbolized by, each trademark of the Debtor (excluding trademark
applications for which the Debtor has not filed and had accepted under
applicable Law a “Statement of Use” or “Amendment to Allege Use”), including,
without limitation, each trademark listed on Schedule A; 

(ii)              each
trademark license, including, without limitation, each trademark license listed
on Schedule B;

(iii)             all
claims by the Debtor against third parties for (a) past, present, or future
infringement or dilution of any trademark, including, without limitation, any
trademark listed on Schedule A or under any trademark licensed under any
trademark license including, without limitation, any trademark license listed on
Schedule B, (b) injury to the goodwill associated with any trademark or
(c) breach or enforcement of any trademark license; and

(iv)            all
products and proceeds of the foregoing;

provided, however, that the security interests granted herein
shall not extend to any trademark license or any rights thereunder where the
Debtor is a licensee to the extent that the granting of a security interest
therein would, under the express terms of such license, be prohibited or
restricted or result in a breach of the terms of, constitute a default under, or
result in a termination of any such license or any related agreement.

The rights and remedies of the Secured
Party with respect to the security interest granted herein are without prejudice
to, and are in addition to, those set forth in the Security Agreement, all terms
and provisions of which are incorporated herein by reference. In the event that
any provisions of this Agreement are deemed to conflict with the
Security Agreement, the provisions of the Security Agreement shall govern. 

[Signatures follow]

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first above written.

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

ACKNOWLEDGMENT

PROVINCE OF ONTARIO

COUNTY OF WATERLOO

I, Irwin A. Duncan, a Notary Public
for said County and State, do hereby certify that Edward F. Spink personally
appeared before me this day and stated that he is the CEO of TurboSonic
Technologies, Inc. and acknowledged, on behalf of TurboSonic Technologies, Inc.
the due execution of the foregoing instrument.

Witness my hand and official seal,
this 12th day of October, 2012.

	 	/s/
    Irwin A. Duncan
	 	Notary Public 
	My commission expires: is for life	 
	/s/ Irwin A.
    Duncan	 

Agreed and accepted as of the 10th day of October, 2012.

MEGTEC SYSTEMS, INC., 
as the Secured Party

	By: \s\ Gregory R.
      Linn 	 
	Name: Gregory R. Linn 	 
	Title: Senior Vice President and Chief Financial OfficerTurboSonic Technologies Inc.: Exhibit 10.4 - Filed by newsfilecorp.com

Exhibit 10.4

PATENT SECURITY AGREEMENT

THIS PATENT SECURITY AGREEMENT
(this “Agreement”) dated as of October 10, 2012, is by and between
TURBOSONIC TECHNOLOGIES, INC., a Delaware corporation (the “Debtor”), and
MEGTEC SYSTEMS, INC., a Delaware corporation (the “Secured Party”).

This Agreement is executed
pursuant to the terms of (a) the Promissory Note of even date herewith (as
amended, restated, supplemented, or otherwise modified from time to time, the
“Note”) executed by the Debtor in favor of the Secured Party, and (b) the
Second Lien Security Agreement of even date herewith (as amended, restated,
supplemented, or otherwise modified from time to time, the “Security
Agreement”) executed by the Debtor in favor of the Secured Party.
Capitalized terms used herein but not defined herein shall have the meaning
assigned to them in the Note or the Security Agreement, as applicable.

NOW, THEREFORE, for good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the Debtor hereby grants to the Secured Party a security interest
junior to the Senior Secured Debt in all of the Debtor’s right, title, and
interest in, to, and under the following, whether presently existing or
hereafter arising or acquired:

(i)              all
patents and patent applications, including, without limitation, each patent
listed on Schedule A; 

(ii)             each
license of any patent under which Debtor is a licensee or licensor;

(iii)             all
claims by the Debtor against third parties for (a) past, present, or future
infringement of any patent, including, without limitation, any patent listed on
Schedule A or under any patent licensed under any patent license under
which Debtor is a licensee or licensor, or (b) breach or enforcement of any
patent license; and

(iv)             all
products and proceeds of the foregoing;

provided, however, that the security interests granted herein
shall not extend to any patent license or any rights thereunder where the Debtor
is a licensee to the extent that the granting of a security interest therein
would, under the express terms of such license, be prohibited or restricted or
result in a breach of the terms of, constitute a default under, or result in a
termination of any such license or any related agreement.

The rights and remedies of the
Secured Party with respect to the security interest granted herein are without
prejudice to, and are in addition to, those set forth in the Security Agreement,
all terms and provisions of which are incorporated herein by reference. In the
event that any provisions of this Agreement are deemed to conflict with the
Security Agreement, the provisions of the Security Agreement shall govern. 

[Signatures follow]

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first above written.

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

ACKNOWLEDGMENT

PROVINCE OF ONTARIO

COUNTY OF WATERLOO

I, Irwin A. Duncan,
a Notary Public for said County and State, do hereby certify that Edward F.
Spink
personally appeared before me this day and stated that he is the CEO of TurboSonic Technologies, Inc. and acknowledged, on behalf of TurboSonic
Technologies, Inc. the due execution of the foregoing instrument.

Witness my hand and official
seal, this 12th day of October, 2012.

	 	/s/ Irwin A. Duncan
	 	Notary Public 
	My commission expires: is for life	
	/s/ Irwin A. Duncan	 

S-1

Agreed and accepted as of the 10th day of October, 2012.

MEGTEC SYSTEMS, INC.,
as the Secured Party

	By:\s\ Gregory R.
      Linn 	 
	Name: Gregory R. Linn 	 
	Title: Senior Vice President and Chief Financial Officer
	 

S-2TurboSonic Technologies Inc.: Exhibit 10.5 - Filed by newsfilecorp.com

Exhibit 10.5

GENERAL SECURITY AGREEMENT 

THIS AGREEMENT is dated as of October 10, 2012 

B E T W E E N :

TURBOSONIC TECHNOLOGIES, INC.

(“TurboSonic US”)

- and -

TURBOSONIC CANADA, INC.

(“TurboSonic Canada”)

 - and
-

TURBOSONIC INC.

(“TurboSonic”)

- and -

MEGTEC SYSTEMS, INC. 

(the “Secured Party”) 

CONTEXT:

	A. 	
      The Debtors (as hereinafter defined) are indebted to the
      Secured Party pursuant to a Second Lien Promissory Note (the
      “Note”) of the Debtors of even date herewith payable to the order
      of the Secured Party in the aggregate principal amount of $1,000,000 or
      the aggregate of such amounts the Secured Party has disbursed to the
      Debtors, together with all accrued interest thereon.

	 	 
	B. 	
      As a condition precedent to accept the Note and to commit
      to make the loan evidenced thereby, the Secured Party requires the Debtors
      to grant a security interest subordinate to the Senior Secured Debt (as
      hereinafter defined) in all of the Collateral (as hereinafter
    defined).

NOW THEREFORE each of the Debtors agrees with the Secured Party
as follows:

- 2 -

ARTICLE 1 
INTERPRETATION

	1.1 	
      Definitions

In this Agreement, the following terms have the following
meanings:

	1.1.1 	
      “Account Debtor” is defined in Section
  2.5.

	 	 
	1.1.2 	
      “Agreement” means this agreement, including all
      Schedules, as it may be supplemented, amended, restated or replaced by
      written agreement between the Parties.

	 	 
	1.1.3 	
      “Books and Records” means all books, books of
      account, records, files, papers, disks, documents, correspondence, plans,
      ledgers, electronically recorded data and other repositories of data
      recorded in any form or medium, evidencing or relating to the Collateral,
      which are at any time owned or held by each of the Debtors or to which
      each of the Debtors (or any Person on each of the Debtors’ behalf) has
      access.

	 	 
	1.1.4 	
      “Business Day” means any day excluding a Saturday,
      Sunday or statutory holiday in the Province of Ontario.

