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<SEC-DOCUMENT>0000950131-02-001241.txt : 20020415
<SEC-HEADER>0000950131-02-001241.hdr.sgml : 20020415
ACCESSION NUMBER:		0000950131-02-001241
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		15
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020328

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:		10-K405
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-07099
		FILM NUMBER:		02591780

	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>10-K405
<SEQUENCE>1
<FILENAME>d10k405.txt
<DESCRIPTION>FORM 10-K
<TEXT>
<PAGE>

================================================================================

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

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

                                   FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the fiscal year ended December 31, 2001

                                      or

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

                          Commission File No. 0-7099

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

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

<TABLE>
 <S>                                      <C>
                 Delaware                              13-2566064
       (State or Other Jurisdiction       (I.R.S. Employer Identification No.)
    of Incorporation or Organization)
   3120 Forrer Street Cincinnati, Ohio                   45209
 (Address of Principal Executive Offices)              (Zip Code)
</TABLE>

                                (513) 458-2600
             (Registrant's Telephone Number, Including Area Code):

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

          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

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

   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: $90,994,000.

   Aggregate market value of voting stock held by non-affiliates of registrant
(based on the last sale price on March 19, 2002): $22,108,375.

   Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: 9,614,087 shares of common
stock, par value $0.01 per share, as of March 19, 2002.

================================================================================

<PAGE>

                                    PART I

Item 1.   Business

  General

   CECO Environmental Corp. ("CECO" or the "Company") was incorporated in New
York State in 1966 and reincorporated in Delaware in January 2002. We operate
as a provider of air pollution control products and services.

   CECO Group, Inc. ("CECO Group") is a wholly-owned subsidiary of CECO. CECO
Group owns 100% of the stock of The Kirk & Blum Manufacturing Company ("Kirk &
Blum"), approximately 94% of the common stock of CECO Filters, Inc., a Delaware
corporation ("Filters"), 100% of the stock of CECO Abatement Systems, Inc.
("CECO Abatement") and beneficially owns 100% of the stock of kbd/Technic, Inc
("kbd/Technic"). The other operating company controlled by CECO, New Busch Co.,
Inc. ("Busch"), is a wholly-owned subsidiary of Filters. CECO operates through
its wholly-owned subsidiary, CECO Group. The terms "we", "us" and "our" herein
refer to CECO, CECO Group, Filters, and their respective subsidiaries. "CECO"
or the "Company" refers to CECO Environmental Corp.

   Over the past two and a half years, our business strategy has been to
transition from a product-based company to a solutions-based provider. Several
accomplishments that have helped us with this transformation are:

  .   We made key operating management changes within Filters, Busch and Kirk &
      Blum's Louisville division.

  .   We implemented a targeted sales approach with "Centers of Excellence"
      industry teams to identify and capture profitable sales and
      cross-marketing opportunities throughout our organization.

  .   We put into action operating plans to help us realize synergies created
      among our companies after the acquisition of Kirk & Blum.

  .   We completed the consolidation of the Company's administrative and
      finance functions to Cincinnati, Ohio.

  .   We eliminated, by closing down U.S. Facilities Management, Inc. and
      selling the assets of Air Purator Corporation ("APC"), those divisions
      that were not as profitable or did not serve our vision for our future
      operations. We also intend to divest the assets of Busch MARTEC.

  .   We launched CECO Abatement in May 2001 to leverage existing fabrication
      and installation resources for thermal oxidation technology with Kirk &
      Blum by adding higher-level engineering design capabilities.

  .   We established KB Duct, a division of Kirk & Blum, to complement an
      existing products business unit with Kirk & Blum.

   During the 1999 fiscal year, we underwent a fundamental transformation that
triggered our ability to begin to position ourselves as a solutions-based
provider. With the acquisition of Kirk & Blum and kbd/Technic on December 7,
1999, the size of our business and focus was fundamentally changed. 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, added a new dimension to our product line that broadened our coverage
of air pollution control technology. In 1999, Kirk & Blum and kbd/Technic had
combined revenue of $70,435,000 (unaudited), while the revenue of CECO and its
subsidiaries (other than Kirk & Blum and kbd/Technic, Inc.) for that period was
$17,525,664. Prior to December, 1999, Filters was the Company's primary
operating subsidiary. Its primary business was acting as an equipment
manufacturer and seller. Specifically, its major products are industrial air
filters known as fiber bed mist eliminators.

                                      2

<PAGE>

   The financing for the Kirk & Blum transaction was provided by a bank loan
facility in the original amount of $25 million in term loans and a $10 million
revolving credit facility. The bank loan facility was provided by PNC Bank,
National Association, Fifth Third Bank and Bank One, N.A. (the "Bank
Facility"). In connection with these loans, the banks providing the Bank
Facility received a lien on substantially all of our assets.

   The senior secured credit facility has been amended through five amendments
to, among other things, reduce minimum coverage under several financial
covenants. Additional fees have been paid and prepayments of principal on the
Bank Facility have been made in connection with these amendments.

   In addition, as a condition to obtaining the Bank Facility, we 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.
   The $5 million subordinated debt was provided to us in connection with the
Kirk & Blum transaction in the amount of $4 million by Can-Med Technology, Inc.
d/b/a Green Diamond Oil Corp. ("Green Diamond"), $500,000 by ICS Trustee
Services, Ltd. and $500,000 by Harvey Sandler. These investors were also issued
warrants to purchase 1,000,000 shares of Common Stock in the aggregate (the
"Subdebt Warrants") at a price of $2.25 per share, the fair market value of the
shares at date of issuance. ICS Trustee Services, Ltd. and Harvey Sandler are
not our affiliates. 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 Louis DeZwirek, Phillip DeZwirek's son, 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. Payments of interest are subject to the subordination agreement
with the banks providing the financing referred to above.

   In December 2001, the Subdebt Warrants were exercised for 1,000,000 shares,
and we received gross proceeds of $2,250,000 from such exercise.

   On December 31, 2001, we completed the sale of 706,668 shares of our common
stock, at a price of $3.00 per share, and the issuance of warrants ("Warrants")
to purchase 353,334 shares of our common stock (collectively, with the 706,668
shares, the "Investor Shares") at an initial exercise price of $3.60 per share,
to a group of accredited investors (the "Investors") led by Crestview Capital
Fund, L.P., a Chicago-based private investment fund. We used these proceeds
along with the proceeds received from the exercise of the Subdebt Warrants, to
pay down the Bank Facility. We have agreed to use our best efforts to register
the Investor Shares on a Form S-1, which has or will be initially filed with
the Securities Exchange Commission on or about March 28, 2002. The shares that
were issued upon exercise of the Subdebt Warrants and the 14,000 shares
underlying warrants that were issued as a finder's fee in connection with the
sale of shares to the Investors will also be included in the Form S-1, for a
total of 2,074,002 shares.

   In addition, under the Subscription Agreement CECO entered into with the
Investors, we are required to issue to such Investors additional shares for
every $100,000 our EBITDA for fiscal year 2002 is below $7,800,000, up to a
maximum of 826,802 additional shares.

   We sold the assets of a subsidiary of Filters, APC, as of December 31, 2001,
and intend to divest the assets of a division of Busch called Busch MARTEC by
June 30, 2002. APC was engaged in the manufacture of specialty needled
fiberglass fabrics and Busch MARTEC acts as a manufacturer's representative
with manufacturers of air and fluid products.

  Products and Services

   We have two segments, our Systems Segment, consisting of Kirk & Blum, Busch,
kbd/Technic and CECO Abatement, and our Media Segment, consisting of Filters
and, prior to the sale of its assets, APC. No class of similar products or
services accounted for ten percent (10%) or more of our consolidated revenues
in 2001 or 2000 or fifteen percent (15%) in 1999. See Note 19 to our
Consolidated Financial Statements for financial information regarding segment
reporting.


                                      3

<PAGE>

                                Systems Segment

The Kirk & Blum Manufacturing Company

   Kirk & Blum is the dominant part of the Systems Segment, with its
headquarters in Cincinnati, Ohio. It serves as the backbone to our operations
in terms of the majority of revenue generated, depth and breadth of personnel
employed, and services provided by its administrative and finance staff. Kirk &
Blum has been operating continuously since its founding in 1907. Before its
purchase by CECO, Kirk & Blum was continuously owned and operated by family
members of one of the original founders. Operating management of Kirk & Blum
remained the same after its acquisition by CECO.

   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 that capture, clean and destroy 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 2001,
Engineering News Record ranked Kirk & Blum as the largest specialty sheet metal
contractor in the country in 2000. With a diversified base of more than 1,500
active customers, Kirk & Blum provides services to a myriad of industries
including aerospace, brick, cement, ceramics, metalworking, printing, paper,
food, foundries, metal plating, woodworking, chemicals, tobacco, glass,
automotive, and pharmaceuticals.

   Increasingly stringent air quality standards and the need for improved
industrial workplace environments are chief among the factors that drive Kirk &
Blum's business. Some of the underlying federal legislation that affects air
quality standards is the Clean Air Act of 1970 and the Occupational Safety and
Health Act of 1970. The Environmental Protection Agency ("EPA") and
Occupational Safety and Health Administration Agency ("OSHA"), as well as other
state and local agencies, administer these air quality standards. Industrial
air quality has been improving through EPA mandated Maximum Achievable Control
Technology ("MACT") standards and OSHA established Threshold Limit Values
("TLV") for more than 1000 industrial contaminants. Recent bio-terrorism
threats have also increased awareness for improved industrial workplace air
quality. Any of these factors, whether individually or collectively, tend to
cause increases in industrial capital spending that are not directly impacted
by general economic conditions, expansion or capacity increases. Favorable
conditions in the economy generally lead to plant expansions and the
construction of new industrial sites. Economic expansion provides Kirk & Blum
with the potential to increase and accelerate levels of growth.

   Kirk & Blum's strategy is to provide a solutions-based approach for
controlling industrial airborne contaminants by being a single source provider
of industrial ventilation and air-pollution control products and services. Kirk
& Blum believes this provides a discernable competitive advantage and executes
this strategy by skillfully utilizing our portfolio of in-house technologies
and those of third party equipment suppliers. Many of these have been long
standing relationships. This enables Kirk & Blum to leverage existing business
with selective alliances of suppliers and application specific engineering
expertise. Kirk & Blum, therefore, competes with its competitors by providing
competitive pricing with turnkey solutions.

   The operating framework of Kirk & Blum has developed into a "hub and spoke"
business model whereby executive management and finance and administrative
staff serve as the hub and the operating units serve as spokes. This
decentralized operating philosophy is used in all of our operating units. Each
operating location is operated autonomously as a profit center except for back
office support such as finance and administration. Company wide efforts to
capitalize on industry and customer sales and cross marketing opportunities are
coordinated through a "Centers of Excellence" marketing program led by the
Company's senior vice president of sales and marketing. Production capacity is
generally considered on an aggregate basis based on physical and labor
capabilities available throughout Kirk & Blum's seven operating locations. For
example, larger projects

                                      4

<PAGE>

may be built as components in one or more operating locations. Kirk & Blum has
approximately 420,000 square feet in manufacturing space in its seven operating
locations. The largest located in Cincinnati, Ohio has approximately 240,000
square feet, while the six other locations range in size from 10,000 to 30,000
square feet. Capacity for projects involving field installation generally are
only limited to local employment availability. When acquiring such projects,
Kirk & Blum has not experienced any appreciable limitations due to local labor
shortages in the past 15 years.

   Kirk & Blum has four principal lines of business, all evolving from the
original air pollution systems business (contracting, fabricating, parts and
clamp-together duct systems). The largest line of business, with seven
strategic locations throughout the Midwest and Southeast United States, is air
pollution control systems and industrial ventilation. This line of business
includes designing, fabricating, and installing complete systems on a turnkey
basis. Kirk & Blum's system product offerings include oil mist collection, dust
collection, industrial exhaust, chip collection, industrial baghouses, make-up
air, as well as automotive spray booth systems, industrial and process piping,
and other industrial sheet metal work. Kirk & Blum's expertise is providing a
cost effective engineered solution to in-plant process problems in order to
control airborne pollutants. Major customers include General Electric, General
Motors, Procter & Gamble, Ingersoll Milling Machine, Lafarge, Corning, RR
Donnelly, Toyota, Matsushita, and Alcoa. North America is the principal market
served by Kirk & Blum. It has also, at times, supplied equipment and
engineering services in certain overseas markets. Kirk & Blum sales personnel
directly market and sell these products and services.

   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. Kirk & Blum has
developed significant expertise in custom sheet metal fabrication. These
operations give Kirk & Blum flexible production capacity 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. The United States is the principal market served. Kirk & Blum
believes that it is the fabricator of choice of product components for many
companies choosing to outsource their manufacturing. Generally, Kirk & Blum
will market its custom fabrication services under a long-term sales agreement.
For example, Kirk & Blum will receive a customer commitment with a blanket
purchase order and obtain releases for orders during the term of the agreement.
Kirk & Blum sales personnel directly market and sell these products and
services. Major customers include Siemens, General Electric, 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. Some of the products produced are used in other Kirk & Blum
operating units. 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. The United States is the primary market
served. Products are principally sold to distributors, dealers and contractors.
Kirk & Blum also sells products through telemarketing efforts. Major
distributors of this division's products include N.B. Handy, Three States
Supply, Albina Pipe Bending, and Indiana Supply.

   K&B Duct, a division of Kirk & Blum, began operations in 2001. This
division, based in Greensboro, North Carolina, produces a clamp together
componentized duct system utilizing an over-center latching mechanism for
industrial users across North America. This system is primarily used in source
capture of nuisance dust, fume and other airborne contaminates. These products
are considered a cost effective alternative to traditional duct (e.g., welded,
bolted or tech-screwed together duct) due to installation savings and
reusability. Duct components range from 4 inches to 22 inches in diameter in
galvanized or stainless steel. The market for these products is in light to
moderately abrasive particulate applications. Industries that utilize these
products include furniture, metal fabrication, cement, paper, chemical, and
food. Kirk & Blum sales personnel directly market and sell these products and
services. Some cross-marketing opportunities may occur among Kirk & Blum's
other divisions.

                                      5

<PAGE>

   During 2001, Kirk & Blum contributed $78.9 million to consolidated revenue
or 86.7% of our total consolidated revenue, $76.2 million or 84.8% in 2000, and
$4.7 million or 21.1% in 1999. During 2001, the Systems Segment as a whole
contributed $85.1 million to our consolidated revenue or 93.5% of our total
consolidated revenue, $84.3 million or 93.9% in 2000, and $15.1 million or
67.5% in 1999. Busch contributed $10.2 million, or 45.7% of our consolidated
revenue in 1999.

   We believe that the Systems Segment with respect to working capital items is
consistent with industry practices. An objective is to make our jobs
self-funding. We try to achieve this by (a) progress billing contracts, when
possible, (b) utilizing extended payment terms from material suppliers, and (c)
paying sub-contractors after payment from our customers, which is an industry
practice. Our investment in net working capital is funded by cash flow from
operations and by our revolving line of credit. Inventory does not constitute a
significant part of this segment's investment in working capital. Stock items
used in this segment such as angle iron, sheet metal and welding supplies, are
generally readily available with short notice to our suppliers.

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. kbd/Technic personnel directly market and sell their services.

   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 is the beneficial owner of 100% of the stock of kbd/Technic.

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. Prior to 2002, Busch consisted of two divisions:
Busch INTERNATIONAL and Busch MARTEC. In 1999, 2000 and 2001, Busch generated
approximately 58%, 48% and 38% of Filters' consolidated net sales,
respectively. By June 30, 2002, we intend to divest the assets that related to
Busch MARTEC. Busch MARTEC operates as a manufacturer's representative business
for manufacturers of air and fluid products and does business almost
exclusively in Ohio, Pennsylvania and West Virginia.

   Busch INTERNATIONAL 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.


                                      6

<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 a
strip cooler, strip dryer, coil cooler, and strip blow-off system and is
gaining market recognition 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 personnel market and sell Busch products and services with Busch sales
personnel and manufacturers' representatives. Busch's products and services are
generally marketed in geographic regions with metal manufacturing facilities.
At certain times, more than half of Busch's work may be supplying overseas
markets.

CECO Abatement Systems, Inc.

   CECO Abatement was established in 2001 as a wholly-owned subsidiary of CECO
Group. This company was created to extend penetration into the thermal
oxidation market. CECO Abatement leverages Kirk & Blum's knowledge by
complementing it with additional engineering and marketing expertise to broaden
its appeal to a larger thermal oxidation market. CECO Abatement engineers,
builds and installs thermal oxidation control systems that eliminate toxic
emission fumes and volatile organic compounds ("VOC's") that result from
large-scale industrial processes. CECO Abatement will contract out the
fabrication and installation of the systems to other CECO companies or to third
parties. CECO Abatement supplies its products and services to new construction
and existing production facilities. As with Kirk & Blum, increasingly stringent
air quality standards are chief among the factors expected to drive its
business.

   CECO Abatement, based in Chicago, Illinois, is oriented to serve the North
American market. It may also supply equipment and engineering services in
certain overseas markets. Its first significant order in 2001 was in
collaboration with Kirk & Blum, securing orders valued at approximately $4
million to supply regenerative thermal oxidation systems for alternative fuel
plants located in North America. The customer base is expected to be comprised
of prime contractors supplying specialized equipment and industrial users, all
of which will require destruction of VOC's or other toxic fumes. CECO Abatement
is expected to service a diverse industrial base. Sales personnel directly
market and sell these products and services.

                                 Media Segment

CECO Filters, Inc.

   Filters is located in Conshohocken, Pennsylvania. Filters manufactures and
sells industrial air filters known as fiber bed mist eliminators. In the past
two years, Filters has been transitioning from a company that sells equipment
to a company that, like Kirk & Blum, provides turnkey design services. 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 also are used to collect
fine insoluble particulates.

                                      7

<PAGE>

   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. 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.

   Since 1999, Filters has 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.

   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 and 2001, Filters partnered with
Kirk & Blum to offer Filters customers a turnkey package. 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.

                                      8

<PAGE>

   During 2001, the Media Segment contributed $7.9 million to consolidated
revenue or 8.6% of the total consolidated revenue, $6.5 million or 7.2% in
2000, and $7.7 million or 34.4% in 1999. In 1999, Filters contributed $4.1
million, or 18.3% to our consolidated revenue.

   We believe that the Media Segment practices with respect to working capital
items are consistent with industry practices. The investment in net working
capital is funded by cash flow from operations and by our revolving line of
credit. Filters generally maintains consistent levels of inventory and receives
standard payment terms from material suppliers. Billing, with 30-day terms,
occurs upon shipment from Filters' facility. Stock items used in this segment
are generally readily available with short notice to our suppliers.

  Customers

                                 Systems Segment

   No customers comprised 10% or more of our net revenues for 2001. The Systems
Segment does not depend upon any one or few customers.

                                  Media Segment

   During 2001, no customers or group of customers of Filters comprised 10% or
more of our net revenues, however, one customer group comprised approximately
15% of the Media Segment revenue. We believe that the loss of such customers
would not have a material adverse affect on our business, although the
immediate loss of such customers may materially adversely impact the Media
Segment on a temporary basis.

   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.

  Suppliers

                                 Systems Segment

   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.

   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.

   We believe that to the extent our current suppliers are unable or unwilling
to continue to supply Kirk & Blum or Busch with its materials, we would be able
to obtain such materials from other suppliers on acceptable terms.

                                  Media Segment

   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.

                                      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.

  Backlog

                                 Systems Segment

   The backlog for the Systems Segment represented by firm purchase orders from
our customers was approximately $18.2 million and $11.2 million at the end of
the fiscal years 2001 and 2000, respectively. The segment's entire 2000 backlog
was completed in 2001. The segment's entire 2001 backlog is expected to be
completed in 2002.

                                  Media Segment

   The backlog for the Media Segment represented by firm purchase orders from
our customers was approximately $0.4 million and $0.9 million at the end of the
fiscal years 2001 and 2000, respectively. The segment's entire 2000 backlog was
completed in 2001. The segment's entire 2001 backlog is expected to be
completed in 2002.

  Competition and Marketing

                                 Systems Segment

   We do not believe that there are other national competitors on the scale of
Kirk & Blum or any dominant players in the industrial ventilation and air
pollution control markets. The market is fragmented with numerous smaller and
regional participants. As a result, competition varies widely by region and
industry.

   Kirk & Blum believes it 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.

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

   Busch, in addition to using direct solicitation and some sales
representatives, also participates in industrial shows. Busch's products and
services are generally marketed in geographic regions with metal manufacturing
facilities. At times, more than half of Busch's revenue may be generated from
overseas markets.

                                      10

<PAGE>

                                  Media Segment

   With respect to Filters' products, Monsanto Corporation may be larger in the
fiber bed mist eliminator industry. Monsanto's financial resources are 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 believes it is the second largest among Monsanto and its next three
largest competitors. The increase in financial strength of CECO and its
subsidiaries resulting from the acquisition of Kirk & Blum has increased
Filters ability to compete. The principal method of competition for fiber-bed
mist eliminators is by price followed by systems capability.

   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. We believe 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.

   Filters faces substantial competition. Filters faces 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.

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

   Filters also utilizes sales representatives located in North America, Korea,
Taiwan and Japan. Filters products and systems are marketed in the North
American and Asian markets.

  Government Regulations

   We have not been materially negatively impacted by existing government
regulation, nor are we aware of any probable government regulation that would
materially affect our operations. Our costs in complying with environmental
laws have been negligible.

  Research and Development

   During 2001, 2000 and 1999, costs expended in research and development have
not been significant. Such costs are generally included as factors in
determining pricing.

  Employees

   We had 671 full-time employees and 2 part-time employees as of December 31,
2001. All employees are unionized, except for administrative personnel and
executives of CECO, CECO Group and Kirk & Blum, and employees of Filters, Busch
and CECO Abatement. We consider our relationship with our employees to be
satisfactory. Various union contracts expire from March 2002 to May 2006. We
are in the process of renegotiating expiring contracts.

                                      11

<PAGE>

   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.

  Intellectual Property

   There is no assurance that measurable revenues will accrue to us as a result
of our patents or licenses.

                                 Systems Segment

   Busch purchased, among other assets, three patents from Busch Co. in 1997
that relate to the JET*STAR systems. The Patent and Trademark Office ("PTO")
records do not currently reflect such transfer. We are in the process of
attempting to obtain the proper documentation to file with the PTO.
JET*STAR(TM) systems are one of the major revenues for the Systems Segment.

                                  Media Segment

   Filters currently holds a US patent for its N-SERT(R) and X-SERT(R)
prefilters and for its Cantenary Grid scrubber. Filters also holds a US patent
for a fluoropolymer fiberbed for a mist eliminator, a US patent for a fluted
filter, and a US patent for a multiple in-duct filter system. Such patents
combined do not have significant value to our overall performance. We were
assigned the patent to a multiple throat narrow gap venturi scrubber, which
patent may have significant value to the Media segment. We are in the process
of attempting to file the proper documentation with the PTO to reflect proper
ownership. Current PTO records indicate that the party from which we obtained
such patent owns such patent.

Item 2.  Properties

   CECO's principal executive and operating offices and 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.

   CECO has an executive office in Toronto, Canada, at facilities maintained by
affiliates of its Chief Executive Officer and Chairman of the Board and
Secretary, who work at the Toronto office. The Company reimburses such
affiliate $5,000 per month for the use of the space and other office expenses.

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

   Kirk & Blum leases the following facilities:

<TABLE>
<CAPTION>
       Location                   Square Footage Annual Rent Expiration
       --------                   -------------- ----------- -----------
       <S>                        <C>            <C>         <C>
       Columbia, Tennessee.......     28,920      $ 93,000   August 2005
       Greensboro, North Carolina     30,000      $120,000   August 2006
       Louisville, Kentucky......     17,941      $ 45,000      May 2002
       Defiance, Ohio............     10,000      $ 27,000     June 2002
</TABLE>

   Filters owns a 37,400 square foot plant facility in Conshohocken,
Pennsylvania.

                                      12

<PAGE>

   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 10,000 square feet at an annual rental of $88,000. Andrew M.
Halapin, the former principal owner of Busch, is the beneficial owner of the
property in which Busch's offices are located. CECO will terminate the lease at
the end of its term. Busch rents approximately 1,000 square feet at a warehouse
in Pittsburgh, PA at an annual rent of $4,600.

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

   We consider the properties adequate for their respective purposes.

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

   Our annual meeting of the shareholders was held on December 3, 2001. At the
meeting, the Company's five directors Phillip DeZwirek, Jason Louis DeZwirek,
Richard Blum, Josephine Grivas and Donald Wright were elected, and the
appointment of Deloitte & Touche LLP as the Company's accountants was ratified.
The shareholders also approved the reincorporation of the Company from New York
to Delaware. The votes for each of the directors were 7,100,655, with 16,864
against and no abstentions. The votes for reincorporation to Delaware were
7,105,675, with 8,400 against and 3,444 abstentions. The votes for the
appointment of Deloitte & Touche LLP was 7,100,655 with 16,864 against and no
abstentions.

                                      13

<PAGE>

                                    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 SmallCap Market 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.

<TABLE>
<CAPTION>
   CECE Common Stock Bids     CECE Common Stock Bids   CECE Common Stock Bids
 --------------------------- ------------------------ ------------------------
      2000    High     Low        2001   High   Low         2002   High   Low
 -           ------- ------- -           ----- ------ -            ----- -----
 <S>         <C>     <C>     <C>         <C>   <C>    <C>          <C>   <C>
 1st Quarter $ 3.375 $2.0625 1st Quarter $2.13 $ 1.44 1st Quarter  $3.85 $3.02
 2nd Quarter $2.9375 $  2.00 2nd Quarter $2.40 $1.375 (through March 14, 2002)
 3rd Quarter $  2.50 $  2.00 3rd Quarter $2.30 $ 1.76
 4th Quarter $2.3125 $ 1.125 4th Quarter $4.60 $ 2.01
</TABLE>

      (b) The approximate number of beneficial holders of common stock of the
   Company as of March 14, 2002 was 1,680.

      (c) The Company has paid no dividends during the fiscal year ended
   December 31, 2000 or the fiscal year ended December 31, 2001. 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.

      (d) In the year 2001, we issued the following securities that were not
   registered under the Securities Act of 1933, as amended (the "Securities
   Act"):

          1. On October 5, 2001, we issued an option to purchase 25,000 shares
       of common stock to Jason Louis DeZwirek.

          2. In December 2001, we issued an aggregate of 1,000,000 shares of
       common stock to Green Diamond, Harvey Sandler and ICS Trustee Services,
       Ltd. upon the exercise of warrants. These warrants had been acquired
       from us on December 7, 1999 in a private transaction.

          3. On December 31, 2001, we completed the sale of 706,668 shares of
       our common stock, at a price of $3.00 per share, and the issuance of
       warrants to purchase 353,334 shares of our common stock at an initial
       exercise price of $3.60 per share, to the Investors. We paid commissions
       of $104,500 in connection with such placement. In connection with such
       transaction, we also issued warrants as of December 31, 2001 to purchase
       14,000 shares of common stock pursuant to an agreement with The Shemano
       Group at a price of $3.00 per share.

   There were no underwriters employed in connection with any of these
issuances. The issuances of the securities described above were deemed to be
exempt from registration under the Securities Act in reliance on Section 4(2)
of the Securities Act as transactions by an issuer not involving a public
offering. All recipients either received adequate information about us or had
access, through employment or other relationships, to such information.

Item 6.  Selected Financial Data

   The following table sets forth our selected financial information. The
financial information as of December 31, 2001 and 2000 and for the years ended
December 31, 2001, 2000 and 1999 has been derived from our audited consolidated
financial statements included elsewhere in this Annual Report. The financial
information as of December 31, 1999, 1998 and 1997 and for the years ended
December 31, 1998 and December 31, 1997 have been derived from our audited
consolidated financial statements not included in this Annual Report. This
historical selected financial information may not be indicative of our future
performance and should be read in conjunction with the information contained in
"Management's Discussion and Analysis of Financial Condition

                                      14

<PAGE>

and Results of Operations" and the consolidated financial statements and the
related notes included elsewhere in this Annual Report.

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                     ----------------------------------------------
                                                     2001(1)  2000(2)   1999       1998      1997
                                                     -------  -------  -------  ----------  -------
                                                     (dollars in thousands, except per share amount)
<S>                                                  <C>      <C>      <C>      <C>         <C>
Statement of operations information:
Net sales........................................... $90,994  $89,817  $22,414  $   21,753  $14,531
Gross profit........................................  18,532   18,097    8,387       8,235    6,415
Depreciation and amortization.......................   2,320    2,154      729         582      385
Income (loss) from continuing operations............    (264)    (690)    (434)        945      (54)
Discontinued operations.............................      --       --     (509)       (412)      --
Net (loss) income...................................    (264)    (690)    (943)        533      (54)
Basic and diluted net (loss) earnings per share from
  continuing operations(4)..........................    (.03)    (.08)    (.05)        .11     (.01)
Basic and diluted net (loss) earnings per share(4)..    (.03)    (.08)    (.11)        .06     (.01)
Weighted average shares outstanding (in thousands)
   Basic............................................   7,899    8,195    8,485       8,251    6,868
   Diluted..........................................   7,899    8,195    8,485       8,846    6,868
Supplemental financial data:
Ratio of earnings to fixed charges(5)...............     n/a      n/a      n/a   7.62 to 1      n/a
Deficiency(5)....................................... $  (141) $(1,032) $  (281)        n/a  $   (71)
Cash flows from operating activities................   4,382    2,630     (846)       (759)   2,563
EBITDA(6)...........................................   5,325    4,164    1,171       2,464      361

                                                                     At December 31,
                                                     ----------------------------------------------
                                                     2001(1)  2000(2)   1999       1998      1997
                                                     -------  -------  -------  ----------  -------
                                                                 (dollars in thousands)
Balance sheet information:
Working capital..................................... $ 8,063  $10,690  $14,504  $      372  $   649
Total assets........................................  53,030   54,954   56,448      15,475   13,961
Short-term debt.....................................   2,826    3,776    2,788       1,585      334
Long-term debt......................................  18,588   26,101   28,290       1,570    1,733
Shareholders' equity(3).............................   9,821    7,008    9,038       7,557    6,743
</TABLE>
- --------
(1) During December 2001, we received approximately $4.4 million of gross
    proceeds from equity transactions.
(2) During fiscal 2000, depreciation and goodwill increased by $0.6 million due
    to the acquisition of Kirk & Blum and kbd/Technic, whose results of
    operations are included with their respective dates of acquisition.
(3) Effective January 1, 2001, we adopted Statement of Financial Accounting
    Standards No. 133, "Accounting for Derivative Instruments and Hedging
    Activities," as amended.
(4) Basic and diluted earnings (loss) per common share are calculated by
    dividing income (loss) by the weighted average number of common shares
    outstanding during the period.
(5) For purposes of determining the ratio of earnings to fixed charges,
    "earnings" are defined as income (loss) from continuing operations before
    income taxes less minority interest plus fixed charges. "Fixed charges"
    consist of interest expense on all indebtedness and that portion of
    operating lease rental expense that is representative of the interest
    factor. "Deficiency" is the amount by which fixed charges exceeded earnings.
(6) EBITDA equals operating income (loss) plus depreciation and amortization
    expense. EBITDA is not intended to represent cash flow or any other measure
    of performance of liquidity in accordance with accounting principles
    generally accepted in the United States of America. EBITDA is included here
    because we believe that you may find it to be a useful analytical tool.
    Other companies may calculate EBITDA differently, and we cannot assure you
    that our figures are comparable with similarly titled figures for other
    companies.

                                      15

<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Conditions and
Results of Operations

  Overview

   Our principal operating units are Kirk & Blum, kbd/Technic, Inc., Filters,
Busch, CECO Abatement, and APC, 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. We provide standard and engineered systems and filter media for air
quality improvement through our Media segment.

   Our Systems segment consists of Kirk & Blum, kbd/Technic, Busch and CECO
Abatement. 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 2001, Engineering News Record ranked Kirk & Blum as the largest
specialty sheet metal contractor in the country in 2000. With a diversified
base of more than 1,500 active customers, Kirk & Blum provides services to a
number of industries including aerospace, ceramics, metal working, printing,
paper, food, foundries, metal plating, woodworking, chemicals, tobacco, glass,
automotive and pharmaceuticals. Busch engages in the business of marketing,
selling, designing and assembling ventilation, environmental and process
related products. Busch 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 system work. Areas of expertise include turbine inlet filtration,
evaporative cooling, gas absorption, scrubbers, acoustics and corrosion
control. Busch uses a variety of standard, proprietary and patented
technologies including its JET*STAR(TM). kbd/Technic is a specialty engineering
firm concentrating in industrial ventilation and dust and fume control. CECO
Abatement engineers, builds and installs thermal oxidation control systems to
eliminate toxic emission fumes and volatile organic compounds resulting from
large-scale industrial processes. These companies have extensive knowledge and
experience in providing complete turnkey systems in new installations and
renovating existing systems.

   Our Media segment consists of Filters and APC. Filters, located in
Conshohocken, Pennsylvania, manufactures and sells industrial air 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. 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 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. Filter's filters are used by, among others,
the chemical and electronics industries; manufacturers of various acids,
vegetable and animal based cooking oils, textile products, alkalis, chlorine,
paper, computers, automobiles, asphalt, pharmaceutical products and chromic
acids; electric generating facilities including cogeneration facilities; and
end users of pollution control products such as incinerators. APC, which was
sold effective December 31, 2001, designed and manufactured 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.

  Critical Accounting Policies

   The consolidated financial statements of CECO are prepared in conformity
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires the use of estimates,
judgments, and assumptions that affect the reported amounts of assets and
liabilities at the date of

                                      16

<PAGE>

the financial statements and the reported amounts of revenues and expenses
during the periods presented. CECO believes that of its significant accounting
policies, the accounting policy for recognizing revenues under the percentage
of completion method may involve a higher degree of judgments, estimates, and
complexity.

   A substantial portion of the Company's revenues is derived from contracts,
which are accounted for under the percentage of completion method of
accounting. This method requires a higher degree of management judgment and use
of estimates than other revenue recognition methods. The judgments and
estimates involved include management's ability to accurately estimate the
contracts percentage of completion and the reasonableness of the estimated
costs to complete, among other factors, at each financial reporting period. In
addition, certain contracts are highly dependent on the work of contractors and
other subcontractors participating in a project, over which the Company has no
or limited control, and their performance on such project could have an adverse
effect on the profitability of the Company's contracts. Delays resulting from
these contractors and subcontractors, changes in the scope of the project,
weather, and labor availability also can have an effect on a contracts'
profitability.

