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<SEC-DOCUMENT>0000950116-01-000611.txt : 20010410
<SEC-HEADER>0000950116-01-000611.hdr.sgml : 20010410
ACCESSION NUMBER:		0000950116-01-000611
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		15
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010405

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CECO ENVIRONMENTAL CORP
		CENTRAL INDEX KEY:			0000003197
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564]
		IRS NUMBER:				132566064
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		
		SEC FILE NUMBER:	000-07099
		FILM NUMBER:		1596112

	BUSINESS ADDRESS:	
		STREET 1:		505 UNIVERSITY AVE
		STREET 2:		STE 1400
		CITY:			TORONTO ONTARIO MSG
		STATE:			A6
		BUSINESS PHONE:		4165936543

	MAIL ADDRESS:	
		STREET 1:		111 ELIZABETH STREET SUITE 600
		CITY:			TORONTO ONTARIO
		STATE:			A6

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	API ENTERPRISES INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ALARM PRODUCTS INTERNATIONAL INC
		DATE OF NAME CHANGE:	19851210
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>

<PAGE>

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
                For Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

     Annual Report Pursuant to Section 13 or 15(a) of the Securities Act of
                1934 for the fiscal year ended December 31, 2000

                           Commission File No. 0-7099

                            CECO ENVIRONMENTAL CORP.
             (Exact Name of Registrant as Specified in Its Charter)

          New York                                      13-2566064
(State or Other Jurisdiction               (I.R.S. Employer Identification No.)
of Incorporation or Organization)

505 University Avenue, Suite 1400
Toronto, Ontario CANADA                                   M5G 1X3
(Address of Principal Executive Offices)                 (Zip Code)

        Registrant's Telephone Number, Including Area Code:(416) 593-6543

           Securities registered under Section 12(b) of the Act: None

               Securities registered under Section (g) of the Act:

                     Common Stock, $0.01 par value per share
                                (Title of Class)

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the  Securities Exchange
Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    Yes   __X__   No ____

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         Issuer's Revenues for its most recent fiscal year: $89,816,829.

         Aggregate market value of voting stock held by non-affiliates of
registrant (based on the last sale price on March 19, 2001): $7,470,060

         Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practical date: 7,875,872 shares of
common stock, par value $0.01 per share, as of March 19, 2001.

                                       1
<PAGE>


PART I

Item 1.  Business

         CECO Environmental Corp. (the "Company") was incorporated in New York
State in 1966. The Company owns 100% of the stock of CECO Group, Inc. ("CECO
Group"). CECO Group owns 100% of the stock of The Kirk & Blum Manufacturing
Company ("Kirk & Blum"), and 93.8% of the common stock of CECO Filters, Inc., a
Delaware corporation ("Filters"), and beneficially owns 100% of the stock of
kbd/Technic, Inc. The Company operates through its wholly owned subsidiary, CECO
Group.

         During the 1999 fiscal year, the Company underwent a fundamental
transformation. With the acquisition of Kirk & Blum and kbd/Technic, Inc.
("kbd/Technic") on December 7, 1999, the size of the business and the focus of
the Company was fundamentally changed. With the addition of Kirk & Blum, 89.2%
of whose net sales arose from the fabrication and installation of industrial
ventilation, dust, fume and mist control systems in 1999, the Company added a
new dimension to its product line that broadened its coverage of air pollution
control technology. In 1999, Kirk & Blum and kbd/Technic had combined revenue of
$70,435,000, while the revenue of the Company and its subsidiaries (other than
Kirk & Blum and kbd/Technic, Inc.) for that period was $17,525,664. The Company
now consolidates under a single organization both Kirk & Blum, kbd/Technic and
Filters and its subsidiaries.

Change in Corporate Structure

         As part of the acquisition of Kirk & Blum, the Company created CECO
Group as a wholly owned subsidiary of the Company for the purpose of holding all
the stock of its operating companies. Immediately following the acquisition of
Kirk & Blum, CECO Group beneficially owned Kirk & Blum, kbd/Technic (through the
voting trust referred to below) and approximately 93.8% of Filters formerly held
by the Company. The other operating companies controlled by the Company, Air
Purator Corporation ("APC") and New Busch Co., Inc. ("Busch"), are wholly-owned
subsidiaries of Filters.

         In connection with this restructuring, Richard J. Blum, the president
of Kirk & Blum and the chairman of kbd/Technic, was named the president and
chief executive officer of CECO Group and president of the Company. Mr. Blum's
responsibilities include the overall management and direction of the various
CECO operating companies, the management of Kirk & Blum and integrating the
various CECO subsidiaries.

The Kirk & Blum Manufacturing Company

         Kirk & Blum, with headquarters in Cincinnati, Ohio, is a leading
provider of turnkey engineering, design, manufacturing and installation services
in the air pollution control industry. Kirk & Blum's business is focused on
designing, building, and installing systems that remove airborne contaminants
from industrial facilities as well as equipment that control emissions from such
facilities. Kirk & Blum serves its customers from offices and plants in
Cincinnati, Ohio; Indianapolis, Indiana; Defiance, Ohio; Louisville and
Lexington, Kentucky; Columbia, Tennessee; and Greensboro, North Carolina. In
October 1998, Engineering News Record ranked Kirk & Blum as the largest
specialty sheet metal contractor in the country. With a diversified base of more
than 1,500 active customers, Kirk & Blum provides services to a number of
industries including aerospace, ceramics, metalworking, printing, paper, food,
foundries, metal plating, woodworking, chemicals, tobacco, glass, automotive,
and pharmaceuticals.

                                       2
<PAGE>


         Kirk & Blum has three lines of business, all evolving from the original
air pollution systems business. The largest line of business, located in seven
strategic locations, is with respect to air pollution control systems and
industrial ventilation. This line of business includes fabricating, designing,
engineering, and installing industrial ventilation, dust, fume, and mist control
systems, as well as automotive spray booth systems, industrial and process
piping, and other industrial sheet metal work. Kirk & Blum's expertise is the
engineered solution of in-plant process problems with respect to controlling
airborne pollutants. Well known customers include General Motors, Procter &
Gamble, Ingersoll Milling Machine, Toyota, Saturn, Matsushita, and Alcoa.

         Kirk & Blum also provides custom metal fabrication services at its
Cincinnati, Ohio and Lexington, Kentucky locations. These operations fabricate
parts, subassemblies, and customized products for air pollution and non-air
pollution applications from sheet, plate, and structurals. These operations give
Kirk & Blum the ability to meet project schedules and cost targets in air
pollution control projects while generating additional fabrication revenue in
support of non-air pollution control industries in the tri-state region
surrounding Cincinnati. Kirk & Blum believes that it is the fabricator of choice
of product components for many companies choosing to outsource their
manufacturing. Customers include Siemens Energy & Automation, Duriron and
Eastman Chemical.

         Kirk & Blum also manufactures component parts for industrial air
systems at its Cincinnati, Ohio location. This division provides standard and
custom components for contractors and companies that design and/or install their
own air systems. Products include angle rings, elbows, cut-offs, and other
components used in ventilation systems. Kirk & Blum's air systems parts business
is well positioned to benefit from an industry movement toward outsourcing
ductwork components. Major distributors of this division's products include N.B.
Handy, Three States Supply, Albina Pipe Bending, and Indiana Supply.

kbd/Technic, Inc.

         kbd/Technic, a sister company of Kirk & Blum, is a specialty
engineering firm concentrating in industrial ventilation and dust and fume
control. Services offered include air system testing and balancing, source
emission testing, industrial ventilation engineering, turnkey project
engineering (civil, structural and electrical), sound and vibration system
engineering, and other special projects. In addition to generating service
revenue, kbd/Technic often serves as a referral source for other Kirk & Blum
divisions. Customers include General Motors, Ford, Baldwin Graphic Products,
Emtec, and Heidelberg & Harris.

CECO Filters, Inc.

         Filters is located in Conshohocken, Pennsylvania. Filters manufactures
and sells industrial air filters known as fiber bed mist eliminators. The
filters are used to trap, collect and remove solid soluble and liquid
particulate matter suspended in an air or other gas stream whether generated in
a point source emission or otherwise. The principal functions that can be
performed by use of the filters are (a) the removal of damaging mists and
particles (for example, in process operations that could cause downstream
corrosion and damage to equipment), (b) the removal of pollutants and (c) the
recovery of valuable materials for reuse. The filters are also used to collect
fine insoluble particulates. Filters' filters are used by, among others, the
chemical and electronics industries; manufacturers of various acids, vegetable
and animal based cooking oils, textile products, alkalies, chlorine, paper,
computers, automobiles, asphalt, pharmaceutical products and chromic acid;
electric generating facilities including cogeneration facilities; and end users
of pollution control products such as incinerators.

                                       3

<PAGE>


         Filters holds a US Patent for a device with the trade names of the
N-SERT(R) and X-SERT(R) prefilter. This device is used to protect the filter's
surface from becoming coated with insoluble solids. Field performance has
demonstrated the effectiveness of this device. Filters also holds a patent for
its N-ESTED(R) multiple-bed fiber bed TWIN-PAK(R) filter, which permits an
increase in filter surface area of 60% or more, thus decreasing energy
consumption and improving collection efficiency. The device also permits the
user to increase the capacity of the emission-generating source without an
energy or major modification penalty.

         Filters' filters range in height from 2 to 20 feet and are typically
either 16 or 24 inches in diameter. The cages used in Filters' filter assemblies
may be stainless steel, carbon steel, titanium, fiberglass mesh or other
specialty materials. The filter material used in approximately 75% of Filters'
filters is fiberglass, which may be purchased in various grades of fiber
diameter and chemical resistance depending on the specific requirements of the
customer. Filter material may also be made of polyester, polypropylene or
ceramic materials. Filters' filters are manufactured with different levels of
efficiency in the collectibility of particulates, depending on the requirements
of the customer.

         Eventually, the filter material contained in Filters' filters will
become saturated with insoluble solids or corroded and require replacement. The
life of the filter material will be primarily dependent on the nature of the
particles collected and the filtration atmosphere. Filter life generally ranges
from 3 months to 15 years. The filters can be returned to Filters for
replacement of the filter material, or can be replaced on-site by the customer.
Filters sells replacement filter material segments with the trade name of
SITE-PAK(R) for on-site installation by the customer and compressor kits to be
used in connection with on-site replacement.

         Filters has exclusive rights to engineer, market and sell the patented
Catenary Grid(R) scrubber. This device is designed for use with heat and mass
transfer operations and particulate control. Filters designs complete systems
centered around these devices.

         A significant portion of Filters' business consists of the sale of
replacement filter material segments for its filters and for filters made by
other manufacturers. The replacement process for filters made by other
manufacturers involves modification of the cages to permit the insertion of
replacement segments. Once modification of the cage and replacement of filter
material has been completed by Filters, subsequent replacement of the filter
material can be made on-site by the customer.

         During 1999 and into 2000, Filters continued to implement the results
of its new design strategies by utilizing standard components customized for
specific customer needs. These unique designs are characterized by ease of use,
flexibility in application and the ability to achieve complete product recycle
when the customer's use is satisfied. This strategy enables Filters to offer the
same units or applications in widely disparate industries with the possibility
to reuse the units once the original use is satisfied. It also allows Filters
the flexibility to sell or rent the systems. The rental approach allows Filters
to reuse the units after cleaning and repacking, resulting in a higher return on
capital employed.

                                       4

<PAGE>


Air Purator Corporation

         APC, a wholly owned subsidiary of Filters, is engaged in the
manufacture of specialty needled fiberglass fabrics. Some of the fabrics are
coated to permit their use in certain highly corrosive applications. The fabrics
are typically used in a particulate collection device known as a pulse-jet
baghouse, which is fabricated, by a number of companies. Before APC's fabric is
placed into the baghouse, the fabric will generally be sewn into a shape
resembling a tube closed at one end, called a bag. The bag is then placed in an
enclosed cylindrical apparatus known as a bag holder. APC primarily sells its
fabrics to the bag fabricator. Other applications include the recovery of
valuable materials such as carbon black. There are many domestic and foreign
fabricators with which APC deals. APC's flagship product line is known in the
field under the Huyglas(R) trade name. Other products include Dynaglas(R) and
Huyflex products.

         A felted fiberglass fabric developed by APC and targeted to compete
with other fabrics sold for dust collection in industrial applications is now
being marketed. This product may allow Filters to compete for a larger share of
the global market for filter fabric media and may add to Filters' established
position with the Huyglas(R) trade name. APC recently developed two new products
that are capable of higher temperature exposure and less costly final
fabrication. These products, once commercialized, could improve the operating
results of APC.

         APC is presently engaged in the development of additional products
based on its proprietary technology. In conjunction with the corporate-wide
sales and marketing efforts, sales personnel are vigorously pursuing various
applications outside of uses traditionally associated with such fabrics. Several
new products are currently being tested, but APC is unable to predict whether
these efforts will result in the successful development of marketable products.

New Busch Co., Inc.

         Busch, a wholly-owned subsidiary of Filters, is engaged in the business
of marketing, selling, designing and assembling ventilation, environmental and
process-related products, and providing manufacturer's representative services
to certain companies or manufacturers. Busch consists of two divisions: Busch
INTERNATIONAL and Busch MARTEC. In 1999 and 2000, Busch generated approximately
58% and 48% of Filters' consolidated net sales, respectively.

         Busch INTERNATIONAL, the larger division of Busch, designs and supplies
custom air systems to steel, aluminum, chemical, paper, glass, cement, power
generation, and related industries on an international level. As part of its
system designs, it supplies custom engineered precision-manufactured products
specializing in air related applications. In addition, Busch INTERNATIONAL
provides a wide range of special services, including conceptual studies,
application engineering, and system start-up. Busch employs an engineering staff
experienced in aerodynamic, mechanical, civil, and electrical disciplines. These
personnel are utilized entirely to support Busch's air systems work. Areas of
expertise include turbine inlet filtration, evaporative cooling, gas absorption,
scrubbers, acoustics, and corrosion control.

                                       5
<PAGE>


         Busch INTERNATIONAL is considered a premier supplier of custom
engineered solutions for the control of fume and oil mist emissions from steel
and aluminum rolling mills. Busch's Fume-Shield(TM) systems are designed and
supplied by Busch and are devised to contain, capture, convey, and clean
contaminated air. Busch INTERNATIONAL fume exhaust systems and air-curtain hoods
are designed to provide high efficiency control of oil mist and fumes.

         Busch INTERNATIONAL also designs, manufactures and supplies ventilation
and other air handling equipment for industrial use. It also provides systems
for corrosion protection, fugitive emissions control, evaporative cooling, oil
mist collection, mill building ventilation, crane cab ventilation and other air
handling applications. Some of these air handling units are the MRV-80(TM),
MRV-81(TM), N-DUR-AIR(TM), RE-TREAT(R), PCR(TM) and CR(TM) series.

         Busch INTERNATIONAL'S patented JET*STAR(TM) heat and transfer device is
an excellent strip cooler, strip dryer, coil cooler, and strip blow-off system
and is gaining significant market penetration for its ability to rapidly cool or
heat metal or other materials. Busch believes that the rapid cooling permits
higher throughput than competitive processes. Busch is presently involved in
supplying JET*STAR(TM) for new and upgrade mill construction work.

         Busch MARTEC acts as a manufacturers' representative with manufacturers
for air and fluid products. Busch MARTEC does business almost exclusively in the
Pittsburgh and tri-state area. Busch MARTEC also supplies certain products to
the other Busch division.

U.S. Facilities Management

         In 1999, Filters closed its U.S. Facilities Management operation.

Customers

         No customers comprised 10% or more of the Company's consolidated net
revenues for 2000 or 1999.

         Because the demand for Filters' filters, replacement segments, fabric
material, scrubbers and consulting services is not constant but can fluctuate
due to economic conditions, filter life and other factors beyond Filters'
control, Filters is unable to predict the level of purchases by its largest
customers, or any other customer, in the future.

         While Filters is exploring targeting larger industrial markets, Filters
is also continuing to service specialty market areas, where it believes it has a
competitive advantage over its larger competitors who generally have much
greater resources than Filters. During 2000, Filters partnered with Kirk & Blum
to offer Filters customers a turnkey package. Whereas, Filters performs the
design and build capabilities and Kirk & Blum performs the field installation.
In the year ended December 31, 2000, Filters and its subsidiaries continued to
develop additional market areas, including storage facility vent emission
control and its related odor control, new dry particulate emission control and
combination scrubber-fiber bed filter systems, while also implementing changes
to reach larger industrial markets, such as machining, automotive and asphalt
markets. In recent years, Filters added capabilities to penetrate the
semiconductor and printed circuit board markets through its filter technology
and its patented scrubbers.

                                       6
<PAGE>


Other Aspects of the Kirk & Blum Acquisition

Employment Agreements, Bonuses and Stock Purchase Warrants

         In connection with such acquisition, CECO Group entered into a
five-year employment agreement with Richard J. Blum. Lawrence J. Blum and David
D. Blum entered into five-year employment agreements with Kirk and Blum. These
employment agreements also provide for annual salaries of $206,000, $100,000 and
$154,000, respectively, for the three Blums. These agreements granted Richard,
Lawrence and David Blum warrants to purchase 448,000, 217,000 and 335,000 shares
of common stock of the Company, respectively, at $2.9375, the closing price of
the Company's common stock on December 7, 1999. These warrants become
exercisable at the rate of 25% per year over the four years following December
7, 1999. The warrants have a term of ten years. In addition, the employment
agreements provide that each of the Blums will be paid a bonus with respect to
each of the fiscal years ended as of December 31, 2000, 2001, 2002, 2003 and
2004 equal to, in the aggregate, (i) 25% of the net income of the Company before
interest and taxes in excess of $4,000,000 as reported on the Company's audited
financial statements filed with the Securities and Exchange Commission with
respect to such year, less (ii) the contribution made on behalf of such
employees to any profit sharing or 401(k) plan by the Company, CECO Group, Kirk
& Blum or any affiliate (other than contributions made by the employees) with
respect to such fiscal year. Of such aggregate bonus, Richard J. Blum will
receive 44.8%, Lawrence J. Blum will receive 21.7% and David D. Blum will
receive 33.5%.

         Additionally, none of these bonuses will be paid if the Company or CECO
Group is in default under any financing agreement with any bank or other
financial institution or any other material agreement to which the Company or
CECO Group is a party, or if the payment of such bonus would cause the Company
or CECO Group to be in default under any such agreement. If no bonuses are paid
as a result of the operation of the foregoing sentence, the unpaid bonuses will
accrue interest at the rate of 8% per annum. Any accrued and unpaid bonuses and
interest will be paid as soon as the Company or CECO Group ceases to be in
default under such agreements and such payment would not cause a default under
any such agreement. The payment of these bonuses is also subject to a
subordination agreement in favor of the banks providing the financing described
below. In connection with the results of operations from 2000, no bonuses were
earned by the Blums.

Bank Financing

         The financing for the transaction was provided by a bank loan facility
in the amount of $25 million in term loans and a $10 million revolving credit
facility. The $14.5 million term loan has a maturity of November 30, 2004; the
$8.5 million term loan has a maturity of May 31, 2006; and the $2 million term
loan has a maturity of 90 days after December 7, 1999. Interim payments of
principal are required with respect to the $14.5 million and the $8.5 million
term loans. The Company borrowed against the cash value of life insurance owned
by Kirk & Blum in order to repay the $2 million term loan. The bank loan
facility was provided by PNC Bank, National Association, The Fifth Third Bank
and Bank One, N.A. (the "Bank Facility").

                                       7
<PAGE>


         In addition, as a condition to obtaining the bank financing, the
Company placed $5 million of subordinated debt. The proceeds of the bank loans
and the additional $5 million of subordinated debt were used to pay the purchase
prices for Kirk & Blum and kbd/Technic, and to pay expenses incurred in
connection with the acquisitions, to refinance existing indebtedness and for
working capital purposes. In connection with these loans, the banks providing
the loan facility received a lien on substantially all the assets of the Company
and its subsidiaries.

         The senior secured credit facility was amended in March 2001 by
reducing the requirements under several financial covenants as of December 31,
2000 and for the four quarters in 2001, raising interest rates on the Company's
borrowings by 0.5%, and reducing the total amount available under the revolving
line to $9 million. Additionally, the Company is required to make additional
prepayments against the term loans of $.5 million by June 30, 2001 and September
30, 2001 and $1 million by December 31, 2001. In consideration for this
amendment, additional fees were paid to the bank group and additional fees are
payable to the bank group unless the Company raises additional capital by a
specified time period. In addition, the Company agreed to pledge its Peerless
Manufacturing Company common stock as additional collateral and any proceeds
from the sale or other disposition of such stock will be applied against the
additional prepayments to reduce the principal balance under the term loan
portion of the facilities. The Company would not have been in compliance with
the financial covenants had the amendment not been made.

Subordinated Debt

         The subordinated debt was provided to the Company in the amount of $4
million by Can-Med Technology, Inc. d/b/a Green Diamond Oil Corp., $.5 million
by ICS Trustee Services, Inc. and $.5 million by Harvey Sandler. ICS Trustee
Services, Inc. and Harvey Sandler are not affiliated with the Company. Green
Diamond Oil Corp. is owned 50.1% by Icarus Investment Corp., a corporation owned
50% by Phillip DeZwirek, the Chairman of the Board of Directors and Chief
Executive Officer of the Company and a major stockholder and 50% by Jason
DeZwirek, Phillip DeZwirek's son and a director and secretary of the Company and
a major stockholder of the Company. The promissory notes which were issued to
evidence the subordinated debt provide that they accrue interest at the rate of
12% per annum, payable semi-annually subject to the subordination agreement with
the banks providing the financing referred to above.

         In consideration for the subordinated lenders making the Company the
subordinated loans, the Company issued to the subordinated lenders warrants to
purchase up to 1,000,000 shares of the Company's common stock for $2.25 per
share, the closing price of the Company's common stock on the day that the
subordinated lenders entered into an agreement with the Company to provide the
subordinated loans. The warrants are exercisable from June 6, 2000 to December
7, 2009. In connection with such warrants, the subordinated lenders were granted
certain registration rights with respect to their warrants and shares of common
stock of the Company into which the warrants are convertible.

         In March 2001, the subordinated notes were amended so that the Company
has the option to convert the outstanding principal balance of the notes (and
accrued interest) into shares of its common stock. The Company's right to prepay
the outstanding principal balance of the notes prior to its scheduled maturity
was eliminated.

                                       8

<PAGE>


The kbd/Technic, Inc. Voting Trust

         kbd/Technic may engage in engineering services in the State of Ohio and
in other states. In order to be a corporation licensed to perform engineering
services in the state of Ohio, Ohio law requires that a majority of the stock of
kbd/Technic be owned by a licensed engineer. CECO Group has therefore arranged
that the stock of kbd/Technic be owned by a voting trust of which Richard J.
Blum, the president of CECO Group and the Company, is the trustee. CECO Group
remains the beneficial owner of 100% of the stock of kbd/Technic.

Peerless Manufacturing Company

         The Company purchased 177,900 shares of the common stock of Peerless
Manufacturing Company ("Peerless"), which represented 12.25% of the outstanding
Stock of Peerless during 1999. The Company acquired the common stock for
purposes of pursuing the possibility of acquiring the majority or all of the
stock of Peerless. The Company subsequently sold 113,300 shares of Peerless
through December 31, 2000 and is no longer intending to purchase additional
shares for the purpose of obtaining control.

Government Regulations

         The Company and its subsidiaries have not been materially impacted by
existing government regulation, nor is the Company aware of any probable
government regulation that would materially affect its operations. The Company's
costs in complying with environmental laws have been negligible.

         During 2000 and 1999, the Company estimates that $.1 million and
$33,000 respectively, had been expended on research and development programs.
Such costs are generally included as factors in determining pricing.

Suppliers

         Kirk & Blum purchases its raw materials (mainly angle iron and sheet
plate products) from a variety of sources. When possible, Kirk & Blum secures
these materials from steel mills. Other materials are purchased from a variety
of steel service centers. Kirk & Blum does not anticipate any shortages in the
near future.

         Filters purchases all of its chemical grade fiberglass as needed from
Manville Corporation, which Filters believes is the only domestic supplier of
such fiberglass. However, there are foreign suppliers of chemical grade
fiberglass, and, based on current conditions, Filters believes that it could
obtain such material from foreign suppliers on acceptable terms. Filters
believes that there is sufficient supply of raw materials for the other
components of its filters and does not anticipate any shortages in the near
future.

         APC purchases its raw material from a variety of sources and does not
anticipate any shortages in the near future.

                                       9

<PAGE>


         While Filters depends upon two suppliers for certain specialty items,
including glass and chemicals, Filters believes it has a good relationship with
such suppliers and does not anticipate any difficulty in continuing to receive
such items on terms acceptable to the Company.

         Busch purchases a majority of its fans from New York Blower and a
majority of its louvers and dampers from American Warming. Busch purchases
additional materials from a variety of sources and does not anticipate any
shortages in the near future. Busch believes it has a good relationship with
such suppliers and does not anticipate any difficulty in continuing to receive
such items on terms acceptable to Busch.

Competition and Marketing

         Kirk & Blum is the largest industrial sheet metal contractor in the
United States. Kirk & Blum believes that it is the largest provider of the types
of industrial ventilation systems that it produces. While there are equipment
manufacturers that are larger, Kirk & Blum believes that there are no systems
contractors who are larger.

         Kirk & Blum faces substantial competition with respect to its contract
fabrication services. Kirk & Blum focuses on securing relationships and
contracts with manufacturers that need its services on a long-term basis.

         Kirk & Blum believes that it is the second largest supplier in the
component parts industry. Its major competitor is Mid West Metal Products. Kirk
& Blum believes that it is the only provider in this market segment that uses a
network of stocking distributors.

         The arena in which kbd/Technic competes is highly fragmented.
kbd/Technic believes that it is one of the largest consulting firms providing
only air engineering consulting services. Larger consulting engineering
companies may provide some of the services provided by kbd/Technic, however,
they do not concentrate on air engineering consulting services. Such consulting
engineering companies, however, generally will have greater resources than
kbd/Technic.

         With respect to Filters' products, Monsanto Corporation may be larger
in the fiber bed mist eliminator industry. Monsanto's financial resources are
considered far greater than Filters, and Monsanto can undertake much more
extensive marketing and advertising programs than Filters. Monsanto is also a
competitor of Busch. Certain other competitors also have greater financial
resources than Filters.

         Filters competes by stressing its exclusive products, including
SITE-PAK(R) segments that permit on-site filter media replacement capability and
prefilters, its patented product that protects the surface of a fiber bed filter
from becoming plugged with solids, and its patented multiple-bed fiberbed
filters that dramatically increase the surface area of a filter. In addition,
the Company believes that Filters is the only U.S. manufacturer of fiber bed
mist eliminators whose filter material can be replaced on-site by a customer.
The Company believes that Filters is price competitive within the market for
filters with similar efficiency.

         Manufacturers of electrostatic precipitators and wet scrubbers may also
be deemed to be in competition with Filters, because those devices are also
effective in removing particulates from an air or another gas stream. While such
devices may have higher operating costs than fiber bed mist eliminators,
replacement of the component parts of such devices is rare as compared to fiber
bed mist eliminators.

                                       10
<PAGE>


         Filters and its subsidiaries each face substantial competition. APC and
Filters each face competition from other forms of environmental control and
material recovery devices including scrubbers and electrostatic precipitators
and from other filter fabric media that can also be fabricated into bags for
baghouses. These fabrics and fibers include, Teflon(R), Gore-Tex(R), woven
fiberglass (both treated and non-treated), polyester, Ryton(R), Nomex(R) and
several other fabrics.

         Kirk & Blum markets its ventilation systems through direct solicitation
of existing customers and through its marketing personnel. Kirk & Blum also
utilizes some finders' arrangements.

         Filters and its subsidiaries' marketing efforts have consisted of
telemarketing and direct solicitation of orders from existing customers. Filters
and its subsidiaries also utilize direct mail solicitation and selected
advertising in trade journals and product guides and trade shows.

         Filters and its subsidiaries also utilize sales representatives located
in the United States, Canada and overseas and Special Sales Directors, each
focused on specific industries. Busch, in addition to using direct solicitation
and some sales representatives, also participates in industrial shows. Filters'
subsidiaries have increased sales personnel and have added representatives in
the United States, United Kingdom and Brazil.

Employees

         CECO Group and its subsidiaries had 663 full-time employees and 5
part-time employees as of December 31, 2000. None of the Company's employees are
currently unionized other than certain employees of Kirk & Blum. As of December
31, 2000, Kirk & Blum had 471 union employees in sixteen separate locals. Kirk &
Blum is a party to sixteen union contracts; fourteen are with different locals
of the Sheet Metal Workers International Association and two are with the Pipe
Fitters. Two of the contracts expired in May 2000. Four of the contracts expire
during 2001, one in March, one in April, one in May and another in June. The
remaining ten contracts expire at various times during 2002. The Company
considers its relationship with its employees to be satisfactory.

Key Employees

         The operations of the Company are largely dependent on Richard J. Blum
and certain other key executives. The loss of Mr. Blum or any of its key
executives could have a material adverse effect upon the operations of the
Company.

Product Liability Insurance

         The Company's subsidiaries carry product liability insurance covering
its respective products, excluding environmental liability.

                                       11

<PAGE>


Patents

         Filters currently holds one US patent for its N-SERT(R) and X-SERT(R)
prefilters. Filters also holds a patent on its Twin Pak(R) multiple bed fiberbed
filter and an exclusive world-wide license to the patent on the Catenary Grid(R)
scrubber, Ultra-violet Enhanced Cantenary Grid(R) scrubber, and the Narrow Gap
Venturi(R) scrubber, along with fluoropolymer media for diffusion filtration.
APC holds two patents on the Huyglas material. All of the prefilters, the
multiple bed units and the Huyglas material have contributed to Filters'
performance during 2000. Busch holds an exclusive license to the patent on the
JET*STAR(TM) strip cooler, strip dryer, coil cooler, and strip blow-off systems.
Busch also holds an exclusive license on the patent on the flexible nozzle
material used in connection with the JET*STAR(TM) systems and the process of
using water in addition to air used in the JET*STAR(TM) systems. There is no
assurance that measurable revenues will accrue to the Company or its
subsidiaries as a result of their patents or licenses.

Shares of Filters owned by CECO Group

         As of December 31, 2000, the CECO Group owned 6,439,606 shares of
Filters, representing 93.8% of Filters' common stock. CECO Group may consider
purchasing additional shares of Filters common stock if such additional shares
become available at a price that CECO Group considers reasonable.

Acquisition of Company Stock by the Company

         During 2000, the Company purchased 566,000 shares of Company common
stock as treasury shares at a total cost of $1.2 million from the former
president of CECO Filters, Inc. and his family in connection with his
resignation that was effective June 30, 2000. Additionally, the Company made
open market purchases of 60,000 shares of its common stock in 2000.

Item 2.  Properties

         The Company maintains its executive offices in Toronto, Ontario and its
operating offices in Cincinnati, Ohio.

         Kirk & Blum's headquarters are located in Cincinnati, Ohio at a 236,178
square foot facility owned by Kirk & Blum. Functions performed in this facility
include operating management, sales, manufacturing and design. Located in this
facility are manufacturing capabilities for custom metal fabrication component
parts, as well as the headquarters of kbd/Technic and manufacturing for air
pollution control systems.

         Kirk & Blum also owns a 30,000 square foot facility in Indianapolis,
Indiana, a 35,000 square foot facility in Louisville, Kentucky, and a 33,400
square foot facility in Lexington, Kentucky.

         Kirk & Blum leases a 28,920 square foot facility in Columbia, Tennessee
and an 18,225 square foot facility in Greensboro, North Carolina. The lease for
the Columbia property has current annual rent payments of $92,500 expiring
August 2005. The Greensboro facility lease has annual lease payments of $52,404
and is renewed on an annual basis.

                                       12

<PAGE>


         Filters owns a plant facility in Conshohocken, Pennsylvania. On March
16, 1999, CECO refinanced the property with a seven year commercial mortgage
from PNC Bank, National Association at 7.75%, which was repaid in December 1999.

         Filters, for APC's operations, leases 11,500 square feet of space from
BTR North America, Inc. for the premises in Taunton, Massachusetts for annual
rental of $54,625. This lease expires on February 28 of each year and is
renewable yearly upon mutual consent and APC continues to lease the premises as
a tenant-at-will.

         Busch maintains its offices in Pittsburgh, Pennsylvania. The lease that
Busch was assigned in connection with the acquisition of the Busch assets, is
dated January 10, 1980 and extends through July 31, 2002. The lease is for
approximately 12,000 square feet at an annual rental of $82,398. The rental
amount was adjusted commencing August 1, 2000 to increase the annual rental to
$85,694. Andrew M. Halapin, the former principal owner of Busch, is the
beneficial owner of the property in which Busch's offices are located.

         All properties owned by Kirk & Blum and Filters are subject to
mortgages to secure the amounts owed under the Bank Facility.

         The Company considers the properties adequate for their respective
uses.

Item 3.  Legal Proceedings

         There are no material pending legal proceedings to which the Company or
any of its subsidiaries is a party or to which any of their property is subject.

Item 4.  Submission of Matters to a Vote of Security Holders

         The annual meeting of the shareholders of the Company was held on
November 22, 2000. At the meeting, the Company's five directors were elected,
and the appointment of Deloitte & Touche LLP as the Company's accountants was
ratified. The votes for each of the directors were 5,827,335, with 18,200
against and 21,400 abstentions. The votes for the appointment of Deloitte &
Touche LLP was 5,824,122, with 21,413 against and 16,525 abstentions.

PART II

Item 5.  Market of the Registrant's Common Equity and Related Stockholder

Matters.

(a) The Company's common stock is traded in the over-the-counter market and is
quoted in the NASDAQ automated quotation system under the symbol CECE. The
following table sets forth the range of bid prices for the common stock of the
Company as reported in the NASDAQ system during the periods indicated, and
represents prices between broker-dealers, which do not include retail mark-ups
and mark-downs, or any commissions to the broker-dealers. The bid prices do not
reflect prices in actual transactions.


                                       13

<PAGE>

<TABLE>
<CAPTION>

     CECE Common Stock - Bids                      CECE Common Stock - Bids
     ------------------------                      ------------------------
1999              High           Low           2000             High         Low
- ----              ----           ---           ----             ----         ---
<S>               <C>            <C>           <C>              <C>          <C>
1st Quarter       $4.50          $2.25         1st Quarter      $3.375       $2.0625
2nd Quarter       $4.625         $3.00         2nd Quarter      $2.9375      $2.00
3rd Quarter       $3.75          $2.0625       3rd Quarter      $2.50        $2.00
4th Quarter       $4.00          $1.7188       4th Quarter      $2.3125      $1.125

2001
- ----
1st Quarter       $2.125         $1.4375
(through March 19, 2001)
</TABLE>

(b) The approximate number of beneficial holders of common stock of the Company
as of March 19, 2001 was 1,700.

(c) The Company has paid no dividends during the fiscal year ended December 31,
1999 or the fiscal year ended December 31, 2000. The Company does not expect to
pay dividends in the foreseeable future. The Company and its subsidiaries are
parties to various loan documents, which prevent the Company from paying any
dividends.

Item 6.  Management's Discussion and Analysis of Financial Conditions and
Results of Operations.

Overview

         The principal operating units of CECO Environmental Corp. (the
"Company") are The Kirk & Blum Manufacturing Company ("Kirk & Blum"),
kbd/Technic, Inc. ("kbd/Technic"), CECO Filters, Inc. ("Filters"), Air Purator
Corporation ("APC") and New Busch Co., Inc. ("Busch") which provide innovative
solutions to industrial ventilation and air quality problems through dust, mist,
and fume control systems and particle and chemical control technologies. The
Company operates in two reportable segments: Systems and Media. The Systems
segment assembles and manufactures ventilation, environmental and
process-related products. The Company provides standard and engineered systems
and filter media for air quality improvement through its Media segment.

The Company's Systems segment consists of Kirk & Blum, kbd/Technic and Busch.
Kirk & Blum is a leading provider of turnkey engineering, design, manufacturing
and installation services in the air pollution control industry. Kirk & Blum's
business is focused on designing, building and installing systems, which remove
airborne contaminants from industrial facilities as well as equipment that
control emissions from such facilities. Busch is engaged in providing
system-based solutions for industrial ventilation and air pollution control
problems by designing, fabricating, supplying equipment and installing equipment
used to control the environment in and around industrial plants with a variety
of standard, proprietary and patented technologies including its JET*STAR(TM)
cooling system. kbd/Technic is a specialty-engineering firm concentrating in
industrial ventilation. kbd/Technic provides air systems testing and balancing,
source emissions testing, industrial ventilation engineering, turnkey project
engineering (civil, structural and electrical), and sound and vibration systems
engineering. These companies have extensive knowledge and experience in
providing complete turnkey systems in new installations and renovating existing
systems.

                                       14
<PAGE>


         The Company's Media segment consists of Filters and APC. Filters
manufactures and markets filters known as fiber bed mist eliminators, designed
to trap, collect and remove solid soluble and liquid particulate matter
suspended in an air or other gas stream whether generated from a point source
emission or otherwise. Filters offers innovative patented technologies such as
the Catenary Grid(R) and the Narrow Gap Venturi(R) scrubbers, which are designed
for use with heat and mass transfer operations and particulate control. APC
designs and manufactures high performance filter media for use in high
temperature pulse jet baghouses, a highly effective type of baghouse for
capturing submicron particulate from gas streams.

         The following discussion of the Company's results of operations and
financial condition should be read in conjunction with the Consolidated
Financial Statements and Notes thereto (including Note 19, Segment and Related
Information) and other financial information included elsewhere in this report.

Results of Operations

         The Company's consolidated statement of operations for the years ended
December 31, 2000 and 1999 reflect the operations of the Company, consolidated
with the operations of its subsidiaries. At December 31, 2000, the Company owned
approximately 94% of Filters. Minority interest has been separately presented in
the statement of operations.

         The following table sets forth line items shown on the consolidated
statement of operations, as a percentage of total net sales, for the years ended
December 31, 2000 and 1999. This table should be read in conjunction with the
consolidated financial statements and notes thereto.
                                                              YEAR ENDED
                                                              DECEMBER 31,
                                                          2000            1999
                                                          ----            ----
Net Sales                                                100.0           100.0
Costs and expenses:
     Cost of sales                                        79.9            62.6
     Selling and administrative                           15.5            32.2
     Depreciation and amortization                         2.4             3.2
                                                       -------         -------
                                                          97.8            98.0
Income from continuing operations before
     investment income and interest expense                2.2             2.0
Investment income                                           .9             2.2
Interest expense                                           4.2             5.4
                                                       -------         -------
Income (loss) from continuing operations before
     income taxes and minority interest                   (1.1)           (1.2)
Provision (benefit) for income taxes                        .3              .7
                                                       -------         -------
Income (loss) from continuing operations before
     minority interest                                     (.8)           (1.9)
Minority interest                                           .0              .0
                                                       -------         -------
Income (loss) from continuing operations                   (.8)           (1.9)
Loss from discontinued operations                           .0            (2.3)
                                                       -------         -------
Net loss                                                   (.8)           (4.2)
                                                       =======         =======

                                       15

<PAGE>

Net Sales

         Consolidated net sales increased 300% for the twelve months ended
December 31, 2000 to $89.8 million, up $67.4 million over 1999. The increase in
2000 was due to the combination of increased revenue from the Systems segment,
principally due to the positive impact from the acquisition of Kirk & Blum and
kbd/Technic in December 1999, offset by a decrease in revenue from the Media
segment.

         Systems segment revenue increased by $69.2 million during 2000. The
primary factors for this increase were the inclusion of Kirk & Blum and
kbd/Technic offset by lower revenue generated by Busch. The Company's newly
acquired Kirk & Blum operating unit generated increased revenue over its 1999
levels. The decline in revenue from Busch is principally due to a general
decline in the metals industry and a decline in demand at rolling mills for fume
exhaust systems and Busch's proprietary JET*STAR(TM) cooling technology.
However, both the inquiry level and the order level increased late in 2000 for
the aluminum segment of the metals industry.

         Media segment sales reflect a decline of $1.2 million primarily due to
a decline in the Company's high performance filter media unit, Air Purator
Corporation. Sales to bag manufacturers that use the filter media in pulse jet
baghouses slowed during 2000 due in part to inventory rationalization and
increased competition from lower priced filter media. The Company believes that
its filter media has better performance characteristics in high temperature use
applications than its competition and is pursing this avenue in its marketing
approach.

Gross Profit

         Gross profit increased $9.7 million to $18.1 million in 2000 compared
with $8.4 million in 1999. Gross profit, as a percentage of revenues, was 20.2%
in 2000 compared with 37.4% in the prior year. The decline is attributable to
the mix of increased sales from lower margin Systems segment sales and decreased
sales from the higher margin Media segment. Overall, margins as a percentage of
sales will be impacted by the addition of Kirk & Blum to the Systems segment as
this operating unit represents a significant portion in the Company's total
revenue and operates at lower margins. Subsequent to year-end, Kirk & Blum
identified a potential loss on a contract in progress as of December 31, 2000
with a major industrial company and recorded a $.6 million reserve in the fourth
quarter of 2000. The Company is attempting to recover this loss from the
customer. This loss has not been reduced for a potential recovery as the amount
of recovery is not reasonably determinable as of December 31, 2000.

Expenses

         Selling and administrative expenses increased by $6.7 million to $13.9
million in 2000 due to the acquisition of Kirk & Blum and kbd/Technic. Selling
and administrative expenses, as a percentage of revenues for 2000 and 1999, were
15.5% and 32.2%, respectively. A substantial portion of these expenses, which
are considered fixed, have been under review by Management for cost savings
opportunities resulting from administrative efficiencies that could be realized
from consolidating the Company's operating headquarters in Cincinnati, Ohio.
Additionally, variable selling expenses have been under review to better align
compensation of sales personnel with performance. In 2000, Management identified
overhead reductions at an annualized rate of approximately $1 million. Savings
that should be realized from this realignment and cost reduction efforts have
favorably affected results in 2000 by approximately $.4 million. Management
believes that the balance of overhead reductions should be realized in 2001.

                                       16

<PAGE>


         Depreciation and amortization increased by $1.4 million to $2.2 million
in 2000 primarily due to the larger base of depreciable and amortizable assets
and the goodwill resulting from the acquisition of Kirk & Blum and kbd/Technic.

Investment Income

         Investment income increased by $.3 million to $.8 million during 2000
compared with $.5 million in 1999. The increase in investment income resulted
from interest income, dividend income, net realized gains and net unrealized
appreciation in investments. At December 31, 2000, the Company's most
significant investment was 64,600 shares of Peerless Manufacturing Company
common stock which is listed on the Nasdaq Stock Market(R) traded under the
symbol PMFG. The closing price of the Peerless stock was $15.50 per share as of
December 31, 2000.

Interest Expense

         Interest expense increased by $2.6 million to $3.8 million during 2000
compared with $1.2 million in 1999 principally due to higher borrowing levels,
increased rates under the newly established bank credit facilities, and
subordinated and related party debt. The bulk of such debt was incurred in
connection with the acquisition of Kirk & Blum and kbd/Technic. In August 1999,
the Company issued a demand note and warrants to purchase 1 million shares of
common stock to a related party. The inherent discount associated with the value
for the warrants was immediately amortized, and $.6 million of interest expense
was recognized in the quarter ended September 30, 1999. Management of the
Company and the holder of the warrants believed that the inherent interest rate
resulting from the valuation was higher than originally contemplated when the
transaction was structured and, therefore, in September 2000, the holder
cancelled the warrants after repayment of the debt.

Income Taxes

         Federal and state income tax benefit was $.3 million in 2000 compared
with a tax provision of $.2 million in 1999. The 29.4% effective income tax
benefit rate in 2000 was less than the statutory rate primarily due to
non-deductible goodwill amortization relating to investments in Filters, Kirk &
Blum and kbd/Technic.

Discontinued Operations

         Discontinued operations reflect the closure of the operations of the
Company's subsidiary US Facilities Management during 1999. Operating losses and
disposal costs, net of income tax benefits and minority interest totaled $.5
million in 1999.

Net Loss

         Net loss for the year ended December 31, 2000 was ($.7 million)
compared with a net loss of ($.9 million) in 1999.

Backlog

         The Company's backlog consists of purchase orders it has received for
products and services it expects to ship and deliver within the next 12 months.
The Company's backlog, as of December 31, 2000, was $12.1 million. The Systems
segment provided over 90% of the backlog. There can be no assurance that backlog
will be replicated or increased or translated into higher revenues in the
future. The success of the Company's business depends on a multitude of factors
that are out of the Company's control. The Company's operating results can be
affected by the introduction of new products, new manufacturing technologies,
rapid change of the demand for its products, decrease in average selling price
over the life of the product as competition increases and the Company's
dependence on efforts of intermediaries to sell a portion of its product.


                                       17
<PAGE>


Financial Condition, Liquidity and Capital Resources

         On December 7, 1999, the Company acquired Kirk & Blum Manufacturing
Company and kbd/Technic, Inc., which are engaged in the design, fabrication, and
installation of specialized ventilation systems and related engineering and
technical services. Both Companies became wholly owned subsidiaries of the
Company. The Company paid cash totaling approximately $25 million to owners of
Kirk & Blum and kbd/Technic and the Company assumed debt obligations of Kirk &
Blum and kdb/Technic totaling $5 million. The transaction was accounted for as a
purchase. The activity of Kirk & Blum and kbd/Technic has been included with the
Company's consolidated results of operations from December 7, 1999. The purchase
price has been allocated to Kirk & Blum and kbd/Technic balance sheets based on
independent appraisals of the various assets acquired. Approximately, $3.1
million of intangibles, including Kirk & Blum's trade name and the valuation of
its workforce, are included in the Company's consolidated balance sheet as of
December 31, 2000 and 1999 relating to these acquisitions. Under the terms of an
escrow agreement entered into among the Company and the owners of Kirk & Blum,
the Company received $.3 million during the second quarter of 2000 as a
post-closing price adjustment.

         At December 31, 2000, cash and cash equivalents and marketable
securities totaled $1.7 million compared with $3.8 million at December 31, 1999.
Cash provided by operating activities for the year ended December 31, 2000 was
$2.6 million compared with cash used of $.8 million for the same period in 1999.
In December 1999, the Company consummated new credit facilities totaling $38.0
million under a senior secured syndicated banking facility of $33.0 million
maturing in 2004 - 2006, and $5.0 million of subordinated debt maturing in 2006
to finance the acquisition of Kirk & Blum and kbd/Technic and refinance its
existing $8 million credit facility and working capital. The bank credit
facility allows the Company, subject to certain financial covenants, to borrow
for its general corporate needs, including acquisitions. Borrowings under this
arrangement bear interest at a Libor based rate from 30 - 180 days or based upon
the bank's prime rate at the Company's designation.

         The Company's investment in marketable securities consisted principally
of its investment in Peerless Manufacturing Company and other investments with a
value of $1.0 million on December 31, 2000.

         Total bank and related debt as of December 31, 2000 was $26.4 million,
a decrease of $1.5 million, due to net repayments under bank credit facilities
and payments made with respect to other notes payable. Unused credit
availability at December 31, 2000, was $5.0 million under the Company's bank
line of credit.