	 	 
	1.1.5 	
      “Collateral” means all present and after-acquired
      personal property of any kind or description owned, leased, licensed,
      possessed or acquired by any of the Debtors, or in which any of the
      Debtors has rights, including all present and after-acquired Goods
      (including Equipment), Investment Property, Instruments, Intellectual
      Property, Documents of Title, Chattel Paper (including electronic Chattel
      Paper), Intangibles (including Accounts), Computer Hardware and Software,
      Money (including deposit accounts of every jurisdiction wherever situate),
      letter of credit rights, commercial tort claims, financial assets, crops
      and fixtures, owned, leased, licensed, possessed or acquired by each of
      the Debtors, or in which each of the Debtors has rights, and all Proceeds
      of that property 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, but
      specifically excludes the Excluded Collateral.

	 	 
	1.1.6 	
      “Communication” means any notice, demand, request,
      consent, approval or other communication which is required or permitted by
      this Agreement to be given or made by a Party.

	 	 
	1.1.7 	
      “Computer Hardware and Software” means, with
      respect to each of the Debtors, all of its 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, 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 property.

- 3 -

	1.1.8 	
      “Contracts” means all contracts, licenses and
      agreements to which any of the Debtors is at any time a party or pursuant
      to which any of the Debtors has at any time acquired rights, as those
      contracts, licenses and agreements may be amended, restated, supplemented
      or replaced and includes:

	 	 	 
		1.1.8.1 	
      all rights of each of the Debtors to receive money due
      and to become due to it in connection with a contract, licence or
      agreement;

	 	 	 
		1.1.8.2 	
      all rights of each of the Debtors to damages arising out
      of, or for breach or default in respect of, a contract, licence or
      agreement; and

	 	 	 
		1.1.8.3 	
      all rights of each of the Debtors to perform and exercise
      all remedies in connection with a contract, licence or
agreement.

	 	 	 
	1.1.9 	
      “Contractual Rights and Agreements” means all
      present and after-acquired leases, licences, permits and other agreements,
      and all present and after-acquired entitlements, franchises and rights of
      any kind, to which each of the Debtors is a party or of which each of the
      Debtors has the benefit.

	 	 	 
	1.1.10 	
      “Control Agreement” means an agreement in writing
      between a Person and, as applicable, an issuer of uncertificated
      securities of each of the Debtors or a securities intermediary holding
      security entitlements of each of the Debtors, under which that Person is
      given Control of the relevant Investment Property.

	 	 	 
	1.1.11 	
      “Debtors” means collectively TurboSonic US,
      TurboSonic Canada and TurboSonic, and “Debtor” means either one of
      them.

	 	 	 
	1.1.12 	
      “Event of Default” is defined in Section
    6.1.

	 	 	 
	1.1.13 	
      “Excluded Collateral” means Consumer Goods, the
      last day of the term of any real property lease and any Intellectual
      Property Right, Permit or Contract which would be breached or terminated if a Security Interest was
      granted in it without the consent of a third party, unless that consent is
      obtained, but does not include Accounts.

- 4 -

	1.1.14 	
      “Governmental Authority” means

	 	 	 
		1.1.14.1 	
      any federal, provincial, state, local, municipal,
      regional, territorial, aboriginal, or other government, governmental or
      public department, branch, ministry, or court, domestic or foreign,
      including any district, agency, commission, board, arbitration panel or
      authority and any subdivision of any of them exercising or entitled to
      exercise any administrative, executive, judicial, ministerial,
      prerogative, legislative, regulatory or taxing authority or power of any
      nature; and

	 	 	 
		1.1.14.2 	
      any quasi-governmental or private body exercising any
      regulatory, expropriation or taxing authority under or for the account of
      any of them, and any subdivision of any of them.

	 	 	 
	1.1.15 	
      “Intellectual Property Rights” means with respect
      to each of the Debtors, all of its 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.

	 	 	 
	1.1.16 	
      “Investment Property” shall have the meaning
      ascribed to it in the PPSA.

	 	 	 
	1.1.17 	
      “Motor Vehicles” means all automobiles, trucks,
      motorcycles, motorized snow vehicles, and any other vehicle that is
      self-propelled, but excluding boats and aircraft.

	 	 	 
	1.1.18 	
      “Obligations” means all indebtedness, both present
      and future, and whether arising on current account or otherwise, together
      with interest thereon and all liabilities, present and future, direct or
      indirect, absolute or contingent of all of the Debtors to the Secured
      Party, including any advance or re-advance and every unpaid balance of
      them, by the Secured Party to any of the Debtors, whenever made, and
      interest thereon to the same extent as if the advance or re-advance had
      been made at the time of creation of this Agreement, and all present and
      future obligations of any of the Debtors to the Secured Party, whether or
      not contained in this Agreement.

- 5 -

	1.1.19 	
      “Parties” means each of the Debtors and the
      Secured Party, collectively, and “Party” means any one of
    them.

	 	 	 
	1.1.20 	
      “Patent Security Agreement” means the Patent
      Security Agreement of even date herewith by and between TurboSonic US and
      the Secured Party, as the same may be amended, restated, supplemented or
      otherwise modified from time to time in accordance with its
  terms.

	 	 	 
	1.1.21 	
      “Permits” means all authorizations, registrations,
      permits, licenses, consents, quotas, grants, approvals, franchises,
      rights-of-way, easements and entitlements that any of the Debtors has, or
      is required to have, to own, possess or operate any of its property, or to
      operate and carry on any part of its business.

	 	 	 
	1.1.22 	
      “Person” will be broadly interpreted and
      includes:

	 	 	 
		1.1.22.1 	
      a natural person, whether acting in his or her own
      capacity, or in his or her capacity as executor, administrator, estate
      trustee, trustee or personal or legal representative, and the heirs,
      executors, administrators, estate trustees, trustees or other personal or
      legal representatives of a natural person;

	 	 	 
		1.1.22.2 	
      a corporation or a company of any kind, a partnership of
      any kind, a sole proprietorship, a trust, a joint venture, an association,
      an unincorporated association, an unincorporated syndicate, an
      unincorporated organization or any other association, organization or
      entity of any kind; and

	 	 	 
		1.1.22.3 	
      a Governmental Authority.

	 	 	 
	1.1.23 	
      “PPSA” means the Personal Property Security Act
      of the Province of Ontario.

	 	 	 
	1.1.24 	
      “Receiver” means a receiver or receiver-manager of
      the Collateral.

	 	 	 
	1.1.25 	
      “Replacement Equipment” is defined in Section
      5.2.

	 	 	 
	1.1.26 	
      “Security Interests” is defined in Section
    2.2.

	 	 	 
	1.1.27 	
      “Senior Secured Debt” means all obligations,
      liabilities, and indebtedness of every nature of any of the Debtors 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, without 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, and standby letters of credit for approximately
    US$450,000.

	 	 	 
	1.1.28 	
      “Serial Number Goods” means Motor Vehicles,
      trailers, aircraft, boats, outboard motors, and mobile homes.

	 	 	 
	1.1.29 	
      “STA” means the Securities Transfer Act (2006)
      (Ontario).

- 6 -

	1.1.30 	
      “Tax” means all taxes, duties, fees, premiums,
      assessments, imposts, levies, rates, withholdings, dues, government
      contributions and other charges of any kind whatsoever, whether direct or
      indirect, together with all interest, penalties, fines, additions to tax
      or other additional amounts, imposed by any Governmental
  Authority.

	 	 
	1.1.31 	
      “Trademark Security Agreement” means the Trademark
      Security Agreement of even date herewith by and between TurboSonic US and
      the Secured Party, as the same may be amended, restated, supplemented or
      otherwise modified from time to time in accordance with its
  terms.

	 	 
	1.2 	
      Incorporated Definitions

Capitalized terms not otherwise defined in this Agreement have
the definitions set out in the PPSA and the STA, as applicable.

	1.3 	
      Governing Law

This Agreement is governed by, and is to be construed and
interpreted in accordance with, the laws of the Province of Ontario and the laws
of Canada applicable in that Province.