   The following discussion of our 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

   Our consolidated statements of operations for the years ended December 31,
2001, 2000 and 1999 reflect our operations, consolidated with the operations of
our subsidiaries. At December 31, 2001, CECO 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, 2001, 2000 and 1999. This table should be read in
conjunction with the consolidated financial statements and notes thereto.

<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                                ----------------------
                                                                                 2001      2000   1999
                                                                                -----     -----  -----
<S>                                                                             <C>       <C>    <C>
Net Sales...................................................................... 100.0     100.0  100.0
Costs and expenses:
   Cost of Sales...............................................................  79.6      79.9   62.6
   Selling and administrative..................................................  14.5      15.5   32.2
   Depreciation and amortization...............................................   2.6       2.4    3.2
                                                                                -----     -----  -----
                                                                                 96.7      97.8   98.0
Income from continuing operations before investment income and interest expense   3.3       2.2    2.0
Investment income..............................................................    .4        .9    2.2
Interest expense...............................................................   3.9       4.2    5.4
                                                                                -----     -----  -----
Loss from continuing operations before income taxes and minority interest......   (.2)     (1.1)  (1.2)
Provision (benefit) for income taxes...........................................    .1       (.3)    .7
                                                                                -----     -----  -----
Loss from continuing operations before minority interest.......................   (.3)      (.8)  (1.9)
Minority interest..............................................................     0         0      0
                                                                                -----     -----  -----
Loss from continuing operations................................................   (.3)      (.8)  (1.9)
Loss from discontinued operations..............................................     0         0   (2.3)
                                                                                -----     -----  -----
Net Loss.......................................................................   (.3)      (.8)  (4.2)
                                                                                =====     =====  =====
</TABLE>

                                      17

<PAGE>

   2001 vs. 2000  Consolidated net sales increased 1.3%, or $1.2 million to
$91.0 million, driven by a 21.3%, or a $1.4 million increase in revenue from
the Media segment. The Systems segment's revenue increased $0.7 million or 1%
during 2001. Intersegment sales, which eliminate in consolidation, rose $.9
million to $2.0 million during 2001. The significant increase in the Media
segment's sales resulted from a $2.2 million increase in Filter's sales
partially offset by a $0.8 million decrease in sales of APC. The increase is
attributed to the successful implementation of a new marketing campaign by
Filters focusing on nurturing relationships and increasing repeat orders. The
market for APC's high temperature pulse jet bag houses continued to decline
during 2001 compared to 2000. In December 2001, we sold the fixed assets and
inventory of APC, a wholly owned subsidiary, for $475,000. The sale of APC was
financed by the Company, with a substantial portion of the financing due on
March 15, 2002. The purchaser failed to repay the note in full at maturity and
we are in the process of negotiating extended payment terms for the note. The
Company also provided a working capital note that was to mature on March 15,
2002 and was secured by a personal guaranty from the purchasers' principal
shareholder. The aggregate principal outstanding on the notes is approximately
$475,000. The note is secured by the APC assets sold to the purchaser. We have
deferred the gain of $250,000 on the sale of the assets until a substantial
portion of the notes are collected or collection of such notes is reasonably
assured. Sales in the Systems segment increased slightly as sales to steel
foundries and automotive manufacturers continued to decline during the second
half of the year causing sales for the systems segment to slow down. Management
is optimistic for 2002 considering backlog for the consolidated company is
$18.6 million of which the Systems segment comprises $18.2 million of the total.

   Gross profit excluding depreciation increased $0.4 million to $18.5 million
in 2001 compared with $18.1 million in 2000. Gross profit as a percentage of
revenues, was 20.4% in 2001 compared with 20.1% in 2000. The gross margin of
each the companies was consistent with the gross margin in 2000 except for APC
which decreased 8.0%. During the second quarter of 2001, we expanded our design
build capabilities into specialty piping for automotive finishing facilities.
In connection with this expansion, we entered into a contract that resulted in
a contract loss of $1.3 million. Accordingly, a charge was recorded to cost of
sales for that amount. We abandoned our plans to continue our expansion in this
area. Gross profit for the Systems segment was negatively impacted by about 1%
as a result of this charge.

   Selling and administrative expenses decreased by $0.7 million to $13.2
million in 2001. Selling and administrative expenses, as a percentage of
revenues for 2001 were 14.5% compared to 15.5% in 2000. This reduction results
from the cost savings identified in 2000, the reversal of a contingency reserve
held in connection with a customer bankruptcy ($0.2 million), and the reversal
of a reserve held in conjunction with the operations discontinued in 1999 ($0.2
million). As management anticipated, the cost reductions identified resulted in
a favorable impact in 2001. Depreciation and amortization increased by $0.1
million to $2.3 million in 2001.

   Investment income decreased by $0.4 million to $0.4 million during 2001
compared with $0.8 million in 2000. The decrease was a result of reduced
investment income from the Company's holdings in Peerless Manufacturing common
stock, which was sold in the first half of 2001.

   Interest expense decreased by $0.3 million to $3.5 million during 2001
compared with $3.8 million in 2000 principally due to lower borrowing levels
and decreased rates under the bank credit facility.

   Federal and state income tax provision was $0.1 million in 2001 compared
with a tax benefit of $0.3 million in 2000. The effective income tax rate in
2001 was 93%. The effective income tax rate is affected by non-deductible
goodwill amortization and interest expense particularly in years when income
(loss) from operations before income taxes and minority interest is low in
comparison to the non-deductible items.

   Net loss for the year ended December 31, 2001 was $0.3 million compared with
a net loss of $0.7 million in 2000.

   2000 vs. 1999  Consolidated net sales increased 301% for the twelve months
ended December 31, 2000 to $89.8 million, up $67.4 million over 1999. This
increase was attributed to the combination of increased revenue from the
Systems segment principally due to the positive impact from the acquisition of
Kirk & Blum and kbd/

                                      18

<PAGE>

Technic in December 1999, offset by a decrease in revenue from the Media
segment. Systems segment revenues 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 by Busch. Our newly acquired Kirk & Blum
operating unit generated increased revenue over its 1999 levels. The decline in
revenue from Busch is principally due to the general decline in the metal
industry and a decline in demand at rolling mills for fume exhaust systems and
Busch's propriety JET*STAR(TM) cooling technology. However, both the inquiry
level and order level increased late in 2000 for the aluminum segment of the
metal industry. Media segment sales reflect a decline of $1.2 million primarily
due to a decline in sales by APC. Sales to bag manufacturers that use the
filter media in pulsejet bag houses slowed during 2000 due in part to inventory
rationalization and increased competition from lower priced filter media. We
believe that our filter media has better performance characteristics in high
temperature use applications than its competitors and we are pursuing this
avenue in its marketing approach.

   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 20.1% 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 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 of our 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 $0.6 million reserve in the fourth quarter of
2000. We are 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.

   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 our 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 $0.4
million. Depreciation and amortization increased by $1.4 million to $2.2
million in 2001, primarily due to the larger base of depreciable and
amortizable assets and goodwill resulting from the acquisition of Kirk & Blum
and kbd/Technic.

   Investment income increase by $0.3 million to $0.8 million during 2000
compared with $0.5 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, our most significant
investment was Peerless stock which was $15.50 per share as of December 31,
2000.

   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,
CECO issued a demand note and warrants to purchase 1,000,000 shares of common
stock to a related party. The inherent discount associated with the value of
the warrants was immediately amortized, and $0.6 million of interest expense
was recognized in the quarter ended September 30, 1999. Management of CECO 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.

   Federal and state income tax benefit was $0.3 million in 2000 compared with
a tax provision of $0.2 million in 1999. The 29.4% effective income tax benefit
rate in 2000 was less than the statutory rate primarily due to nondeductible
goodwill amortization relating to investments in Filters, Kirk & Blum and
kbd/Technic.

                                      19

<PAGE>

   Discontinued operations reflect the closure of the operations of our
subsidiary, US Facilities Management, during 1999. Operating losses and
disposal costs, net of income tax benefits and minority interest totaled $0.5
million in 1999.

   Net loss for the year ended December 31, 2000 was $0.7 million compared with
a net loss of $0.9 million in 1999.

  Backlog

   Our backlog consists of orders we have received for products and services we
expect to ship and deliver within the next 12 months. Our backlog, as of
December 31, 2001 was $18.6 million compared to $12.1 million as of December
31, 2000. The Systems segment provided over 97% of the backlog in 2001 and 92%
in 2000. There can be no assurances that backlog will be replicated or
increased or translated into higher revenues in the future. The success of our
business depends on a multitude of factors that are out of our control. Our
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 our dependence on efforts of intermediaries to sell a portion of
our product.

  Financial Condition, Liquidity and Capital Resources

   On December 7, 1999, we 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 CECO
Group, the wholly-owned subsidiary of CECO. We paid cash totaling approximately
$25 million to owners of Kirk & Blum and kbd/Technic and we assumed debt
obligations of Kirk & Blum and kbd/Technic totaling $5 million. The transaction
was accounted for as a purchase. The activity of Kirk & Blum and kbd/Technic
has been included with our 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 our consolidated balance
sheets as of December 31, 2001, 2000 and 1999 related to these acquisitions.
Under the terms of an escrow agreement entered into between CECO and the owner
of Kirk & Blum, we received $0.3 million during the second quarter of 2000 as a
post-closing price adjustment.

   At December 31, 2001, cash and cash equivalents and marketable securities
totaled $0.1 million compared with $1.7 million at December 31, 2000. Cash
provided by operating activities for the year ended December 31, 2001, was $4.4
million in 2001 compared with cash provided of $2.6 million for the same period
in 2000.

   Our investment in marketable securities consisted of our investment in
Peerless Manufacturing Company and other investments with a value of $1.0
million on December 31, 2000. We sold the remaining balance of the marketable
securities held in Peerless Manufacturing Company during 2001.

   Total bank and related debt as of December 21, 2001 was $17.7 million, a
decrease of $8.8 million, due to net repayments under bank credit facilities
and payments made with respect to other notes payable. Unused credit
availability at December 31, 2001, was $3.8 million under our bank line of
credit.

   The senior secured credit facility was amended in August 2001 by reducing
the minimum coverage requirements under several financial covenants as of June
30, 2001 and September 30, 2001, raising interest rates by 1%, reducing the
total amount available under the revolving line of credit to $8.0 million from
$9.0 million and changing the maturity of the revolving line of credit to April
2003 from December 2004. In consideration for this amendment, additional fees
were paid to the lenders. The facility was amended in March 2002 by reducing
several financial covenants as of December 31, 2001. During December 2001, as
discussed below, we raised additional capital of $4.4 million used to reduce
the principal balance of the credit facility.

   Investing activities used cash of $0.8 million during 2001 compared with
cash used of $0.3 million for the same period in 2000. Capital expenditures for
property and equipment, and leasehold improvements were $0.8 million during
2001. Expenditures in 2001 were primarily for manufacturing and engineering
equipment of

                                      20

<PAGE>

which $0.3 million of equipment expenditures related to the start-up of K&B
Duct, a new division in Kirk & Blum. Capital expenditures for property and
equipment are anticipated to be in the range of $0.5 million to $0.9 million
for 2002 and will be funded by cash from operations, line of credit borrowing
and/or lease financing.

   Financing activities used cash of $4.2 million during 2001 compared with
$2.8 million of cash used by financing activities during the same period of
2000. In the fourth quarter of 2001, we received gross proceeds of $2.1 million
and issued 706,668 shares of stock to an outside investor group. Also, in the
fourth quarter, Green Diamond and two non-affiliated third parties exercised
warrants to purchase 1,000,000 shares of CECO stock generating proceeds of $2.3
million. During 2001, $7.8 million was used to pay down long-term debt offset
by proceeds from common stock issued under CECO's Employee Stock Purchase Plan.

   We believe that our cash, cash equivalents and marketable securities, cash
flows from operations, and our credit facilities are adequate to meet our cash
requirements over the next twelve months.

  New Accounting Standards

   In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
No. 141 requires that all business combinations be accounted for under the
purchase method only and that certain acquired intangible assets in a business
combination be recognized as assets apart from goodwill. SFAS No. 142 requires
that ratable amortization of goodwill be replaced with periodic tests of the
goodwill's impairment and that intangible assets other than goodwill should be
amortized over their useful lives. Implementation of SFAS No. 141 and SFAS No.
142 is required for fiscal 2002. Management is in the process of evaluating the
results of the effects of these standards on its financial position.

   In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" requiring that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which superceded SFAS No. 121 Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. The primary difference is that goodwill has been removed from the scope of
SFAS No. 144. It also broadens the presentation of discontinued operations to
include a component of an entity rather than a segment of a business. A
component of an entity comprises operations and cash flows that can clearly be
distinguished operationally and for financial accounting purposes from the rest
of the entity. Implementation of SFAS No. 143 is required for Fiscal 2003 and
SFAS No. 144 is required for fiscal 2002. Management is in the process of
evaluating the results of the effects of these standards on its financial
position.

   In June 2000, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended, which is effective for the
Company's fiscal years beginning January 1, 2001. 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. We recognized
a transition obligation of $209,000 net of tax of $140,000, in other
comprehensive loss in the first quarter ended March 31, 2001 from the adoption
of SFAS 133.

  Forward-Looking Statements

   We desire to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 and are making this cautionary
statement in connection with such safe harbor legislation. This Form

                                      21

<PAGE>

10-K, the Annual Report to Shareholders or Form 8-K of CECO or any other
written or oral statements made by or on our behalf may include forward-looking
statements which reflect our 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-K are "forward-looking statements," and are based on
management's current expectations of our near-term results, based on current
information available pertaining to us.

   We wish to caution investors that any forward-looking statements made by or
on our behalf 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. We wish to
caution investors that other factors might, in the future, prove to be
important in affecting our 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 our views as of the date the
statement is made. We undertake no obligation to publicly update or revise any
forward-looking statements, whether because of new information, future events
or otherwise.

Item 7a.  Quantitative and Qualitative Disclosure About Market Risk

  Risk Management Activities

   We are exposed to market risk including changes in interest and commodity
prices. We use derivative instruments to manage our interest rate exposures. We
do not use derivative instruments for speculative or trading purposes.
Generally, we enter into hedging relationships such that changes in the fair
values of cash flows of items and transactions being hedged are expected to be
offset by corresponding changes in the values of the derivatives.

  Interest Rate Management

   We enter into interest rate swap agreements to manage interest rate costs
and risks associated with changing interest rates. The differential to be paid
or received under these agreements is accrued and recognized as adjustments to
interest expense. The fair value of the swap agreements and changes in the fair
value as a result of changes in market interest rates are recognized in
Accumulated Other Comprehensive Income (loss) in our consolidated balance
sheets. At December 31, 2001, we had interest rate swap agreements outstanding
with a commercial bank having a notional principal amount of $9.8 million. This
swap effectively changed the interest rate exposure of $9.8 million of our
floating debt to a weighted fixed rate of 6.96% plus the applicable spread.

   The remaining amount of loans outstanding under the Credit Agreement bear
interest at the floating rates as described in Note 11 to the consolidated
statements contained in Item 8.

   Accordingly, the combined effect of a 1% increase in an applicable index
rates would result in additional interest expense of approximately $.1 million
annually, assuming no change in the level of borrowings. At December 31, 2001,
we had unrealized net losses under an interest rate swap agreement of $.2
million, which has been recorded net of tax in Accumulated Other Comprehensive
Income (loss) in the consolidated balance sheet.

   We do not hold collateral for these instruments and therefore are exposed to
credit loss in the event of nonperformance by the other party to the interest
swap agreement. However, we do not anticipate any such nonperformance.

                                      22

<PAGE>

   The following table presents information of all dollar-denominated interest
rate instruments. The fair value presented below approximates the cost to
settle the outstanding contract.

<TABLE>
<CAPTION>
                                               Expected Maturity Date
                          ---------------------------------------------------------------
                          2002   2003   2004   2005   2006   Thereafter Total   Fair Value
                          -----  -----  -----  -----  -----  ---------- ------  ----------
($ in thousands)
<S>                       <C>    <C>    <C>    <C>    <C>    <C>        <C>     <C>
Liabilities
 Variable Rate Debt ($).. 2,800  7,673  4,700  2,327     --      --     17,500    17,500
   Average Interest Rate.   6.4%   6.7%   6.4%   6.9%                      6.6%      6.6%
 Subordinated Debt.......    --     --     --     --  3,750      --      3,750     4,140
   Average Interest Rate.    --     --     --     --   17.8%     --       17.8%     18.0%
 Fixed Rate Debt ($).....    26     26     26     26     60      --        164       164
   Average Interest Rate.   3.0%   3.0%   3.0%   3.0%   3.0%     --        3.0%      3.0%
Interest Rate Derivatives
Interest Rate Swap
 Variable to Fixed ($)... 9,750     --     --     --     --      --      9,750       401
   Average Pay Rate......   7.0%    --     --     --     --      --        7.0%      7.0%
   Average Receive Rate..   2.0%    --     --     --     --      --        2.0%      2.0%
</TABLE>

  Credit Risk

   As part of our ongoing control procedures, we monitor concentrations of
credit risk associated with financial institutions with which it conducts
business. Credit risk is minimal as credit exposure is limited with any single
high quality financial institution to avoid concentration. We also monitor the
creditworthiness of our customers to which we grant credit terms in the normal
course of business. Concentrations of credit associated with these trade
receivables are considered minimal due to our geographically diverse customer
base. Bad debts have been minimal. We do not normally require collateral or
other security to support credit sales.

Item 8.  Financial Statements and Supplementary Data

   The consolidated financial statements of CECO Environmental Corp. and
subsidiaries for years ended December 31, 2001, 2000 and 1999 and other data
are included in this Report following the signature page of this Report:

<TABLE>
<S>                                                                                        <C>
Cover Page................................................................................ F-1
Independent Auditors' Reports............................................................. F-2 to F-3
Consolidated Balance Sheets............................................................... F-4
Consolidated Statements of Operations..................................................... F-5
Consolidated Statements of Shareholders' Equity........................................... F-6
Consolidated Statements of Cash Flows..................................................... F-7 to F-8
Notes to Consolidated Financial Statements for the Years Ended December 31, 2001, 2000 and
  1999.................................................................................... F-9 to F-27
</TABLE>

Item 9.  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 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.

                                      23

<PAGE>

                                   PART III

Item 10.  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.

<TABLE>
<CAPTION>
Name                 Age                         Position with CECO
- ----                 ---                         ------------------
<C>                  <C> <S>
David D. Blum....... 46  Senior Vice President-Sales and Marketing; Assistant Secretary
Richard J. Blum..... 55  Director; President
Jason Louis DeZwirek 31  Director; Secretary
Phillip DeZwirek.... 64  Chairman of the Board of Directors; Chief Executive Officer
Josephine Grivas.... 65  Director
Marshall J. Morris.. 42  Vice President-Finance and Administration; Chief Financial Officer
Donald A. Wright.... 64  Director
</TABLE>

   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. Mr. Blum is also a director of The Factory Power Company,
a company of which CECO owns a minority interest and that provides steam energy
to various companies, including CECO. 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 through January 1, 2002 served as a member of the
Committee that was established to administer CECO'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, Inc.,
a company that owns a children's portal. Mr. DeZwirek is (and has been since
2001) the Chairman of the Board of API Electronics Group, Inc., a publicly
traded company, that is a manufacturer of power semi-conductors primarily for
military use. From 1993 until he commenced employment with kaboose, Inc., Mr.
DeZwirek was President of Digital Fusion Multimedia Corp., a company that
adapted books and movies to the CD Rom medium.

   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); President of Can-Med Technology, Inc. d/b/a Green Diamond Oil
Corp. ("Green Diamond") (since 1990) and Vice Chairman and Chief Executive
Officer of API Electronics Group, Inc. Mr. DeZwirek has also been involved in
private investment activities for the past five years.

                                      24

<PAGE>

   Josephine Grivas has been a director of the Company since February 1991. 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.

   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, and since January 1, 2002 has served on the
Committee that administers the Stock Option 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, 2001, 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. The Audit Committee held three
telephonic meetings during the fiscal year ended December 31, 2001.

   Section 16(a) Beneficial Ownership Reporting Compliance. We are 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 11.  Executive Compensation

   Except for the compensation described below, we have not 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 CECO's executive officers
or directors.

   The following table summarizes the total compensation of Phillip DeZwirek,
Richard J. Blum, David D. Blum and Marshall J. Morris for 2001 and the two
previous years. 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 CECO. David D. Blum, who also serves as
Vice-President of Kirk & Blum, is paid by Kirk & Blum. No other officer of CECO
made in excess of $100,000.

                                      25

<PAGE>

Summary Compensation Table For CECO

<TABLE>
<CAPTION>
                                    Annual Compensation   Long-Term
                                   --------------------- Compensation   All Other
Name/Principal Position       Year  Salary       Bonus   Options (#)   Compensation
- -----------------------       ---- --------     -------- ------------  ------------
<S>                           <C>  <C>          <C>      <C>           <C>
Phillip DeZwirek              2001 $111,000                500,000(2)    $139,000(1)
Chairman of the Board         2000 $137,545                500,000(3)
& Chief Executive Officer     1999 $100,000

Richard J. Blum               2001 $227,538     $122,224    25,000(4)    $ 25,406(5)
President of CECO &           2000 $206,000                448,000(8)    $ 19,883(6)
President & Chief Executive   1999 $ 13,972(7)
Officer of CECO Group

David D. Blum                 2001 $170,106     $ 76,388   335,000(12)   $ 17,104(9)
Senior Vice President-Sales   2000 $154,000                              $ 10,873(10)
& Marketing and Assistant     1999 $ 10,458(11)
Secretary of CECO and
Vice President of Kirk & Blum

Marshall J. Morris            2001 $155,769                 50,000(14)   $  1,377(13)
Vice President-Finance &      2000 $133,211                              $ 22,040(15)
Administration and Chief
Financial Officer
</TABLE>
- --------
(1) Includes $139,000 paid to Can-Med Technology, Inc. d/b/a Green Diamond Oil
    Corp. for consulting services provided by Mr. DeZwirek through Green
    Diamond.
(2) Represents 500,000 Warrants issued to Phillip DeZwirek on August 14, 2000.
(3) Represents 500,000 Warrants issued to Phillip DeZwirek on January 22, 1999.
(4) Represents options to purchase 25,000 shares of CECO's stock granted on
    October 5, 2001. Such options are exercisable at any time between April 5,
    2002 and October 5, 2011 at a price of $2.01 per share.
(5) Represents Company contribution of $22,475 to 401(k) plan on behalf of Mr.
    Richard Blum and $2,931 of insurance premiums paid for term life insurance
    for his benefit.
(6) Represents Company contribution of $18,315 to 401(k) plan on behalf of Mr.
    Richard Blum and $1,568 of insurance premiums paid by CECO for term life
    insurance for the benefit of Mr. Richard Blum
(7) Based on an annual salary of $206,000; Mr. Richard Blum commenced
    employment with CECO Group on December 7, 1999.
(8) Represents Warrants to purchase 448,000 shares of CECO'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.
(9) Represents Company contribution of $16,362 to 401(k) plan on behalf of Mr.
    David Blum and $742 of insurance premiums paid for term life insurance for
    his benefit.
(10) Represents Company contribution of $10,134 to 401(k) plan on behalf of Mr.
     David Blum and $740 of insurance premiums paid by CECO for term life
     insurance for the benefit of Mr. David Blum.
(11) Based on an annual salary of $154,000; amount shown is from December 7,
     1999, the date CECO Group acquired Kirk & Blum.
(12) Represents Warrants to purchase 335,000 shares of CECO'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.
(13) Represents Company contribution of $897 to 401(k) plan on behalf of Mr.
     Morris and $480 of insurance premiums paid for term life insurance for his
     benefit.
(14) Represents Options to purchase 50,000 shares of CECO's stock granted on
     January 20, 2000. Such options become exercisable at the rate of 20% per
     year over the five years following January 20, 2000 at a price per share
     of $2.50.
(15) Represents Company contribution of $436 to 401(k) plan on behalf of Mr.
     Morris, $284 of insurance premiums paid by CECO for term life insurance
     for the benefit of Mr. Morris and $21,320 of reimbursement of relocation
     expenses.

                                      26

<PAGE>

Option Grants and Exercises in Last Fiscal Year

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

<TABLE>
<CAPTION>
                                                    Option/SAR Grants By CECO
                                              For The Year Ended December 31, 2001
                     ---------------------------------------------------------------------------------------
                                                                                        Potential Realizable
                                                                                          Value at Assumed
                                                                                          Annual Rates of
                                            % of Total                                      Stock Price
                                           Options/SARs                                   Appreciation for
                     Number of Securities   Granted to                                    Option Term (2)
                      Underlying Options   Employees in   Exercise or Base  Expiration  --------------------
Name                     Granted (#)      Fiscal Year (1) Price ($/SH) (3)     Date       5% ($)    10% ($)
- ----                 -------------------- --------------- ---------------- ------------  -------   -------
<S>                  <C>                  <C>             <C>              <C>          <C>        <C>
Jason Louis DeZwirek        25,000             41.7%           $2.01       Oct. 5, 2011 $31,602    $80,086
Richard J. Blum.....        25,000             41.7%           $2.01       Oct. 5, 2011 $31,602    $80,086
</TABLE>
- --------
(1) Based on options to purchase an aggregate of 60,000 shares granted to
    employees and officers during 2001.
(2) Potential realizable value is based on an assumption that the stock price
    appreciates at the annual rate shown (compounded annually) from the date of
    grant until the end of the ten-year option term. These numbers are
    calculated based on the requirements promulgated by the Securities and
    Exchange Commission ("SEC") and do not reflect our estimate of future stock
    price.
(3) Granted at fair market value on the date of issuance.

<TABLE>
<CAPTION>
                                          Aggregated Option/SAR On CECO
                                  Exercises For The Year Ended December 31, 2001
                              And Option/SAR Values On CECO As Of December 31, 2001
                     ------------------------------------------------------------------------
                                                                      Value of Unexercised
                                            Number of Securities          In-The-Money
                                           Underlying Unexercised        Options/SARs at
                       Shares             Options/SARs at 12/31/01          12/31/01
                      Acquired    Value   ------------------------- -------------------------
Name                 on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----                     (#)       ($)    ----------- ------------- ----------- -------------
<S>                  <C>         <C>      <C>         <C>           <C>         <C>
Phillip DeZwirek....      0         0      2,250,000           0    $2,412,250         N/A
Richard J. Blum.....      0         0        224,000     249,000    $   81,200    $113,450
David D. Blum.......      0         0        167,500     167,500    $   60,719    $ 60,719
Marshall J. Morris..      0         0         10,000      40,000    $    8,000    $ 32,000
Jason Louis DeZwirek      0         0              0      25,000           N/A    $ 32,250
</TABLE>

Board Compensation Report On Executive Compensation

   The Board of Directors does not have a compensation committee. Richard J.
Blum, Phillip DeZwirek and Jason Louis DeZwirek, all executive officers, have
participated in deliberations of the Board of Directors concerning executive
officer compensation.

   Our employee compensation policy is to offer a package including a
competitive salary, competitive benefits, and an efficient workplace
environment. We also encourage broad-based employee ownership of CECO stock
through our Stock Purchase Plan in which most employees are eligible to
participate. Our officers may also participate in the Stock Purchase Plan.

   The Company's compensation policy for officers is similar to that for other
employees, and is designed to promote excellent performance and attainment of
corporate and personal goals.

   The Board of Directors (comprised of three executive officers and two
non-employee directors) reviews and approves individual officer salaries and
bonuses.

   Officers of CECO are paid salaries in line with their responsibilities.
These salaries are structured so they are comparable with salaries paid by
competitors in the relevant industries. Officers (and other employees) are

                                      27

<PAGE>

also eligible to receive stock option grants, which are intended to promote
success by aligning employee financial interests with long-term shareholder
value. Stock option grants are based on various subjective factors primarily
relating to the responsibilities of the individual officers, and also to their
expected future contributions and prior option grants.

   The Board of Directors annually reviews and approves the compensation of
Phillip DeZwirek, Chief Executive Officer and Chairman of the Board. His
compensation is tied to revenues and profits, strategic goals, capital raising
efforts, and his general performance. In addition, Mr. DeZwirek is a
significant shareholder in CECO; to the extent his performance translates into
an increase in the value of CECO's stock, all shareholders, including Mr.
DeZwirek, share the benefit.

Employment Contracts

   Richard J. Blum entered into an Employment Agreement dated December 7, 1999
with CECO Group. The Employment Agreement, which was recently extended for an
additional year, has a term through December 7, 2005. Either party may
terminate the Employment Agreement for cause. Mr. Richard Blum's base salary is
set annually, at the Board's discretion, and is currently $228,400 per year. In
addition to his base salary, Mr. Richard Blum is entitled to a bonus, depending
upon whether CECO 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, which was recently extended for an
additional year, has a term through December 7, 2005. Either party may
terminate the Employment Agreement for cause. Mr. David Blum's base salary is
set annually, at the Board's discretion, and is currently $170,750 per year. In
addition to his base salary, Mr. David Blum is entitled to a bonus, depending
upon whether CECO exceeds certain targets, and four weeks paid vacation.

Options

   In consideration for Jason Louis DeZwirek's valuable service to CECO as an
officer and director, CECO granted Mr. DeZwirek options on October 5, 2001 to
purchase up to 25,000 shares of CECO's common stock, which are exercisable at
any time between April 5, 2002 and October 5, 2011, inclusive, at a price of
$2.01, the closing price of CECO's common stock on October 5, 2001. Such
options are not transferable other than by will or the laws of descent.

Compensation Under CECO Stock Option Plan and Stock Purchase Plans

  Stock Option Plan

   Our Stock Option Plan was adopted by our board of directors on October 1,
1997 and approved by the shareholders on September 10, 1998. This plan provides
for the grant of incentive stock options to our employees and nonstatutory
stock options to our employees, consultants, advisors and directors. The number
of shares of common stock reserved under the Stock Option Plan are 1,500,000.
Of these shares, 182,500 shares were subject to outstanding options and
1,317,500 shares were available for future grant as of March 15, 2002. No
options have been exercised as of March 15, 2002.

   A committee of our board administers the stock plan and determines the terms
of awards granted, including the exercise price, the number of shares subject
to individual awards and the vesting period of awards. Directors Grivas and
Wright currently serve on such committee. In the case of options intended to
quality as "performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the
committee will consist of two or more "outside directors" within the meaning of
Section 162(m) of the Code. The committee determines the exercise price of
options granted under the Stock Option Plan, but with respect to nonstatutory
stock options intended to qualify as "performance-based compensation"

                                      28

<PAGE>

within the meaning of Section 162(m) of the Code and all incentive stock
options, the exercise price must at least be equal to the fair market value of
our common stock on the date of grant. The term of an incentive stock option
may not exceed ten years, except that with respect to any participant who owns
10% of the voting power of all classes of our outstanding capital stock, the
term must not exceed five years and the exercise price must equal at least 110%
of the fair market value on the grant date. The committee determines the term
of all other options.

   In the year 2001, options to purchase 35,000 shares of stock of CECO were
granted under the Stock Option Plan.

   On October 5, 2001, Richard J. Blum, in consideration for his valuable
services as an executive officer and director was granted an option under the
Stock Option Plan to purchase up to 25,000 shares of stock of CECO. The option
becomes exercisable on April 5, 2002 and expires on October 5, 2011. The
exercise price per share is $2.01, the closing price for CECO's common stock on
the date of the grant. On October 5, 2001, Donald Wright, in consideration for
his valuable services as a director of CECO, was granted an option under the
Plan to purchase up to 10,000 shares of stock of CECO. The option becomes
exercisable on April 5, 2002 and expires on October 5, 2011. The exercise price
per share is $2.01, the closing price for CECO's common stock on the date of
the grant.

  Stock Purchase Plan

   On September 21, 1999, the Board of Directors of CECO adopted the Stock
Purchase Plan which was approved by the stockholders on November 16, 1999.
Employees, other than certain part-time employees, are eligible to participate
in the Stock Purchase Plan, which provides employees the opportunity to
purchase stock of CECO at a discounted price. The maximum number of shares of
common stock of CECO that will be offered under the Stock Purchase Plan is
1,000,000. Such shares will be offered in nine separate consecutive offerings,
which commenced October 1, 1999, with the final offering terminating on
September 30, 2004. The purchase price per share will be the lesser of 85% of
the market price of the stock on the last business day of the offering period
or 85% of the market price of the stock on the first day of the offering
period. Payment for the stock under the Stock Purchase Plan is paid through
employee payroll deductions. The Stock Purchase Plan is administered by CECO's
board of directors, however, the board of directors may delegate its authority
to a committee of the board or an officer of CECO. Directors Grivas and Wright
currently administer the Stock Purchase Plan.

   As of March 19, 2002, 47,948 shares of stock have been issued under the
Stock Purchase Plan; 4,053 of which have been issued to Mr. Richard Blum, and
4,724 of which have been issued to Mr. David Blum in 2001. No other shares of
stock under the Stock Purchase Plan have been issued to an executive officer or
director of CECO.

Director Compensation

   The directors of CECO received no consideration for serving in their
capacity as directors of CECO or as members of any committee of the Board
during its last fiscal year, other than Donald Wright, Richard J. Blum and
Jason Louis DeZwirek who received options to purchase 10,000, 25,000 and 25,000
shares of common stock, respectively. Phillip DeZwirek, a director, receives
compensation in his capacity as an executive officer.

                                      29

<PAGE>

Stock Performance Graph

   The line graph below compares the annual percentage change in CECO's
cumulative total shareholder return on its Common Stock with the cumulative
total return of the Russell 2000 Stock Index (a broad-based market index
consisting of small-cap stocks) and The Dow Jones Industry Group--Pollution
Control (a "Peer Group Index") for the five-year period ending December 31,
2001. The graph and table assume $100 invested on December 31, 1996 in the
Company's Common Stock, the Russell 2000 Stock Index and The Dow Jones Industry
Group--Pollution Control and that all dividends were reinvested. The Dow Jones
Industry Group--Pollution Control Index total return is weighted by market
capitalization.

   The Dow Jones Industry Group--Pollution Control reflects CECO's performance
against pollution control businesses, the Company's principal industry group,
and provides an appropriate indicator of cumulative total shareholder returns.
There are 60 companies included in this industry group.