                                       18

<PAGE>

         The senior secured credit facility was amended in March 2001 by
reducing the requirements under several financial covenants as of December 31,
2000 and for the four quarters in 2001, raising interest rates on the Company's
borrowings by 0.5% and reducing the total amount available under the revolving
line to $9 million. Additionally, the Company is required to make additional
prepayments against the term loans of $.5 million by June 30, 2001 and September
30, 2001 and $1 million by December 31, 2001. In consideration for this
amendment, additional fees were paid to the bank group and additional fees are
payable to the bank group unless the Company raises additional capital by a
specified time period. In addition the Company agreed to pledge its Peerless
Manufacturing Company common stock as additional collateral and any proceeds
from the sale or other disposition of such stock will be applied against the
additional prepayments to reduce the principal balance under the term loan
portion of the facilities. In March 2001, the subordinated notes were amended
granting the Company the option to convert the unpaid principal balance (and
accrued but unpaid interest) of the notes into shares of common stock at an
initial conversion price of $ 2.00 per share. The conversion price is subject to
adjustment upon the occurrence of certain corporate events. In addition, the
Company's right to prepay the holders prior to its scheduled maturity was
eliminated.

         Investing activities used cash of $.3 million during 2000 compared with
$25.9 million for the same period in 1999. The Company acquired the Kirk & Blum
Manufacturing Company and kbd/Technic for $25 million cash plus assumed debt of
$5 million on December 7, 1999. During the second quarter of 2000, the Company
received $.3 million as a post-closing price adjustment related to its December
1999 acquisition of Kirk & Blum and kbd/Technic. Capital expenditures for
property and equipment and intangibles were $.6 million and $.4 million for the
years ended December 31, 2000 and 1999, respectively. Expenditures in 2000 were
primarily for manufacturing and engineering equipment, and leasehold
improvements. Capital expenditures for property and equipment are anticipated to
be in the range of $.5 million to $.9 million for 2001 and will be funded by
cash from operations, line of credit borrowings and/or lease financing.

         Financing activities used cash of $2.8 million during 2000 compared
with $27.5 million of cash provided by financing during the same period of 1999.
The Company incurred debt in 1999 to finance the acquisition of Kirk & Blum and
kbd/Technic and to refinance existing debt. In the third quarter of 2000, the
Company purchased 566,000 shares of its common stock as treasury shares at a
total cost of $1.2 million from the former president of CECO Filters, Inc. and
his family in connection with his resignation that was effective June 30, 2000.
Additionally, current year financing activities included net borrowings under
senior credit facilities and repayments of certain outstanding debt to Green
Diamond Oil Corp. offset by proceeds from common stock issued under the
Company's Employee Stock Purchase Plan.

         The Company believes that its cash, cash equivalents and marketable
securities, cash flow from operations, and its credit facilities are adequate to
meet the Company's cash requirements over the next twelve months.

New Accounting Standards

         Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting
for Derivative Instruments and Hedging Activities", as amended, is effective for
fiscal years beginning after June 15, 2000. SFAS 133 requires a Company to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
the hedged assets, liabilities, or firm commitments are recognized through
earnings or in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. The adoption of SFAS 133 did not have a
significant impact on the Company's consolidated results of operations,
financial position or cash flows.

         SEC Staff Accounting Bulletin 101, "Revenue Recognition", effective for
the year ended December 31, 2000, did not have a material impact on the
consolidated financial statements.

                                       19
<PAGE>


Market Risk

         The Company's market risk includes the potential loss arising from
adverse changes in interest rates. The Company's market risk from interest rates
is the potential increase in fair value of long-term debt resulting from a
change in interest rates.

         At December 31, 2000, the fair value of the Company's long-term debt
approximates market. The Company's market risk is estimated as the potential
increase in fair value resulting from a hypothetical one-half percent change in
interest rates and amounts to approximately $.1 million.

Forward-Looking Statements

         The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 and is making this
cautionary statement in connection with such safe harbor legislation. This Form
10-KSB, the Annual Report to Shareholders, Form 10-QSB or Form 8-K of the
Company or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the Company's
current views with respect to future events and financial performance. The words
"believe," "expect," "anticipate," "intends," "estimate," "forecast," "project,"
"should" and similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All forecasts and projections in this Form 10-KSB are "forward-looking
statements," and are based on management's current expectations of the Company's
near-term results, based on current information available pertaining to the
Company, including the risk factors noted below.

         The Company wishes to caution investors that any forward-looking
statements made by or on behalf of the Company are subject to uncertainties and
other factors that could cause actual results to differ materially from such
statements. These uncertainties and other risk factors include, but are not
limited to: changing economic and political conditions in the United States and
in other countries, changes in governmental spending and budgetary policies,
governmental laws and regulations surrounding various matters such as
environmental remediation, contract pricing, and international trading
restrictions, customer product acceptance, and continued access to capital
markets, and foreign currency risks. The Company wishes to caution investors
that other factors might, in the future, prove to be important in affecting the
Company's results of operations. New factors emerge from time to time and it is
not possible for management to predict all such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
a combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.

         Investors are further cautioned not to place undue reliance on such
forward-looking statements as they speak only to the Company's views as of the
date the statement is made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether because of new
information, future events or otherwise.

                                       20
<PAGE>


Item 7.  Financial Statements

         The Company's consolidated financial statements of CECO Environmental
Corp. and subsidiaries for years ended December 31, 2000 and 1999 and other data
are included in this Report following this page:

Cover Page                                                    F-1

Independent Auditors' Reports                                 F-2 to F-3

Consolidated Balance Sheet                                    F-4

Consolidated Statement of Operations                          F-5

Consolidated Statement of Shareholders'                       F-6
Equity

Consolidated Statement of Cash Flows                          F-7

Notes to Consolidated Financial Statements                    F-8 to F-24
for the Years Ended December 31, 2000
and 1999

                                       21
<PAGE>




                            CECO ENVIRONMENTAL CORP.


                        CONSOLIDATED FINANCIAL STATEMENTS


                               FOR THE YEARS ENDED
                           DECEMBER 31, 2000 AND 1999




















                                       F-1

<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
CECO Environmental Corp.

We have audited the accompanying consolidated balance sheet of CECO
Environmental Corp. and subsidiaries (the "Company") as of December 31, 2000,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such 2000 financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.



/s/ Deloitte & Touche LLP



Cincinnati, Ohio
March 30, 2001

                                       F-2

<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To the Board of Directors and Shareholders
CECO Environmental Corp.
Toronto, Ontario Canada


We have audited the accompanying consolidated balance sheet of CECO
Environmental Corp. and subsidiaries as of December 31, 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CECO Environmental Corp. and
subsidiaries as of December 31, 1999, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.


                                        /S/ MARGOLIS & COMPANY P.C.
                                        ----------------------------
                                        Certified Public Accountants




Bala Cynwyd, PA
March 30, 2001


                                      F-3

<PAGE>


                            CECO ENVIRONMENTAL CORP.

                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                2000                   1999
                                                                            ------------          ------------
<S>                                                                         <C>                   <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                 $    664,155          $  1,134,792
  Marketable securities - trading                                              1,002,399             2,690,919
  Accounts receivable, net                                                    17,372,149            17,204,539
  Costs and estimated earnings in excess of
    billings on uncompleted contracts                                          5,099,359             2,951,773
  Inventories                                                                  2,372,811             2,173,010
  Prepaid expenses and other current assets                                      757,018               635,423
  Deferred income taxes                                                        1,123,408               647,600
                                                                            ------------          ------------
           Total current assets                                               28,391,299            27,438,056

Property and equipment, net                                                   13,586,851            14,244,457
Goodwill, net                                                                  8,478,743             8,917,290
Other intangible assets, net                                                   4,148,997             4,375,070
Deferred charges and other assets                                              1,289,915             1,473,054
                                                                            ------------          ------------
                                                                            $ 55,895,805          $ 56,447,927
                                                                            ============          ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of debt (including related party
    of $800,000 in 1999)                                                    $  3,775,662          $  2,788,054
  Accounts payable and accrued expenses                                       11,808,182             9,685,938
  Billings in excess of costs and estimated
    earnings on uncompleted contracts                                          1,175,203               460,092
                                                                            ------------          ------------
           Total current liabilities                                          16,759,047            12,934,084
                                                                            ------------          ------------

Other liabilities                                                                703,608               713,003
                                                                            ------------          ------------

Debt, less current portion                                                    22,640,187            25,116,985
                                                                            ------------          ------------

Deferred income taxes                                                          5,263,927             5,374,501
                                                                            ------------          ------------

Minority interest                                                                 59,916                98,541
                                                                            ------------          ------------

Subordinated notes (convertible - see note 12, related party -
  $2,768,822 and $2,522,400, respectively)                                     3,461,026             3,172,695
                                                                            ------------          ------------

Preferred stock, $.01 par value; 10,000,000 shares
  authorized, none issued                                                           --                    --
Common stock, $.01 par value; 100,000,000 shares authorized, 8,639,792
  and 8,623,391 shares issued in 2000 and 1999, respectively                      86,398                86,234
Capital in excess of par value                                                12,591,617            12,560,667
Accumulated deficit                                                           (3,950,038)           (3,260,114)
Accumulated other comprehensive loss                                             (33,992)                 --
                                                                            ------------          ------------
                                                                               8,693,985             9,386,787
Less treasury stock, at cost, 753,920 and 137,920 shares, respectively        (1,685,891)             (348,669)
                                                                            ------------          ------------
                                                                               7,008,094             9,038,118
                                                                            ------------          ------------

Commitments and contingencies (Note 15)

                                                                            $ 55,895,805          $ 56,447,927
                                                                            ============          ============
</TABLE>


The notes to consolidated financial statements are in integral part of the above
statement.

                                      F-4

<PAGE>

                            CECO ENVIRONMENTAL CORP.

                      CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                                    YEAR ENDED DECEMBER 31,
                                                                                                 2000                  1999
                                                                                             ------------          ------------
<S>                                                                                          <C>                   <C>
Net sales                                                                                    $ 89,816,829          $ 22,413,782
                                                                                             ------------          ------------

Costs and expenses:
  Cost of sales, exclusive of items shown separately below                                     71,719,822            14,026,730
  Selling and administrative                                                                   13,932,648             7,216,148
  Depreciation and amortization                                                                 2,154,572               729,333
                                                                                             ------------          ------------

                                                                                               87,807,042            21,972,211
                                                                                             ------------          ------------

Income from continuing operations before investment income and interest expense                 2,009,787               441,571

Investment income                                                                                 765,369               497,938
Interest expense (including related party interest of $711,980 and $670,333, respectively)     (3,807,453)           (1,220,795)
                                                                                             ------------          ------------

Loss from continuing operations before income taxes and minority interest                      (1,032,297)             (281,286)

Income tax provision (benefit)                                                                   (303,748)              151,362
                                                                                             ------------          ------------

Loss from continuing operations before minority interest                                         (728,549)             (432,648)

Minority interest in (income) loss of consolidated subsidiary                                      38,625                (1,112)
                                                                                             ------------          ------------

Loss from continuing operations                                                                  (689,924)             (433,760)
                                                                                             ------------          ------------

Discontinued operations:
  Loss from operations, net of $133,519 tax benefit                                                  --                (378,070)
  Loss on disposal, net of $46,381 tax benefit                                                       --                (131,331)
                                                                                             ------------          ------------
  Loss from discontinued operations                                                                  --                (509,401)
                                                                                             ------------          ------------

Net loss                                                                                     $   (689,924)         $   (943,161)
                                                                                             ============          ============

Basic net loss per share:
  Loss from continuing operations                                                            $       (.08)         $       (.05)
                                                                                             ============          ============

  Net loss per share                                                                         $       (.08)         $       (.11)
                                                                                             ============          ============

Diluted net loss per share:
  Loss from continuing operations                                                            $       (.08)         $       (.05)
                                                                                             ============          ============

  Net loss per share                                                                         $       (.08)         $       (.11)
                                                                                             ============          ============

</TABLE>

The notes to consolidated financial statements are an integral part of the above
statement.


                                      F-5
<PAGE>

                            CECO ENVIRONMENTAL CORP.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                         Accumulated
                                         Capital in                         Other                                        Total
                               Common    Excess of      Accumulated     Comprehensive     Treasury                   Comprehensive
                                Stock    Par Value        Deficit           Loss            Stock          Total          Loss
                               --------- ------------   -----------      ---------      ------------    -----------    -----------

<S>                            <C>       <C>             <C>            <C>            <C>               <C>             <C>
Balance, December 31, 1998      $ 86,234 $ 10,136,667   $(2,316,953)                    $   (348,669)   $ 7,557,279


Net loss for the year ended
  December 31, 1999                                        (943,161)                                       (943,161)   $  (943,161)


Stock warrants issued
  (see note 13)                             2,424,000                                                     2,424,000
                               --------- ------------   -----------      ---------      ------------    -----------    -----------

Balance, December 31, 1999        86,234   12,560,667    (3,260,114)                        (348,669)     9,038,118    $  (943,161)
                                                                                                                       ===========


Net loss for the year ended
  December 31, 2000                                        (689,924)                                       (689,924)   $  (689,924)

Issuance of common stock             164       30,950                                                        31,114

Treasury stock purchases                                                                  (1,337,222)    (1,337,222)

Other comprehensive loss:
  Minimum pension liability, net
    of tax of $22,659                                                    $ (33,992)                         (33,992)       (33,992)
                               --------- ------------   -----------      ---------      ------------    -----------    -----------

Balance, December 31, 2000     $  86,398 $ 12,591,617   $(3,950,038)     $ (33,992)     $ (1,685,891)   $ 7,008,094     $ (723,916)
                               ========= ============   ===========      =========      ============    ===========    ===========

</TABLE>

The notes to consolidated financial statements are an integral part of the above
statement.



                                      F-6
<PAGE>

                            CECO ENVIRONMENTAL CORP.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                               YEAR ENDED DECEMBER 31,
                                                                                             2000                  1999
                                                                                        ------------          ------------
<S>                                                                                     <C>                   <C>
Cash flows from operating activities:
  Net loss                                                                              $   (689,924)         $   (943,161)
  Adjustments to reconcile net loss to net cash provided by (used in)
    operating activities:
  Loss from discontinued operations                                                             --                 509,401
  Depreciation and amortization                                                            2,154,572               729,333
  Deferred income taxes                                                                     (609,041)              (44,100)
  Minority interest                                                                          (38,625)                    -
  Gain on sale of marketable securities, trading                                            (631,618)              (95,684)
  Changes in operating assets and liabilities, net of acquired businesses:
    Marketable securities - trading                                                        2,320,138            (1,899,291)
    Accounts receivable                                                                     (167,610)             (807,546)
    Costs and estimated earnings in excess of billings on uncompleted contracts           (2,147,586)             (458,274)
    Inventories                                                                             (199,801)            1,568,999
    Prepaid expenses and other current assets                                               (121,595)               90,319
    Deferred charges and other assets                                                        (17,506)             (142,319)
    Accounts payable and accrued expenses                                                  2,122,244             1,532,080
    Billings in excess of costs and estimated earnings on uncompleted contracts              715,111            (1,196,709)
    Discontinued operations                                                                     --                 113,294
    Other                                                                                    (57,883)              197,975
                                                                                        ------------          ------------

           Net cash provided by (used in) operating activities                             2,630,876              (845,683)
                                                                                        ------------          ------------

Cash flows from investing activities:
  Acquisitions of property and equipment and intangible assets                              (559,763)             (439,844)
  Acquisitions of businesses, net of cash acquired                                              --             (25,488,445)
  Cash received from purchase price adjustment                                               253,550                  --
                                                                                        ------------          ------------

           Net cash used in investing activities                                            (306,213)          (25,928,289)
                                                                                        ------------          ------------

Cash flows from financing activities:
  Net borrowings on revolving credit facility                                              1,300,000             2,473,384
  Proceeds from issuance of stock                                                             31,114                  --
  Proceeds from issuance of debt                                                                --              29,012,392
  Repayments of debt                                                                      (2,789,192)           (6,714,828)
  Proceeds from borrowing against cash surrender value of life insurance                        --               2,773,168
  Purchases of treasury stock                                                             (1,337,222)                 --
                                                                                        ------------          ------------

           Net cash provided by (used in) financing activities                            (2,795,300)           27,544,116
                                                                                        ------------          ------------

Net increase (decrease) in cash and cash equivalents                                        (470,637)              770,144

Cash and cash equivalents at beginning of year                                             1,134,792               364,648
                                                                                        ------------          ------------

Cash and cash equivalents at end of year                                                $    664,155          $  1,134,792
                                                                                        ============          ============

                       SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the year for:
  Interest                                                                              $  2,870,211          $    304,970
                                                                                        ============          ============
  Income taxes                                                                          $    253,865          $    503,684
                                                                                        ============          ============

</TABLE>

The notes to consolidated financial statements are an integral part of the above
statement.

                                      F-7
<PAGE>


                            CECO ENVIRONMENTAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999




1.       Nature of Business and Summary of Significant Accounting Policies

         Nature of business - The principal businesses of CECO Environmental
         Corp. (the "Company") provide innovative solutions to industrial
         ventilation and air quality problems through dust, mist and fume
         control systems and particle and chemical technologies to industrial
         and commercial customers, primarily in the United States.

         Principles of consolidation - The consolidated financial statements
         include the accounts of the Company and the following subsidiaries:

                                                            % Owned As Of
                                                           December 31, 2000
                                                           -----------------

         CECO Group, Inc. ("Group")                               100%
         CECO Filters, Inc. and Subsidiaries ("CFI")               94%
         The Kirk & Blum Manufacturing Company ("K&B")            100%
         kbd/Technic, Inc.                                        100%

         CFI includes two wholly-owned subsidiaries:
           Air Purator Corporation
           New Busch Co., Inc. ("Busch")

         All material intercompany balances and transactions have been
         eliminated. Minority interest represents minority shareholders'
         proportionate share of the equity in CFI.

         Use of estimates - The preparation of financial statements in
         conformity with accounting principles generally accepted in the United
         States requires management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities and disclosure of
         contingent assets and liabilities at the date of the financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates.

         Claims - Claims are recognized as income by the Company when
         collectibility of the claim is probable and the amount can be
         reasonably estimated.

         Cash and cash equivalents - The Company considers all highly liquid
         investments with original maturities of three months or less to be cash
         equivalents.

         Investments in marketable securities - The Company's investments in
         marketable securities are comprised of corporate common stock
         securities. All are classified as trading securities, which are carried
         at their fair value based on quoted market prices. Accordingly, net
         realized and unrealized gains and losses on trading securities and
         interest income are included in investment income. Realized gains and
         losses are recorded based on the specific identification method. Gross
         unrealized gains included in marketable securities at December 31, 2000
         and 1999 were $355,300 and $270,348, respectively.

         Inventories - The labor content of work-in-process and finished
         products and all inventories of steel of K&B (approximately 63% and 68%
         of total inventories at December 31, 2000 and 1999, respectively) are
         valued at the lower of cost or market using the last-in, first-out
         (LIFO) method. All other inventories of K&B and inventories of the
         other subsidiaries are valued at the lower of cost or market, using the
         first-in, first-out (FIFO) method. The LIFO method of inventory
         valuation for all classes of inventory approximated the FIFO value at
         December 31, 2000 and 1999.

                                      F-8

<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


1.       Nature of Business and Summary of Significant Accounting Policies -
         Continued

         Accounting for long-lived assets - The Company's policy is to assess
         the recoverability of long-lived assets when there are indications of
         potential impairment and the undiscounted cash flows estimated to be
         generated by those assets are less than the carrying value of such
         assets.

         Property and equipment - Property and equipment are recorded at cost.
         Expenditures for repairs and maintenance are charged to income as
         incurred. Depreciation and amortization are computed using
         straight-line and accelerated methods over the estimated useful lives
         of the assets, which range from 12 to 40 years for building and
         improvements and 3 to 10 years for machinery and equipment.

         Intangible assets - Goodwill associated with the CFI and Busch
         acquisitions is being amortized on a straight-line basis over 40 years,
         and 20 years for the K&B acquisition. Other intangible assets are being
         amortized on a straight-line basis over their estimated useful lives,
         which range from 5 to 20 years.

         Deferred charges - Deferred charges primarily represent deferred
         financing costs which are amortized over the life of the related loan.
         Amortization expense was $203,100 and $55,000 for 2000 and 1999,
         respectively.

         Revenue recognition - Revenues are recognized when risk and title
         passes to the customer, which is generally upon shipment of product.

         Revenues from contracts are recognized on the percentage of completion
         method, measured by the percentage of contract costs incurred to date
         compared to estimated total contract costs for each contract. This
         method is used because management considers contract costs to be the
         best available measure of progress on these contracts.

         Contract costs include direct material, labor costs and those indirect
         costs related to contract performance, such as indirect labor,
         supplies, tools and repairs. Selling and administrative costs are
         charged to expense as incurred. Provisions for estimated losses on
         uncompleted contracts are made in the period in which such losses are
         determined. Changes in job performance, job conditions and estimated
         profitability may result in revisions to contract revenue and costs and
         are recognized in the period in which the revisions are made. In the
         year ended December 31, 2000, the Company provided for estimated losses
         on uncompleted contracts of $602,000. Such provision was recorded in
         the three months ended December 31, 2000.

         The asset, "Costs and estimated earnings in excess of billings on
         uncompleted contracts," represents revenues recognized in excess of
         amounts billed. The liability, "Billings in excess of costs and
         estimated earnings on uncompleted contracts," represents billings in
         excess of revenues recognized.

         SEC Staff Accounting Bulletin 101, "Revenue Recognition," effective for
         the year ended December 31, 2000 did not have a material effect on the
         consolidated financial statements.

         Income taxes - Deferred taxes are determined based on the differences
         between the financial statement and tax bases of assets and liabilities
         using tax rates in effect for the year in which the differences are
         expected to reverse.

         Advertising costs - Advertising costs are charged to operations in the
         year incurred and totaled $188,066 and $87,168 in 2000 and 1999,
         respectively.

         Research and development - Research and development costs are charged
         to expense as incurred. The amounts charged to operations were $139,824
         and $32,873 in 2000 and 1999, respectively.

                                      F-9
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


1.   Nature of Business and Summary of Significant Accounting Policies -
     Continued

     Earnings per share - The following table represents a reconciliation
     from basic weighted average common shares outstanding to diluted
     weighted average common shares outstanding. There are no adjustments to
     net loss for the basic or diluted earnings per share computations.

                                                             2000        1999
                                                           ---------   ---------

     Determination of shares:
     Basic weighted average common shares outstanding      8,195,140   8,485,471
     Assumed conversion of stock options and warrants              -           -
                                                           ---------   ---------

     Dilutive weighted average common shares outstanding   8,195,140   8,485,471
                                                           =========   =========


     The Company considers outstanding options and warrants in computing
     diluted net loss per share only when they are dilutive. Options and
     warrants to purchase 3,929,400 and 6,228,120 shares for the years ended
     December 31, 2000 and 1999, respectively, were not included in the
     computation of diluted earnings per share due to their having an
     anti-dilutive effect.

     Reclassifications - Certain reclassifications have been made to the
     1999 financial statements to conform with the 2000 presentation.

     Stock-based compensation - The Company has adopted the disclosure-only
     provisions of Statement of Financial Accounting Standards ("SFAS") No.
     123, "Accounting for Stock-Based Compensation" and continues to apply
     Accounting Principles Board Opinion No. 25 and related interpretations
     in the accounting for stock option plans. Under such method,
     compensation is measured by the quoted market price of the stock at the
     measurement date less the amount, if any, that the employee is required
     to pay. The measurement date is the first date on which the number of
     shares that an individual employee is entitled to receive and the
     option or purchase price, if any, are known. The Company did not incur
     any compensation expense in 2000 or 1999.

     Recent accounting pronouncements - On January 1, 2001, the Company
     adopted SFAS No. 133, "Accounting for Derivative Instruments and
     Hedging Activities," as amended by SFAS No. 138, "Accounting for
     Certain Derivative Instruments and Certain Hedging Activities". SFAS
     No. 133 establishes accounting and reporting standards for derivative
     instruments and for hedging activities. It requires that all derivative
     instruments, including those embedded in other contracts, be recognized
     as either assets or liabilities and that those financial instruments be
     measured at fair value. The accounting for changes in the fair value of
     derivatives depends on their intended use and designation. Management
     has reviewed the requirements of SFAS No. 133 and has determined that
     the impact of adopting SFAS No. 133 was not material to the Company's
     financial position, operations, or cash flows.

2.   Acquisition of Businesses

     On December 7, 1999, the Company purchased all of the issued stock of
     K&B and kbd/Technic, Inc., two companies with related ownership. The
     purchase price was approximately $25,000,000 plus the assumption of
     $5,000,000 of existing indebtedness of the companies, in addition to
     acquisition costs the Company incurred. The transaction was accounted
     for as a purchase. The aggregate purchase price of the net assets
     acquired was allocated to tangible and identifiable intangible assets,
     based upon the fair value, resulting in goodwill of $4,019,450. During
     the second quarter of 2000, the Company received $253,550 as a
     post-closing price adjustment related to this acquisition.

                                      F-10


<PAGE>


                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

2.       Acquisition of Businesses - Continued

         On a pro forma basis, unaudited results of operations for the year
         ended December 31, 1999 would have been as follows, if the acquisition
         had been made as of January 1, 1999:

                                                            December 31, 1999
                                                            ------------------

         Total revenues                                          $ 87,961,062
         Loss from continuing operations
             before taxes on income and minority interest            (274,917)
         Net loss                                                    (939,340)
         Basic and diluted net loss per share                            (.11)


         The increase in total revenues of $65,547,280 represents the inclusion
         of K&B and kbd/Technic, Inc. prior to the acquisition date. The
         increase in loss from continuing operations before taxes on income
         and minority interest includes pre-acquisition results from K&B and
         kbd/Technic, Inc. of $2,593,687 less additional interest expense of
         $2,587,318, which was calculated using the total borrowings and
         approximate interest rate on the bank credit facility at December 31,
         1999. The net loss amount was adjusted for the above items at the
         approximate statutory tax rate.

         During 1999, the Company acquired, for cash, an additional 65,800
         shares of CFI's common stock from unrelated third parties resulting in
         additional goodwill of approximately $34,000. As of December 31, 2000
         and 1999, the Company owned approximately 94% of CFI's common stock.

3.       Discontinued Operations

         On March 31, 1999, the Company sold the contracts and customer list of
         Integrated Facilities Management ("IFM"), Inc. for $250,000. The sales
         price was paid through a non-interest bearing promissory note from the
         purchaser. Monthly principal payments of $1,500 were to commence
         October 1, 1999 with a balloon payment for the balance due on April 1,
         2007. At December 31, 2000 and 1999, the note was fully reserved.

         The following is a summary of operating activity for this discontinued
         operation and the loss recorded in 1999 from the disposal of this
         operation:
                                                          December 31, 1999
                                                          -----------------

         Net Sales                                             $ 387,656
         Cost of revenues                                       (493,439)
         Operating Expenses                                     (431,032)
                                                                --------

         Loss from operations of discontinued operation         (536,815)
                                                                --------

         Impairment of goodwill                                 (166,932)
         Disposition costs                                       (19,543)
                                                                --------

         Loss from disposal of discontinued operation           (186,475)
                                                                --------

         Income tax benefit                                      179,900
         Minority interest                                        33,989
                                                                --------

                                                              $ (509,401)
                                                                ========
                                      F-11
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

3.       Discontinued Operations - Continued

         At December 31, 1999, basic and diluted net loss per common share
         related to the disposal of IFM was $(0.06) of which $(0.05) related to
         the loss from continuing operations and $(0.01) related to the loss on
         disposal. At December 31, 2000, there was no impact to basic or diluted
         earnings per share as a result of the disposal.

4.       Financial Instruments

         Fair value of financial instruments:
<TABLE>
<CAPTION>
                                                                 2000                                1999
                                               --------------------------------------  ---------------------------------
                                                   Carrying              Fair              Carrying              Fair
                                                     Amount              Value               Amount              Value
                                               ------------------  ------------------  ------------------  -------------
         <S>                                        <C>                 <C>               <C>                <C>
         Financial assets:
           Cash and cash equivalents                $ 664,155           $ 664,155         $ 1,134,792        $ 1,134,792
           Marketable securities                    1,002,399           1,002,399           2,690,919          2,690,919

         Financial liabilities:
           Debt obligations                        26,415,849          26,415,849          27,905,039         27,845,227
           Subordinated notes (convertible)
             (See Note 12)                          3,461,026           3,461,026           3,172,695          3,172,695
</TABLE>

         The fair values of cash and cash equivalents are assumed to be equal to
         their reported carrying amounts. Most of the debt obligations are also
         assumed to be equal to their reported carrying amounts based on future
         payments discounted at current interest rates for similar obligations
         or interest rates which fluctuate with the market.

         Valuations for marketable securities are determined based on quoted
         market prices.

         The Company does not hold any financial instruments for trading
         purposes, other than marketable securities.

         The Company is exposed to market risk from changes in interest rates.
         The Company's policy is to manage interest rate cost using a mix of
         fixed and variable rate debt. To manage this mix in a cost-efficient
         manner, the Company may enter into interest rate swaps or other hedge
         type arrangements, in which the Company agrees to exchange, at
         specified intervals, the difference between fixed and variable interest
         amounts calculated by reference to an agreed-upon notional principal
         amount. The Company has entered into an interest rate swap agreement to
         convert variable rate debt to a fixed rate (see Note 11). The Company
         uses settlement accounting for the swap whereby interest payments
         receivable and payable under the terms of the interest rate swap
         agreement are accrued over the period to which the payment relates and
         the net difference is treated as an adjustment of interest expense
         related to the underlying liability. The fair value of the swap at
         December 31, 2000 if the Company had terminated said agreement would
         have been a liability of approximately $220,000.

         Concentrations of credit risk:

         Financial instruments that potentially subject the Company to credit
         risk consist principally of cash and accounts receivable. The Company
         maintains cash and cash equivalents with various major financial
         institutions. The Company performs periodic evaluations of the
         financial institutions in which its cash is invested. Concentrations of
         credit risk with respect to trade and contract receivables are limited
         due to the large number of customers and various geographic areas.
         Additionally, the Company performs ongoing credit evaluations of its
         customers' financial condition.

                                      F-12
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

5.  Accounts Receivable

                                            2000           1999
                                        ------------   ------------

    Trade receivables                   $  3,661,932   $  3,418,326
    Contract receivables                  14,034,830     13,911,213
    Allowance for doubtful accounts         (324,613)      (125,000)
                                        ------------   ------------

                                        $ 17,372,149   $ 17,204,539
                                        ============   ============

    Balances billed, but not paid by customers under retainage provisions
    in contracts amounted to approximately $515,000 and $95,000 at December
    31, 2000 and 1999, respectively. Receivables on contracts in progress
    are generally collected within twelve months.

    Provision for doubtful accounts was approximately $311,000 and $258,000
    during 2000 and 1999, respectively.

6.  Inventories

                                              2000               1999
                                           ----------         ----------

    Raw material and subassemblies         $1,449,725         $1,328,175
    Finished goods                            734,033            626,033
    Parts for resale                          189,053            218,802
                                           ----------         ----------

                                           $2,372,811         $2,173,010
                                           ==========         ==========

7.  Costs and Estimated Earnings on Uncompleted Contracts


                                                        2000           1999
                                                   ------------    ------------
    Costs incurred on uncompleted contracts        $ 12,933,481    $  8,684,263
    Estimated earnings                                2,580,548       2,582,427
                                                   ------------    ------------
                                                     15,514,029      11,266,690
    Less billings to date                           (11,589,873)     (8,775,009)
                                                   ------------    ------------

                                                   $  3,924,156    $  2,491,681
                                                   ============    ============

    Included in the accompanying consolidated
    balance sheets under the following captions:

    Costs and estimated earnings in excess
      of billings on uncompleted contracts         $  5,099,359    $  2,951,773
    Billings in excess of costs and estimated
      earnings on uncompleted contracts              (1,175,203)       (460,092)
                                                   ------------    ------------

                                                   $  3,924,156    $  2,491,681
                                                   ============    ============

                                      F-13
<PAGE>
                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


8.       Property and Equipment

                                                 2000              1999
                                             ------------      ------------

         Land                                $  1,597,342      $  1,597,342
         Building and improvements              5,746,853         5,725,069
         Machinery and equipment                9,711,537         9,220,480
                                             ------------      ------------
                                               17,055,732        16,542,891
         Less accumulated depreciation         (3,468,881)       (2,298,434)
                                             ------------      ------------

                                             $ 13,586,851      $ 14,244,457
                                             ============      ============

         Depreciation expense was $1,180,931 and $316,941 for 2000 and 1999,
         respectively.

9.       Goodwill and Other Intangible Assets

                                                   2000              1999
                                               -----------        -----------

         Goodwill                              $ 9,456,359        $ 9,555,970
         Less accumulated amortization            (977,616)          (638,680)
                                               -----------        -----------

                                               $ 8,478,743        $ 8,917,290
                                               ===========        ===========

         Non-compete agreements                $   700,000        $   500,000
         Patents                                 1,345,965          1,340,433
         Tradename and workforce                 3,150,000          3,150,000
                                               -----------        -----------
                                                 5,195,965          4,990,433
         Less accumulated amortization          (1,046,968)          (615,363)
                                               -----------        -----------

                                               $ 4,148,997        $ 4,375,070
                                               ===========        ===========

         Amortization expense was $770,541 and $357,392 for 2000 and 1999,
         respectively.

10.      Accounts Payable and Accrued Expenses

                                                       2000          1999
                                                   -----------   -----------

         Trade accounts payable                    $ 7,002,694   $ 4,763,219
         Compensation and related benefits           1,491,099     1,985,302
         Other accrued expenses                      3,314,389     2,937,417
                                                   -----------   -----------

                                                   $11,808,182   $ 9,685,938
                                                   ===========   ===========

                                      F-14
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

11.   Debt
                                                          2000         1999
                                                     ------------  ------------

      Bank credit facility                           $ 26,223,386  $ 26,673,384
      Pennsylvania Industrial Development Authority       192,463       219,263
      Loan payable to Green Diamond Oil Corporation          --         800,000
      Other                                                  --         212,392
                                                     ------------  ------------
                                                       26,415,849    27,905,039

      Less current portion                             (3,775,662)   (2,788,054)
                                                     ------------  ------------

                                                     $ 22,640,187  $ 25,116,985
                                                     ============  ============


      In December 1999, the Company obtained a bank credit facility aggregating
      $33,000,000 consisting of $23,000,000 in term loans and a $10,000,000
      revolving credit line. Interest is charged based on the bank's prime or
      the Libor rate. The proceeds of the credit facility were used to finance
      the acquisition of K&B and kbd/Technic, Inc. (see Note 2). The proceeds of
      the subordinated notes (see note 12) were used to refinance CFI's existing
      indebtedness and working capital.

      The revolving credit facility permits borrowings of up to the lesser of 1)
      $10,000,000 less outstanding letters of credit, or 2) borrowings which are
      limited to 75% of eligible accounts receivable, plus 50% of eligible
      inventory, minus outstanding letters of credit. Amounts unused and
      available under this line were $5,027,000 and $6,327,000 at December 31,
      2000 and 1999, respectively. Amounts borrowed under this line were
      approximately $4,973,000 and $3,673,000 at December 31, 2000 and 1999,
      respectively. The line of credit matures in 2004. The weighted average
      interest rates were 10.02% and 9.4% at December 31, 2000 and 1999,
      respectively.

      The term loans consist of a $14,500,000 and an $8,500,000 term facility
      with quarterly principal installments on the $14,500,000 facility of
      $437,500 commencing February 28, 2000, increasing to $700,000 in 2002,
      $875,000 in 2003 and $1,175,000 in 2004 with the final payment due
      November 2004; and quarterly principal installments on the $8,500,000
      of $1,375,000 commencing February 2005 increasing to $1,500,000 in 2006
      with the final payment due May 2006. The amount borrowed under the term
      loans were $21,250,000 and $23,000,000 at December 31, 2000 and 1999,
      respectively. The weighted average interest rates were 9.9% and 9.7% at
      December 31, 2000 and 1999, respectively.

      The credit facility was amended in March 2001 and effective December 31,
      2000 by reducing minimum coverage under several financial covenants as of
      December 31, 2000 and for the four quarters in 2001, raising interest
      rates by .5%, and reducing the total amount available under the revolving
      line to $9 million. Additionally, the Company is required to make
      additional prepayments against the term loans of $.5 million by June 30,
      2001 and September 30, 2001 and $1 million by December 31, 2001. In
      consideration for this amendment, additional fees were paid to the bank
      group and additional fees are payable to the bank group unless the Company
      raises additional capital by a specified time period. The Company agreed
      to pledge its Peerless Manufacturing Company common stock as additional
      collateral and proceeds thereof will be applied against the additional
      prepayments to reduce the principal balance under the term loan portion of
      the facilities. The Company would not have been in compliance with the
      financial covenants had the amendment not been made.

      In April 1992, the Company obtained a loan through the Pennsylvania
      Industrial Development Authority which is collateralized by a mortgage on
      the land and building of CFI. Principal and interest, at an annual rate of
      3%, is paid quarterly over an amortization period of fifteen years ending
      in 2006.

      The debt financing obtained to purchase the Peerless common stock from
      Green Diamond Oil Corp. at an annual rate of 10% was paid during 2000. In
      connection with this financing, the stock warrants were issued to Green
      Diamond Oil Corp. to purchase 1 million shares of the Company's stock at
      an exercise price of $2.50 per share (market value at time of issuance),
      expiring in August 2009. The warrants were cancelled by the holder in
      September 2000. See note 13.

      Other includes notes payable with weighted average interest rate of
      7.48% at December 31, 1999.

                                      F-15
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

11.      Debt - Continued

         At December 31, 2000, the Company had in place an interest rate swap
         agreement ("Swap"). The Swap had a notional amount of $10,625,000 under
         which the Company paid a fixed rate of interest and received a floating
         rate of interest over the term of the Swap. The Swap converted a
         portion of the credit facility from a floating rate obligation to a
         fixed rate obligation.

         Maturities of all long-term debt over the next five years after
         considering the amendment to the bank credit facility in March 2001,
         are estimated as follows:

                         2001                             $3,775,662
                         2002                              2,825,662
                         2003                              3,525,662
                         2004                             15,199,047
                         2005                              1,025,662

         The Company's property and equipment, accounts receivable, investments
         and inventory serve as collateral for its bank debt. The Company's debt
         agreements contain customary covenants and events of default.

12.      Subordinated notes (convertible)

         During December 1999, as part of the Company's refinancing activities
         (that were accomplished at the same time as the acquisition of K&B and
         kbd/Technic), the Company obtained $4,000,000 of subordinated debt
         financing from Can-Med Technology, Inc., dba Green Diamond Oil Corp., a
         company beneficially owned by two major shareholders of the Company. In
         addition, the Company obtained $1,000,000 of subordinated debt
         financing with two unrelated parties. Interest on the notes accrue
         semi-annually at a rate of 12% per annum. The notes are subject to a
         subordination agreement. The notes provide for the issuance to the
         holders detachable stock warrants that expire December, 2009 (see Note
         13). The fair value of the warrants was determined to be $1,847,000 and
         the subordinated debt was discounted by such amount. The discount is
         being amortized as a component of interest expense over the life of the
         subordination which coincides with the bank's term loan maturity date
         of May, 2006. The amortization of the discount was approximately
         $288,000 and $20,000 for the years ended December 31, 2000 and 1999,
         respectively. The effective annualized interest rate on the
         subordinated debt obligations is 17.75%, after taking into account the
         value of the warrants.

         In March 2001, subordinated debt notes were amended granting the
         Company the option to convert the unpaid principal balance (and accrued
         but unpaid interest) into shares of common stock at the initial
         conversion price of $2 per share. The conversion price is subject to
         adjustment upon the occurrence of certain corporate events.

13.      Shareholders' Equity

         Stock Option Plan

         The Company maintains a stock option plan for the employees of the
         Company and its subsidiaries. Generally, options are exercisable one
         year from the date of grant, at the rate of 20% each year over the
         following five years and expire between five and ten years of the date
         of grant. There are 1,500,000 shares of the Company's common stock that
         have been reserved for issuance under this plan.

                                      F-16
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


13.      Shareholders' Equity - Continued

         The status of the Company's stock option plan is as follows:
<TABLE>
<CAPTION>
                                                        2000                      1999
                                                  Weighted Average          Weighted Average
                                                             Exercise                 Exercise
                                              Shares           Price    Shares          Price
                                            --------------  --------- -------------   --------
<S>                                           <C>             <C>        <C>            <C>
         Outstanding, beginning of year       268,120         $ 4.56     312,320        $ 4.46
         Granted                              130,000                         --
         Forfeited                           (243,720)                   (44,200)
                                            ---------                  ---------

         Outstanding, end of year             154,400           2.89     268,120          4.56
                                            =========                  =========

         Options exercisable at year end       23,640                     86,190
                                            =========                  =========

         Available for grant at end of year 1,345,600                  1,231,880
                                            =========                  =========
</TABLE>
         At December 31, 2000, exercise prices for the above options range from
         $2.06 to $3.88. The weighted average remaining life is approximately 9
         years. The weighted average exercise price of the options exercisable
         at December 31, 2000 is $3.88.

         The following table compares 2000 and 1999 results as reported to the
         pro forma results, considering both options and warrants discussed in
         the following paragraphs, had the Company adopted the expense
         recognition provision of SFAS No. 123:

                                                 2000             1999
                                            ---------------  ---------------

         Net loss
           As reported                      $    (689,924)  $    (943,161)
           Pro forma under SFAS No. 123        (1,543,306)     (2,108,408)

         Basic and diluted loss per share
           As reported                              (0.08)           (.11)
           Pro forma under SFAS No.123              (0.19)          (0.25)


                                    F-17


<PAGE>

         The fair value of the options and warrants granted, which is amortized
         to expense over the option vesting period in determining the proforma
         impact, is estimated at the date of grant using the Black-Scholes
         option pricing model with the following weighted average assumptions.
         The expected life of the options valued in 2000 and 1999 is 10 years.
         The risk free interest rate applicable for 2000 and 1999 is 6.5%. The
         expected volatility of the Company's stock used in 2000 and 1999 is
         .75. The expected dividend yield used in 2000 and 1999 is 0%.

         The weighted average fair values at the date of grant for options and
         warrants granted during 2000 and 1999 were $1.79 and $2.45,
         respectively.

         Employee Stock Purchase Plan

         Effective October 1, 1998, the Company established an Employee Stock
         Purchase Plan for all employees meeting certain eligibility criteria.
         Under the Plan, eligible employees may purchase through the initial
         twelve month offering and through a series of semiannual offerings,
         each October and April, commencing October 1, 1999, shares of the
         Company's common stock, subject to certain limitations. The purchase
         price of each share is 85% of the lesser of its fair market value on
         the grant date or on the exercise date. The aggregate number of whole
         shares of common stock allowed to be purchased under the option shall
         not exceed 10% of the employee's base compensation. At December 31,
         1998, 250,000 shares were available for purchase under the plan. During
         2000, the Company issued 16,401 shares under this plan at an amount
         that approximated fair value. There were no shares issued during 1999.

         Warrants to Purchase Common Stock

         Former K&B Shareholders:

         In December, 1999, as part of their employment contracts, warrants were
         granted to three of the former owners of K&B to purchase a total of
         1,000,000 shares of the Company's common stock at an exercise price of
         $2.9375 per share which was the fair market value on the date granted.
         These warrants become exercisable at the rate of 25% per year over the
         four years following December 1999. The warrants have a term of ten
         years.

                                      F-18

<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


13.      Shareholders' Equity - Continued

         Related Party and Other:

         In December, 1999, warrants were issued to the subordinated lenders
         (see Note 12) to purchase up to 1,000,000 shares of the Company's
         common stock for $2.25 per share which was the fair market value on the
         date granted. The warrants are exercisable from June, 2000 until
         December, 2009. In connection with such warrants, the subordinated
         lenders were granted certain registration rights with respect to their
         warrants and shares of the Company's common stock into which the
         warrants are convertible. Management of the Company valued the
         detachable stock warrants at $1,847,000 and discounted the subordinated
         debt obligations by such amount (see Note 12)and recorded additional
         capital in excess of par value at December 31, 1999.

         In August, 1999, warrants were issued to Green Diamond Oil Corp. in
         connection with the demand note of $800,000 (see Note 11) to purchase
         up to 1,000,000 shares of the Company's common stock for $2.50 per
         share, which was the fair market value on the date granted. Management
         of the Company valued the detachable stock warrants at $577,000 and
         discounted the demand note by such amount and recorded interest expense
         and additional capital in excess of par value at December 31, 2000.
         Management of the Company and the holder of the warrants believed that
         the inherent interest rate resulting from the valuation was higher than
         originally contemplated when the transaction was structured and
         therefore, in September 2000, the holder cancelled the warrants after
         repayment of the debt.

         Chief Executive Officer:

         In January, 1999 and 1998, warrants were issued to the Chief Executive
         Officer to purchase 500,000 and 250,000 shares of the Company's common
         stock at an exercise price of $3.00 and $2.75 per share, respectively.
         In September 1998, warrants were issued to the Chief Executive Officer
         to purchase 250,000 shares of the Company's common stock. These
         warrants have an exercise price of $1.625 per share. In August 2000,
         warrants were issued to the Chief Executive Officer to purchase 500,000
         shares of the Company's common stock at an exercise price of $2.06 per
         share. The warrants expire 10 years from the date of issuance.

         Consulting Agreement:

         In November, 1998, the Company entered into a one year consulting
         agreement with an option to renew for an additional year with unrelated
         third parties, to provide investor relations services to the Company.
         As compensation, the consultant received warrants to purchase 500,000
         shares of the Company's common stock at $2 per share for the first
         250,000 shares and $3 per share for the remaining 250,000 shares. In
         connection with this transaction, warrants were issued to an unrelated
         third party to purchase 700,000 shares of the Company's common stock at
         $2 per share for the first 450,000 shares and $3 per share for the
         remaining 250,000 shares. All such warrants expired without being
         exercised in November 2000. The value of the warrants was considered to
         be de minimis.

         Stock Options:

         In June, 1998, the Company granted options to a member of the Board of
         Directors to purchase 10,000 shares of the Company's common stock at
         $2.75 per share. The options became exercisable on February 1, 1999 and
         extend through June 30, 2008.

         In January 2000, the Company granted options to an officer of the
         Company to purchase 50,000 shares of its common stock at $2.50 per
         share. The options become exercisable at the rate of 20% per year over
         five years following January 2000. The options have a term of ten
         years.

         In April 2000, the Company granted options to certain key employees to
         purchase 75,000 shares of its common stock at $2.625 per share. The
         options become exercisable at the rate of 20% per year over five years
         following April 2000. The options have a term of ten years.

         In September 2000, the Company granted options to a member of the Board
         of Directors to purchase 5,000 shares of the Company's common stock at
         $2.0625 per share. The options become exercisable on March 18, 2001 and
         extend through September 18, 2010.