	1.4 	
      Entire Agreement

This Agreement together with the Note constitutes the entire
agreement between the Parties pertaining to the subject matter of this Agreement
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties and there are no
representations, warranties or other agreements between the Parties in
connection with the subject matter of this Agreement except as specifically set
out in this Agreement or the other agreements and documents delivered pursuant
to this Agreement. No Party has been induced to enter into this Agreement in
reliance on, and there will be no liability assessed, either in tort or
contract, with respect to, any warranty, representation, opinion, advice or
assertion of fact, except to the extent it has been reduced to writing and
included as a term in this Agreement or in one of the other agreements and
documents delivered pursuant to this Agreement.

	1.5 	
      Business Day

Whenever any payment to be made or action to be taken under
this Agreement is required to be made or taken on a day other than a Business
Day, the payment is to be made or action taken on the next Business Day
following.

- 7 -

ARTICLE 2
GRANT OF SECURITY INTEREST

	2.1 	
      Security Interests

As security for the payment and performance of the Obligations,
each of the Debtors mortgages, pledges, assigns and charges to the Secured
Party, and grants to the Secured Party a continuing security interest
(subordinated to the Senior Secured Debt) in, and the Secured Party takes a
security interest in, all of its right, title and interest in and to its
Collateral.

	2.2 	
      Limitations on Grant of
Security

The mortgages, charges and security interests granted and
created in this Agreement (collectively the “Security Interests”) do not
apply or extend to:

	2.2.1 	
      the last day of any term created by any lease or
      agreement for lease of real property now held or in the future acquired by
      any of the Debtors, but each of the Debtors will stand possessed of the
      reversion remaining in it of any leasehold premises in trust for the
      Secured Party to assign and dispose of it as the Secured Party or any
      buyer of those leasehold premises directs; and

	 	 	 
	2.2.2 	
      any Contractual Rights and Agreements which provide
      that:

	 	 	 
		2.2.2.1 	
      they may not be assigned, subleased, charged or
      encumbered without the consent or approval of the other party to them;
      or

	 	 	 
		2.2.2.2 	
      any assignment, sublease, charge or encumbrance of them
      without obtaining the consent or approval of the other party to them would
      be a breach of, or allow the termination of, those Contractual Rights and
      Agreements;

	 	 	 
		
      but the Debtor will hold those Contractual Rights and
      Agreements in trust for the Secured Party, use commercially reasonable
      efforts to obtain the required consent or approval, and assign those
      Contractual Rights and Agreements to the Secured Party upon obtaining the
      required consent or approval, and the Security Interests will attach and
      extend to those Contractual Rights and Agreements as soon as the required
      consent or approval is obtained.

	 	 	 
	2.3 	
      Intellectual Property

Nothing in Section 2.1 is to be construed as constituting an
absolute transfer or assignment of any present or future Intellectual Property
Rights, but that Section is to be construed as granting to the Secured Party a
Security Interest (subordinated to the Senior Secured Debt) in and a charge on
all of each of the Debtors’ present and after-acquired Intellectual Property
Rights. The Debtors hereby irrevocably authorize the Secured Party at any time
and from time to time to file with the United States Patent and Trademark Office
and/or the Canadian Patent and Trademark Office, the Patent Security Agreement, the Trademark Security
Agreement, and other documents, without the signature of the Debtors where
permitted by law, and naming the Debtors as debtors and the Secured Party as
subordinated secured party. 

- 8 -

	2.4 	
      Attachment

The Debtors and the Secured Party do not intend to postpone the
attachment of the Security Interests, except as provided in Section 2.2, and
except as provided in that Section the Security Interests will attach when:

	2.4.1 	
      this Agreement has been executed, or in the case of
      after-acquired property, that property has been acquired by any of the
      Debtors;

	 	 
	2.4.2 	
      value has been given; and

	 	 
	2.4.3 	
      any of the Debtors has rights in its Collateral, or in
      the case of after-acquired property, acquires rights in its
    Collateral.

	 	 
	2.5 	
      Notification

Before or after an Event of Default (as later defined) has
occurred, the Secured Party may notify any debtor of any of the Debtors on an
Intangible, Chattel Paper, or Account, or any obligor of any of the Debtors on
an Instrument (“Account Debtor”) of the Security Interests, and after an
Event of Default the Secured Party may notify any Account Debtor to make all
payments on Collateral to the Secured Party. Each of the Debtors acknowledges
that the Proceeds of all sales, or any payments on or other Proceeds of the
Collateral, including but not limited to payments on, or other Proceeds of, the
Collateral received by any of the Debtors from any Account Debtor, whether
before or after notification to the Account Debtor and whether before or after
default under this Agreement, will be received and held by the relevant Debtors
in trust for the Secured Party and will be turned over to the Secured Party upon
request, and none of the Debtors will commingle any Proceeds of or payments on
the Collateral with any of its funds or property, but will hold them separate
and apart. 

	2.6 	
      Purchase Money Security
Interests

The Security Interests will constitute purchase money security
interests to the extent that any of the Obligations are monies advanced by the
Secured Party to any of the Debtors for the purpose of enabling any of the
Debtors to purchase or acquire rights in any of the Collateral and were so used
by those Debtors, and a certificate of an officer of the Secured Party as to the
extent that the Obligations are monies so advanced and used will be prima facie
proof of the purchase money security interests constituted by this
Agreement.

- 9 -

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

	3.1 	
      Representations and
Warranties

Each of the Debtors represents and warrants, jointly and
severally, to the Secured Party that:

	3.1.1 	
      Corporate Existence. TurboSonic US is duly
      incorporated and validly existing under the laws of the State of Delaware.
      TurboSonic Canada and TurboSonic are duly incorporated and validly
      existing under the laws of the Province of Ontario.

	 	 	 
	3.1.2 	
      Power and Capacity. It has all necessary corporate
      power, authority and capacity to carry on the business now being carried
      on by it and to enter into and perform its obligations under this
      Agreement.

	 	 	 
	3.1.3 	
      Binding Obligation. The execution and delivery of
      this Agreement, and all matters, registrations and deliveries contemplated
      by this Agreement, have been duly authorized by all necessary corporate
      action on its part. This Agreement has been duly executed and delivered by
      it and constitutes a valid and binding obligation of it, enforceable
      against it in accordance with the terms of this Agreement, subject to
      applicable bankruptcy, insolvency and other laws of general application
      limiting the enforcement of creditors’ rights generally and to the fact
      that equitable remedies, including specific performance, are discretionary
      and may not be ordered in respect of certain defaults.

	 	 	 
	3.1.4 	
      Absence of Conflict. None of the execution and
      delivery of this Agreement, the performance of its obligations under this
      Agreement, or the completion of the matters contemplated by this Agreement
      will (with or without the giving of notice or lapse of time, or
    both):

	 	 	 
		3.1.4.1 	
      result in or constitute a breach of any term or provision
      of, or constitute a default under, its articles or by-laws or any
      resolution of its board of directors or shareholders, or any Contract to
      which it is a party;

	 	 	 
		3.1.4.2 	
      constitute an event which would permit any party to any
      Contract with it to amend, cancel, terminate or accelerate its obligations
      under any Contract;

	 	 	 
		3.1.4.3 	
      result in the creation or imposition of any lien or other
      encumbrance on its right, title or interest in the Collateral;

	 	 	 
		3.1.4.4 	
      contravene any applicable law; or

	 	 	 
		3.1.4.5 	
      contravene any judgment, order, writ, injunction or
      decree of any Governmental Authority.

- 10 -

	3.1.5 	
      No Actions. There are no actions or proceedings
      pending or, to its knowledge, threatened which challenge the validity of
      this Agreement or which might result in a material adverse change in its
      financial condition or which would materially adversely affect its ability
      to perform its obligations under this Agreement or any document evidencing
      any of its indebtedness to the Secured Party.