                   Based on an Initial Investment of $100 on
                 December 31, 1996, with Dividends Reinvested

                                          [CHART]


                         Dec.   Dec.    Dec.    Dec.    Dec.    Dec.
Company Name/Index       1996   1997    1998    1999    2000    2001
CECO ENVIRONMENTAL CORP. 100    153.13  150.00  125.00   68.75  165.00
RUSSELL 2000 INDEX       100    122.34  118.91  142.21  136.07  137.46
PEER GROUP INDEX         100    124.53  129.64   77.42  103.54  123.49


                                      30

<PAGE>

Item 12.  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 19, 2002, and the percent of the class so owned by each such person.

<TABLE>
<CAPTION>
                                    No. of Shares of
         Name and Address             Common Stock    % of Total Common Shares
        of Beneficial Owner        Beneficially Owned     Outstanding (1)
        -------------------        ------------------ ------------------------
 <S>                               <C>                <C>
 Phillip DeZwirek (2,3)...........     4,508,557                38.0%
 Chief Executive Officer and
 Chairman of the Board
 505 University Avenue
 Suite 1400
 Toronto, Ontario M5G 1X3

 Jason Louis DeZwirek (2,4,5).....     3,758,026                39.0%
 Secretary
 247 Erskine Avenue
 Toronto, Ontario M4P 1Z6

 Icarus Investment Corp. (2,6)....     2,134,360                22.2%
 505 University Avenue
 Suite 1400
 Toronto, Ontario M5G 1X3

 IntroTech Investments, Inc. (4)..     1,598,666                16.6%
 247 Erskine Avenue
 Toronto, Ontario M4P 1Z6

 Can-Med Technology, Inc. (6).....       800,000                 8.3%
 d/b/a Green Diamond Oil Corp.
 505 University Avenue, Suite 1400
 Toronto, Ontario M5G 1X3

 Harvey Sandler (7)...............       511,000                 5.3%
 17591 Lake Estates Drive
 Boca Raton, FL 33496
</TABLE>
- --------
(1) Based upon 9,614,087 shares of common stock of CECO outstanding as of March
    19, 2002. 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 19, 2002, 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 CECO
    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) Includes (i) 750,000 shares of CECO's common stock that Phillip DeZwirek
    can purchase on or prior to November 7, 2006 from CECO at a price of $1.75
    per share pursuant to warrants granted to Mr. DeZwirek by CECO on November
    7, 1996; (ii) 250,000 shares that may be purchased pursuant to warrants
    granted

                                      31

<PAGE>

   January 14, 1998 at a price of $2.75 per share prior to January 14, 2008;
   (iii) 250,000 shares of CECO's common stock that may be purchased pursuant
   to warrants granted September 14, 1998 at a price of $1.626 per share prior
   to September 14, 2008; (iv) 500,000 shares that may be purchased pursuant to
   warrants granted to Mr. DeZwirek by CECO 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 CECO August 14, 2000, which are exercisable prior to August 14,
   2010 at a price of $2.0625 per share.

(4) IntroTech Investments, Inc. ("IntroTech") is owned 100% by Jason Louis
    DeZwirek. Ownership of the shares of common stock of CECO 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.

(5) Includes 25,000 shares of CECO's common stock that Jason Louis DeZwirek can
    purchase on or prior to October 5, 2011 at a price of $2.01 per share
    pursuant to options granted to Mr. DeZwirek on October 5, 2001.

(6) 50.1% of the shares of Green Diamond are owned by Icarus. Ownership of the
    shares of common stock of Green Diamond also are attributed to Icarus.
    Icarus has voting and dispositive power, with respect to such shares which
    is shared with the other shareholders of Green Diamond.

(7) Includes 20,000 shares held in the name of Phyllis Sandler, Mr. Sandler's
    spouse.

                                      32

<PAGE>

   (b) Security Ownership of Management

   As of March 19, 2002, 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:

<TABLE>
<CAPTION>
                                               Number of Shares  % Total Company
              Name and Address                 of Common Stock    Common Shares
             of Beneficial Owner              Beneficially Owned Outstanding (1)
             -------------------              ------------------ ---------------
<S>                                           <C>                <C>
Phillip DeZwirek(2)..........................     4,508,557             38%
505 University Avenue
Suite 1400
Toronto, Ontario M5G 1P7

Jason Louis DeZwirek(3)......................     3,758,026             39%
247 Erskine Avenue
Toronto, Ontario M4P 1Z6

Richard J. Blum(4)...........................       275,241            2.8%
3120 Forrer Street
Cincinnati, Ohio 45209

David D. Blum(5).............................       179,136            1.8%
3120 Forrer Street
Cincinnati, Ohio 45202

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

Donald A. Wright(6)..........................        50,000            0.5%
4538 Cass Street
San Diego, California 92109

Marshall J. Morris(7)........................        30,600            0.3%
3120 Forrer Street
Cincinnati, Ohio 45202

Officers and Directors as a group (7 persons)     6,667,200           54.0%
</TABLE>
- --------
(1) See Note 1 to the foregoing table.

(2) See Notes 2 and 3 to the foregoing table.

(3) See Notes 2, 4 and 5 to the foregoing table.

(4) Includes 224,000 shares of CECO'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/Technic to purchase 448,000 shares of common stock
    in CECO. This warrant became exercisable on December 7, 2000, with respect
    to 112,000 of such shares, on December 7, 2001, with respect to another
    112,000 shares and becomes exercisable with respect to an additional 25% of
    such shares on each of the next two anniversaries of such date. Also
    includes 25,000 shares that may be purchased pursuant to Options granted to
    Mr. Blum October 5, 2001 at a price of $2.01 per share.

(5) Includes 167,500 shares of CECO'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/Technic to purchase 335,000 shares of stock in CECO.
    This

                                      33

<PAGE>

   warrant became exercisable on December 7, 2000, with respect to 83,750 of
   such shares, on December 7, 2001 with respect to another 83,750 shares, and
   is exercisable with respect to an additional 25% of such shares on each of
   the next two anniversaries of such date.

(6) Includes (i) 10,000 shares of the CECO 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; (ii) 5,000 shares of CECO'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; and (iii) 10,000 shares that
    may be purchased pursuant to Options granted October 5, 2001 at a price of
    $2.01 per share.

(7) Includes 400 shares held in the name of Cynthia S. Morris, the spouse of
    Mr. Morris. Also includes 20,000 shares of common stock of CECO that may be
    purchased pursuant to options granted to Mr. Morris to purchase 50,000
    shares of CECO's common stock on January 20, 2000. This option became
    exercisable on January 20, 2001, with respect to 10,000 of such shares, on
    January 20, 2002 with respect to another 10,000 shares, and becomes
    exercisable with respect to an additional 20% of the 50,000 shares on each
    of the next three anniversaries of such date. The exercise price of the
    options is $2.50 per share.

   (c) Changes in Control

   We are not aware of any current arrangement(s) that may result in a change
in control of CECO. However, the Investors could potentially own up to 17.5% of
CECO common stock if our EBITDA for fiscal year 2002 is significantly below
$7,800,000 and assuming the exercise of their Warrants. We are required to
issue to such Investors additional shares for every $100,000 our EBITDA is
below $7,800,000 for a maximum of 826,802 additional shares. In such event,
such group could significantly influence our business. However, we are not
obligated to issue in excess of 1,772,576 shares to the Investors (including
shares underlying the Warrants) in the aggregate unless shareholder approval is
obtained. In the event our EBITDA is not below $7,800,000 for fiscal year 2002,
the Investors would own 10.6% of CECO common stock assuming the exercise of
their Warrants.

Item 13.  Certain Relationships and Related Transactions

   Since January 1, 2001, 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.

   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 approximately $88,000 for 2001. The
lease terminates July 31, 2002 and we will not be renewing the lease.

   As a condition to obtaining the Bank Facility, CECO placed $5 million of
subordinated debt. Green Diamond provided $4 million 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. Actual payment is subject to the subordination agreement with
the banks providing the Bank Facility.

   In consideration for the subordinated lenders making CECO the subordinated
loans, CECO issued to the subordinated lenders warrants to purchase up to
1,000,000 shares of CECO's common stock for $2.25 per share, the closing price
of CECO's common stock on the day that the subordinated lenders entered into an
agreement with CECO to provide the subordinated loans. Green Diamond was issued
800,000 of such warrants. Green Diamond exercised the warrants on December 21,
2001 for all 800,000 shares.

   During the fiscal year ended December 31, 2001, CECO reimbursed Can-Med
Technology d/b/a Green Diamond Oil Corp. $5,000 per month for use of the space
and other office expenses of CECO's Toronto office. Green Diamond is owned
50.1% by Icarus Investment Corp., which is controlled by Phillip DeZwirek, the
Chief Executive Officer and Chairman of the Board of CECO, and Jason Louis
DeZwirek, the Secretary of CECO.

                                      34

<PAGE>

   During the fiscal year ended December 31, 2001, CECO advanced $337,000 to
Green Diamond (see description above). Green Diamond repaid this advance in
March 2002. CECO did not receive interest on these advances.

   During the fiscal year ended December 31, 2001, CECO paid fees of $139,000
to Green Diamond for management consulting services. The services were provided
by Phillip DeZwirek, the Chief Executive Officer and Chairman of the Board of
CECO, through Green Diamond. Such amount also is included as compensation paid
to Mr. DeZwirek under "Management".

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

   (a) Exhibits

<TABLE>
<CAPTION>
Exhibit
Number                                            Description
- ------                                            -----------
<C>      <S>

   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)

   2.2   Certificate of Ownership and Merger Merging CECO Environmental Corp. into CECO
           Environmental Corp.

   2.3   Certificate of Merger of CECO Environmental Corp. into CECO Environmental Corp. Under
           Section 907 of the Business Corporation Law.

   3(i)  Certificate of Incorporation.

   3(ii) 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 and Amendment. (Incorporated by reference
           from Form S-8, Exhibit 4, filed March 24, 2000, 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)

  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-KSB 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-KSB 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-KSB 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)

  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)
</TABLE>

                                      35

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                            Description
- ------                                            -----------
<C>     <S>

 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)

 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)
</TABLE>

                                      36

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                             Description
- ------                                             -----------
<C>     <S>

 10.23  Credit Agreement, dated as of December 7, 1999, among PNC Bank, National Association, 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)

 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  kbd\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.
          (Incorporated by reference from the Company's Form 10-KSB dated December 31, 2000)

 10.31  Second Amendment to Credit Agreement dated November 19, 2000. (Incorporated by reference
          from the Company's Form 10-KSB dated December 31, 2000)

 10.32  Stock Option Agreement for Donald A. Wright dated September 18, 2000. (Incorporated by
          reference from the Company's Form 10-KSB dated December 31, 2000)

 10.33  Warrant Agreement dated as of August 14, 2000 between the Company and Phillip DeZwirek.
          (Incorporated by reference from the Company's Form 10-KSB dated December 31, 2000)

 10.34  Incentive Stock Option Agreement for Marshall J. Morris dated as of January 20, 2000.
          (Incorporated by reference from the Company's Form 10-KSB dated December 31, 2000)

 10.35  Separation Agreement and General Release between Steven I. Taub and the Company. (Incorporated
          by reference from the Company's Form 10-KSB dated December 31, 2000)

 10.36  Stock Sale Agreement between the Company and Steven I. Taub dated July 5, 2000. (Incorporated
          by reference from the Company's Form 10-KSB dated December 31, 2000)

 10.37  Stock Sale Agreement between the Company and Hilary Taub dated July 5, 2000. (Incorporated by
          reference from the Company's Form 10-KSB dated December 31, 2000)

 10.38  Amended and Restated Replacement Promissory Note in the amount of $4,000,000, dated as of
          May 1, 2001, made by CECO Environmental Corp. and payable to Taurus Capital Markets Ltd.
</TABLE>

                                      37

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                           Description
- ------                                           -----------
<C>     <S>

 10.39  Amended and Restated Replacement Promissory Note in the amount of $500,000, dated as of May 1,
          2001, made by CECO Environmental Corp. and payable to Harvey Sandler.

 10.40  Amended and Restated Replacement Promissory Note in the amount of $500,000, dated as of May 1,
          2001, made by CECO Environmental Corp. and payable to Taurus Capital Markets Ltd.

 10.41  Third Amendment to Credit Agreement dated March 30, 2001. (Incorporated by reference from the
          Company's Form 10-KSB dated December 31, 2000)

 10.42  Fourth Amendment to Credit Agreement dated August 20, 2001.

 10.43  Fifth Amendment to Credit Agreement dated March 27, 2002.

 10.44  Option for the Purchase of Shares of Common Stock of Jason Louis DeZwirek dated October 5,
          2001.

 10.45  Asset Purchase Agreement between Belfiber, Co. and Air Purator Corporation dated December 31,
          2001.

 10.46  Subscription Agreement dated December 31, 2001. (Incorporated by reference from the Company's
          Form 8-K filed January 15, 2002)

 10.47  Form of Warrant (for Investors). (Incorporated by reference from the Company's Form 8-K filed
          January 15, 2002)

 10.48  Form of Warrant (for Finders).

 21     Subsidiaries of the Company.

 23.1   Consent of Margolis & Company, P.C., Certified Public Accountants.
</TABLE>

   (b) Financial Statements and Schedules

   The financial statements are set forth in this Report following the
signature page of this Report.

   (c) Reports on Form 8-K

   The Company did not file a report on Form 8-K during the fiscal quarter
ended December 31, 2001.

                                      38

<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of 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: March 27, 2002


   Pursuant to the requirements of 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:

          Signature                       Title                  Date
          ---------                       -----                  ----

    /S/  PHILLIP DEZWIREK     Principal Executive Officer,  March 27, 2002
- -----------------------------   Chairman of the Board,
      Phillip DeZwirek          Director and Chief
                                Executive Officer

   /S/  MARSHALL J. MORRIS    Principal Financial and       March 27, 2002
- -----------------------------   Accounting Officer, Vice
     Marshall J. Morris         President-Finance and
                                Administration, Chief
                                Financial Officer

    /S/  RICHARD J. BLUM      President, Director           March 27, 2002
- -----------------------------
       Richard J. Blum

  /S/  JASON LOUIS DEZWIREK   Secretary, Director           March 27, 2002
- -----------------------------
    Jason Louis DeZwirek

    /S/  JOSEPHINE GRIVAS     Director                      March 27, 2002
- -----------------------------
      Josephine Grivas

     /S/  DONALD WRIGHT       Director                      March 27, 2002
- -----------------------------
        Donald Wright

                                      39

<PAGE>

                           CECO ENVIRONMENTAL CORP.

                       CONSOLIDATED FINANCIAL STATEMENTS


                                      F-1

<PAGE>

                         INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
CECO Environmental Corp.

   We have audited the accompanying consolidated balance sheets of CECO
Environmental Corp. and subsidiaries (the "Company") as of December 31, 2001
and 2000, and the related consolidated statements of operations, shareholders'
equity, and cash flows for the years 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 audits.

   We conducted our audits 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
audits provide a reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 2001 and 2000, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Cincinnati, Ohio
March 27, 2002

                                      F-2

<PAGE>

                         INDEPENDENT AUDITORS' REPORT

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

   We have audited the consolidated statement of operations, shareholders'
equity, and cash flows of CECO Environmental Corp. and subsidiaries for the
year ended December 31, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion of
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, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of CECO
Environmental Corp. and subsidiaries for the year ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States
of America.


                                                   /s/   MARGOLIS & COMPANY P.C.
                                                   Certified Public Accountants

Bala Cynwyd, PA
March 27, 2002

                                      F-3

<PAGE>

                           CECO ENVIRONMENTAL CORP.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                                      --------------------
                                                                                         2001       2000
                                                                                       --------   -------
                                                                                      Dollars in thousands
                                                                                        except share data
<S>                                                                                   <C>         <C>
                                       ASSETS
Current assets:
   Cash and cash equivalents......................................................... $     53    $   664
   Marketable securities--trading....................................................       --      1,002
   Accounts receivable, net..........................................................   17,000     17,372
   Costs and estimated earnings in excess of billings on uncompleted contracts.......    5,572      5,099
   Inventories.......................................................................    2,157      2,373
   Prepaid expenses and other current assets.........................................    1,805        939
                                                                                       --------   -------
       Total current assets..........................................................   26,587     27,449
Property and equipment, net..........................................................   13,136     13,587
Goodwill, net........................................................................    8,135      8,479
Other intangible assets, net.........................................................    3,859      4,149
Deferred charges and other assets....................................................    1,313      1,290
                                                                                       --------   -------
                                                                                       $53,030    $54,954
                                                                                       ========   =======
                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of debt........................................................... $  2,826    $ 3,776
   Accounts payable and accrued expenses.............................................   13,103     11,808
   Billings in excess of costs and estimated earnings on uncompleted contracts.......    2,595      1,175
                                                                                       --------   -------
       Total current liabilities.....................................................   18,524     16,759
Other liabilities....................................................................    2,032        764
Debt, less current portion...........................................................   14,838     22,640
Deferred income tax liability........................................................    4,065      4,322
Subordinated notes (see note 12, related party--$3,000 and $2,769, respectively).....    3,750      3,461
                                                                                       --------   -------
       Total liabilities.............................................................   43,209     47,946
                                                                                       --------   -------
Commitments and contingencies (Note 15)

Shareholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, none issued...........       --         --
Common stock, $.01 par value; 100,000,000 shares authorized, 10,378,007 and 8,639,792
  shares issued in 2001 and 2000, respectively.......................................      104         86
Capital in excess of par value.......................................................   16,304     12,592
Accumulated deficit..................................................................   (4,214)    (3,950)
Accumulated other comprehensive loss.................................................     (687)       (34)
                                                                                       --------   -------
                                                                                        11,507      8,694
Less treasury stock, at cost, 763,920 shares in 2001 and 2000........................   (1,686)    (1,686)
                                                                                       --------   -------
       Total shareholders' equity....................................................    9,821      7,008
                                                                                       --------   -------
                                                                                      $ 53,030    $54,954
                                                                                       ========   =======
</TABLE>

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

                                      F-4

<PAGE>

                           CECO ENVIRONMENTAL CORP.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                     ------------------------------------------
                                                                         2001            2000          1999
                                                                      ----------      ----------    ----------
                                                                     Dollars in thousands, except per share dat
<S>                                                                  <C>             <C>           <C>
Net sales........................................................... $   90,994      $   89,817    $   22,414
                                                                      ----------      ----------    ----------
Costs and expenses:
 Cost of sales, exclusive of items shown separately below...........     72,462          71,720        14,027
 Selling and administrative.........................................     13,207          13,933         7,216
 Depreciation and amortization......................................      2,320           2,154           729
                                                                      ----------      ----------    ----------
                                                                         87,989          87,807        21,972
                                                                      ----------      ----------    ----------
Income from continuing operations before investment income and
  interest expense..................................................      3,005           2,010           442
Investment income...................................................        396             765           498
Interest expense (including related party interest of $710, $712 and
  $670, respectively)...............................................     (3,542)         (3,807)       (1,221)
                                                                      ----------      ----------    ----------
Loss from continuing operations before income taxes and minority
  interest..........................................................       (141)         (1,032)         (281)
Income tax provision (benefit)......................................        131            (303)          152
                                                                      ----------      ----------    ----------
Loss from continuing operations before minority interest............       (272)           (729)         (433)
Minority interest in (income) loss of consolidated subsidiary.......          8              39            (1)
                                                                      ----------      ----------    ----------
Loss from continuing operations.....................................       (264)           (690)         (434)
                                                                      ----------      ----------    ----------
Discontinued operations:
 Loss from operations, net of $134 tax benefit......................         --              --          (378)
 Loss on disposal, net of $46 tax benefit...........................         --              --          (131)
                                                                      ----------      ----------    ----------
 Loss from discontinued operations..................................         --              --          (509)
                                                                      ----------      ----------    ----------
Net loss............................................................ $     (264)     $     (690)   $     (943)
                                                                      ==========      ==========    ==========
Basic net loss per share:
 Loss from continuing operations.................................... $     (.03)     $     (.08)   $     (.05)
                                                                      ==========      ==========    ==========
 Net loss per share................................................. $     (.03)     $     (.08)   $     (.11)
                                                                      ==========      ==========    ==========
Diluted net loss per share:
 Loss from continuing operations.................................... $     (.03)     $     (.08)   $     (.05)
                                                                      ==========      ==========    ==========
 Net loss per share................................................. $     (.03)     $     (.08)   $     (.11)
                                                                      ==========      ==========    ==========
Weighted average number of common shares outstanding:
   Basic and diluted................................................  7,899,092       8,195,140     8,485,471
                                                                      ==========      ==========    ==========
</TABLE>

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

                                      F-5

<PAGE>

                           CECO ENVIRONMENTAL CORP.

                CONSOLIDATED STATEMENTS 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
                                   ------ ---------- ----------- ------------- -------- -------  -------------
                                                              Dollars in thousands
<S>                                <C>    <C>        <C>         <C>           <C>      <C>      <C>
Balance, December 31, 1998........  $ 86   $10,137     $(2,317)                $  (349) $ 7,557
Net loss for the year ended
  December 31, 1999...............                        (943)                            (943)     $(943)
Stock warrants issued.............           2,424                                        2,424
                                    ----   -------     -------       -----     -------  -------      -----
Balance, December 31, 1999........    86    12,561      (3,260)                   (349)   9,038      $(943)
                                                                                                     =====
Net loss for the year ended
  December 31, 2000...............                        (690)                            (690)     $(690)
Issuance of common stock..........              31                                           31
Treasury stock purchases..........                                              (1,337)  (1,337)
Other comprehensive loss:
 Minimum pension liability, net
   of tax $23.....................                                   $ (34)                 (34)       (34)
                                    ----   -------     -------       -----     -------  -------      -----
Balance, December 31, 2000........    86    12,592      (3,950)        (34)     (1,686)   7,008      $(724)
                                                                                                     =====
Cumulative effect of change in
  accounting principle-adoption of
  SFAS No. 133, net of tax $140                                       (209)                (209)     $(209)
Net loss for the year ended
  December 31, 2001...............                        (264)                            (264)      (264)
Exercise of warrants..............    10     2,240                                        2,250
Issuance of common stock..........     8     1,132                                        1,140
Contingent stock warrants issued..             340                                          340
Other comprehensive loss:
 Minimum pension liability,
   net of tax $275................                                    (413)                (413)      (413)
 Change in fair value of swap, net
   of tax $20.....................                                     (31)                 (31)       (31)
                                    ----   -------     -------       -----     -------  -------      -----
Balance, December 31, 2001........  $104   $16,304     $(4,214)      $(687)    $(1,686) $ 9,821      $(917)
                                    ====   =======     =======       =====     =======  =======      =====
</TABLE>


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

                                      F-6

<PAGE>

                           CECO ENVIRONMENTAL CORP.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            Year Ended December 31
                                                                          --------------------------
                                                                           2001     2000      1999
                                                                          -------  -------  --------
                                                                             Dollars in thousands
<S>                                                                       <C>      <C>      <C>
Cash flows from operating activities:
 Net loss................................................................ $  (264) $  (690) $   (943)
 Adjustments to reconcile net loss to net cash provided by (used in)
   operating activities:
 Loss from discontinued operations.......................................      --       --       509
 Depreciation and amortization...........................................   2,320    2,154       729
 Deferred income taxes...................................................    (103)    (609)      (44)
 Minority interest.......................................................      (8)     (39)        1
 Gain on sale of marketable securities, trading..........................    (388)    (632)      (96)
 Changes in operating assets and liabilities, net of acquired businesses:
 Marketable securities--trading..........................................   1,390    2,320    (1,899)
   Accounts receivable...................................................     372     (168)     (808)
   Costs and estimated earnings in excess of billings on
     uncompleted contracts...............................................    (473)  (2,147)     (458)
   Inventories...........................................................     216     (200)    1,569
   Prepaid expenses and other current assets.............................    (767)    (122)       90
   Deferred charges and other assets.....................................    (440)     (17)     (142)
   Accounts payable and accrued expenses.................................   1,303    2,122     1,532
   Other liabilities.....................................................    (285)      --        --
   Billings in excess of costs and estimated earnings on
     uncompleted contracts...............................................   1,420      715    (1,197)
   Discontinued operations...............................................      --       --       113
   Other.................................................................      89      (57)      198
                                                                          -------  -------  --------
       Net cash provided by (used in) operating activities...............   4,382    2,630      (846)
                                                                          -------  -------  --------
Cash flows from investing activities:
 Acquisitions of property and equipment and intangible assets............    (793)    (560)     (440)
 Acquisitions of businesses, net of cash acquired........................      --       --   (25,488)
 Cash received from purchase price adjustment............................      --      254        --
                                                                          -------  -------  --------
       Net cash used in investing activities.............................    (793)    (306)  (25,928)
                                                                          -------  -------  --------
Cash flows from financing activities:
 Net borrowings (repayments) on revolving credit line....................    (800)   1,300     2,473
 Proceeds from issuance of stock and detachable warrants.................   4,377       31        --
 Proceeds from issuance of debt..........................................      --       --    29,013
 Repayments of debt......................................................  (7,952)  (2,789)   (6,715)
 Proceeds from borrowing against cash surrender value of life insurance..     175       --     2,773
 Purchases of treasury stock.............................................      --   (1,337)       --
                                                                          -------  -------  --------
       Net cash provided by (used in) financing activities...............  (4,200)  (2,795)   27,544
                                                                          -------  -------  --------
Net increase (decrease) in cash and cash equivalents.....................    (611)    (471)      770
Cash and cash equivalents at beginning of year...........................     664    1,135       365
                                                                          -------  -------  --------
Cash and cash equivalents at end of year................................. $    53  $   664  $  1,135
                                                                          =======  =======  ========
</TABLE>

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

                                      F-7

<PAGE>

                           CECO ENVIRONMENTAL CORP.

               SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

<TABLE>
               <S>                            <C>    <C>    <C>
               Cash paid during the year for:
                  Interest................... $2,693 $2,870 $305
                                              ====== ====== ====
                  Income taxes............... $  673 $  254 $504
                                              ====== ====== ====
</TABLE>

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

                                      F-8

<PAGE>

                           CECO ENVIRONMENTAL CORP.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For the Years Ended December 31, 2001, 2000 and 1999
               (Dollars in thousands, except per share amounts)
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 of the
Company include the accounts of the following subsidiaries:

<TABLE>
<CAPTION>
                                                        % Owned As Of
                                                      December 31, 2001
                                                      -----------------
        <S>                                           <C>
        CECO Group, Inc. ("Group")...................        100%
        CECO Filters, Inc. and Subsidiaries ("CFI")..         94%
        The Kirk & Blum Manufacturing Company ("K&B")        100%
        kbd/Technic, Inc.............................        100%
        CECO Abatement Systems, Inc..................        100%
</TABLE>

   CFI includes two wholly-owned subsidiaries, New Busch Co., Inc. ("Busch"),
and Air Purator Corporation ("APC") through its date of sale on December 31,
2001 (see Note 2).

   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 of America,
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.

   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 were $355.

   Inventories--The labor content of work-in-process and finished products and
all inventories of steel of K&B (approximately 71% and 63% of total inventories
at December 31, 2001 and 2000, 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, 2001 and 2000.

   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.

                                      F-9

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


   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 the 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 17 years.

   Deferred charges--Deferred charges primarily represent deferred financing
costs, which are amortized over the life of the related loan. Amortization
expense was $220, $231 and $55 for 2001, 2000 and 1999, respectively.

   Financial Instruments--On January 1, 2001, the Company adopted Statement of
Financial Accounting Standards ("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. The Company recognized a transition obligation of
$209, net of tax of $140, in other comprehensive loss in the first quarter
ended March 31, 2001 from the adoption of SFAS 133.

   The Company is exposed to market risk from changes in interest rates. The
Company's policy is to manage interest rate costs 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.

   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. At
December 31, 2001 and 2000, the Company provided for estimated losses on
uncompleted contracts of $108 and $602, respectively.

   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.

                                     F-10

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


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

   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 $109, $188 and $87 in 2001, 2000 and 1999, respectively.

   Research and development--Research and development costs are charged to
expense as incurred. The amounts charged to operations were $104, $140 and $33
in 2001, 2000 and 1999, respectively.

   Earnings per share--For the years ended December 31, 2001, 2000 and 1999,
both basic weighted average common shares outstanding and diluted weighted
average common shares outstanding were 7,899,092, 8,195,140 and 8,485,471,
respectively. The Company considers outstanding options and warrants in
computing diluted net loss per share only when they are dilutive. Options and
warrants to purchase 3,488,500, 3,929,400 and 6,228,120 shares for the years
ended December 31, 2001, 2000 and 1999, respectively, were not included in the
computation of diluted earnings per share due to their having an anti-dilutive
effect. There were no adjustments to net loss for the basic or diluted earnings
per share computations.

   Stock-based compensation--The Company has adopted the disclosure-only
provisions of 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 2001,
2000 or 1999 related to its stock option plans.

   Recent accounting pronouncements--In June 2001, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that all
business combinations be accounted for under the purchase method only and that
certain acquired intangible assets in a business combination be recognized as
assets apart from goodwill. SFAS No. 142 requires that ratable amortization of
goodwill be replaced with periodic tests of the goodwill's impairment and that
intangible assets other than goodwill should be amortized over their useful
lives. Implementation of SFAS No. 141 and SFAS No. 142 is required for fiscal
2002.

   In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," requiring that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which superceded SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". The primary difference is that goodwill has been removed from the scope of
SFAS No. 144. It also broadens the presentation of discontinued operations to
include a component of an entity rather than a segment of a business. A
component of an entity comprises operations and cash flows that can clearly be
distinguished operationally and for financial accounting purposes from the rest
of the entity. Implementation of SFAS No. 143 is required for fiscal 2003 and
SFAS No. 144 is required for fiscal 2002.

                                     F-11

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


   The Company has not completed the process of evaluating the impact that will
result from adopting these statements. The Company is therefore, unable to
disclose the impact, if any, that adopting these statements will have on its
financial position and results of operations when such statements are adopted.

2.  Acquisition and Divestitures 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 plus the assumption of $5,000 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 fair value, resulting in goodwill of
$4,020. During the second quarter of 2000, the Company received $254 as a
post-closing price adjustment related to this acquisition.

   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:

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                                 1999
                                                                             ------------
<S>                                                                          <C>
Total revenues..............................................................   $87,961
Loss from continuing operations before taxes on income and minority interest      (275)
Net loss....................................................................      (939)
Basic and diluted net loss per share........................................      (.11)
</TABLE>

   The increase in total revenues of $65,547 represents the inclusion of K&B
and kbd/Technic, Inc. prior to the acquisition date. The reduction in loss from
continuing operations before taxes on income and minority interest includes
pre-acquisition results of operations from K&B and kbd/Technic, Inc. of $2,594
less additional interest expense of $2,588, 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. As a result the Company owns approximately 94%
of CFI's common stock.

   Effective December 31, 2001, the Company sold the fixed assets and inventory
of APC and received notes totaling $475. The notes, $375 due in March 2002 and
$100 due in monthly installments through September 2003 beginning in April
2002, are secured by the assets of APC. The Company deferred the gain of $250
on the sale of the assets until a substantial portion of the notes are
collected, or collection of such notes is reasonably assured. At December 31,
2001, the current portion of the notes, $425, is recorded in prepaid expenses
and other current assets in the consolidated balance sheets net of the $250
deferred gain. The $50 non-current portion is included in deferred charges and
other assets. The sales agreement also provides for additional consideration
contingent upon the future operations of APC, which has not been considered in
the computation of the deferred gain. In addition, the sales agreement provides
for a $75 line of credit from the Company to temporarily fund operations. The
line was due March 2002, and is secured by a personal guaranty from the
purchaser's President. There were no amounts drawn against the line at December
31, 2001. The purchaser failed to repay the notes in full at maturity and the
Company is in the process of negotiating extended payment terms for the notes.
The aggregate principal outstanding on all of the notes is approximately
$475,000. The net assets and operations of APC were not material to the
consolidated Company.

                                     F-12

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


   The Company intends to divest Busch Martec's assets since this division of
Busch International no longer serves our vision for our future operations. Its
assets are insignificant to the consolidated financial statements.

3.  Discontinued Operations

   On March 31, 1999, the Company sold the contracts and customer list of U.S.
Facilities Management, Inc. ("USFM") for $250. The sales price was paid through
a non-interest bearing promissory note from the purchaser. Monthly principal
payments were to commence October 1, 1999 with a balloon payment for the
balance due on April 1, 2007. At December 31, 2001, 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:

<TABLE>
<CAPTION>
                                                         December 31,
                                                             1999
                                                         ------------
          <S>                                            <C>
          Net Sales.....................................    $ 388
          Cost of revenues..............................     (494)
          Operating Expenses............................     (431)
                                                            -----
          Loss from operations of discontinued operation     (537)
                                                            -----
          Impairment of goodwill........................     (167)
          Disposition costs.............................      (19)
                                                            -----
          Loss from disposal of discontinued operation..     (186)
          Income tax benefit............................      180
          Minority interest.............................       34
                                                            -----
          Net loss......................................    $(509)
                                                            =====
</TABLE>

   At December 31, 1999, basic and diluted net loss per common share related to
the disposal of USFM was $0.06 of which $0.05 related to the loss from
continuing operations and $0.01 related to the loss on disposal.

4.  Financial Instruments

   The Company's financial instruments consist primarily of investments in cash
and cash equivalents, marketable securities, receivables and certain other
assets as well as obligations under accounts payable, long-term debt and
subordinated notes. The carrying values of these financial instruments
approximate fair value at December 31, 2001 and 2000 except for subordinated
notes at December 31, 2001 which fair value was $4,100.

   Most of the debt obligations approximate 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 has entered into an interest rate swap agreement to convert
variable rate debt to a fixed rate (see Note 11). The fair value of the swap at
December 31, 2001 which was determined using discounted cash

                                     F-13

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999

flow analysis based on current rates offered for similar issues of debt, is a
liability of approximately $400 and is recorded in other liabilities and
accumulated other comprehensive loss, net of tax, in the accompanying
consolidated balance sheets and consolidated statements of shareholder' equity,
respectively.

  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.

5.  Accounts Receivable

<TABLE>
<CAPTION>
                                                2001     2000
                                               -------  -------
               <S>                             <C>      <C>
               Trade receivables.............. $ 2,195  $ 3,662
               Contract receivables...........  15,183   14,035
               Allowance for doubtful accounts    (378)    (325)
                                               -------  -------
                                               $17,000  $17,372
                                               =======  =======
</TABLE>

   Balances billed, but not paid by customers under retainage provisions in
contracts, amounted to approximately $1,300 and $515 at December 31, 2001 and
2000, respectively. Receivables on contracts in progress are generally
collected within twelve months.