                                      F-19
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


14.      Pension and Employee Benefit Plans

         K&B sponsors a non-contributory defined benefit pension plan for
         certain union employees. The plan is funded in accordance with the
         funding requirements of the Employee Retirement Income Security Act of
         1974.

         K&B also sponsors a post-retirement health care plan for office
         employees. Effective January 1, 1990, the plan was amended and retirees
         after that date are not eligible to receive benefits under the plan.
         The plan allows retirees who have attained the age of 65 to elect the
         type of coverage desired.

<TABLE>
<CAPTION>
                                                                     Pension Benefits              Other Benefits
                                                                   2000           1999           2000           1999
                                                               -----------    -----------    -----------    -----------
<S>                                                            <C>            <C>            <C>            <C>
         Projected benefit obligation at beginning of year     $ 3,743,941    $ 3,255,529    $   729,547    $   783,536
         Service cost                                              103,845        109,099           --             --
         Interest cost                                             253,238        249,270         45,697         51,348
         Actuarial (gain)/loss                                    (102,930)       157,099        (26,666)          --
         Amendments                                                   --          105,613           --             --
         Benefits paid                                            (254,341)      (132,669)       (98,164)      (105,337)
                                                               -----------    -----------    -----------    -----------
         Projected benefit obligation at end of year             3,743,753      3,743,941        650,414        729,547
                                                               -----------    -----------    -----------    -----------

         Fair value of plan assets at beginning of year          3,699,345      2,959,800           --             --
         Actual return/(loss) on plan assets                      (152,458)       772,214           --             --
         Employee contribution                                        --          100,000           --             --
         Benefits paid                                            (254,341)      (132,669)          --             --
                                                               -----------    -----------    -----------    -----------
         Fair value of plan assets at end of year                3,292,546      3,699,345           --             --
                                                               -----------    -----------    -----------    -----------

         Funded status                                            (451,207)       (44,596)      (650,414)      (729,547)
         Unrecognized prior service cost                            64,434         70,378           --             --
         Net transition obligation                                    --          (37,900)          --             --
         Unrecognized net actuarial loss (gain)                    408,438         52,751        (26,666)          --
                                                               -----------    -----------    -----------    -----------
         Prepaid (accrued) benefit cost                        $    21,665    $    40,633    $  (677,080)   $  (729,547)
                                                               ===========    ===========    ===========    ===========


         Amounts recognized in the balance sheet consist of:
           Prepaid benefit cost                                $    21,665    $    40,633    $      --      $      --
           Accrued benefit liability                              (121,085)          --         (677,080)      (729,547)
           Intangible asset included in deferred
             charges and other assets                               64,434           --             --             --
           Accumulated other comprehensive income                   56,651           --             --             --
                                                               -----------    -----------    -----------    -----------
         Net amount recognized                                 $    21,665    $    40,633    $  (677,080)   $  (729,547)
                                                               ===========    ===========    ===========    ===========

         Weighted-average assumptions of December 31:
           Discount rate                                                7%             7%             7%             7%
           Expected return on plan assets                             8.5%           8.5%            N/A            N/A
</TABLE>

         Benefits under the plans are not based on wages and, therefore, future
         wage adjustments have no effect on the projected benefit obligations.

                                      F-20

<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


14.      Pension and Employee Benefit Plans - Continued

         The details of net periodic benefit cost included in the accompanying
         consolidated statements of income for the years ended December 31, 2000
         and 1999 are as follows:
<TABLE>
<CAPTION>
                                             Pension Benefits            Other Benefits
                                             2000         1999         2000         1999
                                          ---------    ---------    ---------   ---------
<S>                                       <C>          <C>          <C>         <C>
         Service cost                     $ 103,845    $ 109,099    $    --     $    --
         Interest cost                      253,238      249,270       45,697      51,348
         Expected return on plan assets    (308,022)    (245,501)        --          --
         Net amortization and deferral      (30,093)     (17,820)        --          --
                                          ---------    ---------    ---------   ---------

         Net periodic benefit cost        $  18,968    $  95,048    $  45,697   $  51,348
                                          =========    =========    =========   =========
</TABLE>

         Changes in health care costs have no effect on the plan as future
         increases are assumed by the retirees.

         In connection with collective bargaining agreements, K&B participates
         with other companies in defined benefit pension plans. These plans
         cover substantially all of its contracted union employees not covered
         in the aforementioned plan. If K&B were to withdraw from its
         participation in these multi-employer plans, K&B would be required to
         contribute its share of the plans' unfunded benefit obligation.
         Management has no intention of withdrawing from any plan and,
         therefore, no liability has been provided in the accompanying financial
         statements.

         Amounts charged to pension expense under the above plans including the
         multi-employer plans totaled $2,262,000 and $107,000 for 2000 and 1999,
         respectively.

         K&B also sponsors a profit sharing and 401(k) savings retirement plan
         for non-union employees. The plan covers substantially all employees
         who have completed one year of service, completed 1,000 hours of
         service and who have attained 21 years of age. The Plan allows K&B to
         make discretionary contributions and provides for employee salary
         derrerals of up to 15%. K&B provides matching contributions of 25% of
         the first 5% of employee contributions. Matching contributions and
         discretionary contributions were $386,000 and $31,000 during 2000 and
         1999, respectively.

         CFI has a 401(k) Savings and Retirement Plan which covers substantially
         all employees. Under the terms of the Plan, employees can contribute
         between 1% and 22% of their annual compensation to the Plan. CFI
         matches 50% of the first 6%. Plan expense for the years ended December
         31, 2000 and 1999 was $62,835 and $72,000, respectively.

         CFI also has a profit-sharing plan which covers substantially all
         employees. There were no contributions to the plan for 2000 and 1999.

                                      F-21

<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

15.      Commitments

         Rent

         The Company leases certain facilities on a year-to-year basis. The
         Company also has future annual minimum rental commitments under
         noncancellable operating leases as follows:

                               2001            $304,212
                               2002             188,594
                               2003             146,035
                               2004              93,431
                               2005              53,521

         The Company leases a facility from the former President and chief
         operating officer of Busch who is the beneficial owner of the property
         with an annual base rental of $83,000 expiring July, 2002.

         Total rent expense under all operating leases for 2000 and 1999 was
         $382,000 and $340,000, respectively.

         Non-Compete Agreement

         In connection with the acquisition of Busch, the Company entered into a
         non-compete agreement with a former shareholder of Busch. In addition
         to the $100,000 paid at the closing date, the agreement requires annual
         payments of $200,000 from 1998 through 2001. The related cost is being
         amortized ratably over the four-year period. The Company has an
         additional payment to the former shareholder of Busch due January 2002
         of $450,000 for consulting services for a two-year period.

         Employment Agreements

         In December 1999, Group and K&B entered into five-year employment
         agreements with three of the former owners of K&B. The agreements
         provide for agreed-upon annual salaries and a bonus, for each of the
         next five years, equal to 25% of the Company's earnings before interest
         and taxes in excess of $4,000,000 less contributions made by the
         Company on behalf of the former owners to any profit sharing or 401(k)
         plan.

16.      Income Taxes

         Income tax provision (benefit) consisted of the following for the year
         ended December 31:

                                       2000              1999
                                    ---------         ---------
         Current:
           Federal                  $ 215,663         $ 127,374
           State                       66,971            68,088
                                    ---------         ---------

                                      282,634           195,462
                                    ---------         ---------
         Deferred:
           Federal                   (449,087)           (9,600)
           State                     (137,295)          (34,500)
                                    ---------         ---------

                                     (586,382)          (44,100)
                                    ---------         ---------

                                    $(303,748)        $ 151,362
                                    =========         =========

                                      F-22
<PAGE>
                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


16.      Income Taxes - Continued

         The income tax provision (benefit) differs from the statutory rate due
         to the following:

                                                           2000          1999
                                                        ----------    ---------

         Tax benefit at statutory rate                  $(350,981)    $ (95,637)
         Increase (decrease) in tax resulting from:
          State income tax, net of federal benefit        (46,414)       22,391
          Permanent differences, principally goodwill
            and interest                                   94,075       255,277
          Over/under accrual of prior years' taxes           (428)       18,260
          Other                                                --       (48,929)
                                                         ---------    ---------

                                                         $(303,748)   $ 151,362
                                                         =========    =========

         Deferred income taxes reflect the future tax consequences of temporary
         differences between the carrying amounts of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. The net deferred tax liability consisted of the following at
         December 31:
<TABLE>
<CAPTION>
                                                               2000          1999
                                                           -----------    -----------
<S>                                                       <C>            <C>
         Current deferred tax assets attributable to:
           Accrued expenses                                $   609,026    $   490,600
           Deferred state taxes                                289,900           --
           Reserves on assets                                  224,482        122,400
           Federal net operating loss carryforwards               --           34,600
                                                           -----------    -----------
                    Current deferred tax asset               1,123,408        647,600
                                                           -----------    -----------

         Noncurrent deferred tax assets (liabilities)
          attributable to:
           Depreciation                                     (3,913,408)    (3,761,296)
           Goodwill and intangibles                         (1,335,840)    (1,305,400)
           Inventory                                          (942,166)      (876,434)
           Unrealized gain on marketable securities           (152,779)      (108,000)
           Accrued expenses                                    619,480        359,729
           Non-compete agreement                               222,167        142,700
           Reserves on assets                                     --           73,600
           Foreign interest accrual                            154,800           --
           State net operating loss carryforwards               83,819        208,300
           Valuation allowance                                    --         (107,700)
                                                           -----------    -----------
                    Net noncurrent deferred tax liability   (5,263,927)    (5,374,501)
                                                           -----------    -----------

         Net deferred tax liability                        $(4,140,519)   $(4,726,901)
                                                           ===========    ===========
</TABLE>

         The Company had federal net operating loss carryforwards of $79,000 at
         December 31, 1999, which were utilized in 2000. Additionally, the
         Company has state net operating loss carryforwards of $3,644,038 and
         $2,800,000, at December 31, 2000 and 1999, respectively, which begin to
         expire in 2001.

         Due to the uncertainty of the realization of certain tax carryforwards,
         the Company had established a valuation allowance against these
         carryforward benefits in the amount of $107,700 at December 31, 1999.
         The Company's net decrease of $107,700 in valuation allowance resulted
         from the taxable income generated in 2000.

         The Company files a consolidated federal income tax return.

                                      F-23
<PAGE>

                            CECO ENVIRONMENTAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


18.      Backlog of Uncompleted Contracts from Continuing Operations

         The Company's backlog of uncompleted contracts from continuing
         operations was $12,119,000 and $9,901,000, at December 31, 2000 and
         1999, respectively.

19.      Segment and Related Information

         The Company has two reportable segments: Systems and Media. The Systems
         segment assembles and manufactures ventilation, environmental and
         process-related products. The Company provides standard and engineered
         systems and filter media for air quality improvement through its Media
         segment.

         Included in the "Corporate and other" category are the corporate
         functional departments plus the discontinued operations disposed of in
         1999.

         The accounting policies of the segments are the same as those described
         in the summary of significant accounting policies.
<TABLE>
<CAPTION>
                                                                                       ELIMINATION
                                                                     CORPORATE          OF INTER-
                                                                        AND              SEGMENT            TOTAL
                                 SYSTEMS            MEDIA              OTHER              ACTIVITY      CONSOLIDATED
                            ------------------------------------ ------------------ ------------------------------------
      2000
- -----------------
<S>                              <C>                <C>                                  <C>               <C>
Total revenues                   $ 84,354,965       $ 6,481,399                          $ (1,019,535)     $ 89,816,829

Depreciation and amortization       1,298,518           226,937          $ 629,117                            2,154,572

Operating income (loss)             4,298,960          (344,757)        (1,968,416)            24,000         2,009,787

Net costs and estimated earnings
  in excess of billings on
  uncompleted contracts             3,924,156                                                                 3,924,156

Total assets, net of
  inter-segment receivables        42,744,626        15,496,985          4,902,745         (7,248,551)       55,895,805

Capital expenditures                  458,163            39,289             62,311                              559,763


      1999
- -----------------

Total revenues                     15,134,547         7,716,934             48,582           (486,281)       22,413,782

Depreciation and amortization         358,041           219,864            151,428                              729,333

Operating income (loss)               274,491           359,658           (192,578)                             441,571

Net costs and estimated earnings
  in excess of billings on
  uncompleted contracts             2,491,681                                                                 2,491,681

Total assets, net of
  inter-segment receivables        41,865,528        14,371,892          5,720,458         (5,509,951)       56,447,927

Capital expenditures                   12,258           153,026            274,560                              439,844

</TABLE>

                                      F-24


<PAGE>


Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

         On September 28, 2000, the Company dismissed the firm of Margolis
Company P.C. ("Margolis") as the principal independent accountant. Also on
September 28, 2000, the Board approved and the Company engaged the firm of
Deloitte & Touche LLP to serve as its principal independent accountant. In
connection with the audits of the two fiscal years ended December 31, 1999 and
1998, and during subsequent interim periods, there were no disagreements on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedures which, if not resolved to the satisfaction of
Margolis, would have caused Margolis to make reference to the matter in its
report.

PART III

Item 9.  Directors and Executive Officers of the Registrant; Compliance with
Section 16(a) of the Exchange Act

         The following are the directors and executive officers of the Company.
The terms of all directors expire at the next annual meeting of shareholders and
upon election of their successors. The terms of all officers expire at the next
annual meeting of the board of directors and upon the election of the successors
of such officers.

Name                        Age       Position
- ----                        ---       --------

David D. Blum               45        Senior Vice President-Sales and Marketing;
                                      Assistant Secretary

Richard J. Blum             54        Director; President

Jason Louis DeZwirek        30        Director; Secretary

Phillip DeZwirek            63        Chairman of the Board of
                                      Directors; Chief Executive Officer

Josephine Grivas            61        Director; Assistant Secretary

Marshall J. Morris          41        Vice President-Finance and
                                      Administration; Chief Financial Officer

Donald Wright               63        Director

                                       22
<PAGE>


         The business backgrounds during the past five years of the Company's
directors and officers are as follows:

         David D. Blum became the Senior Vice President-Sales and Marketing and
an Assistant Secretary of the Company on July 1, 2000. Mr. Blum served as Vice
President of Kirk & Blum from 1997 to 2000 and was Vice President-Division
Manager Louisville at Kirk & Blum from 1984 to 1997. Mr. David Blum is the
brother of Mr. Richard Blum.

         Richard J. Blum became the President and a director of the Company on
July 1, 2000 and the Chief Executive Officer and President of CECO Group, Inc.
on December 10, 1999. Mr. Blum has been a director and the President of Kirk &
Blum since February 28, 1975 and the Chairman and a director of kbd/Technic
since November 1988. Kirk & Blum and kbd/Technic were acquired by the Company on
December 7, 1999. Mr. Richard Blum is the brother of Mr. David Blum.

         Jason Louis DeZwirek, the son of Phillip DeZwirek, became a director of
the Company in February, 1994. He became Secretary of the Company on February
20, 1998, following the resignation of Josephine Grivas as Secretary. Mr.
DeZwirek from October 1, 1997, has also been a member of the Committee that was
established to administer the Company's stock option plan. He also serves as
Secretary of CECO Group (since December 10, 1999). Mr. DeZwirek's principal
occupation since October 1999 has been as President of kaboose.com Inc., a
company that owns a children's portal.

         Phillip DeZwirek became a director, the Chairman of the Board and the
Chief Executive Officer of the Company in August 1979. Mr. DeZwirek also served
as Chief Financial Officer until January 26, 2000. Mr. DeZwirek's principal
occupations during the past five years have been as Chairman of the Board and
Vice President of Filters (since 1985); Treasurer and Assistant Secretary of
CECO Group (since December 10, 1999); a director of Kirk & Blum and kbd/Technic
(since 1999); and President of Can-Med Technology, Inc. d/b/a Green Diamond
Corp. ("Can-Med") (since 1990). Mr. DeZwirek has also been involved in private
investment activities for the past five years. CECO Group, Kirk & Blum,
kbd/Technic and Filters are discussed elsewhere in this document. See Item 1 -
Business.

         Josephine Grivas has been a director of the Company since February,
1991 and the Assistant Secretary since July 1, 2000. She was its Secretary from
October, 1992 until she resigned as of February 2, 1998. Ms. Grivas has since
October 1, 1997, also been a member of the Committee that was established to
administer the Company's stock option plan. She is also one of the initial
administrators of the CECO Environmental Corp. 1999 Employee Stock Purchase
Plan. Since February 20, 1998, Ms. Grivas has been a member of the Audit
Committee, which was created to evaluate transactions where the potential for a
conflict of interest exists and such other matters that are properly referred to
the Audit Committee by the Board of Directors. Ms. Grivas had been an
administrative assistant for Phillip DeZwirek since 1975. She retired from this
position in February, 1998.

                                       23

<PAGE>


         Marshall J. Morris became the Chief Financial Officer of the Company on
January 26, 2000 and the Vice President-Finance and Administration on July 1,
2000. Mr. Morris also serves as Chief Financial Officer of CECO Group (since
January 26, 2000). From 1996 to 1999 Mr. Morris was Treasurer of Calgon Carbon
Corporation which stock trades on the New York Stock Exchange and which is a
worldwide producer of specialty chemicals and supplier of pollution control
technologies and services with annual sales of approximately $300 million. From
1995 to 1996 he served as a consultant with respect to business management and
strategic planning. From 1989 through 1995 Mr. Morris also served as the
Treasurer of Trico Products Corporation, an international manufacturer and
distributor of original equipment automotive parts with annual sales of
approximately $350 million.

         Donald A. Wright became a director of the Company on February 20, 1998.
Mr. Wright has also been a member of the Audit Committee since February 20,
1998. He is also one of the initial administrators of the CECO Environmental
Corp. 1999 Employee Stock Purchase Plan. Mr. Wright has been a principal of and
real estate broker with The Phillips Group in San Diego, California, a company
which is a real estate developer and apartment building syndicator, since 1992.
Since November 1996, Mr. Wright has also been a real estate broker with
Prudential Dunn Realtors in Pacific Beach, California. From August 1995 until
October 1996 he was the principal of and real estate broker with Barbour Real
Estate Sales and Leasing in La Costa, California.

         During the fiscal year ended December 31, 2000, the Board held no
meetings. During and since the end of such period, action has been taken by
unanimous written consent of the Board of Directors.

         Section 16(a) Beneficial Ownership Reporting Compliance. The Company is
not aware of any persons who beneficially own or owned more than 10 percent of
the outstanding common stock of the Company or any officer, director or other
person subject to the requirements of Section 16 of the Securities Exchange Act
of 1934 who, during the period covered by this Annual Report on Form 10-K,
failed to file, or failed to file on a timely basis, any reports or forms
required to be filed under said Section 16 or the rules and regulations
promulgated thereunder.

Item 10.  Executive Compensation

         Except for the compensation described below, neither the Company nor
any of its subsidiaries paid, set aside or accrued any salary or other
remuneration or bonus, or any amount pursuant to a profit-sharing, pension,
retirement, deferred compensation or other similar plan, during its last fiscal
year, to or for any of the Company's executive officers or directors.


                                       24
<PAGE>

Warrants

         In consideration for Phillip DeZwirek's valuable service to the Company
as an employee, officer and director, the Company granted Mr. DeZwirek warrants
on August 14, 2000 to purchase up to 500,000 shares of the Company's common
stock, which are exercisable at any time between February 14, 2001 and August
14, 2010 inclusive at a price of $2.0625, the closing price of the Company's
common stock on August 14, 2000. All of such warrants grant the holders thereof
piggyback registration rights, i.e. the right to participate in any registration
of securities by the Company other than a registration statement in connection
with a merger or pursuant to registration statements on Forms S-4 or S-8.
Additionally, the holders of a majority of the shares underlying the warrants
and the warrants have the right on two occasions to have the Company prepare and
file with the Securities and Exchange Commission a registration statement and
such other documents as may be necessary for such holders to effect a public
offering of the shares underlying the warrants previously issued or to be issued
upon the effectiveness of such registration statement. The Company is however
required to pay the expenses of only one of such registrations. The right to
demand such registrations expires August 14, 2010, or upon the happening of
certain other conditions.

Compensation

         In the year 2000, options to purchase 130,000 shares of stock of the
Company were granted under the CECO Environmental Corp. 1997 Stock Option Plan
(the "Plan").

         On January 20, 2000, Marshall J. Morris, in consideration for his
valuable services as an executive officer was granted an option under the Plan
to purchase up to 50,000 shares of stock of the Company. The option became
exercisable with respect to 10,000 of the 50,000 shares on January 20, 2001 and
provided Mr. Morris' employment with the Company or any subsidiary of the
Company remains continuous and becomes exercisable with respect to another 20%
of the 50,000 shares on each of the next four anniversaries of such date. The
exercise price per share is $2.50, the fair market value of the stock of the
Company as of the date of the grant. On September 18, 2000, Donald A. Wright, in
consideration for his valuable services as a director of the Company, was
granted an option under the Plan to purchase up to 5,000 shares of stock of the
Company. The option is exercisable on March 18, 2001 and expires on September
18, 2010. The exercise price per share is $2.0625, the fair market value of the
stock of the Company as of the date of the grant.

         On September 21, 1999, the Board of Directors of the Company adopted
the CECO Environmental Corp. 1999 Employee Stock Purchase Plan (the "Stock
Plan") which was approved by the stockholders on November 16, 1999. Sixteen
thousand four hundred and one (16,401) shares of stock have been issued as of
March 20, 2001 under the Stock Plan, 2,188 of which have been issued to Mr.
Richard Blum, and 1,636 of which have been issued to Mr. David Blum. No other
shares of stock under the Stock Plan have been issued to an executive officer or
director of the Company.

         The following table summarizes the total compensation of Phillip
DeZwirek, Richard J. Blum, David D. Blum and Marshall J. Morris for 2000 and the
two previous years. There were no other executive officers of the Company who
received compensation in excess of $100,000 in 2000. Richard J. Blum, who also
serves as Chief Executive Officer and President of CECO Group, is paid the
amounts set forth below by CECO Group. Mr. DeZwirek and Mr. Morris are paid by
the Company. David D. Blum, who also serves as Vice-President of Kirk & Blum, is
paid by Kirk & Blum.

                                       25

<PAGE>

SUMMARY COMPENSATION TABLE FOR THE COMPANY:
<TABLE>
<CAPTION>

                                                       Annual                 Long Term
Name/Principal                                      Compensation              Compensation       All Other
Position                        Year           Salary           Bonus         Options (#)        Compensation
- --------                        ----           ------           -----         -----------        ------------

<S>                             <C>            <C>                            <C>                <C>
Phillip DeZwirek                2000           $120,834                       500,000(1)
Chairman of the Board and       1999           $100,000                       500,000(2)
Chief Executive Officer         1998           $ 80,000                       500,000(3)

Richard J. Blum President of    2000           $206,000         $122,224                        $19,883(4)
the Company and President and   1999           $ 13,972(5)                    448,000(6)
Chief Executive Officer of
CECO Group

David D. Blum                   2000           $154,000         $ 76,388                        $10,873(7)
Senior Vice-President-Sales     1999           $ 10,548(8)                    335,000(9)
and Marketing and Assistant
Secretary of the Company and
Vice President of Kirk & Blum

Marshall J. Morris Vice         2000           $133,211                        50,000(10)       $22,040(11)
President - Finance and
Administration and Chief
Financial Officer
</TABLE>

- --------------------
(1)  Represents 500,000 Warrants issued to Phillip DeZwirek on August 14, 2000.
(2)  Represents 500,000 Warrants issued to Phillip DeZwirek on January 22, 1999.
(3)  Represents 250,000 Warrants issued on January 14, 1998 and 250,000 Warrants
     issued on September 14, 1998.
(4)  Represents Company contribution of $18,315 to 401(k) plan on behalf of Mr.
     Richard Blum and $1,568 of insurance premiums paid by the Company for term
     life insurance for the benefit of Mr. Richard Blum.
(5)  Based on an annual salary of $206,000; Mr. Richard Blum commenced
     employment with CECO Group on December 7, 1999.
(6)  Represents Warrants to purchase 448,000 shares of the Company's stock
     granted in Mr. Richard Blum's Employment Agreement. Such Warrants become
     exercisable at the rate of 25% per year over the four years following
     December 7, 1999 at a price per share of $2.9375.
(7)  Represents Company contribution of $10,134 to 401(k) plan on behalf of Mr.
     David Blum and $740 of insurance premiums paid by the Company for term life
     insurance for the benefit of Mr. David Blum.
(8)  Based on an annual salary of $154,000; amount shown is from December 7,
     1999, the date CECO Group acquired Kirk & Blum.
(9)  Represents Warrants to purchase 335,000 shares of the Company's stock
     granted in Mr. David Blum's Employment Agreement. Such Warrants become
     exercisable at the rate of 25% per year over the four years following
     December 7, 1999 at a price per share of $2.9375.
(10) Represents Options to purchase 50,000 share of the Company's stock granted
     on January 20, 2000.
(11) Represents Company contribution of $436 to 401(k) plan on behalf of Mr.
     Morris, $284 of insurance premiums paid by the Company for term life
     insurance for the benefit of Mr. Morris and $21,320 of reimbursement of
     relocation expenses.


                                       26
<PAGE>


         Richard J. Blum entered into an Employment Agreement dated December 7,
1999 with Ceco Group. The Employment Agreement has a term through December 7,
2004. Either party may terminate the Employment Agreement for cause. Mr. Richard
Blum's base salary is set at $206,000 per year. In addition to his base salary,
Mr. Richard Blum is entitled to a bonus, depending upon whether the Company
exceeds certain targets, and four weeks paid vacation.

         David D. Blum entered into an Employment Agreement dated December 7,
1999 with Kirk & Blum. The Employment Agreement has a term through December 7,
2004. Either party may terminate the Employment Agreement for cause. Mr. David
Blum's base salary is set at $154,000 per year. In addition to his base salary,
Mr. David Blum is entitled to a bonus, depending upon whether the Company
exceeds certain targets, and four weeks paid vacation.

         The following tables set forth information with respect to the
Company's executive officers concerning grants and exercises of options on stock
of the Company during the last fiscal year and unexercised options on stock of
the Company held as of the end of the fiscal year.

OPTION/SAR GRANTS BY THE COMPANY
FOR THE YEAR ENDED DECEMBER 31, 2000:
<TABLE>
<CAPTION>
                       Number of Securities     % of Total Options/SARs
                       Underlying Options       Granted to Employees in   Exercise or Base Price    Expiration
Name                   Granted (#)              Fiscal Year               ($/SH)                    Date
- ----                   --------------------     -----------------------   ----------------------    -----------
<S>                    <C>                      <C>                       <C>                      <C>
Phillip DeZwirek       500,000                  80%                       $2.0625                   Aug. 14, 2010

Marshall J. Morris      50,000                  8%                        $2.50                     Jan. 20, 2010
</TABLE>

AGGREGATED OPTION/SAR ON THE COMPANY
EXERCISES FOR THE YEAR ENDED DECEMBER 31, 2000
AND OPTION/SAR VALUES ON THE COMPANY AS OF DECEMBER 31, 2000:
<TABLE>
<CAPTION>
                     Shares Acquired   Value             Number of Securities Underlying      Value of Unexercised In-the-Money
                     on Exercise       Realized        Unexercised Options/SARs at 12/31/00         Options/SARs at 12/31/00
Name                 (#)               ($)              Exerciseable        Unexercisable       Exerciseable     Unexercisable
- ----                 ---------------   --------------   ------------        -------------       ------------     -------------
<S>                   <C>               <C>             <C>                 <C>                 <C>              <C>
Phillip DeZwirek      0                 0               1,750,000           500,000             $0               $0

Richard J. Blum       0                 0                 112,000           336,000             $0               $0

David D. Blum         0                 0                  83,750           251,250             $0               $0

Marshall J. Morris    0                 0                  10,000            40,000             $0               $0

</TABLE>

                                       27
<PAGE>

         The following table summarizes the total compensation of the former
Chief Executive Officer of CECO Filters, Inc. for 2000 and the two previous
years.

SUMMARY COMPENSATION TABLE FOR FILTERS:

                               Annual
                            Compensation
Name/Principal Position         Year         Salary       All Other Compensation
- -----------------------         ----         ------       ----------------------
Steven I. Taub, Ph.D./          2000       $123,318(1)           $83,928(2)
President and                   1999       $247,603              $ 5,000
Chief Executive                 1998       $240,740              $ 4,750
Officer


         Steven Taub's employment with Filters was terminated as of June 30,
2000 pursuant to a Separation Agreement and General Release (the "Agreement").
Under the terms of the Agreement Mr. Taub agrees that for a period commencing on
June 30, 2000 and continuing until October 28, 2001, Mr. Taub will not, within
the continental United States, directly or indirectly engage in certain
competitive businesses. If Mr. Taub is presented with or finds an opportunity
for the Company or its affiliates at any time within one year from October
28,2000, Mr. Taub must first present such opportunity to the Company. In
addition, all options to purchase stock of the Company held by Mr. Taub were
terminated as of June 30, 2000.

         The Company, pursuant to the Agreement, purchased on July 5, 2000, all
of Mr. Taub's stock of the Company, aggregating 441,297 shares for $2.125 per
share and 124,703 shares of Hilary Taub's, Mr. Taub's former wife, stock of the
Company, aggregating 124,703 shares for $2.125 per share. In addition, through
October 28, 2000, Mr. Taub was paid $678.37 per day from Filters. Filters also
agreed to pay all of Mr. Taub's major medical insurance costs through October
28, 2000.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         (a)  Security Ownership of Certain Beneficial Owners

         The following table sets forth the name and address of each beneficial
owner of more than five percent (5%) of the Company's common stock known to the
Company, the number of shares of common stock of the Company beneficially owned
as of March 22, 2001, and the percent of the class so owned by each such person.



- --------------------
(1)  $112,500 is allocated to base salary and the remainder to an IRA
     contribution, automobile allowance and insurance premiums, all of which
     items Dr. Taub pays for directly.
(2)  Represents $2,524 of a matching contribution by Filters to Filters' 401(k)
     Plan on behalf of Dr. Taub and $81,404 in severance pay.


                                       28
<PAGE>



                                    No. of Shares                % of Total
Name and Address of                 of Common Stock              Common Shares
Beneficial Owner                    Beneficially Owned           Outstanding(1)
- -------------------------------------------------------------------------------

Icarus Investment Corp.(2,6)
505 University Avenue,
Suite 1400
Toronto, Ontario M5G 1X3            2,134,360                    24.60%

Phillip DeZwirek(2,3,4)
505 University Avenue,
Suite 1400
Toronto, Ontario M5G 1P7            4,508,557                    41.26%

IntroTech Investments, Inc.(5)
195 Hillsdale Avenue East
Toronto, Ontario M5S 1T4            1,598,666                    20.30%

Jason Louis DeZwirek(2,5)
195 Hillsdale Avenue East
Toronto, Ontario M5S 1T4            3,733,026                    43.03%

Brinker Pioneer, L.P.
259 Radnor-Chester Road
Radnor, PA  19087                     580,266                    7.37%

Can-Med Technology, Inc.(6)
d/b/a Green Diamond Corp.
505 University Ave. Ste. 1400
Toronto, Ontario
Canada M5G 1X3                        800,000                    9.22%

- --------------------
(1)  Based upon 7,875,872 shares of common stock of the Company outstanding as
     of March 22, 2001. For each named person, this percentage includes Common
     Stock of which such person has the right to acquire beneficial ownership
     either currently or within 60 days of March 22, 2001, including, but not
     limited to, upon the exercise of an option; however, such Common Stock
     shall not be deemed outstanding for the purpose of computing the percentage
     owned by any other person.
(2)  Icarus Investment Corp. ("Icarus") is owned 50% by Phillip DeZwirek and 50%
     by Jason Louis DeZwirek. Ownership of the shares of common stock of the
     Company owned by Icarus Investment Corp. also are attributed to both
     Messrs. Phillip DeZwirek and Jason Louis DeZwirek. With respect to the
     shares owned by Icarus, Icarus has sole dispositive and voting power and
     Phillip DeZwirek and Jason Louis DeZwirek are deemed to have shared voting
     and shared dispositive power.
(3)  Phillip DeZwirek is the Chief Executive Officer and Chairman of the Board
     of Directors of the Company.
(4)  Includes (i) 750,000 shares of the Company's common stock that Phillip
     DeZwirek can purchase on or prior to November 7, 2006 from the Company at a
     price of $1.75 per share pursuant to Warrants granted to Mr. DeZwirek by
     the Company on November 7, 1996; (ii) 250,000 shares that may be purchased
     pursuant to Warrants granted January 14, 1998 at a price of $2.75 per share
     prior to January 14, 2008; (iii) 250,000 shares of the Company's common
     stock that may be purchased pursuant to Warrants granted September 14, 1998
     at a price of $1.625 per share prior to September 14, 2008; (iv) 500,000
     shares that may be purchased pursuant to Warrants granted to Mr. DeZwirek
     by the Company January 22, 1999, which are exercisable prior to January 22,
     2009 at a price of $3.00 per share; and (v) 500,000 shares that may be
     purchased pursuant to Warrants granted to Mr. DeZwirek by the Company
     August 14, 2000, which are exercisable prior to August 14, 2010 at a price
     of $2.0625 per share.
(5)  Introtech Investments, Inc. ("IntroTech") is owned 100% by Jason Louis
     DeZwirek. Ownership of the shares of common stock of the Company owned by
     IntroTech also are attributed to Jason Louis DeZwirek. IntroTech and Jason
     Louis DeZwirek are each deemed to have sole dispositive and sole voting
     power with respect to such shares.
(6)  50.1% of the shares of Can-Med are owned by Icarus. Ownership of the shares
     of common stock owned by Can-Med also are attributed to Icarus. Icarus has
     voting and dispositive power, with respect to such shares which is shared
     with the other shareholders of Can-Med. Represents 800,000 shares of stock
     that may be purchased by the exercise of warrants.


                                       29
<PAGE>


         (b)  Security Ownership of Management

         As of March 22, 2001, the present directors and executive officers of
the Company are the beneficial owners of the numbers of shares of common stock
of the Company set forth below:

Name and Address                    Number of Shares          % Total Company
of Beneficial                       of Common Stock           Common Shares
Owner                               Beneficially Owned(1)     Outstanding(2)
- -----------------------------------------------------------------------------

Phillip DeZwirek                    4,508,557(3)              41.26%
505 University Avenue
Suite 1400
Toronto, Ontario M5G 1P7

Jason Louis DeZwirek                3,733,026(4)              43.03%
195 Hillsdale Avenue East
Toronto, Ontario M5S 1T4

Josephine Grivas                           --                    --
505 University Avenue
Suite 1400
Toronto, Ontario M5G 1P7

Donald A. Wright                       36,000(5)               0.46%
4538 Cass Street
San Diego, California 92109

Richard J. Blum                       132,000(6)               1.65%
3120 Forrer Street
Cincinnati, Ohio 45209

Marshall J. Morris                     20,600(7)               0.26%
3120 Forrer Street
Cincinnati, Ohio 45209

David D. Blum                          93,750(8)               1.18%
3120 Forrer Street
Cincinnati, Ohio 45209

Officers and                        6,389,573                 57.32%
Directors as a
group (7 persons)

- ------------------
(1) Except as indicated in the footnotes to this table and pursuant to
    applicable community property laws, the persons named in the table have sole
    voting and investment power with respect to all shares of Common Stock. The
    number of shares beneficially owned includes Common Stock of which such
    individual has the right to acquire beneficial ownership either currently or
    within 60 days after March 22, 2001, including, but not limited to, upon the
    exercise of an option.
(2) See Note 1 to the foregoing table.
(3) See Notes 2, 3, and 4 to the foregoing table.
(4) See Notes 2 and 5 to the foregoing table.


                                       30

<PAGE>

(5) Includes (i) 10,000 shares of the Company's common stock that may be
    purchased pursuant to Options granted June 30, 1998 at a price of $2.75 per
    share prior to June 30, 2008 and (ii) 5,000 shares of the Company's common
    stock that may be purchased pursuant to Options granted September 18, 2000
    at a price of $2.0625 per share prior to September 18, 2010.
(6) Includes 112,000 shares of the Company's common stock that Mr. Richard Blum
    has the right to purchase for $2.9375 per share pursuant to a warrant
    granted to Mr. Richard Blum on December 7, 1999 in connection with the
    acquisition of Kirk & Blum and kbd/Technics to purchase 448,000 shares of
    common stock in the Company. This warrant became exercisable on December 7,
    2000 with respect to 112,000 of such shares and becomes exercisable with
    respect to an additional 25% of such shares on each of the next three
    anniversaries of such date.
(7) Includes 10,000 shares of common stock of the Company that may be purchased
    pursuant to options granted to Mr. Morris to purchase 50,000 shares of the
    Company's common stock on January 20, 2000. This option became exercisable
    on January 20, 2001 with respect to 10,000 of such shares and becomes
    exercisable with respect to an additional 20% of the 50,000 shares on each
    of the next four anniversaries of such date.
(8) Includes 83,750 shares of the Company's common stock that Mr. David Blum has
    the right to purchase for $2.9375 per share pursuant to a warrant granted to
    Mr. David Blum on December 7, 1999 in connection with the acquisition of
    Kirk & Blum and kbd/Technics to purchase 335,000 shares of stock in the
    Company. This warrant became exercisable on December 7, 2000 with respect to
    83,750 of such shares, and becomes exercisable with respect to an additional
    25% of such shares on each of the next three anniversaries of such date.









                                       31
<PAGE>


         (c)  Changes in Control

         The Company is not aware of any current arrangement(s) that may result
in a change in control of the Company.

Item 12.  Certain Relationships and Related Transactions

         Since January 1, 1999, the following transactions have occurred in
which persons who, at the time of such transactions, were directors, officers or
owners of more than 5% of the Company's common stock, had a direct or indirect
material interest.

         Steven Taub's employment with Filters was terminated as of June 30,
2000 pursuant to a Separation Agreement and General Release (the "Agreement").
The Company, pursuant to the Agreement, purchased on July 5, 2000, all of Mr.
Taub's stock of the Company, aggregating 441,297 shares for $2.125 per share and
124,703 shares of Hilary Taub's, Mr. Taub's former wife, stock of the Company,
aggregating 124,703 shares for $2.125 per share. In addition, through October
28, 2000, Mr. Taub was entitled to $678.37 per day from Filters. Filters also
agreed to pay all of Mr. Taub's major medical insurance costs through October
28, 2000.

         Andrew Halapin, former President of Busch, is the beneficial owner of
the building in which Busch leases its principal office. The lease is a triple
net lease, with annual rent in the amount of $82,398.

         The Company purchased shares of Peerless stock in 1999. Part of the
funds used to purchase such stock were borrowed from Can-Med. Can-Med is owned
50.1% by Icarus, which is owned 50% by Phillip DeZwirek (the Chairman of the
Board of Directors and Chief Executive Officer of the Company) and 50% by Jason
DeZwirek (a director and the Secretary of the Company). As of December 31, 2000
the loan was paid in full. The loan accrued interest at a rate of 10%. Warrants
to purchase 1 million shares of common stock were issued to Can-Med in August
1999 and later cancelled by the holder in 2000.

         As a condition to obtaining the Bank Facility, the Company placed $5
million of subordinated debt. Can-Med provided $4,000,000 of the subordinated
debt. The promissory notes which were issued to evidence the subordinated debt
provide that they accrue interest at the rate of 12% per annum, payable
semi-annually, subject to the subordination agreement with the banks providing
the Bank Facility. The notes were amended in March, 2001 providing for
conversion, at the Company's option of the outstanding principal balance and
accrued but unpaid interest into shares of Common Stock at a conversion price
of $2.00. The conversion price is adjustable to compensate the holders for
various corporate events such as stock splits, reverse stock splits, common
stock dividends and reorganizations.

         In consideration for the subordinated lenders making the Company the
subordinated loans, the Company issued to the subordinated lenders warrants to
purchase up to 1,000,000 shares of the Company's common stock for $2.25 per
share, the closing price of the Company's common stock on the day that the
subordinated lenders entered into an agreement with the Company to provide the
subordinated loans. Can-Med was issued 800,000 of such warrants. The warrants
are exercisable from June 6, 2000 until December 7, 2009. The subordinated
lenders, including Can-Med, were granted certain registration rights with
respect to their warrants and shares of common stock of the Company into which
the warrants are convertible.

         In August 1999, the Company issued a demand note and warrants to
purchase 1 million shares of common stock to a related party. The Company has
restated the financial statements to account for the inherent discount
associated with the value for the warrants, and recognized $.6 million of
interest expense in the quarter ending September 30, 1999. Management of the
Company and the holder of the warrants believed that the inherent interest rate
resulting from the valuation was higher than originally contemplated when the
transaction was structured and, therefore, the holder cancelled the warrants
after repayment of the debt.

                                       32
<PAGE>


Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a)    Exhibits

         2.1    Agreement and Plan of Reorganization dated August 13, 1997
between CECO, the Company and Steven I. Taub. (Incorporated by reference from
Form 10-KSB dated December 31, 1997 of the Company)

         3(i)   Articles of Incorporation (Incorporated by reference from Form
10-KSB dated December 31, 1993 of the Company)

         3(ii)  Bylaws (Incorporated by reference from Form 10-KSB dated
December 31, 1993 of the Company) and Amendment to Bylaws.

         4.1    CECO Filters, Inc. Savings and Retirement Plan. (Incorporated by
reference from CECO's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990)

         4.2    CECO Environmental Corp. 1997 Stock Option Plan. (Incorporated
by reference from Form 10-KSB, exhibit 4.4, dated December 31, 1997 of the
Company)

         4.3    1999 CECO Environmental Corp. Employee Stock Purchase Plan
(Incorporated by reference from Form S-8, filed September 22, 1999 of the
Company).

         4.4    Amendment CECO Environmental Corp. 1997 Stock Option Plan, dated
as of January 20, 2000.

         10.1   Mortgage dated October 28, 1991 by CECO and the Montgomery
County Industrial Development Corporation ("MCIDC") (Incorporated by reference
from CECO's Annual Report on Form 10-K for the fiscal year ended December 31,
1991)

         10.2   Installment Sale Agreement dated October 28, 1991 between CECO
and MCIDC (Incorporated by reference from CECO's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991)

         10.3   Lease dated as of March 10, 1992 between CECO and BTR North
America, Inc. (Incorporated by reference from CECO's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991)

         10.4   Consulting Agreement dated as of January 1, 1994 and effective
as of July 1, 1994 between the Company and CECO (Incorporated by reference to
Form 10-QSB dated September 30, 1994 of the Company)

                                       33

<PAGE>

         10.5   Warrant Agreement dated as of November 7, 1996 between the
Company and Phillip DeZwirek. (Incorporated by reference from the Company's Form
10-KSB dated December 31, 1996)

         10.6   Warrant Agreement dated as of January 14, 1998 between the
Company and Phillip DeZwirek. (Incorporated by reference from the Company's Form
10-KSB dated December 31, 1998)

         10.7   Asset Purchase Agreement among New Busch Co., Inc., Busch Co.
and Andrew Halapin dated September 9, 1997. (Incorporated by reference from the
Form 8-K filed by CECO on October 9, 1997 with respect to event of September 25,
1997)

         10.8   Employment, Non-Compete and Confidentiality Agreement between
New Busch Co., Inc. and Andrew M. Halapin dated September 25, 1997.
(Incorporated by reference from the Form 8-K filed by CECO on October 9, 1997
with respect to event of September 25, 1997)

         10.9   Employment Agreement and Addendum to Employment Agreement
between CECO and Steven I. Taub dated September 30, 1997. (Incorporated by
reference from the Company's Quarterly Report on Form 10-QSB for quarter ended
September 30, 1997)

         10.10  Lease between Busch Co. and Richard Roos dated January 10, 1980,
Amendment to Lease dated August 1, 1988 between Busch Co. and Richard Roos,
Amendment to Lease dated May 21, 1991 between Richard A. Roos and Busch Co. and
Amendment to Lease dated June 1, 1991 between JDA, Inc. and Busch Co.
(Incorporated by reference from the Company's Form 10-KSB dated December 31,
1997)

         10.11  Assignment of Lease dated September 25, 1997 among Richard A.
Roos, JDA, Inc., Busch Co. and New Busch Co., Inc. (Incorporated by reference
from the Company's Form 10-KSB dated December 31, 1998)

         10.12  Lease between Joseph V. Salvucci and Busch Co. dated October 17,
1994. (Incorporated by reference from the Company's Form 10-KSB dated December
31, 1997)

         10.13  Warrant Agreement dated as of September 14, 1998 between the
Company and Phillip DeZwirek. (Incorporated by reference from the Company's Form
10-KSB dated December 31, 1998)

         10.14  Warrant Agreement dated as of January 22, 1999 between the
Company and Phillip DeZwirek. (Incorporated by reference from the Company's Form
10-KSB dated December 31, 1998)

         10.15  Option for the Purchase of Shares of Common Stock for Donald
Wright dated June 30, 1998. (Incorporated by reference from the Company's Form
10-KSB dated December 31, 1998)

         10.16  Stock Purchase Agreement, dated as of December 7, 1999, among
CECO Environmental Corp., CECO Filters, Inc. and the Stockholders of The Kirk &
Blum Manufacturing Company and kbd/Technic, Inc. and Richard J. Blum, Lawrence
J. Blum and David D. Blum. (Incorporated by reference from the Company's Form
8-K filed December 22, 1999 with respect to event that occurred December 7,
1999.)

                                       34

<PAGE>


         10.17 Employment Agreement, dated as of December 7, 1999, between
Richard J. Blum and CECO Group, Inc. (Incorporated by reference from the
Company's Form 8-K filed December 22, 1999 with respect to event that occurred
December 7, 1999.)

         10.18  Stock Purchase Warrant, dated as of December 7, 1999, granted by
CECO Environmental Corp. to Richard J. Blum. (Incorporated by reference from the
Company's Form 8-K filed December 22, 1999 with respect to event that occurred
December 7, 1999.)

         10.19  Employment Agreement, dated as of December 7, 1999, between
Lawrence J. Blum and The Kirk & Blum Manufacturing Company. (Incorporated by
reference from the Company's Form 8-K filed December 22, 1999 with respect to
event that occurred December 7, 1999.)

         10.20  Stock Purchase Warrant, dated as of December 7, 1999, granted by
CECO Environmental Corp. to Lawrence J. Blum. (Incorporated by reference from
the Company's Form 8-K filed December 22, 1999 with respect to event that
occurred December 7, 1999.)

         10.21  Employment Agreement, dated as of December 7, 1999, between
David D. Blum and The Kirk & Blum Manufacturing Company. (Incorporated by
reference from the Company's Form 8-K filed December 22, 1999 with respect to
event that occurred December 7, 1999.)

         10.22  Stock Purchase Warrant, dated as of December 7, 1999, granted by
CECO Environmental Corp. to David D. Blum. (Incorporated by reference from the
Company's Form 8-K filed December 22, 1999 with respect to event that occurred
December 7, 1999.)