	 	 
	3.1.6 	
      Name. Its full legal name (including any French or
      French/English form of its legal name), and any other name under which it
      conducts its business, is correctly specified on the signature page of
      this Agreement.

	 	 
	3.1.7 	
      Place of Business. Its sole place of business or
      chief executive office, as applicable, and the place where it keeps its
      Books and Records, is at the applicable address specified in Schedule
      1.

	 	 
	3.1.8 	
      Location of Collateral. The location of all other
      existing places where it carries on business or keeps tangible Collateral,
      and the locations of all real property owned or leased by it, are set out
      in Schedule 1.

	 	 
	3.1.9 	
      Owns Collateral. It either owns, possesses and has
      good and marketable title to, or has enforceable leasehold or other rights
      to, all of its currently held Collateral, free from all security
      interests, mortgages, charges, encumbrances, liens and claims, except only
      those, if any, listed in Schedule 2.

	 	 
	3.1.10 	
      Right and Authority. It has the right and
      authority to create the Security Interests.

	 	 
	3.2 	
      Survival of Representations and
  Warranties

All representations and warranties and covenants made by each
of the Debtors in this Agreement are material, will be considered to have been
relied on by the Secured Party and will survive, without regard to any
investigation made at any time by or on behalf of the Secured Party or any
disposition or payment of the Obligations, until repayment and performance in
full of the Obligations and termination of all rights of any of the Debtors
that, if exercised, would result in the existence of Obligations.

ARTICLE 4
POSITIVE COVENANTS

	4.1 	
      Positive Covenants

Each of the Debtors, jointly and severally, covenants with the
Secured Party that:

	4.1.1 	
      Defend Collateral. It will defend its Collateral
      against all claims and demands of all Persons claiming its Collateral or
      an interest in its Collateral at any time.

	 	 
	4.1.2 	
      Lists of Accounts. If the Collateral includes
      Accounts, it will, on demand by the Secured Party, deliver to the Secured
      Party within 30 days of each calendar month end an aged list of its Accounts as at that particular
      month end in a form acceptable to the Secured Party.

- 11 -

	4.1.3 	
      Provide Information. Upon the demand by the
      Secured Party it will furnish in writing to the Secured Party all
      information requested concerning its Collateral, and it will promptly
      advise the Secured Party of the vehicle identification number, serial
      number, year, make and model of each Serial Number Good at any time
      included in its Collateral.

	 	 	 
	4.1.4 	
      Insurance. It will keep its Collateral insured to
      its full insurable value with financially sound and reputable companies
      against loss or damage by fire, explosion, theft and other risks as are
      customarily insured against by Persons carrying on similar businesses, or
      owning similar property. The relevant insurance policies will:

	 	 	 
		4.1.4.1 	
      be in form and substance satisfactory to the Secured
      Party;

	 	 	 
		4.1.4.2 	
      provide that no cancellation, material reduction in
      amount, or material change in coverage will be effective until at least 30
      days after receipt of written notice by the Secured Party;

	 	 	 
		4.1.4.3 	
      contain by way of endorsement a standard mortgagee clause
      in a form approved by the Insurance Bureau of Canada and satisfactory to
      the Secured Party; and

	 	 	 
		4.1.4.4 	
      name the Secured Party as mortgagee, first loss payee,
      and additional insured as its interest may appear.

	 	 	 
		
      It will, at the Secured Party’s request, deliver its
      insurance policies (or satisfactory evidence of those policies) to the
      Secured Party.

	 	 	 
	4.1.5 	
      Repair. It will keep its Collateral in good
      condition and repair according to the nature and description of
  it.

	 	 	 
	4.1.6 	
      Additional Information. It will advise the Secured
      Party, in reasonable detail, within 2 Business Days of becoming aware
      of:

	 	 	 
		4.1.6.1 	
      any security interest (other than the Security Interests
      and any security interest listed in Schedule 2) on, or claim asserted
      against, any of its Collateral;

	 	 	 
		4.1.6.2 	
      the occurrence of any event or claim that could
      reasonably be expected to have a material adverse effect on the value of
      its Collateral or on the Security Interests;

	 	 	 
		4.1.6.3 	
      any change in the location of any of its places of
      business (including additional locations) or chief executive
  office;

- 12 -

		4.1.6.4	
      any change in the location of any of its tangible
      Collateral (including additional locations);

	 	 	 
		4.1.6.5 	
      any acquisition of significant personal property, or
      leasehold or real property, by it;

	 	 	 
		4.1.6.6 	
      any change in its name;

	 	 	 
		4.1.6.7 	
      any merger or amalgamation of it with any other Person;
      and

	 	 	 
		4.1.6.8 	
      any material loss of or damage to any of its
      Collateral.

	 	 	 
		
      It agrees not to effect or permit any of the changes
      referred to in clauses 4.1.6.3 to 4.1.6.7 above unless all filings have
      been made and all other actions taken that are required in order for the
      Secured Party to continue at all times following any such change to have a
      valid and perfected Security Interest in all of the Collateral.

	 	 	 
	4.1.7 	
      Additional Investment Property. If, following the
      date of this Agreement, it acquires additional Investment Property, it
      will inform the Secured Party of that acquisition and will, promptly upon
      the request of the Secured Party, enter into a pledge agreement and, if
      necessary, a related Control Agreement, to enhance the Secured Party’s
      Security Interests in that Collateral.

	 	 	 
	4.1.8 	
      Other Indebtedness. It will pay and discharge as
      they become due all payments due and owing under or relating to any other
      indebtedness created or security given by it to any Person or corporation,
      including, without limitation, the Senior Secured Debt and will observe,
      perform and carry out all the terms, covenants, provisions and agreements
      relating to that indebtedness and security.

	 	 	 
	4.1.9 	
      Right of Inspection. The Secured Party will have
      the right whenever the Secured Party considers reasonably necessary, to
      order either its officers or authorized agents to enter upon its premises
      and to inspect its Collateral, its Books and Records and copies of all
      returns made from time to time by it to any Governmental Authority and to
      take extracts from them.

	 	 	 
	4.1.10 	
      Costs of Preparation and Enforcement. It will pay
      all costs, charges and expenses of and relating to the taking,
      preparation, execution and registering notice (and any amendments and
      renewals of that notice) of this Agreement and in taking, recovering,
      keeping possession of or inspecting the Collateral and generally in any
      other proceedings taken in enforcing the remedies in this Agreement or
      otherwise in connection with this Agreement or by reason of non-payment or
      procuring payment of the monies secured by this Agreement.

	 	 	 
	4.1.11 	
      Court Costs. In any judicial proceedings taken to
      enforce this Agreement and its covenants under it the Secured Party will
      be entitled to special costs.

	 	 	 
	4.1.12 	
      Corporate Existence. It will at all times maintain
      its corporate existence, carry on and conduct its business in a proper,
      efficient and businesslike manner and in accordance with good business practice, and keep or cause
      to be kept proper books of account in accordance with sound accounting
      practice.

- 13 -

	4.1.13 	
      Taxes. It will pay all Taxes, now or in the future
      rated, charged, assessed, levied or imposed by any Governmental Authority
      or otherwise on it, on its Collateral or on the Secured Party in respect
      of its Collateral or any part of it, or any other matter or thing in
      connection with this Agreement, except when and so long as the validity of
      those Taxes is in good faith contested by it, and will, if and when
      required in writing by the Secured Party, furnish for inspection the
      receipts for any such payments.

	 	 
	4.1.14 	
      Payments. It will promptly pay or remit all
      amounts which if left unpaid or unremitted might give rise to a lien or
      charge on any of its Collateral ranking or purporting to rank in priority
      to the Security Interests.

	 	 
	4.1.15 	
      Purchase Monies. If the Secured Party advances
      money to it for the purpose of enabling it to purchase or acquire rights
      in any Collateral, it will use that money only for that purpose and will
      promptly provide the Secured Party with evidence that the money was so
      applied.