   Provision for doubtful accounts was approximately $154, $311 and $258 during
2001, 2000 and 1999, respectively.

6.  Costs and Estimated Earnings on Uncompleted Contracts

<TABLE>
<CAPTION>
                                                                              2001      2000
                                                                            --------  --------
<S>                                                                         <C>       <C>
Costs incurred on uncompleted contracts.................................... $ 19,163  $ 12,933
Estimated earnings.........................................................    2,131     2,581
                                                                            --------  --------
                                                                              21,294    15,514
Less billings to date......................................................  (18,317)  (11,590)
                                                                            --------  --------
                                                                            $  2,977  $  3,924
                                                                            ========  ========
Included in the accompanying consolidated balance sheets under the
  following captions:
Costs and estimated earnings in excess of billings on uncompleted contracts $  5,572  $  5,099
Billings in excess of costs and estimated earnings on uncompleted contracts   (2,595)   (1,175)
                                                                            --------  --------
                                                                            $  2,977  $  3,924
                                                                            ========  ========
</TABLE>

                                     F-14

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


7.  Inventories

<TABLE>
<CAPTION>
                                                  2001   2000
                                                 ------ ------
                  <S>                            <C>    <C>
                  Raw material and subassemblies $1,279 $1,450
                  Finished goods................    156    734
                  Parts for resale..............    722    189
                                                 ------ ------
                                                 $2,157 $2,373
                                                 ====== ======
</TABLE>

8.  Property and Equipment

<TABLE>
<CAPTION>
                                               2001     2000
                                              -------  -------
                <S>                           <C>      <C>
                Land......................... $ 1,597  $ 1,597
                Building and improvements....   5,636    5,747
                Machinery and equipment......  10,151    9,712
                                              -------  -------
                                               17,384   17,056
                Less accumulated depreciation  (4,248)  (3,469)
                                              -------  -------
                                              $13,136  $13,587
                                              =======  =======
</TABLE>

   Depreciation expense was $1,242, $1,181 and $317 for 2001, 2000 and 1999,
respectively.

9.  Goodwill and Other Intangible Assets

<TABLE>
<CAPTION>
                                               2001     2000
                                              -------  -------
                <S>                           <C>      <C>
                Goodwill..................... $ 9,456  $ 9,456
                Less accumulated amortization  (1,321)    (977)
                                              -------  -------
                                              $ 8,135  $ 8,479
                                              =======  =======
                Non-compete agreements....... $   900  $   700
                Patents......................   1,346    1,346
                Trade name and workforce.....   3,150    3,150
                                              -------  -------
                                                5,396    5,196
                Less accumulated amortization  (1,537)  (1,047)
                                              -------  -------
                                              $ 3,859  $ 4,149
                                              =======  =======
</TABLE>

   Amortization expense was $834, $771 and $357 for 2001, 2000 and 1999,
respectively.

10.  Accounts Payable and Accrued Expenses

<TABLE>
<CAPTION>
                                                  2001    2000
                                                 ------- -------
               <S>                               <C>     <C>
               Trade accounts payable........... $ 7,400 $ 7,003
               Compensation and related benefits   1,286   1,491
               Accrued interest.................     992     640
               Other accrued expenses...........   3,425   2,674
                                                 ------- -------
                                                 $13,103 $11,808
                                                 ======= =======
</TABLE>

                                     F-15

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


11.  Debt

<TABLE>
<CAPTION>
                                                       2001     2000
                                                      -------  -------
        <S>                                           <C>      <C>
        Bank credit facility......................... $17,500  $26,223
        Pennsylvania Industrial Development Authority     164      193
                                                      -------  -------
                                                       17,664   26,416
        Less current portion.........................  (2,826)  (3,776)
                                                      -------  -------
                                                      $14,838  $22,640
                                                      =======  =======
</TABLE>

   In December 1999, the Company obtained a bank credit facility aggregating
$33,000 consisting of $23,000 in term loans and a $10,000 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.

   At December 31, 2001, the revolving credit line, as amended, permits
borrowings of up to the lesser of 1) $8,000 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 revolving credit facility were $3,827 and $5,027 at
December 31, 2001 and 2000, respectively. Amounts borrowed were $4,173 and
$4,973 at December 31, 2001 and December 31, 2000, respectively. There were no
amounts outstanding under letters of credit at December 31, 2001 and 2000. The
line of credit matures in 2003. The weighted average interest rates were 6.90%
and 10.02% at December 31, 2001 and 2000, respectively.

   The term loans consist of a $14,500 and an $8,500 term facility with
quarterly principal installments on the $14,500 facility of $438 commencing
February 28, 2000, increasing to $700 in 2002, $875 in 2003 and $1,175 in 2004
with the final payment due November 2004; and payments against the $8,500
facility of $1,375 in February 2005 and $952 in May 2005. The amount borrowed
under the term loans was $13,327 and $21,250 at December 31, 2001 and 2000,
respectively. The weighted average interest rates were 6.5% and 9.9% at
December 31, 2001 and 2000, respectively. In connection with issuance of common
stock and the exercise of warrants discussed in Note 13, $4,000 of the $8,500
term facility were prepaid.

   In March 2002, the credit facility as discussed above was amended effective
December 31, 2001, reducing minimum coverage under several financial covenants
as of December 31, 2001. The Company would not have been in compliance with the
financial covenants had the amendment not been made. The credit facility was
also amended in August 2001 and effective June 30, 2001, by reducing the
minimum coverage under several financial covenants as of June 30, 2001 and
September 30, 2001, raising interest rates by 1%, reducing the amount available
under the revolving line of credit to $8,000 and changing the maturity of the
revolving line of credit to April 2003 from December 2004. In consideration of
this amendment, additional fees were paid to the bank group. The Company would
not have been in compliance with the financial covenants had the amendment not
been made.

   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
$9,000. Additionally, the Company was required to make additional prepayments
against the term loans of $500 by June 30, 2001 and September 30, 2001 and
$1,000 by December 31, 2001. In consideration for this amendment, additional
fees were paid to the bank group. The Company agreed to pledge its Peerless
Manufacturing Company common stock

                                     F-16

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999

as additional collateral and proceeds from the sale thereof were 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.

   Funds used to purchase the Peerless common stock were obtained with debt
financing from Green Diamond Oil Corp. at an annual rate of 10%. Such debt was
paid during 2000. In connection with this financing, 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.

   During 2001, the Company had in place a four year interest rate swap
agreement ("Swap Agreement") to manage its variable interest rate exposure
maturing in 2002. Under the terms of the Swap Agreement, the Company exchanges
at specified intervals, the difference between fixed and variable interest
amounts based on a notional principal amount of $9,750 and $10,625 at December
31, 2001 and 2000, respectively. The Swap Agreement effectively fixes the
interest rate on $9,750 of the debt under the credit facility at 6.96% plus the
applicable spread for the duration of the interest rate swap. The difference
between the amount of interest to be paid and the amount of interest to be
received under the Swap Agreement due to changing interest rates is charged or
credited to interest expense over the life of the agreement. As of December 31,
2001, $11,000 in debt was outstanding under the credit facility, of which
interest on $9,750 is essentially fixed by the Swap Agreement. The Swap
Agreement expires in November 2002.

   Maturities of all long-term debt over the next five years are estimated as
follows:

<TABLE>
<CAPTION>
                            December 31, Maturities
                            ------------ ----------
                            <S>          <C>
                                2002....   $2,826
                                2003....    7,699
                                2004....    4,726
                                2005....    2,353
                                2006....       60
</TABLE>

   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

   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 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
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 and amendments to the Bank Credit Facility. In
connection with this agreement, accrued interest on the subordinated notes
totaling $963 and $360 at December 31, 2001 and 2000, respectively,

                                     F-17

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999

was not paid. 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 at the date of issuance 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, $288 and $20 for the years
ended December 31, 2001, 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 May 2001, subordinated debt notes were amended revoking a March amendment
that had granted 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 $2.00 per share which was fair market value at the time of
the amendment.

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.

   The status of the Company's stock option plan is as follows:

<TABLE>
<CAPTION>
                                          2001                2000                1999
                                   ------------------- ------------------- -------------------
                                              Weighted            Weighted            Weighted
                                              Average             Average             Average
                                              Exercise            Exercise            Exercise
                                    Shares     Price    Shares     Price    Shares     Price
                                   ---------  -------- ---------  -------- ---------  --------
<S>                                <C>        <C>      <C>        <C>      <C>        <C>
Outstanding, beginning of year....   154,400   $2.89     268,120   $4.56     312,320   $4.46
Granted...........................    35,000    2.01     130,000    2.56          --      --
Forfeited.........................    (6,900)   3.88    (243,720)   4.55     (44,200)   3.88
                                   ---------           ---------           ---------
Outstanding, end of year..........   182,500    2.68     154,400    2.89     268,120    4.56
                                   =========           =========           =========
Options exercisable at year end...    53,000              23,640              86,190
                                   =========           =========           =========
Available for grant at end of year 1,317,500           1,345,600           1,231,880
                                   =========           =========           =========
</TABLE>

   For the years ended December 31, 2001, 2000 and 1999, no compensation
expense was recognized under stock-based employee compensation plans.

   The range of exercise prices on shares outstanding as of December 31, 2001
was as follows:

<TABLE>
<CAPTION>
                                  Outstanding            Exerciserable
                         ------------------------------ ---------------
                                                               Weighted
                                            Remaining          Average
           Range of              Exercise  Contractual         Exercise
         Exercise Prices Shares   Price   Life in Years Shares  Price
         --------------- ------- -------- ------------- ------ --------
         <S>             <C>     <C>      <C>           <C>    <C>
          $2.01 - 2.63.. 150,000  $2.42      8 - 10     27,000  $2.47
          $3.88.........  32,500  $3.88        6        26,000  $3.88
</TABLE>


                                     F-18

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999

   The following table compares 2001, 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:

<TABLE>
<CAPTION>
                                            2001     2000     1999
                                           -------  -------  -------
          <S>                              <C>      <C>      <C>
          Net loss
             As reported.................. $  (264) $  (690) $  (943)
             Pro forma under SFAS No. 123.  (1,039)  (1,191)  (2,108)
          Basic and diluted loss per share
             As reported..................   (0.03)   (0.08)   (0.11)
             Pro forma under SFAS No.123..   (0.13)   (0.15)   (0.25)
</TABLE>

   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 2001, 2000 and 1999 is 10 years. The risk free interest rate
applicable for 2001 is 4.5% and 6.5% in 2000 and 1999. The expected volatility
of the Company's stock used in 2001, 2000 and 1999 was .70, .75 and .75,
respectively. The expected dividend yield used in 2001, 2000 and 1999 is 0%.

   The weighted average fair values at the date of grant for options and
warrants granted during 2001, 2000 and 1999 were $2.01, $1.79 and $2.45,
respectively.

   The Company may grant the right to purchase restricted shares of its common
stock. Such shares are subject to restriction on transfer under Federal
securities laws. During October 2001, the Company granted options to Jason
Louis DeZwirek, a related party and a member of the Board of Directors, to
purchase up to 25,000 shares of the Company's common stock, exercisable at any
time between April 5, 2002 and October 5, 2011, inclusive, at a price of $2.01,
fair market value at date of grant.

Employee Stock Purchase Plan

   The Company maintains 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 first business day or the last business day of the offering period. The
aggregate number of whole shares of common stock allowed to be purchased under
the option cannot exceed 10% of the employee's base compensation. There were
250,000 shares made available for purchase under the plan. During 2001 and
2000, the company issued 31,500 and 16,401 shares, respectively, under this
plan at amounts that approximated fair value. No shares were issued under the
plan during 1999.

Warrants to Purchase Common Stock

   In December 2001, warrants to purchase 1,000,000 shares of common stock at
$2.25 per share were exercised; 800,000 shares by the Green Diamond Oil
Corporation and 200,000 shares by two unrelated subordinated debt lenders.
Gross proceeds of $2,250 were received from the exercise of the warrants and
were used to pay down the bank credit facility.

   On December 31, 2001, the Company issued 706,668 shares of common stock at a
price of $3.00 per share, and issued detachable stock warrants to purchase
353,334 shares of common stock at an initial exercise price of

                                     F-19

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999

$3.60 per share to a group of accredited investors ("the investors"). Gross
proceeds of $2,120 were received from the issuance of these shares and were
used to pay down the bank credit facility. The right to purchase shares under
the warrants vest immediately upon the issuance of the warrants, and the
warrants contain various features to protect the investors in the event of a
merger or consolidation and from dilution in the event of a stock issuance at
prices below the exercise price. The warrants also require the Company to pay
the investors a fee for each full or partial month that the Company fails to
use its best efforts to prepare and file with the SEC a registration statement
within 90 days of the issuance of such warrants and cause the registration
statement to become effective within 150 days of the issuance. Management of
the Company valued these warrants at $240 which is included in other
liabilities in the accompanying consolidated financial statements.

   In connection with this transaction, the Company has an obligation to issue
additional shares (based on a formula) to the investors if the Company's
earnings before interest, taxes, depreciation and amortization ("EBITDA"), as
defined, is less than $7,800 for the fiscal year ending December 31, 2002, at
no additional cost to the investors. However, the Company is not obligated to
issue in excess of 1,772,576 shares in the aggregate unless shareholder
approval is obtained. Management of the Company valued these EBITDA shares at
$442, which is included as contingent stock warrants in the accompanying
consolidated financial statements.

   In connection with the issuance of the common shares and warrants to the
investors, the Company estimated $440 of issuance costs and issued warrants to
purchase 14,000 shares of common stock at an initial exercise price of $3.00.
These costs were accrued at December 31, 2001. The fair value of the warrants,
valued by management of the Company at $18, has been included as issuance costs
and recorded as a liability in other liabilities in the accompanying
consolidated financial statements. The total issuance costs including the fair
value of the warrants to purchase 14,000 shares of common stock were allocated
to common stock, detachable stock warrants and contingent stock warrants based
on their respective fair market values.

  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.

  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 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 (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 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

                                     F-20

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999

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, warrants were issued to the Chief Executive Officer to
purchase 500,000 shares of the Company's common stock at an exercise price of
$3.00 per share. Prior to 1999, 1,250,000 shares had been issued to the Chief
Executive Officer, at exercise prices ranging from $1.625 to $2.75 per share.
In August 2000, warrants were issued to the Chief Executive Officer to purchase
500,000 shares at an exercise price of $2.06 per share. The warrants expire 10
years from the date of issuance.

   In December 2001, the Green Diamond Oil Corporation exercised warrants to
purchase 800,000 shares at a price of $2.25 per share as previously disclosed.

  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 $2.00 per share for the first 250,000 shares and $3.00 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 $2.00 per share for the first 450,000 shares and
$3.00 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

   Stock options granted during the years ended December 31, 2001 and 2000
summarized in the Stock Option Plan disclosures within this Note 13 is as
follows:

   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 (fair market
value at the date of grant). 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 (fair market
value at the date of grant). 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 (fair market value at the date of grant). The options became exercisable
on March 18, 2001 and extend through September 18, 2010.

   In October 2001, the Company granted options to a member of the Board of
Directors and a key employee to purchase 10,000 and 25,000 shares,
respectively, at $2.01 per share (fair market value at date of grant). The
options become exercisable in April 2002 and extend through October 2011.

   In October 2001, the Company granted to a member of the Board of Directors
and Secretary of the Company, unregistered options to purchase up to 25,000
common shares, which are exercisable between April 2002 and October 2011 at a
price of $2.01 (fair market value at date of grant), the closing price of
CECO's common stock on date of issuance.

                                     F-21

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


  Treasury Stock

   During 2000, the Company purchased 566,000 shares of its common stock as
treasury shares at a total cost of $1,200 from the former president of CFI and
his family in connection with his resignation that was effective June 30, 2000.
Also in 2000, 60,000 shares of common stock were acquired for treasury at a
total cost of $134.

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
retiring before January 1, 1990. The plan allows retirees who have attained the
age of 65 to elect the type of coverage desired.

<TABLE>
<CAPTION>
                                                                  Pension Benefits Other Benefits
                                                                  ---------------  -------------
                                                                   2001     2000    2001   2000
                                                                  -------  ------  -----   -----
<S>                                                               <C>      <C>     <C>     <C>
Change in projected benefit obligation:
Projected benefit obligation at beginning of year................ $ 3,744  $3,744  $ 650   $ 730
Service cost.....................................................     121     104     --      --
Interest cost....................................................     252     253     43      45
Actuarial gain/loss..............................................     (56)   (103)    17     (27)
Amendments.......................................................      --      --     --      --
Benefits paid....................................................    (176)   (254)   (91)    (98)
                                                                  -------  ------  -----   -----
Projected benefit obligation at end of year......................   3,885   3,744    619     650
                                                                  -------  ------  -----   -----
Change in plan assets:
Fair value of plan assets at beginning of year...................   3,293   3,700     --      --
Actual loss on plan assets.......................................    (383)   (153)    --      --
Employees contribution...........................................      --      --     91      98
Benefits paid....................................................    (176)   (254)   (91)    (98)
                                                                  -------  ------  -----   -----
Fair value of plan assets at end of year.........................   2,734   3,293     --      --
                                                                  -------  ------  -----   -----
Funded status....................................................  (1,151)   (451)  (619)   (650)
Unrecognized prior service cost..................................      58      64     --      --
Unrecognized net actuarial loss (gain)...........................   1,008     409    (10)    (27)
                                                                  -------  ------  -----   -----
Prepaid (accrued) benefit cost................................... $   (85) $   22  $(629)  $(677)
                                                                  =======  ======  =====   =====
Amounts recognized in the consolidated balance sheets consist of:
Prepaid/(accrued) benefit cost................................... $   (85) $   22  $  --   $  --
Accrued benefit liability........................................    (746)   (121)  (629)   (677)
Intangible asset included in deferred charges and other assets...      58      64     --      --
Accumulated other comprehensive income, net......................     688      57     --      --
                                                                  -------  ------  -----   -----
Net amount recognized............................................ $   (85) $   22  $(629)  $(677)
                                                                  =======  ======  =====   =====
Weighted-average assumptions at December 31:
Discount rate....................................................     7.0%    7.0%   7.0%    7.0%
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-22

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


   The details of net periodic benefit cost for pension benefits included in
the accompanying consolidated statements of operations for the years ended
December 31, 2001, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                             2001   2000   1999
                                             -----  -----  -----
              <S>                            <C>    <C>    <C>
              Service cost.................. $ 121  $ 104  $ 109
              Interest cost.................   252    253    249
              Expected return on plan assets  (272)  (308)  (245)
              Net amortization and deferral.     6    (30)   (18)
                                             -----  -----  -----
              Net periodic benefit cost..... $ 107  $  19  $  95
                                             =====  =====  =====
</TABLE>

   The net periodic benefit cost (representing interest cost only) for the
post-retirement plan included in the accompanying consolidated statements of
operations was $43, $45 and $51 for the years ended December 31, 2001, 2000 and
1999, respectively.

   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 K&B's 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 consolidated financial statements.

   Amounts charged to pension expense under the above plans including the
multi-employer plans totaled $2,644, $2,262 and $107 for 2001, 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 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 deferrals of up to 15%. K&B provides matching
contributions of 25% of the first 5% of employee contributions. The Company
made matching contributions and discretionary contributions of $203, $386 and
$31 during 2001, 2000 and 1999, respectively.

   CFI has a 401(k) Savings and Retirement Plan which covers substantially all
of CFI's 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, 2001, 2000 and 1999
was $47, $63 and $72, respectively.


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:

<TABLE>
<CAPTION>
                            December 31, Commitment
                            ------------ ----------
                            <S>          <C>
                                2002....    $567
                                2003....     363
                                2004....     262
                                2005....     193
                                2006....      80
</TABLE>

                                     F-23

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


   The Company leases a facility from a related party, the former President and
chief operating officer of Busch who is the beneficial owner of the property,
with an annual base rental of $88 expiring July, 2002.

   Total rent expense under all operating leases for 2001, 2000 and 1999 was
$470, $382 and $340, 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 paid at the closing date, the agreement requires annual payments of $200
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 in 2002 of $450 for consulting services for a two-year
period. This payment is being accrued over the term of service.

Employment Agreements

   In December 1999, Group and K&B entered into five-year employment agreements
with three of the former owners of K&B. In 2001, these agreements were amended
by extending the term one additional year. The agreements provide for 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 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 years
ended December 31:

<TABLE>
<CAPTION>
                                     2001  2000   1999
                                     ----  -----  ----
                         <S>         <C>   <C>    <C>
                         Current:
                            Federal. $ 67  $ 216  $128
                            State...  (39)    67    68
                                     ----  -----  ----
                                       28    283   196
                                     ----  -----  ----
                         Deferred:
                            Federal.  106   (449)  (10)
                            State...   (3)  (137)  (34)
                                     ----  -----  ----
                                      103   (586)  (44)
                                     ----  -----  ----
                                     $131  $(303) $152
                                     ====  =====  ====
</TABLE>

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

<TABLE>
<CAPTION>
                                                             2001  2000   1999
                                                             ----  -----  ----
<S>                                                          <C>   <C>    <C>
Tax benefit at statutory rate............................... $(48) $(351) $(95)
Increase (decrease) in tax resulting from:
   State income tax, net of federal benefit.................  (28)   (46)   22
   Permanent differences, principally goodwill and interest.  157     94   255
Over/under accrual of prior years' taxes....................   50     (0)   18
Other.......................................................   (0)    (0)  (48)
                                                             ----  -----  ----
                                                             $131  $(303) $152
                                                             ====  =====  ====
</TABLE>

                                     F-24

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


   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>
                                                                                      2001     2000
                                                                                     -------  -------
<S>                                                                                  <C>      <C>
Current deferred tax assets (liabilities) attributable to:
   Accrued expenses................................................................. $   746  $   609
   Deferred state taxes.............................................................     292      290
   Reserves on assets...............................................................     167      224
   Inventory........................................................................    (925)    (942)
                                                                                     -------  -------
Current deferred tax asset (included in prepaid expenses and other current assets in
  the consolidated balance sheets)..................................................     280      181
                                                                                     -------  -------
Noncurrent deferred tax assets (liabilities) attributable to:
   Depreciation.....................................................................  (3,856)  (3,913)
   Goodwill and intangibles.........................................................  (1,262)  (1,336)
   Other liabilities................................................................     268      619
   Non-compete agreement............................................................     280      222
   Minimum pension liability........................................................     275       --
   Foreign interest accrual.........................................................      --      155
   Federal and State net operating loss carry forwards..............................     143       84
   Interest rate swap...............................................................     183       --
   AMT credit carry forward.........................................................     111       --
   Other............................................................................    (207)    (153)
                                                                                     -------  -------
Net noncurrent deferred income tax liability........................................  (4,065)  (4,322)
                                                                                     -------  -------
Net deferred tax liability.......................................................... $(3,785) $(4,141)
                                                                                     =======  =======
</TABLE>

   The Company has Federal net operating loss carry forwards of $202 at
December 31, 2001 to be utilized in future years, which begin to expire in
2019. Additionally, the Company has State net operating loss carry forwards of
$2,971 and $3,644 at December 31, 2001 and 2000, respectively, which begin to
expire in 2001.

   The Company files a consolidated Federal income tax return.

17.  Related Party Transactions

   During 2001, the Company reimbursed Green Diamond Oil Corp. $5 per month for
use of the space and other office expenses of the Company's Toronto office. In
2001, 2000 and 1999, reimbursement were $60, $36 and $36, respectively. During
2001, the Company paid fees of $139 to Green Diamond for management consulting
services. These services were provided by Phillip DeZwirek, the Chief Executive
Officer and Chairman of the Board of the Company, through Green Diamond. During
2001, the Company advanced $337 to Green Diamond, which was repaid in March
2002.

18.  Backlog of Uncompleted Contracts from Continuing Operations

   The Company's backlog of uncompleted contracts from continuing operations
was $18,628 and $12,119, at December 31, 2001 and 2000, respectively.

                                     F-25

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


19.  Segment and Related Information

   The Company has two reportable segments: Systems and Media. The Systems
segment consists of Kirk & Blum, kbd/Technic, Busch and CECO Abatement. Kirk &
Blum focuses on designing, building, and installing systems that remove
airborne contaminants from industrial facilities, as well as equipment that
controls emissions from such facilities. Kbd/Technic is a specialty-engineering
firm concentrating in industrial ventilation and dust and fume control. CECO
Abatement engineers, builds and installs thermal oxidation control systems to
eliminate fumes and volatile organic compounds resulting from large-scale
industrial processes. Busch engages in the business of marketing, selling,
designing and assembling ventilation, environmental and process-related
products.

   The Media segment consists of CECO Filters, which manufactures and sells
industrial air filters known as fiber bed mist eliminators used to improve air
quality.

   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 of
                                                                 Corporate Inter-Segment     Total
                                                Systems  Media   and Other    Activity    Consolidated
                                                ------- -------  --------- -------------- ------------
<S>                                             <C>     <C>      <C>       <C>            <C>
2001
 Net sales..................................... $85,091 $ 7,863               $(1,960)      $90,994
 Depreciation and amortization.................   1,385     213   $   722                     2,320
     Operating income (loss)...................   4,701     642    (2,350)         12         3,005
 Net costs and estimated earnings in excess of
   billings on uncompleted contracts...........   2,740     237                               2,977
 Total assets, net of inter-segment receivables  37,158   6,502    17,552      (8,182)       53,030
 Capital expenditures..........................     723      62         8                       793
2000
 Net sales..................................... $84,355 $ 6,481               $(1,019)      $89,817
 Depreciation and amortization.................   1,298     227   $   629                     2,154
     Operating income (loss)...................   4,299    (345)   (1,968)         24         2,010
 Net costs and estimated earnings in excess of
   billings on uncompleted contracts...........   3,924                                       3,924
 Total assets, net of inter-segment receivables  42,745  15,497     3,961      (7,249)       54,954
 Capital expenditures..........................     458      39        63                       560
1999
 Net sales..................................... $15,134 $ 7,717   $    49     $  (486)      $22,414
 Depreciation and amortization.................     358     220       151                       729
     Operating income (loss)...................     274     360      (192)                      442
 Net costs and estimated earnings in excess of
   billings on uncompleted contracts...........   2,492                                       2,492
 Total assets, net of inter-segment receivables  41,866  14,372     5,720      (5,510)       56,448
 Capital expenditures..........................      12     153       275                       440
</TABLE>

                                     F-26

<PAGE>

                           CECO ENVIRONMENTAL CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

             For the Years Ended December 31, 2001, 2000 and 1999


20.  Quarterly Financial Data (unaudited)

   The following quarterly financial data are unaudited, but in the opinion of
management include all necessary adjustments for a fair presentation of the
interim results, which are subject to significant seasonal variations.

<TABLE>
<CAPTION>
                                             First   Second    Third   Fourth
                                            Quarter  Quarter  Quarter  Quarter   Total
                                            -------  -------  -------  -------  -------
<S>                                         <C>      <C>      <C>      <C>      <C>
Year ended December 31, 2001
Revenues:
Systems.................................... $18,769  $21,913  $22,486  $21,923  $85,091
Media......................................   1,069    1,324    1,882    3,588    7,863
Intercompany revenue.......................     (70)    (163)     (51)  (1,676)  (1,960)
                                            -------  -------  -------  -------  -------
Total Revenues.............................  19,768   23,074   24,317   23,835   90,994
Operating profit:
Systems(1)(3)..............................     646      891    1,463    1,700    4,700
Media(2)...................................     126     (227)     395      349      643
Corporate and other........................    (489)    (535)    (555)    (759)  (2,338)
                                            -------  -------  -------  -------  -------
Income from operations.....................     283      129    1,303    1,290    3,005
Net income (loss)..........................    (340)    (117)     190        3     (264)
Basic earnings (loss) per share............   (0.04)   (0.01)    0.02     0.00    (0.03)
Diluted earnings (loss) per share..........   (0.04)   (0.01)    0.02     0.00    (0.03)

Year ended December 31, 2000
Revenues:
Systems.................................... $22,394  $20,805  $21,079  $20,076  $84,354
Media......................................   1,232    1,608    1,506    2,135    6,481
Intercompany revenues......................     (72)    (385)    (194)    (367)  (1,018)
                                            -------  -------  -------  -------  -------
Total revenues.............................  23,554   22,028   22,391   21,844   89,817
Operating profit:
Systems(4).................................   1,219    1,092    1,277      740    4,328
Media......................................    (101)    (369)    (446)     572     (344)
Corporate and other........................    (360)    (539)    (390)    (685)  (1,974)
                                            -------  -------  -------  -------  -------
Income from operations.....................     758      184      441      627    2,010
                                            -------  -------  -------  -------  -------
Net income (loss)..........................      75     (183)    (224)    (358)    (690)
Basic and diluted earnings (loss) per share    0.01    (0.02)   (0.03)   (0.04)   (0.08)
</TABLE>
- --------
(1) Includes a $200 reversal of a reserve in the first quarter held in
    connection with a customer in bankruptcy.
(2) Includes a $170 reversal of a reserve in the first quarter held in
    connection with an operating division discontinued in 1999.
(3) Reflects a $600 loss during the third quarter and a $650 loss during the
    fourth quarter related to expansion into a new product line during the
    second quarter which was abandoned during the third quarter.
(4) Reflects a $600 charge established for a potential loss on a contract
    commenced in the fourth quarter.

                                     F-27

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>3
<FILENAME>dex22.txt
<DESCRIPTION>CERTIFICATE OF OWNERSHIP
<TEXT>
<PAGE>

                                                                     Exhibit 2.2

                       CERTIFICATE OF OWNERSHIP AND MERGER
                                     MERGING
                            CECO ENVIRONMENTAL CORP.
                                      INTO
                            CECO ENVIRONMENTAL CORP.

                                  * * * * * * *

     CECO ENVIRONMENTAL CORP., a corporation organized and existing under the
laws of New York,

DOES HEREBY CERTIFY:

     FIRST: That this corporation was incorporated on the 7th day of April,
1966, pursuant to the Business Corporation Laws of the State of New York, the
provisions of which permit the merger of a corporation of another state and a
corporation organized and existing under the laws of said state.

     SECOND: That this corporation owns all of the outstanding shares of the
stock of CECO Environmental Corp. a corporation incorporated on the / 10th / day
                                                                    --------
of January, 2002, pursuant to the General Corporation Laws of the State of
Delaware.

     THIRD: That the directors of CECO Environmental Corp., a New York
corporation, by the following resolutions of its Board of Directors, duly
adopted by the unanimous written consent of its members, filed with the minutes
of the Board on the 5th day of September, 2001, determined to merge itself into
said CECO Environmental Corp., a Delaware corporation:

          NOW, THEREFORE, BE IT RESOLVED, that the Corporation be and
     hereby is authorized to form a wholly-owned subsidiary in the State of
     Delaware with the name of CECO Environmental Corp. ("Subsidiary");

          FURTHER RESOLVED, that the Corporation merge itself into
     Subsidiary, which assumes all of the obligations of the Corporation.

          FURTHER RESOLVED, that the merger shall be effective upon filing
     with the Secretary of State of Delaware.

          FURTHER RESOLVED, that the terms and conditions of the merger are
     as follows:

          (a) Each share of common stock of the Corporation which shall be
          outstanding on the effective date of the merger, and all rights
          in respect thereof shall forthwith be automatically converted
          into shares of Subsidiary on a one-for-one basis.

                                     1

<PAGE>

          (b) Each share of common stock of the surviving corporation which
          shall be outstanding on the effective date of the merger, and all
          rights in respect thereof shall forthwith be cancelled and no
          consideration shall be payable with respect to any such shares.

          FURTHER RESOLVED, that upon approval by the shareholders of the
     merger, the Chairman of the Board, Chief Executive Officer and/or
     President of this Corporation be and he or she is each hereby directed
     to make and execute a Certificate of Ownership and Merger setting
     forth a copy of the resolutions to merge itself into said Subsidiary,
     and the date of adoption thereof, and to cause the same to be filed
     with the Department of State of Delaware and to do all acts and things
     whatsoever whether within or without the State of Delaware, which may
     be in any way necessary or proper to effect said merger.

     FOURTH: That the proposed merger has been adopted, approved, certified,
executed and acknowledged by CECO Environmental Corp. in accordance with the
laws of the State of New York, under which the corporation was organized.

     FIFTH: Anything herein or elsewhere to the contrary notwithstanding, this
merger may be amended or terminated and abandoned by the Board of Directors of
CECO Environmental Corp. at any time prior to the time that this merger filed
with the Secretary of State becomes effective.

     IN WITNESS WHEREOF, said CECO Environmental Corp. has caused this
Certificate to be signed by Phillip DeZwirek, its Chief Executive Officer, this
4th day of January, 2002.

                                          CECO ENVIRONMENTAL CORP., a New
                                          York corporation


                                          By:       /s/ Phillip DeZwirek
                                               --------------------------------
                                               Phillip DeZwirek
                                               Chief Executive Officer

                                             2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.3
<SEQUENCE>4
<FILENAME>dex23.txt
<DESCRIPTION>CERTIFICATE OF MERGER
<TEXT>
<PAGE>

                                                                     Exhibit 2.3

                              CERTIFICATE OF MERGER
                                       OF
                            CECO ENVIRONMENTAL CORP.
                                      INTO
                            CECO ENVIRONMENTAL CORP.
                UNDER SECTION 907 OF THE BUSINESS CORPORATION LAW

     1. CECO Environmental Corp. (f/k/a API Enterprises, Inc., original name:
Alarm Products International, Inc.) a corporation of the State of New York
("CECO-New York") owns all of the outstanding shares of each class of CECO
Environmental Corp., a corporation of the State of Delaware ("CECO-Delaware").

     2. As to each corporation to be merged, the designation and number of
outstanding shares of each class and the number of such shares, if any, owned by
the surviving corporation are as follows:

                        Name of Corporation to be Merged
                        --------------------------------

CECO Environmental Corp., a New York corporation

                  Designation and Number of Outstanding Shares
                  --------------------------------------------

7,907,419 Common Shares Issued

                       Number of Shares Owned by Survivor
                       ----------------------------------

None. Survivor is the subsidiary.

     3. Each of the issued and outstanding shares of the CECO-New York, are
converted into, and exchangeable for, one issued and outstanding share of
CECO-Delaware.