         10.23  Credit Agreement, dated as of December 7, 1999, among PNC Bank,
National Association, The Fifth Third Bank, and Bank One, N.A. and PNC Bank,
National Association as agent, and CECO Group, Inc., CECO Filters, Inc., Air
Purator Corporation, New Busch Co., Inc., The Kirk & Blum Manufacturing Company
and kbd\Technic, Inc. (Incorporated by reference from the Company's Form 8-K
filed December 22, 1999 with respect to event that occurred December 7, 1999.)

         10.24  Promissory Note in the amount of $4,000,000, dated as of
December 7, 1999, made by CECO Environmental Corp. and payable to Green Diamond
Oil Corp. (Incorporated by reference from the Company's Form 8-K filed December
22, 1999 with respect to event that occurred December 7, 1999.)

         10.25  Promissory Note in the amount of $500,000, dated as of December
7, 1999, made by CECO Environmental Corp. and payable to Harvey Sandler.
(Incorporated by reference from the Company's Form 8-K filed December 22, 1999
with respect to event that occurred December 7, 1999.)


                                       35

<PAGE>

         10.26  Promissory Note in the amount of $500,000, dated as of December
7, 1999, made by CECO Environmental Corp. and payable to ICS Trustee Services,
Ltd. (Incorporated by reference from the Company's Form 8-K filed December 22,
1999 with respect to event that occurred December 7, 1999.)

         10.27  Warrant Agreement, dated as of December 7, 1999, among CECO
Environmental Corp. and Green Diamond Oil Corp., Harvey Sandler and ICS Trustee
Services, Ltd. (Incorporated by reference from the Company's Form 8-K filed
December 22, 1999 with respect to event that occurred December 7, 1999.)

         10.28  KDB\Technic, Inc. Voting Trust Agreement, dated as of December
7, 1999, Richard J. Blum, trustee. (Incorporated by reference from the Company's
Form 8-K filed December 22, 1999 with respect to event that occurred December 7,
1999.)

         10.29  Amendment to Credit Agreement dated March 28, 2000 (Incorporated
by reference from the Company's Form 10-KSB dated December 31, 1999.)

         10.30  Letter Agreement between PNC Bank and CECO Group, Inc., dated
September 28, 2000.

         10.31  Second Amendment to Credit Agreement dated November 19, 2000.

         10.32  Stock Option Agreement for Donald A. Wright dated September 18,
2000.

         10.33  Warrant Agreement dated as of August 14, 2000 between the
Company and Phillip DeZwirek.

         10.34  Incentive Stock Option Agreement for Marshall J. Morris dated as
of January 20, 2000.

         10.35  Separation Agreement and General Release between Steven I. Taub
and the Company.

         10.36  Stock Sale Agreement between the Company and Steven I. Taub
dated July 5, 2000.

         10.37  Stock Sale Agreement between the Company and Hilary Taub dated
July 5, 2000.

         10.38  Replacement Promissory Note in the amount of $4,000,000, dated
as of March 12, 2001, made by CECO Environmental Corp. and payable to Green
Diamond Oil Corp.

         10.39  Replacement Promissory Note in the amount of $500,000, dated as
of March 12, 2001, made by CECO Environmental Corp. and payable to Harvey
Sandler.


                                       36
<PAGE>

         10.40  Replacement Promissory Note in the amount of $500,000, dated as
of March 12, 2001, made by CECO Environmental Corp. and payable to ICS Trustee
Services, Ltd.

         10.41  Third Amendment to Credit Agreement dated March 30, 2001.

         21     Subsidiaries of the Company (Incorporated by reference from the
Company's Form 10KSB dated December 31, 1999.)

         (b)    Reports on Form 8-K

         The Company did not file a report on Form 8-K during the fiscal quarter
ended December 31, 2000.

         23     Consent of Independent Public Accountants




                                       37

<PAGE>


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                           CECO ENVIRONMENTAL CORP.

                           By:         /s/ Phillip DeZwirek
                                    --------------------------
                                    Phillip DeZwirek,
                                    Chief Executive Officer
                                    Dated:  April 2, 2001

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:

Principal Executive Officer


/s/ Phillip DeZwirek                                              April 2, 2001
- ------------------------------------
Phillip DeZwirek, Chairman
of the Board, Director and
Chief Executive Officer

Principal Financial
and Accounting Officer


/s/    Marshall J. Morris                                         April 2, 2001
- ------------------------------------
Marshall J. Morris,
Vice President-Finance
and Administration;
Chief Financial Officer



/s/ Richard J. Blum                                               April 2, 2001
- ------------------------------------
Richard J. Blum, President,
Director

/s/ Jason Louis DeZwirek                                          April 2, 2001
- ------------------------------------
Jason Louis DeZwirek, Director

/s/ Josephine Grivas                                              April 2, 2001
- ------------------------------------
Josephine Grivas, Director

/s/ Donald Wright                                                 April 2, 2001
- ------------------------------------
Donald Wright, Director


                                       38
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EXHIBIT 4.4
<TEXT>

<PAGE>


                                                                     EXHIBIT 4.4

                                    AMENDMENT

                            CECO ENVIRONMENTAL CORP.
                             1997 STOCK OPTION PLAN
                            ------------------------

This Amendment of the CECO Environmental Corp. 1997 Stock Option Plan ("Plan")
is entered into as of January 20, 2000 by CECO Environmental Corp. (the
"Company"), effective the date hereof ("Effective Date").


                                    RECITALS

A. The Company adopted the Plan on October 1, 1997, effective the date thereof,
as an incentive stock option plan within the meaning of Section 422 of the
Internal Revenue Code ("Code").

B. The Company has determined it appropriate to amend the Plan to provide for
Company discretion to terminate or otherwise modify options issued pursuant to
the Plan, on or after the Effective Date, in the event of the sale, merger,
recapitalization, dissolution or other similar capital event as set forth
herein.

                                    AMENDMENT

         1.       All capitalized terms not defined in this Amendment shall have
the meaning set forth in the Plan.

         2.       Effective  January  20,  2000,  Section 11 of the Plan is
deleted in its  entirety  and  replaced as follows:

                                   "SECTION 11

           ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; SALE OF COMPANY

         (a)      For all  stock options issued prior to January 20, 2000:

         A pro rata adjustment for an increase or decrease in the number of
         shares of Common Stock of the Company subject to the Plan or that may
         be awarded to any individual in any year shall be made to give effect
         to any consolidation of shares, the equivalent value in stock of cash
         dividends, stock dividends, stock splits, stock combinations,
         recapitalization and other similar changes in the capital structure of
         the Company. Pro rata adjustment shall be made in the number, kind and
         price of shares of Common Stock of the Company covered by any
         outstanding stock option hereunder to give effect to any consolidation
         of shares, stock dividends, stock spits, stock combinations,
         recapitalization and similar changes in the capital structure in the
         Company, or a merger or dissolution or reorganization of the Company,
         after the date the Option is granted so that the Optionee is treated in
         a manner equivalent to that of holders of the underlying Common Stock.


<PAGE>


         (b) For all stock options issued on or after January 20, 2000
         ("Effective Date") and on or before the last day for the duration of
         the Plan provided under Section 7 of the Plan:

         (i) In the event that the outstanding shares of Common Stock of the
         Company are changed into or exchanged for a different number or kind of
         shares or other securities of the Company or of another corporation by
         reason of any reorganization, merger, consolidation, recapitalization,
         reclassification, change in par value, stock split-up, combination of
         shares or dividend payable in capital stock, the Company shall make
         adjustments to such outstanding stock options (including, by way of
         example and not by way of limitation, the grant of substitute options
         under the Plan or under the plan of such other corporation) as the
         Administrator may determine to be appropriate under the circumstances
         in the sole discretion of the Administrator, and, in addition,
         appropriate adjustments shall be made in the number and kind of shares
         and in the option price per share subject to outstanding options under
         the Plan or under the plan of such successor corporation. No such
         adjustment shall be made which shall, within the meaning of Section 424
         of the Code, constitute such a modification, extension, or renewal of
         an option as to cause the adjustment to be considered as the grant of a
         new option.

                  (ii)  Notwithstanding anything herein to the contrary, the
         Company may, in its sole discretion:

                           (A) accelerate the timing of the exercise provisions
                  of any stock option in the event of (1) the adoption of a plan
                  of merger or consolidation under which all the shares of
                  Common Stock of the Company would be eliminated, or (2) a sale
                  of all or substantially all of the Company's assets or shares
                  of Common Stock; (B) cancel any or all stock options granted
                  hereunder (on or after the Effective Date) upon any of the
                  foregoing events and provide for the payment to Optionees in
                  cash of an amount equal to the difference between the option
                  price and the price of a share of Common Stock, as determined
                  in good faith by the Administrator, at the close of business
                  on the date of such event, multiplied by the number of such
                  shares of Option Stock so canceled; or (C) accelerate the
                  timing of the exercise provisions of any stock option if (1)
                  any such business combination is to be accounted for as a
                  pooling-of-interests under APB Opinion 16 (or any successor
                  opinion) and (2) the timing of such acceleration does not
                  prevent such pooling-of-interests treatment; provided, that if
                  any provision of the Plan would disqualify the combination
                  from pooling-of-interests accounting treatment, then the Plan
                  shall be interpreted to preserve such accounting treatment or,
                  if necessary, the applicable provision shall be null and void.
                  All determinations to be made in connection with the preceding
                  sentence shall be made by the independent accounting firm
                  whose opinion with respect to the pooling-of-interests
                  treatment is required as a condition to the Company's
                  consummation of such combination.


<PAGE>


                  (iii) Upon a business combination by the Company or any
         Subsidiary with any corporation or other entity through the adoption of
         a plan of merger or consolidation or a share exchange or through the
         purchase of all or substantially all of the capital stock or assets of
         such other corporation or entity, the Board of Directors or the
         Committee may, in its sole discretion, grant stock options to all or
         any persons who, on the effective date of such transaction, hold
         outstanding options to purchase securities of such other corporation or
         entity and who, on and after the effective date of such transaction,
         will become employees of the Company or any Subsidiary. The number of
         shares of Option Stock subject to such substitute stock options shall
         be determined in accordance with the terms of the transaction by which
         the business combination is effected. Notwithstanding the other
         provisions of this Plan, the other terms of such substitute stock
         options shall be substantially the same as or economically equivalent
         to the terms of the options for which such stock options are
         substituted, all as determined by the Administrator. Upon the grant of
         substitute stock options pursuant hereto, the options to purchase
         securities of such other corporation or entity for which such stock
         options are substituted shall be canceled immediately.

                  (iv) Upon the dissolution or liquidation of the Company other
         than in connection with a transaction to which the preceding
         subparagraphs (i), (ii) or (iii) of this Section 11(b) is applicable,
         all stock options granted hereunder shall terminate and become null and
         void; provided, however, that if the rights of an Optionee under the
         applicable options have not otherwise terminated and expired, the
         Optionee shall have the right immediately prior to such dissolution or
         liquidation to exercise any stock option granted hereunder to the
         extent that the right to purchase shares thereunder has become
         exercisable as of the date immediately prior to such dissolution or
         liquidation."

         3.       The Plan is hereby ratified, confirmed and approved as amended
hereby.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EXHIBIT 10.30
<TEXT>


<PAGE>


                                                                   EXHIBIT 10.30


                                                                        PNC BANK

September 28, 2000



Marshall Morris, Chief Financial Officer
CECO Group, Inc.
3120 Forrer Road
Cincinnati, OH   45209


         Re:      Credit Agreement dated as of October 7, 1999
                  --------------------------------------------


Gentlemen:

         We refer to Section 6.3 of the Credit Agreement, dated as of December
7, 2000 (as amended, the "Agreement"), among CECO Group, Inc. and its
subsidiaries party thereto (collectively, the "Borrowers"), PNC Bank, National
Association, as agent (the "Agent") for the banks and other financial
institutions party thereto (the "Banks"), and the Banks. Capitalized terms used
herein without definition have the meanings given in the Agreement. In
connection with the delivery of Bonds by unaffiliated sureties for the
Borrowers, such sureties have requested and may from time to time require that
the Borrowers and/or their affiliates enter into indemnity agreements of the
type set forth as Exhibit A hereto (the "Indemnity Agreements"). As used herein,
"Bonds" means surety bonds, performance bonds or other instruments or agreements
of guarantee issued in connection with the fulfillment of obligations by the
Borrowers.

         The Borrowers have requested that the Banks consent to the execution
and delivery of the Indemnity Agreement and the execution and delivery by the
Borrowers from time to time of other Permitted Agreements.

         In reliance upon the Borrowers' representations and warranties and
subject to the terms and conditions herein set forth, the Banks agree as
follows:

         1. Consent. The Banks hereby consent to the execution, delivery and
performance of the Indemnity Agreement. The Banks hereby agree that the
execution, delivery and performance of Permitted Agreements in the ordinary
course of business do not and will not violate the provisions of Section 6.3 of
the Agreement.

         2. Limitation of Consent. Except as expressly described above, this
letter shall not constitute (a) a modification or an alteration of the terms,
conditions or covenants of the Agreement or any other Loan Document or (b) a
waiver, release or limitation upon the Agent's or the Banks' exercise of any of
their rights and remedies thereunder, which are herby


<PAGE>



expressly reserved. This letter shall not relieve or release the Borrowers in
any way from any of their duties, obligations, covenants or agreements under the
Agreement or the other Loan Documents or from the consequences of any Event of
Default thereunder, except as expressly described above. This letter shall not
obligate the Banks, or be construed to require the Banks, to waive any other
Events of Default or defaults, whether now existing or which may occur after the
date hereof.

         3. Execution in Counterparts.This letter agreement may be executed in
multiple counterparts, and by the parties hereto on separate counterparts, each
of which shall constitute an original, but all such counterparts shall
constitute but one and the same instrument.

         Please execute the enclosed extra copy of this letter in the space
provided below and return the fully executed document to the undersigned for
this letter to be effective.


                                                  Very truly yours,

                                                  PNC BANK, NATIONAL ASSOCIATION
                                                           as Agent


                                                  By: /s/ John G. Siegrist
                                                      --------------------------
                                                          John G. Siegrist

Accepted and agreed to, as of the date written above:

CECO GROUP, INC., as Borrowers'
 Representative


By: /s/ M.J. Morris
    -----------------------
Name: /s/ Marshall J. Morris
Title: /s/ CFO



<PAGE>


                                                                   EXHIBIT 10.30





                                    EXHIBIT A

                           FORM OF INDEMNITY AGREEMENT





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>EXHIBIT 10.31
<TEXT>

<PAGE>

                                  EXHIBIT 10.31

                      SECOND AMENDMENT TO CREDIT AGREEMENT
                      ------------------------------------

         This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of the 19th day of November, 2000, by and among CECO GROUP, INC., CECO FILTERS,
INC., AIR PURATOR CORPORATION, NEW BUSCH CO., INC., THE KIRK & BLUM
MANUFACTURING COMPANY and KBD/TECHNIC, INC. (the "Borrowers"), and PNC BANK,
NATIONAL ASSOCIATION ("PNC"), individually and as agent for itself and the other
banks (collectively, the "Banks") which from time to time are parties to the
hereinafter defined Credit Agreement (in such capacity, the "Agent").

                                   BACKGROUND
                                   ----------

         A. The Agent, the Banks and the Borrowers are parties to a Credit
Agreement dated as of December 7, 1999 as amended by Amendment to Credit
Agreement, date as of March 28, 2000 (as amended, the "Credit Agreement").

         B. The Borrowers have requested and the Agent and the Banks have agreed
to amend the Credit Agreement on the terms and conditions set forth herein.

         Now, Therefore, in consideration of the foregoing and for good and
valuable consideration, the legality and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:

         1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

         2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows:

         (a) Section 5.2 of the Credit Agreement is hereby amended by inserting
the following new subsection (f):

         "(f) (i) internally prepared consolidated financial projections for
         CECO for the quarter ending December 31, 2000 on or before December 15,
         2000; (ii) internally prepared preliminary consolidated financial
         projections for CECO for the fiscal year ending December 31, 2001 on or
         before December 15, 2000; (iii) internally prepared final consolidated
         financial projections for CECO for the fiscal year ending December 31,
         2001 on or before January 31, 2001, together with a written explanation
         of any changes to the preliminary projections for such period; (iv)
         internally prepared financial statements of CECO for the quarter and
         fiscal year ending December 31, 2000, and covenant compliance
         calculations for such periods, on or before February 15, 2001.
         Notwithstanding any provision to the contrary contained in this
         Agreement, the Borrowers' failure to deliver any of the items required
         by this subsection (f) shall constitute and immediate Event of Default
         without any required notice or cure period."

         (b) Section 6.1(c) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
<PAGE>

"Interest Coverage Ratio. Permit the Interest Coverage Ratio for the period (i)
beginning January 1, 2000 and ending June 30, 2000 to be less than 1.50 to 1, or
(ii) beginning January 1, 2000 and ending September 30, 2000 to be less than
1.50 to 1, or permit the Interest Coverage Ratio, as of the end of any fiscal
quarter ending during the periods specified below, for the prior four
consecutive fiscal quarters, to be less than the ratio set forth opposite such
period:

- --------------------------------------------------------------------------------
Last Day of Fiscal Quarter During Period       Interest  Coverage  Ratio Not
                                               To Be Less Than
- --------------------------------------------------------------------------------
December 31, 2000 through December 30, 2001              2.50 to 1
- --------------------------------------------------------------------------------
December 31, 2001 through December 30, 2002              3.25 to 1
- --------------------------------------------------------------------------------
December 31, 2002 through December 30, 2003              3.75 to 1
- --------------------------------------------------------------------------------
December 31, 2003 through Termination Date               4.00 to 1
- --------------------------------------------------------------------------------

         (c) Section 6.1(e) of the Credit Agreement is hereby amended by
deleting the "$5,100,000" amount in the third row of the table with respect to
the period from January 1, 2000 through September 30, 2000, and inserting
"$3,900,000" in its place.

         (d) Section 6.8 of the Credit Agreement is hereby amended by inserting
the following sentence at the end of such Section:

         "Notwithstanding anything herein to the contrary, the Borrowers shall
         not pay management fees to CECO in excess of $40,000 for each of the
         months of October, November and December, 2000."

         3. Additional Covenant. The Borrowers and Green Diamond Oil Corp.
("Green Diamond") agree that the scheduled payment to Green Diamond on the
Subordinated Debt (as defined in the Subordination Agreement) due on or about
September 30, 2000 shall be deferred until December 31, 2000, and no payment of
principal or interest on the Subordinated Debt may be made to or received by
Green Diamond before December 31, 2000. Notwithstanding any provision to the
contrary contained in the Credit Agreement, the Borrowers' failure to comply
with this Section 3 shall constitute an immediate Event of Default without any
required notice or cure period.

         4. Amendment to the Loan Documents. All references to the Credit
Agreement in the Loan Documents and in any documents executed in connection
therewith shall be deemed to refer to the Credit Agreement as amended by this
Amendment.

         5. Ratification of the Loan Documents.Notwithstanding anything to the
contrary herein contained or any claims of the parties to the contrary, the
Agent, the Banks and the Borrowers agree that the Loan Documents and each of the
documents executed in connection therewith are in full force and effect and each
such document shall remain in full force and effect, as further amended by this
Amendment, and each of the Borrowers hereby ratifies and confirms its
obligations thereunder.
<PAGE>

         6. Representations and Warranties.

         (a) Each Borrower hereby certifies that (i) the representations and
warranties of such Borrower in the Credit Agreement are true and correct in all
material respects as of the date hereof, as if made on the date hereof and (ii)
no Event of Default and no event which could become an Event of Default with the
passage of time or the giving of notice, or both, under the Credit Agreement or
the other Loan Documents exists on the date hereof.

         (b) Each Borrower further represents that it has all the requisite
power and authority to enter into and to perform its obligations under this
Amendment, and that the execution, delivery and performance of this Amendment
have been duly authorized by all requisite action and will not violate or
constitute a default under any provision of any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect or of the Articles of Incorporation or by-laws of such
Borrower, or of any indenture, note, loan or credit agreement, license or any
other agreement, lease or instrument to which such Borrower is a party or by
which such Borrower or any of its properties are bound.

         (c) Each Borrower also further represents that its obligation to repay
the Loans, together with all interest accrued thereon, is absolute and
unconditional, and there exists no right of set off or recoupment, counterclaim
or defense of any nature whatsoever to payment of the Loans.

         (d) Each Borrower also further represents that there have been no
changes to the Articles of Incorporation, by-laws or other organizational
documents of each such Borrower since the most recent date true and correct
copies thereof were delivered to the Agent.

         7. Conditions Precedent. The effectiveness of the amendments set forth
herein is subject to the fulfillment, to the satisfaction of the Agent and its
counsel, of the following conditions precedent:

         (a) The Borrowers shall have delivered to the Agent the following, all
of which shall be in form and substance satisfactory to the Agent and shall be
duly completed and executed:

             (i) This Amendment and the consent of the Guarantor and the
         Subordinated Creditor listed on the consents attached hereto; and

             (ii) Such additional documents, certificates and information as the
         Agent may require pursuant to the terms hereof or otherwise reasonably
         request. (b) The Borrowers shall have received not less than $120,000
         in cash from Green Diamond as a repayment of interest previously paid
         to Green Diamond by the Borrowers.

         (c) After giving effect to the amendments contained herein, the
representations and warranties set forth in the Credit Agreement shall be true
and correct on and as of the date hereof.

         (d) After giving effect to the amendments contained herein, no Event of
Default hereunder, and no event which, with the passage of time or the giving of
<PAGE>

notice, or both, would become such an Event of Default shall have occurred and
be continuing as of the date hereof.

         (e) The Borrowers shall have paid the reasonable fees and disbursements
of the Agent's counsel incurred in connection with this Amendment.

         6. No Waiver. Except as expressly provided herein, this Amendment does
not and shall not be deemed to constitute a waiver by the Agent or the Banks of
any Event of Default, or of any event which with the passage of time or the
giving of notice or both would constitute an Event of Default, nor does it
obligate the Agent or the Banks to agree to any further modifications to the
Credit Agreement or any other Loan Document or constitute a waiver of any of the
Agent's or the Banks' other rights or remedies.
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.


                          CECO GROUP, INC.

                          By: /s/ Marshall J. Morris
                          Name: /s/ Marshall J. Morris
                          Title: /s/  CFO

                          CECO FILTERS, INC.

                          By: /s/ Marshall J. Morris
                          Name: /s/ Marshall J. Morris
                          Title: /s/ Secretary

                          AIR PURATOR CORPORATION

                          By: /s/ Marshall J. Morris
                          Name: /s/ Marshall J. Morris
                          Title: /s/ Secretary

                          NEW BUSCH CO., INC.

                          By: /s/ Marshall J. Morris
                          Name: /s/ Marshall J. Morris
                          Title: /s/ Secretary

                          THE KIRK & BLUM MANUFACTURING COMPANY

                          By: /s/ David D. Blum
                          Name: /s/ David D. Blum
                          Title: /s/ VP
<PAGE>

                          KBD/TECHNIC, INC.

                          By: /s/ Marshall J. Morris
                          Name: /s/ Marshall J. Morris
                          Title: /s/ Assist. Secretary

                          PNC BANK, NATIONAL ASSOCIATION,
                          as Agent and as a Bank

                          By: /s/ John G. Siegrist
                          Title: /s/ Vice President

                          FIFTH THIRD BANK, as a Bank

                          By: /s/ David Alexander
                          Title: /s/ Fifth Third Bank - Assistant Vice President

                          BANK ONE, N.A., as a Bank

                          By: /s/ Mark Palazzo
                          Title: /s/ 1st Vice President
<PAGE>

                               GUARANTOR'S CONSENT

         By Corporate Guaranty, dated December 7, 2000 (the "Guaranty"), the
undersigned (the "Guarantor") guaranteed to the Agent and the Banks, subject to
the terms and conditions set forth therein, the prompt payment and performance
of all of the Obligations (as defined therein). The Guarantor consents to the
Borrowers' execution of the foregoing Second Amendment to Credit Agreement. The
Guarantor hereby acknowledges and agrees that the Guaranty remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.



                               CECO ENVIRONMENTAL CORP.


                               By: /s/ Marshall J. Morris
                               Title: /s/ CFO
<PAGE>

                         SUBORDINATED CREDITOR'S CONSENT

         The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"). The
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Second Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3 of the foregoing Second Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3 of the
foregoing Second Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.


                               GREEN DIAMOND OIL CORP.


                               By: /s/ Phillip DeZwirek
                               Title: /s/ President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>EXHIBIT 10.32
<TEXT>

<PAGE>


                                                                   EXHIBIT 10.32

                              STOCK OPTION AGREEMENT

                            CECO ENVIRONMENTAL CORP.
                             1997 STOCK OPTION PLAN



THIS AGREEMENT is dated and made effective as of September 18, 2000 ("Effective
Date") by and between CECO ENVIRONMENTAL CORP. a New York corporation (the
"Company"), and DONALD WRIGHT ("Optionee").


                                   WITNESSETH:

WHEREAS, Optionee on the date hereof is an officer of the Company or one of its
Subsidiaries; and

WHEREAS, the Company desires to grant a non-qualified stock option to Optionee
to purchase shares of the Company's Common Stock pursuant to the Company's 1997
Stock Option Plan, as amended (the "Plan"); and

WHEREAS, the Board of Directors of the Company has authorized the grant of a
non-qualified stock option to Optionee and has determined that, on the Effective
Date, the Fair Market Value of Option Stock of the Company is $2.0625 per share.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:

1. Grant of Option. The Company hereby grants to Optionee as of the Effective
Date the right and option (the "Option") to purchase up to five thousand (5,000)
shares of Option Stock ("Shares") at an exercise price of $2.0625 per share on
the terms and conditions set forth herein and subject to the terms and
conditions of the Plan.

All capitalized terms not defined in this Agreement shall have the meaning set
forth in the Plan.

2.  Duration and Exercisability.


a. Exercise Period. The Option shall become exercisable on March 18, 2001 six
months after the date of this grant agreement.

b. Expiration. The Option shall expire on September 18, 2010 ("Expiration Date")
and must be exercised, if at all, on or before the Expiration Date.


<PAGE>



c. Lapse Upon Expiration. To the extent that this Option is not exercised prior
to the Expiration Date, all rights of Optionee under this Option shall thereupon
be forfeited.

3.  Manner of Exercise.

a. General. The Option may be exercised only by Optionee (or other proper party
in the event of death or incapacity), subject to the conditions of the Plan and
this Agreement, and subject to such other administrative rules as the
Administrator deems advisable, by delivering written notice of exercise to the
Company at its principal office. The notice shall state the number of Shares
exercised and shall be accompanied by payment in full of the Option price for
all Shares exercised pursuant to the notice. Any exercise of the Option shall be
effective upon receipt of such notice by the Company together with payment that
complies with the terms of the Plan and this Agreement. The Option may be
exercised with respect to any number or all of the shares as to which it can
then be exercised and, if partially exercised, may be so exercised as to the
unexercised shares at any time and from time to time prior to expiration of the
Option as provided in this Agreement.

b. Form of Payment. Subject to approval by the Administrator, payment of the
Option price by Optionee shall be in the form of cash, personal check, certified
check, or where permitted by law and provided that a public market for the
Company's stock exists: (i) through a "same day sale" commitment from Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby Optionee irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay for the exercise
price and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the Company; (ii) through a
"margin" commitment from Optionee and a NASD Dealer whereby Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (iii) by tender of shares of Common Stock of the Company having a
Fair Market Value on the date received by the Company equal to the exercise
price for the Shares exercised. Optionee shall be solely responsible for any
income or other tax consequences from any payment for Shares with Optionee's
Common Stock of the Company.

c. Stock Transfer Records. Provided that the notice of exercise and payment are
in form and substance satisfactory to counsel for the Company, as soon as
practicable after the effective exercise of all or any part of the Option,
Optionee shall be recorded on the stock transfer books of the Company as the
owner of the Shares purchased, and the Company shall deliver to Optionee, or to
the NASD Dealer, as the case may be, one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer documentary
stamp taxes shall be paid by the Company. Optionee shall pay all other costs of
the Company incurred to issue such Shares to such NASD Dealer.


<PAGE>





Shares purchased pursuant to exercise hereunder: (i) may be deposited with a
NASD Dealer designated by Optionee, in street name, if so provided in such
exercise notice accompanied by all applications and forms reasonably required by
the Administrator to effect such deposit, or (ii) may be issued to Optionee and
such other person, as joint owners with the right of survivorship, as is
specifically described in such exercise notice. Optionee shall be solely
responsible for any income or other tax consequences of such a designation of
ownership hereunder (or the severance thereof).

4.  Miscellaneous.

a. Employment Rights as Shareholder. This Agreement shall not confer on Optionee
any right with respect to employment by the Company or any Subsidiary. Optionee
shall have no rights as a shareholder with respect to Shares subject to this
Option until such Shares are issued to Optionee upon the exercise of this
Option. No adjustment shall be made for dividends (ordinary or extra-ordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date such shares are issued, except as
provided in Section 11 of the Plan.

b. Securities Law Compliance. The exercise of the Option and the issuance and
transfer of Shares shall be subject to compliance by the Company and Optionee
with all applicable requirements of federal and state securities laws and with
all applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer.

c. Mergers, Recapitalization, Stock Splits, Etc. The provisions of Section 11 of
the Plan, as amended effective the Effective Date, shall govern all Options in
the event of any reorganization, merger, consolidation, recapitalization,
reclassification, change in par value, stock split-up, combination of shares or
dividend payable in capital stock, or other such transaction described under
Section 11 of the Plan, and the Company reserves all discretion provided
therein.

d. Nontransferability. The Option may not be transferred in any manner other
than by will or by the laws of descent and distribution and may be exercised
during the lifetime of Participant only by Participant. The terms of the Option
shall be binding upon the executors, administrators, successors and assigns of
Participant.

e. 1997 Stock Option Plan. The Option evidenced by this Agreement is granted
pursuant to the Plan, as amended the Effective Date, a copy of which Plan has
been made available to Optionee and is hereby incorporated into this Agreement.
This Agreement shall be subject to and in all respects limited and conditioned
as provided in the Plan. The Plan governs this Option and, in the event of any
questions as to the construction of this Agreement or in the event of a conflict
between the Plan and this Agreement, the Plan shall govern, except as the Plan
otherwise provides.


<PAGE>


f. Accounting Compliance. Optionee agrees that, in the event of a transaction
subject to Section 11 of the Plan, treated as a "pooling of interests" under
generally accepted accounting principles, and Optionee is an affiliate of the
Company or any Subsidiary (as described in Section 11 of the Plan) at the time
of such change of control transaction, Optionee will comply with all
requirements of Rule 145 of the Securities Act of 1933, as amended, and the
requirements of such other legal or accounting principles, and will execute any
documents necessary to ensure such compliance.

g. Stock Legend. The Administrator may require that the certificates for any
Shares purchased by Optionee (or, in the case of death, Optionee's successors)
bear an appropriate legend to reflect the restrictions of Section 4(f), of this
Agreement.

h. Withholding. Optionee acknowledges that, upon exercise of all or any portion
of this Option, the Company shall have the right to require Optionee to pay to
the Company an amount equal to the amount the Company is required to withhold as
a result of such exercise federal and state income tax purposes.

i. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and Optionee and any successor or
successors of Optionee permitted Section 4(d) of this Agreement.

j. Interpretation. The Administrator shall have the sole discretion to interpret
and administer the Plan. Any determination made by the Administrator with
respect to any Option shall be final and binding on the Company and on all
persons having an interest in the Option granted under this Agreement and the
Plan.

k. Entire Option. The Plan, as amended, is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersede all
prior understandings and agreements with respect to such subject matter.

l. Successors and Assigns. The Company may assign any of its rights under the
Option. The Option shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, the Option shall be binding upon Optionee and Optionee's
heirs, executors, administrators, legal representatives, successors and assigns.

m. Governing Law. The Option shall be governed by and construed in accordance
with the internal laws of the State of Ohio, without regard to that body of law
pertaining to choice of law or conflict of law.



<PAGE>





IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.

CECO ENVIRONMENTAL CORP.                                OPTIONEE


By: /s/ Richard J. Blum                                 /s/ Donald Wright
   ---------------------------------                    ------------------------
Its:/s/ President                                           Donald Wright


The Grant set forth in this
Agreement has been approved by
Administrators of CECO
Environmental Corp.
1997 Stock Option Plan



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.33
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>EXHIBIT 10.33
<TEXT>

<PAGE>


                                                                   EXHIBIT 10.33



                         -------------------------------


                            CECO ENVIRONMENTAL CORP.

                                       AND

                                PHILLIP DeZWIREK




                                WARRANT AGREEMENT




                           Dated as of August 14, 2000



                         -------------------------------





<PAGE>





         WARRANT AGREEMENT (the "Agreement") dated as of August 14, 2000 between
CECO Environmental Corp., a New York corporation (the "Company"), and Phillip
DeZwirek (hereinafter referred to as a "Holder" or "DeZwirek").

                              W I T N E S S E T H :
                               - - - - - - - - - -

         WHEREAS, DeZwirek is an employee, officer and director of the Company;
and

         WHEREAS, DeZwirek has, and continues to provide valuable services
to the Company; and

         WHEREAS, the Company desires to grant to DeZwirek, and DeZwirek desires
to accept from the Company, warrant certificates giving DeZwirek the right to
purchase shares of the Company's Common Stock.

         NOW, THEREFORE, in consideration of the premises, the payment by
DeZwirek to the Company of an aggregate of ten dollars ($10.00), the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1. Grant. DeZwirek is granted the right to purchase, from the Company,
at any time from August 14, 2001, until 5:30 p.m., New York time, on August 14,
2010 (the "Expiration Date"), at which time the Warrants expire, up to an
aggregate of 500,000 shares (subject to adjustment as provided in Section 8
hereof) of common stock, par value $.01 per share, of the Company ("Common
Stock") at an initial exercise price (subject to adjustment as provided in
Section 11 hereof) of $2.0625 per share (the "Exercise Price").


<PAGE>


         2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.

         3. Registration of Warrant. The Warrants shall be numbered and shall be
registered  on the books of the Company when issued.

         4. Exercise of Warrant.

                  4.1 Method of Exercise. The Warrants initially are exercisable
at the product of (i) the Exercise Price multiplied by (ii) the number of shares
of Common Stock purchased (subject to adjustment as provided in Section 11
hereof), as set forth in Section 8 hereof payable by certified or official bank
check in United States dollars. The product of the number of Warrants exercised
at any one time multiplied by the Exercise Price shall be referred to as the
"Purchase Price." Upon surrender of a Warrant Certificate with the annexed Form
of Election to Purchase duly executed, together with payment of the Purchase
Price for the shares of Common Stock purchased at the Company's principal
offices located at 505 University Avenue, Suite 1400, Toronto, Ontario, Canada,
the registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock). In the case of the purchase of less
than all the shares of Common Stock purchasable under any Warrant Certificate,
the Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the shares of Common Stock purchasable thereunder.

         5. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock shall be made forthwith (and
in any event within five (5) business days thereafter) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections 7 and 9 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.


<PAGE>


         The Warrant Certificates and the certificates representing the shares
of Common Stock, or other securities, property or rights issued upon exercise of
the Warrants shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chief Executive Officer, President or
any Vice President of the Company, attested to by the manual or facsimile
signature of the then present Secretary or any Assistant Secretary of the
Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.

         6. Non-transferability of Warrants. The Warrants issued hereunder or
any interest in such Warrants may not be sold, assigned, conveyed, gifted,
pledged, hypothecated or otherwise transferred in any manner other than by will
or the laws of descent and distribution. Notwithstanding any other Section of
this Agreement, any such attempted sale, assignment, conveyance, gift, pledge,
hypothecation or transfer shall be null and void and shall nullify such Warrants
immediately.

         7. Transfer of Warrant. The Warrants shall be transferable only as set
forth in Section 6 above and only on the books of the Company maintained at its
principal office, where its principal office may then be located, upon delivery
thereof duly endorsed by the Holder or by its duly authorized attorney or
representative accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any such permitted transfer, the Company shall
execute and deliver new Warrants to the person entitled thereto.

         7. Exercise Price and Number of Securities. Except as otherwise
provided in Section 10 hereof, each of the Warrants are exercisable to purchase
one share of Common Stock at an initial exercise price equal to the Exercise
Price. The Exercise Price and the number of shares of Common Stock for which the
Warrant may be exercised shall be the price and the number of shares of Common
Stock which shall result from time to time from any and all adjustments in
accordance with the provisions of Section 11 hereof.

<PAGE>

         8. Registration Rights.

                  8.1 Registration Under the Securities Act of 1933. Each
Warrant Certificate and each certificate representing the shares of Common
Stock, and any of the other securities issuable upon exercise of the Warrants
and the securities underlying the securities issuable upon exercise of the
Warrants (collectively, the "Warrant Shares") shall bear the following legend,
unless (i) such Warrants or Warrant Shares are distributed to the public or sold
for distribution to the public pursuant to this Section 9 or otherwise pursuant
to a registration statement filed under the Securities Act of 1933, as amended
(the "Act"), (ii) such Warrants or Warrant Shares are subject to a currently
effective registration statement under the Act; or (iii) the Company has
received an opinion of counsel, in form and substance reasonably satisfactory to
counsel for the Company, that such legend is unnecessary for any such
certificate:

         THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
         ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
         PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
         SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER
         SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE
         DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
         OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER,
         THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

         THE TRANSFER OR EXCHANGE OF THE WARRANTS OR OTHER SECURITIES
         REPRESENTED BY THE CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
         WARRANT AGREEMENT REFERRED TO HEREIN.


                  8.2 Piggyback Registration. If, at any time commencing October
30, 2001, and expiring on the Expiration Date, the Company proposes to register
any of its securities, not registered on the date hereof, under the Act (other
than in connection with a merger or pursuant to Form S-4 or Form S-8) it will
give written notice by registered mail, at least thirty (30) days prior to the
filing of each such registration statement, to the Holders of the Warrants
and/or the Warrant Shares of its intention to do so. If any of the Holders of
the Warrants and/or Warrant Shares notify the Company within twenty (20) days
after mailing of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford
such Holders of the Warrants and/or Warrant Shares the opportunity to have any
such Warrant Shares registered under such registration statement. In the event
that the managing underwriter for said offering advises the Company in writing
that in the underwriter's opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without causing a diminution in the offering price or otherwise
adversely affecting the offering, the Company will include in such registration
(a) first, the securities the Company proposes to sell, (b) second, the
securities held by the entities that made the demand for registration, (c)
third, the Warrants and/or Warrant Shares requested to be included in such
registration which in the opinion of such underwriter can be sold, pro rata
among the Holders of Warrants and/or Warrant Shares on the basis of the number
of Warrants and/or Warrant Shares requested to be registered by such Holders,
and (d) fourth, other securities requested to be included in such registration.


<PAGE>


         Notwithstanding the provisions of this Section 9.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 9.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.

                  8.3 Demand Registration.

                           (a) At any time commencing October 30, 2001 and
expiring on the Expiration Date, the Holders of the Warrants and/or Warrant
Shares representing a "Majority" (as hereinafter defined) of the Warrants and/or
Warrant Shares shall have the right on one occasion (which right is in addition
to the registration rights under Section 9.2 hereof), exercisable by written
notice to the Company, to have the Company prepare and file with the Securities
and Exchange Commission (the "Commission"), a registration statement and such
other documents, including a prospectus, as may be necessary in the opinion of
both counsel for the Company and counsel for the Holders, in order to comply
with the provisions of the Act, so as to permit a public offering and sale by
such Holders and any other Holders of the Warrants and/or Warrant Shares who
notify the Company within fifteen (15) days after the Company mails notice of
such request pursuant to Section 9.3(b) hereof (collectively, the "Requesting
Holders") of their respective Warrant Shares so as to allow the unrestricted
sale of the Warrant Shares to the public from time to time until the earlier of
the following: (i) the Expiration Date, or (ii) the date on which all of the
Warrant Shares requested to be registered by the Requesting Holders have been
sold (the "Registration Period").

                           (b) The Company covenants and agrees to give written
notice of any registration request under this Section 9.3 by any Holder or
Holders representing a Majority of the Warrants and/or Warrant Shares to all
other registered Holders of the Warrants and the Warrant Shares within ten (10)
days from the date of the receipt of any such registration request.

                           (c) In addition to the registration rights under
Section 9.2 and subsection (a) of this Section 9.3, at any time commencing
October 30, 2001 and expiring on the Expiration Date, the Holders of Warrants
and/or Warrant Shares shall have the right on one occasion, exercisable by
written request to the Company, to have the Company prepare and file with the
Commission a registration statement so as to permit a public offering and sale
by such Holders of their respective Warrant Shares, for a period not to exceed
one hundred eighty (180) days, until the first to occur of the following: (i)
the expiration of this Agreement, or (ii) all of the Warrant Shares requested to
be registered by such Holders have been sold; provided, however, that the
provisions of Section 9.4(b) hereof shall not apply to any such registration
request and registration and all costs incident thereto shall be at the expense
of the Holder or Holders making such request.


<PAGE>


                  8.4 Covenants of the Company With Respect to
Registration. In connection with any registration under Section 9.2 or 9.3
hereof, the Company covenants and agrees as follows:

                           (a) The Company shall use its best efforts to file a
registration statement within ninety (90) days of receipt of any demand
therefor, and to have any registration statements declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Warrant
Shares such number of prospectuses as shall reasonably be requested. The Company
shall also file such applications and other documents as may be necessary to
permit the sale of the Warrant Shares to the public during the Registration
Period in those states to which the Company and the holders of the Warrants
and/or Warrant Shares shall mutually agree.

                           (b) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to Sections 9.2 and 9.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses in connection with the
registration statement filed pursuant to Section 9.3(c)


                           (c) The Company will take all necessary action which
may be required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.

<PAGE>


                           (d) The Company shall indemnify the Holder(s) of the
Warrant Shares to be sold pursuant to any registration statement and each
person, if any, who controls such Holder(s) within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement.

                           (e) In order to provide for just and equitable
contribution under the Act in any case in which (i) any Holder of the Warrant
Shares or controlling person thereof makes a claim for indemnification but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 9.4(d) hereof
provide for indemnification in such case or (ii) contribution under the Act may
be required on the part of any Holder of the Warrant Shares, or controlling
person thereof, then the Company, any such Holder of the Warrant Shares, or
controlling person thereof shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or a Holder of
Warrant Shares, or controlling person thereof on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and such Holders of such
securities and such controlling persons agree that it would not be just and
equitable if contribution pursuant to this Section 10.4(e) were determined by
pro rata allocation or by any other method which does not take account of the
equitable considerations referred to in this Section 9.4(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
9.4(e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

                           (f) The Holder(s) of the Warrant Shares to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against any loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished in writing, by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such registration statement.

<PAGE>


                           (g) Nothing  contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.

                           (h) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be included in any registration
statement filed pursuant to Section 10.3 hereof, or permit any other
registration statement (other than a registration statement on Form S-4 or S-8)
to be or remain effective during a ninety (90) day period following the
effective date of a registration statement filed pursuant to Section 9.3 hereof,
without the prior written consent of the Holder(s) of the Warrants and Warrant
Shares representing a Majority of such securities or as otherwise required by
the terms of any existing registration rights granted prior to the date of this
Agreement by the Company to the holders of any of the Company's securities.

                           (i) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a "cold
comfort" letter dated the date of the closing under the underwriting agreement)
signed by the independent public accountants who have issued a report on the
Company's financial statements included in such registration statement, in each
case covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.

                           (j) The Company shall enter into an underwriting
agreement with the managing underwriters selected for such underwriting by
Holders holding a Majority of the Warrant Shares requested to be included in
such underwriting. Such agreement shall be satisfactory in form and substance to
the Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter. The Holder(s) shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Shares and may, at their
option, require that any or all of the representations, warranties and covenants
of the Company to or for the benefit of such underwriters shall also be made to
and for the benefit of such Holder(s). Such Holder(s) shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holder(s) and their intended
methods of distribution.

<PAGE>


                           (k) For purposes of this Agreement, the term
"Majority" in reference to the Warrants or Warrant Shares, shall mean in excess
of fifty percent (50%) of the then outstanding Warrants or Warrant Shares that
(i) are not held by the Company, or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission under the Act or
Rule 144 promulgated under the Act.

         9. Obligations of Holders. It shall be a condition  precedent
to the obligations of the Company to take any action pursuant to Section 9
hereof that each of the selling Holders shall:

                           (a) Furnish to the Company such information regarding
themselves, the Warrant Shares held by them, the intended method of sale or
other disposition of such securities, the identity of and compensation to be
paid to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required to
effect the registration of their Warrant Shares.

                           (b) Notify the Company, at any time when a prospectus
relating to the Warrant Shares covered by a registration statement is required
to be delivered under the Act, of the happening of any event with respect to
such selling Holder as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.

         10. Adjustments to Exercise Price and Number of Securities. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of the Warrants or the securities underlying the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events as follows:

                  10.1 Dividend, Subdivision and Combination. In case the
Company shall (i) declare a dividend or make a distribution on its outstanding
shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur.

<PAGE>

                  10.2 Adjustment in Number of Securities. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 11, the number
of Warrant Shares issuable upon the exercise at the adjusted Exercise Price of
each Warrant shall be adjusted to the nearest number of whole shares of Common
Stock determined by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of the applicable Warrant
Shares issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.

                  10.3 Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Articles of Incorporation of the Company as of the date
hereof, or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.

                  10.4 Merger or Consolidation. In case of any consolidation of
the Company with, or merger of the Company into, another corporation (other than
a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to each Holder a supplemental
warrant agreement providing that the Holder of each Warrant then outstanding
shall have the right thereafter (until the Expiration Date) to receive, upon
exercise of such Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger to which
the Holder would have been entitled if the Holder had exercised such Warrant
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 11. The above provision of
this subsection shall similarly apply to successive consolidations or mergers.

                  10.5 No Adjustment of the Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made:

                           (a)      Upon the issuance or sale of the Warrants or
the Warrant Shares;

                           (b)      Upon the  issuance  or sale of Common Stock
(or any other security convertible, exercisable, or exchangeable into shares of
Common Stock) upon the direct or indirect conversion, exercise, or exchange of
any options, rights, warrants, or other securities or indebtedness of the
Company outstanding as of the date of this Agreement or granted pursuant to any
stock option plan of the Company in existence as of the date of this Agreement,
pursuant to the terms thereof or issued pursuant to any stock purchase plan in
existence as of the date of this Agreement, pursuant to the terms thereof; or

                           (c)      If the amount of said adjustment shall be
less than ten cents ($.10) per share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least ten cents ($.10) per share.



<PAGE>


         11. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable, without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company for a new
Warrant Certificate of like tenor and date representing in the aggregate the
Holder's right to purchase the same number of Warrant Shares in such
denominations as shall be designated in such Warrant Certificate at the time of
such surrender.

         Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrant
Certificate, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.

         12. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
or other securities upon the exercise of the Warrants, nor shall it be required
to issue scrip or pay cash in lieu of fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.