	 	 
	4.1.16 	
      Governing Law. It will require that any agreement
      to which it and any securities intermediary are a party in respect of any
      security entitlement or security account included in or relating to any
      Collateral will specify that the laws of the province of Ontario, or any
      other laws consented to by the Secured Party in writing, will be that
      securities intermediary’s jurisdiction for the purposes of that agreement,
      the STA and the PPSA.

	 	 
	4.2 	
      Covenant re Costs Covered by
  Default

If any of the Debtors defaults in any covenant to be performed
by it under this Agreement, the Secured Party may, but is not required to,
perform any covenant of the defaulting Debtor capable of being performed by the
Secured Party, and if the Secured Party pays any costs, charges, expenses or
outlays to perform any such covenant, the Debtors will indemnify the Secured
Party for those costs, charges, expenses or outlays, and those costs, charges,
expenses or outlays (including solicitors’ fees and charges incurred by the
Secured Party on a “solicitor and own client” basis) will be payable immediately
by one or any combination of the Debtors to the Secured Party, will bear
interest at the highest rate borne by any of the other Obligations and will,
together with that interest, form part of the Obligations secured by this
Agreement.

- 14 -

ARTICLE 5
NEGATIVE COVENANTS

	5.1 	
      Negative Covenants

Each of the Debtors, jointly and severally, covenants and
agrees with the Secured Party that it will not, without the prior written
consent of the Secured Party:

	5.1.1 	
      change its name;

	 	 
	5.1.2 	
      amalgamate or otherwise merge its business with the
      business of any other Person;

	 	 
	5.1.3 	
      continue from the jurisdiction which currently exercises
      primary corporate governance over its affairs;

	 	 
	5.1.4 	
      permit its Collateral or any part of it to become subject
      to any mortgage, charge, lien, encumbrance or security interest, whether
      made, given or created by it or otherwise, except as permitted by Schedule
      2, if any;

	 	 
	5.1.5 	
      sell, lease or otherwise dispose of its Collateral or any
      part of it, and if any sale, lease or other disposition is permitted or
      consented to it will pay the Proceeds to the Secured Party;

	 	 
	5.1.6 	
      release, surrender or abandon its Collateral or any part
      of it;

	 	 
	5.1.7 	
      move its Collateral or any part of it from its present
      location or locations (and will promptly advise the Secured Party of the
      new location or locations); or

	 	 
	5.1.8 	
      permit any of its Collateral to become an accession to
      any property other than other Collateral.

	 	 
	5.2 	
      Sale of Equipment

Until an Event of Default has occurred [and is
continuing] and the Secured Party has determined to enforce the Security
Interests, each of the Debtors may sell Equipment:

	5.2.1 	
      which is replaced by Equipment of similar or superior
      quality and capacity (“Replacement Equipment”); or

	 	 
	5.2.2 	
      which is obsolete, worn out or otherwise no longer used
      or useful to each of the Debtors in its business,

and the Proceeds of which are either applied to the purchase
price of Replacement Equipment or paid to the Secured Party to be held as
security for, or applied to reduce, the Obligations, as the Secured Party sees
fit, provided in each case only as permitted under the Senior Secured Debt
documents.

- 15 -

ARTICLE 6
DEFAULT AND ENFORCEMENT

	6.1 	
      Events of Default

The occurrence of any one or more of the following events or
conditions will be an event of default under this Agreement (“Event of
Default”):

	6.1.1 	
      any of the Debtors defaults in payment to the Secured
      Party when due of any indebtedness or liabilities forming part of the
      Obligations;

	 	 	 
	6.1.2 	
      any of the Debtors defaults in performance of any of the
      Obligations other than payment under Section 6.1.1;

	 	 	 
	6.1.3 	
      any of the Debtors defaults in the observance or
      performance of any of the terms, conditions or covenants to be observed or
      performed by it under this Agreement or any other agreement, document or
      instrument existing at any time between any of the Debtors and the Secured
      Party;

	 	 	 
	6.1.4 	
      TurboSonic Technologies defaults in the observance or
      performance of any of the terms, conditions or covenants to be observed or
      performed by it under any agreement, document or instrument existing at
      any time between TurboSonic Technologies and the Secured Party;

	 	 	 
	6.1.5 	
      any representation, warranty or statement made or given
      by or on behalf of one or more of the Debtors to the Secured Party is
      untrue in any material respect at the time it was made or deemed to be
      made;

	 	 	 
	6.1.6 	
      any of the Debtors defaults in payment of any
      indebtedness to any Person other than the Secured Party, or defaults in
      the performance of any term, provision or condition created in any
      agreement under which that indebtedness was created or is governed, where
      that default would allow that Person to cause the indebtedness to become
      due prior to its stated maturity, or any such indebtedness is declared to
      be due and payable other than by a regularly scheduled payment;

	 	 	 
	6.1.7 	
      any of the Debtors ceases or threatens to cease to carry
      on its business;

	 	 	 
	6.1.8 	
      any of the Debtors commits or threatens to commit any act
      of bankruptcy or becomes insolvent;

	 	 	 
	6.1.9 	
      proceedings are commenced against or affecting any of the
      Debtors, or any of the Debtors institutes proceedings or takes any
      corporate action or executes any agreement to authorize its participation
      in or the commencement of any proceedings:

	 	 	 
		6.1.9.1 	
      seeking to adjudicate it a bankrupt or insolvent;
    or

	 	 	 
		6.1.9.2 	
      seeking liquidation, dissolution, winding up,
      reorganization, arrangement, protection, relief or composition of it or
      any of its property or debt or making a proposal with respect to
      it under any law relating to bankruptcy, insolvency, reorganization or
      compromise of debts or other similar laws (including any application for
      reorganization under the Companies’ Creditors Arrangement Act
      (Canada) or the Bankruptcy and Insolvency Act (Canada) or any
      reorganization, arrangement or compromise of debt under the laws of any
      applicable jurisdiction);

- 16 -

	6.1.10 	
      proceedings are commenced against or affecting any of the
      Debtors seeking the appointment of, or any creditor of any of the Debtors
      or any other Person privately appoints, a receiver, receiver-manager,
      trustee, custodian, liquidator or similar official for any of the Debtors
      or any part of the property of any of the Debtors, including the
      Collateral or any part of it;

	 	 
	6.1.11 	
      the holder of a security interest delivers a notice of
      intention to enforce its security or take possession of all or any part of
      the property of any of the Debtors, including its Collateral or any part
      of it, or an execution or other process of any court becomes enforceable
      against any of the Debtors, or a distress or analogous process is levied
      upon its Collateral or any part of it;

	 	 
	6.1.12 	
      any Governmental Authority condemns, seizes or otherwise
      appropriates, or takes custody or control of, all or substantially all of
      the property of any of the Debtors;

	 	 
	6.1.13 	
      any of the Debtors permits any sum which has been
      admitted as due, or is not disputed to be due, by it, and which forms or
      is capable of forming a charge upon any of its Collateral in priority to
      the Security Interests, to remain unpaid for 30 days;

	 	 
	6.1.14 	
      any of the Debtors fails within 30 days to pay, bond or
      otherwise discharge any judgment or order for the payment of money
      outstanding at any time, which is not stayed on appeal or otherwise
      appropriately contested by it in good faith;

	 	 
	6.1.15 	
      in the opinion of the Secured Party, effective control of
      any of the Debtors changes;

	 	 
	6.1.16 	
      in the opinion of the Secured Party, a material adverse
      change occurs in the financial condition of any of the Debtors;
  or

	 	 
	6.1.17 	
      the Secured Party in good faith and on commercially
      reasonable grounds believes that the ability of any of the Debtors to pay
      or perform any of the Obligations to the Secured Party or to perform any
      other covenants contained in this Agreement is impaired or any security
      granted by any of the Debtors to the Secured Party is or is about to be
      impaired or in jeopardy.