     4. (a) The Certificate of Incorporation of CECO-New York was filed in the
Department of State on the 7th day of April, 1966.

     (b) CECO-Delaware was incorporated under the laws of the State of Delaware
on the /10th/ day of January, 2002, no application has been filed for authority
       ------
to do business in the State of New York.

     (c) The merger is permitted by the laws of the state of incorporation of
each foreign corporation constituent to this merger and is in compliance
therewith.

                                       1

<PAGE>

     5. The surviving corporation is CECO-Delaware, a corporation of the state
of Delaware, incorporated on the /10th/ day of January, 2002, no application has
                                 ------
been filed for authority to do business in the State of New York and it will not
do business in New York until an application for authority shall have been filed
by the Department of State. The merger is permitted by the laws of the state of
its incorporation and is in compliance therewith.

     6. CECO-Delaware agrees that it may be served with process in the State of
New York in any action or special proceeding for the enforcement of any
liability or obligation of any constituent corporation, previously amenable to
suit in the State of New York, and for the enforcement under the Business
Corporation Law, of the right of shareholders of any constituent domestic
corporation to receive payment for their shares against the surviving
corporation; and it designates the Secretary of State of New York as its agent
upon whom process may be served in the manner set forth in paragraph (b) of
Section 306 of the Business Corporation Law, in any action or special
proceeding. The post office address to which the Secretary of State shall mail a
copy of any process against it served upon him is c/o C T Corporation System,
111 Eighth Avenue, New York, N.Y. 10011. Such post office address shall
supersede any prior address designated as the address to which process shall be
mailed.

     7. CECO-Delaware agrees that, subject to the provisions of Section 623 of
the Business Corporation Law, it will promptly pay to the shareholders of each
constituent domestic corporation the amount, if any, to which they shall be
entitled under the provisions of the Business Corporation Law, relating to the
right of shareholders to receive payment for their shares.

     8. The merger has been approved by the shareholders of CECO-New York, in
accordance with paragraph (a) of Section 903 of the Business Corporation Law.

     9. The merger was approved, if necessary, in accordance with the laws of
the state of incorporation of the surviving corporation.

     10. Each of the constituent domestic corporations hereby certifies that all
fees and taxes (including penalties and interest) administered by the Department
of Taxation and Finance of the State of New York which are now due and payable
by each constituent domestic corporation have been paid and that a cessation
franchise tax report (estimated or final) through the anticipated date of the
merger has been filed by each constituent domestic corporation. The said report,
if estimated, is subject to amendment.

     CECO-Delaware hereby agrees that it will within 30 days after the filing of
the certificate of merger file the cessation franchise tax report, if an
estimated report was previously filed, and promptly pay to the Department of
Taxation and Finance of the State of New York all fees and taxes (including
penalties and interest), if any, due to the Department of Taxation and Finance
by each constituent domestic corporation.

                                       2

<PAGE>

Dated: January /4th/, 2002
               -----

                                 CECO Environmental Corp.,
                                 a New York corporation

                                 By:       /s/ Phillip DeZwirek
                                       -----------------------------------------
                                       Phillip DeZwirek, Chief Executive Officer


                                 CECO Environmental Corp.,
                                 a Delaware corporation


                                 By:      /s/ Phillip DeZwirek
                                       -----------------------------------------
                                       Phillip DeZwirek, Chief Executive Officer

                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(I)
<SEQUENCE>5
<FILENAME>dex3i.txt
<DESCRIPTION>CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>


                                                                    Exhibit 3(i)

                          CERTIFICATE OF INCORPORATION
                                       OF
                            CECO ENVIRONMENTAL CORP.

                               * * * * * * * * * *

                                        I

     The name of the corporation is CECO Environmental Corp.

                                       II

     The address of the corporation's registered office in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle and the name of its registered agent at such address is The
Corporation Trust Company.

                                       III

     The business or purposes to be conducted or promoted is to engage in any
lawful act or activity for which corporations may be organized under the
Delaware General Corporation Law (the "DGCL").

                                       IV

     The total number of shares of stock which the corporation shall have
authority to issue is One Hundred Million Ten Thousand (100,010,000). The total
number of shares of Common Stock which the Corporation shall have authority to
issue is One Hundred Million (100,000,000) shares with a par value of $.01 per
share. The total number of shares of Preferred Stock which the Corporation shall
have the authority to issue is Ten Thousand (10,000) shares, with a par value of
$.01 per share.

     The Board of Directors is authorized, subject to limitations prescribed by
law and the above provisions of this Article FOURTH, to provide for the issuance
of shares of Preferred Stock in series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.

     The authority of the board with respect to each series shall include, but
not be limited to, determination of the following:

          (a) The number of shares constituting that series and the distinctive
     designation of that series;

                                       1

<PAGE>


          (b) The dividend rate on the shares of that series, whether dividends
     shall be cumulative, and, if so, from which date or dates, and the relative
     rights of priority, if any, of payment of dividends on shares of that
     series;

          (c) Whether that series shall have voting rights, in addition to the
     voting rights provided by law, and, if so, the terms of such voting rights;

          (d) Whether that series shall have conversion privileges, and, if so,
     the terms and conditions of such conversion, including provision for
     adjustment of the conversion rate in such events as the Board of Directors
     shall determine;

          (e) Whether or not the shares of that series shall be redeemable, and
     if so, the terms and conditions of such redemption, including the date or
     date upon or after which they shall be redeemable, and the amount per share
     payable in case of redemption, which amount may vary under different
     conditions and at different redemption dates;

          (f) Whether that series shall have a sinking fund for the redemption
     or purchase of shares of that series, and, if so, the terms and amount of
     such sinking fund;

          (g) The rights of the shares of that series in the event of voluntary
     or involuntary liquidation, dissolution or winding up of the corporation,
     and the relative rights of priority, if any, of payment of shares of that
     series; and

          (h) Any other relative rights, preferences and limitations of that
     series.

                                        V

     The  name and mailing address of the incorporator is as follows:

                 NAME                                 MAILING ADDRESS
                 ----                                 ---------------

        Cynthia M. Hendzel                   30 North LaSalle Street, Suite 2600
                                             Chicago, Illinois 60602

                                       VI

     The corporation is to have perpetual existence.

                                       VII

     In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to make, alter or repeal the
bylaws of the corporation.

                                       2

<PAGE>

                                      VIII

     Election of directors need not be by written ballot unless the bylaws of
the corporation shall so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the corporation.

                                       IX

     A.   Indemnification of Officers and Directors: The Corporation shall:
          -----------------------------------------

          (a) indemnify, to the fullest extent permitted by the DGCL, any
     person who was or is a party or is threatened to be made a party to
     any threatened, pending or completed action, suit or proceeding,
     whether civil, criminal, administrative or investigative (other than
     an action by or in the right of the Corporation) by reason of the fact
     that such person is or was a director or an officer of the
     Corporation, or is or was serving at the request of the Corporation as
     a director, officer, employee or agent of another corporation,
     partnership, joint venture, trust or other enterprise, or, if such
     person has previously been designated for indemnification by the
     resolution of the Board of Directors, an officer, employee or agent of
     the Corporation, against expenses (including attorneys' fees),
     judgments, fines and amounts paid in settlement actually and
     reasonably incurred by such person in connection with such action,
     suit or proceeding if such person acted in good faith and in a manner
     such person reasonably believed to be in or not opposed to the best
     interest of the Corporation, and, with respect to any criminal action
     or proceeding, had no reasonable cause to believe such person's
     conduct was unlawful. The termination of any action, suit or
     proceeding by judgment, order, settlement, conviction or upon a plea
     of no lo contendere or its equivalent, shall not, of itself, create a
     presumption that the person did not act in good faith and in a manner
     which such person reasonably believed to be in or not opposed to the
     best interests of the Corporation, and, with respect to any criminal
     action or proceeding, had reasonable cause to believe that such
     person's conduct was unlawful; and

          (b) indemnify any person who was or is a party or is threatened
     to be made a party to any threatened, pending or completed action or
     suit by or in the right of the Corporation to procure a judgment in
     its favor by reason of the fact that such person is or was a director
     or an officer, or is or was serving at the request of the Corporation
     as a director, officer, employee or agent of another corporation,
     joint venture, trust or other enterprise, or, if such person has
     previously been designated for indemnification by the resolution of
     the Board of Directors, an officer, employee or agent of the
     Corporation, against expenses (including attorneys' fees) actually and
     reasonably incurred by each person in connection with the defense or
     settlement of such action or suit if such person acted in good faith
     and in a manner such person reasonably believed to be in or not
     opposed to the best interests of the Corporation and except that no
     indemnification shall be made in respect of any claim, issue or

                                       3

<PAGE>

     matter as to which such person shall have been adjudged to be liable
     to the Corporation unless and only to the extent that the Court of
     Chancery or the court in which such action or suit was brought shall
     determine upon application that, despite the adjudication of liability
     but in view of all the circumstances of the case, such person is
     fairly and reasonably entitled to indemnity for such expenses which
     the Court of Chancery or such other court shall deem proper; and

          (c) indemnify any director, or, if such person has previously
     been designated for indemnification by the resolution of the Board of
     Directors, an officer, employee or agent against expenses (including
     attorneys' fees) actually and reasonably incurred by such person in
     connection therewith, to the extent that such director, officer,
     employee or agent of the Corporation has been successful on the merits
     or otherwise in defense of any action, suit or proceeding referred to
     in Article IX.A. (a) and (b), or in defense of any claim, issue or
     matter therein; and

          (d) make any indemnification under Article IX.A. (a) and (b)
     (unless ordered by a court) only as authorized in the specific case
     upon a determination that indemnification of the director, officer,
     employee or agent is proper in the circumstances because such
     director, officer, employee or agent has met the applicable standard
     of conduct set forth in Article IX.A. (a) and (b). Such determination
     shall be made (1) by the Board of Directors by a majority vote of a
     quorum consisting of directors who were not parties to such action,
     suit or proceeding, or (2) if such a quorum is not obtainable, or,
     even if obtainable a quorum of disinterested directors so directs, by
     independent legal counsel in a written opinion, or (3) by the
     stockholders of the Corporation; and

          (e) pay expenses incurred by a director or an officer in
     defending a civil or criminal action, suit or proceeding in advance of
     the final disposition of such action, suit or proceeding upon receipt
     of an undertaking by or on behalf of such director or officer to repay
     such amount if it shall ultimately be determined that such director or
     officer is not entitled to be indemnified by the Corporation as
     authorized in this Article IX. Notwithstanding the foregoing, the
     Corporation shall not be obligated to pay expenses incurred by a
     director or an officer with respect to any threatened, pending, or
     completed claim, suit or action, whether civil, criminal,
     administrative, investigative or otherwise ("Proceedings") initiated
     or brought voluntarily by a director or an officer and not by way of
     defense (other than Proceedings brought to establish or enforce a
     right to indemnification under the provisions of this Article IX
     unless a court of competent jurisdiction determines that each of the
     material assertions made by the director or officer in such proceeding
     were not made in good faith or were frivolous). The Corporation shall
     not be obligated to indemnify the director or officer for any amount
     paid in settlement of a Proceeding covered hereby without the prior
     written consent of the Corporation to such settlement; and

          (f) not deem the indemnification and advancement of expenses
     provided by, or granted pursuant to, the other subsections of this
     Article IX exclusive of any

                                       4

<PAGE>

     other rights to which those seeking indemnification or advancement of
     expenses may be entitled under any by-law, agreement, vote of
     stockholders or disinterested directors or otherwise, both as to
     action in such director's or officer's official capacity and as to
     action in another capacity while holding such office; and

          (g) have the right, authority and power to purchase and maintain
     insurance on behalf of any person who is or was a director, officer,
     employee or agent of the Corporation, or is or was serving at the
     request of the Corporation as a director, officer, employee or agent
     of another corporation, partnership, joint venture, trust or other
     enterprise against any liability asserted against such person and
     incurred by such person in any such capacity, or arising out of such
     person's status as such, whether or not the Corporation would have the
     power to indemnify such person against such liability under the
     provisions of this Article IX; and

          (h) deem the provisions of this Article IX to be a contract
     between the Corporation and each director, or appropriately designated
     officer, employee or agent who serves in such capacity at any time
     while this Article IX is in effect and any repeal or modification of
     this Article IX shall not affect any rights or obligations then
     existing with respect to any state of facts then or theretofore
     existing or any action, suit or proceeding theretofore or thereafter
     brought or threatened based in whole or in part upon such state of
     facts. The provisions of this Article IX not be deemed to be a
     contract between the Corporation and any directors, officers,
     employees or agents of any other Corporation (the "Second
     Corporation") which shall merge into or consolidate with this
     Corporation when this Corporation shall be the surviving or resulting
     Corporation, and any such directors, officers, employees or agents of
     the Second Corporation shall be indemnified to the extent required
     under the DGCL only at the discretion of the Board of Directors of
     this Corporation; and

          (i) continue the indemnification and advancement of expenses
     provided by, or granted pursuant to, this Article IX, unless otherwise
     provided when authorized or ratified, as to a person who has ceased to
     be a director, officer, employee or agent of the Corporation and such
     rights shall inure to the benefit of the heirs, executors and
     administrators of such a person.

     B. Elimination of Certain Liability of Directors: No director of the
        ---------------------------------------------
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, as the same exists or hereafter may be amended, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the DGCL is amended to authorize the further elimination or
limitation of liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by an amended DGCL. Any
repeal or modification of this Article IX by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.

                                       5

<PAGE>

                                        X

     Whenever a compromise or arrangement is proposed between the corporation
and its creditors or any class of them and/or between the corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the corporation under the provisions of
Section 291 of the DGCL or on the application of trustees in dissolution or of
any receiver or receivers appointed for the corporation under the provisions of
Section 279 of the DGCL order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of the
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the corporation, as the case may be,
and also on the corporation.

                                       XI

     The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.

     I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purposes of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 4th day of January, 2002.


                                                          /s/ Cynthia M. Hendzel
                                                    ----------------------------
                                                    Cynthia M. Hendzel

                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>6
<FILENAME>dex3ii.txt
<DESCRIPTION>BYLAWS
<TEXT>
<PAGE>

                                                                   Exhibit 3(ii)

                                     BY-LAWS

                                       OF

                            CECO ENVIRONMENTAL CORP.

                                    ARTICLE I
                                    ---------

                                     OFFICES
                                     -------

     The corporation shall continuously maintain in the State of Delaware a
registered office and a registered agent whose office is identical with such
registered office, and may have other offices within or without the state.

     The registered office of the corporation required by The General
Corporation Law to be maintained in the State of Delaware may be, but need not
be, identical with the principal place of business of the corporation, and the
address of the registered office may be changed from time to time by the Board
of Directors of the corporation. The Board of Directors shall also have the
power to appoint a new registered agent from time to time, and to terminate the
services of an incumbent registered agent.

                                   ARTICLE II
                                   ----------

                                  STOCKHOLDERS
                                  ------------

     SECTION 1. Annual Meeting. An annual meeting of the stockholders commencing
                --------------
with the year 2002, shall be held on the date fixed, from time to time, by the
directors, provided that each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting, for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting.

     SECTION 2. Special Meetings. Special meetings of all of the stockholders of
                ----------------
the Corporation, may be called only by the Board of Directors or by any officer
instructed by the Board of Directors to call the meeting. The business
transacted at any special meeting of the stockholders shall be limited to the
purposes stated in the notice for the meeting transmitted to stockholders.

     SECTION 3. Place Of Meeting. The Board of Directors may designate any
                ----------------
place, either within or without the State of Delaware, as a place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
If no designation is made, or if a special meeting be otherwise called, the
place of meeting shall be at the corporation's executive offices.

     SECTION 4. Notice Of Meetings. Written or printed notice stating the place,
                ------------------
date, and hour of the meeting, and in the case of a special meeting, the purpose
or purposes for which the

                                       1

<PAGE>

meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days, or in the case of a merger or consolidation not less than twenty (20)
days, before the date of the meeting.

     SECTION 5. Meeting Of All Stockholders. If all of the stockholders shall
                ---------------------------
meet at any time and place, either within or without the State of Delaware, and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any corporate action may be
taken.

     SECTION 6. Fixing Of Record Date. For the purpose of determining the
                ---------------------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend, or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of shares, or for the purpose of any other lawful action,
the Board of Directors of the corporation may fix in advance a record date which
shall not be more than sixty (60) days and not less than ten (10) days, before
the date of such meeting. If no record date is fixed, the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be the date on which notice of the meeting is mailed, and the
record date for the determination of stockholders for any other purpose shall be
the date on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting.

     SECTION 7. Voting Lists. The officer or agent having charge of the transfer
                ------------
books for shares of the corporation shall make at least ten (10) days before
such meeting, whichever is earlier, a complete list of the stockholders entitled
to vote at such meeting, arranged in alphabetical order, showing the address of
and the number of shares registered in the name of the stockholder, which list,
for a period of ten (10) days prior to such meeting, shall be kept on file at
the principal place of business of the corporation and shall be subject to
inspection by any stockholder, and to copying at the stockholder's expense, at
any time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and may be inspected by any
stockholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept in this State, shall be prima facie
evidence as to who are the stockholders entitled to examine such list or share
ledger or transfer book or to vote at any meeting of stockholders.

     SECTION 8. Quorum. The holders of a majority of the outstanding shares of
                ------
the corporation, present in person or represented by proxy, shall constitute a
quorum at any meeting of stockholders; provided that if less than a majority of
the outstanding shares are represented at said meeting, a majority of the shares
so represented may adjourn the meeting at any time without further notice. If a
quorum is present, the affirmative vote of the majority of the shares
represented at the meeting shall be the act of the stockholders, unless the vote
of a greater number or voting by classes is required by statute or the
Certificate of Incorporation. At any adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the original meeting. Withdrawal of stockholders from any meeting shall not
cause failure of a duly constituted quorum at the meeting.

                                       2

<PAGE>

     SECTION 9. Proxies. Each stockholder entitled to vote at a meeting of
                -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy.

     SECTION 10. Voting Of Shares. Unless provided in the certificate of
                 ----------------
incorporation, each outstanding share, regardless of class, shall be entitled to
one vote upon each matter submitted to a vote at a meeting of stockholders.

     SECTION 11. Voting Of Shares By Certain Stockholders. Shares standing in
                 ----------------------------------------
the name of another corporation, domestic or foreign, may be voted by such
officer, agent, or proxy as the by-laws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.

     Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian, or conservator, either in person or by proxy without a transfer of
such shares into the name of such administrator, executor, court appointed
guardian, or conservator. Shares standing in the name of a trustee may be voted
by him, either in person or by proxy.

     Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.

     A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.

     Any number of stockholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their shares, for a period not to exceed ten (10) years, by entering into a
written voting trust agreement specifying the terms and conditions of such
voting trust, and by transferring their shares to such trustee or trustees for
the purpose of the agreement. Any such trust agreement shall not become
effective until a counterpart of the agreement is deposited with the corporation
at its registered office. The counterpart of the voting trust agreement so
deposited with the corporation shall be subject to the same right of examination
by a stockholder of the corporation, in person, by agent or attorney, as are the
books and records of the corporation, and shall be subject to examination by any
holder of a beneficial interest in the voting trust, either in person, by agent
or attorney, at any reasonable time for any proper purpose.

     Shares of its own stock belonging to this corporation shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares at any given time.

                                       3

<PAGE>

     SECTION 12. Inspectors. At any meeting of stockholders, the presiding
                 ----------
officer may, or upon the request of any stockholder shall, appoint one or more
persons as inspectors for such meeting.

     Such inspectors shall ascertain and report the number of shares represented
at the meeting, based upon their determination of the validity and effect of
proxies; count all votes and report the results; and do such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the stockholders.

     Each report of an inspector shall be in writing and shall be signed by him
or by a majority of them if there be more than one (1) inspector acting at such
meeting. If there is more than one (1) inspector, the report of a majority shall
be the report of the inspectors. The report of the inspector or inspectors on
the number of shares represented at the meeting and the results of the voting
shall be prima facie evidence thereof.

     SECTION 13. Meeting Leadership. The chairman of the board shall preside at
                 ------------------
all meeting of the stockholders. In the absence or inability to act of the
chairman, the chief executive officer, the president, the chief financial
officer or an executive vice president (in that order) shall preside, and in
their absence or inability to act another person designated by one of them shall
preside. The chairman of the meeting shall appoint a person who need not be a
stockholder to act as secretary of the meeting.

     SECTION 14. Order. Meetings of the stockholders need not be governed by any
                 -----
prescribed rules of order. The presiding officer's rulings on procedural matters
shall be final. The presiding officer is authorized to impose time limits on the
remarks of individual stockholders and may take such steps as such officer may
deem necessary or appropriate, in his or her sole discretion, to assure that the
business of the meeting is conducted in an orderly manner.

     SECTION 15. Consent Of Absentees. No defect in the noticing of a
                 --------------------
stockholders' meeting will affect the validity of any action at the meeting if a
quorum was present, and if each stockholder entitled to notice signs a written
waiver of notice either before or after the meeting, such waivers, consents, or
approvals are filed with the corporate records of made a part of the minutes of
the meeting.

     SECTION 16. Informal Action By Stockholders. Unless otherwise provided in
                 -------------------------------
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of the stockholders of the corporation, or any other action
which may be taken at a meeting of the stockholders, may be taken without a
meeting and without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voting. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.

                                       4

<PAGE>

                                   ARTICLE III
                                   -----------

                                    DIRECTORS
                                    ---------

     SECTION 1. General Powers. The business and affairs of the corporation
                --------------
shall be managed by its Board of Directors.

     SECTION 2. Number, Tenure And Qualifications. The number of directors of
                ---------------------------------
the corporation shall be at least three (3) and no more than nine (9). A
director shall hold office until the next annual meeting of stockholders and
until his successor shall have been elected and qualified. Directors need not be
residents of Delaware or stockholders of the corporation. The number of
directors may be increased or decreased from time to time by the board of
directors, but no decrease shall have the effect of shortening the term of any
incumbent director.

     SECTION 3. Regular Meetings. A regular meeting of the Board of Directors
                ----------------
shall be held without other notice than this By-Law, immediately after the
annual meeting of stockholders. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Delaware,
for the holding of additional regular meetings without other notice than such
resolution.

     SECTION 4. Special Meetings. Special meetings of the Board of Directors may
                ----------------
be called by or at the request of the chairman of the board, the chief executive
officer, or a majority of the directors. The person or persons authorized to
call special meetings of the Board of Directors may fix any place as the place
for holding any special meeting of the Board of Directors called by them.

     SECTION 5. Notice. Notice of any special meeting shall be given at least
                ------
five (5) days prior thereto by written notice to each director at his business
address. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
is sent by facsimile or e-mail, a confirming copy shall be sent by United States
mail, addressed as set forth above, and such notice shall be deemed to be
delivered when mailed in the prescribed manner. The attendance of a director at
any meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.

     SECTION 6. Quorum. A majority of the number of directors fixed by these
                ------
By-Laws shall constitute a quorum for transaction of business at any meeting of
the Board of Directors; provided that if less than a majority of such number of
directors are present at said meeting, a majority of the directors present may
adjourn the meeting at any time without further notice.

     SECTION 7. Manner Of Acting. The act of the majority of the directors
                ----------------
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by statute or by
the Certificate of Incorporation.

                                       5

<PAGE>

     SECTION 8. Vacancies. Vacancies and newly created directorships resulting
                ---------
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.

     SECTION 9. Resignation And Removal. Any director or member of a committee
                -----------------------
may resign at any time upon written notice to the Board of Directors, its
chairman, or to the chief executive officer or secretary of the corporation. One
or more directors may be removed with or without cause at any time by the
affirmative vote of the holders of a majority of the outstanding shares then
entitled to vote, provided that, if done at a meeting, the notice of such
meeting states the name of the director or directors to be removed.

     SECTION 10. Action Without A Meeting. Unless specifically prohibited by the
                 ------------------------
Certificate of Incorporation, any action required to be taken at a meeting of
the Board of Directors, or any other action which may be taken at a meeting of
the Board of Directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all the directors entitled
to vote with respect to the subject matter thereof. Any such consent signed by
all the directors shall have the same effect as a unanimous vote, and may be
stated as such in any document filed with the Secretary of State or with any
other party.

     SECTION 11. Compensation. The Board of Directors, by the affirmative vote
                 ------------
of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers, or otherwise. By resolution of the Board of Directors the directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors. No such payment previously mentioned in this section shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefore.

     SECTION 12. Presumption Of Assent. A director of the corporation who is
                 ---------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting, or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof, or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.

                                       6

<PAGE>

     SECTION 13. Meetings By Telephone. The Board of Directors or any committee
                 ---------------------
thereof may conduct meetings through a conference telephone or other
communications equipment by means of which each and all persons participating
can hear the others, in accordance with the provisions of Section 141(i) of the
General Corporation Law of the State of Delaware.

     SECTION 14. Committees. The Board of Directors may, by resolution passed by
                 ----------
a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation (except that a committee may, to
the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors as provided in
subsection (a) of Section 151 of the Delaware General Corporation Law, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the stock or authorize the
increase or decrease of the shares of any series), and if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide, such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.

     SECTION 15. Committee Minutes. Each committee shall keep regular minutes of
                 -----------------
its meetings and shall file such minutes and all written consents with the
Secretary of the Corporation. Each committee may determine the procedural rules
for meeting and conducting its business and shall act in accordance therewith,
except as otherwise provided herein or required by law. Adequate provision shall
be made for notice to members of all meetings; one-third of the members shall
constitute a quorum unless the committee shall consist of one or two members, in
which event one member shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action may be taken by an
committee without a meeting if all members thereof consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of
such committee.

                                   ARTICLE IV
                                   ----------

                                    OFFICERS
                                    --------

     SECTION 1. Number. The officers of the corporation shall initially be a
                ------
chairman of the board, a chief executive officer, a president, a chief financial
officer and a secretary, each of whom shall be elected by the Board of
Directors, and such vice-presidents (who may be designated as Vice Presidents,
Senior Vice Presidents or Executive Vice Presidents), assistant

                                       7

<PAGE>

treasurers, assistant secretaries or other officers (the number thereof to be
determined by the Board of Directors) as may be elected or appointed by the
Board of Directors or appointed by the chief executive officer. Any two or more
offices may be held by the same person.

     SECTION 2. Election of Officers. The Board of Directors at its first
                --------------------
meeting after each annual meeting of stockholders shall choose a chairman of the
board, a chief executive officer, a president, a chief financial officer, one or
more vice-presidents and a secretary, as the Board of Directors shall determine.
Any number of offices may be held by the same person, unless the Certificate of
Incorporation or these by-laws otherwise provide.

     SECTION 3. Other Officers. The Board of Directors may appoint such other
                --------------
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.

     SECTION 4. Compensation and Contract Rights. The Board of Directors shall
                --------------------------------
have authority (a) to fix the compensation, whether in the form of salary,
bonus, stock options or otherwise, of all officers and employees of the
Corporation, either specifically or by formula applicable to particular classes
of officers or employees, and (b) to authorize officers of the Corporation to
fix the compensation of subordinate employees. The Board of Directors shall have
authority to appoint a Compensation Committee and may delegate to such committee
any or all of its authority relating to compensation. The appointment of an
officer shall not of itself create contract rights.

     SECTION 5. Term. The officers of the corporation shall hold office until
                ----
their successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors, or with respect to
persons who have the title of vice president, but are not officers of the
corporation, may be filled by the chief executive officer.

     SECTION 6. Chairman of the Board. The chairman of the Board of Directors,
                ---------------------
when present, shall preside at all meetings of the stockholders and the Board of
Directors. The chairman of the Board of Directors shall perform other duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors shall designate from time to
time. The chairman of the board shall be ex-officio a member of all committees.

     SECTION 7. Chief Executive Officer. The chief executive officer shall be
                -----------------------
the ultimate decision-making officer of the corporation and shall have general
charge and supervision of the business of the Corporation, shall see that all
orders, actions and resolutions of the Board of Directors are carried out. The
chief executive officer shall preside at all meetings of the stockholders and at
all meetings of the board of directors, unless the chairman of the board of
directors has been appointed and is present. The chief executive officer shall
perform other duties commonly incident to the office of chief executive officer
and shall also perform such other duties and have such other powers as may be
prescribed by the board from time to time.

                                       8

<PAGE>

     SECTION 8. President. The president shall be in charge of the day-to-day
                ---------
operations and other such duties assigned to the president by the board or the
chief executive officer. The president shall report to the chief executive
officer of the corporation. The president shall perform other duties commonly
incident to the office of president and shall also perform such other duties and
have such other powers as may be prescribed by the board from time to time.

     SECTION 11. Vice Presidents. The vice-presidents shall report to the chief
                 ---------------
executive officer or the president of the corporation, as the chief executive
officer shall determine, and shall assist the chief executive officer and the
president in the discharge of their duties as the chief executive officer and/or
the president, as appropriate, may direct. The vice president shall perform
other duties commonly incident to their office and shall also perform such other
duties and have such other powers as the board, the chief executive officer or
the president shall designate from time to time.

     The chief executive officer shall be authorized to appoint employees with
the title of vice-president without the approval of the Board of Directors. Such
appointed vice-presidents shall not be officers of the corporation and shall not
have the powers given to vice-presidents under these By-Laws.

     SECTION 12. The Secretary And Assistant Secretary. The secretary shall
                 -------------------------------------
attend all meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the Board of Directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors, the chairman of the board or chief
executive officer, under whose supervision he shall be. He shall have custody of
the corporate seal of the corporation and he, or an assistant secretary, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
assistant secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.

     The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.

     SECTION 13. The Chief Financial Officer. The chief financial officer shall
                 ---------------------------
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors.

     He shall disburse the funds of the corporation as may be ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the chairman of the

                                       9

<PAGE>

board, the chief executive officer and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as chief financial officer and of the financial condition of the
corporation.

     If required by the Board of Directors, he shall give the corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of his office and
for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.

                                    ARTICLE V
                                    ---------

                      CONTRACTS, LOANS, CHECKS AND DEPOSITS
                      -------------------------------------

     SECTION 1. Contracts. The Board of Directors may authorize any officer or
                ---------
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.

     SECTION 2. Loans. No loans shall be contracted on behalf of the corporation
                -----
and no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.

     SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the
                -------------------
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.

     SECTION 4. Deposits. All funds of the corporation not otherwise employed
                --------
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositaries as the Board of Directors may
select.

                                   ARTICLE VI
                                   ----------

                   CERTIFICATES FOR SHARES AND THEIR TRANSFER
                   ------------------------------------------

     SECTION 1. Certificates For Shares. Certificates representing shares of the
                -----------------------
corporation shall be signed by the chief executive officer, the president or the
chief operating officer or by such officer as shall be designated by resolution
of the Board of Directors and by the secretary or an assistant secretary, and
may be sealed with the seal or a facsimile of the seal of the corporation, if
the corporation uses a seal. If both the signatures of the officers be by
facsimile, the certificate shall be manually signed by or on behalf of a duly
authorized transfer agent or clerk. Each certificate representing shares shall
be consecutively numbered or otherwise identified, and shall also state the name
of the person to whom issued, the number and class of shares (with designation
of series, if any), the date of issue, that the corporation is organized under
the laws of the State of Delaware, and the par value of such shares or a
statement that the shares are without par value. If the corporation is

                                       10

<PAGE>

authorized and does issue shares of more than one class, or of series within a
class, the certificate shall also contain such information or statement as may
be required by law.

     The name and address of each stockholder, the number and class of shares
held and the date on which the certificates for the shares were issued shall be
entered on the books of the corporation. The person in whose name shares stand
on the books of the corporation shall be deemed the owner thereof for all
purposes as regards the corporation.

     SECTION 2. Lost Certificates. If a certificate representing shares has
                -----------------
allegedly been lost or destroyed the Board of Directors, the chief executive
officer, the president or the chief operating officer may in its discretion,
except as may be required by law, direct that a new certificate be issued upon
such indemnification and other reasonable requirements as it may impose.

     SECTION 3. Transfers Of Shares. Transfers of shares of the corporation
                -------------------
shall be recorded on the books of the corporation and, except in the case of a
lost or destroyed certificate, the certificate or certificates representing such
shares shall be surrendered for cancellation. A certificate presented for
transfer must be duly endorsed and accompanied by proper guaranty of signature
and other appropriate assurances that the endorsement is effective.

                                   ARTICLE VII
                                   -----------

                                   FISCAL YEAR
                                   -----------

     The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.

                                  ARTICLE VIII
                                  ------------

                                    DIVIDENDS
                                    ---------

     The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and the Certificate of Incorporation.

                                   ARTICLE IX
                                   ----------

                                      SEAL
                                      ----

     The corporation may in its discretion determine to use a corporate seal. If
a corporate seal is used, the corporate seal shall have inscribed thereon the
name of the corporation. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any manner reproduced.

                                       11

<PAGE>

                                    ARTICLE X
                                    ---------

                                WAIVER OF NOTICE
                                ----------------

     Whenever any notice is required to be given under the provisions of these
By-Laws or under the provisions of the Certificate of Incorporation or under the
provisions of the General Corporation Law of the State of Delaware, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting objects to the holding of the
meeting because proper notice was not given.

                                   ARTICLE XI
                                   ----------

                               RECORDS AND REPORTS
                               -------------------

     SECTION 1. Inspection Of Books And Records. All books and records provided
                -------------------------------
for by statute shall be open to inspection of the stockholders from time to time
and to the extent provided by statute, and of otherwise. Any director may
examine such books and records at all reasonable times.

     SECTION 2. Closing Stock Transfer Books. The Board of Directors may close
                ----------------------------
the transfer books in its discretion for a period not exceeding sixty (60) days
preceding any meeting, annual or special, of the stockholders, or the day
appointed for the payment of a dividend.

                                   ARTICLE XII
                                   -----------

                                   AMENDMENTS
                                   ----------

     The power to make, alter, amend, or repeal these By-Laws shall be vested in
the stockholders or the Board of Directors, unless reserved to the stockholders
by the Certificate of Incorporation. These By-Laws may contain any provisions
for the regulation and management of the affairs of the corporation not
inconsistent with law or the Certificate of Incorporation.

                                  ARTICLE XIII
                                  ------------

                              CONSTRUCTION OF TERMS
                              ---------------------

     The use of singular and plural words and terms, and of the male or female
gender, in these By-Laws may be construed and applied alternatively in
accordance with the facts and circumstances existing at the time of construction
and application of such words and terms.