         13. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof or the exercise or conversion of any
other exercisable or convertible securities underlying the Warrants. Every
transfer agent and warrant agent (collectively "Transfer Agent") for the Common
Stock and other securities of the Company issuable upon the exercise of the
Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized shares of Common Stock and other securities as shall
be requisite for such purpose. The Company will keep a copy of this Agreement on
file with every Transfer Agent for the Common Stock and other securities of the
Company issuable upon the exercise of the Warrants. The Company will supply
every such Transfer Agent with duly executed stock and other certificates, as
appropriate, for such purpose. The Company covenants and agrees that, upon each
exercise of the Warrants and payment of the Purchase Price, all shares of Common
Stock and other securities issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any stockholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock and other securities
issuable upon the exercise of the Warrants and the securities underlying the
securities issuable upon exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges or securities
associations on which the Common Stock issued to the public in connection
herewith may then be listed and/or quoted.

<PAGE>

         14. Notices to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holder(s) of the Warrants the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Warrants and their exercise, any of the
following events shall occur:

                           (a)      the Company  shall take a record of the
holders of its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or retained
earnings, as indicated by the accounting treatment of such dividend or
distribution on the books of the Company; or

                           (b)      the Company shall offer to all the holders
of its Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or

                           (c)      a dissolution,  liquidation or winding up of
the Company (other than in connection with a consolidation or merger) or a sale
of all or substantially all of its property, assets and business as an entirety
shall be proposed; then in any one or more of said events, the Company shall
give written notice to the registered holders of the Warrants of such event at
least fifteen (15) days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled to
such dividend, distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.

         15. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:

                           (a)      if to the registered Holder of the Warrants,
to the address of such Holder as shown on the books of the Company; or

                           (b)      if to the Company, to the address set forth
in Section 4 hereof or to such other address as the Company may designate by
notice to the Holders.


<PAGE>


         16. Investment Representation. The Holder represents and warrants that
the Warrants and any shares of Common Stock to be issued upon exercise of the
Warrants are and will be acquired by the Holder solely for the Holder's own
account for investment and not with a view to or for sale in connection with any
distribution thereof. The Holder agrees that the Holder will not, directly or
indirectly, offer, transfer, sell, pledge, convey, gift, assign, encumber,
alienate, hypothecate or otherwise dispose of all or any shares of Common Stock
underlying the Warrants (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of all or any of the shares of Common Stock underlying
the Warrants), except in compliance with this Agreement, the Act and the rules
and regulations of the Commission thereunder, and in compliance with applicable
state securities or "blue sky" laws.

         18. Supplements; Amendments; Entire Agreement. This Agreement contains
the entire understanding between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party against whom enforcement of the modification or amendment is
sought. The Company and the Holder(s) may from time to time supplement or amend
this Agreement in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Holders may deem necessary
or desirable and which the Company and the Holder deem shall not adversely
affect the interests of the Holders of Warrant Certificates.

         19. Successors. All of the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holder(s)
and their respective successors and assigns hereunder.

         20. Survival of Representations and Warranties. All statements in any
schedule, exhibit or certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated by
this Agreement, shall be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this Agreement or pursuant hereto shall survive.

         21. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.

         22. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.

         23. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.


<PAGE>


         24. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and
DeZwirek and any other registered Holder(s) of the Warrant Certificates or
Warrant Shares any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and DeZwirek and any other Holder(s) of the Warrant Certificates or
Warrant Shares.

         25. Counterparts. This Agreement may be executed in any  number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.

                                            CECO ENVIRONMENTAL CORP.


                                            By: /s/  Richard J. Blum
                                               ---------------------------------

                                            Name: /s/ Richard J. Blum
                                                 -------------------------------

                                            Title: /s/ President
                                                  ------------------------------

                                              /s/ Phillip DeZwirek
                                            ------------------------------------
                                            Phillip DeZwirek



<PAGE>






                                    EXHIBIT A

                          [FORM OF WARRANT CERTIFICATE]

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THE TRANSFER OR EXCHANGE OF THE WARRANTS OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.

                            EXERCISABLE ON OR BEFORE
                                      5:30 P.M., NEW YORK TIME, AUGUST 14, 2010

                                Warrant No. ___


                               WARRANT CERTIFICATE

         This Warrant Certificate certifies that ______________ , or registered
assigns, is the registered holder of Warrants to purchase initially, at any time
from August 14, 2001 until 5:30 p.m., New York time, on August 14, 2010
("Expiration Date"), up to __________ shares, of fully-paid and non-assessable
common stock, $.01 par value ("Common Stock") of CECO Environmental Corp., a New
York corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events, of $2.0625 per share upon surrender of this
Warrant Certificate and payment of the Exercise Price at the principal executive
office of the Company, but subject to the conditions set forth herein. Payment
of the Exercise Price shall be made by certified or official bank check in
United States dollars payable to the order of the Company.

         No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter expire and shall be void.

         The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.



<PAGE>




         The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.

         Upon due presentment for registration of transfer of this Warrant
Certificate at the principal executive office of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.

         Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered of unexercised Warrants.

         The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

         All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.

         This Warrant Certificate does not entitle any Warrant holder to any of
the rights of a shareholder of the Company.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.

Dated as of __________________, 200__.


ATTEST:                                           CECO ENVIRONMENTAL CORP.

                                                  By:___________________________
_______________________________
Secretary
                                                  Name:_________________________

                                                  Title:________________________



<PAGE>



          [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.1 OF THE
                               WARRANT AGREEMENT]


         The undersigned hereby irrevocably elects to exercise the right,
represented by Warrant Certificate No. , to purchase shares of Common Stock (as
defined in the Warrant Agreement described below) and herewith tenders in
payment for such securities a certified or official bank check payable in United
States dollars to the order of CECO Environmental Corp., a New York corporation
(the "Company") in the amount of $____________, all in accordance with the terms
of Section 4.1 of the Warrant Agreement dated as of August 14, 2000 between the
Company and Phillip DeZwirek. The undersigned requests that a certificate for
such securities be registered in the name of the undersigned, and if said number
of shares of Common Stock shall not be all the shares of Common Stock
purchasable hereunder, that a new Warrant Certificate for the balance of the
shares of Common Stock purchasable under the within Warrant Certificate be
registered in the name of the undersigned warrant holder or his assignee as
below indicated and delivered to the address stated below.


Dated:____________________



                                             Signature:_________________________
                                             (Signature  must  conform  in  all
                                             respects  to  name of  holder as
                                             specified on the face of the
                                             Warrant Certificate.)

                          Address:______________________________________________

                          ______________________________________________________



                          ______________________________________________________
                          (Insert Social Security or Other Identifying Number of
                          Holder)

Signature Guaranteed:___________________________________________________________

(Signature must be guaranteed by a bank, savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>EXHIBIT 10.34
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.34

                        INCENTIVE STOCK OPTION AGREEMENT

                            CECO ENVIRONMENTAL CORP.
                             1997 STOCK OPTION PLAN

THIS AGREEMENT is dated and made effective as of January 20, 2000 ("Effective
Date") by and between CECO ENVIRONMENTAL CORP. a New York corporation (the
"Company"), and MARSHALL J. MORRIS ("Optionee").

                                   WITNESSETH:

WHEREAS, Optionee on the date hereof is an officer of the Company or one of its
Subsidiaries; and

WHEREAS, the Company desires to grant an incentive stock option to Optionee to
purchase shares of the Company's Common Stock pursuant to the Company's 1997
Stock Option Plan, as amended (the "Plan"); and

WHEREAS, the Board of Directors of the Company has authorized the grant of an
incentive stock option to Optionee and has determined that, on the Effective
Date, the Fair Market Value of Option Stock of the Company is $2.50 per share.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:

1. Grant of Option. The Company hereby grants to Optionee as of the Effective
Date the right and option (the "Option") to purchase as many as fifty thousand
(50,000) shares of Option Stock ("Shares") at an exercise price of $2.50 per
share on the terms and conditions set forth herein and subject to the terms and
conditions of the Plan. This Option is intended to qualify as an "incentive
stock option" within the meaning of Section 422, or any successor provision, of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.

All capitalized terms not defined in this Agreement shall have the meaning set
forth in the Plan.

2. Duration and Exercisability.

a. Vesting/Exercise Period. The Option shall become exercisable as to portions
of the Shares as follows: (i) the Option shall not be exercisable with respect
to any of the Shares until January 20, 2001 (the "First Vesting Date"); (ii) if
Optionee has continuously provided services to the Company or any Subsidiary or
Parent of the Company from the Effective Date through the First Vesting Date and
has not been Terminated (as hereafter defined) on or before the First Vesting
Date, then on the First Vesting Date the Option shall become exercisable as to
twenty percent (20%) of the Shares (10,000 Shares); and (iii) thereafter,
<PAGE>

provided that Optionee continuously provides services to the Company or any
Subsidiary of the Company and is not Terminated, upon each successive
anniversary of the First Vesting Date, the Option shall become exercisable as to
an additional twenty percent (20%) of the Shares (10,000 Shares); provided, that
the Option shall in no event ever become exercisable with respect to more than
100% of the Shares. The Shares vesting under the Option have been limited to the
number of Shares allowed to conform to the $100,000 limit set forth at Section
9(c) of the Plan.

b. Expiration . The Option shall expire on January 20, 2010 ("Expiration Date")
and must be exercised, if at all, on or before the earlier of the Expiration
Date and any date on which the Option terminated in accordance with the
provisions of Section 3.

c. Lapse Upon Expiration. To the extent that this Option is not exercised prior
to the applicable expiration date set forth in Section 2(b) or Section 3 of this
Agreement, all rights of Optionee under this Option shall thereupon be
forfeited.

3. Termination.

a. Termination for Any Reason Other than Death, Disability or a Change of
Control. If Optionee is Terminated for any reason other than his death,
Disability or a Change of Control (both terms as hereafter defined), this Option
shall be exercisable only to the extent the Option was exercisable on the date
of Termination, but had not previously been exercised, and shall expire on the
earlier of (i) the close of business three months after the Termination Date (as
hereafter defined) and (ii) the Expiration Date. Notwithstanding the foregoing,
if the Optionee is terminated for Cause, then the Option shall terminate
immediately on the Optionee's Termination Date.

b. Termination Because of Death or Disability. If Optionee is Terminated because
of his death or his Disability (or Optionee dies within three (3) months after a
Termination other than because of his Disability or for Cause), then this Option
shall be exercisable by Optionee, or the person or persons to whom Optionee's
rights under this Option shall have passed by Optionee's will or by the laws of
descent and distribution, only to the extent the Option was exercisable on the
date of Optionee's Termination, but had not previously been exercised, and shall
expire on the earlier of: (i) the close of business six months after Optionee's
Termination Date and (ii) the Expiration Date.

c. Change of Control. Notwithstanding the provisions of Section 2(a), upon a
Change of Control (and without regard for any Termination or absence thereof),
the Option shall be fully vested and exercisable by Optionee. The provisions of
Section 3(a) or 3(b) shall govern such Option thereafter, as the case may be.

A "Change of Control" shall mean a sale, assignment or other transfer
(collectively, "Transfer") of legal or beneficial ownership of shares of the
voting stock of the Company (other than as security for a loan), representing
<PAGE>

more than one-half of the votes of all such shares of stock then outstanding, to
one or more persons other than the owners of stock in the Company or their
affiliates or its Subsidiaries on the Effective Date (collectively, the "present
owners"). A Change of Control will occur on the date that the present owners
cease to own more than one-half of the shares of the voting stock of the Company
then outstanding. For this purpose, an "affiliate" is an ancestor or lineal
descendant of an individual shareholder of the Company; the grantor, trustee or
beneficiary of a shareholder of the Company that is a trust; or any person that
directly, or indirectly controls, or is controlled by, or is under common
control with a shareholder of the Company.

d. Definitions.

"Termination" or "Terminated" means that Optionee has for any reason ceased to
provide services as an employee of the Company or Subsidiary of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Administrator, provided that such leave is for a period of not
more than ninety (90) days, or reinstatement upon the expiration of such leave
is guaranteed by contract or statute. The Administrator shall have sole
discretion to determine whether Optionee has ceased to provide services and the
effective date on which Optionee ceased to provide services (the "Termination
Date").

"Disability" means a permanent and total disability within the meaning of
Section 22(e)(3) of the Code (as provided under Section 422(c)(6), or such
applicable successor provision, of the Code), as determined by the
Administrator.

"Cause" means that Optionee:

         (a) shall have been convicted of any felony or a crime involving fraud,
             theft, misappropriation, dishonesty, or embezzlement;

         (b) shall have committed intentional acts that materially impair the
             goodwill or business of the Company or cause material damage to its
             property, goodwill or business; or

         (c) shall have failed to perform his material duties to the Company
             (other than as a result of a short-term disability (i.e., a
             disability that does not fall within the previously defined
             parameters of a Disability), or a short term disability or medical
             emergency involving a member of the Optionee's immediate family, or
             as a result of any Company approved leave).

4. Manner of Exercise.

a. General. The Option may be exercised only by Optionee (or other proper party
in the event of death or incapacity), subject to the conditions of the Plan and
this Agreement, and subject to such other administrative rules as the
<PAGE>

Administrator deems advisable, by delivering written notice of exercise to the
Company at its principal office. The notice shall state the number of Shares
exercised and shall be accompanied by payment in full of the Option price for
all Shares exercised pursuant to the notice. Any exercise of the Option shall be
effective upon receipt of such notice by the Company together with payment that
complies with the terms of the Plan and this Agreement. The Option may be
exercised with respect to any number or all of the shares as to which it can
then be exercised and, if partially exercised, may be so exercised as to the
unexercised shares at any time and from time to time prior to expiration of the
Option as provided in this Agreement.

b. Form of Payment. Subject to approval by the Administrator, payment of the
Option price by Optionee shall be in the form of cash, personal check, certified
check, or where permitted by law and provided that a public market for the
Company's stock exists: (i) through a "same day sale" commitment from Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby Optionee irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay for the exercise
price and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the Company; (ii) through a
"margin" commitment from Optionee and a NASD Dealer whereby Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (iii) by tender of shares of Common Stock of the Company having a
Fair Market Value on the date received by the Company equal to the exercise
price for the Shares exercised. Optionee shall be solely responsible for any
income or other tax consequences from any payment for Shares with Optionee's
Common Stock of the Company.

c. Stock Transfer Records. Provided that the notice of exercise and payment are
in form and substance satisfactory to counsel for the Company, as soon as
practicable after the effective exercise of all or any part of the Option,
Optionee shall be recorded on the stock transfer books of the Company as the
owner of the Shares purchased, and the Company shall deliver to Optionee, or to
the NASD Dealer, as the case may be, one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer documentary
stamp taxes shall be paid by the Company. Optionee shall pay all other costs of
the Company incurred to issue such Shares to such NASD Dealer.

Shares purchased pursuant to exercise hereunder: (i) may be deposited with a
NASD Dealer designated by Optionee, in street name, if so provided in such
exercise notice accompanied by all applications and forms reasonably required by
the Administrator to effect such deposit, or (ii) may be issued to Optionee and
such other person, as joint owners with the right of survivorship, as is
specifically described in such exercise notice. Optionee shall be solely
responsible for any income or other tax consequences of such a designation of
ownership hereunder (or the severance thereof).
<PAGE>

5. Miscellaneous.

a. Employment Rights as Shareholder. This Agreement shall not confer on Optionee
any right with respect to continuance of employment by the Company or any
Subsidiary, nor shall it affect the right of the Company to Terminate such
employment. Optionee shall have no rights as a shareholder with respect to
Shares subject to this Option until such Shares are issued to Optionee upon the
exercise of this Option. No adjustment shall be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such shares are
issued, except as provided in Section 12 of the Plan.

b. Securities Law Compliance. The exercise of the Option and the issuance and
transfer of Shares shall be subject to compliance by the Company and Optionee
with all applicable requirements of federal and state securities laws and with
all applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer.

c. Mergers, Recapitalization, Stock Splits, Etc. Subject to the provisions of
Section 3(c) of this Agreement, the provisions of Section 11 of the Plan, as
amended effective the Effective Date, shall govern all Options in the event of
any reorganization, merger, consolidation, recapitalization, reclassification,
change in par value, stock split-up, combination of shares or dividend payable
in capital stock, or other such transaction described under Section 11 of the
Plan, and the Company reserves all discretion provided therein.

d. Withholding Taxes on Disqualifying Disposition. In the event of a
disqualifying disposition of the Shares acquired through the exercise of this
Option, Optionee hereby agrees to promptly provide the Company written notice of
such disposition, which notice shall be deemed delivered when received by the
Company. Upon notice of a disqualifying disposition, the Company may take such
action as it deems appropriate to insure that, if necessary to comply with all
applicable federal or state income tax laws or regulations, all applicable
federal and state payroll, income or other taxes are withheld from any amounts
payable by the Company to Optionee. If the Company is unable to withhold such
federal and state taxes, for whatever reason, Optionee hereby agrees to pay to
the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. Optionee may, subject to the
approval and discretion of the Administrator or such administrative rules it may
deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company's Common Stock having
a fair market value equal to such obligations. For the purpose of this Section
5(d), a "disqualifying disposition" means a sale or other transfer of any Shares
on or before the later of (i) the date two years after the Effective Date and
(ii) the date one (1) year after transfer of such Shares to Optionee upon
exercise of the Option, as more particularly set forth at Section 422(a)(1) of
the Code

e. Nontransferability. The Option may not be transferred in any manner other
than by will or by the laws of descent and distribution and may be exercised
during the lifetime of Participant only by Participant. The terms of the Option
shall be binding upon the executors, administrators, successors and assigns of
Participant.
<PAGE>

f. 1997 Stock Option Plan. The Option evidenced by this Agreement is granted
pursuant to the Plan, as amended the Effective Date, a copy of which Plan has
been made available to Optionee and is hereby incorporated into this Agreement.
This Agreement shall be subject to and in all respects limited and conditioned
as provided in the Plan. The Plan governs this Option and, in the event of any
questions as to the construction of this Agreement or in the event of a conflict
between the Plan and this Agreement, the Plan shall govern, except as the Plan
otherwise provides.

g. Accounting Compliance. Optionee agrees that, in the event of a transaction
subject to Section 12, treated as a "pooling of interests" under generally
accepted accounting principles, and Optionee is an affiliate of the Company or
any Subsidiary (as defined in Section 12 of the Plan) at the time of such change
of control transaction, Optionee will comply with all requirements of Rule 145
of the Securities Act of 1933, as amended, and the requirements of such other
legal or accounting principles, and will execute any documents necessary to
ensure such compliance.

h. Stock Legend. The Administrator may require that the certificates for any
Shares purchased by Optionee (or, in the case of death, Optionee's successors)
bear an appropriate legend to reflect the restrictions of Section 5(g), of this
Agreement.

i. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and Optionee and any successor or
successors of Optionee permitted by Section 3 or Section 5(e) of this Agreement.

j. Interpretation. The Administrator shall have the sole discretion to interpret
and administer the Plan. Any determination made by the Administrator with
respect to any Option shall be final and binding on the Company and on all
persons having an interest in the Option granted under this Agreement and the
Plan.

k. Entire Option. The Plan, as amended, is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersede all
prior understandings and agreements with respect to such subject matter.

l. Successors and Assigns. The Company may assign any of its rights under the
Option. The Option shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, the Option shall be binding upon Optionee and Optionee's
heirs, executors, administrators, legal representatives, successors and assigns.

m. Governing Law. The Option shall be governed by and construed in accordance
with the internal laws of the State of Ohio, without regard to that body of law
pertaining to choice of law or conflict of law.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.

CECO ENVIRONMENTAL CORP.                             OPTIONEE



By: /s/ Richard Blum                             /s/ Marshall J. Morris
    ---------------------------                  -------------------------------
    Its: /s/ President                           Marshall J. Morris
         ----------------------

The Grant set forth in this
Agreement has been approved by
The Board of Directors of CECO
Environmental Corp.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.35
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>EXHIBIT 10.35
<TEXT>

<PAGE>


                                                                   EXHIBIT 10.35

                                    AGREEMENT

         This Separation Agreement and General Release (the "Agreement") is made
and entered into by and between Steven I. Taub ("Employee") and CECO Filters,
Inc., a Delaware corporation (sometimes referred to as the "Company") and CECO
Environmental Corp., a New York corporation ("CECO").

1. Separation Date. Employee's employment with the Company ends June 30, 2000
(the "Separation Date"). As of the Separation Date (i) Employee shall resign as
President and Chief Executive Officer and as a director of the Company, (ii) the
Employment Agreement between Employee, Company and CECO dated September 30,
1997, as amended, and all other benefits and financial arrangements between
Company and Employee shall automatically terminate except as specifically set
forth herein, (iii) all options issued to Employee pursuant to the Incentive
Stock Option Agreement between CECO and Employee dated October 1, 1997 ("Stock
Option Agreement") shall immediately terminate, notwithstanding Paragraph 2.b of
the Stock Option Agreement.

2. Services. Employee shall cooperate in achieving an orderly transition of
responsibility and information within the Company. In addition, following the
Separation Date and through and including October 28, 2000 (the "Extension
Date"), Employee shall make himself reasonable available to assist the Company
in its business operations. Company shall give Employee reasonable notice of
where and when Employee's services are required and Employee shall use his
reasonable efforts to accommodate such requirements. Employee shall be
reimbursed for such reasonable and authorized expenditures which he may incur in
the performance of services provided hereunder. Such authorized expenditures
will be reimbursed upon presentation by Employee to the Company of receipts
relating thereto in the form usually required by the Company according to its
regular policy and in conformity with applicable rules and regulations of the
Internal Revenue Service.

3. Payment of Earned Wages and Vacation Pay. Not later than the next regularly
scheduled payday on or after the Separation Date, the Company will pay Employee
all wages that he earned at the Company through the Separation Date, as well as
for all vacation days that he had accrued but not used as of that date, in
accordance with the following Schedule:

                         $4,451.92 payable July 13, 2000
                         $2,225.96 payable July 13, 2000
                         $4,788.40 payable July 13, 2000
                         $9,577.00 payable July 27, 2000
                         $9,577.00 payable Aug 10, 2000
                         $9,577.00 payable Aug 24, 2000
                         $9,577.00 payable Sept 7, 2000
                         $9,577.00 payable Sept 21, 2000
                         $9,577.00 payable Oct 5, 2000
                         $9,577.00 payable Oct 19, 2000
                         $9,577.00 payable Nov 2, 2000
<PAGE>

4. Consideration from the Company to Employee.

   In consideration for the releases and covenants by Employee set forth in this
Agreement, CECO agrees that, provided that Employee fully complies with all of
his covenants and obligations under this Agreement (including without limitation
those which survive the end of his employment):

         (a) CECO shall purchase from Employee all of his CECO stock,
   aggregating 441,297 shares, at the purchase price of $2.125 per share,
   pursuant to a Stock Purchase Agreement in substantially the form attached
   hereto as Exhibit A;

         (b) CECO shall purchase from Hilary Taub CECO stock owned by her that
   was previously transferred from Employee to Hilary Taub, aggregating 124,703
   shares at the purchase price of $2.125 per share, pursuant to a Stock
   Purchase Agreement in substantially the form attached hereto as Exhibit B;
   and

         (c) Company shall pay Taub $678.37 per day through the Extension Date
   for a total of $81,404.40 (the "Additional Payment"). The Additional Payment
   shall not include amounts paid for Employee's major medical insurance costs
   which shall be paid by Employer until the Extension Date. Payments of the
   Additional Payment shall be made on Company's regularly scheduled paydays.

         The Company, at its option, may terminate this Agreement in the event
that Hilary Taub does not enter into and perform the terms of a Stock Purchase
Agreement pursuant to (b) above.

5. Benefits. Employee's coverage under all of the Company's benefit programs and
plans other than the major medical insurance plan will end as of the Separation
Date. Employee's coverage under the Company's major medical insurance plan will
end as of the Extension Date, and will be paid for by Employer until such date.
Employee shall be eligible, at his sole cost and expense, to elect health care
continuation coverage as of the Extension Date to the extent required by the
Federal Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") or
Pennsylvania law, as the case may be. Employee shall be entitled to a
certificate of creditable coverage to the extent required by the Federal Health
Insurance Portability and Accountability Act. The Company will cooperate with
the transfer of Employee's existing 401(k) plan funds from the Company's 401(k)
plan as directed by Employee.

6. Released Parties. "Released Parties," as used in this Agreement, shall mean:

   (a) with respect to Employee, (1) the Company and any entity or person that
controls, is controlled by or is under common control with, including without
limitation, CECO and CECO Group, Inc.; and (2) all past and present partners,
members, officers, directors, shareholders, agents, employees, officials,
employee benefit plans (and their sponsors, fiduciaries (to the extent permitted
by the Employee Retirement Income Security Act of 1974) and administrators),
insurers, and attorneys of any entity or person described in part (1) of this
Paragraph 6(a); and
<PAGE>

   (b) with respect to the Company, Employee.

7. Release. In consideration for the respective promises described herein and
for the stock purchases and other consideration described in paragraph 3 above,
which Employee acknowledges are in excess of any earned salary, wages or
benefits due and owing to Employee, Employee, on behalf of himself and his
agents, representatives, attorneys, assigns, heirs, executors, and
administrators, and Company, on behalf of itself, its agents, representatives,
attorneys, successors and assigns, fully releases each of the Released Parties
indicated with respect to such releasing party in Paragraph 6 hereof, from any
and all liability, claims, demands, actions, causes of action, suits,
grievances, debts, sums of money, agreements, promises, damages, back and front
pay, costs, expenses, attorneys fees, and remedies of any type, known or
unknown, liquidated or unliquidated, absolute or contingent, at law or in
equity, which were or could have been filed with any Federal, state, or local
court, agency, arbitrator or any other entity, regarding any act or failure to
act that occurred up to and including the date on which Employee signs this
Agreement, including but not limited to relating to Employee's employment with
and separation of employment from the Company and including but not limited to
all claims, actions or liability under: (1) Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866 (42 U.S.C.
ss.1981), the Age Discrimination in Employment Act, the Americans With
Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the National
Labor Relations Act, the Employee Retirement Income Security Act and the Family
and Medical Leave Act, (2) any other federal, state or local statute, ordinance,
regulation, or constitutional provision regarding employment, payment of wages,
compensation, employee benefits, termination of employment, or discrimination in
employment; and (3) the common law of the United States, Pennsylvania or any
other state relating to contracts, wrongful discharge, fraud, defamation, or any
other matter. This Agreement shall not waive or release any rights or claims
that Employee or the Company may have against the other which arise after the
date that Employee signs this Agreement. Employee does herein waive his right to
re-employment, reinstatement and Employee does herein agree not to reapply for
employment with the Company or CECO or any affiliate therof.

8. Covenant Not To Sue. Except for an action arising out of a breach of this
Agreement, each of CECO and Employer on the one hand, and Employee on the other
hand agrees, on behalf of itself/himself and its/his agents, representatives,
attorneys, successors, assigns, heirs, executors, and administrators, never to
bring (or cause to be brought) any claim, action or proceeding against any of
the Released Parties regarding any act or failure to act that occurred up to and
including the date on which CECO or Employer/Employee signs this Agreement,
including but not limited to any claim, action or proceeding relating to
Employee's employment with or separation of employment from the Company. If any
such claim, action or proceeding has been brought before such party signs this
Agreement, the tender of this Agreement shall be sufficient to obtain a
dismissal of such claim, action or proceeding and the complaining party shall
pay for all attorney fees and costs incurred by the other party to enforce this
covenant. The complaining party must and will take all steps necessary to cause
it to be withdrawn and dismissed with prejudice. If any such claim, action or
proceeding is brought after Employee signs this Agreement, Employee will
immediately become ineligible for any further consideration from the Company
under this Agreement and must and will return to the Company all consideration
already received from the Company under this Agreement, except that the purchase
<PAGE>

of stock by CECO from Employee and Hilary Taub shall not be reversed or
otherwise affected by the bringing of such claim, action or proceeding.

9. Non-admission. This Agreement does not constitute an admission by any of the
Released Parties, and the Company specifically denies, that any action that any
of the Released Parties has taken or has failed to take with respect to Employee
was wrongful, unlawful, or susceptible of inflicting any damages or injury on
Employee.

10. Confidentiality of Agreement. Except as may be specifically required by law,
Employee will not (without the prior written consent of the Chairman of CECO)
disclose, publish, indicate, or in any manner communicate any of the terms of
this Agreement to any other person or entity except his attorney(s) or
accountant(s). Prior to any such authorized disclosure, Employee will inform
each such person to whom disclosure is to be made that the terms of this
Agreement are confidential and secure the agreement of each such person to
maintain the confidentiality of all terms of this Agreement. If Employee is
specifically required by law to disclose any of the terms or provisions of this
Agreement, Employee will, before making any such disclosure, provide prompt
written notice to the Chairman of CECO in which Employee shall describe the
reason for, and the scope, nature, and timing of, any such legally required
disclosure.

11. Confidential Information. Employee acknowledges and agrees that during the
course of his employment he has been in continuous contact with customers,
suppliers and others doing business with the Company throughout the world.
Employee further acknowledges that the performance of his duties has exposed him
to data and information of a confidential nature concerning the business and
affairs of the Company and its customers and suppliers, including but not
limited to information relative to strategic plans, business model, sales
methods, new programs, profitability analysis and related information, customers
and customer buying patterns, suppliers and sources of supply, and the entirety
of the systems, methods, processes and procedures and operations utilized in the
provision of goods and services to customers. All such data (collectively the
"Confidential Information") is vital, sensitive, confidential, and proprietary
to the Company and/or its customers and suppliers.

   Employee expressly agrees that as an employee of the Company he has been
under a duty of confidentiality, and that this duty extends indefinitely beyond
his employment. Employee expressly agrees that he will not, directly or
indirectly, whether as a director, shareholder, owner, partner, member, employee
or agent of any business, or in any other capacity, make known, disclose,
furnish, make available, or utilize any of the Confidential Information.
Employee's obligation under this paragraph with respect to particular
Confidential Information shall terminate at such time (if any) as the
Confidential Information in question becomes generally known to the public other
than through a breach of Employee's obligations hereunder. The obligations or
confidentiality hereunder shall not relate to information which:

         (a) presently is in the public domain;

         (b) hereafter becomes part of the public domain by publication or
otherwise through no action of Employee or any person or entity subject to
confidentiality requirements similar to those contained in this agreement; or
<PAGE>

         (c) hereafter is obtained by Employee from a source other than a
Released Party, which was not under an obligation of confidentiality to a
Released Party.

12. Non-Solicitation.

    (a) Employee agrees that, for one year following the Extension Date, he will
not approach or attempt to entice away or in any other manner solicit, persuade
or attempt to persuade: (i) any employee of the Company to discontinue such
employee's employment with the Company, or (ii) any client, customer, affiliate,
sponsor or strategic partner of the Company to discontinue or otherwise reduce
or modify the amount or manner of business with the Company

    (b) Employee acknowledges that the Confidential Information is proprietary
property of the Company, as are the relationships of the Company with its
clients, customers, affiliates, sponsors and strategic partners, from which the
Company derives a competitive advantage and economic value, and the
confidentiality of which must be maintained; and that any disclosure of
Confidential Information or breach of the non-solicitation provisions of
Paragraph 12(a) or breach of the provisions of Paragraph 13 would cause
irreparable harm to the Company and that monetary damages alone would not be
sufficient to cure any such resultant harm. Employee further acknowledges that
the restrictions contained in Paragraphs 11, 13 and this Paragraph 12 are
reasonable in light of the interest of the Company in protecting its businesses,
and that such restrictions will not prevent him from earning a livelihood in
Employee's chosen career and business. Therefore, in the event of any actual or
threatened breach by Employee of any of the provisions of Paragraph 11,
Paragraph 12, or Paragraph 13 of this Agreement, the Company will be entitled to
injunctive relief without posting a bond, in addition to such other rights and
remedies which may be available to the Company at law or in equity.

13. Non-Compete; Right of First Refusal. Employee agrees that for a period
commencing on the Separation Date and continuing for one year from the Extension
date, Employee will not, within the continental Unites States, directly or
indirectly engage in the business of the manufacture and sale of fiber bed
filter and bag house medium pollution control systems or in any other business
competitive with the Company. Directly or indirectly engaging in the business of
the manufacture and sale of fiber bed filter and bag house medium pollution
control systems or in any competitive business shall include engaging in
business as owner, partner or agent, or as employee of any person, firm or
corporation engaged in such business, or being interested directly or indirectly
in any such business conducted by any person, firm, corporation, or other entity
or association. Employee's ownership of less than five percent (5%) of the
outstanding voting securities of any publicly traded company shall not violate
the foregoing prohibition.

   Notwithstanding the foregoing, Employee, commencing after the Extension Date,
may engage in consulting activities involving environmental matters, including
air quality improvement matters; provided, that in the event that Employee is
presented with or finds an opportunity for CECO or its affiliates at any time
within one (1) year from the Extension Date, Employee shall first present such
opportunity to CECO. In the event that CECO declines an opportunity after
<PAGE>

Employee notifies CECO in writing of such opportunity, Employee may offer such
opportunity to another company that may be engaged in a similar business to CECO
or the Company. If CECO does not notify Employee that CECO or one of its
affiliates is interested in pursuing such opportunity within 10 days of
receiving written notice of an opportunity, CECO shall be deemed to have
declined such opportunity; provided, that if the circumstances or terms of such
opportunity change, Employee shall again be required to first offer such
opportunity to CECO prior to any other party. An opportunity for CECO shall
include the identification of (i) potential customers for CECO or its
affiliates, (ii) available equipment or services for acquisition by CECO or its
affiliates, (iii) strategic alliance opportunities for CECO or its affiliates,
and (iv) such other opportunities that may benefit CECO or its affiliates. With
respect to opportunities brought to CECO by Employee that CECO pursues and
closes, CECO shall treat Employee as a finder and shall compensate him as agreed
to among the parties based upon similar customary transactions. "Affiliates" for
purposes of this Agreement means with respect to any party, any entity or person
that, directly or indirectly, controls, is controlled by or is under common
control with such party. For purposes of this Section 13, the term "opportunity"
shall mean a corporate opportunity that is or represents a transaction, business
arrangement, acquisition, deal, purchase, sale, partnership, joint venture or
alliance opportunity, potential customer or vendor relationship or other
business activity of the type or nature in which CECO or any of its direct or
indirect subsidiaries are currently involved or otherwise engaged as of the date
of this Agreement.

14. Return of Company Materials and Property and Delivery of Current Activity
    Report Upon Termination.

    (a) No later than two business days after the Separation Date, Employee
shall return to the Company all the Company property, including but not limited
to equipment, keys, phone cards, passkeys, documents, memoranda, correspondence,
manuals, handbooks, and any and all other records or documents, including
information stored on computer disks or in computer readable form, with no right
of retention of any copy, except that Employee may retain such items as are
necessary for Employee to perform the services set forth in paragraph 2;
provided, all such items shall be returned to the Company no later than two
business days after the Extension Date. The Company may assert its authority and
rights under this Paragraph 14(a) by inspection.

    (b) No later than five (5) business days after the Separation Date, and in
accordance with Employee's duties as an employee of the Company through the
Separation Date, Employee shall deliver to the Company a complete activity
report of recent, current and pending contacts and relationships with all
clients, customers, affiliates, strategic partners, and potential clients,
customers, affiliates, and strategic partners, of the Company. Such activity
report shall be in writing and shall present, in an organized and easily
understood manner,

    (i)  the names and address of all such parties,

    (ii) the name, telephone number, facsimile number and e-mail address (as may
         apply) of each person with whom Employee has had any substantive
         contact for each such party,
<PAGE>

        (iii) the last date of any personal meeting and the last date of any
              conversation without a personal meeting with each such contact
              person,

        (iv)  the substance of the last such meeting and last such conversation,
              as well as a summary of all prior personal meetings and
              conversations with such contact person in which substantive
              business discussions occurred,

        (v)   the status of all such discussions, and

        (vi)  all other information known to Employee upon which the Company
              reasonably would conclude that it may have any obligation
              whatsoever to any such parties as a result of the business
              activity of Employee, or any other employee of the Company

15. No Encouragement of Claims, No Disparagement.

    (a) Employee will not encourage any person to file a lawsuit, charge, claim,
or complaint against any of the Released Parties. Employee will not assist any
person who has filed a lawsuit, charge, claim, or complaint against any of the
Released Parties unless and only to the extent that he is required to render
such assistance pursuant to a lawful subpoena or other legal obligation. If
Employee is served with any such legal subpoena or becomes subject to any such
legal obligation, he will provide prompt written notice to the chief executive
officer of the Company, in which he shall enclose a copy of the subpoena and any
other documents describing the legal obligation.

    (b) Neither Employee nor the Company shall at any time, including without
limitation any time following the last payment by the Company to Employee under
this Agreement, make any negative or disparaging statements about Employee's
employment with the Company, the termination of that employment or any other
dealings of any kind between Employee and the Company and/or CECO, to any third
party, including without limitation, any past, present or prospective employee
of the Company or any of its affiliates, or any client, customer, affiliate,
partner, sponsor or potential client, customer, affiliate, partner or sponsor of
the Company or its affiliates (including without limitation any person employed
by or otherwise associated with any education institution in the business and
educational community in which the Company or its affiliates conducts business);
provided, the Company shall not be liable for any unauthorized disparaging
statement by any employee of the Company provided that the Company exercises
reasonable due diligence to inform and direct all of its employees of the
existence and obligations of the Company under this non-disparagement covenant.

16. Entire Agreement. This Agreement contains the entire agreement and
understanding between Employee and the Company concerning the matters described
herein, and supersedes all prior agreements, discussions, negotiations,
understandings, and proposals of the parties. The terms of this Agreement cannot
be changed except in a subsequent document signed by Employee and an authorized
representative of the Company.
<PAGE>

17. Costs and Attorneys' Fees. If either party to this Agreement institutes a
legal action to enforce its rights under any provision of this Agreement, the
non-prevailing party in such action shall be liable to the prevailing party for
the costs and reasonable attorneys' fees incurred by the prevailing party in
connection with the action.

18. Severability. The provisions of this Agreement shall be severable and the
invalidity of any provision shall not affect the validity of the other
provisions; provided, however, that if Employee brings a lawsuit, claim, charge,
or complaint against any of the Released Parties, and a court of competent
jurisdiction finds that a release or waiver of claims or rights by Employee in
Paragraph 7 above, or a covenant by Employee in Paragraph 8 above, is illegal,
void or unenforceable, Employee agrees, at the Company's option, either to
execute promptly a release, waiver and/or covenant that is legal and enforceable
or to return promptly to the Company the full value of the consideration
provided to Employee under Paragraph 4 and Paragraph 5 above.

19. Applicable Law. This Agreement shall be construed and enforced in accordance
with, and all questions concerning the construction, validity, interpretation
and performance of this Agreement shall be governed by, the laws of the State of
Pennsylvania, without giving effect to that state's principles regarding
conflict of laws.

20. Knowing and Voluntary Waiver. Employee acknowledges that:

    (i) he has carefully read this Agreement and fully understands its meaning;

    (ii) he was advised in writing by the Company to consult with an attorney
before he signed this Agreement;

    (iii) he was not coerced into signing this Agreement;

    (iv) he agrees to all the terms of this Agreement and is entering into it
knowingly and voluntarily; and

    (v) the only consideration he is receiving for signing this Agreement is
described herein, and no other promises or representations of any kind have been
made by any person or entity to cause him to sign this Agreement.

21. Orderly Transition. It shall be of the essence of this Agreement that
Employee will assist in achieving an orderly transition of responsibilities to
his designated successor with respect to each responsibility.

22. Counterparts. This Agreement may be executed in counterparts and will be as
fully binding as if signed in one entire document.
<PAGE>

EMPLOYEE                                            CECO Filters, Inc.


/s/ Steven J. Taub                                  By: /s/ Phillip DeZwirek
- ------------------------------------                    ------------------------
Steven I. Taub                                      Its: /s/ Chairman
                                                         -----------------------

Date: /s/ 7/5/00                                    Date: /s/ July 5/00
     -------------------------------                      ----------------------

CECO Environmental Corp.

By: /s/ Phillip DeZwirek
    --------------------------------
Its: /s/ Chairman & CEO
     -------------------------------

Date: /s/ July 5/00
     -------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.36
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>EXHIBIT 10.36
<TEXT>


<PAGE>


                                                                   EXHIBIT 10.36


                              STOCK SALE AGREEMENT
                              --------------------

         This agreement  (the  "Agreement")  is made as of the /s/ 5th day of
/s/ July,  2000 by and between Steven I. Taub (the "Seller"), and CECO
Environmental Corp. (the "Purchaser").

                                    RECITALS:

         A. The Seller desires to sell 441,297 shares of the common stock of the
Purchaser (the "Shares") for $2.125 per share.

         C. Purchaser desires to purchase the Shares.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the mutual representations,
warranties and undertakings contained herein, the parties hereto agree as
follows:

         1. Sale and Purchase of Shares. In accordance with the terms and
subject to the conditions contained herein, the Purchaser hereby agrees to
purchase from the Seller and the Seller hereby agrees to sell to the Purchaser
the Shares for aggregate purchase consideration of $937,756.13 (the "Purchase
Price").

         2. The Closing. The closing (the "Closing") shall occur on June 30,
2000. On the date of the Closing the Seller shall deliver to the Purchaser
certificates representing the Shares ("Certificates") endorsed in blank or
accompanied by assignments separate from certificate sufficient to transfer the
Shares into the name of Purchaser and Purchaser shall deliver to the Seller the
Purchase Price by certified check or immediately available funds via wire
transfer.

         3. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchaser as follows:

            3.1 Authority Relative to this Agreement. The Seller has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered by the Seller and is a valid and binding Agreement enforceable in
accordance with its terms except as such enforcement is subject to bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally.

            3.2 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement will violate or result, with the giving of notice
or lapse of time, or both, in a violation of or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or lapse of
time or both) any obligation under, or result in the creation of imposition of
any lien, charge, pledge, security interest or other encumbrance upon the
property of the Seller pursuant to any provision of any contract, agreement,
note, mortgage, lien, indenture, license, lease, other instrument, law,
ordinance, regulation, arbitration, order, judgment or decree to which the
Seller is a party or by which it, or its property is bound, or permit the
termination of any agreement, instrument, lien, license, lease or mortgage to
which the Seller is a party.


<PAGE>


            3.4 Court Orders, Decrees and Laws. There is no outstanding or, to
the Seller's knowledge, threatened, order, writ, injunction or decree of any
court, government agency or arbitrational tribunal against or affecting the
Seller or any of its assets that would significantly interfere with the Seller's
ability to consummate the transaction contemplated by this Agreement.

            3.5 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the best knowledge of the
Seller, threatened or contemplated by any person including, without limitation
any governmental or regulatory agency, against the Seller or with respect to the
assets of the Seller or which seeks to prohibit, restrict or delay consummation
of this Agreement or the transactions contemplated hereby. There is no factual
basis known to the Seller which is known to present a possibility for any such
action, suit, proceeding, claim, arbitration or investigation.

            3.6 Encumbrances. Seller has good and marketable title to the Shares
free and clear of all liens, charges, encumbrances, security interests and
claims whatsoever.

            3.7 Status of Seller. Seller is an executive officer of CECO
Filters, Inc. Seller has been given access to all the information that Seller
considers necessary or appropriate for deciding whether to sell the Shares.
Seller further represents that he has had an opportunity to ask questions and
receive answers from Purchaser regarding the business, properties, prospects and
financial condition of the Purchaser and its affiliates.

         4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as follows:

            4.1 The Purchaser. The Purchaser is a corporation duly organized and
validly existing under the laws of the State of New York and has all requisite
right, power and authority necessary to own, lease and operate all of its
property and to carry on its business as it is now being carried on.

            4.2 Authority Relative to the Contracts. The Purchaser has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered by the Purchaser and is a valid and binding Agreement enforceable
in accordance with its terms except as such enforcement is subject to
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally.

            4.3 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement will violate any provision of the articles of
organization or operating agreement of the Purchaser or violate or result, with
the giving of notice or lapse of time, or both, in a violation of or result in
the acceleration of or entitle any party to accelerate (whether after the giving
of notice or lapse of time or both) any obligation under, or result in the
creation of imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of the Purchaser pursuant to any provision of any
contract, agreement, note, mortgage, lien, indenture, license, lease, other
instrument, law, ordinance, regulation, arbitration, order, judgment or decree
to which the Purchaser is a party or by which it, or its property is bound, or
permit the termination of any agreement, instrument, lien, license, lease or
mortgage to which the Purchaser is a party.



<PAGE>


            4.4 Court Orders, Decrees and Laws. There is no outstanding or, to
the Purchaser's knowledge, threatened, order, writ, injunction or decree of any
court, government agency or arbitrational tribunal against or affecting the
Purchaser or any of its assets that would significantly interfere with the
Purchaser's ability to consummate the transaction contemplated by this
Agreement.

            4.5 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the best knowledge of the
Purchaser, threatened or contemplated by any person including, without
limitation any governmental or regulatory agency, against the Purchaser or with
respect to the assets of the Purchaser or which seeks to prohibit, restrict or
delay consummation of this Agreement or the transactions contemplated hereby.
There is no factual basis known to the Purchaser which is known to present a
possibility for any such action, suit, proceeding, claim, arbitration or
investigation.

            5. Conditions Precedent to Obligations of the Purchaser.
Consummation of the transaction contemplated hereby on the part of the Purchaser
is subject to the fulfillment, to the reasonable satisfaction of the Purchaser,
of each of the following conditions:

            5.1 Representations True at Closing. The representations and
warranties of the Seller contained in Section 3 of this Agreement shall be true
in all material respects on the date hereof and at the time of the delivery of
the Certificates.

            5.2 Litigation. No litigation or proceeding shall be pending or
threatened to restrain, set aside or invalidate the transactions contemplated by
this Agreement.

            5.3 Separation Agreement. Seller has entered into and is not in
default of that certain Separation Agreement among Purchaser, Seller and CECO
Filters, Inc.

            5.4 Hilary Taub Agreement. Hilary Taub has entered into and
performed her obligations pursuant to a Stock Purchase Agreement among Hilary
Taub, CECO Filters, Inc. and Purchaser in form satisfactory to Purchaser.

         6. Conditions Precedent to Obligations of the Seller. Consummation
of the transactions contemplated hereby on the part of the Seller is subject to
the fulfillment, to the reasonable satisfaction of the Seller of each of the
following conditions:

            6.1 Representations True at Closing. The Purchaser's representations
and warranties contained in Section 4 of this Agreement shall be true in all
material respects at the date hereof and at the time of the delivery of the
Certificates.

            6.2 Litigation. No litigation or proceeding shall be pending or
threatened to restrain, set aside or invalidate the transactions

contemplated by this Agreement.

         7. Survival of Representations, Warranties, Covenants and Agreements.
All warranties, representations, covenants and agreements made hereunder shall
survive the Closing.



<PAGE>


         8. Termination. If any of the conditions for the consummation by the
Seller or the Purchaser of the closing of the transactions hereunder shall not
have been fulfilled (despite the best efforts of the party, if any, obligated to
fulfill such condition) or waived by July 15, 2000, then this Agreement may
thereafter be terminated by any party hereto. Such termination hereunder shall
be effected by notice by the terminating party to the other parties hereunder,
and upon such termination this Agreement shall be without further force and
effect, and no party hereto shall be liable to any other for any claim, damage,
cost or expense arising from the execution and delivery of this Agreement or the
failure to consummate the transactions contemplated hereby.