	 	 
	6.2 	
      Acceleration

If an Event of Default described in Section 6.1 occurs, all of
the Obligations will immediately become due and payable at the Secured Party’s
sole and absolute discretion without any demand or any notice of any kind to any
of the Debtors.

- 17 -

	6.3 	
      Demand Obligations

Each of the Debtors agrees that the provisions of Section 6.1
and Section 6.2 will not affect the demand nature of any indebtedness or
obligations payable on demand and the Secured Party may demand payment of that
indebtedness and those obligations at any time without restriction, whether or
not each of the Debtors has complied with the provisions of this Agreement or
any other instrument between any of the Debtors and the Secured Party.

	6.4 	
      Security Interests
Enforceable

The occurrence of an Event of Default will cause the Security
Interests to become enforceable against all of the Debtors without the need for
any action or notice by the Secured Party.

	6.5 	
      Remedies of the Secured
Party

If the Security Interests become enforceable, the Secured Party
may enforce its rights by any one or more of the following remedies, subject to
the terms of the Senior Secured Debt documents and as permitted thereunder:

	6.5.1 	
      by taking possession of the Collateral or any part of it,
      and collecting, demanding, suing, enforcing, recovering, receiving and
      otherwise getting in the Collateral, and for that purpose entering into
      and upon any lands, buildings, and premises and doing any act and taking
      any proceedings in the name of each of the Debtors, or otherwise, as
      applicable and as the Secured Party considers necessary;

	 	 
	6.5.2 	
      by proceedings in any court of competent jurisdiction for
      the appointment of a Receiver or of all or any part of the
    Collateral;

	 	 
	6.5.3 	
      by proceedings in any court of competent jurisdiction for
      the sale or foreclosure of all or any part of the Collateral;

	 	 
	6.5.4 	
      by filing of proofs of claim and other documents to
      establish its claims in any proceeding or proceedings relating to any of
      the Debtors;

	 	 
	6.5.5 	
      by appointment by instrument in writing of a Receiver of
      all or any part of the Collateral;

	 	 
	6.5.6 	
      by sale or lease by the Secured Party of all or any part
      of the Collateral (whether or not it has taken possession of the
      Collateral);

	 	 
	6.5.7 	
      by retaining any of the Collateral in satisfaction of all
      or part of the Obligations, in accordance with Section Error! Reference
      source not found.;

	 	 
	6.5.8 	
      by any other remedy or proceeding authorized or permitted
      by this Agreement or by law or equity, including all of the rights and
      remedies of a secured party under the PPSA;

- 18 -

and in exercising, delaying in exercising or failing to
exercise, any such right or remedy the Secured Party will not incur any
liability to any of the Debtors.

	6.6 	
      Power of Sale

The provisions of Section 6.7.7 will also apply to a sale or
lease of any of the Collateral by the Secured Party under Section 6.5.6.

	6.7 	
      Receiver or
Receiver-Manager

After the Security Interests have become enforceable, the
Secured Party may from time to time appoint in writing any qualified Person to
be a Receiver of the Collateral and may remove any Person so appointed and
appoint another qualified Person in his stead. Any Receiver appointed under this
Agreement will have the following powers:

	6.7.1 	
      to take possession of the Collateral or any part of it,
      and to collect and get in the Collateral and for that purpose to enter
      into and upon any lands, buildings, and premises and to do any act and
      take any proceedings in the name of any of the Debtors, or otherwise, as
      applicable and as the Receiver considers necessary;

	 	 
	6.7.2 	
      to carry on or concur in carrying on the business of any
      of the Debtors (including, without limiting the generality of the powers
      contained in this Agreement, the payment of the obligations of any of the
      Debtors whether or not they are due and the cancellation or amendment of
      any Contracts) and the employment and discharge of those agents, managers,
      employees and others upon terms and with salaries, wages or remuneration
      as the Receiver thinks proper;

	 	 
	6.7.3 	
      to repair and keep in repair the Collateral or any part
      of it, and to do all acts and things necessary to protect the
      Collateral;

	 	 
	6.7.4 	
      to make any arrangement or compromise which the Receiver
      thinks expedient in the interests of the Secured Party or any of the
      Debtors and to assent to any modification or change in or omission from
      the provisions of this Agreement;

	 	 
	6.7.5 	
      to exchange any part of the Collateral for any other
      property suitable for the purposes of any of the Debtors upon terms that
      seem expedient, and either with or without payment or exchange of money or
      equality of exchange or otherwise;

	 	 
	6.7.6 	
      to raise on the security of the Collateral or any part of
      it, by mortgage, charge or otherwise any sum of money required for the
      repair, insurance or protection of the Collateral, or any other purposes
      mentioned in this Agreement, or as may be required to pay off or discharge
      any lien, charge or encumbrance upon the Collateral or any part of it,
      which would or might have priority over the Security Interests;

	 	 
	6.7.7 	
      whether or not the Receiver has taken possession, to sell
      or lease or concur in the sale or leasing of any of the Collateral or any
      part of it after giving each of the Debtors not less than 20 days’ written
      notice of the Receiver’s intention to sell or lease, and
  to carry any sale or lease into effect by conveying,
      transferring or assigning in the name of or on behalf of any of the
      Debtors or otherwise; and any sale or lease may be made either at public
      sale or lease (including public auction or closed tender), or by private
      sale or lease, as the Receiver may determine and any sale or lease may be
      made from time to time as to the whole or any part of the Collateral; and
      the Receiver may rescind or vary any contract for the sale or lease of any
      of the Collateral or any part of it, and may resell and re-lease without
      being liable for any loss occasioned by doing so; and the Receiver may
      sell or lease any of the Collateral for cash or credit, or part cash and
      part credit, or otherwise as may appear to be most advantageous, and at
      the prices that can be reasonably obtained for the Collateral, and if a
      sale or lease on credit neither the Receiver nor the Secured Party will be
      accountable for or charged with any monies until actually
  received.

- 19 -

	6.8 	
      Liability of Receiver

A Receiver appointed and exercising powers under this Agreement
will not be liable for any loss arising unless the loss is caused by the
Receiver’s own gross negligence or wilful default, and when so appointed the
Receiver will be considered to be the agent of each of the Debtors and the
Debtors will be responsible for the Receiver’s acts and defaults and for the
Receiver’s remuneration.

	6.9 	
      Effect of Appointment of
Receiver

Immediately upon the Secured Party taking possession of any
Collateral or appointing a Receiver, all powers, functions, rights and
privileges of the directors and officers of each of the Debtors concerning the
Collateral will cease, unless specifically continued by the written consent of
the Secured Party or the Receiver.

	6.10 	
      Grant of Licence

For the purpose of enabling the Secured Party to exercise its
rights and remedies under this Article 6 when the Secured Party is entitled to
do so, and for no other purpose, each of the Debtors grants to the Secured Party
an irrevocable, non-exclusive licence (exercisable without payment of royalty or
other compensation to any of the Debtors) to use, assign or sublicense any or
all of the Intellectual Property Rights, including in any licence a grant of
reasonable access to all media in which any of the licensed items may be
recorded or stored, and to all computer programs used for the compilation or
printout of them.

	6.11 	
      Sale of Securities

The Secured Party is authorized, in connection with any offer
or sale of any Investment Property forming part of the Collateral, to comply
with any limitation or restriction as it may be advised by counsel is necessary
to comply with applicable law, including compliance with procedures that may
restrict the number of prospective bidders and purchasers, requiring that
prospective bidders and purchasers have certain qualifications, and restricting
prospective bidders and purchasers to Persons who will represent and agree that
they are purchasing for their own account or investment and not with a view to the distribution
or resale of that Investment Property. Each of the Debtors further agrees that
compliance with any such limitation or restriction will not result in a sale
being considered or deemed not to have been made in a commercially reasonable
manner, and the Secured Party will not be liable or accountable to any of the
Debtors for any discount allowed by reason of the fact that Investment Property
is sold in compliance with any such limitation or restriction.