                                       12

<PAGE>

                                ARTICLE XIV
                                -----------

                        INDEMNIFICATION OF OFFICERS,
                        ----------------------------
                      DIRECTORS, EMPLOYEES AND AGENTS
                      -------------------------------

     The corporation shall indemnify and advance expenses to its officers and
directors to the fullest extent permitted by the General Corporation Law of
Delaware, as amended (the "Act"), provided, however, the indemnification and
advancement of expenses provided by or granted pursuant to the Act shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
or her official capacity and as to action in any other capacity while holding
such office. The indemnification and advancement of expenses shall continue as
to a person who has ceased to be a director, or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.

     The corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the corporation to the fullest extent of
the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the corporation.

     The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of his
or her status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article.

                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.38
<SEQUENCE>7
<FILENAME>dex1038.txt
<DESCRIPTION>AMENDED & RESTATED PROMISSORY NOTE-TAURUS CAPITAL
<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.
                            ------------------------
                        AMENDED AND RESTATED REPLACEMENT
                                 PROMISSORY NOTE
                                 ---------------

$4,000,000                                                           May 1, 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 Replacement Promissory
Note dated March 12, 2001 (the "Prior Note"), which Prior Note shall be
cancelled and replaced by this Amended and Restated Replacement Promissory Note.

     WHEREAS, Green Diamond has assigned the Prior Note to Taurus Capital
Markets Ltd.

          FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of
Taurus Capital Markets Ltd. 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 to be issued in connection
with a mezzanine financing by the Company (the "1999 Subordinated Notes").

                                        1

<PAGE>

     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 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.

     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

                                       2

<PAGE>

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.

     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. Prepayment.
        ----------

          6.1 Optional Prepayment. The Company, at its option and without any
              -------------------
     premium, may prepay in whole or in part the principal amount of this Note
     at 100% of the face value of the Note at any time; provided, however, that
     if the Company intends to prepay any one or more of the 1999 Subordinated
     Notes in part, it shall prepay the same percentage of each outstanding 1999
     Subordinated Note. The Company shall, at the time of any such prepayment,
     pay to the holder of this Note all interest accrued and unpaid to the
     Prepayment Date (defined below). Notwithstanding the foregoing, once a
     notice of the Closing of a Sale Transaction pursuant to Section 13.4 has
     been sent to the Holder, the Company may not prepay this Note prior to the
     Closing of a Sale Transaction, or until the Sale Transaction has been
     formally abandoned.

          6.2 Notice of Prepayment. At least five (5) but not more than fifteen
              --------------------
     (15) days prior to the date fixed for any prepayment, written notice shall
     be given to the holder of the Notes of the election of the Company to
     prepay all or a specified portion of the principal amount of the Note (the
     "Prepayment Notice"). The Prepayment Notice shall specify the date upon
     ("Prepayment Date") and the place at which, payment may be obtained and
     shall call upon the Holder to surrender the Note to the Company in the
     manner and at the place designated. On the Prepayment Date, the Holder
     shall surrender this Note to the Company in the manner and at the place
     designated in the Prepayment Notice, and thereupon prepayment shall be made
     to Holder and this Note shall be cancelled. In the event that less than all
     of the principal amount of this Note is prepaid, upon surrender of this
     Note to the Company, the Company shall execute and deliver to Holder a new
     Note or Notes in principal amount equal to the unpaid principal amount of
     this Note.

          6.3 Cessation of Rights. From and after the Prepayment Date, unless
              -------------------
     there has been a default under the Prepayment Notice, all interest on the
     redeemed principal amount shall cease to accrue and all rights of Holder as
     a Holder of this Note shall cease with respect to the principal amount
     prepaid and, with respect to such amount, this Note

                                       3

<PAGE>

     thereafter shall not be deemed to be outstanding for any purpose
     whatsoever. By acceptance of this Note, Holder agrees to execute and
     deliver such documents as may be reasonably requested from time to time by
     the Company in order to implement the foregoing provisions of this Section.

     7. Warrant Coverage. Holder shall receive, on the date hereof, ten-year
        ----------------
warrants (the "Warrants) to purchase 800,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants shall be $2.25 per
share of Common Stock of the Company ("Exercise Price") and shall become
exercisable six months after the date hereof. The Warrants shall contain the
terms and shall be in the form attached hereto, as Exhibit A.

     The holders of the Warrant shall have registration rights in accordance
with the terms as set forth in the a Warrant Agreement in the form attached as
Exhibit B.

     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 dated December 7,
1999 ("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 dated December 7, 1999 (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"):

          10.1 Obtain or incur any indebtedness or other monetary obligations
     that are senior to or on parity with the Notes, other than the Superior
     Debt.

          10.2 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.

          10.3 Enter into any arrangement or agreement involving the merger or
     consolidation of the Company.

                                        4

<PAGE>

          10.4 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.
          -----------------

          11.1 Occurrences of Events of Default. Each of the following events
               --------------------------------
     shall constitute an "Event of Default" for purposes of this Note:

               (a) if the Company fails to pay any amount payable, under this
          Note when due;

               (b) if the Company breaches any of its representations,
          warranties or covenants set forth in this Note or the Warrant
          Agreement;

               (c) 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;

               (d) 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

               (e) 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.

          11.2 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:

                                        5

<PAGE>

          12.1 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.

          12.2 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.

          12.3 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.

          12.4 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.

          12.5 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.
          -------------

          13.1 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.

          13.2 Governing Law. The Note shall be governed in all respects by the
               -------------
     laws of the State of New York, excluding its conflict of laws.

          13.3 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

                                        6

<PAGE>

     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.

          13.4 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.

          13.5 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.

          13.6 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.

          13.7 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.

          13.8 Time. Time is of the essence in this Note.
               ----

                                        7

<PAGE>

          13.9 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.

          13.10 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.

          13.11 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.

          13.12 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.

          13.13 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.

          13.14 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

                                        8

<PAGE>

     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.

          3.15 This Note is issued, in part, in replacement of the Prior Note.
     The indebtedness evidenced by the Prior Note has not been paid; instead
     this Note is issued in substitution for the Prior Note and the unpaid
     indebtedness evidenced thereby continues to be outstanding and is intended
     to be evidenced hereby.

                                              CECO ENVIRONMENTAL CORP.


                                              By: /s/  Phillip DeZwirek
                                                  ---------------------
                                                  Phillip DeZwirek, President

                                        9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.39
<SEQUENCE>8
<FILENAME>dex1039.txt
<DESCRIPTION>AMENDED & RESTATED PROMISSORY NOTE-HARVEY SANDLER
<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.
                            ------------------------
                        AMENDED AND RESTATED REPLACEMENT
                                 PROMISSORY NOTE
                                 ---------------

$500,000                                                             May 1, 2001

     WHEREAS, Harvey 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 Replacement Promissory
Note dated March 12, 2001 (the "Prior Note"), which Prior Note shall be
cancelled and replaced by this Amended and Restated 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
Harvey Sandler or registered assigns ("Holder"), the principal sum of FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00) 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 to be issued in
connection with a mezzanine 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 December 7, 1999; (ii) six (6) months after repayment of the Superior
Debt (as defined in Section 8 below); or (iii) the

                                        1

<PAGE>

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.

     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

                                        2

<PAGE>

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.

     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. Prepayment.
        ----------

          6.1 Optional Prepayment. The Company, at its option and without any
              -------------------
     premium, may prepay in whole or in part the principal amount of this Note
     at 100% of the face value of the Note at any time; provided, however, that
     if the Company intends to prepay any one or more of the 1999 Subordinated
     Notes in part, it shall prepay the same percentage of each outstanding 1999
     Subordinated Note. The Company shall, at the time of any such prepayment,
     pay to the holder of this Note all interest accrued and unpaid to the
     Prepayment Date (defined below). Notwithstanding the foregoing, once a
     notice of the Closing of a Sale Transaction pursuant to Section 13.4 has
     been sent to the Holder, the Company may not prepay this Note prior to the
     Closing of a Sale Transaction, or until the Sale Transaction has been
     formally abandoned.

          6.2 Notice of Prepayment. At least five (5) but not more than fifteen
              --------------------
     (15) days prior to the date fixed for any prepayment, written notice shall
     be given to the holders of the 1999 Subordinated Notes of the election of
     the Company to prepay all or a specified portion of the principal amount of
     the Note (the "Prepayment Notice.") The Prepayment Notice shall specify the
     date upon ("Prepayment Date") and the place at which, payment may be
     obtained and shall call upon the Holder to surrender this Note to the
     Company in the manner and at the place designated. On the Prepayment Date,
     the Holder shall surrender this Note to the Company in the manner and at
     the place designated in the Prepayment Notice, and thereupon prepayment
     shall be made to Holder and this Note shall be cancelled. In the event that
     less than all of the principal amount of this Note is prepaid, upon
     surrender of this Note to the Company, the Company shall execute and
     deliver to Holder a new Note or Notes in principal amount equal to the
     unpaid principal amount of this Note.

          6.3 Cessation of Rights. From and after the Prepayment Date, unless
              -------------------
     there has been a default under the Prepayment Notice, all interest on the
     redeemed principal amount shall cease to accrue and all rights of Holder as
     a Holder of this Note shall cease with respect to the principal amount
     prepaid and, with respect to such amount, this Note thereafter shall not be
     deemed to be outstanding for any purpose whatsoever. By acceptance of this
     Note, Holder agrees to execute and deliver such documents as may be
     reasonably

                                        3

<PAGE>

     requested from time to time by the Company in order to implement the
     foregoing provisions of this Section.

     7. Warrant Coverage. Holder shall receive, on the date hereof, ten-year
        ----------------
warrants (the "Warrants) to purchase 100,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants shall be $2.25 per
share of Common Stock of the Company ("Exercise Price") and shall become
exercisable six months after the date hereof. The Warrants shall contain the
terms and shall be in the form attached hereto, as Exhibit A.

     The holders of the Warrant shall have registration rights in accordance
with the terms as set forth in the a Warrant Agreement in the form attached as
Exhibit B.

     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"):

          10.1 Obtain or incur any indebtedness or other monetary obligations
     that are senior to or on parity with the Notes, other than the Superior
     Debt.

          10.2 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.

          10.3 Enter into any arrangement or agreement involving the merger or
     consolidation of the Company.

          10.4 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

                                        4

<PAGE>

     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.
         -----------------

          11.1 Occurrences of Events of Default. Each of the following events
               --------------------------------
     shall constitute an "Event of Default" for purposes of this Note:

               (a) if the Company fails to pay any amount payable, under this
          Note when due;

               (b) if the Company breaches any of its representations,
          warranties or covenants set forth in this Note or the Warrant
          Agreement;

               (c) 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;

               (d) 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

               (e) 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.

          11.2 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:

          12.1 Experience. The Holder has substantial experience in evaluating
               ----------
     and investing in private placement transactions of securities in companies
     similar to the

                                       5

<PAGE>

     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.

          12.2 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.

          12.3 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.

          12.4 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.

          12.5 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.
         -------------

          13.1 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.

          13.2 Governing Law. The Note shall be governed in all respects by the
               -------------
     laws of the State of New York, excluding its conflict of laws.

          13.3 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:

                                       6

<PAGE>

          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, with a copy to Lawrence N.
     Rosen, Esq., Lawrence N. Rosen, P.A., 2925 Aventura Boulevard, Suite 308,
     Aventura, Florida 33180.

          13.4 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.

          13.5 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.

          13.6 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.

          13.7 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.

          13.8 Time. Time is of the essence in this Note.
               ----

                                       7

<PAGE>

          13.9 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.

          13.10 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.

          13.11 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.

          13.12 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.

          13.13 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.

          13.14 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

                                       8

<PAGE>

     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.

          3.15 This Note is issued, in part, in replacement of the Prior Note.
     The indebtedness evidenced by the Prior Note has not been paid; instead
     this Note is issued in substitution for the Prior Note and the unpaid
     indebtedness evidenced thereby continues to be outstanding and is intended
     to be evidenced hereby.

                                       CECO ENVIRONMENTAL CORP.


                                       By:         /s/  Phillip DeZwirek
                                                --------------------------------
                                                Phillip DeZwirek, President

                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>9
<FILENAME>dex1040.txt
<DESCRIPTION>AMENDED & RESTATED PROMISSORY NOTE-ICS TRUSTEE SVC
<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.
                          ------------------------
                      AMENDED AND RESTATED REPLACEMENT
                              PROMISSORY NOTE
                              ---------------

$500,000                                                            May 1, 2001

     WHEREAS, ICS Trustee Services Ltd. 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 Replacement Promissory
Note dated March 12, 2001 (the "Prior Note"), which Prior Note shall be
cancelled and replaced by this Amended and Restated Replacement Promissory Note.

     WHEREAS, ICS Trustee Services Ltd. has assigned the Prior Note to Taurus
Capital Markets Ltd.

     FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of
Taurus Capital Markets Ltd. or registered assigns ("Holder"), the principal sum
of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) 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 to be issued
in connection with a mezzanine 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 December 7, 1999; (ii) six (6) months after repayment of the Superior
Debt (as defined in Section 8 below); or (iii) the

                                       1

<PAGE>

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.

     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

                                       2

<PAGE>

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.

     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. Prepayment.
        ----------

          6.1 Optional Prepayment. The Company, at its option and without any
              -------------------
     premium, may prepay in whole or in part the principal amount of this Note
     at 100% of the face value of the Note at any time; provided, however, that
     if the Company intends to prepay any one or more of the 1999 Subordinated
     Notes in part, it shall prepay the same percentage of each outstanding 1999
     Subordinated Note. The Company shall, at the time of any such prepayment,
     pay to the holder of this Note all interest accrued and unpaid to the
     Prepayment Date (defined below). Notwithstanding the foregoing, once a
     notice of the Closing of a Sale Transaction pursuant to Section 13.4 has
     been sent to the Holder, the Company may not prepay this Note prior to the
     Closing of a Sale Transaction, or until the Sale Transaction has been
     formally abandoned.

          6.2 Notice of Prepayment. At least five (5) but not more than fifteen
              -------------------
     (15) days prior to the date fixed for any prepayment, written notice shall
     be given to the holders of the 1999 Subordinated Notes of the election of
     the Company to prepay all or a specified portion of the principal amount of
     the Note (the "Prepayment Notice.") The Prepayment Notice shall specify the
     date upon ("Prepayment Date") and the place at which, payment may be
     obtained and shall call upon the Holder to surrender this Note to the
     Company in the manner and at the place designated. On the Prepayment Date,
     the Holder shall surrender this Note to the Company in the manner and at
     the place designated in the Prepayment Notice, and thereupon prepayment
     shall be made to Holder and this Note shall be cancelled. In the event that
     less than all of the principal amount of this Note is prepaid, upon
     surrender of this Note to the Company, the Company shall execute and
     deliver to Holder a new Note or Notes in principal amount equal to the
     unpaid principal amount of this Note.

          6.3 Cessation of Rights. From and after the Prepayment Date, unless
              -------------------
     there has been a default under the Prepayment Notice, all interest on the
     redeemed principal amount shall cease to accrue and all rights of Holder as
     a Holder of this Note shall cease with respect to the principal amount
     prepaid and, with respect to such amount, this Note thereafter shall not be
     deemed to be outstanding for any purpose whatsoever. By acceptance of this
     Note, Holder agrees to execute and deliver such documents as may be
     reasonably

                                       3

<PAGE>

     requested from time to time by the Company in order to implement the
     foregoing provisions of this Section.

     7. Warrant Coverage. Holder shall receive, on the date hereof, ten-year
        ----------------
warrants (the "Warrants) to purchase 100,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants shall be $2.25 per
share of Common Stock of the Company ("Exercise Price") and shall become
exercisable six months after the date hereof. The Warrants shall contain the
terms and shall be in the form attached hereto, as Exhibit A.

     The holders of the Warrant shall have registration rights in accordance
with the terms as set forth in the a Warrant Agreement in the form attached as
Exhibit B.

     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"):

          10.1 Obtain or incur any indebtedness or other monetary obligations
     that are senior to or on parity with the Notes, other than the Superior
     Debt.

          10.2 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.

          10.3 Enter into any arrangement or agreement involving the merger or
     consolidation of the Company.

          10.4 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

                                        4

<PAGE>

     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.
         -----------------

          11.1 Occurrences of Events of Default. Each of the following events
               --------------------------------
     shall constitute an "Event of Default" for purposes of this Note:

               (a) if the Company fails to pay any amount payable, under this
          Note when due;

               (b) if the Company breaches any of its representations,
          warranties or covenants set forth in this Note or the Warrant
          Agreement;

               (c) 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;

               (d) 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

               (e) 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.

          11.2 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:

          12.1 Experience. The Holder has substantial experience in evaluating
               ----------
     and investing in private placement transactions of securities in companies
     similar to the

                                       5

<PAGE>

     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.

          12.2 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.

          12.3 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.

          12.4 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.

          12.5 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.
         -------------

          13.1 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.

          13.2 Governing Law. The Note shall be governed in all respects by the
               -------------
     laws of the State of New York, excluding its conflict of laws.

          13.3 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:

                                       6

<PAGE>

     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, with a copy to Lawrence N.
     Rosen, Esq., Lawrence N. Rosen, P.A., 2925 Aventura Boulevard, Suite 308,
     Aventura, Florida 33180.

          13.4 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.

          13.5 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.

          13.6 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.

          13.7 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.

          13.8 Time. Time is of the essence in this Note.
               ----

                                       7

<PAGE>

          13.9 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.

          13.10 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.

          13.11 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.

          13.12 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.

          13.13 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.

          13.14 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

                                       8

<PAGE>

     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.

          3.15 This Note is issued, in part, in replacement of the Prior Note.
     The indebtedness evidenced by the Prior Note has not been paid; instead
     this Note is issued in substitution for the Prior Note and the unpaid
     indebtedness evidenced thereby continues to be outstanding and is intended
     to be evidenced hereby.

                                        CECO ENVIRONMENTAL CORP.


                                        By:         /s/  Phillip DeZwirek
                                                 -------------------------------
                                                 Phillip DeZwirek, President

                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>10
<FILENAME>dex1042.txt
<DESCRIPTION>FOURTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>

                                                                   Exhibit 10.42

                      FOURTH AMENDMENT TO CREDIT AGREEMENT
                      ------------------------------------

     This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of
the 20th day of August, 2001 by and among CECO GROUP, INC., CECO FILTERS,

INC., AIR PURATOR CORPORATION, NEW BUSCH CO., INC., THE KIRK & BLUM
MANUFACTURING COMPANY, KBD/TECHNIC, INC. and CECO ABATEMENT SYSTEMS, 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, by Second Amendment to Credit Agreement dated as of
November 10, 2000 and by Third Amendment to Credit Agreement dated as of March
30, 2001 (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) The definition of "Revolving Credit Commitment" as presently set
forth in Section 1.1 of the Credit Agreement shall be deleted and shall be
replaced with the following:

          "Revolving Credit Commitment": means $8,000,000, as reduced from time
           ---------------------------
          to time pursuant to Section 2.9.

          (b) The definition of "Termination Date" as presently set forth in
Section 1.1 of the Credit Agreement shall be deleted and shall be replaced with
the following:

          "Termination Date": April 1, 2003
           ----------------

                                       1

<PAGE>


          (c) Annex I to the Credit Agreement shall be deleted and shall be
replaced with the following:

- ---------------------------------------------------------------------------
     Loans              Applicable Margin for         Applicable Margin for
                           Eurodollar Loans              Base Rate Loans
- ---------------------------------------------------------------------------
Revolving Loans                 4.50%                         3.00%
- ---------------------------------------------------------------------------
  Term Loan A                   4.50%                         3.00%
- ---------------------------------------------------------------------------
  Term Loan B                   5.00%                         3.50%
- ---------------------------------------------------------------------------

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

          (d) The provisions of paragraph 2(k) of the Third Amendment to Credit
Agreement, which modifies Section 2.6(b) of the Credit Agreement, is hereby
modified by adding the following at the end of paragraph 2(k):

          and such additional amounts, up to $4,000,000 (not including the
          $1,000,000), (i) that the Borrowers or Guarantors receive as net
          proceeds of the Equity Contribution and (ii) any amounts in excess of
          $6,500,000 EBITDA for the twelve months ending December 31, 2001, also
          will be used as a prepayment of the Term Loans. The sum total of the
          $1,000,000 prepayment and the aforementioned items (i) and (ii) will
          not exceed $5,000,000.

          (e) Section 2.10 of the Credit Agreement shall be modified by adding
the following at the end thereof.

          (g) Life Insurance. No later than September 30, 2001, Borrowers shall
              --------------
          obtain the maximum amount of the cash value of the Life Insurance as
          will not cause the Life Insurance policy to be canceled or create
          substantial adverse income tax consequences for Borrowers and shall
          pay to Agent, for the ratable benefit of the Banks, an amount equal to
          the cash value of the Life Insurance so obtained as a prepayment of
          the principal of the Term Loan B. Such payment shall be applied in the
          inverse order of maturity. Borrowers shall disclose to the Banks, in
          detail reasonably acceptable to the Banks, any substantial adverse
          income tax consequences to Borrowers which reduce the amount of cash
          value taken from the Life Insurance and paid to the Agent.

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

               (g) Beginning on Monday of the second week after the week in
               which the Fourth Amendment to Credit Agreement is dated and
               continuing on Monday of each week thereafter, for the balance of
               the term of the Credit Agreement, rolling twelve (12) week,
               weekly cash flow projections for the Borrowers, for the weeks
               which begin with the Monday of the week following the date each
               such projection is due. Beginning with the second such projection
               which is due, and continuing on each Monday thereafter, for the
               balance of the term of the Credit Agreement, a comparison of
               actual cash

                                       2

<PAGE>

               flow of the Borrowers to projected cash flow of the Borrowers for
               the week which ended on the Friday of the week before such
               comparison is due. The projections and comparisons shall all be
               in form and content reasonably acceptable to the Banks.
               Notwithstanding any provision to the contrary contained in this
               Agreement, the Borrowers' failure to deliver any of the items
               required by this subsection (g) subject to a cure period of three
               (3) business days after the required notice, shall constitute an
               Event of Default.

          (g) Section 5.6 of the Credit Agreement is hereby amended by inserting
the following new subsection (d):

               (d) Provide to the Banks, on or before August 31, 2001, a list of
               the equipment of Borrowers which includes the following
               information: (i) the location of each piece of equipment; (ii)
               the serial number of each piece of equipment which has a serial
               number; (iii) a description of each piece of equipment; and (iv)
               the date each piece of equipment was placed in service by one of
               the Borrowers, to the extent known; thereafter, permit appraisers
               selected as provided below access to the Borrowers property, as
               the appraisers deem reasonably necessary, to perform appraisals
               for the Banks; and pay the reasonable costs of such appraisals.
               The Banks will attempt to minimize the costs of the equipment
               appraisals to the extent reasonably possible without defeating
               the Banks' purpose for obtaining such equipment appraisals. The
               Banks will obtain bids from not less than four (4) real estate
               appraisers to appraise all of the Borrowers' real estate except
               for the Conshohocken, Pennsylvania property. The Banks will
               provide the Borrowers with summaries of all of such bids. The
               Banks shall engage the lowest acceptable bidder chosen by the
               Banks. All appraisals hereunder shall be in form and content
               reasonably acceptable to the Banks.

          (h) The provision of paragraph 2(m) of the Third Amendment to Credit
Agreement, which modifies Section 6.1(a) Leverage Ratio of the Credit Agreement,
                                         --------------
is hereby modified as follows:

          (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 Must Not Be
Last Day of Fiscal Quarter During Period                  Greater 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                   6.70 to 1
- -----------------------------------------------------------------------------
September 30, 2001 through December 30, 2001               5.50 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.

          (i) The provision of paragraph 2(n) of the Third Amendment to Credit
Agreement, which modifies Section 6.1(b) Fixed Charge Coverage Ratio of the
                                         ---------------------------
Credit Agreement, is hereby modified as follows

          (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 Must Not Be
Last Day of Fiscal Quarter During Period                   Less Than
- --------------------------------------------------------------------------------
December 31, 2000 through March 30, 2001                    .84 to 1
- --------------------------------------------------------------------------------
March 31, 2001 through June 29, 2001                        .80 to 1
- --------------------------------------------------------------------------------
June 30, 2001 through September 29, 2001                    .76 to 1
- --------------------------------------------------------------------------------
September 30, 2001 through December 30, 2001                .80 to 1
- --------------------------------------------------------------------------------
December 31, 2001                                          1.00 to 1
- --------------------------------------------------------------------------------

          provided, however, that the calculation of Fixed Charge Coverage Ratio
          for September 30, 2001, shall be calculated on the basis of calendar
          year 2001 to date, rather than on a rolling twelve month basis, and
          further provided, however, that 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.

          (j) The provision in paragraph 2(o) of the Third Amendment to Credit
Agreement, which modifies Section 6.1(c) Interest Coverage Ratio of the Credit
                                         -----------------------
Agreement, is hereby modified as follows:

                                       4

<PAGE>

          (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:

          (c) 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:

- --------------------------------------------------------------------------------
                                                   Interest Coverage Ratio Must
Last Day of Fiscal Quarter During Period                 Not 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                     1.00 to 1
- --------------------------------------------------------------------------------
September 30, 2001 through December 30, 2001                1.25 to 1
- --------------------------------------------------------------------------------
December 31, 2001                                           2.20 to 1
- --------------------------------------------------------------------------------

          provided, however, that Interest Coverage Ratio for September 30,
          2001, shall be calculated on the basis of calendar year 2001 to date,
          rather than a rolling twelve month basis, and further provided,
          however, the abatement of Section 6.1(c) Interest Coverage Ratio of
                                                   -----------------------
          the Credit Agreement shall cease on January 2, 2002, and such section
          shall continue as provided in the Credit Agreement immediately before
          the effective date of this Amendment, except that the words "equal or
          exceed" in the fifth line of Section 6.1(c) shall be changed to "be
          less than".

          (k) Beginning on the date of the Fourth Amendment to Credit Agreement,
for the balance of the term of the Credit Agreement, the "Interest Period" with
respect to all Eurodollar Loans and conversions to Eurodollar Loans shall be for
a one month period and no Eurodollar Loan with a period of more than one month
which exists on the date of the Fourth Amendment to Credit Agreement may be
continued for a period of more than one month and requests by Borrowers for
borrowings, conversions or continuations of Eurodollar Loans for periods of more
than one month shall be treated as requests for borrowings, conversions or
continuations of Eurodollar Loans for a period of one month.

     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 hereby represent to the Banks that their operations
located in Chicago, Illinois, will be performed by CECO Abatement Systems, Inc.,
a Delaware corporation which was formed on April 26, 2001, and which is wholly
owned Subsidiary of one of Borrowers. By executing this Fourth Amendment to
Credit Agreement, CECO Abatement Systems, Inc. agrees: (i) to become one of the
Borrowers under the Credit Agreement, as if it had originally executed the
Credit Agreement and the other Loan Documents; (ii) to be bound by the terms of
the Credit Agreement and the other Loan Documents; (iii) to complete the due
diligence worksheets provided

                                       5

<PAGE>

by the Banks within fifteen (15) days after provided by the Banks; (iv) to keep
all of its assets free and clear of all liens and security interests except for
the liens and security interests given for the benefit of the Banks and
permitted liens under Section 6.3 of the Credit Agreement; and (v) within
fifteen (15) days after provided to it by the Banks, execute and deliver all
such mortgages, deeds of trust, security agreements, pledges, financing
statements and other collateral security documents as the Banks shall request,
from time to time.

          (b) Upon request by the Banks, the Borrowers, and each of them, shall
execute and deliver any documents required by the Banks to perfect their liens
and security interests under the Credit Agreement and the other Loan Documents,
including, but not limited to, real estate mortgages or deeds of trust and
security agreements and financing statements under the Uniform Commercial Code.

     4. Amendment Fees. The Borrowers shall pay to the Agent, for the ratable
        --------------
benefit of the Banks, upon the date of this Amendment, a fee of twenty-five
thousand dollars ($25,000). In addition, the provisions of paragraphs 4 and 5 of
the Third Amendment to Credit Agreement for the payment of the one hundred fifty
thousand dollar ($150,000) Amendment Fee are amended to provide that: (i) on the
date of this Amendment, the amount of fifty thousand dollars ($50,000) currently
in the Cash Collateral Account at Fifth Third Bank shall be paid to Agent, for
the ratable benefit of the Banks; and (ii) immediately upon payment by the
Borrowers of the fifty thousand dollars ($50,000) deposits, if any, required to
be made to the Cash Collateral Account at Fifth Third Bank on (A) the earlier of
(i) the date of the Equity Contribution or (ii)September 30, 2001, and (B) if
the Equity Contribution was not made prior to September 30, 2001, the earlier of
(i) the date of the Equity Contribution or (ii) December 31, 2001, as provided
in paragraph 5 of the Third Amendment to Credit Agreement, those deposits shall
be paid to Agent, for the ratable benefit of the Banks. Such deposits and
payments shall satisfy all payments due under paragraph 4 of the Credit
Agreement. In all other respects the provisions of paragraphs 4 and 5 of the
Third Amendment to Credit Agreement shall remain in effect.

     5. 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.

     6. 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.

     7. 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, provided that, for purposes of this Amendment, only: (x) the
representations and warranties made in Section 3.1(a) and (b) and 3.21

                                       6

<PAGE>

of the Credit Agreement shall relate to the most recent financial statements of
the type referred to therein which have been given by the Borrowers to the Banks
(but the foregoing shall not be a waiver of any Default or Event of Default
based on any representation or warranty made by the Borrowers in the Credit
Agreement or any amendment thereof, prior to this Amendment, being untrue at the
time made, or for any breach of any covenant contained in the Credit Agreement,
as amended prior to the date of this Amendment); (y) the representations and
warranties made in Section 3.1(c) of the Credit Agreement shall be made as of
the date of this Amendment and not as of the Closing Date; and (z) the
representations and warranties made in Section 3.2 of the Credit Agreement shall
refer to Material Adverse Effect since the last audited consolidated financial
statements of the Borrowers provided to the Banks by the Borrowers, instead of
since September 30, 1999 (but the foregoing shall not be a waiver of any Default
or Event of Default based on any representation or warranty made by the
Borrowers in the Credit Agreement or any amendment thereof, prior to this
Amendment, being untrue at the time made, or for any breach of any covenant
contained in the Credit Agreement, as amended prior to the date of this
Amendment); 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.

     8. 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
          consent of Green Diamond Oil Corp. as attached hereto; and

                                       7

<PAGE>

               (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.

     9. 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.

     10. 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.

     11. Effective Date. The parties hereto agree that subsections (h), (i) and
         --------------
(j) of Section 2 hereof shall for all purposes be deemed to be effective as of
June 30, 2001 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.

                                          CECO GROUP, INC.


                                          By:         /s/  Richard J. Blum
                                                   -----------------------------
                                          Name:    Richard J. Blum
                                          Title:   CEO & President

                                       8

<PAGE>

                                          CECO FILTERS, INC.


                                          By:        /s/  Marshall J. Morris
                                                   -----------------------------
                                          Name:    Marshall J. Morris
                                          Title:   Treasurer


                                          AIR PURATOR CORPORATION


                                          By:        /s/  Marshall J. Morris
                                                   -----------------------------
                                          Name:    Marshall J. Morris
                                          Title:   Treasurer


                                          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


                                          KBD/TECHNIC, INC.


                                          By:        /s/  Marshall J. Morris
                                                   -----------------------------
                                          Name:    Marshall Morris
                                          Title:   Treasurer


                                          CECO ABATEMENT SYSTEMS, INC.


                                          By:        /s/  David D. Blum
                                                   -----------------------------
                                          Name:    David D. Blum
                                          Title:   President

                                       9

<PAGE>

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


                                          By:        /s/  William c. Miles
                                                   -----------------------------
                                          Name:    William C. Miles
                                          Title:   Vice President


                                          FIFTH THIRD BANK, as a Bank


                                          By:        /s/  David R. Alexander
                                                   -----------------------------
                                          Name:    David R. Alexander
                                          Title:   Assistant Vice President


                                          BANK ONE, NA, as a Bank


                                          By:        /s/  Jeffrey C. Nicholson
                                                   -----------------------------
                                          Name:    Jeffrey C. Nicholson
                                          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 Fourth 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/  Richard J. Blum
                                                   -----------------------------
                                          Name:    Richard J. Blum
                                          Title:   President

                                       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
Fourth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that 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
                                                   -----------------------------
                                          Name:    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
Fourth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that 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:
                                             -----------------------------------
                                          Name:
                                          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
Fourth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that the Subordination Agreement remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.

                                                  HARVEY SANDLER


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

                                       14

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.43
<SEQUENCE>11
<FILENAME>dex1043.txt
<DESCRIPTION>FIFTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                   Exhibit 10.43

                       FIFTH AMENDMENT TO CREDIT AGREEMENT

     This FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of
the 27th day of March, 2002 by and among CECO GROUP, INC., CECO FILTERS,
INC., AIR PURATOR CORPORATION, NEW BUSCH CO., INC., THE KIRK & BLUM
MANUFACTURING COMPANY, KBD/TECHNIC, INC. and CECO ABATEMENT SYSTEMS, 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, by Second Amendment to Credit Agreement
dated as of November 10, 2000, by Third Amendment to Credit Agreement dated as
of March 30, 2001 and by Fourth Amendment to Credit Agreement dated as of August
20, 2001(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 are 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) The provision in paragraph 2(m) of the Third Amendment to Credit
Agreement (as modified by paragraph 2(h) of the Fourth Amendment to Credit
Agreement), which modifies Section 6.1(a) Leverage Ratio of the Credit
Agreement, is hereby modified as follows:

        (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:

                                       1

<PAGE>

<TABLE>
<CAPTION>
            ---------------------------------------------------------------------------------------
                                                                     Leverage Ratio Must Not Be
              Last Day of Fiscal Quarter During Period                       Greater Than
            ---------------------------------------------------------------------------------------
              <S>                                                   <C>

            ---------------------------------------------------------------------------------------
              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                        6.70 to 1
            ---------------------------------------------------------------------------------------
              September 30, 2001 through December 30, 2001                    5.50 to 1
            ---------------------------------------------------------------------------------------
              December 31, 2001                                               3.40 to 1
            ---------------------------------------------------------------------------------------
</TABLE>


              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 on January 2,
              2002.