         9. Remedies. The parties hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement and all other appropriate equitable remedies. The parties agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach of the provisions of this Agreement, and hereby agree to
waive the defense, in any action for specific performance, that monetary damages
would be adequate compensation. The parties hereto further agree that in the
event of any breach of this Agreement, the breaching party shall be liable for
all damages arising as a consequence of such breach, including without
limitation, costs and expenses (including, without limitation, attorneys' fees),
incurred by the non-breaching party in attempting to enforce its rights
hereunder.

         10. Miscellaneous. It is the understanding of the parties hereto that:

            10.1 Waiver. Any party may, at its option, waive in writing any or
all of the conditions herein contained to which its obligations hereunder are
subject.

            10.2 Expenses. Each party hereto shall bear its own expenses in
connection with this Agreement and the transactions contemplated herein.

            10.3 Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements, arrangements
and communications, whether oral or written, with respect to the subject matter
hereof. This Agreement shall not be modified or amended except by written
agreement of the parties hereto. Captions appearing in this Agreement are for
convenience only and shall not be deemed to explain, limit or amplify the
provisions or contents hereof.

            10.4 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted.

            10.5 Binding Effect; Assignment. All the terms, provisions,
covenants and conditions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs and successors. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the written consent of the other parties hereto.

<PAGE>



            10.6 Notices. Any notice or other instrument or thing required or
permitted to be given, served or delivered to any of the parties hereto shall be
in writing and shall be considered given when hand-delivered to the recipient,
or when delivered to an internationally recognized courier service, or when
deposited with the U.S. Postal Service using certified mail, postage prepaid,
addressed to the recipient at:

         The Seller:

                  Steven I. Taub
                  ________________________

                  ________________________

         The Purchaser:

                  CECO Environmental Corp.
                  505 University Avenue
                  Suite 1400
                  Toronto, Ontario M5G 1X3
                  Canada
                  Attn:  Phillip DeZwirek

         with a copy to:

                  Leslie J. Weiss, Esq.
                  Sugar, Friedberg & Felsenthal
                  30 North LaSalle Street
                  Suite 2600
                  Chicago, Illinois 60602

or at such other address as a party may designate to another party in accordance
with the terms of this Section 10.6.

            10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to its rules
governing conflicts of laws) of the State of Pennsylvania.

            10.8 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

            10.9 Costs and Attorneys' Fees. If either party to this Agreement
institutes a legal action to enforce its rights under any provision of this
Agreement, the non-prevailing party in such action shall be liable to the
prevailing party for the costs and reasonable attorneys' fees incurred by the
prevailing party in connection with the action.


<PAGE>




            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.

                                            CECO Environmental Corp.


                                                  By: /s/ Phillip DeZwirek
                                                     ---------------------------
                                                  Its: /s/ Chairman
                                                      --------------------------
 .


                                                   /s/ Steven J. Taub
                                                  ------------------------------
                                                       Steven I. Taub


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.37
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>EXHIBIT 10.37
<TEXT>


<PAGE>


                                                                   EXHIBIT 10.37

                              STOCK SALE AGREEMENT
                              --------------------


         This agreement (the "Agreement") is made as of the /s/ 5th day of /s/
July, 2000 by and between Hilary Taub (the "Seller"), and CECO Environmental
Corp. (the "Purchaser").

                                    RECITALS:

         A. The Seller desires to sell 124,703 shares of the common stock of the
Purchaser (the "Shares") for $2.125 per share.

         B. Purchaser desires to purchase the Shares.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the mutual representations,
warranties and undertakings contained herein, the parties hereto agree as
follows:

         11. Sale and Purchase of Shares. In accordance with the terms and
subject to the conditions contained herein, the Purchaser hereby agrees to
purchase from the Seller and the Seller hereby agrees to sell to the Purchaser
the Shares for aggregate purchase consideration of $264,993.88 (the "Purchase
Price").

         12. The Closing. The closing (the "Closing") shall occur on June 30,
2000. On the date of the Closing the Seller shall deliver to the Purchaser
certificates representing the Shares ("Certificates") endorsed in blank or
accompanied by assignments separate from certificate sufficient to transfer the
Shares into the name of Purchaser and Purchaser shall deliver to the Seller the
Purchase Price by certified check or immediately available funds via wire
transfer.

         13. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchaser as follows:

            3.1 Authority Relative to this Agreement. The Seller has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered by the Seller and is a valid and binding Agreement enforceable in
accordance with its terms except as such enforcement is subject to bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally.

            3.2 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement will violate or result, with the giving of notice
or lapse of time, or both, in a violation of or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or lapse of
time or both) any obligation under, or result in the creation of imposition of
any lien, charge, pledge, security interest or other encumbrance upon the
property of the Seller pursuant to any provision of any contract, agreement,
note, mortgage, lien, indenture, license, lease, other instrument, law,
ordinance, regulation, arbitration, order, judgment or decree to which the
Seller is a party or by which it, or its property is bound, or permit the
termination of any agreement, instrument, lien, license, lease or mortgage to
which the Seller is a party.

<PAGE>


            3.3 Court Orders, Decrees and Laws. There is no outstanding or, to
the Seller's knowledge, threatened, order, writ, injunction or decree of any
court, government agency or arbitrational tribunal against or affecting the
Seller or any of its assets that would significantly interfere with the Seller's
ability to consummate the transaction contemplated by this Agreement.

            3.4 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the best knowledge of the
Seller, threatened or contemplated by any person including, without limitation
any governmental or regulatory agency, against the Seller or with respect to the
assets of the Seller or which seeks to prohibit, restrict or delay consummation
of this Agreement or the transactions contemplated hereby. There is no factual
basis known to the Seller which is known to present a possibility for any such
action, suit, proceeding, claim, arbitration or investigation.

            3.5 Encumbrances. Seller has good and marketable title to the Shares
free and clear of all liens, charges, encumbrances, security interests and
claims whatsoever.

            3.6 Status of Seller. Seller has been given access to all the
information that Seller considers necessary or appropriate for deciding whether
to sell the Shares. Seller further represents that she has had an opportunity to
ask questions and receive answers from Purchaser regarding the business,
properties, prospects and financial condition of the Purchaser and its
affiliates, including without limitation from Steven I. Taub, an executive
officer of CECO Filters, Inc.

         14. Representations, Warranties and Covenants of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as follows:

            4.1 The Purchaser. The Purchaser is a corporation duly organized and
validly existing under the laws of the State of New York and has all requisite
right, power and authority necessary to own, lease and operate all of its
property and to carry on its business as it is now being carried on.

            4.2 Authority Relative to the Contracts. The Purchaser has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered by the Purchaser and is a valid and binding Agreement enforceable
in accordance with its terms except as such enforcement is subject to
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally.

            4.3 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement will violate any provision of the articles of
organization or operating agreement of the Purchaser or violate or result, with
the giving of notice or lapse of time, or both, in a violation of or result in
the acceleration of or entitle any party to accelerate (whether after the giving
of notice or lapse of time or both) any obligation under, or result in the
creation of imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of the Purchaser pursuant to any provision of any
contract, agreement, note, mortgage, lien, indenture, license, lease, other
instrument, law, ordinance, regulation, arbitration, order, judgment or decree
to which the Purchaser is a party or by which it, or its property is bound, or
permit the termination of any agreement, instrument, lien, license, lease or
mortgage to which the Purchaser is a party.


<PAGE>


            4.4 Court Orders, Decrees and Laws. There is no outstanding or, to
the Purchaser's knowledge, threatened, order, writ, injunction or decree of any
court, government agency or arbitrational tribunal against or affecting the
Purchaser or any of its assets that would significantly interfere with the
Purchaser's ability to consummate the transaction contemplated by this
Agreement.

            4.5 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the best knowledge of the
Purchaser, threatened or contemplated by any person including, without
limitation any governmental or regulatory agency, against the Purchaser or with
respect to the assets of the Purchaser or which seeks to prohibit, restrict or
delay consummation of this Agreement or the transactions contemplated hereby.
There is no factual basis known to the Purchaser which is known to present a
possibility for any such action, suit, proceeding, claim, arbitration or
investigation.

         15. Conditions Precedent to Obligations of the Purchaser. Consummation
of the transaction contemplated hereby on the part of the Purchaser is subject
to the fulfillment, to the reasonable satisfaction of the Purchaser, of each of
the following conditions:

            5.1 Representations True at Closing. The representations and
warranties of the Seller contained in Section 3 of this Agreement shall be true
in all material respects on the date hereof and at the time of the delivery of
the Certificates.

            5.2 Litigation. No litigation or proceeding shall be pending or
threatened to restrain, set aside or invalidate the transactions contemplated by
this Agreement.

            5.3 Separation Agreement. Seller has entered into and is not in
default of that certain Separation Agreement among Purchaser, Seller and CECO
Filters, Inc.

            5.4 Steven I. Taub Agreement. Steven I. Taub has entered into and
performed his obligations pursuant to a Stock Purchase Agreement among Steven I.
Taub, CECO Filters, Inc. and Purchaser in form satisfactory to Purchaser.

         16. Conditions Precedent to Obligations of the Seller. Consummation of
the transactions contemplated hereby on the part of the Seller is subject to the
fulfillment, to the reasonable satisfaction of the Seller of each of the
following conditions:

            6.1 Representations True at Closing. The Purchaser's representations
and warranties contained in Section 4 of this Agreement shall be true in all
material respects at the date hereof and at the time of the delivery of the
Certificates.

            6.2 Litigation. No litigation or proceeding shall be pending or
threatened to restrain, set aside or invalidate the transactions contemplated by
this Agreement.



<PAGE>


         17. Survival of Representations, Warranties, Covenants and Agreements.
All warranties, representations, covenants and agreements made hereunder shall
survive the Closing.

         18. Termination. If any of the conditions for the consummation by the
Seller or the Purchaser of the closing of the transactions hereunder shall not
have been fulfilled (despite the best efforts of the party, if any, obligated to
fulfill such condition) or waived by July 15, 2000, then this Agreement may
thereafter be terminated by any party hereto. Such termination hereunder shall
be effected by notice by the terminating party to the other parties hereunder,
and upon such termination this Agreement shall be without further force and
effect, and no party hereto shall be liable to any other for any claim, damage,
cost or expense arising from the execution and delivery of this Agreement or the
failure to consummate the transactions contemplated hereby.

         19. Remedies. The parties hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement and all other appropriate equitable remedies. The parties agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach of the provisions of this Agreement, and hereby agree to
waive the defense, in any action for specific performance, that monetary damages
would be adequate compensation. The parties hereto further agree that in the
event of any breach of this Agreement, the breaching party shall be liable for
all damages arising as a consequence of such breach, including without
limitation, costs and expenses (including, without limitation, attorneys' fees),
incurred by the non-breaching party in attempting to enforce its rights
hereunder.

         20. Miscellaneous. It is the understanding of the parties hereto that:

            10.1 Waiver. Any party may, at its option, waive in writing any or
all of the conditions herein contained to which its obligations hereunder are
subject.

            10.2 Expenses. Each party hereto shall bear its own expenses in
connection with this Agreement and the transactions contemplated herein.

            10.3 Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements, arrangements
and communications, whether oral or written, with respect to the subject matter
hereof. This Agreement shall not be modified or amended except by written
agreement of the parties hereto. Captions appearing in this Agreement are for
convenience only and shall not be deemed to explain, limit or amplify the
provisions or contents hereof.

            10.4 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted.

            10.5 Binding Effect; Assignment. All the terms, provisions,
covenants and conditions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs and successors. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the written consent of the other parties hereto.



<PAGE>


            10.6 Notices. Any notice or other instrument or thing required or
permitted to be given, served or delivered to any of the parties hereto shall be
in writing and shall be considered given when hand-delivered to the recipient,
or when delivered to an internationally recognized courier service, or when
deposited with the U.S. Postal Service using certified mail, postage prepaid,
addressed to the recipient at:

         The Seller:

                  Hilary Taub

                  ___________________________

                  ___________________________

         The Purchaser:

                  CECO Environmental Corp.
                  505 University Avenue
                  Suite 1400
                  Toronto, Ontario M5G 1X3
                  Canada
                  Attn:  Phillip DeZwirek

         with a copy to:

                  Leslie J. Weiss, Esq.
                  Sugar, Friedberg & Felsenthal
                  30 North LaSalle Street
                  Suite 2600
                  Chicago, Illinois 60602

or at such other address as a party may designate to another party in accordance
with the terms of this Section 10.6.

            10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to its rules
governing conflicts of laws) of the State of Pennsylvania.

            10.8 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

            10.9 Costs and Attorneys' Fees. If either party to this Agreement
institutes a legal action to enforce its rights under any provision of this
Agreement, the non-prevailing party in such action shall be liable to the
prevailing party for the costs and reasonable attorneys' fees incurred by the
prevailing party in connection with the action.

<PAGE>




            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.

                                            CECO Environmental Corp.


                                                 By: /s/ Phillip DeZwirek
                                                     ---------------------------
                                                 Its: /s/ Chairman & CEO
                                                     ---------------------------
 .


                                                     /s/ Hilary Taub
                                                     ---------------------------
                                                         Hilary Taub


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.38
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>EXHIBIT 10.38
<TEXT>

<PAGE>


                                                                   EXHIBIT 10.38


NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON THE EXERCISE OF
THE WARRANTS HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW.
NEITHER THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION
OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER
QUALIFICATION IS NOT REQUIRED.


THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT (AS DEFINED
HEREIN IN SECTION 8) IN FAVOR OF PNC BANK, NATIONAL ASSOCIATION, AS AGENT FOR
CERTAIN BANKS. NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN
CONNECTION WITH THE WITHIN INSTRUMENT OR ANY RELATED AGREEMENT (WHETHER OF
PRINCIPAL, INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED
EXCEPT IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION AGREEMENT.


                            CECO Environmental Corp.
                                   REPLACEMENT
                                 PROMISSORY NOTE

$4,000,000                                                       March 12, 2001

         WHEREAS, Green Diamond Oil Corp., an Ontario corporation ("Green
Diamond") has prior to this date advanced $4,000,000 (the "Advance") to CECO
Environmental Corp.

         WHEREAS, the terms of the Advance are set forth in a Promissory Note
dated December 7, 1999, (the "Original Note"), which Original Note shall be
cancelled and replaced by this Replacement Promissory Note.

         FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of Green
Diamond or registered assigns ("Holder"), the principal sum of FOUR MILLION
DOLLARS ($4,000,000) on the Maturity Date, as defined in Section 1 below. This
Note is part of a series of Notes of like tenor and effect to this Note in the
aggregate principal amount of $5,000,000 issued in connection with a financing
by the Company (the "1999 Subordinated Notes").

         1. Maturity. This Note shall be due and payable upon the earlier to
occur of the following events (the "Maturity Date"): (i) six and one-half (6
1/2) years from the December 7, 1999; (ii) six (6) months after repayment of the
Superior Debt (as defined in Section 8 below); or (iii) the closing (any such
closing referred to as the "Closing") of a Sale Transaction. For purposes of
this Note, a Sale Transaction shall mean (i) a merger, consolidation, corporate
reorganization, or sale of shares of stock of the Company as a result of which
there is a change in control and/or the shareholders of the Company on the date
hereof ("Current Shareholders") own 50% or less of the outstanding shares of the
Company on a fully-diluted basis immediately after the transaction and,
including as outstanding for purposes of such calculation, any warrants, options
or other instruments convertible or exchangeable into equity securities of the
Company issued to persons other than the Current Shareholders in connection with
the transaction or (ii) the sale of (A) fifty percent or more of the assets of
the Company or (B) any subsidiary, division or line of business of the Company
for total consideration in excess of $5 million.
<PAGE>

         2. Interest. Interest shall accrue on the unpaid principal balance
hereof and on any interest payment that is not made when due at the simple
compounded rate of twelve percent (12%) per annum from the date hereof. Accrued
Interest shall be due and payable on June 30 and December 31 of each year
commencing June 30, 2000 and on the Maturity Date. Notwithstanding the
foregoing, interest due under this Note on June 30, 2000 and December 31, 2000,
will be paid in accordance with the terms of the Subordination Agreement. It
shall not be a default hereunder and interest will not accrue on any portion of
such interest payments deferred pursuant to the Subordination Agreement
("Deferred Interest") so long as the Deferred Interest is paid at the time and
in the manner allowed by the Subordination Agreement. In the Event of Default
(as defined herein), interest shall accrue on all unpaid amounts due hereunder
including without limitation, interest, at the rate of fifteen percent (15%) per
annum. If a judgment is entered against the Company on this Note, the amount of
the judgment so entered shall bear interest at the highest rate authorized by
law as of the date of the entry of the judgment.

         3. Payments. Payments of both principal and interest shall be made at
the principal executive office of the Company, or such other place as the holder
hereof shall designate to the Company in writing, in lawful money of the United
States of America.

            So long as no Event of Default has occurred in this Note, all
payments hereunder shall first be applied to interest, then to principal. Upon
the occurrence of an Event of Default in this Note, all payments hereunder shall
first be applied to costs pursuant to Section 13.5, then to interest and the
remainder to principal.

         4. Registration, Transfer and Exchange of Notes. The Company will keep
at its principal office a register in which it will provide for the registration
of and transfer of this Note, at its own expense (excluding transfer taxes). If
any Note is surrendered at said office or at the place of payment named in the
Note for registration of transfer or exchange (accompanied in the case of
registration of transfer or exchange by a written instrument of transfer in form
satisfactory to the Company duly executed by or on behalf of the holder), the
Company, at its expense, will deliver in exchange one or more new Notes in
denominations of $10,000 or larger multiples of $1,000, as requested by the
holder for the aggregate unpaid principal amount. Any Note or Notes issued in a
transfer or exchange shall carry the same rights to increase Notes surrendered.
The Holder agrees that prior to making any sale, transfer, pledge, assignment,
hypothecation, or other disposition (each, a "Transfer") of the Note, the Holder
shall give written notice to the Company describing the manner in which any such
proposed Transfer is to be made and providing such additional information and
documentation regarding the Transfer as the Company reasonably requests. If the
Company so requests, the Holder shall at his expense provide the Company with an
opinion of counsel (which counsel must be reasonably satisfactory to the
Company, to the holder, in form and substance satisfactory to the Company) that
the proposed Transfer complies with applicable federal and state securities
laws. The Company shall have no obligation to Transfer any Notes unless the
holder thereof has complied with the foregoing provisions, and any such
attempted Transfer shall be null and void.
<PAGE>

         5. Registered Owner. Prior to due presentation for registration of
transfer, the Company may treat the person in whose name any Note is registered
as the owner and holder of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes.

         6. Conversion.

            a. Conversion Procedure.

                (1) At any time and from time to time, the Company may elect to
      convert all or any portion of the unpaid principal balance on any 1999
      Subordinated Note into the number of shares of common stock of the
      Company, $0.01 par value per share ("Common Stock") computed by
      multiplying the unpaid principal balance to be converted times $1.00 per
      share and dividing the result by the 1999 Subordinated Note Conversion
      Price determined pursuant to Section 6.b. The Company shall pay to the
      holder of each 1999 Subordinated Note so converted, all accrued and unpaid
      interest in cash or, at the Company's option, in Common Stock valued at
      Fair Market Value, at the time of conversion with respect to such 1999
      Subordinated Note so converted with no further interest accruing or
      payable on the converted portion of the 1999 Subordinated Note.

                (2) Each conversion of all or any portion of a 1999 Subordinated
      Note will be deemed to have been effected as of the close of business on
      the date on which the Company gives written notice to a holder of such
      1999 Subordinated Note that the Company shall convert all or part of such
      1999 Subordinated Note. At such time as such conversion has been effected,
      the rights of the holder of such 1999 Subordinated Note as provided
      hereunder with respect to the portion of the 1999 Subordinated Note to be
      converted will cease, and the Person or Persons in whose name or names any
      certificate or certificates for shares of Common Stock are to be issued
      upon such conversion will be deemed to have become the holder or holders
      of record of the shares of Common Stock represented thereby.

                (3) As soon as possible after a conversion has been effected and
      in no event later than twenty (20) business days thereafter, the Company
      will deliver to the converting holder:

                    (a) a certificate or certificates representing the number of
      shares of Common Stock issuable by reason of such conversion in such name
      or names and such denomination or denominations as the holder of the
      converted 1999 Subordinated Note has specified;


<PAGE>

                    (b) payment of all accrued and unpaid interest on such
      converted portion of the 1999 Subordinated Note;

                    (c) the amount payable under Subsection 6.a.(6) below with
      respect to such conversion; and

                    (d) if applicable, a replacement 1999 Subordinated Note
      representing any portion of the 1999 Subordinated Note which was not
      converted.

                (4) The issuance of certificates for shares of Common Stock upon
      conversion of a 1999 Subordinated Note will be made without charge to the
      holders of such 1999 Subordinated Note for any issuance tax in respect
      thereof or other cost incurred by the Company in connection with such
      conversion and the related issuance of shares of Common Stock. Upon
      conversion of all or any portion of a 1999 Subordinated Note, the Company
      will take all such actions as are necessary in order to insure that the
      Common Stock issued as a result of such conversion is validly issued,
      fully paid and nonassessable.

                (5) The Company will not close its books against the transfer of
      Common Stock issued or issuable upon conversion of the 1999 Subordinated
      Notes in any manner which interferes with the timely conversion of the
      1999 Subordinated Notes.

                (6) If any fractional interest in a share of Common Stock would,
      except for the provisions of this Subsection 6.a.(6), be deliverable upon
      any conversion of any 1999 Subordinated Note, the Company, in lieu of
      delivering the fractional share therefor, shall pay an amount to the
      holder thereof equal to the Fair Market Value of such fractional interest
      as of the date of conversion.

                (7) Any 1999 Subordinated Notes which are converted shall be
      canceled and will not be reissued or otherwise transferred.

                (8) The Company will take such corporate action as may be
      necessary from time to time so that at all times it will have authorized,
      and reserved out of its authorized but unissued Common Stock for the sole
      purpose of issuance upon conversion the 1999 Subordinated Notes, a
      sufficient number of shares of Common Stock to permit the conversion in
      full of the sum of the aggregate unpaid principal balances and accrued but
      unpaid interest due on all 1999 Subordinated Notes.

                (9) For purposes of this Section 6, "Fair Market Value" means
      the average of the last reported sales price of the Common Stock on the
      Nasdaq Stock Market or on any national or regional securities exchange on
      which the Common Stock is listed or admitted to unlisted trading
      privileges and on which the Common Stock is principally traded or quoted,
      as reported for each of the 10 consecutive trading days ending on the 10th
      trading date prior to any dividend payment date; or if there is no public
      market for the Common Stock of the Company, the Fair Market Value shall be
      calculated based on the price paid per share of Common Stock or the
      valuation of the Company in the Company's most recent equity financing
      transaction with a third party, or, if in the judgment of the Board of
      Directors of the Company, the fair market value is materially different
      from that reflected by such valuation, then the Fair Market Value shall be
      determined by the Board of Directors in good faith.


<PAGE>

              b. Adjustments to  1999 Subordinated Notes Conversion Price.

                (1) In order to prevent dilution of the interests of the holders
      of the 1999 Subordinated Notes as a result of the conversion right granted
      to the Company under this subsection 6, the 1999 Subordinated Note
      Conversion Price will be subject to adjustment from time to time pursuant
      to this Section 6.b. The term "1999 Subordinated Note Conversion Price"
      initially means $2.00, as subsequently adjusted as provided below.

                (2) If the Company issues or sells, or in accordance with
      Section 6.c. is deemed to have issued or sold, any shares of its Common
      Stock (except as set forth in Section 6.c.(9)) without consideration or
      for a consideration per share less than the 1999 Subordinated Note
      Conversion Price in effect immediately prior to the time of such issuance
      or sale, then upon such issuance or sale the 1999 Subordinated Note
      Conversion Price will be reduced to the conversion price determined by
      dividing (a) the sum of (1) the product derived by multiplying the 1999
      Subordinated Conversion Price in effect immediately prior to such issuance
      or sale times the number of fully-diluted shares of Common Stock
      outstanding immediately prior to such issuance or sale, and (2) the
      consideration, if any, received by the Company upon such issuance or sale,
      by (b) the number of shares of fully-diluted Common Stock outstanding
      immediately prior to such issuance or sale plus the number of shares of
      Common Stock issued or deemed to have been issued in such sale pursuant to
      this Section 6.

             c. Effect on 1999 Subordinated Note Conversion Prices of Certain
Events.

                (1) For purposes of determining the adjusted 1999 Subordinated
      Note Conversion Prices under Section 6.b., the following will be
      applicable:

                    (a) Issuance of Rights or Options. If the Company grants,
      issues or sells Options to acquire Common Stock or Convertible Securities
      and the price per share for which Common Stock is issuable upon the
      exercise of such Options or upon conversion or exchange of any Convertible
      Securities issuable upon the exercise of such Options is less than the
      1999 Subordinated Note Conversion Price in effect immediately prior to the
      time of the granting, issuance or sale of such Options, then the total
      maximum number of shares of Common Stock issuable upon the exercise of
      such Options or upon conversion or exchange of the total maximum amount of
      such Convertible Securities issuable upon the exercise of such Options
      shall be deemed to be outstanding and to have been issued and sold by the
      Company at the time of the granting of such Options for such price per
      share. For purposes of this Section, the "price per share for which Common
      Stock is issuable" shall be determined by dividing (A) the sum of (i) the
      amount, if any, received or receivable by the Company as consideration for
      the granting of such Options, plus (ii) the minimum aggregate amount of
      additional consideration payable to the Company upon exercise of all such
      Options, plus (iii) in the case of such Options which relate to
      Convertible Securities, the minimum aggregate amount of additional
      consideration, if any, payable to the Company upon the issuance or sale of
      such Convertible Securities and the conversion or exchange thereof, by (B)
      the total maximum number of shares of Common Stock issuable upon the
      exercise of such Options or upon the conversion or exchange of all such
      Convertible Securities issuable upon the exercise of such Options. No
      further adjustment of the 1999 Subordinated Note Conversion Price shall be
      made when Convertible Securities are actually issued upon the exercise of
      such Options or when Common Stock is actually issued upon the exercise of
      such Options or the conversion or exchange of such Convertible Securities.
<PAGE>

                    (b) Issuance of Convertible Securities. If the Company in
      any manner issues or sells any Convertible Securities and the price per
      share for which Common Stock is issuable upon such conversion or exchange
      thereof is less than the 1999 Subordinated Note Conversion Price in effect
      immediately prior to the time of such issue or sale, then the maximum
      number of shares of Common Stock issuable upon conversion or exchange of
      such Convertible Securities shall be deemed to be outstanding and to have
      been issued and sold by the Company at the time of the issuance or sale of
      such Convertible Securities for such price per share. For the purposes of
      this Section, the "price per share for which Common Stock" shall be
      determined by dividing (A) the sum of (i) the amount received or
      receivable by the Company as consideration for the issue or sale of such
      Convertible Securities, plus (ii) the minimum aggregate amount of
      additional consideration, if any, payable to the Company upon the
      conversion or exchange thereof, by (B) the total maximum number of shares
      of Common Stock issuable upon the conversion or exchange of all such
      Convertible Securities. No further adjustment of the 1999 Subordinated
      Note Conversion Price shall be made when Common Stock is actually issued
      upon the conversion or exchange of such Convertible Securities, and if any
      such issue or sale of such Convertible Securities is made upon exercise of
      any Options for which adjustments of the 1999 Subordinated Note Conversion
      Price had been or are to be made pursuant to other provisions of this
      Section 6, no further adjustment of the 1999 Subordinated Note Conversion
      Price shall be made by reason of such issue or sale.

                    (c) Change in Option Price or Conversion Rate. If the
      purchase price provided for in any Options, the additional consideration,
      if any, payable upon the issue, conversion or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are
      convertible into or exchangeable for Common Stock change at any time, the
      1999 Subordinated Note Conversion Price in effect at the time of such
      change shall be readjusted to the 1999 Subordinated Note Conversion Price
      which would have been in effect at such time had such Options or
      Convertible Securities originally provided for such changed purchase
      price, additional consideration or changed conversion rate, as the case
      may be, at the time initially granted, issued or sold.

                (2) For purposes of determining the adjusted 1999 Subordinated
      Note Conversion Price under Subsection 6.b.(2) and (3), the following will
      be applicable:
<PAGE>



                    (a) Calculation of Consideration Received. If any Common
      Stock, Options or Convertible Securities are issued or sold or deemed to
      have been issued or sold for cash, the consideration received therefor
      will be deemed to be the gross amount received by the Company therefor
      after deducting any discounts or commissions paid or incurred by the
      Company in connection with the issuance and sale. In case any Common
      Stock, Options or Convertible Securities are issued or sold for a
      consideration other than cash, the amount of the consideration other than
      cash received by the Company will be the Fair Market Value thereof as of
      the date of receipt. If any Common Stock, Options or Convertible
      Securities are issued in connection with any merger in which the Company
      is the surviving Company, the amount of consideration therefor will be
      deemed to be the Fair Market Value of such portion of the net assets and
      business of the non-surviving Company as is attributable to such Common
      Stock, Options or Convertible Securities, as the case may be.

                    (b) Integrated Transactions. In case any Options are issued
      in connection with the issue or sale of other securities of the Company,
      together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the
      Options will be deemed to have been issued for a consideration of $0.01
      each.

                    (c) Treasury Shares. The number of shares of Common Stock
      outstanding at any given time shall not include shares owned or held by or
      for the account of the Company, and the disposition of any shares so owned
      or held will be considered an issue or sale of Common Stock.

                    (d) Record Date. If the Company takes a record of the
      holders of Common Stock for the purpose of entitling them (i) to receive a
      dividend or other distribution payable in Common Stock, Options or
      Convertible Securities or (ii) to subscribe for or purchase Common Stock,
      Options or Convertible Securities, then such record date will be deemed to
      be the date of the issue or sale of the shares of Common Stock deemed to
      have been issued or sold upon the declaration of such dividend or upon the
      making of such other distribution or the date of the granting of such
      right of subscription or purchase, as the case may be.

                (3) Subdivision or Combination of Common Stock. If the Company
      at any time subdivides one or more classes of its outstanding shares of
      Common Stock into a greater number of shares, the 1999 Subordinated Note
      Conversion Price in effect immediately prior to such subdivision will be
      proportionately reduced, and if the Company at any time combines (by
      combination, reverse stock split or otherwise) one or more classes of its
      outstanding shares of Common Stock into a smaller number of shares, the
      1999 Subordinated Note Conversion Price in effect immediately prior to
      such combination will be proportionately increased.

                (4) Stock Dividends. In the event of any stock dividend or other
      distribution payable in shares of Common Stock, or other securities or
      property of the Company, including securities of a third party, then in
      each such event the 1999 Subordinated Note Conversion Price shall be
      adjusted by multiplying the 1999 Subordinated Note Conversion Price then
      in effect by a fraction (i) the numerator of which is the total number of
      shares of Common Stock issued and outstanding immediately prior to the
      time of such issuance, and (ii) the denominator of which is the total
      number of shares of Common Stock issued and outstanding immediately prior
      to the time of such issuance plus the number of shares of Common Stock
      issuable in payment of such dividend or the number of shares of Common
      Stock which may be purchased at fair market value using the consideration
      equal to the aggregate Fair Market Value of the securities or other
      property of the Company to be distributed; provided, however, this
      adjustment shall exclude any such distributions to the extent a
      substantially similar distribution is made to the holders of the 1999
      Subordinated Notes.
<PAGE>

                (5) Distributions of Property. In the event that the Company
      makes a distribution of its property to the holders of Common Stock as a
      dividend in liquidation or partial liquidation or by way of return of
      capital or other than as a dividend payable out of funds legally available
      for dividends under the laws of the State of Delaware, the holders of 1999
      Subordinated Notes Preferred Stock shall, upon conversion thereof, be
      entitled to receive, in addition to the number of shares of Common Stock
      receivable thereupon, and without payment of any consideration therefor, a
      sum equal to the amount of such property as would have been payable to
      them as owners of that number of shares of Common Stock receivable upon
      such conversion, had they been the holders of record of such Common Stock
      on the record date for such distribution; and an appropriate provision
      therefor shall be made a part of any such distribution; provided, however,
      this adjustment shall exclude any such distributions to the extent a
      substantially similar distribution is made to the holders of the 1999
      Subordinated Notes.

                (6) Reorganization, Reclassification, Merger or Consolidation.
      If at any time, as a result of:

                    (i) a capital reorganization or reclassification (other than
            a subdivision, combination, dividend or distribution provided for in
            Subsections (3), (4) or (5) above); or

                    (ii) a merger or consolidation of the Company with another
            Company (whether or not the Company is the surviving Company), the
            Common Stock issuable upon the conversion of the 1999 Subordinated
            Notes shall be changed into or exchanged for the same or a different
            number of shares of any class or classes of stock of the Company or
            any other Company, or other securities convertible into such shares,
            then, as a part of such reorganization, reclassification, merger or
            consolidation, appropriate adjustments shall be made in the terms of
            the 1999 Subordinated Notes (or of any instruments or securities
            into which the 1999 Subordinated Notes are changed or converted or
            for which the 1999 Subordinated Notes are exchanged), so that:

                (x) the holders of shares of the 1999 Subordinated Notes or of
      such substitute securities shall thereafter be entitled to receive, upon
      conversion of the such 1999 Subordinated Notes or of such substitute
      securities, the substantially equivalent kind and amount of shares of
      stock, other securities, money and property which such holders would have
      received at the time of such capital reorganization, reclassification,
      merger, or consolidation, if the Company had elected to convert such 1999
      Subordinated Notes into Common Stock immediately prior to such capital
      reorganization, reclassification, merger, or consolidation, and

                (y) the 1999 Subordinated Notes or such substitute securities
      shall thereafter be adjusted on terms as nearly equivalent as may be
      practicable to the adjustments theretofore provided in this Section 6.c.

<PAGE>

         The provisions of this Subsection (6) shall similarly apply to
successive capital reorganizations, reclassifications, mergers, and
consolidations.

                (7) Certain Events. If any event occurs of the type contemplated
      by the provisions of Section 6.c. but not expressly provided for by such
      provisions, then the Board of Directors will make an appropriate
      adjustment in the 1999 Subordinated Note Conversion Price so as to protect
      the rights of the holders of the 1999 Subordinated Notes; provided,
      however, that, no such adjustment will increase the 1999 Subordinated Note
      Conversion Price as otherwise determined pursuant to Section 6.c. or
      decrease the number of shares of Common Stock issuable upon conversion of
      the 1999 Subordinated Notes.

                (8) Notwithstanding the foregoing, no adjustment to the 1999
      Subordinated Note Conversion Price shall be made for:

                    (a) issuances of Common Stock occurring prior to the date of
      this replacement Note;

                    (b) the issuance of warrants to officers, directors,
      shareholders or other investors in the Company, provided such issuance is
      approved by the Board of Directors;

                    (c) the issuance of shares of Common Stock into which the
      1999 Subordinated Notes are convertible;

                    (d) the issuance of shares of Common Stock upon exercise of
      all options and warrants outstanding as of the date of this replacement
      Note;

                    (e) the issuance of options to acquire shares of Common
      Stock under the Company's incentive stock option or similar plans(or the
      issuance of such Common Stock upon the exercise thereof), provided each
      such plan has been approved by the Board of Directors;

                    (f) the issuance of shares of Common Stock under the
      Company's stock purchase or similar plans, provided each such plan has
      been approved by the Board of Directors;

                    (g) the issuance of Common Stock or Options, warrants or
      rights to acquire Common Stock or the issuance of Common Stock upon the
      exercise thereof, in connection with (i) strategic transactions including
      acquisitions, joint ventures and similar arrangements, (ii) to vendors or
      suppliers or other business associates, (iii), in connection with debt
      financings or (iv) as compensation to service providers including without
      limitation, as brokers, finders and financial consultants, in connection
      with capital raising transactions.


<PAGE>

            d. Notices. As soon as practicable (and in any case not later than
      fifteen (15) days) upon any adjustment of the 1999 Subordinated Note
      Conversion Price, the Company will give written notice thereof to all
      holders of 1999 Subordinate Notes.

            e. Definitions.

                  "Convertible Securities" means securities convertible into or
         exchangeable for Common Stock.

                  "Options" means any grant, issue or sale by the Corporation of
         any right or option to subscribe for or to purchase Common Stock or any
         Convertible Securities.

         7. Warrant Coverage. Holder has received, on December 7, 1999, ten-year
warrants (the "Warrants) to purchase 800,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants is $2.25 per share
of Common Stock of the Company. The Warrants are evidenced by Warrant
Certificates, issued in accordance with the terms of a Warrant Agreement.

         8. Subordination. The indebtedness evidenced by this Note shall at all
times be wholly subordinate and junior in right of payment to all obligations of
the Company under or in connection with the Credit Agreement of even date
herewith ("Superior Debt") among the Company as guarantor, the borrowers CECO
Group Inc., CECO Filters, Inc., Air Purator Corporation, New Bush Co., Inc.,
U.S. Facilities Management, Inc., The Kirk & Blum Manufacturing Company, and
kbd/Technic, Inc., and the lenders PNC Bank, National Association and various
other financial institutions, upon the terms and conditions contained in the
Subordination Agreement between Green Diamond Oil Corp., Harvey Sandler, ICS
Trustee Services, Ltd., and PNC Bank, National Association and various other
financial institutions of even date herewith (the "Subordination Agreement").

         9. Repayment of Notes. In the event the Company completes an equity
financing or offering or a series of equity financing or offerings for a total
consideration in excess of $10,000,000, then twenty-five percent (25%) of all
such consideration in excess of $10,000,000 shall be used immediately, upon
receipt by the Company, to pre-pay the 1999 Subordinated Notes, provided such
prepayment shall be made proportionately among the 1999 Subordinated Notes until
the 1999 Subordinated Notes are paid in full.

         10. Covenants of the Company. The Company covenants and agrees that it
shall not, without the prior written approval of the Holders of a majority of
the aggregate principal amount outstanding of the 1999 Subordinated Notes
("Majority Holders"):
<PAGE>

                    a. Obtain or incur any indebtedness or other monetary
      obligations that are senior to or on parity with the Notes, other than the
      Superior Debt.

                    b. Allow, suffer or cause to exist any lien, claim, security
      interest or encumbrance on the Company's property or assets, other than
      with respect to the Superior Debt and purchase money indebtedness incurred
      in the ordinary course of business.

                    c. Enter into any arrangement or agreement involving the
      merger or consolidation of the Company.

                    d. Use the proceeds from the sale of the 1999 Subordinated
      Notes other than in the ordinary course of its business for general
      corporate purposes including lending monies to any of its subsidiaries.
      The Company also covenants and agrees that it shall operate its business
      in the ordinary course.

         11. Events of Default.

                    a. Occurrences of Events of Default. Each of the following
      events shall constitute an "Event of Default" for purposes of this Note:

                       (1) if the Company fails to pay any amount payable, under
            this Note when due;

                       (2) if the Company breaches any of its representations,
            warranties or covenants set forth in this Note or the Warrant
            Agreement;

                       (3) the commencement of an involuntary case against the
            Company or its subsidiary or any of its subsidiaries under any
            applicable bankruptcy, insolvency or other similar law now or
            hereafter in effect, or the appointing of a receiver, liquidator,
            assignee, custodian, trustee or similar official of the Company or
            for any substantial part of the Company or one of its subsidiary's
            property, or ordering the winding-up or liquidation of the Company
            or one of its subsidiary's affairs;

                       (4) if the Company or any of its subsidiaries shall
            commence a voluntary case under any applicable bankruptcy,
            insolvency or other similar law now or hereafter in effect, or shall
            consent to the entry of an order for relief in an involuntary case
            under any such law, or shall consent to the appointment of or taking
            possession by a receiver, liquidator, assignee, trustee, custodian
            or similar official of the Company or its subsidiary or for any
            substantial part of the Company or one of its subsidiary's property,
            or shall make any general assignment for the benefit of creditors,
            or shall take any corporate action in furtherance of any of the
            foregoing; or


<PAGE>

                       (5) if the Company's business shall fail, as determined
            in good faith by the Majority Holders and evidenced by the Company's
            inability to pay its ongoing debts as such debts become due.

            b. Acceleration Upon Event of Default. If any Event of Default shall
      have occurred and be continuing, for any reason whatsoever (and whether
      such occurrence shall be voluntary or involuntary or come about or be
      effected by operation of law or otherwise), the unpaid principal amount
      of, and the accrued interest on, the Notes shall automatically become
      immediately due and payable, without presentment, demand, protest or other
      requirements of any kind, all of which are hereby expressly waived by the
      Company.

         12. Investment Representations of the Holder. With respect to the
purchase of this Note, the Common Stock issuable upon the exercise of the
Warrants (collectively, the "Securities"), the Holder hereby represents and
warrants to the Company as follows:

            a. Experience. The Holder has substantial experience in evaluating
      and investing in private placement transactions of securities in companies
      similar to the Company so that it is capable of evaluating the merits and
      risks of its investment in the Company and has the capacity to protect its
      own interests.

            b. Investment. The Holder is acquiring the Securities for investment
      for its own account, not as a nominee or agent, and not with the view to,
      or for resale in connection with, any distribution thereof. The Holder
      understands that the Securities have not been, and will not be, registered
      under the Securities Act of 1933, as amended ("Securities Act"), by reason
      of a specific exemption from the registration provisions of the Securities
      Act, the availability of which depends upon, among other things, the bona
      fide nature of the investment intent and the accuracy of the Holder's
      representations as expressed herein. The holder is an "accredited
      investor" within the meaning of Regulation D, Section 501(a), promulgated
      by the Securities and Exchange Commission.

            c. Rule 144. The Holder acknowledges that the Securities must be
      held indefinitely unless subsequently registered under the Securities Act,
      or unless an exemption from such registration is available. The Holder
      understands that at this time the Company is not under any obligation to
      register any of the Securities. The Holder is aware of the provisions of
      Rule 144 promulgated under the Securities Act that permit limited resale
      of securities purchased in a private placement subject to satisfaction of
      certain conditions.

            d. No Public Market. The Holder understands that no public market
      now exists for any of the Securities issued by the Company and that the
      Company has made no assurances that a public market will ever exist for
      the Securities.


<PAGE>

            e. Access to Data. The Holder has had an opportunity to discuss the
      Company's business, management and financial affairs with the Company's
      management and has also had an opportunity to ask questions of the
      Company's officers, which questions were answered to its satisfaction.

        13. Miscellaneous.

            a. Invalidity of Any Provision. If any provision or part of any
      provision of this Note shall for any reason be held invalid, illegal or
      unenforceable in any respect, such invalidity, illegality or
      unenforceability shall not affect any other provisions of this Note and
      this Note shall be construed as if such invalid, illegal or unenforceable
      provisions or part hereof had never been contained herein, but only to the
      extent of its invalidity, illegality or unenforceability.

            b. Governing Law. The Note shall be governed in all respects by the
      laws of the State of New York, excluding its conflict of laws.

            c. Notices. Any notice or other communication required or permitted
      hereunder shall be in writing and shall be deemed to have been duly given
      (i) on the date of delivery if delivered personally, (ii) one (1) business
      day after transmission by facsimile transmission with a written
      confirmation copy sent by first class mail, or (iii) five (5) days after
      mailing if mailed by first class mail, to the following addresses:

                  If to the Company:        CECO Environmental Corp.
                                            505 University Avenue, Suite 1400
                                            Toronto, Ontario M5G 1X3
                                            CANADA
                                            Attention: Phillip DeZwirek

            And if to the Holder, to the address or facsimile number of Holder
      as set forth on the Company's records, or such other address as the Holder
      has provided to the Company by notice duly given.

            d. Notice of a Sale Transaction. The Company shall give all Holders
      of Notes notice of the Closing of a Sale Transaction at least thirty (30)
      days prior to such Closing.

            e. Collection. If the indebtedness represented by the Note or any
      part thereof is collected at law or in equity or in bankruptcy,
      receivership or other judicial proceedings or if the Note is placed in the
      hands of attorneys for collection after the occurrence of an Event of
      Default, the Company agrees to pay, in addition to the outstanding
      principal and accrued interest payable hereon, reasonable attorneys' fees
      and costs incurred by the Holder, or on behalf of the Holder by a
      representative of the Holder.


<PAGE>

            f. Successors and Assigns. The rights and obligations of the Company
      and the Holder shall be binding upon and benefit the successors, assigns,
      heirs, administrators and transferees of the parties.

            g. Waivers. The Company and any endorsers, sureties, guarantors, and
      all others who are, or may become liable for the payment hereof severally:
      (a) waive presentment for payment, demand, notice of demand, notice of
      nonpayment or dishonor, protest and notice of protest of this Note, and
      all other notices in connection with the delivery, acceptance,
      performance, default, or enforcement of the payment of this Note, (b)
      consent to all extensions of time, renewals, postponements of time of
      payment of this Note or other modifications hereof from time to time prior
      to or after the maturity date hereof, whether by acceleration or in due
      course, without notice, consent or consideration to any of the foregoing,
      (c) agree to any substitution, exchange, addition, or release of any of
      the security for the indebtedness evidenced by this Note or the addition
      or release of any party or person primarily or secondarily liable hereon,
      (d) agree that Holder shall not be required first to institute any suit,
      or to exhaust its remedies against the Company or any other person or
      party to become liable hereunder or against the security in order to
      enforce the payment of this Note and (e) agree that, notwithstanding the
      occurrence of any of the foregoing (except by the express written release
      by Holder of any such person), the Company shall be and remain, directly
      and primarily liable for all sums due under this Note.

            h. Time. Time is of the essence in this Note.

            i. Captions. The captions of sections of this Note are for
      convenient reference only, and shall not affect the construction or
      interpretation of any of the terms and provisions set forth in this Note.

            j. Number and Gender. Whenever used in this Note, the singular
      number shall include the plural, and the masculine shall include the
      feminine and the neuter, and vice versa.

            k. Remedies. All remedies of the Holder shall be cumulative and
      concurrent and may be pursued singly, successively, or together at the
      sole discretion of the Holder and may be exercised as often as occasion
      therefor shall arise. No act of omission or commission of the Holder,
      including specifically any failure to exercise any right, remedy or
      recourse shall be effective unless it is set forth in a written document
      executed by the Holder and then only to the extent specifically recited
      therein. A waiver or release with reference to one event shall not be
      construed as continuing as a bar to or as a waiver or release of any
      subsequent right, remedy, or recourse as to any subsequent event.

            l. No Waiver by Holder. The acceptance by Holder of any payment
      under this Note which is less than the amount then due or the acceptance
      of any amount after the due date thereof, shall not be deemed a waiver of
      any right or remedy available to Holder nor nullify the prior exercise of
      any such right or remedy by Holder. None of the terms or provisions of
      this Promissory Note may be waived, altered, modified or amended except by
      a written document executed by Holder and then only to the extent
      specifically recited therein. No course of dealing or conduct shall be
      effective waive, alter, modify or amend any of the terms or provisions
      hereof. The failure or delay to exercise any right or remedy available to
      Holder shall not constitute a waiver of the right of the Holder to
      exercise the same or any other right or remedy available to Holder at that
      time or at any subsequent time.