- 20 -

	6.12 	
      Appointment of Attorney

Each of the Debtors appoints the Secured Party, and any officer
or agent of the Secured Party, with full power of substitution, effective upon
the occurrence of an Event of Default, to be the attorney of each of the Debtors
with full power and authority in the place of each of the Debtors and in the
name of each of the Debtors or in its own name, to take all appropriate action
and to execute all documents and instruments as, in the opinion of the attorney
acting reasonably, may be necessary or desirable to accomplish the purposes of
this Agreement, and generally to use the name of each of the Debtors and to do
all things as may be necessary or incidental to the exercise of all or any of
the powers conferred on the Secured Party under this Agreement. These powers are
coupled with an interest and are irrevocable until this Agreement is terminated
and the Security Interests are released. Nothing in this Section affects the
right of the Secured Party or any other Person, to sign and file or deliver (as
applicable) all financing statements, financing change statements, notices,
verification agreements and other documents relating to the Collateral and this
Agreement as the Secured Party or the other Person considers appropriate.

	6.13 	
      Proceeds of Disposition

The Proceeds of the sale, lease or other disposition of the
whole or any part of the Collateral will be applied to pay the amounts owed to
the Secured Party under Section 7.6 and the Obligations, and, if any surplus
remains in the hands of the Receiver or the Secured Party, that surplus will be
distributed as required by the PPSA.

	6.14 	
      No Set-Off

The Obligations will be paid by the Debtors without regard to
any equities between any of the Debtors and the Secured Party or any right of
set-off, combination of accounts, cross-claim or counterclaim. Any indebtedness
owing by the Secured Party to any of the Debtors may be set off or applied
against, or combined with, the Obligations by the Secured Party at any time,
either before or after maturity, without demand upon, or notice to, anyone.

	6.15 	
      Deficiency

If the Proceeds of the realization of the Collateral are
insufficient to fully pay the Obligations to the Secured Party, one or any
combination of the Debtors will be liable to pay, and will immediately pay or
cause to be paid, the deficiency to the Secured Party.

- 21 -

	6.16	
      Waiver

The Secured Party may waive, in writing, any breach by any of
the Debtors of any of the provisions contained in this Agreement or any Event of
Default, provided that no waiver of, failure to exercise or delay in exercising
any provision of this Agreement constitutes a waiver of any other provision or
Event of Default (whether or not similar) nor does any waiver constitute a
continuing waiver unless otherwise expressly provided.

	6.17 	
      Time for Payment

If the Secured Party demands payment of any Obligations which
are payable on demand or if any Obligations are otherwise due by maturity or
acceleration, it will be considered reasonable for the Secured Party to exercise
its remedies immediately if payment is not made, and any days of grace or any
time for payment which might otherwise be required to be given to any of the
Debtors by applicable law is irrevocably waived.

ARTICLE 7
GENERAL

	7.1 	
      No Automatic Discharge

This Agreement will not be or be considered to have been
discharged by reason only of any of the Debtors ceasing to be indebted or under
any liability, direct or indirect, absolute or contingent, to the Secured
Party.

	7.2 	
      Discharge

If at any time there are no Obligations then outstanding and
none of the Debtors is in default of any of the covenants, terms and agreements
on its part contained in this Agreement, then, at the request and at the expense
of the Debtors and upon payment by one or any combination of the Debtors to the
Secured Party of the Secured Party’s reasonable discharge fee for discharging a
security agreement, the Secured Party will cancel and discharge this Agreement
and the Security Interests and the Secured Party will at the request of the
Debtors execute and deliver to the Debtors the documents required to effect a
discharge.

	7.3 	
      No Obligation to Advance

None of the preparation, execution or registration of notice of
this Agreement will bind the Secured Party to advance the monies secured by this
Agreement, nor will the advance of a part of the monies secured by this
Agreement bind the Secured Party to advance any unadvanced portion of it.

- 22 -

	7.4 	
      Security Additional

The Security Interests are in addition to and not in
substitution for any other security now or in the future held by the Secured
Party.

	7.5 	
      Realization

Each of the Debtors acknowledges and agrees that the Secured
Party may realize upon various securities securing the Obligations or any part
of them in any order that it sees fit, and realization by any means upon any
security or part of it will not bar realization upon any other security or the
Security Interests or any part of them.

	7.6 	
      Payment of Costs

The Debtors agree that they are jointly and severally liable to
pay on demand all costs and expenses incurred (including legal costs and
disbursements on a 100 percent, complete indemnity basis) and fees charged by
Secured Party in connection with obtaining or discharging this Agreement,
establishing or confirming the priority of the charges created by this Agreement
or by law, or complying with any demand by any Person under the PPSA to amend or
discharge any registration relating to this Agreement, and by the Secured Party
or any Receiver in exercising any remedy under this Agreement (including
preserving, repairing, processing, preparing for disposition and disposing of
the Collateral by sale, lease or otherwise) and in carrying on the Debtor’s
business. All of those amounts will bear interest from time to time at the
highest interest rate then applicable to any of the Obligations, and the Debtor
will reimburse Secured Party upon demand for any amount so paid

	7.7 	
      No Merger

This Agreement will not operate to create any merger or
discharge of any of the Obligations, or of any assignment, transfer, guarantee,
lien, contract, promissory note, bill of exchange or security interest held or
which may in the future be held by the Secured Party from any of the Debtors or
from any other Person. The taking of a judgment concerning any of the
Obligations will not operate as a merger of any of the covenants contained in
this Agreement.

	7.8 	
      Extensions

The Secured Party may grant extensions of time and other
indulgences, take and give up security, accept compositions, compound,
compromise, settle, grant releases and discharges, refrain from perfecting or
maintaining perfection of the Secured Party’s subordinated security interests
and otherwise deal with any of the Debtors, Account Debtors, sureties and others
and with the Collateral and other security interests as the Secured Party may
see fit without prejudice to the liability of any of the Debtors or to the
Secured Party’s right to hold and realize on the security constituted by this
Agreement.

- 23 -

	7.9 	
      Provisions Reasonable

Each of the Debtors acknowledges that the provisions of this
Agreement and, in particular, those provisions respecting rights, remedies and
powers of the Secured Party or any Receiver against any of the Debtors, its
business and any Collateral are commercially reasonable.

	7.10 	
      Notices

Any Communication must be in writing and either:

	7.10.1 	
      personally delivered;

	 	 
	7.10.2 	
      sent by prepaid registered mail; or

	 	 
	7.10.3 	
      sent by facsimile, e-mail or functionally equivalent
      electronic means of communication, charges (if any)
  prepaid.

Any Communication must be sent to the intended recipient at its
address as follows:

	 	to the Debtors at: 
	 	  	  
	 	A-14 – 550 Parkside Drive 
	 	Waterloo, ON N2L 5V4 
	 	  	  
	 	Attention: 	Edward F. Spink 
	 	Facsimile No.: 	●
	 	  	  
	 	to the Secured Party at: 
	 	  	  
	 	830 Prosper Road 
	 	P.O. Box 5030 
	 	De Pere,WI 54115-5030 
	 	USA 	  
	 	  	  
	 	Attention: 	Mohit Uberoi 
	 	Facsimile No.: 	●
	 	  	  
	 	with a copy to 	  
	 	  	  
	 	Gowling Lafleur Henderson LLP 
	 	1020 – 50 Queen Street North 
	 	P.O. Box 2248 
	 	Kitchener, ON N2H 6M2 
	 	  	  
	 	Attention: 	Rosa Lupo 
	 	Facsimile No.: 	519-575-5011 

- 24 -

or at any other address as any Party may from time to time
advise the other by Communication given in accordance with this Section 7.10.
Any Communication delivered to the Party to whom it is addressed will be deemed
to have been given and received on the day it is so delivered at that Party’s
address, provided that if that day is not a Business Day then the Communication
will be deemed to have been given and received on the next Business Day. Any
Communication transmitted by facsimile or other form of electronic communication
will be deemed to have been given and received on the day on which it was
transmitted (but if the Communication is transmitted on a day which is not a
Business Day or after 3:00 p.m. (local time of the recipient)), the
Communication will be deemed to have been received on the next Business Day.