          (b) The provision in paragraph 2(o) of the Third Amendment to Credit
     Agreement (as modified by paragraph 2(j) of the Fourth Amendment to Credit
     Agreement), which modifies Section 6.1(c) Interest Coverage Ratio of the
     Credit Agreement, is hereby modified as follows:

               (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:

               (c) 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:

<TABLE>
<CAPTION>

            ---------------------------------------------------------------------------------------
                                                                     Interest Coverage Ratio Must
              Last Day of Fiscal Quarter During Period                       Not Be Less Than
            ---------------------------------------------------------------------------------------
              <S>                                                    <C>
            ---------------------------------------------------------------------------------------
              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                        1.00 to 1
            ---------------------------------------------------------------------------------------
              September 30, 2001 through December 30, 2001                    1.25 to 1
            ---------------------------------------------------------------------------------------
              December 31, 2001                                               1.65 to 1
            ---------------------------------------------------------------------------------------
</TABLE>


              provided, however, that Interest Coverage Ratio for September 30,
              2001, shall be calculated on the basis of calendar year 2001 to
              date, rather than a rolling twelve month basis, and further
              provided, however, the abatement of Section 6.1(c) Interest
              Coverage Ratio of the Credit Agreement shall cease on January 2,
              2002, and such section shall continue as provided in the Credit
              Agreement immediately before the effective date of this
              Amendment, except that the words "equal or exceed" in the fifth
              line of Section 6.1(c) shall be changed to "be less than".

     3. Sale of Assets. The provisions of Section 2.10 (c) and Section 6.5 of
the Credit Agreement notwithstanding, Borrowers are permitted to sell the assets
described on Exhibit A-5


                                       2

<PAGE>

attached hereto and by this reference incorporated herein, subject to
fulfillment, to the satisfaction of Agent and its counsel, of the following
terms:

        (a) In addition to any other amounts due under the Credit Agreement,
Borrowers shall have paid to Agent, for the ratable benefit of the Banks, the
sum of Two Hundred Fifty Thousand Dollars ($250,000), on or prior to the date of
this Amendment. Such amount and all other amounts required to be paid hereunder
shall be applied as prepayment of the principal of Term Loan B. Such payments
shall be applied in the inverse order of maturity.

        (b) In addition to any other amounts due under the Credit Agreement,
Borrowers shall pay to Agent, for the ratable benefit of the Banks, the sum of
One Hundred Twenty-Five Thousand Dollars ($125,000), on or prior to March 15,
2002, which amount shall be applied as a prepayment of the principal of Term
Loan B as provided in subparagraph 3 (a) above.

        (c) In addition to any other amounts due under the Credit Agreement,
Borrowers shall pay to Agent, for the ratable benefit of the Banks, the sum of
Fifty Thousand Dollars ($50,000) each, on or prior to September 30, 2002 and
March 31, 2003, which amounts shall be applied as a prepayment of the principal
of Term Loan B as provided in subparagraph 3 (a) above.

        (d) This authorization of sale of assets shall not be deemed to be a
waiver of the provisions of Section 2.10 (c) or Section 6.5 of the Credit
Agreement or any other provision thereof which prohibits or restricts sale of
any other assets of Borrowers.

     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.

     6. 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, provided that, for purposes of this Amendment, only: (x) the
representations and warranties made in Section 3.1(a) and (b) and 3.21 of the
Credit Agreement shall relate to the most recent financial statements of the
type referred to therein which have been given by the Borrowers to the Banks
(but the foregoing shall not be a waiver of any Default or Event of Default
based on any representation or warranty made by the Borrowers in the Credit
Agreement or any amendment thereof, prior to this Amendment, being untrue at the
time made, or for any breach of any covenant contained in the Credit Agreement,
as

                                       3

<PAGE>

amended prior to the date of this Amendment); (y) the representations and
warranties made in Section 3.1(c) of the Credit Agreement shall be made as of
the date of this Amendment and not as of the Closing Date; and (z) the
representations and warranties made in Section 3.2 of the Credit Agreement shall
refer to Material Adverse Effect since the last audited consolidated financial
statements of the Borrowers provided to the Banks by the Borrowers, instead of
since September 30, 1999 (but the foregoing shall not be a waiver of any Default
or Event of Default based on any representation or warranty made by the
Borrowers in the Credit Agreement or any amendment thereof, prior to this
Amendment, being untrue at the time made, or for any breach of any covenant
contained in the Credit Agreement, as amended prior to the date of this
Amendment); 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, 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.

     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 consents of the Guarantor and the
     Subordinated Creditors as attached hereto; and

            (ii) The Amendment to Security Agreement which adds CECO Abatement
     Systems, Inc. as a Debtor; updates the representations and warranties

                                       4

<PAGE>

          set forth in the Security Agreement dated December 7, 1999 as to all
          Debtors; and authorizes Agent to file such financing and continuation
          statements as Agent deems necessary or appropriate in order to perfect
          and continue the perfection of the security interests created by the
          Security Agreement, without the signature of any Debtor, including,
          without limitation, "in lieu of" filings.

               (iii) 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.

     8. 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.

     9. 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.

     10. Effective Date. The parties hereto agree that the provisions of
paragraph 2 of this Amendment shall for all purposes be deemed to be effective
as of December 31, 2001and 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 paragraph, even though this Amendment is executed
after such date.

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

                                       5

<PAGE>

                             CECO GROUP, INC.


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


                             CECO FILTERS, INC.


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

                             AIR PURATOR CORPORATION

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

                             NEW BUSCH CO., INC.


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


                             THE KIRK & BLUM MANUFACTURING COMPANY


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



                                       6

<PAGE>

                             KBD/TECHNIC, INC.


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


                             CECO ABATEMENT SYSTEMS, INC.


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


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


                             By: /s/ William C. Miles
                                ------------------------------------------------
                             Name:  /s/ William C. Miles
                             Title: /s/ Vice President


                             FIFTH THIRD BANK, as a Bank


                             By: /s/ David R. Alexander
                                ------------------------------------------------
                             Name:  /s/ David R. Alexander
                             Title: /s/ Assistant Vice President


                             BANK ONE, NA, as a Bank


                             By: /s/ Gary K. Myers
                                ------------------------------------------------
                             Name: /s/ Gary K. Myers
                             Title: /V.P./

                                       7

<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 Fifth 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:
                                         ---------------------------------------
                                      Name:
                                      Title:


                                       8

<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
Fifth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that 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:
                                            ------------------------------------
                                         Name:
                                         Title























                                       9

<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
Fifth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that 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:
                                          --------------------------------------
                                       Name:
                                       Title


                                       10

<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
Fifth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that the Subordination Agreement remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.

                                       HARVEY SANDLER


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

                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.44
<SEQUENCE>12
<FILENAME>dex1044.txt
<DESCRIPTION>OPTION FOR PURCHASE OF SHARES-JASON DEZWIREK
<TEXT>
<PAGE>


                                                                   Exhibit 10.44

                Option for the Purchase of Shares of Common Stock
                -------------------------------------------------

                                                                   25,000 Shares

FOR VALUE RECEIVED, CECO Environmental Corp. (the "Company"), hereby certifies
that Jason DeZwirek, or a permitted assign thereof, is entitled to purchase from
the Company, at any time or from time to time commencing April 5, 2002, and
prior to 5:00 P.M., P.S.T., on October 5, 2011, Twenty-five Thousand (25,000)
fully paid and nonassessable shares of the common stock, of the Company for a
purchase price of $2.01 per share. (Hereinafter, (i) said common stock, together
with any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "Common Stock," (ii)
the shares of the Common Stock purchasable hereunder or under any other Option
or (as hereinafter defined) are referred to as the "Option Shares," (iii) the
price payable hereunder for each of the Option Shares is referred to as the
"Option Exercise Price," (iv) this Option, and all options hereafter issued in
exchange or substitution for this Option or such other options are referred to
as the "Options" and (v) the holder of this Option is referred to as the
"Holder" and the holder of this Option and all other Options are referred to as
the "Holders"). The Option Exercise Price is subject to adjustment as
hereinafter provided:

1.   Exercise of Option.
     ------------------

     a)   Exercise for Cash
          -----------------

     This Option may be exercised, in whole at any time or in part from time to
     time, commencing April 5, 2002, and prior to 5:00 P.M., P.S.T., on October
     5, 2011, by the Holder by the surrender of this Option (with the
     subscription form at the end hereof duly executed) at the address set forth
     in Subsection 8(a) hereof, together with proper payment of the Per Share
     Option Price times the number of shares of Common Stock to be received.
     Payment for Option Shares shall be made by certified or official bank check
     payable to the order of the Company or if applicable, without cash pursuant
     to a cashless net exercise. If this Option is exercised in part, this
     Option must be exercised for a number of whole shares of the Common Stock,
     and the Holder is entitled to receive a new Option Covering the Option
     Shares which have not been exercised. Upon such surrender of this Option
     the Company will (a) issue a certificate or certificates in the name of the
     Holder for the largest number of whole shares of the Common Stock to which
     the Holder shall be entitled and, if this Option is exercised in whole, in
     lieu of any fractional share of the Common Stock to which the Holder shall
     be entitled, pay to the Holder cash in an amount equal to the fair value of
     such fractional share (determined in such reasonable manner as the Board of
     Directors of the Company shall determine), and (b) deliver the other
     securities and properties receivable upon the exercise of this Option, or
     the proportionate part thereof if this Option is exercised in part,
     pursuant to the provisions of this Option.

                                       1

<PAGE>

     b)   Cashless Exercise
          -----------------

     In lieu of exercising this Option in the manner set forth in paragraph l(a)
     above, this Option may be exercised, in whole or in part, by surrender of
     the Option without payment of any other consideration, commission or
     remuneration, by execution of the cashless exercise subscription form (at
     the end hereof, duly executed). The number of shares to be issued in
     exchange for the Option will be computed by subtracting the Option Exercise
     Price from either (i) the closing bid price of the Common Stock on the date
     of receipt of the cashless exercise subscription form, or (ii) the most
     recent negotiated value used in connection with any sale of the Company's
     securities or in connection with any business combination involving the
     Company, and multiplying that amount by the number of shares represented by
     the Option, and dividing by the closing bid price as of the same date.

2.   Reservation of Option Shares, Listing.
     -------------------------------------

     The Company agrees that, prior to the expiration of this Option, the
     Company will at all times have authorized and in reserve, and will keep
     available, solely for issuance or delivery upon the exercise of this
     Option, the shares of the Common Stock and other securities and properties
     as from time to time shall be receivable upon the exercise of this Option,
     free and clear of all restrictions on sale or transfer (except for
     applicable state or federal securities law restrictions) and free and clear
     of all pre-emptive rights.

3.   Protection Against Dilution.
     ---------------------------

     a)   If, at any time or from time to time after the date of this Option,
          the Company shall issue or distribute (for no consideration) to the
          holders of shares of Common Stock evidences of its indebtedness, any
          other securities of the Company or any cash, property or other assets
          (excluding a subdivision, combination or reclassification, or dividend
          or distribution payable in shares of Common Stock, referred to in
          Subsection 3(b), and also excluding cash dividends or cash
          distributions paid out of net profits legally available therefor if
          the full amount thereof, together with the value of other dividends
          and distributions made substantially concurrently therewith or
          pursuant to a plan which includes payment thereof, is equivalent to
          not more than 5% of the Company's net worth) (any such nonexcluded
          event being herein called a "Special Dividend"), the Option Exercise
          Price shall be adjusted by multiplying the Option Exercise Price then
          in effect by a fraction, the numerator of which shall be the then
          current market price of the Common Stock (defined as the average for
          the thirty consecutive business days immediately prior to the record
          date of the daily closing price of the Common Stock as reported by the
          principal exchange or market on which the Common Stock is listed) less
          the fair market value (as determined by the Company's Board of
          Directors) of the evidences of indebtedness, securities or property,
          or other assets issued or distributed in such Special Dividend
          applicable to one share of Common Stock and the denominator of which
          shall be such then current market price per share of Common Stock. An
          adjustment made pursuant to

                                       2

<PAGE>

          this Subsection 3(a) shall become effective immediately after the
          record date of any such Special Dividend.

     b)   In case the Company shall hereafter (i) pay a dividend or make a
          distribution on its capital stock in shares of Common Stock, (ii)
          subdivide its outstanding shares of Common Stock into a greater number
          of shares, (iii) combine its outstanding shares of Common Stock into a
          smaller number of shares or (iv) issue by reclassification of its
          Common Stock any shares of capital stock of the Company, the Option
          Exercise Price shall be adjusted so that the Holder of any Option upon
          the exercise hereof shall be entitled to receive the number of shares
          of Common Stock or other capital stock of the Company which he would
          have owned immediately prior thereto. An adjustment made pursuant to
          this Subsection 3(b) shall become effective immediately after the
          record date in the case of a dividend or distribution and shall become
          effective immediately after the effective date in the case of a
          subdivision, combination or reclassification. If, as a result of an
          adjustment made pursuant to this Subsection 3(b), the Holder of any
          Option thereafter surrendered for exercise shall become entitled to
          receive shares of two or more classes of capital stock or shares of
          Common Stock and other capital stock of the Company, the Board of
          Directors (whose determination shall be conclusive and shall be
          described in a written notice to the Holder of any Option promptly
          after such adjustment) shall reasonably determine the allocation of
          the adjusted Option Exercise Price between or among shares of such
          classes or capital stock or shares of Common Stock and other capital
          stock.

     c)   In case of any capital reorganization or reclassification, or any
          consolidation or merger to which the Company is a party other than a
          merger or consolidation in which the Company is the continuing
          corporation, or in case of any sale or conveyance to another entity of
          the property of the Company as an entirety or substantially as an
          entirety, or in the case of any statutory exchange of securities with
          another corporation (including any exchange effected in connection
          with a merger of a third corporation into the Company), the Holder of
          this Option shall have the right thereafter to convert such Option
          into the kind and amount of securities, cash or other property which
          he would have owned or have been entitled to receive immediately after
          such reorganization, reclassification, consolidation, merger,
          statutory exchange, sale or conveyance had this Option been converted
          immediately prior to the effective date of such reorganization,
          reclassification, consolidation, merger, statutory exchange, sale or
          conveyance and in any such case, if necessary, appropriate adjustment
          shall be made in the application of the provisions set forth in this
          Section 3 with respect to the rights and interests thereafter of the
          Holder of this Option to the end that the provisions set forth in this
          Section 3 shall thereafter correspondingly be made applicable, as
          nearly as may reasonably be, in relation to any shares of stock or
          other securities or be, in relation to any shares of stock or other
          securities or property thereafter deliverable on the conversion of
          this Option. The above provisions of this Subsection 3(c) shall
          similarly apply to successive reorganizations, reclassifications,
          consolidations, mergers, statutory exchanges, sales or

                                       3

<PAGE>

          conveyances. The issuer of any shares of stock or other securities or
          property thereafter deliverable on the conversion of this Option shall
          be responsible for all of the agreements and obligations of the
          Company hereunder. Notice of any such reorganization,
          reclassification, consolidation, merger, statutory exchange, sale or
          conveyance and of said provisions so proposed to be made, shall be
          mailed to the Holders of the Options not less than 10 days prior to
          such event. A sale of all or substantially all of the assets of the
          Company for a consideration consisting primarily of securities shall
          be deemed a consolidation or merger for the foregoing purposes.

     d)   No adjustment in the Option Exercise Price shall be required unless
          such adjustment would require an increase or decrease of at least
          $0.05 per share of Common Stock; provided, however, that any
          adjustments which by reason of this Subsection 3(d) are not required
          to be made shall be carried forward and taken into account in any
          subsequent adjustment; provided further, however, that adjustments
          shall be required and made in accordance with the provisions of this
          Section 3 (other than this Subsection 3(d)) not later than such time
          as may be required in order to preserve the tax-free nature of a
          distribution to the Holder of this Option or Common Stock issuable
          upon exercise hereof. All calculations under this Section 3 shall be
          made to the nearest cent. Anything in this Section 3 to the contrary
          notwithstanding, the Company shall be entitled to make such reductions
          in the Option Exercise Price, in addition to those required by this
          Section 3, as it in its discretion shall deem to be advisable in order
          that any stock dividend, subdivision of shares or distribution of
          rights to purchase stock or securities convertible or exchangeable for
          stock hereafter made by the Company to its shareholders shall not be
          taxable.

     e)   Whenever the Option Exercise Price is adjusted as provided in this
          Section 3 and upon any modification of the rights of a Holder of
          Options in accordance with this Section 3, the Company shall promptly
          obtain, at its expense, a certificate of a firm of independent public
          accountants of recognized standing selected by the Board of Directors
          (who may be the regular auditors of the Company) setting forth the
          Option Exercise Price and the number of Option Shares after such
          adjustment or the effect of such modification, a brief statement of
          the facts requiring such adjustment or modification and the manner of
          computing the same and cause copies of such certificate to be mailed
          to the Holders of the Options.

     f)   If the Board of Directors of the Company shall declare any dividend or
          other distribution with respect to the Common Stock, other than a cash
          distribution out of earned surplus, the Company shall mail notice
          thereof to the Holders of the Options not less than 10 days prior to
          the record date fixed for determining shareholders entitled to
          participate in such dividend or other distribution.

4.   Fully Paid Stock, Taxes.
     -----------------------

     The Company agrees that the shares of the Common Stock represented by each
     and every certificate for Option Shares delivered on the exercise of this
     Option shall, at the time of

                                       4

<PAGE>

     such delivery, be validly issued and outstanding, fully paid and
     nonassessable, and not subject to pre-emptive rights, and the Company will
     take all such actions as may be necessary to assure that the par value or
     stated value, if any, per share of the Common Stock is at all times equal
     to or less than the then Option Exercise Price. The Company further
     covenants and agrees that it will pay, when due and payable, any and all
     Federal and state stamp, original issue or similar taxes which may be
     payable in respect of the issue of any Option Share or certificate
     therefor.

5.   Transferability.
     ---------------

     Subject to compliance with federal and applicable state securities laws and
     the provisions of Section 13, the Holder of any Option may, prior to
     exercise or expiration thereof, surrender such Option at the principal
     office of the Company for transfer or exchange. Within a reasonable time
     after notice to the Company from a registered Holder of its intention to
     make such exchange and without expense (other than transfer taxes, if any)
     to such registered Holder, the Company shall issue in exchange therefor
     another Option or Options, in such denominations as requested by the
     registered Holder, for the same aggregate number of Option Shares so
     surrendered and containing the same provisions and subject to the same
     terms and conditions as the Option(s) so surrendered. The Company may treat
     the registered Holder of this Option as he or it appears on the Company's
     books at any time as the Holder for all purposes. The Company shall permit
     any Holder of a Option or his duly authorized attorney, upon written
     request during ordinary business hours, to inspect and copy or make
     extracts from its books showing the registered holders of Options. All
     options issued upon the transfer or assignment of this Option will be dated
     the same date as this Option, and all rights of the Holder thereof shall be
     identical to those of the Holder.

6.   Loss, etc., of Option.
     ---------------------

     Upon receipt of evidence satisfactory to the Company of the loss, theft,
     destruction or mutilation of this Option, and of indemnity reasonably
     satisfactory to the Company, if lost, stolen or destroyed, and upon
     surrender and cancellation of this Option, if mutilated, the Company shall
     execute and deliver to the Holder a new Option of like date, tenor and
     denomination.

7.   Option Holder Not Shareholders.
     ------------------------------

     Except as otherwise provided herein, this Option does not confer upon the
     Holder any right to vote or to consent to or receive notice as a
     shareholder of the Company, as such, in respect of any matters whatsoever,
     or any other rights or liabilities as a shareholder, prior to the exercise
     hereof.

8.   Communication.
     -------------

     No notice or other communication under this Option shall be effective
     unless, but any notice or other communication shall be effective and shall
     be deemed to have been given if, the same is in writing and (i) is
     personally delivered, (ii) five days after such written material is

                                       5

<PAGE>

     mailed by first-class mail, postage prepaid, or (iii) one day after such
     written material is sent by a nationally recognized overnight courier,
     addressed to:

     a)   the Company at 505 University Avenue, Suite 1400, Toronto, Ontario M5G
          1X3, Canada, Attn: Phillip DeZwirek or such other address as the
          Company has designated in writing to the Holder; or

     b)   the Holder at 505 University Avenue, Suite 1400, Toronto, Ontario M5G
          1X3, Canada, or such other address as the Holder has designated in
          writing to the Company.

9.   Headings.
     --------

     The headings of this Option have been inserted as a matter of convenience
     and shall not affect the construction hereof.

10.  Withholding.
     -----------

     The Holder acknowledges that, upon any exercise of this Option, the Company
     shall have the right to require the Holder to pay to the Company an amount
     equal to the amount the Company is required to withhold as a result of such
     exercise for federal and state income tax purposes.

11.  Applicable Law.
     --------------

     This Option shall be governed by and construed in accordance with the law
     of the State of New York without giving effect to the principles of
     conflicts of law thereof.

12.  Securities Law Compliance.
     -------------------------

     The exercise of all or any parts of this Option shall only be effective at
     such time as counsel to the Company shall have determined that the issuance
     and delivery of Common Stock pursuant to such exercise will not violate any
     state or federal securities or other laws. Holder may be required by the
     Company, as a condition of the effectiveness of any exercise of this
     Option, to agree in writing that all Common Stock to be acquired pursuant
     to such exercise shall be held, until such time that such Common Stock is
     registered or exempt from registration and freely tradable under applicable
     state and federal securities laws, for Holder's own account without a view
     to any further distribution thereof, that the certificates for such shares
     shall bear an appropriate legend to that effect and that such shares will
     be not transferred or disposed of except in compliance with applicable
     state and federal securities laws.

13.  Nontransferability.
     ------------------

     Except as otherwise agreed to by the Company, during the lifetime of
     Holder, this Option shall be exercisable only by Holder or by the Holder's
     guardian or other legal representative,

                                       6

<PAGE>

     and shall not be assignable or transferable by Holder, in whole or in part,
     other than by will or by the laws of descent and distribution.

14.  Scope of Agreement.
     ------------------

     This Agreement shall bind and inure to the benefit of the Company and its
     successors and assigns and Holder and any successor or successors of Holder
     permitted by Section 13 above.

IN WITNESS WHEREOF, CECO Environmental Corp. has caused this Option to be signed
by its Chairman, as of this 5th day of October, 2001.

                                      CECO ENVIRONMENTAL CORP.


                                      By:     /s/ Phillip DeZwirek
                                            ----------------------
                                      Name: Phillip DeZwirek
                                      Title:Chairman and Chief Executive Officer

                                       7

<PAGE>

                                SUBSCRIPTION
                                ------------

The undersigned,                      , pursuant to the provisions of the
                ----------------------
foregoing Option, hereby agrees to subscribe for and purchase shares of the
Common Stock of CECO Environmental Corp. covered by said Option, and makes
payment therefor in a manner specified in the Option in full at the price per
share provided by said Option.


Dated:                                      Signature:

                                            Address:

                                       8

<PAGE>

                                 ASSIGNMENT
                                 ----------

FOR VALUE RECEIVED                    hereby sells, assigns and transfers unto
                  -------------------
            the foregoing Option and all rights evidenced thereby, and does
- ------------
irrevocably constitute and appoint                        , attorney, to
                                   -----------------------
transfer said Option on the books of                      .
                                     ---------------------


Dated:                                      Signature:

                                            Address:

                                       9

<PAGE>

                               PARTIAL ASSIGNMENT
                               ------------------

FOR VALUE RECEIVED                     hereby assigns and transfers unto
                  --------------------
                    the right to purchase                shares of the
- -------------------                       --------------
Common Stock of CECO Environmental Corp. by the foregoing Option, and a
proportionate part of said Option and the rights evidenced hereby, and does
irrevocably constitute and appoint attorney, to transfer that part of said
Option on the books of                      .
                      ----------------------


Dated:                                      Signature:

                                            Address:

                         CASHLESS EXERCISE SUBSCRIPTION
                         ------------------------------

The undersigned                         pursuant to the provisions of the
               ------------------------
foregoing Option, hereby agrees to subscribe to that number of shares of
Common Stock of CECO Environmental Corp. as are issuable in accordance with
the formula set forth in paragraph l(b) of the Option, and makes payment
therefore in full by surrender and delivery of this Option.

Dated:                                      Signature:

                                            Address:

                                       10

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.45
<SEQUENCE>13
<FILENAME>dex1045.txt
<DESCRIPTION>ASSET PURCHASE AGREEMENT
<TEXT>
<PAGE>

                                                                   Exhibit 10.45

                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (the "Agreement") made and entered into this
31st day of December 2001 by and between BELFIBER, CO., a Virginia corporation,
(the "Buyer") and AIR PURATOR CORPORATION, a Delaware corporation (the
"Seller").

                                   WITNESSETH:

     WHEREAS, Seller is engaged in the manufacturing of nonwoven fabric filter
products (the "Business"); and

     WHEREAS, Seller wishes to sell and transfer to Buyer certain assets,
properties and business of Seller and to retain certain of its assets and
liabilities pursuant to and in accordance with the terms and conditions of this
Agreement; and

     WHEREAS, Buyer wishes to acquire certain assets, properties and business of
the Seller, pursuant to and in accordance with the terms and conditions of this
Agreement.

     NOW, THEREFORE, for and in consideration of the promises and mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
mutually agree as follows:

     1. Purchase and Sale of Assets. At the Closing, as hereinafter defined,
        ---------------------------
Seller shall sell, assign, transfer and deliver to Buyer all right, title and
interest of Seller in and to the following:

          a) any and all rights Seller possesses with regard to the name "Air
Purator Corporation";

          b) any and all inventory, including, but not limited to, finished
goods, work-in process, raw materials, supplies and other materials
(collectively, the "Inventory") possessed by Seller, as such Inventory exists
(determined in accordance with Section 6 hereof) as of the Closing ;

          c) the intellectual property owned by Seller and specified on Exhibit
1 attached hereto and made a part hereof;

          d) to the extent transferable, all approvals, permits, product
licenses and other governmental authorizations and approvals (federal, state and
local) relating to the Assets, as such items are specified on Exhibit 1;

          e) Seller's customer list, as specified on Exhibit 1; and

          f) certain fixed assets, as specified on Exhibit 1.

(collectively the "Assets").

                                       1

<PAGE>

     Subject to the terms and conditions of this Agreement, Seller shall sell,
assign, transfer and deliver the Assets to Buyer, and Buyer shall purchase the
Assets, for the consideration set forth in Section 4 below.

     2. Excluded Assets. The Assets shall exclude any and all assets owned or
        ---------------
used by Seller that are not specifically identified in Section 1 above on
Exhibit 1.

     3. Liabilities and Obligations to be Assumed Prior to Closing. Except as
        ----------------------------------------------------------
set forth on Exhibit 2 attached hereto and made a part hereof, Buyer shall not
assume, pay or discharge, and shall not be liable for, any debts, obligations,
responsibilities or liabilities of Seller, or any claim, action or suit relating
thereto, whether now existing or hereafter arising, known or unknown, contingent
or absolute, relating to or arising from the period prior to the Closing,
including, by way of example only and not in limitation thereof, Seller's
liabilities in connection with any of Seller's contractual obligations; Seller's
account payables; Seller's tax liabilities of any kind or nature whatsoever; or
any liabilities of Seller of any other kind or description whether accrued,
absolute, contingent or otherwise (collectively the "Liabilities"). Seller shall
remain fully and completely liable for all of Liabilities. From and after the
Closing, Buyer shall be solely responsible for any and all debts, obligations,
responsibilities and liabilities relating to or arising from the Assets or the
business related thereto.

     4. Purchase Price. In consideration of the sale, assignment, transfer and
        --------------
delivery to Buyer of the Assets, and as payment in full therefore, subject to
the adjustment provisions of Section 7 hereof, and upon the terms and subject to
the conditions contained in this Agreement, Buyer shall pay to Seller the sum of
Four Hundred and Seventy-Five Thousand Dollars ($475,000) (the "Purchase Price")
for the Assets. Three Hundred and Seventy-Five Thousand Dollars ($375,000) of
the Purchase Price shall be paid in cash or by debt instrument at the Closing.
Buyer shall execute a promissory note in the form attached hereto as Exhibit 3
(the "Note") for the balance of the Purchase Price.

     5. Payment of Purchase Price. At the Closing, Buyer shall pay any cash
        -------------------------
portion of the Purchase Price to Seller by wire transfer in immediately
available funds, and shall deliver any and all debts instruments, including but
not limited to the Note, to Seller. Any additional Purchase Price required to be
paid pursuant to Section 7 hereof shall be paid in accordance therewith.

     6. Determination of Inventory. The quantity and valuation of the Inventory
        --------------------------
shall be determined as follows:

          a) The value of the Inventory as of the Closing shall be determined
from the books and records of the Seller. A physical inventory shall be taken on
December 29, 2001 and the books and records of the Seller shall be adjusted to
reflect the actual Inventory quantities as of such date (the "Physical Inventory
Amount"). The Physical Inventory Amount shall be valued in accordance with
paragraph (c) of this Section 6. Seller's representatives at Seller's expense
shall conduct such physical inventory jointly with Buyer' s representatives at
Buyer's expense.

          b) The Physical Inventory Amount shall be adjusted at close of
business on the date of the Closing to reflect any incoming receipts or outgoing
shipments that occurred between

                                       2

<PAGE>

the physical inventory and close of business on the date of Closing (the "Final
Inventory Amount"). The books and records of the Seller shall be adjusted to
reflect the Final Inventory Amount. The Final Inventory Amount shall be valued
in accordance with paragraph (c) of this Section 6. The Final Inventory Amount
will be reflected on a "Final Inventory Statement".

          c) The Physical Inventory Amount and Final Inventory Amount reflected
on the Final Inventory Statement shall be determined in accordance with
generally accepted accounting principles, as applied by Seller ("GAAP").

          d) Any disagreement regarding the quantity or value of the Inventory,
or both, shall be resolved in the manner and at the time described in Section 7
(b) hereof.

     7. Post Closing Adjustment.
        -----------------------

          a) The Purchase Price will be adjusted dollar for dollar following the
Closing to the extent that the Final Inventory Amount shown upon the Final
Inventory Statement differs from $150,000 (the "Reference Amount"). Buyer and
Seller will jointly prepare the Final Inventory Statement in the manner set
forth in Section 6 above.

          b) If Buyer and Seller are unable to agree on the Final Inventory
Statement within thirty (30) days after the Closing, then any dispute regarding
the Final Inventory Statement will be resolved by an accounting firm mutually
acceptable to both parties or, in the absence of agreement, by an accounting
firm of national reputation selected by lot after eliminating Seller's and
Buyer's principal outside accountants. The determination by the accounting firm
so selected of the Final Inventory Statement and the Final Inventory Amount
shall be conclusive and binding upon the parties. The fees and expenses of such
accounting firm in acting under this Section 7 (b) shall be shared equally by
Buyer and Seller.

          c) If the Reference Amount is greater than the Final Inventory Amount,
then Seller shall pay to Buyer an amount equal to the difference. If the
Reference Amount is less than the Final Inventory Amount, then Buyer shall pay
to Seller an amount equal to the difference. Payment shall be made by the party
obligated to make such payment not more than five (5) business days following
the determination of the Final Inventory Amount pursuant to Section 7 (a)
hereof. Such payment shall bear interest from the date of Closing to the date of
payment at an interest rate equal to six percent (6%) per annum.

     8. Closing.
        -------

          a) The Closing shall take place at the offices of Seller or its
counsel on December 31, 2001, or in any other manner or any other place as the
parties may hereafter agree (the "Closing").

          b) If the Closing does not occur on or before December 31, 2001, this
Agreement shall terminate and be of no force and effect and neither Buyer nor
Seller shall have any obligation hereunder, except as otherwise specifically set
forth herein.

     9. Collections. Buyer will exercise its best efforts in assisting Seller in
        -----------
the collection and settling of the Seller's accounts receivable (the
"Accounts"). In the event that Buyer

                                       3

<PAGE>

receives any payments on the Accounts, Buyer agrees to hold said payments in
trust for Seller and to forward said payments to Seller within ten (10) days of
receipt thereof.

     10. Buyer's Handling of Unfilled Orders. At the Closing, there shall exist
         -----------------------------------
certain purchase orders received by Seller prior to Closing which have not been
filled (the "Unfilled Orders"). A list of the Unfilled Orders is attached hereto
as Exhibit 4.

          a) Within sixty (60) days of Closing, Buyer shall fulfill, bill and
ship all products which were required to be provided by Seller under Unfilled
Orders.

          b) When fulfilling the Unfilled Orders, Buyer shall provide the
customers with Buyer's billing information for the remittance of payments due
thereon.

          c) Buyer shall hold in trust for Seller all payments received on the
Unfilled Orders and forward said payments less the cost of fulfilling the
Unfilled Orders to Seller within ten (10) days of receipt thereof. Buyer shall
prepare and delivery to Seller with said payments a statement detailing the
fulfillment costs associated with each Unfilled Order. Seller shall be
responsible for any commissions owned with respect to the Unfilled Orders.

          d) For the purposes of this Section, the term "Unfilled Orders" shall
apply only to those purchase orders received by Seller on or before the Closing,
but not yet filled as of the Closing or, if partially filled, then only to the
extent not yet filled as of the Closing.

     11. Earn-Out. The parties shall adjust the Purchase Price of the Assets
         --------
based on the gross revenue ("Gross Revenue"), as determined by GAAP, for the
calendar year 2002, of the Buyer's operation of the Business (the "Earn-Out")
under the following terms and conditions:

          a) Payment Calculation. For each dollar of Gross Revenue of the
             -------------------
Business for the calendar year 2002 in excess of One Million Three Hundred and
Fifty Thousand Dollars ($1,350,000) (the "Baseline"), Seller shall receive 10%
of each such dollar.

          By way of an example only, if the Gross Revenue in 2002 is $2,000,000,
the Seller would receive an Earn-Out payment of $65,000 (($2,000,000-$1,350,000)
* 10%)).

          b)   Determination of Gross Revenue.
               ------------------------------

               (i) Buyer will prepare and deliver financial statements,
          including a statement of operations of the Business (the "Income
          Statement") for year ended December 31, 2002 by February 28, 2003. The
          Income Statement shall be prepared in accordance with GAAP and will
          contain a calculation of Gross Revenue for such period. Buyer will
          give Seller's representatives access to its books and records and to
          the appropriate personnel of Buyer for purposes of confirming the
          Income Statement and the calculation of Gross Revenue. Unless Seller
          notifies Buyer, in writing, that it disagrees with the Income
          Statement and the calculation of Gross Revenue within thirty (30) days
          after receipt thereof, the Income Statement and the calculation of
          Gross Revenue shall be conclusive and binding on Buyer and Seller.