<PAGE>

            m. Submission to Jurisdiction. BORROWER, AND ANY ENDORSERS,
      SURETIES, GUARANTORS AND ALL OTHERS WHO ARE, OR WHO MAY BECOME, LIABLE FOR
      THE PAYMENT HEREOF SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY (A) AGREE
      THAT ANY SUIT, ACTION, OR OTHER LEGAL PROCEEDING ARISING OUT OF OR
      RELATING TO THIS NOTE OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
      DELIVERED PURSUANT TO, OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT
      AND MAINTAINED IN THE COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, OR IN
      THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
      (B) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT,
      ACTION OR PROCEEDING; AND (C) WAIVE ANY OBJECTION WHICH IT OR THEY MAY
      HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING IN ANY
      OF SUCH COURTS.

            n. Waiver of Trial by Jury. HOLDER AND BORROWER HEREBY KNOWINGLY,
      IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE
      TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM
      BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
      NOTE OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH, OR ANY COURSE
      OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
      ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
      HOLDER TO MAKE THE LOAN EVIDENCED BY THIS NOTE.


                                           CECO ENVIRONMENTAL CORP.


                                           By: /s/ Phillip DeZwirek
                                               ------------------------------
                                               Phillip DeZwirek, President



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.39
<SEQUENCE>12
<FILENAME>0012.txt
<DESCRIPTION>EXHIBIT 10.39
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.39

NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON THE EXERCISE OF
THE WARRANTS HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW.
NEITHER THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION
OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER
QUALIFICATION IS NOT REQUIRED.

THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT (AS DEFINED
HEREIN IN SECTION 8) IN FAVOR OF PNC BANK, NATIONAL ASSOCIATION, AS AGENT FOR
CERTAIN BANKS. NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN
CONNECTION WITH THE WITHIN INSTRUMENT OR ANY RELATED AGREEMENT (WHETHER OF
PRINCIPAL, INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED
EXCEPT IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION AGREEMENT.

                            CECO Environmental Corp.
                                   REPLACEMENT
                                 PROMISSORY NOTE

$500,000                                                          March 12, 2001

         WHEREAS, Harvey Sandler ("Sandler") has prior to this date advanced
$500,000 (the "Advance") to CECO Environmental Corp.

         WHEREAS, the terms of the Advance are set forth in a Promissory Note
dated December 7, 1999, (the "Original Note"), which Original Note shall be
cancelled and replaced by this Replacement Promissory Note.

         FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of
Sandler or registered assigns ("Holder"), the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) on the Maturity Date, as defined in Section 1 below.
This Note is part of a series of Notes of like tenor and effect to this Note in
the aggregate principal amount of $5,000,000 issued in connection with a
financing by the Company (the "1999 Subordinated Notes").

         1. Maturity. This Note shall be due and payable upon the earlier to
occur of the following events (the "Maturity Date"): (i) six and one-half (6
1/2) years from the December 7, 1999; (ii) six (6) months after repayment of the
Superior Debt (as defined in Section 8 below); or (iii) the closing (any such
<PAGE>

closing referred to as the "Closing") of a Sale Transaction. For purposes of
this Note, a Sale Transaction shall mean (i) a merger, consolidation, corporate
reorganization, or sale of shares of stock of the Company as a result of which
there is a change in control and/or the shareholders of the Company on the date
hereof ("Current Shareholders") own 50% or less of the outstanding shares of the
Company on a fully-diluted basis immediately after the transaction and,
including as outstanding for purposes of such calculation, any warrants, options
or other instruments convertible or exchangeable into equity securities of the
Company issued to persons other than the Current Shareholders in connection with
the transaction or (ii) the sale of (A) fifty percent or more of the assets of
the Company or (B) any subsidiary, division or line of business of the Company
for total consideration in excess of $5 million.

         2. Interest. Interest shall accrue on the unpaid principal balance
hereof and on any interest payment that is not made when due at the simple
compounded rate of twelve percent (12%) per annum from the date hereof. Accrued
Interest shall be due and payable on June 30 and December 31 of each year
commencing June 30, 2000 and on the Maturity Date. Notwithstanding the
foregoing, interest due under this Note on June 30, 2000 and December 31, 2000,
will be paid in accordance with the terms of the Subordination Agreement. It
shall not be a default hereunder and interest will not accrue on any portion of
such interest payments deferred pursuant to the Subordination Agreement
("Deferred Interest") so long as the Deferred Interest is paid at the time and
in the manner allowed by the Subordination Agreement. In the Event of Default
(as defined herein), interest shall accrue on all unpaid amounts due hereunder
including without limitation, interest, at the rate of fifteen percent (15%) per
annum. If a judgment is entered against the Company on this Note, the amount of
the judgment so entered shall bear interest at the highest rate authorized by
law as of the date of the entry of the judgment.

         3. Payments. Payments of both principal and interest shall be made at
the principal executive office of the Company, or such other place as the holder
hereof shall designate to the Company in writing, in lawful money of the United
States of America.

            So long as no Event of Default has occurred in this Note, all
payments hereunder shall first be applied to interest, then to principal. Upon
the occurrence of an Event of Default in this Note, all payments hereunder shall
first be applied to costs pursuant to Section 13.5, then to interest and the
remainder to principal.

         4. Registration, Transfer and Exchange of Notes. The Company will keep
at its principal office a register in which it will provide for the registration
of and transfer of this Note, at its own expense (excluding transfer taxes). If
any Note is surrendered at said office or at the place of payment named in the
Note for registration of transfer or exchange (accompanied in the case of
registration of transfer or exchange by a written instrument of transfer in form
satisfactory to the Company duly executed by or on behalf of the holder), the
Company, at its expense, will deliver in exchange one or more new Notes in
denominations of $10,000 or larger multiples of $1,000, as requested by the
holder for the aggregate unpaid principal amount. Any Note or Notes issued in a
transfer or exchange shall carry the same rights to increase Notes surrendered.
The Holder agrees that prior to making any sale, transfer, pledge, assignment,
hypothecation, or other disposition (each, a "Transfer") of the Note, the Holder
shall give written notice to the Company describing the manner in which any such
proposed Transfer is to be made and providing such additional information and
documentation regarding the Transfer as the Company reasonably requests. If the
<PAGE>

Company so requests, the Holder shall at his expense provide the Company with an
opinion of counsel (which counsel must be reasonably satisfactory to the
Company, to the holder, in form and substance satisfactory to the Company) that
the proposed Transfer complies with applicable federal and state securities
laws. The Company shall have no obligation to Transfer any Notes unless the
holder thereof has complied with the foregoing provisions, and any such
attempted Transfer shall be null and void.

            5. Registered Owner. Prior to due presentation for registration of
transfer, the Company may treat the person in whose name any Note is registered
as the owner and holder of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes.

            6. Conversion.

               a. Conversion Procedure.

                  (1) At any time and from time to time, the Company may elect
            to convert all or any portion of the unpaid principal balance on any
            1999 Subordinated Note into the number of shares of common stock of
            the Company, $0.01 par value per share ("Common Stock") computed by
            multiplying the unpaid principal balance to be converted times $1.00
            per share and dividing the result by the 1999 Subordinated Note
            Conversion Price determined pursuant to Section 6.b. The Company
            shall pay to the holder of each 1999 Subordinated Note so converted,
            all accrued and unpaid interest in cash or, at the Company's option,
            in Common Stock valued at Fair Market Value, at the time of
            conversion with respect to such 1999 Subordinated Note so converted
            with no further interest accruing or payable on the converted
            portion of the 1999 Subordinated Note.

                  (2) Each conversion of all or any portion of a 1999
            Subordinated Note will be deemed to have been effected as of the
            close of business on the date on which the Company gives written
            notice to a holder of such 1999 Subordinated Note that the Company
            shall convert all or part of such 1999 Subordinated Note. At such
            time as such conversion has been effected, the rights of the holder
            of such 1999 Subordinated Note as provided hereunder with respect to
            the portion of the 1999 Subordinated Note to be converted will
            cease, and the Person or Persons in whose name or names any
            certificate or certificates for shares of Common Stock are to be
            issued upon such conversion will be deemed to have become the holder
            or holders of record of the shares of Common Stock represented
            thereby.

                  (3) As soon as possible after a conversion has been effected
            and in no event later than twenty (20) business days thereafter, the
            Company will deliver to the converting holder:

                      (a) a certificate or certificates representing the number
            of shares of Common Stock issuable by reason of such conversion in
            such name or names and such denomination or denominations as the
            holder of the converted 1999 Subordinated Note has specified;
<PAGE>

                      (b) payment of all accrued and unpaid interest on such
            converted portion of the 1999 Subordinated Note;

                      (c) the amount payable under Subsection 6.a.(6) below with
            respect to such conversion; and

                      (d) if applicable, a replacement 1999 Subordinated Note
            representing any portion of the 1999 Subordinated Note which was not
            converted.

                  (4) The issuance of certificates for shares of Common Stock
            upon conversion of a 1999 Subordinated Note will be made without
            charge to the holders of such 1999 Subordinated Note for any
            issuance tax in respect thereof or other cost incurred by the
            Company in connection with such conversion and the related issuance
            of shares of Common Stock. Upon conversion of all or any portion of
            a 1999 Subordinated Note, the Company will take all such actions as
            are necessary in order to insure that the Common Stock issued as a
            result of such conversion is validly issued, fully paid and
            nonassessable.

                  (5) The Company will not close its books against the transfer
            of Common Stock issued or issuable upon conversion of the 1999
            Subordinated Notes in any manner which interferes with the timely
            conversion of the 1999 Subordinated Notes.

                  (6) If any fractional interest in a share of Common Stock
            would, except for the provisions of this Subsection 6.a.(6), be
            deliverable upon any conversion of any 1999 Subordinated Note, the
            Company, in lieu of delivering the fractional share therefor, shall
            pay an amount to the holder thereof equal to the Fair Market Value
            of such fractional interest as of the date of conversion.

                  (7) Any 1999 Subordinated Notes which are converted shall be
            canceled and will not be reissued or otherwise transferred.

                  (8) The Company will take such corporate action as may be
            necessary from time to time so that at all times it will have
            authorized, and reserved out of its authorized but unissued Common
            Stock for the sole purpose of issuance upon conversion the 1999
            Subordinated Notes, a sufficient number of shares of Common Stock to
            permit the conversion in full of the sum of the aggregate unpaid
            principal balances and accrued but unpaid interest due on all 1999
            Subordinated Notes.

                  (9) For purposes of this Section 6, "Fair Market Value" means
            the average of the last reported sales price of the Common Stock on
            the Nasdaq Stock Market or on any national or regional securities
            exchange on which the Common Stock is listed or admitted to unlisted
            trading privileges and on which the Common Stock is principally
            traded or quoted, as reported for each of the 10 consecutive trading
            days ending on the 10th trading date prior to any dividend payment
            date; or if there is no public market for the Common Stock of the
            Company, the Fair Market Value shall be calculated based on the
            price paid per share of Common Stock or the valuation of the Company
            in the Company's most recent equity financing transaction with a
            third party, or, if in the judgment of the Board of Directors of the
<PAGE>

            Company, the fair market value is materially different from that
            reflected by such valuation, then the Fair Market Value shall be
            determined by the Board of Directors in good faith.

               b. Adjustments to  1999 Subordinated Notes Conversion Price.

                  (1) In order to prevent dilution of the interests of the
            holders of the 1999 Subordinated Notes as a result of the conversion
            right granted to the Company under this subsection 6, the 1999
            Subordinated Note Conversion Price will be subject to adjustment
            from time to time pursuant to this Section 6.b. The term "1999
            Subordinated Note Conversion Price" initially means $2.00, as
            subsequently adjusted as provided below.

               (2) If the Company issues or sells, or in accordance with Section
            6.c. is deemed to have issued or sold, any shares of its Common
            Stock (except as set forth in Section 6.c.(9)) without consideration
            or for a consideration per share less than the 1999 Subordinated
            Note Conversion Price in effect immediately prior to the time of
            such issuance or sale, then upon such issuance or sale the 1999
            Subordinated Note Conversion Price will be reduced to the conversion
            price determined by dividing (a) the sum of (1) the product derived
            by multiplying the 1999 Subordinated Conversion Price in effect
            immediately prior to such issuance or sale times the number of
            fully-diluted shares of Common Stock outstanding immediately prior
            to such issuance or sale, and (2) the consideration, if any,
            received by the Company upon such issuance or sale, by (b) the
            number of shares of fully-diluted Common Stock outstanding
            immediately prior to such issuance or sale plus the number of shares
            of Common Stock issued or deemed to have been issued in such sale
            pursuant to this Section 6.

               c. Effect on 1999 Subordinated Note Conversion Prices of Certain
                  Events.

                  (1) For purposes of determining the adjusted 1999 Subordinated
            Note Conversion Prices under Section 6.b., the following will be
            applicable:

                      (a) Issuance of Rights or Options. If the Company grants,
            issues or sells Options to acquire Common Stock or Convertible
            Securities and the price per share for which Common Stock is
            issuable upon the exercise of such Options or upon conversion or
            exchange of any Convertible Securities issuable upon the exercise of
            such Options is less than the 1999 Subordinated Note Conversion
            Price in effect immediately prior to the time of the granting,
            issuance or sale of such Options, then the total maximum number of
            shares of Common Stock issuable upon the exercise of such Options or
            upon conversion or exchange of the total maximum amount of such
            Convertible Securities issuable upon the exercise of such Options
            shall be deemed to be outstanding and to have been issued and sold
            by the Company at the time of the granting of such Options for such
            price per share. For purposes of this Section, the "price per share
            for which Common Stock is issuable" shall be determined by dividing
            (A) the sum of (i) the amount, if any, received or receivable by the
            Company as consideration for the granting of such Options, plus (ii)
            the minimum aggregate amount of additional consideration payable to
            the Company upon exercise of all such Options, plus (iii) in the
            case of such Options which relate to Convertible Securities, the
            minimum aggregate amount of additional consideration, if any,
<PAGE>

            payable to the Company upon the issuance or sale of such Convertible
            Securities and the conversion or exchange thereof, by (B) the total
            maximum number of shares of Common Stock issuable upon the exercise
            of such Options or upon the conversion or exchange of all such
            Convertible Securities issuable upon the exercise of such Options.
            No further adjustment of the 1999 Subordinated Note Conversion Price
            shall be made when Convertible Securities are actually issued upon
            the exercise of such Options or when Common Stock is actually issued
            upon the exercise of such Options or the conversion or exchange of
            such Convertible Securities.

                      (b) Issuance of Convertible Securities. If the Company in
            any manner issues or sells any Convertible Securities and the price
            per share for which Common Stock is issuable upon such conversion or
            exchange thereof is less than the 1999 Subordinated Note Conversion
            Price in effect immediately prior to the time of such issue or sale,
            then the maximum number of shares of Common Stock issuable upon
            conversion or exchange of such Convertible Securities shall be
            deemed to be outstanding and to have been issued and sold by the
            Company at the time of the issuance or sale of such Convertible
            Securities for such price per share. For the purposes of this
            Section, the "price per share for which Common Stock" shall be
            determined by dividing (A) the sum of (i) the amount received or
            receivable by the Company as consideration for the issue or sale of
            such Convertible Securities, plus (ii) the minimum aggregate amount
            of additional consideration, if any, payable to the Company upon the
            conversion or exchange thereof, by (B) the total maximum number of
            shares of Common Stock issuable upon the conversion or exchange of
            all such Convertible Securities. No further adjustment of the 1999
            Subordinated Note Conversion Price shall be made when Common Stock
            is actually issued upon the conversion or exchange of such
            Convertible Securities, and if any such issue or sale of such
            Convertible Securities is made upon exercise of any Options for
            which adjustments of the 1999 Subordinated Note Conversion Price had
            been or are to be made pursuant to other provisions of this Section
            6, no further adjustment of the 1999 Subordinated Note Conversion
            Price shall be made by reason of such issue or sale.

                      (c) Change in Option Price or Conversion Rate. If the
            purchase price provided for in any Options, the additional
            consideration, if any, payable upon the issue, conversion or
            exchange of any Convertible Securities, or the rate at which any
            Convertible Securities are convertible into or exchangeable for
            Common Stock change at any time, the 1999 Subordinated Note
            Conversion Price in effect at the time of such change shall be
            readjusted to the 1999 Subordinated Note Conversion Price which
            would have been in effect at such time had such Options or
            Convertible Securities originally provided for such changed purchase
            price, additional consideration or changed conversion rate, as the
            case may be, at the time initially granted, issued or sold.

                  (2) For purposes of determining the adjusted 1999 Subordinated
            Note Conversion Price under Subsection 6.b.(2) and (3), the
            following will be applicable:
<PAGE>

                      (a) Calculation of Consideration Received. If any Common
            Stock, Options or Convertible Securities are issued or sold or
            deemed to have been issued or sold for cash, the consideration
            received therefor will be deemed to be the gross amount received by
            the Company therefor after deducting any discounts or commissions
            paid or incurred by the Company in connection with the issuance and
            sale. In case any Common Stock, Options or Convertible Securities
            are issued or sold for a consideration other than cash, the amount
            of the consideration other than cash received by the Company will be
            the Fair Market Value thereof as of the date of receipt. If any
            Common Stock, Options or Convertible Securities are issued in
            connection with any merger in which the Company is the surviving
            Company, the amount of consideration therefor will be deemed to be
            the Fair Market Value of such portion of the net assets and business
            of the non-surviving Company as is attributable to such Common
            Stock, Options or Convertible Securities, as the case may be.

                      (b) Integrated Transactions. In case any Options are
            issued in connection with the issue or sale of other securities of
            the Company, together comprising one integrated transaction in which
            no specific consideration is allocated to such Options by the
            parties thereto, the Options will be deemed to have been issued for
            a consideration of $0.01 each.

                      (c) Treasury Shares. The number of shares of Common Stock
            outstanding at any given time shall not include shares owned or held
            by or for the account of the Company, and the disposition of any
            shares so owned or held will be considered an issue or sale of
            Common Stock.

                      (d) Record Date. If the Company takes a record of the
            holders of Common Stock for the purpose of entitling them (i) to
            receive a dividend or other distribution payable in Common Stock,
            Options or Convertible Securities or (ii) to subscribe for or
            purchase Common Stock, Options or Convertible Securities, then such
            record date will be deemed to be the date of the issue or sale of
            the shares of Common Stock deemed to have been issued or sold upon
            the declaration of such dividend or upon the making of such other
            distribution or the date of the granting of such right of
            subscription or purchase, as the case may be.

                  (3) Subdivision or Combination of Common Stock. If the Company
            at any time subdivides one or more classes of its outstanding shares
            of Common Stock into a greater number of shares, the 1999
            Subordinated Note Conversion Price in effect immediately prior to
            such subdivision will be proportionately reduced, and if the Company
            at any time combines (by combination, reverse stock split or
            otherwise) one or more classes of its outstanding shares of Common
            Stock into a smaller number of shares, the 1999 Subordinated Note
            Conversion Price in effect immediately prior to such combination
            will be proportionately increased.

                  (4) Stock Dividends. In the event of any stock dividend or
            other distribution payable in shares of Common Stock, or other
            securities or property of the Company, including securities of a
            third party, then in each such event the 1999 Subordinated Note
            Conversion Price
<PAGE>

            shall be adjusted by multiplying the 1999 Subordinated Note
            Conversion Price then in effect by a fraction (i) the numerator of
            which is the total number of shares of Common Stock issued and
            outstanding immediately prior to the time of such issuance, and (ii)
            the denominator of which is the total number of shares of Common
            Stock issued and outstanding immediately prior to the time of such
            issuance plus the number of shares of Common Stock issuable in
            payment of such dividend or the number of shares of Common Stock
            which may be purchased at fair market value using the consideration
            equal to the aggregate Fair Market Value of the securities or other
            property of the Company to be distributed; provided, however, this
            adjustment shall exclude any such distributions to the extent a
            substantially similar distribution is made to the holders of the
            1999 Subordinated Notes.

                  (5) Distributions of Property. In the event that the Company
            makes a distribution of its property to the holders of Common Stock
            as a dividend in liquidation or partial liquidation or by way of
            return of capital or other than as a dividend payable out of funds
            legally available for dividends under the laws of the State of
            Delaware, the holders of 1999 Subordinated Notes Preferred Stock
            shall, upon conversion thereof, be entitled to receive, in addition
            to the number of shares of Common Stock receivable thereupon, and
            without payment of any consideration therefor, a sum equal to the
            amount of such property as would have been payable to them as owners
            of that number of shares of Common Stock receivable upon such
            conversion, had they been the holders of record of such Common Stock
            on the record date for such distribution; and an appropriate
            provision therefor shall be made a part of any such distribution;
            provided, however, this adjustment shall exclude any such
            distributions to the extent a substantially similar distribution is
            made to the holders of the 1999 Subordinated Notes.

                  (6) Reorganization, Reclassification, Merger or Consolidation.
            If at any time, as a result of:

                      (i) a capital reorganization or reclassification (other
                  than a subdivision, combination, dividend or distribution
                  provided for in Subsections (3), (4) or (5) above); or

                      (ii) a merger or consolidation of the Company with another
                  Company (whether or not the Company is the surviving Company),
                  the Common Stock issuable upon the conversion of the 1999
                  Subordinated Notes shall be changed into or exchanged for the
                  same or a different number of shares of any class or classes
                  of stock of the Company or any other Company, or other
                  securities convertible into such shares, then, as a part of
                  such reorganization, reclassification, merger or
                  consolidation, appropriate adjustments shall be made in the
                  terms of the 1999 Subordinated Notes (or of any instruments or
                  securities into which the 1999 Subordinated Notes are changed
                  or converted or for which the 1999 Subordinated Notes are
                  exchanged), so that:

               (x) the holders of shares of the 1999 Subordinated Notes or of
            such substitute securities shall thereafter be entitled to receive,
            upon conversion of the such 1999 Subordinated Notes or of such
<PAGE>

            substitute securities, the substantially equivalent kind and amount
            of shares of stock, other securities, money and property which such
            holders would have received at the time of such capital
            reorganization, reclassification, merger, or consolidation, if the
            Company had elected to convert such 1999 Subordinated Notes into
            Common Stock immediately prior to such capital reorganization,
            reclassification, merger, or consolidation, and

               (y) the 1999 Subordinated Notes or such substitute securities
            shall thereafter be adjusted on terms as nearly equivalent as may be
            practicable to the adjustments theretofore provided in this Section
            6.c.

         The provisions of this Subsection (6) shall similarly apply to
successive capital reorganizations, reclassifications, mergers, and
consolidations.

                  (7) Certain Events. If any event occurs of the type
         contemplated by the provisions of Section 6.c. but not expressly
         provided for by such provisions, then the Board of Directors will make
         an appropriate adjustment in the 1999 Subordinated Note Conversion
         Price so as to protect the rights of the holders of the 1999
         Subordinated Notes; provided, however, that, no such adjustment will
         increase the 1999 Subordinated Note Conversion Price as otherwise
         determined pursuant to Section 6.c. or decrease the number of shares of
         Common Stock issuable upon conversion of the 1999 Subordinated Notes.

                  (8) Notwithstanding the foregoing, no adjustment to the 1999
         Subordinated Note Conversion Price shall be made for:

                      (a) issuances of Common Stock occurring prior to the date
         of this replacement Note;

                      (b) the issuance of warrants to officers, directors,
         shareholders or other investors in the Company, provided such issuance
         is approved by the Board of Directors;

                      (c) the issuance of shares of Common Stock into which the
         1999 Subordinated Notes are convertible;

                      (d) the issuance of shares of Common Stock upon exercise
         of all options and warrants outstanding as of the date of this
         replacement Note;

                      (e) the issuance of options to acquire shares of Common
         Stock under the Company's incentive stock option or similar plans(or
         the issuance of such Common Stock upon the exercise thereof), provided
         each such plan has been approved by the Board of Directors;

                      (f) the issuance of shares of Common Stock under the
         Company's stock purchase or similar plans, provided each such plan has
         been approved by the Board of Directors;
<PAGE>

                      (g) the issuance of Common Stock or Options, warrants or
         rights to acquire Common Stock or the issuance of Common Stock upon the
         exercise thereof, in connection with (i) strategic transactions
         including acquisitions, joint ventures and similar arrangements, (ii)
         to vendors or suppliers or other business associates, (iii), in
         connection with debt financings or (iv) as compensation to service
         providers including without limitation, as brokers, finders and
         financial consultants, in connection with capital raising transactions.

               d. Notices. As soon as  practicable  (and in any case not later
         than  fifteen  (15) days) upon any adjustment of the 1999  Subordinated
         Note Conversion Price, the Company will give written notice thereof to
         all holders of 1999 Subordinate Notes.

               e. Definitions.

                  "Convertible Securities" means securities convertible into or
         exchangeable for Common Stock.

                  "Options" means any grant, issue or sale by the Corporation of
         any right or option to subscribe for or to purchase Common Stock or any
         Convertible Securities.

         7. Warrant Coverage. Holder has received, on December 7, 1999, ten-year
warrants (the "Warrants) to purchase 800,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants is $2.25 per share
of Common Stock of the Company. The Warrants are evidenced by Warrant
Certificates, issued in accordance with the terms of a Warrant Agreement.

         8. Subordination. The indebtedness evidenced by this Note shall at all
times be wholly subordinate and junior in right of payment to all obligations of
the Company under or in connection with the Credit Agreement of even date
herewith ("Superior Debt") among the Company as guarantor, the borrowers CECO
Group Inc., CECO Filters, Inc., Air Purator Corporation, New Bush Co., Inc.,
U.S. Facilities Management, Inc., The Kirk & Blum Manufacturing Company, and
kbd/Technic, Inc., and the lenders PNC Bank, National Association and various
other financial institutions, upon the terms and conditions contained in the
Subordination Agreement between Green Diamond Oil Corp., Harvey Sandler, ICS
Trustee Services, Ltd., and PNC Bank, National Association and various other
financial institutions of even date herewith (the "Subordination Agreement").

         9. Repayment of Notes. In the event the Company completes an equity
financing or offering or a series of equity financing or offerings for a total
consideration in excess of $10,000,000, then twenty-five percent (25%) of all
such consideration in excess of $10,000,000 shall be used immediately, upon
receipt by the Company, to pre-pay the 1999 Subordinated Notes, provided such
prepayment shall be made proportionately among the 1999 Subordinated Notes until
the 1999 Subordinated Notes are paid in full.
<PAGE>

         10. Covenants of the Company. The Company covenants and agrees that it
shall not, without the prior written approval of the Holders of a majority of
the aggregate principal amount outstanding of the 1999 Subordinated Notes
("Majority Holders"):

             a. Obtain or incur any indebtedness or other monetary obligations
         that are senior to or on parity with the Notes, other than the Superior
         Debt.

             b. Allow, suffer or cause to exist any lien, claim, security
         interest or encumbrance on the Company's property or assets, other than
         with respect to the Superior Debt and purchase money indebtedness
         incurred in the ordinary course of business.

             c. Enter into any arrangement or agreement involving the merger or
         consolidation of the Company.

             d. Use the proceeds from the sale of the 1999 Subordinated Notes
         other than in the ordinary course of its business for general corporate
         purposes including lending monies to any of its subsidiaries. The
         Company also covenants and agrees that it shall operate its business in
         the ordinary course.

         11. Events of Default.

             a. Occurrences of Events of Default. Each of the following events
         shall constitute an "Event of Default" for purposes of this Note:

                (1) if the Company fails to pay any amount payable, under this
             Note when due;

                (2) if the Company breaches any of its representations,
             warranties or covenants set forth in this Note or the Warrant
             Agreement;

                (3) the commencement of an involuntary case against the Company
             or its subsidiary or any of its subsidiaries under any applicable
             bankruptcy, insolvency or other similar law now or hereafter in
             effect, or the appointing of a receiver, liquidator, assignee,
             custodian, trustee or similar official of the Company or for any
             substantial part of the Company or one of its subsidiary's
             property, or ordering the winding-up or liquidation of the Company
             or one of its subsidiary's affairs;

                (4) if the Company or any of its subsidiaries shall commence a
             voluntary case under any applicable bankruptcy, insolvency or other
             similar law now or hereafter in effect, or shall consent to the
             entry of an order for relief in an involuntary case under any such
             law, or shall consent to the appointment of or taking possession by
             a receiver, liquidator, assignee, trustee, custodian or similar
             official of the Company or its subsidiary or for any substantial
             part of the Company or one of its subsidiary's property, or shall
             make any general assignment for the benefit of creditors, or shall
<PAGE>

             take any corporate action in furtherance of any of the foregoing;
             or

                (5) if the Company's business shall fail, as determined in good
             faith by the Majority Holders and evidenced by the Company's
             inability to pay its ongoing debts as such debts become due.

             b. Acceleration Upon Event of Default. If any Event of Default
         shall have occurred and be continuing, for any reason whatsoever (and
         whether such occurrence shall be voluntary or involuntary or come about
         or be effected by operation of law or otherwise), the unpaid principal
         amount of, and the accrued interest on, the Notes shall automatically
         become immediately due and payable, without presentment, demand,
         protest or other requirements of any kind, all of which are hereby
         expressly waived by the Company.

         12. Investment Representations of the Holder. With respect to the
purchase of this Note, the Common Stock issuable upon the exercise of the
Warrants (collectively, the "Securities"), the Holder hereby represents and
warrants to the Company as follows:

             a. Experience. The Holder has substantial experience in evaluating
         and investing in private placement transactions of securities in
         companies similar to the Company so that it is capable of evaluating
         the merits and risks of its investment in the Company and has the
         capacity to protect its own interests.

             b. Investment. The Holder is acquiring the Securities for
         investment for its own account, not as a nominee or agent, and not with
         the view to, or for resale in connection with, any distribution
         thereof. The Holder understands that the Securities have not been, and
         will not be, registered under the Securities Act of 1933, as amended
         ("Securities Act"), by reason of a specific exemption from the
         registration provisions of the Securities Act, the availability of
         which depends upon, among other things, the bona fide nature of the
         investment intent and the accuracy of the Holder's representations as
         expressed herein. The holder is an "accredited investor" within the
         meaning of Regulation D, Section 501(a), promulgated by the Securities
         and Exchange Commission.

             c. Rule 144. The Holder acknowledges that the Securities must be
         held indefinitely unless subsequently registered under the Securities
         Act, or unless an exemption from such registration is available. The
         Holder understands that at this time the Company is not under any
         obligation to register any of the Securities. The Holder is aware of
         the provisions of Rule 144 promulgated under the Securities Act that
         permit limited resale of securities purchased in a private placement
         subject to satisfaction of certain conditions.

             d. No Public Market. The Holder understands that no public market
         now exists for any of the Securities issued by the Company and that the
         Company has made no assurances that a public market will ever exist for
         the Securities.
<PAGE>

             e. Access to Data. The Holder has had an opportunity to discuss the
         Company's business, management and financial affairs with the Company's
         management and has also had an opportunity to ask questions of the
         Company's officers, which questions were answered to its satisfaction.

             13. Miscellaneous.

             a. Invalidity of Any Provision. If any provision or part of any
         provision of this Note shall for any reason be held invalid, illegal or
         unenforceable in any respect, such invalidity, illegality or
         unenforceability shall not affect any other provisions of this Note and
         this Note shall be construed as if such invalid, illegal or
         unenforceable provisions or part hereof had never been contained
         herein, but only to the extent of its invalidity, illegality or
         unenforceability.

             b. Governing Law. The Note shall be governed in all respects by the
         laws of the State of New York, excluding its conflict of laws.

             c. Notices. Any notice or other communication required or permitted
         hereunder shall be in writing and shall be deemed to have been duly
         given (i) on the date of delivery if delivered personally, (ii) one (1)
         business day after transmission by facsimile transmission with a
         written confirmation copy sent by first class mail, or (iii) five (5)
         days after mailing if mailed by first class mail, to the following
         addresses:

             If to the Company:        CECO Environmental Corp.
                                       505 University Avenue, Suite 1400
                                       Toronto, Ontario M5G 1X3
                                       CANADA
                                       Attention: Phillip DeZwirek

                And if to the Holder, to the address or facsimile number of
         Holder as set forth on the Company's records, or such other address as
         the Holder has provided to the Company by notice duly given.

             d. Notice of a Sale Transaction. The Company shall give all Holders
         of Notes notice of the Closing of a Sale Transaction at least thirty
         (30) days prior to such Closing.

             e. Collection. If the indebtedness represented by the Note or any
         part thereof is collected at law or in equity or in bankruptcy,
         receivership or other judicial proceedings or if the Note is placed in
         the hands of attorneys for collection after the occurrence of an Event
         of Default, the Company agrees to pay, in addition to the outstanding
         principal and accrued interest payable hereon, reasonable attorneys'
         fees and costs incurred by the Holder, or on behalf of the Holder by a
         representative of the Holder.
<PAGE>

             f. Successors and Assigns. The rights and obligations of the
         Company and the Holder shall be binding upon and benefit the
         successors, assigns, heirs, administrators and transferees of the
         parties.

             g. Waivers. The Company and any endorsers, sureties, guarantors,
         and all others who are, or may become liable for the payment hereof
         severally: (a) waive presentment for payment, demand, notice of demand,
         notice of nonpayment or dishonor, protest and notice of protest of this
         Note, and all other notices in connection with the delivery,
         acceptance, performance, default, or enforcement of the payment of this
         Note, (b) consent to all extensions of time, renewals, postponements of
         time of payment of this Note or other modifications hereof from time to
         time prior to or after the maturity date hereof, whether by
         acceleration or in due course, without notice, consent or consideration
         to any of the foregoing, (c) agree to any substitution, exchange,
         addition, or release of any of the security for the indebtedness
         evidenced by this Note or the addition or release of any party or
         person primarily or secondarily liable hereon, (d) agree that Holder
         shall not be required first to institute any suit, or to exhaust its
         remedies against the Company or any other person or party to become
         liable hereunder or against the security in order to enforce the
         payment of this Note and (e) agree that, notwithstanding the occurrence
         of any of the foregoing (except by the express written release by
         Holder of any such person), the Company shall be and remain, directly
         and primarily liable for all sums due under this Note.

             h. Time. Time is of the essence in this Note.

             i. Captions. The captions of sections of this Note are for
         convenient reference only, and shall not affect the construction or
         interpretation of any of the terms and provisions set forth in this
         Note.

             j. Number and Gender. Whenever used in this Note, the singular
         number shall include the plural, and the masculine shall include the
         feminine and the neuter, and vice versa.

             k. Remedies. All remedies of the Holder shall be cumulative and
         concurrent and may be pursued singly, successively, or together at the
         sole discretion of the Holder and may be exercised as often as occasion
         therefor shall arise. No act of omission or commission of the Holder,
         including specifically any failure to exercise any right, remedy or
         recourse shall be effective unless it is set forth in a written
         document executed by the Holder and then only to the extent
         specifically recited therein. A waiver or release with reference to one
         event shall not be construed as continuing as a bar to or as a waiver
         or release of any subsequent right, remedy, or recourse as to any
         subsequent event.

             l. No Waiver by Holder. The acceptance by Holder of any payment
         under this Note which is less than the amount then due or the
         acceptance of any amount after the due date thereof, shall not be
         deemed a waiver of any right or remedy available to Holder nor nullify
         the prior exercise of any such right or remedy by Holder. None of the
<PAGE>

         terms or provisions of this Promissory Note may be waived, altered,
         modified or amended except by a written document executed by Holder and
         then only to the extent specifically recited therein. No course of
         dealing or conduct shall be effective waive, alter, modify or amend any
         of the terms or provisions hereof. The failure or delay to exercise any
         right or remedy available to Holder shall not constitute a waiver of
         the right of the Holder to exercise the same or any other right or
         remedy available to Holder at that time or at any subsequent time.

             m. Submission to Jurisdiction. BORROWER, AND ANY ENDORSERS,
         SURETIES, GUARANTORS AND ALL OTHERS WHO ARE, OR WHO MAY BECOME, LIABLE
         FOR THE PAYMENT HEREOF SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY (A)
         AGREE THAT ANY SUIT, ACTION, OR OTHER LEGAL PROCEEDING ARISING OUT OF
         OR RELATING TO THIS NOTE OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
         DELIVERED PURSUANT TO, OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT
         AND MAINTAINED IN THE COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, OR
         IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
         YORK; (B) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH
         SUIT, ACTION OR PROCEEDING; AND (C) WAIVE ANY OBJECTION WHICH IT OR
         THEY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR
         PROCEEDING IN ANY OF SUCH COURTS.

             n. Waiver of Trial by Jury. HOLDER AND BORROWER HEREBY KNOWINGLY,
         IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY
         HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
         COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN
         CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
         THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
         (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS
         PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER TO MAKE THE LOAN
         EVIDENCED BY THIS NOTE.


                                      CECO ENVIRONMENTAL CORP.


                                      By: /s/ Phillip DeZwirek
                                          ------------------------------
                                          Phillip DeZwirek, President


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>13
<FILENAME>0013.txt
<DESCRIPTION>EXHIBIT 10.40
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.40


NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON THE EXERCISE OF
THE WARRANTS HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW.
NEITHER THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION
OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER
QUALIFICATION IS NOT REQUIRED.


THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT (AS DEFINED
HEREIN IN SECTION 8) IN FAVOR OF PNC BANK, NATIONAL ASSOCIATION, AS AGENT FOR
CERTAIN BANKS. NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN
CONNECTION WITH THE WITHIN INSTRUMENT OR ANY RELATED AGREEMENT (WHETHER OF
PRINCIPAL, INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED
EXCEPT IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION AGREEMENT.


                            CECO Environmental Corp.
                                   REPLACEMENT
                                 PROMISSORY NOTE

$500,000                                                          March 12, 2001

         WHEREAS, ICS Trustee Services, Ltd. ("ICS") has prior to this date
advanced $500,000 (the "Advance") to CECO Environmental Corp.

         WHEREAS, the terms of the Advance are set forth in a Promissory Note
dated December 7, 1999, (the "Original Note"), which Original Note shall be
cancelled and replaced by this Replacement Promissory Note.

         FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of ICS
or registered assigns ("Holder"), the principal sum of FIVE HUNDRED THOUSAND
DOLLARS ($500,000) on the Maturity Date, as defined in Section 1 below. This
Note is part of a series of Notes of like tenor and effect to this Note in the
aggregate principal amount of $5,000,000 issued in connection with a financing
by the Company (the "1999 Subordinated Notes").

         1. Maturity. This Note shall be due and payable upon the earlier to
occur of the following events (the "Maturity Date"): (i) six and one-half
(6 1/2) years from the December 7, 1999; (ii) six (6) months after repayment of
the Superior Debt (as defined in Section 8 below); or (iii) the closing (any
such closing referred to as the "Closing") of a Sale Transaction. For purposes
of this Note, a Sale Transaction shall mean (i) a merger, consolidation,
corporate reorganization, or sale of shares of stock of the Company as a result
of which there is a change in control and/or the shareholders of the Company on
the date hereof ("Current Shareholders") own 50% or less of the outstanding
shares of the Company on a fully-diluted basis immediately after the transaction
and, including as outstanding for purposes of such calculation, any warrants,
options or other instruments convertible or exchangeable into equity securities
of the Company issued to persons other than the Current Shareholders in
connection with the transaction or (ii) the sale of (A) fifty percent or more of
the assets of the Company or (B) any subsidiary, division or line of business of
the Company for total consideration in excess of $5 million.

<PAGE>


         2. Interest. Interest shall accrue on the unpaid principal balance
hereof and on any interest payment that is not made when due at the simple
compounded rate of twelve percent (12%) per annum from the date hereof. Accrued
Interest shall be due and payable on June 30 and December 31 of each year
commencing June 30, 2000 and on the Maturity Date. Notwithstanding the
foregoing, interest due under this Note on June 30, 2000 and December 31, 2000,
will be paid in accordance with the terms of the Subordination Agreement. It
shall not be a default hereunder and interest will not accrue on any portion of
such interest payments deferred pursuant to the Subordination Agreement
("Deferred Interest") so long as the Deferred Interest is paid at the time and
in the manner allowed by the Subordination Agreement. In the Event of Default
(as defined herein), interest shall accrue on all unpaid amounts due hereunder
including without limitation, interest, at the rate of fifteen percent (15%) per
annum. If a judgment is entered against the Company on this Note, the amount of
the judgment so entered shall bear interest at the highest rate authorized by
law as of the date of the entry of the judgment.

         3. Payments. Payments of both principal and interest shall be made at
the principal executive office of the Company, or such other place as the holder
hereof shall designate to the Company in writing, in lawful money of the United
States of America.

            So long as no Event of Default has occurred in this Note, all
payments hereunder shall first be applied to interest, then to principal. Upon
the occurrence of an Event of Default in this Note, all payments hereunder shall
first be applied to costs pursuant to Section 13.5, then to interest and the
remainder to principal.

         4. Registration, Transfer and Exchange of Notes. The Company will keep
at its principal office a register in which it will provide for the registration
of and transfer of this Note, at its own expense (excluding transfer taxes). If
any Note is surrendered at said office or at the place of payment named in the
Note for registration of transfer or exchange (accompanied in the case of
registration of transfer or exchange by a written instrument of transfer in form
satisfactory to the Company duly executed by or on behalf of the holder), the
Company, at its expense, will deliver in exchange one or more new Notes in
denominations of $10,000 or larger multiples of $1,000, as requested by the
holder for the aggregate unpaid principal amount. Any Note or Notes issued in a
transfer or exchange shall carry the same rights to increase Notes surrendered.
The Holder agrees that prior to making any sale, transfer, pledge, assignment,
hypothecation, or other disposition (each, a "Transfer") of the Note, the Holder
shall give written notice to the Company describing the manner in which any such
proposed Transfer is to be made and providing such additional information and
documentation regarding the Transfer as the Company reasonably requests. If the
Company so requests, the Holder shall at his expense provide the Company with an
opinion of counsel (which counsel must be reasonably satisfactory to the
Company, to the holder, in form and substance satisfactory to the Company) that
the proposed Transfer complies with applicable federal and state securities
laws. The Company shall have no obligation to Transfer any Notes unless the
holder thereof has complied with the foregoing provisions, and any such
attempted Transfer shall be null and void.

<PAGE>


         5. Registered Owner. Prior to due presentation for registration of
transfer, the Company may treat the person in whose name any Note is registered
as the owner and holder of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes.

         6. Conversion.

            a. Conversion Procedure.

                           (1) At any time and from time to time, the Company
         may elect to convert all or any portion of the unpaid principal balance
         on any 1999 Subordinated Note into the number of shares of common stock
         of the Company, $0.01 par value per share ("Common Stock") computed by
         multiplying the unpaid principal balance to be converted times $1.00
         per share and dividing the result by the 1999 Subordinated Note
         Conversion Price determined pursuant to Section 6.b. The Company shall
         pay to the holder of each 1999 Subordinated Note so converted, all
         accrued and unpaid interest in cash or, at the Company's option, in
         Common Stock valued at Fair Market Value, at the time of conversion
         with respect to such 1999 Subordinated Note so converted with no
         further interest accruing or payable on the converted portion of the
         1999 Subordinated Note.

                           (2) Each conversion of all or any portion of a 1999
         Subordinated Note will be deemed to have been effected as of the close
         of business on the date on which the Company gives written notice to a
         holder of such 1999 Subordinated Note that the Company shall convert
         all or part of such 1999 Subordinated Note. At such time as such
         conversion has been effected, the rights of the holder of such 1999
         Subordinated Note as provided hereunder with respect to the portion of
         the 1999 Subordinated Note to be converted will cease, and the Person
         or Persons in whose name or names any certificate or certificates for
         shares of Common Stock are to be issued upon such conversion will be
         deemed to have become the holder or holders of record of the shares of
         Common Stock represented thereby.

                           (3) As soon as possible after a conversion has been
         effected and in no event later than twenty (20) business days
         thereafter, the Company will deliver to the converting holder:

                               (a) a certificate or certificates representing
         the number of shares of Common Stock issuable by reason of such
         conversion in such name or names and such denomination or denominations
         as the holder of the converted 1999 Subordinated Note has specified;

<PAGE>


                               (b) payment of all accrued and unpaid interest on
         such converted portion of the 1999 Subordinated Note;

                               (c) the amount payable under Subsection 6.a.(6)
         below with respect to such conversion; and

                               (d) if applicable, a replacement 1999
         Subordinated Note representing any portion of the 1999 Subordinated
         Note which was not converted.

                           (4) The issuance of certificates for shares of Common
         Stock upon conversion of a 1999 Subordinated Note will be made without
         charge to the holders of such 1999 Subordinated Note for any issuance
         tax in respect thereof or other cost incurred by the Company in
         connection with such conversion and the related issuance of shares of
         Common Stock. Upon conversion of all or any portion of a 1999
         Subordinated Note, the Company will take all such actions as are
         necessary in order to insure that the Common Stock issued as a result
         of such conversion is validly issued, fully paid and nonassessable.

                           (5) The Company will not close its books against the
         transfer of Common Stock issued or issuable upon conversion of the 1999
         Subordinated Notes in any manner which interferes with the timely
         conversion of the 1999 Subordinated Notes.

                           (6) If any fractional interest in a share of Common
         Stock would, except for the provisions of this Subsection 6.a.(6), be
         deliverable upon any conversion of any 1999 Subordinated Note, the
         Company, in lieu of delivering the fractional share therefor, shall pay
         an amount to the holder thereof equal to the Fair Market Value of such
         fractional interest as of the date of conversion.

                           (7) Any 1999 Subordinated Notes which are converted
         shall be canceled and will not be reissued or otherwise transferred.

                           (8) The Company will take such corporate action as
         may be necessary from time to time so that at all times it will have
         authorized, and reserved out of its authorized but unissued Common
         Stock for the sole purpose of issuance upon conversion the 1999
         Subordinated Notes, a sufficient number of shares of Common Stock to
         permit the conversion in full of the sum of the aggregate unpaid
         principal balances and accrued but unpaid interest due on all 1999
         Subordinated Notes.

                           (9) For purposes of this Section 6, "Fair Market
         Value" means the average of the last reported sales price of the Common
         Stock on the Nasdaq Stock Market or on any national or regional
         securities exchange on which the Common Stock is listed or admitted to
         unlisted trading privileges and on which the Common Stock is
         principally traded or quoted, as reported for each of the 10
         consecutive trading days ending on the 10th trading date prior to any
         dividend payment date; or if there is no public market for the Common
         Stock of the Company, the Fair Market Value shall be calculated based
         on the price paid per share of Common Stock or the valuation of the
         Company in the Company's most recent equity financing transaction with
         a third party, or, if in the judgment of the Board of Directors of the
         Company, the fair market value is materially different from that
         reflected by such valuation, then the Fair Market Value shall be
         determined by the Board of Directors in good faith.

<PAGE>


                  b.       Adjustments to 1999 Subordinated Notes Conversion
                           Price.

                           (1) In order to prevent dilution of the interests of
         the holders of the 1999 Subordinated Notes as a result of the
         conversion right granted to the Company under this subsection 6, the
         1999 Subordinated Note Conversion Price will be subject to adjustment
         from time to time pursuant to this Section 6.b. The term "1999
         Subordinated Note Conversion Price" initially means $2.00, as
         subsequently adjusted as provided below.