	7.11 	
      Appropriation of Payments

All payments made in respect of the Obligations from time to
time and monies realized from any security interests held in respect of the
Obligations (including monies collected in accordance with or realized on any
enforcement of this Agreement) may be applied to any part of the Obligations
that the Secured Party may see fit and the Secured Party may at all times and
from time to time change any appropriation as the Secured Party may see fit.

	7.12 	
      No Representations

Each of the Debtors acknowledges and agrees that the Secured
Party has made no representations or warranties other than those contained in
this Agreement.

	7.13 	
      Use of Collateral by
Debtors

Except as provided in this Agreement, until an Event of Default
occurs each of the Debtors will be entitled to possess, operate, collect, use
and enjoy its Collateral in any manner not inconsistent with the terms of this
Agreement.

	7.14 	
      Amendment and Waiver

No supplement, modification, amendment, waiver, discharge or
termination of this Agreement is binding unless it is executed in writing by the
Party to be bound.

	7.15 	
      Disclosure of Information

Each of the Debtors consents to the Secured Party, in
compliance or purported compliance with any statutory disclosure requirements,
disclosing information about it, this Agreement, the Collateral and the
Obligations to any Person the Secured Party believes is entitled to that
information and each of the Debtors acknowledges and agrees that the Secured
Party may charge and retain a reasonable fee and its costs incurred in providing
that information. 

- 25 -

	7.16 	
      Statutory Waivers

To the fullest extent permitted by law, each of the Debtors
waives all of the rights, benefits and protections given by the provisions of
any existing or future statute which imposes limitations upon the powers, rights
or remedies of a secured party or upon the methods of realization of security,
including any seize or sue or anti-deficiency statute or any similar provisions
of any other statute.

	7.17 	
      Severability

Each provision of this Agreement is distinct and severable. If
any provision of this Agreement, in whole or in part, is or becomes illegal,
invalid or unenforceable in any jurisdiction, the illegality, invalidity or
unenforceability of that provision will not affect the legality, validity or
enforceability of the remaining provisions of this Agreement, or the legality,
validity or enforceability of that provision in any other jurisdiction.

In the event of any conflict or ambiguity between the terms,
covenants and provisions of this Agreement and those of the Note, the terms,
covenants and provisions of the Note shall control.

	7.18 	
      Submission to Jurisdiction

Without prejudice to the ability of any Party to enforce this
Agreement in any other proper jurisdiction, each of the Parties irrevocably
submits and attorns to the exclusive jurisdiction of the courts of the Province
of Ontario to determine all issues, whether at law or in equity arising from
this Agreement. To the extent permitted by applicable law, each of the Parties
irrevocably waives any objection (including any claim of inconvenient forum) to
the venue of any legal proceeding arising out of or relating to this Agreement
in the courts of that Province, or that the subject matter of this Agreement may
not be enforced in those courts, and irrevocably agrees not to seek, and waives
any right to, judicial review by any court which may be called upon to enforce
the judgment of the courts referred to in this Section 7.18, of the substantive
merits of any such suit, action or proceeding. To the extent a Party has or in
the future may acquire any immunity from the jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, that Party irrevocably waives that immunity in
respect of its obligations under this Agreement

	7.19 	
      Joint and Several
Obligations

Unless expressly indicated in this Agreement to the contrary,
the representations, warranties and agreements of, and all obligations and
covenants to be performed and observed by, the Debtors under this Agreement will
be the joint and several representations, warranties, agreements, obligations
and covenants of each of the Debtors. Any request or authorization given to the
Secured Party by any of the Debtors will be considered to be the joint and
several requests or authorizations of each of the Debtors.

- 26 -

	7.20 	
      Time of Essence

Time will be of the essence of this Agreement.

	7.21 	
      Counterparts

This Agreement may be executed and delivered by the Parties in
one or more counterparts, each of which will be an original, and each of which
may be delivered by facsimile or functionally equivalent electronic means, and
those counterparts will together constitute one and the same instrument.

	7.22 	
      Further Assurances

To further the attachment, perfection, and priority of, and the
ability of the Secured Party to enforce, the Secured Party’s interest in the
Collateral, and without limitation on the Debtors’ other obligations in this
Agreement, the Debtors agree jointly and severally that, at the request of the
Secured Party and at the Debtors’ sole expense, to execute and deliver any
further agreements and documents and provide any further assurances as may be
reasonably required by the Secured Party to give effect to this Agreement and,
without limiting the generality of the foregoing, will do or cause to be done
all acts and things, execute and deliver or cause to be executed and delivered
all agreements and documents and provide any assurances, undertakings and
information as may be required from time to time by all Governmental Authorities
or stock exchanges having jurisdiction over the affairs of a Party or as may be
required from time to time under applicable securities legislation (limited by
and only to the extent not in violation of the Senior Secured Debt).

	7.23 	
      Assignment

	 	 
	7.23.1 	
      The Secured Party may, without notice to or consent of
      any of the Debtors, at any time assign, transfer or grant a security
      interest in its rights and obligations under this Agreement and the
      Security Interests. Each of the Debtors expressly agrees that the
      assignee, transferee or secured party, as the case may be, will have all
      of the Secured Party’s rights and remedies under this Agreement and none
      of the Debtors will assert any defence, cross-claim, counterclaim, right
      of set off or otherwise any claim which any of the Debtors now has or in
      the future acquires against the Secured Party in any action commenced by
      any assignee, transferee or secured party, as the case may be, and will
      pay the Obligations to the assignee, transferee or secured party, as the
      case may be, as the Obligations become due.

	 	 
	7.23.2 	
      Neither this Agreement nor any rights or obligations
      under this Agreement may be assigned by any of the Debtors without the
      prior consent of the Secured Party.

	 	 
	7.24 	
      Enurement

This Agreement enures to the benefit of and is binding upon the
Parties and their respective successors and permitted assigns.

- 27 -

	7.25 	
      Acknowledgment and Waiver

Each of the Debtors:

	7.25.1 	
      acknowledges receiving a copy of this Agreement;
    and

	 	 
	7.25.2 	
      to the extent permitted by law, waives all rights to
      receive from the Secured Party a copy of any financing statement,
      financing change statement or verification statement filed or issued, as
      the case may be, at any time in respect of this Agreement or any
      amendments to this Agreement.

[SIGNATURE PAGE FOLLOWS]

- 28 -

Each of the Parties has executed and delivered this Agreement,
as of the date noted at the beginning of the Agreement.

	 	TURBOSONIC TECHNOLOGIES, INC.
    
	 	  	  	  
	 	  	  	  
	 	Per 	\s\ Edward F. Spink 
	 	  	Name: 	Edward F. Spink 
	 	  	Title: 	Chief Executive Officer 
	 	 	
      I have authority to bind the corporation

	 	  	  	  
	 	TURBOSONIC CANADA, INC. 
	 	  	  	  
	 	  	  	  
	 	Per 	\s\ Edward F. Spink 
	 	  	Name: 	Edward F. Spink 
	 	  	Title: 	President 
	 		
      I have authority to bind the
    corporation  

	 	  	  	  
	 	TURBOSONIC INC. 
	 	  	  	  
	 	  	  	  
	 	Per 	\s\ Edward F. Spink 
	 	  	Name: 	Edward F. Spink 
	 	  	Title: 	Chief Executive Officer 
	 	 	
      I have authority to bind the corporation 

	 	  	  	  
	 	MEGTEC SYSTEMS, INC. 
	 	  	  	  
	 	  	  	  
	 	Per 	\s\ Gregory R. Linn 
	 	  	Name: 	Gregory R. Linn 
	 	  	Title: 	Senior Vice President and Chief 
	 	  	Financial Officer 
	 	 	
      I have authority to bind the
corporation

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