                                       4

<PAGE>

               (ii) If Seller disagrees with Buyer's calculation of Gross
          Revenue for the Business for the year ended December 31, 2002 and
          notifies Buyer in writing of its disagreement with said calculation
          within thirty (30) days of its receipt of the Income Statement and
          calculation of Gross Revenue, then Buyer and Seller shall attempt to
          resolve their differences with respect thereto within thirty (30) days
          after Buyer's receipt of Seller's written notice of disagreement. Any
          dispute regarding the Income Statement not resolved by Buyer and
          Seller within such 30-day period will be resolved by an accounting
          firm mutually acceptable to both parties or, in the absence of
          agreement, by an accounting firm of national reputation selected by
          lot after eliminating Seller's and Buyer's principal outside
          accountants. The determination by the accounting firm so selected of
          such Gross Revenue shall be conclusive and binding upon the parties.
          Buyer and Seller shall share the fees and expenses of such accounting
          firm in acting under this Section 11(b) equally.

          c) Payment Terms. If the Buyer is obligated to make a payment pursuant
             -------------
to this Section 11, to the Seller, Buyer shall execute a promissory note
substantially similar to the note contained in Exhibit 5 attached hereto and
made a part hereof and make payments according to the terms thereof.

     12. Representations and Warranties of Seller. Seller hereby represents and
         ----------------------------------------
warrants as follows:

          a) Corporate.
             ---------

               (i) Seller is a corporation duly organized, validly existing and
          in good standing under the laws of Delaware and has all corporate
          power and authority to own or lease its properties and to carry on the
          Business as presently conducted.

               (ii) Seller has the requisite power to own the Assets and the
          right and power to sell, assign, transfer, convey and deliver the
          Assets to Buyer. All consents, approvals, authorizations and orders
          (corporate, governmental or otherwise) necessary for the due
          authorization, execution and delivery by Seller of this Agreement and
          the valid delivery of the Assets have been obtained or will be
          obtained prior to the Closing.

               (iii) This Agreement and the other documents delivered at the
          Closing have been duly executed and delivered and are the lawful,
          valid and legally binding obligations of Seller enforceable in
          accordance with their respective terms, except as enforcement may be
          limited by applicable bankruptcy, insolvency, rearrangement,
          reorganization or similar debtor relief legislation affecting the
          rights of creditors generally and subject to the application of
          general principles of equity. The execution and delivery of this
          Agreement will not result in a default under or a breach of (i) the
          charter or bylaws of Seller, (ii) any contract, agreement or other
          instrument to which the Seller or the Business are a party, (iii) any
          regulation, order, writ, decree or judgment of any court or
          governmental agency, or (iv) any law applicable to Seller or the
          Business and will

                                       5

<PAGE>

          not restrict the ability of Buyer to use or dispose of the Assets.
          Seller has obtained each consent or approval by notice from any third
          party required on the part of Seller in connection with the execution
          and delivery by Seller of this Agreement or the consummation by Seller
          of the transaction contemplated hereby.

          b) Title to Assets. Except as set forth on Exhibit 6 attached hereto
             ---------------
and made a part hereof, Seller has good title to the Assets, free and clear of
any lien, pledge, charge, security interest, encumbrance, option, restriction or
other adverse claim thereto. The Assets are being sold to Buyer AS IS, WHERE IS,
WITH ALL FAULTS AND WITH NO REPRESENTATION AS TO MERCHANTABILITY, SALEABILITY OR
QUALITY.

          c) Litigation. There are no actions, suits, proceedings, arbitrations,
             -------------
or investigations pending, or to Seller's best knowledge, threatened, which
question the validity of this Agreement or any actions taken or to be taken in
connection herewith or the consummation of the transactions contemplated herein.

          d) Brokers/ Finders Fee. Seller has not retained any broker or finder
             --------------------
in connection with the transactions contemplated herein and is not obligated and
has not agreed to pay any brokerage or finder's commission, fee or similar
compensation.

     13. Representations and Warranties of Buyer. Buyer hereby represents and
         ---------------------------------------
warrants as follows:

          a) Corporate.
             ---------

               (i) Buyer is a corporation duly organized, validly existing and
          in good standing under the laws of Virginia and has all necessary
          power and authority to execute and deliver this Agreement, to carry on
          the businesses in which it is engaged, to own and use the properties
          owned and used by it, to consummate the transactions contemplated
          hereby, and perform its obligations hereunder.

               (ii) All corporate and other proceedings required to be taken on
          the part of Buyer, including, without limitation, all action required
          to be taken by the directors or shareholders of Buyer to authorize
          Buyer to enter into and carry out this Agreement and to purchase the
          Assets, have been, or prior to the Closing will be, duly and properly
          taken. This Agreement has been duly executed and delivered by Buyer
          and is the valid and binding obligation of Buyer enforceable against
          it in accordance with its terms, except as enforcement may be limited
          by equitable principles limiting the right to obtain specific
          performance or other equitable remedies, or by applicable bankruptcy
          or insolvency laws and related decisions affecting creditors' rights
          generally.

          b) Litigation. There are no actions, suits, proceedings, arbitrations,
             ----------
or investigations pending, or to Buyer's best knowledge, threatened, which
question the validity of this Agreement or any actions taken or to be taken in
connection herewith or the consummation of the transactions contemplated herein.

                                       6

<PAGE>

          c) Brokers/Finders Fee. Buyer has not agreed or become obligated to
             -------------------
pay, and has not taken any action that might result in any person or entity
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the transactions
contemplated hereby.

          d) No Consent. No consent, approval, authorization order, filing,
             ----------
registration or qualification of or with any court, governmental authority or
third person is required to be made or obtained by Buyer in connection with the
execution and delivery of this Agreement by Buyer or the consummation by Buyer
of the transactions contemplated hereby.

          e) No Interference. Buyer agrees not to undertake, directly or
             ---------------
indirectly, any action that will materially adversely affect or interfere with
Seller's rights in and obligations to its Accounts and Liabilities.

     14. Seller's Conditions to Close. Each and every obligation of Seller under
         ----------------------------
this Agreement is subject to the satisfaction of the following conditions:

          a) Each of the representations and warranties of Buyer contained
herein shall be true and correct in all material respects as of the Closing.

          b) Buyer shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied and complied with by it as of the Closing.

          c) No action, suit or proceeding before any court or governmental body
pertaining to the Assets or to the transactions contemplated by this Agreement
shall have been instituted or threatened as of the Closing.

          d) Buyer shall deliver to Seller a true and correct copy of the
resolutions of the Buyer's Board of Directors authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
thereby, certified by a duly elected, qualified and acting officer of the Buyer
in form and substance satisfactory to the Seller.

          e) Buyer shall execute a security agreement in the form attached
hereto as Exhibit 7 securing the Note.

          f) Buyer shall execute a promissory note in original principal sum of
$375,000 for the cash portion of the purchase price (the "$375,000 Note") in the
form attached hereto as Exhibit 8.

          g) Buyer shall execute a Revolving Promissory Note (the "Revolving
Note") in the form attached hereto as Exhibit 9 and Anthony Fanale shall execute
a Guaranty of such note in the form attached hereto as Exhibit 10.

          h) Buyer shall execute a security agreement in the form attached
hereto as Exhibit 11 securing the Revolving Note and the $375,000 Note.

                                       7

<PAGE>

     15. Buyer's Conditions to Close. Each and every obligation of Buyer under
         ---------------------------
this Agreement is subject to the satisfaction of the following conditions:

          a) Each of the representations and warranties of Seller contained
herein shall be true and correct in all material respects as of the Closing.

          b) Seller shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied and complied with by it as of the Closing.

          c) No action, suit or proceeding before any court or governmental body
pertaining to the Assets or to the transactions contemplated by this Agreement
shall have been instituted or threatened as of the Closing.

     16. Covenant of Seller. Seller shall perform any and all actions and shall
         ------------------
execute any and all documents necessary to accomplish the transfer of the
Assets, as reasonably requested by Buyer.

     17. Covenant of Buyer. Buyer shall perform any and all actions and shall
         -----------------
execute any and all documents necessary to accomplish the transfer of the
Assets, as reasonably requested by Seller.

     18. Covenant Not To Compete.
         -----------------------

          a) Seller agrees that for a period of Thirty (30) months immediately
following the Closing, neither Seller nor any of its related or affiliated
entities will directly or indirectly, operate, perform, have any interest in or
otherwise be engaged in or concerned with any business which manufactures
nonwoven fabric filter products for use in high temperature pulse-jet baghouses.
For these purposes, ownership of securities of a company whose securities are
publicly traded under a recognized securities exchange not in excess of 5% of
any class of such securities shall not be considered to be competition with
Buyer.

          b) Further, Seller agrees that for Thirty (30) months following the
Closing, neither Seller nor any of its related or affiliated entities will
induce any of Buyer's employees to terminate his or her relationship with Buyer
to work for Seller.

          c) Each of Seller and Buyer acknowledges that the restrictions on its
activities under this Section 18 are necessary for the reasonable protection of
Buyer and constitute a material inducement to Buyer's entering into and
performing this Agreement.

     19. Indemnification.
         ---------------

          a) Indemnification by Seller. Seller agrees to indemnify, defend,
             -------------------------
protect and hold harmless Buyer from, against and in respect of all liabilities,
losses, claims, damages, causes of action, lawsuits, demands, assessments and
costs and expenses (including reasonable attorney's fees and disbursements of
every kind, nature and description) suffered, sustained, incurred or paid by
Buyer in connection with, resulting from or arising out of, directly or
indirectly, any breach of any representation or warranty of Seller set forth in
this Agreement, or

                                       8

<PAGE>

any agreement executed in connection herewith; or any nonfulfillment of any
covenant or agreement on the part of Seller in this Agreement.

          b) Indemnification by Buyer. Buyer agrees to indemnify, defend,
             ------------------------
protect and hold harmless Seller from, against and in respect of all
liabilities, losses, claims, damages, causes of action, lawsuits, demands,
assessments and costs and expenses (including reasonable attorney's fees and
disbursements of every kind, nature and description) suffered, sustained,
incurred or paid by Seller in connection with, resulting from or arising out of,
directly or indirectly, any breach of any representation or warranty of Buyer
set forth in this Agreement, or any agreement executed in connection herewith;
or any nonfulfillment of any covenant or agreement on the part of Buyer in this
Agreement.

          c) Defense of Actions. Each party indemnified pursuant to Sections
             ------------------
19(a) or 19(b) hereof (an "Indemnified Party") will give the indemnitor (the
"Indemnitor") written notice of any action or proceeding relating to a claim or
loss for which indemnity is sought hereunder within ten (10) business days after
any such Indemnified Party shall have had actual notice thereof; provided,
however, that failure to give such notice shall not impair the Indemnified
Party's rights unless the Indemnitor is actually prejudiced by such failure. The
Indemnified Party and the Indemnitor shall work cooperatively to minimize any
claim or loss for which indemnity is sought and the Indemnitor shall have ten
(10) days after receipt of the aforementioned written notice to cure any breach
(to the extent that such breach can be cured) that leads to a request for
indemnity. The Indemnitor, at its option and expense, shall be entitled to
participate in or direct the defense or settlement of such action, provided the
Indemnitor employs counsel reasonably satisfactory to such Indemnified Party;
provided that prior to the Indemnitor assuming control of such defense it shall
first demonstrate to the Indemnified Party in writing such Indemnitor's
financial ability to provide full indemnification to the Indemnified Party with
respect to such action, lawsuit, proceeding, investigation or other claim giving
rise to such claim for indemnification hereunder and provided further, that:

               (i) the Indemnified Party shall be entitled to participate in the
          defense of such claim and to employ counsel of its choice for such
          purpose; provided that the fees and expenses of such separate counsel
          shall be borne by the Indemnified Party other than any fees and
          expenses of such separate counsel that are reasonably incurred prior
          to the date Indemnitor effectively assumes control of such defense
          which, notwithstanding the foregoing shall be borne by the Indemnitor,
          provided, however, that the Indemnified Party is not responsible for
          any delay in Indemnitor assuming control of such defense.

               (ii) if the Indemnitor shall control the defense of any such
          claim, the Indemnitor shall obtain the prior written consent of the
          Indemnified Party before entering into any settlement of a claim or
          ceasing to defend such claim if, pursuant to or as a result of such
          settlement or cessation, injunctive or other equitable relief will be
          imposed against the Indemnitee or if such settlement does not
          expressly and unconditionally release the Indemnified Party from all
          liabilities and obligations with respect to such claim, without
          prejudice.

                                       9

<PAGE>

          Such Indemnified Party shall have the right to employ its own counsel
          in any such case, but the Indemnitor shall not have the right to
          assume control of such defense and the fees and expenses of such
          counsel shall be borne by such Indemnified Party in the event (i) the
          employment of such counsel has been authorized by the Indemnitor, (ii)
          the Indemnitor fails to defend the claim in a vigorous and time
          manner, or (iii) such Indemnified Party and counsel selected by the
          Indemnitor shall reasonably conclude that there are defenses available
          to the Indemnified Party that are in conflict with those available to
          the Indemnitor. In the event of any of (i), (ii) or (iii), expenses of
          counsel employed by such Indemnified Party shall be borne by the
          Indemnitor.

          d) Limitations on Indemnification. No Indemnitor shall be liable to an
             ------------------------------
Indemnified Party with respect to violations of the representations and
warranties pursuant to Section 19(a) or 19(b) hereof until the total of all
claims or losses for breaches of representations and warranties for which
indemnity is sought by such Indemnified Party exceeds $50,000 and then only for
the amount by which such claims and losses exceed $50,000. In no event shall the
maximum aggregate liability of the Seller or Buyer pursuant to Section 19(a)
hereof exceed $150,000. For purposes of determining whether there has been a
breach of a representation or warranty, the representations and warranties set
forth in this Agreement shall be considered without regard to any materiality
qualification set forth therein.

          e) Other Remedies. The right of an Indemnified Party to be indemnified
             --------------
under this Section 19 shall not limit, reduce or otherwise affect, except as
expressly provided herein, the rights and remedies of such Indemnified Party
with respect to the matters indemnified hereunder. Any indemnification of the
Buyer or the Seller pursuant to this Section 19 shall be effected by wire
transfer of immediately available funds to an account designated by the Buyer or
the Seller, as the case may be, within fifteen (15) days following the
determination thereof.

     20. Post Closing Covenants. From and after the date of this Agreement, the
         ----------------------
parties covenant, represent and warrant as follows:

          a) Continued Assistance. Seller shall refer to Buyer, as promptly as
             --------------------
practicable, any telephone calls, letters, orders, notices, requests, inquiries
and other communications relating to the Business or the Assets.

          b) Certain Payments. Following the Closing, Seller shall use
             ----------------
reasonable efforts to pay and fully discharge all Liabilities within ninety (90)
days of Closing.

          c) Access to Records. Following the Closing, Seller and Buyer shall
             -----------------
allow each other access to available books and records of Seller's Business as
either shall reasonably request.

                                       10

<PAGE>

     21. Remedies.
         --------

          a) The rights and remedies provided by this Agreement and at law or
equity are cumulative and the use of any one right or remedy by any party does
not preclude or waive the right to use any or all other remedies. Such rights
and remedies are given in addition to any other rights the parties may have by
law, statute or otherwise.

     22. Notice. Any notice or demand to be given hereunder by either party
         ------
shall be effected by personal delivery in writing or by certified mail, postage
prepaid, return receipt requested, and shall be deemed communicated forty-eight
(48) hours after mailing. Mailed notices shall be addressed to the parties as
follows:

                If to Buyer:       Belfiber, Co.
                                   115 Oakley Street
                                   PO Box 597
                                   South Hill, VA 23970
                                   Attn: Anthony Fanale

                If to Seller:      Air Purator Corporation
                                   15 Fifth Street, Area B
                                   Taunton, Massachusetts 02780

                With a Copy to:    Marshall Morris
                                   Vice President of Finance and Administration/
                                   Chief Financial Officer
                                   CECO Environmental Corporation
                                   3120 Forrer Street
                                   Cincinnati, Ohio 45209

or such other address as the parties may indicate by written notice.

     23. Arbitration. Any controversy, dispute or claim arising out of, in
         -----------
connection with, or in relation to the interpretation, performance or breach of
this Agreement, or any amount due hereunder, including, without limitation, any
claim based on contract, tort or statute shall be settled, solely and
exclusively, by arbitration. Any arbitration pursuant to this Agreement shall be
conducted in Cincinnati, Ohio before and in accordance with the then existing
Commercial Dispute Resolution Procedures through the American Arbitration
Association, using an arbitrator mutually selected by Buyer, and Seller, or
applicable from a list of those designated by the American Arbitration
Association. Any arbitration shall be final and binding. The findings shall be
delivered in a written opinion with findings of fact based on the record. Any
judgment upon any interim or final award or order rendered by the arbitrator may
be entered by any State or Federal court having jurisdiction thereof. The
parties intend that any agreement pursuant hereto to arbitrate be valid,
enforceable and irrevocable. Each party in any arbitration proceeding commenced
hereunder shall bear such party's own costs and expenses (including expert
witness and attorneys' fees) of investigating, preparing and pursuing such
arbitration claim.

                                       11

<PAGE>

     24.  Miscellaneous.
          -------------

          a) All representations and warranties contained herein or made in
writing by or on behalf of any party to this Agreement in connection with this
Agreement and the provisions of Sections 12, 13, 14, 15, 16, 17,18, 19, 20 and
23 shall survive the Closing of this transaction.

          b) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns. No party may assign any
of its rights or obligations hereunder without the prior written consent of the
other party.

          c) This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof and supersedes all previous
negotiations, commitments and writings.

          d) If any provision of this Agreement shall be held unenforceable,
invalid or void to any extent for any reason, such provision shall remain in
force and effect to the maximum extent allowable, if any, and the enforceability
or validity of the remaining provisions of this Agreement shall not be affected
thereby.

          e) This Agreement may only be amended, modified, superceded or
supplemented by a written instrument duly executed by both parties hereto.

          f) The failure of any party to enforce any provision of this Agreement
shall not be a waiver of any other provision or subsequent breach of the same or
any other obligation hereunder.

          g) This Agreement may be executed in counterparts each of which will
deemed an original but all of which will constitute one and the same instrument.
Facsimile signatures shall have the same force and effect as original
signatures.

          h) The paragraph headings of this Agreement are for reference only and
shall not be considered in the interpretation of this Agreement.

          i) This Agreement shall be construed in accordance with and governed
by the law of the State of Ohio.

     IN WITNESS WHEREOF, the parties have executed this Agreement.

AIR PURATOR CORPORATION,                 BELFIBER, CO.,
a Delaware corporation                       a Virginia corporation


By /s/ Michael J. Meyer                     By /s/ Anthony Fanale
  -----------------------------                ---------------------------------
Name                                         Name  Anthony Fanale
    ---------------------------                  -------------------------------
Its    President                             Its
   ----------------------------                 --------------------------------

                                    12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.48
<SEQUENCE>14
<FILENAME>dex1048.txt
<DESCRIPTION>FORM OF WARRANT
<TEXT>
<PAGE>

                                                                   Exhibit 10.48

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN
     ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
     CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE
     SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED
     IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
     OR AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE
     COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
     ACT OF 1933, AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS.

                                     WARRANT

                                                               December 31, 2001

                  To Purchase        Shares of Common Stock of
                              ------
        CECO Environmental Corp., a New York corporation (the "Company")

     1. Number of Shares; Exercise Price; Term. This certifies that for good and
        --------------------------------------
valuable consideration, receipt and sufficiency of which are hereby acknowledged
               ("Holder") is entitled, upon the terms and subject to the
- --------------
conditions hereinafter set forth, at any time after December 31, 2001, and at or
prior to 11:59 p.m. Central Time, on December 31, 2006 (the "Expiration Time"),
but not thereafter, to acquire from the Company, in whole or in part, from time
to time, up to                     (       ) fully paid and nonassessable shares
               -------------------  -------
(the "Shares") of common stock, $0.011 par value, of the Company ("Common
Stock"), at a purchase price of $3.60 per share (the "Exercise Price"). The
right to purchase all of the Shares under the Warrant shall vest immediately
upon issuance of this Warrant. The number of Shares, type of security and
Exercise Price are subject to adjustment as provided herein, and all references
to "Common Stock" and "Exercise Price" herein shall be deemed to include any
such adjustment or series of adjustments.

     2. Exercise of Warrant. The purchase rights represented by this Warrant are
        -------------------
exercisable by the Holder, in whole or in part, at any time, or from time to
time, prior to the Expiration Time and the Notice of Exercise annexed hereto,
all duly completed and executed on behalf of the Holder, at the office of the
Company in Toronto, Ontario (or such other office or agency of the Company as it
may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company) and upon payment of the Exercise Price
for the Shares thereby purchased (i) by cash, certified or cashier's check, or
wire transfer payable to the Company or (ii) cashless exercise, in which case a
Holder shall indicate on the Notice of Exercise that the Holder is exercising
this Warrant or a portion thereof by authorizing the Company to withhold from
issuance that number of shares of the Common Stock issuable upon such exercise
of the Warrant which when multiplied by the Market Price (as defined below) of
the Common Stock is equal to the aggregate Exercise Price of this Warrant or the
portion being

                                       1

<PAGE>

exercised.). Thereupon, the Holder as the holder of this Warrant, shall be
entitled to receive from the Company a stock certificate in proper form
representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.

     3. Issuance of Shares. Certificates for Shares purchased hereunder shall be
        ------------------
delivered to the Holder within a reasonable time after the date on which this
Warrant shall have been exercised in accordance with the terms hereof. All
Shares that may be issued upon the exercise of this Warrant shall, upon such
exercise, be duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the
issuance thereof (other than liens or charges created by or imposed upon the
Holder as the holder of the Warrant or taxes in respect of any transfer
occurring contemporaneously or otherwise specified herein). The Company agrees
that the Shares so issued shall be and shall for all purposes be deemed to have
been issued to the Holder as the record owner of such Shares as of the close of
business on the date on which this Warrant shall have been exercised or
converted in accordance with the terms hereof. The Company will at all times
reserve and keep available, solely for issuance, sale and delivery upon the
exercise of this Warrant, such number of Shares, equal to the number of such
Shares purchasable upon the exercise of this Warrant.

     4. No Fractional Shares or Scrip. No fractional Shares or scrip
        -----------------------------
representing fractional Shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional Warrant Share to which the Holder as the
holder would otherwise be entitled, the Holder shall be entitled, at its option,
to receive either (i) a cash payment equal to the excess of Market Value for
such fractional Warrant Share above the Exercise Price for such fractional share
(as determined in good faith by the Company) or (ii) a whole Warrant Share if
the Holder tenders the Exercise Price for one whole share.

     5. No Rights as Shareholders. This Warrant does not entitle the Holder as a
        -------------------------
holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.

     6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
        --------------------------------
surrender hereof by Holder as the registered holder at the above-mentioned
office or agency of the Company, for a new Warrant of substantially identical
form and dated as of such exchange. The Company shall maintain at the
above-mentioned office or agency a registry showing the name and address of
Holder as the registered Holder of this Warrant. This Warrant may be surrendered
for exchange or exercise, in accordance with its terms, at the office of the
Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.

     7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
        -------------------------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will

                                       2

<PAGE>

make and deliver a new Warrant of like tenor and dated as of such cancellation
and reissuance, in lieu of this Warrant.

     8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
        ----------------------------------
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day not a
Saturday or a Sunday or a legal holiday.

     9. Adjustments of Rights. The purchase price per Share and/or the number of
        ---------------------
Shares purchasable hereunder are subject to adjustment from time to time as
follows:

          (a) Merger or Consolidation. If at any time there shall be a merger or
              -----------------------

a consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the Holder as the holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities or property
(including cash) of the successor corporation resulting from such merger or
consolidation, to which the Holder as the holder of the stock deliverable upon
exercise of this Warrant would have been entitled in such merger or
consolidation if this Warrant had been exercised immediately before such merger
or consolidation. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the Holder as the holder of this Warrant after the merger or
consolidation. This provision shall apply to successive mergers or
consolidations.

          (b) Reclassification, Recapitalization, etc. If the Company at any
              ---------------------------------------
time shall, by subdivision, combination or reclassification of securities,
recapitalization, automatic conversion, or other similar event affecting the
number or character of outstanding shares of Common Stock, or otherwise, change
any of the securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.

          (c) Split, Subdivision or Combination of Shares. If the Company at any
              -------------------------------------------
time while this Warrant remains outstanding and unexpired shall split, subdivide
or combine the securities as to which purchase rights under this Warrant exist,
the Exercise Price shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.

          (d) Common Stock Dividends. If the Company at any time while this
              ----------------------
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in shares of Common Stock, or make any other distribution with
respect to Common Stock payable in shares of Common Stock, then the Exercise
Price shall be adjusted, from and after the date of determination of the
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately

                                       3

<PAGE>

prior to such date of determination by a fraction (i) the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (ii) the denominator of which shall
be the total number of shares of Common Stock outstanding immediately prior to
such dividend or distribution, plus the number of shares of common stock
issuable in payment of such dividend or distribution.

     10. Adjustment of Number of Shares. Upon each adjustment in the Exercise
         ------------------------------
Price pursuant to Section 9 hereof, the number of Shares purchasable hereunder
shall be adjusted, to the nearest whole Share, to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment by a fraction (i) the numerator of which shall be the Exercise Price
immediately prior to such adjustment, and (ii) the denominator of which shall be
the Exercise Price immediately after such adjustment.

     11. Notice of Adjustments; Notices. Whenever the Exercise Price or number
         ------------------------------
or type of securities issuable hereunder shall be adjusted pursuant to Sections
9 and 10 hereof, the Company shall issue and provide to the Holder as the holder
of this Warrant, within fifteen (15) business days after the event requiring the
adjustment, a certificate signed by an officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise
Price and number of Shares purchasable hereunder after giving effect to such
adjustment.

     12. Governing Law. This Warrant shall be binding upon any successors or
         -------------
assigns of the Company. This Warrant shall constitute a contract under the laws
of New York and for all purposes shall be construed in accordance with and
governed by the laws of said state, without giving effect to the conflict of
laws principles.

     13. Amendments. This Warrant may be amended and the observance of any term
         ----------
of this Warrant may be waived only with the written consent of the Company and
the Holder as the holder hereof.

     14. Notice. All notices hereunder shall be in writing and shall be
         ------
effective (a) on the day on which delivered if delivered personally or
transmitted by telecopier with evidence of receipt, (b) one business day after
the date on which the same is delivered to a nationally recognized overnight
courier service with evidence of receipt, or (c) five business days after the
date on which the same is deposited, postage prepaid, in the U.S. mail, sent by
certified or registered mail, return receipt requested, and addressed to the
party to be notified at the address indicated below for the Company, or at the
address for the Holder set forth in the registry maintained by the Company
pursuant to Section 6 (which initially shall be as set forth in the last page of
this Warrant), or at such other address and/or telecopy and/or to the attention
of such other person as the Company or the Holder may designate by ten-day
advance written notice. Any notice to the Company shall include a copy sent in
the same manner as notices are sent hereunder to Leslie J. Weiss, Sugar,
Friedberg & Felsenthal, 30 N. LaSalle, Suite 2600, Chicago, IL 60602.

                                       4

<PAGE>

     15. Registration Rights
         -------------------

          (a) Piggyback Registration. If, at any time commencing January 1,
              ----------------------
2002, and expiring on the Expiration Time, the Company proposes to register any
of its securities, not registered on the date hereof, under the Securities Act
of 1933 (the "Act") (other than in connection with a merger or pursuant to Form
S-4 or Form S-8 or any similar form) it will give written notice by certified or
registered mail, at least twenty (20) days prior to the filing of each such
registration statement, to the Holders of this Warrant and/or the Shares of its
intention to do so. If any of the Holders of the Warrants and/or Shares notify
the Company within fifteen (15) 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 Shares
the opportunity to have any such 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 persons that made a demand for registration,
(c) third, the Shares and other securities requested to be included in such
registration pursuant to piggyback registration rights which in the opinion of
such underwriter, and if there is no underwriter, the Board of Directors, in
good faith, can be sold, pro rata among such persons on the basis of the number
of Shares and other securities requested to be registered by such persons, and
(d) fourth, other securities requested to be included in such registration.

         Notwithstanding the provisions of this Section 15(a), the Company
shall have the right at any time after it shall have given written notice
pursuant to this Section 15(a) (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.

          (b) Covenants of the Company With Respect to Registration.
              -----------------------------------------------------

               In connection with any registration under Section 15(a) hereof,
the Company covenants and agrees as follows:

               (I) The Company shall furnish to the Holder with respect to the
Shares registered under the registration statement such number of copies of the
registration statement, prospectuses and preliminary prospectuses in conformity
with the requirements of the Act and such other documents as the Holder may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Shares by the Holder, provided, however, that the
obligation of the Company to deliver copies of prospectuses or preliminary
prospectuses to the Holder shall be subject to the receipt by the Company of
reasonable assurances from the Holder that the Holder will comply with the
applicable provisions of the Act and of such other securities or blue sky laws
as may be applicable in connection with any use of such prospectuses or
preliminary prospectuses. The Company shall also file such applications and
other documents as may be necessary to permit the sale of the Shares to the
public during the registration period in those states to which the Company and
the holders of the Shares shall mutually agree.

                                       5

<PAGE>

               (II) 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
Section 15(a) hereof including, without limitation, the Company's legal and
accounting fees, printing expenses, blue sky fees and expenses.

               (III) The Company shall indemnify the Holder(s) of the 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, except for losses,
claims, damages, expenses or liabilities resulting from, based on or arising out
of information included in the registration statement based on written
disclosure provided by the Holder(s) to the Company specifically for inclusion
in the registration statement.

               (IV) In order to provide for just and equitable contribution
under the Act in any case in which (i) any Holder of the 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 15(b)(III) hereof provide for
indemnification in such case or (ii) contribution under the Act may be required
on the part of any Holder of the Shares, or controlling person thereof, then the
Company, any such Holder of the 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 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 15(b)(IV)
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
15(b)(IV). 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 15(b)(IV) 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.

               (V) The Holder(s) of the 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

                                       6

<PAGE>

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.

               (VI) advise the Holder, promptly after it shall receive notice or
obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.

               (VII) 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.

     16. Obligations of Holders. It shall be a condition precedent to the
         ----------------------
obligations of the Company to take any action pursuant to Section 15 hereof that
each of the selling Holders shall:

          (a) Furnish to the Company such information regarding themselves, the
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 or
dealers 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 Shares.

          (b) The Holder agrees that it will promptly notify the Company of any
changes in the information set forth in the registration statement regarding the
Holder or its plan of distribution.

          (c) Notify the Company, at any time when a prospectus relating to the
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.

     17. Transfer. This Warrant may be transferred, in whole or in part, only
         --------
pursuant to an effective registration statement filed under the Act, or an
applicable exemption therefrom as provided in the transfer conditions referred
to in the legend endorsed on the first page of this Warrant.

     18. Entire Agreement. This Warrant and the form attached hereto contain the
         ----------------
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or undertakings with
respect thereto.

     19. Market Price. "Market Price" means as to any security the closing price
         ------------
of such security's sales on the principal securities exchange on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest

                                       7

<PAGE>

bid and lowest asked prices on such exchange at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which "Market Price" is
being determined and the 20 consecutive business days prior to such day. If at
any time such security is not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, the "Market Price" shall be the
fair value thereof without discount for lack of marketability or minority
discount determined by the Board of Directors of the Company.

     IN WITNESS WHEREOF, CECO Environmental Corp. has caused this Warrant to be
executed by its duly authorized officer.

                                             Dated As Of: December 31, 2001
                                             CECO Environmental Corp.,
                                             a New York corporation


                                             By:
                                                      --------------------------
                                             Its:
                                                      --------------------------

Name, Address and
Social Security Number of Holder:

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

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

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

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

                                       8

<PAGE>

                               NOTICE OF EXERCISE
                               ------------------

To:  CECO Environmental Corp.

     1. The undersigned hereby elects to purchase                  shares (the
                                                  ----------------
"Shares") of common stock $0.01 par value of CECO Environmental Corp. (the
"Company") pursuant to the terms of the attached Warrant, and (check on of the
following):

          tenders herewith payment of the purchase price and any transfer taxes
     ----
payable pursuant to the terms of the Warrant, together with an investment
representation statement in form and substance satisfactory to legal counsel to
the Company; or

           gives direction to the Company to withhold from issuance a number of
     -----
Shares issuable upon exercise of the Warrant (or portion thereof) which when
multiplied by the Market Price (as defined in the Warrant) of the Shares is
equal to the aggregate exercise price of this Warrant (or portion being
exercised) and an investment representation statement in form and substance
satisfactory to legal counsel to the Company.

     2. The Shares to be received by the undersigned upon exercise of the
Warrant are being acquired for its own account, not as a nominee or agent, and
not with a view to resale or distribution of any part thereof, and the
undersigned has no present intention of selling, granting any participation in,
or otherwise distributing the same, except in compliance with applicable federal
and state securities laws. The undersigned further represents that it does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to the Shares. The undersigned believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Shares.

     3. Please issue a certificate or certificates representing said Shares in
the name of the undersigned.

     4. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.

                                          a)
                                                   -----------------------------
                                                   Signature

                                          b)
                                                   -----------------------------
                                                   Date

                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>15
<FILENAME>dex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE COMPANY
<TEXT>
<PAGE>

                                                                      Exhibit 21

                           SUBSIDIARIES OF THE COMPANY

CECO Group, Inc.

CECO Filters, Inc. (subsidiary of CECO Group, Inc.)

Kirk & Blum Manufacturing Company (subsidiary of CECO Group, Inc.)

kbd/Technic, Inc. (subsidiary of CECO Group, Inc.)

CECO Abatement Systems, Inc. (subsidiary of CECO Group, Inc.)

Air Purator Corporation (subsidiary of CECO Filters, Inc.)

New Busch Co., Inc. (subsidiary of CECO Filters, Inc.)

                                       1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>16
<FILENAME>dex231.txt
<DESCRIPTION>CONSENT OF MARGOLIS & COMPANY, P.C.
<TEXT>
<PAGE>

                                                                    Exhibit 23.1

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
report dated March 27, 2002 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, 2001.


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



Bala Cynwyd, PA
March 27, 2002




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