                            (2) If the Company issues or sells, or in accordance
         with Section 6.c. is deemed to have issued or sold, any shares of its
         Common Stock (except as set forth in Section 6.c.(9)) without
         consideration or for a consideration per share less than the 1999
         Subordinated Note Conversion Price in effect immediately prior to the
         time of such issuance or sale, then upon such issuance or sale the 1999
         Subordinated Note Conversion Price will be reduced to the conversion
         price determined by dividing (a) the sum of (1) the product derived by
         multiplying the 1999 Subordinated Conversion Price in effect
         immediately prior to such issuance or sale times the number of
         fully-diluted shares of Common Stock outstanding immediately prior to
         such issuance or sale, and (2) the consideration, if any, received by
         the Company upon such issuance or sale, by (b) the number of shares of
         fully-diluted Common Stock outstanding immediately prior to such
         issuance or sale plus the number of shares of Common Stock issued or
         deemed to have been issued in such sale pursuant to this Section 6.

                  c.       Effect on 1999 Subordinated Note Conversion Prices of
                           Certain Events.

                           (1) For purposes of determining the adjusted 1999
         Subordinated Note Conversion Prices under Section 6.b., the following
         will be applicable:

                               (a) Issuance of Rights or Options. If the Company
         grants, issues or sells Options to acquire Common Stock or Convertible
         Securities and the price per share for which Common Stock is issuable
         upon the exercise of such Options or upon conversion or exchange of any
         Convertible Securities issuable upon the exercise of such Options is
         less than the 1999 Subordinated Note Conversion Price in effect
         immediately prior to the time of the granting, issuance or sale of such
         Options, then the total maximum number of shares of Common Stock
         issuable upon the exercise of such Options or upon conversion or
         exchange of the total maximum amount of such Convertible Securities
         issuable upon the exercise of such Options shall be deemed to be
         outstanding and to have been issued and sold by the Company at the time
         of the granting of such Options for such price per share. For purposes
         of this Section, the "price per share for which Common Stock is
         issuable" shall be determined by dividing (A) the sum of (i) the
         amount, if any, received or receivable by the Company as consideration
         for the granting of such Options, plus (ii) the minimum aggregate
         amount of additional consideration payable to the Company upon exercise
         of all such Options, plus (iii) in the case of such Options which
         relate to Convertible Securities, the minimum aggregate amount of
         additional consideration, if any, payable to the Company upon the
         issuance or sale of such Convertible Securities and the conversion or
         exchange thereof, by (B) the total maximum number of shares of Common
         Stock issuable upon the exercise of such Options or upon the conversion
         or exchange of all such Convertible Securities issuable upon the
         exercise of such Options. No further adjustment of the 1999
         Subordinated Note Conversion Price shall be made when Convertible
         Securities are actually issued upon the exercise of such Options or
         when Common Stock is actually issued upon the exercise of such Options
         or the conversion or exchange of such Convertible Securities.

<PAGE>


                               (b) Issuance of Convertible Securities. If the
         Company in any manner issues or sells any Convertible Securities and
         the price per share for which Common Stock is issuable upon such
         conversion or exchange thereof is less than the 1999 Subordinated Note
         Conversion Price in effect immediately prior to the time of such issue
         or sale, then the maximum number of shares of Common Stock issuable
         upon conversion or exchange of such Convertible Securities shall be
         deemed to be outstanding and to have been issued and sold by the
         Company at the time of the issuance or sale of such Convertible
         Securities for such price per share. For the purposes of this Section,
         the "price per share for which Common Stock" shall be determined by
         dividing (A) the sum of (i) the amount received or receivable by the
         Company as consideration for the issue or sale of such Convertible
         Securities, plus (ii) the minimum aggregate amount of additional
         consideration, if any, payable to the Company upon the conversion or
         exchange thereof, by (B) the total maximum number of shares of Common
         Stock issuable upon the conversion or exchange of all such Convertible
         Securities. No further adjustment of the 1999 Subordinated Note
         Conversion Price shall be made when Common Stock is actually issued
         upon the conversion or exchange of such Convertible Securities, and if
         any such issue or sale of such Convertible Securities is made upon
         exercise of any Options for which adjustments of the 1999 Subordinated
         Note Conversion Price had been or are to be made pursuant to other
         provisions of this Section 6, no further adjustment of the 1999
         Subordinated Note Conversion Price shall be made by reason of such
         issue or sale.

                               (c) Change in Option Price or Conversion Rate. If
         the purchase price provided for in any Options, the additional
         consideration, if any, payable upon the issue, conversion or exchange
         of any Convertible Securities, or the rate at which any Convertible
         Securities are convertible into or exchangeable for Common Stock change
         at any time, the 1999 Subordinated Note Conversion Price in effect at
         the time of such change shall be readjusted to the 1999 Subordinated
         Note Conversion Price which would have been in effect at such time had
         such Options or Convertible Securities originally provided for such
         changed purchase price, additional consideration or changed conversion
         rate, as the case may be, at the time initially granted, issued or
         sold.

                           (2) For purposes of determining the adjusted 1999
         Subordinated Note Conversion Price under Subsection 6.b.(2) and (3),
         the following will be applicable:

<PAGE>




                               (a) Calculation of Consideration Received. If any
         Common Stock, Options or Convertible Securities are issued or sold or
         deemed to have been issued or sold for cash, the consideration received
         therefor will be deemed to be the gross amount received by the Company
         therefor after deducting any discounts or commissions paid or incurred
         by the Company in connection with the issuance and sale. In case any
         Common Stock, Options or Convertible Securities are issued or sold for
         a consideration other than cash, the amount of the consideration other
         than cash received by the Company will be the Fair Market Value thereof
         as of the date of receipt. If any Common Stock, Options or Convertible
         Securities are issued in connection with any merger in which the
         Company is the surviving Company, the amount of consideration therefor
         will be deemed to be the Fair Market Value of such portion of the net
         assets and business of the non-surviving Company as is attributable to
         such Common Stock, Options or Convertible Securities, as the case may
         be.

                               (b) Integrated Transactions. In case any Options
         are issued in connection with the issue or sale of other securities of
         the Company, together comprising one integrated transaction in which no
         specific consideration is allocated to such Options by the parties
         thereto, the Options will be deemed to have been issued for a
         consideration of $0.01 each.

                               (c) Treasury Shares. The number of shares of
         Common Stock outstanding at any given time shall not include shares
         owned or held by or for the account of the Company, and the disposition
         of any shares so owned or held will be considered an issue or sale of
         Common Stock.

                               (d) Record Date. If the Company takes a record of
         the holders of Common Stock for the purpose of entitling them (i) to
         receive a dividend or other distribution payable in Common Stock,
         Options or Convertible Securities or (ii) to subscribe for or purchase
         Common Stock, Options or Convertible Securities, then such record date
         will be deemed to be the date of the issue or sale of the shares of
         Common Stock deemed to have been issued or sold upon the declaration of
         such dividend or upon the making of such other distribution or the date
         of the granting of such right of subscription or purchase, as the case
         may be.

                           (3) Subdivision or Combination of Common Stock. If
         the Company at any time subdivides one or more classes of its
         outstanding shares of Common Stock into a greater number of shares, the
         1999 Subordinated Note Conversion Price in effect immediately prior to
         such subdivision will be proportionately reduced, and if the Company at
         any time combines (by combination, reverse stock split or otherwise)
         one or more classes of its outstanding shares of Common Stock into a
         smaller number of shares, the 1999 Subordinated Note Conversion Price
         in effect immediately prior to such combination will be proportionately
         increased.

                           (4) Stock Dividends. In the event of any stock
         dividend or other distribution payable in shares of Common Stock, or
         other securities or property of the Company, including securities of a
         third party, then in each such event the 1999 Subordinated Note
         Conversion Price shall be adjusted by multiplying the 1999 Subordinated
         Note Conversion Price then in effect by a fraction (i) the numerator of
         which is the total number of shares of Common Stock issued and
         outstanding immediately prior to the time of such issuance, and (ii)
         the denominator of which is the total number of shares of Common Stock
         issued and outstanding immediately prior to the time of such issuance
         plus the number of shares of Common Stock issuable in payment of such
         dividend or the number of shares of Common Stock which may be purchased
         at fair market value using the consideration equal to the aggregate
         Fair Market Value of the securities or other property of the Company to
         be distributed; provided, however, this adjustment shall exclude any
         such distributions to the extent a substantially similar distribution
         is made to the holders of the 1999 Subordinated Notes.

<PAGE>


                           (5) Distributions of Property. In the event that the
         Company makes a distribution of its property to the holders of Common
         Stock as a dividend in liquidation or partial liquidation or by way of
         return of capital or other than as a dividend payable out of funds
         legally available for dividends under the laws of the State of
         Delaware, the holders of 1999 Subordinated Notes Preferred Stock shall,
         upon conversion thereof, be entitled to receive, in addition to the
         number of shares of Common Stock receivable thereupon, and without
         payment of any consideration therefor, a sum equal to the amount of
         such property as would have been payable to them as owners of that
         number of shares of Common Stock receivable upon such conversion, had
         they been the holders of record of such Common Stock on the record date
         for such distribution; and an appropriate provision therefor shall be
         made a part of any such distribution; provided, however, this
         adjustment shall exclude any such distributions to the extent a
         substantially similar distribution is made to the holders of the 1999
         Subordinated Notes.

                           (6) Reorganization, Reclassification, Merger or
         Consolidation. If at any time, as a result of:

                                    (i) a capital reorganization or
                           reclassification (other than a subdivision,
                           combination, dividend or distribution provided for in
                           Subsections (3), (4) or (5) above); or

                                    (ii) a merger or consolidation of the
                           Company with another Company (whether or not the
                           Company is the surviving Company), the Common Stock
                           issuable upon the conversion of the 1999 Subordinated
                           Notes shall be changed into or exchanged for the same
                           or a different number of shares of any class or
                           classes of stock of the Company or any other Company,
                           or other securities convertible into such shares,
                           then, as a part of such reorganization,
                           reclassification, merger or consolidation,
                           appropriate adjustments shall be made in the terms of
                           the 1999 Subordinated Notes (or of any instruments or
                           securities into which the 1999 Subordinated Notes are
                           changed or converted or for which the 1999
                           Subordinated Notes are exchanged), so that:

                  (x) the holders of shares of the 1999 Subordinated Notes or of
         such substitute securities shall thereafter be entitled to receive,
         upon conversion of the such 1999 Subordinated Notes or of such
         substitute securities, the substantially equivalent kind and amount of
         shares of stock, other securities, money and property which such
         holders would have received at the time of such capital reorganization,
         reclassification, merger, or consolidation, if the Company had elected
         to convert such 1999 Subordinated Notes into Common Stock immediately
         prior to such capital reorganization, reclassification, merger, or
         consolidation, and

<PAGE>


                  (y) the 1999 Subordinated Notes or such substitute securities
         shall thereafter be adjusted on terms as nearly equivalent as may be
         practicable to the adjustments theretofore provided in this Section
         6.c.

         The provisions of this Subsection (6) shall similarly apply to
successive capital reorganizations, reclassifications, mergers, and
consolidations.

                           (7) Certain Events. If any event occurs of the type
         contemplated by the provisions of Section 6.c. but not expressly
         provided for by such provisions, then the Board of Directors will make
         an appropriate adjustment in the 1999 Subordinated Note Conversion
         Price so as to protect the rights of the holders of the 1999
         Subordinated Notes; provided, however, that, no such adjustment will
         increase the 1999 Subordinated Note Conversion Price as otherwise
         determined pursuant to Section 6.c. or decrease the number of shares of
         Common Stock issuable upon conversion of the 1999 Subordinated Notes.

                           (8) Notwithstanding the foregoing, no adjustment to
         the 1999 Subordinated Note Conversion Price shall be made for:

                               (a) issuances of Common Stock occurring prior to
         the date of this replacement Note;

                               (b) the issuance of warrants to officers,
         directors, shareholders or other investors in the Company, provided
         such issuance is approved by the Board of Directors;

                               (c) the issuance of shares of Common Stock into
         which the 1999 Subordinated Notes are convertible;

                               (d) the issuance of shares of Common Stock upon
         exercise of all options and warrants outstanding as of the date of this
         replacement Note;

                               (e) the issuance of options to acquire shares of
         Common Stock under the Company's incentive stock option or similar
         plans(or the issuance of such Common Stock upon the exercise thereof),
         provided each such plan has been approved by the Board of Directors;

                               (f) the issuance of shares of Common Stock under
         the Company's stock purchase or similar plans, provided each such plan
         has been approved by the Board of Directors;

<PAGE>


                               (g) the issuance of Common Stock or Options,
         warrants or rights to acquire Common Stock or the issuance of Common
         Stock upon the exercise thereof, in connection with (i) strategic
         transactions including acquisitions, joint ventures and similar
         arrangements, (ii) to vendors or suppliers or other business
         associates, (iii), in connection with debt financings or (iv) as
         compensation to service providers including without limitation, as
         brokers, finders and financial consultants, in connection with capital
         raising transactions.

                  d. Notices. As soon as practicable (and in any case not later
         than fifteen (15) days) upon any adjustment of the 1999 Subordinated
         Note Conversion Price, the Company will give written notice thereof to
         all holders of 1999 Subordinate Notes.

                  e. Definitions.

                     "Convertible Securities" means securities convertible into
                  or exchangeable for Common Stock.

                  "Options" means any grant, issue or sale by the Corporation of
         any right or option to subscribe for or to purchase Common Stock or any
         Convertible Securities.

         7. Warrant Coverage. Holder has received, on December 7, 1999, ten-year
warrants (the "Warrants) to purchase 800,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants is $2.25 per share
of Common Stock of the Company. The Warrants are evidenced by Warrant
Certificates, issued in accordance with the terms of a Warrant Agreement.

         8. Subordination. The indebtedness evidenced by this Note shall at all
times be wholly subordinate and junior in right of payment to all obligations of
the Company under or in connection with the Credit Agreement of even date
herewith ("Superior Debt") among the Company as guarantor, the borrowers CECO
Group Inc., CECO Filters, Inc., Air Purator Corporation, New Bush Co., Inc.,
U.S. Facilities Management, Inc., The Kirk & Blum Manufacturing Company, and
kbd/Technic, Inc., and the lenders PNC Bank, National Association and various
other financial institutions, upon the terms and conditions contained in the
Subordination Agreement between Green Diamond Oil Corp., Harvey Sandler, ICS
Trustee Services, Ltd., and PNC Bank, National Association and various other
financial institutions of even date herewith (the "Subordination Agreement").

         9. Repayment of Notes. In the event the Company completes an equity
financing or offering or a series of equity financing or offerings for a total
consideration in excess of $10,000,000, then twenty-five percent (25%) of all
such consideration in excess of $10,000,000 shall be used immediately, upon
receipt by the Company, to pre-pay the 1999 Subordinated Notes, provided such
prepayment shall be made proportionately among the 1999 Subordinated Notes until
the 1999 Subordinated Notes are paid in full.

<PAGE>


         10. Covenants of the Company. The Company covenants and agrees that it
shall not, without the prior written approval of the Holders of a majority of
the aggregate principal amount outstanding of the 1999 Subordinated Notes
("Majority Holders"):

                  a. Obtain or incur any indebtedness or other monetary
         obligations that are senior to or on parity with the Notes, other than
         the Superior Debt.

                  b. Allow, suffer or cause to exist any lien, claim, security
         interest or encumbrance on the Company's property or assets, other than
         with respect to the Superior Debt and purchase money indebtedness
         incurred in the ordinary course of business.

                  c. Enter into any arrangement or agreement involving the
         merger or consolidation of the Company.

                  d. Use the proceeds from the sale of the 1999 Subordinated
         Notes other than in the ordinary course of its business for general
         corporate purposes including lending monies to any of its subsidiaries.
         The Company also covenants and agrees that it shall operate its
         business in the ordinary course.

         11.      Events of Default.

                  a. Occurrences of Events of Default. Each of the following
         events shall constitute an "Event of Default" for purposes of this
         Note:

                            (1) if the Company fails to pay any amount payable,
                  under this Note when due;

                            (2) if the Company breaches any of its
                  representations, warranties or covenants set forth in this
                  Note or the Warrant Agreement;

                            (3) the commencement of an involuntary case against
                  the Company or its subsidiary or any of its subsidiaries under
                  any applicable bankruptcy, insolvency or other similar law now
                  or hereafter in effect, or the appointing of a receiver,
                  liquidator, assignee, custodian, trustee or similar official
                  of the Company or for any substantial part of the Company or
                  one of its subsidiary's property, or ordering the winding-up
                  or liquidation of the Company or one of its subsidiary's
                  affairs;

                           (4) if the Company or any of its subsidiaries shall
                  commence a voluntary case under any applicable bankruptcy,
                  insolvency or other similar law now or hereafter in effect, or
                  shall consent to the entry of an order for relief in an
                  involuntary case under any such law, or shall consent to the
                  appointment of or taking possession by a receiver, liquidator,
                  assignee, trustee, custodian or similar official of the
                  Company or its subsidiary or for any substantial part of the
                  Company or one of its subsidiary's property, or shall make any
                  general assignment for the benefit of creditors, or shall take
                  any corporate action in furtherance of any of the foregoing;
                  or

<PAGE>


                           (5) if the Company's business shall fail, as
                  determined in good faith by the Majority Holders and evidenced
                  by the Company's inability to pay its ongoing debts as such
                  debts become due.

                  b. Acceleration Upon Event of Default. If any Event of Default
         shall have occurred and be continuing, for any reason whatsoever (and
         whether such occurrence shall be voluntary or involuntary or come about
         or be effected by operation of law or otherwise), the unpaid principal
         amount of, and the accrued interest on, the Notes shall automatically
         become immediately due and payable, without presentment, demand,
         protest or other requirements of any kind, all of which are hereby
         expressly waived by the Company.

         12. Investment Representations of the Holder. With respect to the
purchase of this Note, the Common Stock issuable upon the exercise of the
Warrants (collectively, the "Securities"), the Holder hereby represents and
warrants to the Company as follows:

                  a. Experience. The Holder has substantial experience in
         evaluating and investing in private placement transactions of
         securities in companies similar to the Company so that it is capable of
         evaluating the merits and risks of its investment in the Company and
         has the capacity to protect its own interests.

                  b. Investment. The Holder is acquiring the Securities for
         investment for its own account, not as a nominee or agent, and not with
         the view to, or for resale in connection with, any distribution
         thereof. The Holder understands that the Securities have not been, and
         will not be, registered under the Securities Act of 1933, as amended
         ("Securities Act"), by reason of a specific exemption from the
         registration provisions of the Securities Act, the availability of
         which depends upon, among other things, the bona fide nature of the
         investment intent and the accuracy of the Holder's representations as
         expressed herein. The holder is an "accredited investor" within the
         meaning of Regulation D, Section 501(a), promulgated by the Securities
         and Exchange Commission.

                  c. Rule 144. The Holder acknowledges that the Securities must
         be held indefinitely unless subsequently registered under the
         Securities Act, or unless an exemption from such registration is
         available. The Holder understands that at this time the Company is not
         under any obligation to register any of the Securities. The Holder is
         aware of the provisions of Rule 144 promulgated under the Securities
         Act that permit limited resale of securities purchased in a private
         placement subject to satisfaction of certain conditions.

                  d. No Public Market. The Holder understands that no public
         market now exists for any of the Securities issued by the Company and
         that the Company has made no assurances that a public market will ever
         exist for the Securities.

<PAGE>


                  e. Access to Data. The Holder has had an opportunity to
         discuss the Company's business, management and financial affairs with
         the Company's management and has also had an opportunity to ask
         questions of the Company's officers, which questions were answered to
         its satisfaction.

     13.          Miscellaneous.

                  a. Invalidity of Any Provision. If any provision or part of
         any provision of this Note shall for any reason be held invalid,
         illegal or unenforceable in any respect, such invalidity, illegality or
         unenforceability shall not affect any other provisions of this Note and
         this Note shall be construed as if such invalid, illegal or
         unenforceable provisions or part hereof had never been contained
         herein, but only to the extent of its invalidity, illegality or
         unenforceability.

                  b. Governing Law. The Note shall be governed in all respects
         by the laws of the State of New York, excluding its conflict of laws.

                  c. Notices. Any notice or other communication required or
         permitted hereunder shall be in writing and shall be deemed to have
         been duly given (i) on the date of delivery if delivered personally,
         (ii) one (1) business day after transmission by facsimile transmission
         with a written confirmation copy sent by first class mail, or (iii)
         five (5) days after mailing if mailed by first class mail, to the
         following addresses:

                  If to the Company: CECO Environmental Corp.
                                     505 University Avenue, Suite 1400
                                     Toronto, Ontario M5G 1X3
                                     CANADA
                                     Attention: Phillip DeZwirek

                  And if to the Holder, to the address or facsimile number of
         Holder as set forth on the Company's records, or such other address as
         the Holder has provided to the Company by notice duly given.

                  d. Notice of a Sale Transaction. The Company shall give all
         Holders of Notes notice of the Closing of a Sale Transaction at least
         thirty (30) days prior to such Closing.

                  e. Collection. If the indebtedness represented by the Note or
         any part thereof is collected at law or in equity or in bankruptcy,
         receivership or other judicial proceedings or if the Note is placed in
         the hands of attorneys for collection after the occurrence of an Event
         of Default, the Company agrees to pay, in addition to the outstanding
         principal and accrued interest payable hereon, reasonable attorneys'
         fees and costs incurred by the Holder, or on behalf of the Holder by a
         representative of the Holder.

<PAGE>


                  f. Successors and Assigns. The rights and obligations of the
         Company and the Holder shall be binding upon and benefit the
         successors, assigns, heirs, administrators and transferees of the
         parties.

                  g. Waivers. The Company and any endorsers, sureties,
         guarantors, and all others who are, or may become liable for the
         payment hereof severally: (a) waive presentment for payment, demand,
         notice of demand, notice of nonpayment or dishonor, protest and notice
         of protest of this Note, and all other notices in connection with the
         delivery, acceptance, performance, default, or enforcement of the
         payment of this Note, (b) consent to all extensions of time, renewals,
         postponements of time of payment of this Note or other modifications
         hereof from time to time prior to or after the maturity date hereof,
         whether by acceleration or in due course, without notice, consent or
         consideration to any of the foregoing, (c) agree to any substitution,
         exchange, addition, or release of any of the security for the
         indebtedness evidenced by this Note or the addition or release of any
         party or person primarily or secondarily liable hereon, (d) agree that
         Holder shall not be required first to institute any suit, or to exhaust
         its remedies against the Company or any other person or party to become
         liable hereunder or against the security in order to enforce the
         payment of this Note and (e) agree that, notwithstanding the occurrence
         of any of the foregoing (except by the express written release by
         Holder of any such person), the Company shall be and remain, directly
         and primarily liable for all sums due under this Note.

                  h. Time. Time is of the essence in this Note.

                  i. Captions. The captions of sections of this Note are for
         convenient reference only, and shall not affect the construction or
         interpretation of any of the terms and provisions set forth in this
         Note.

                  j. Number and Gender. Whenever used in this Note, the singular
         number shall include the plural, and the masculine shall include the
         feminine and the neuter, and vice versa.

                  k. Remedies. All remedies of the Holder shall be cumulative
         and concurrent and may be pursued singly, successively, or together at
         the sole discretion of the Holder and may be exercised as often as
         occasion therefor shall arise. No act of omission or commission of the
         Holder, including specifically any failure to exercise any right,
         remedy or recourse shall be effective unless it is set forth in a
         written document executed by the Holder and then only to the extent
         specifically recited therein. A waiver or release with reference to one
         event shall not be construed as continuing as a bar to or as a waiver
         or release of any subsequent right, remedy, or recourse as to any
         subsequent event.

                  l. No Waiver by Holder. The acceptance by Holder of any
         payment under this Note which is less than the amount then due or the
         acceptance of any amount after the due date thereof, shall not be
         deemed a waiver of any right or remedy available to Holder nor nullify
         the prior exercise of any such right or remedy by Holder. None of the
         terms or provisions of this Promissory Note may be waived, altered,
         modified or amended except by a written document executed by Holder and
         then only to the extent specifically recited therein. No course of
         dealing or conduct shall be effective waive, alter, modify or amend any
         of the terms or provisions hereof. The failure or delay to exercise any
         right or remedy available to Holder shall not constitute a waiver of
         the right of the Holder to exercise the same or any other right or
         remedy available to Holder at that time or at any subsequent time.

<PAGE>


                  m. Submission to Jurisdiction. BORROWER, AND ANY ENDORSERS,
         SURETIES, GUARANTORS AND ALL OTHERS WHO ARE, OR WHO MAY BECOME, LIABLE
         FOR THE PAYMENT HEREOF SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY (A)
         AGREE THAT ANY SUIT, ACTION, OR OTHER LEGAL PROCEEDING ARISING OUT OF
         OR RELATING TO THIS NOTE OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
         DELIVERED PURSUANT TO, OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT
         AND MAINTAINED IN THE COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, OR
         IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
         YORK; (B) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH
         SUIT, ACTION OR PROCEEDING; AND (C) WAIVE ANY OBJECTION WHICH IT OR
         THEY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR
         PROCEEDING IN ANY OF SUCH COURTS.

                  n. Waiver of Trial by Jury. HOLDER AND BORROWER HEREBY
         KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
         EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING
         OR COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN
         CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
         THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
         (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS
         PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER TO MAKE THE LOAN
         EVIDENCED BY THIS NOTE.


                                            CECO ENVIRONMENTAL CORP.


                                            By:  /s/ Phillip DeZwirek
                                                 ------------------------------
                                                 Phillip DeZwirek, President



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.41
<SEQUENCE>14
<FILENAME>0014.txt
<DESCRIPTION>EXHIBIT 10.41
<TEXT>

<PAGE>

                                                                  Exhibit 10.41

                       THIRD AMENDMENT TO CREDIT AGREEMENT


         This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of the 30th day of March, 2001, and effective as of December 31, 2000, with
respect to Sections 2(b), (c), (d), (m), (n) and (o) hereof, by and among CECO
GROUP, INC., CECO FILTERS, INC., AIR PURATOR CORPORATION, NEW BUSCH CO., INC.,
THE KIRK & BLUM MANUFACTURING COMPANY and KBD/TECHNIC, INC. (the "Borrowers"),
and PNC BANK, NATIONAL ASSOCIATION ("PNC"), individually and as agent for itself
and the other banks (collectively, the "Banks") which from time to time are
parties to the hereinafter defined Credit Agreement (in such capacity, the
"Agent").

                                   BACKGROUND

         A. The Agent, the Banks and the Borrowers are parties to a Credit
Agreement dated as of December 7, 1999 as amended by Amendment to Credit
Agreement, dated as of March 28, 2000 and by Second Amendment to Credit
Agreement dated as of November 10, 2000 (as amended, the "Credit Agreement").

         B. The Borrowers have requested and the Agent and the Banks have agreed
to amend the Credit Agreement on the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the legality and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:

         1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

         2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows:

            (a) Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition:

            "Equity Contribution": shall mean the infusion and continued
            maintenance of capital in the Borrowers in the form of equity or
            subordinated debt in a minimum amount of Four Million and 00/100
            Dollars ($4,000,000), in a form satisfactory to the Agent and the
            Banks in their sole discretion, by CECO.

            (b) The definition of EBITDA as presently set forth in the Credit
Agreement shall be deleted and shall be replaced by the following:

            "EBITDA": For any period, net income (or loss) of a Person for such
            period, plus the amount of income taxes, interest expense,


                                       1
<PAGE>

            reasonable expenses arising out of the preparation, negotiation,
            execution and delivery of the Acquisition Documents and the Loan
            Documents, depreciation and amortization deducted from earnings in
            determining net income (or loss) of such Person excluding all
            investment income of such Person occurring on or after January 1,
            2001, all as determined on a consolidated basis in accordance with
            GAAP.

            (c) The definition of "Fixed Charge Coverage Ratio" as presently set
forth in the Credit Agreement shall be amended to include the following at the
end of the existing definition:

            Provided, however, calculation of the Fixed Charge Coverage Ratio
            shall not include the Term Loan Prepayments.

            (d) The definition of "Leverage Ratio" as presently set forth in the
Credit Agreement shall be deleted and shall be replaced with the following:

            "Leverage Ratio": At the date of determination, the ratio of
            Consolidated Debt of CECO (but (i) excluding that certain debt of
            CECO for funds borrowed to purchase the Peerless Stock, if the
            market value of the Peerless Stock then owned by CECO exceeds the
            amount of such debt), and (ii) further excluding the Subordinated
            Debt; and (iii) further excluding the cash value of life insurance
            loans) to (EBITDA), each determined for CECO on a consolidated basis
            and calculated as of the end of the fiscal quarter ending on or
            immediately preceding such date.

            (e) The definition of "Revolving Credit Commitment" as presently set
forth in the Credit Agreement shall be deleted and shall be replaced with the
following:

            "Revolving Credit Commitment": means $9,000,000, as reduced from
            time to time pursuant to Section 2.9.

            (f) Annex I to the Credit Agreement shall be deleted and shall be
replaced with the following:

             ------------------------------------------------------------------
                  Loans       Applicable Margin for  Applicable Margin for Base
                                 Eurodollar Loans            Rate Loans
             ------------------------------------------------------------------
             Revolving Loans          3.50%                     2.00%
             ------------------------------------------------------------------
               Term Loan A            3.50%                     2.00%
             ------------------------------------------------------------------
               Term Loan B            4.00%                     2.50%
             ------------------------------------------------------------------
             ------------------------------------------------------------------

            provided, however, upon the occurrence and continuation of the
            Equity Infusion, Annex I to the Credit Agreement shall be as
            follows:

                                       2
<PAGE>

             ------------------------------------------------------------------
                  Loans       Applicable Margin for  Applicable Margin for Base
                                 Eurodollar Loans            Rate Loans
             ------------------------------------------------------------------
             Revolving Loans          3.00%                     1.50%
             ------------------------------------------------------------------
               Term Loan A            3.00%                     1.50%
             ------------------------------------------------------------------
               Term Loan B            3.50%                     2.00%
             ------------------------------------------------------------------
             ------------------------------------------------------------------

            (g) Section 2.4(b) shall be amended to provide that the Letter of
Credit Fee shall be changed from one percent (1%) to (1.5%).


            (h) Section 2.1(a)(y)(ii) shall be amended to change plus to minus.

            (i) Section 2.1(a)(y)(iii) shall be deleted.

            (j) The requirement set forth in Section 2.5(a) of the Credit
Agreement that the Borrowers pay to each Bank, through the Agent, a Commitment
Fee shall be abated until the occurrence of the Equity Contribution or 1-02-02
whichever is sooner, at which time, Section 2.5(a) of the Credit Agreement shall
be in full force and effect.

            (k) Section 2.6(b) of the Credit Agreement shall be modified to
include the following at the end of the existing Section 2.6(b):

                In addition to the payments required on the Term Loans by this
                Section 2.6, the Borrowers shall make the following payments to
                be applied to the principal balances of the Term Loans:

                (a) $500,000 on or before June 30, 2001;

                (b) $500,000 on or before September 30, 2001; and,

                (c) $1,000,000 on or before December 31, 2001. (The foregoing
                payments shall be referred to as the "Term Loan Prepayments".)

            (l) In addition to the inspections and audits provided for in
Section 5.6 of the Credit Agreement, the Agent and Banks may request, not more
than once a year, an appraisal of the Collateral.

            (m) Section 6.1(a) Leverage Ratio of the Credit Agreement shall be
abated as it presently exists through January 1, 2002 and shall be modified as
follows:

            (a) Leverage Ratio. Permit the Leverage Ratio, as of the end of any
            fiscal quarter ending during the period specified below, for the
            prior four consecutive fiscal quarters, to equal or exceed the
            amount set forth opposite such period:

                                       3
<PAGE>

             ------------------------------------------------------------------
                                                           Leverage Ratio To Be
             Last Day of Fiscal Quarter During Period            Less Than
             ------------------------------------------------------------------
             December 31, 2000 through March 30, 2001             5.50 to 1
             ------------------------------------------------------------------
             March 31, 2001 through June 29, 2001                 6.30 to 1
             ------------------------------------------------------------------
             June 30, 2001 through September 29, 2001             5.50 to 1
             ------------------------------------------------------------------
             September 30, 2001 through December 30, 2001         4.60 to 1
             ------------------------------------------------------------------
             December 31, 2001                                    3.10 to 1
             ------------------------------------------------------------------

            provided, however, the abatement of Section 6.1(a) Leverage Ratio of
            the Credit Agreement shall cease and such section shall continue as
            provided in the Credit Agreement immediately before the effective
            date of this Amendment on January 2, 2002.

            (n) Section 6.1(b) of the Credit Agreement shall be abated in its
entirety as it presently exists through January 1, 2002 and shall be modified as
follows:

            (b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
            Ratio, as of the end of each fiscal quarter ending during the period
            specified below, to be less than the amount set forth opposite such
            period:

             ------------------------------------------------------------------
                                                          Fixed Charge Ratio To
             Last Day of Fiscal Quarter During Period           Be Less Than
             ------------------------------------------------------------------
             December 31, 2000 through March 30, 2001             .90 to 1
             ------------------------------------------------------------------
             March 31, 2001 through June 29, 2001                 .80 to 1
             ------------------------------------------------------------------
             June 30, 2001 through September 29, 2001             .80 to 1
             ------------------------------------------------------------------
             September 30, 2001 through December 30, 2001         .90 to 1
             ------------------------------------------------------------------
             December 31, 2001                                   1.00 to 1
             ------------------------------------------------------------------

            provided, however, , the abatement of Section 6.1(b) Fixed Charge
            Coverage Ratio of the Credit Agreement shall cease and such section
            shall continue as provided in the Credit Agreement immediately
            before the effective date of this Amendment on January 2, 2002

            (o) Section 6.1(c) Interest Coverage Ratio of the Credit Agreement
shall be abated in its entirety as it presently exists through January 1, 2002
and shall be modified as follows:

            (b) Interest Coverage Ratio. Permit the Interest Coverage Ratio, as
            of the end of each fiscal quarter ending during the period specified
            below, to be less than the amount set forth opposite such period:

                                       4
<PAGE>
            -------------------------------------------------------------------
                                                        Interest Coverage Ratio
            Last Day of Fiscal Quarter During Period        To Be Less Than
            -------------------------------------------------------------------
            December 31, 2000 through March 30, 2001           1.40 to 1
            -------------------------------------------------------------------
            March 31, 2001 through June 29, 2001               1.10 to 1
            -------------------------------------------------------------------
            June 30, 2001 through September 29, 2001           1.25 to 1
            -------------------------------------------------------------------
            September 30, 2001 through December 30, 2001       1.60 to 1
            -------------------------------------------------------------------
            December 31, 2001                                  2.20 to 1
            -------------------------------------------------------------------

            provided, however, the abatement of Section 6.1(c) Interest Coverage
            Ratio of the Credit Agreement shall cease and such section shall
            continue as provided in the Credit Agreement immediately before the
            effective date of this Amendment on January 2, 2002.

         3. Additional Covenants. The Credit Agreement and any other Applicable
Loan Document shall be amended to include the following additional covenants and
the Borrowers' failure to comply with such additional covenants shall constitute
an immediate Event of Default without any required notice or cure period,
notwithstanding any provision to the contrary contained in the Credit Agreement
or any other Loan Document:

            (a) Borrowers shall make no payments of principal or interest on any
Subordinated Debt until the occurrence and continuation of the Equity
Contribution.

            (b) Borrowers shall make no Bonus Pool payments until the occurrence
and continuation of the Equity Contribution.

            (c) Any fee paid to CECO from any of the Borrowers and all
investments maintained in financial institutions or otherwise located in Canada
shall be deposited in an account with Bank One, NA, at its banking office
located in Toronto, Ontario, or a financial institution domiciled in the United
States, acceptable to the Agent and the Banks in their collective sole
discretion, which accounts and all amounts deposited therein shall be pledged to
the Agent for the ratable benefit of the Banks as additional Collateral under
terms and conditions acceptable to the Agent and the Banks in their sole
discretion.

            (d) CECO shall pledge to the Agent, for the ratable benefit of the
Banks, all of its right, title and interest in and to the Taurus Brokerage
Account, which shall contain the Peerless Stock, as additional Collateral under
terms and conditions acceptable to the Agent and the Banks in their collective
sole discretion.

            (e) CECO shall sell the Peerless Stock and the proceeds from such
sale shall be applied to the extent necessary to make the Term Loan Prepayments
as provided in Section 2(k) of this Amendment.

            (f) CECO shall provide to the Agent and to each Bank a proforma
financial statement, prepared on a consolidated basis, containing its forecast
for compliance with the Financial Covenants of the Credit Agreement during each
fiscal quarter of 2001.


                                       5
<PAGE>

            (g) Borrowers shall:

                (i) by April 30, 2001, complete and submit to Agent certain
            Collateral Due Diligence Reports previously requested by Agent;

                (ii) by April 30, 2001, execute and deliver fully executed
            documents perfecting assignment of the accounts specified in
            Sections 3(c) and (e) above and deliver the fully executed
            Subordinated Creditor's Consent in the form attached hereto of ICS
            Trustee Services, Ltd. and Harvey Sandler;

                (iii) within thirty days after requested by Agent deliver any
            additional documents reasonably requested by Agent and Bank to
            perfect any security interests in Collateral granted under the
            Credit Agreement.

         4. Amendment Fee. Borrowers shall pay to the Agent, for the ratable
benefit of the Banks, a fee in the amount of $25,000 upon execution of this
Agreement and an Amendment Fee of $150,000, due and payable on January 2, 2002;
provided however:

            (a) that if the Equity Contribution is made on or before June 30,
2001, the Amendment Fee shall be deemed satisfied by the payment of $50,000 paid
simultaneously with the Equity Contribution;

            (b) that if the Equity Contribution is made between July 1, 2001 and
September 30, 2001, the Amendment Fee shall be deemed satisfied by the payment
of $100,000 paid simultaneously with the Equity Contribution;

            (c) that if the Equity Contribution is made between October 1, 2001
and December 31, 2001, the Amendment Fee shall be $150,000 and shall be paid
simultaneously with the Equity Contribution.

         5. Cash Collateral Account. Borrowers shall establish an account at a
financial institution acceptable to the Agent and the Banks, in their sole
discretion, ("Cash Collateral Account") and shall deposit in such Cash
Collateral Account the amount of $50,000 on the last day of each calendar
quarter, commencing on June 30, 2001, up to the aggregate amount of $150,000.
The Cash Collateral Account and all funds deposited therein shall be pledged to
the Agent and the Banks under terms and conditions acceptable to them in their
sole discretion. Upon payment by the Borrowers of the Amendment Fee, if no Event
of Default has occurred and is continuing or would have occurred, but for the
giving of notice or the passage of time, the Agent and the Banks shall release
their interest in the Cash Collateral Account.

         6. Consent to Extension of Bonus Pool Payments. The Agent and the
Banks, upon the request of Richard J. Blum, Lawrence J. Blum and David Blum,
shall consent to an extension of the Bonus Pool payments for a period of one (1)
year.

                                       6
<PAGE>

         7. Amendment to the Loan Documents. All references to the Credit
Agreement in the Loan Documents and in any documents executed in connection
therewith shall be deemed to refer to the Credit Agreement as amended by this
Amendment.

         8. Ratification of the Loan Documents. Notwithstanding anything to the
contrary herein contained or any claims of the parties to the contrary, the
Agent, the Banks and the Borrowers agree that the Loan Documents and each of the
documents executed in connection therewith are in full force and effect and each
such document shall remain in full force and effect, as further amended by this
Amendment, and each of the Borrowers hereby ratifies and confirms its
obligations thereunder.

         9. Representations and Warranties.

            (a) Each Borrower hereby certifies that (i) the representations and
warranties of such Borrower in the Credit Agreement as amended herein are true
and correct in all material respects as of the date hereof, as if made on the
date hereof and (ii) no Event of Default and no event which could become an
Event of Default with the passage of time or the giving of notice, or both,
under the Credit Agreement or the other Loan Documents exists on the effective
date hereof.

            (b) Each Borrower further represents that it has all the requisite
power and authority to enter into and to perform its obligations under this
Amendment, and that the execution, delivery and performance of this Amendment
have been duly authorized by all requisite action and will not violate or
constitute a default under any provision of any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect or of the Articles of Incorporation or by-laws of such
Borrower, or of any indenture, note, loan or credit agreement, license or any
other agreement, lease or instrument to which such Borrower is a party or by
which such Borrower or any of its properties are bound.

            (c) Each Borrower also further represents that its obligation to
repay the Loans, together with all interest accrued thereon, is absolute and
unconditional, and there exists no right of set off or recoupment, counterclaim
or defense of any nature whatsoever to payment of the Loans, and each Borrower
further represents that the Agents and Banks have fully performed all of their
respective obligations under the Loan Documents through the date of this
Amendment.

            (d) Each Borrower also further represents that there have been no
changes to the Articles of Incorporation, by-laws or other organizational
documents of each such Borrower since the most recent date true and correct
copies thereof were delivered to the Agent.

         10. Conditions Precedent. The effectiveness of the amendments set forth
herein is subject to the fulfillment, to the satisfaction of the Agent and its
counsel, of the following conditions precedent:

                                       7
<PAGE>

            (a) The Borrowers shall have delivered to the Agent the following,
all of which shall be in form and substance satisfactory to the Agent and shall
be duly completed and executed:

                (i) This Amendment and the consent of the Guarantor and the
            consent of Green Diamond Oil Corp. as attached hereto; and

                (ii) Such additional documents, certificates and information as
            the Agent may require pursuant to the terms hereof or otherwise
            reasonably request.

            (b) After giving effect to the amendments contained herein, the
representations and warranties set forth in the Credit Agreement shall be true
and correct on and as of the date hereof.

            (c) After giving effect to the amendments contained herein, no Event
of Default hereunder, and no event which, with the passage of time or the giving
of notice, or both, would become such an Event of Default shall have occurred
and be continuing as of the date hereof.

            (d) The Borrowers shall have paid the reasonable fees and
disbursements of the Agent's counsel incurred in connection with this Amendment.

         11. No Waiver. Except as expressly provided herein, this Amendment does
not and shall not be deemed to constitute a waiver by the Agent or the Banks of
any Event of Default, or of any event which with the passage of time or the
giving of notice or both would constitute an Event of Default, nor does it
obligate the Agent or the Banks to agree to any further modifications to the
Credit Agreement or any other Loan Document or constitute a waiver of any of the
Agent's or the Banks' other rights or remedies.

         12. Waiver and Release. The Borrowers each on behalf of themselves,
their agents, employees, officers, directors, successors and assigns, do hereby
waive and release Agent and Banks, their agents, employees, officers, directors,
affiliates, parents, successors and assigns, from any claims arising from or
related to administration of the Credit Agreement and Loan Document and any
course of dealing among the parties not in compliance with those agreements from
the inception of the Credit Agreement whether known or unknown through the date
of execution and delivery of this Amendment.

         13. Effective Date. The parties hereto agree that subsections (b), (c),
(d), (m), (n) and (o) of Section 2 hereof shall for all purposes be deemed to be
effective as of December 31, 2000 and for all purposes the Credit Agreement
shall be deemed to have been amended as of such date to reflect the amendments
to the Credit Agreement set forth in such subsections.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.


                                       8
<PAGE>
                                        CECO GROUP, INC.


                                        By: /s/ Marshall J. Morris
                                           ------------------------------------
                                        Name: Marshall J. Morris
                                        Title: CFO


                                        CECO FILTERS, INC.


                                        By: /s/ Marshall J. Morris
                                           ------------------------------------
                                        Name: Marshall J. Morris
                                        Title: Secretary


                                        AIR PURATOR CORPORATION


                                        By: /s/ Marshall J. Morris
                                           ------------------------------------
                                        Name: Marshall J. Morris
                                        Title: Secretary

                                        NEW BUSCH CO., INC.


                                        By: /s/ Richard J. Blum
                                           ------------------------------------
                                        Name: Richard J. Blum
                                        Title: Treasurer


                                        THE KIRK & BLUM MANUFACTURING COMPANY


                                        By: /s/ Richard J. Blum
                                           ------------------------------------
                                        Name: Richard J. Blum
                                        Title: President

                                       9
<PAGE>



                                        KBD/TECHNIC, INC.


                                        By: /s/
                                           ------------------------------------
                                        Name:
                                        Title: Treasurer


                                        PNC BANK, NATIONAL ASSOCIATION, as
                                        Agent and as a Bank


                                        By: /s/ William Miles
                                           ------------------------------------
                                        Title: Vice President


                                        FIFTH THIRD BANK, as a Bank


                                        By: /s/ David Alexander
                                           ------------------------------------
                                        Title: Assistant Vice President


                                        BANK ONE, NA, as a Bank


                                        By: /s/ Jeffrey Nicholos
                                           ------------------------------------
                                        Title: Vice President





                                       10
<PAGE>

                               GUARANTOR'S CONSENT


         By Corporate Guaranty, dated December 7, 2000 (the "Guaranty"), the
undersigned (the "Guarantor") guaranteed to the Agent and the Banks, subject to
the terms and conditions set forth therein, the prompt payment and performance
of all of the Obligations (as defined therein). The Guarantor consents to the
Borrowers' execution of the foregoing Third Amendment to Credit Agreement. The
Guarantor hereby acknowledges and agrees that the Guaranty remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.


                                             CECO ENVIRONMENTAL CORP.


                                             By: /s/ Marshall J. Morris
                                                -------------------------------
                                             Title:










                                       11
<PAGE>


                         SUBORDINATED CREDITOR'S CONSENT


         The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"), the
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Third Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3(a) of the foregoing Third Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3(a) of the
foregoing Third Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.

                                              GREEN DIAMOND OIL CORP.


                                              By: /s/ Phillip DeZwirek
                                                 ------------------------------
                                              Title President








                                       12
<PAGE>

                         SUBORDINATED CREDITOR'S CONSENT


         The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"), the
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Third Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3(a) of the foregoing Third Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3(a) of the
foregoing Third Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.

                                              ICS TRUSTEE SERVICES, LTD.


                                              By:
                                                 ------------------------------
                                              Title






                                       13
<PAGE>


                         SUBORDINATED CREDITOR'S CONSENT


         The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"), the
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Third Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3(a) of the foregoing Third Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3(a) of the
foregoing Third Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.

                                             HARVEY SANDLER


                                             By:
                                                -------------------------------
                                             Title




                                       14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>15
<FILENAME>0015.txt
<DESCRIPTION>EXHIBIT 23
<TEXT>

<PAGE>



                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



As independent public accountants, we hereby consent to the incorporation of our
report dated March 30, 2001 for the year ended December 31, 1999 included or
incorporated by reference in this annual report on Form 10-K for CECO
Environmental Corp. and subsidiaries for the year ended December 31, 2000.






                                   /s/MARGOLIS & COMPANY P.C.
                                   ----------------------------
                                   Certified Public Accountants




Bala Cynwyd, PA 19004
March 30, 2001






</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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