EXHIBIT 10.1

EXECUTION VERSION

THIRD AMENDMENT

TO

CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
February 29, 2008 (the “Effective Date”), by and among, on the one hand, CECO
ENVIRONMENTAL CORP., a Delaware corporation (“Parent”), CECO GROUP, INC., a
Delaware corporation (“Group”) and each of the following Subsidiaries of Parent
as Borrowers under this Amendment and the Credit Agreement: CECO FILTERS, INC.,
a Delaware corporation (“Filters”), NEW BUSCH CO., INC., a Delaware corporation
(“New Busch”), THE KIRK & BLUM MANUFACTURING COMPANY, an Ohio corporation
(“K&B”), KBD/TECHNIC, INC., an Indiana corporation (“Technic”), CECOAIRE, INC.,
a Delaware corporation (“Aire”), CECO ABATEMENT SYSTEMS, INC., a Delaware
corporation (“Abatement”), H.M. WHITE, INC., a Delaware corporation (“H.M.
White”), EFFOX INC., formerly known as CECO ACQUISITION CORP., a Delaware
corporation (“Effox”), GMD ENVIRONMENTAL TECHNOLOGIES, INC. formerly known as
GMD ACQUISITION CORP., a Delaware corporation (“GMD”), FKI, LLC, a Delaware
limited liability company (“FKI LLC”), CECO MEXICO HOLDINGS LLC, a Delaware
limited liability company (“CECO Mexico LLC”), and FKI ACQUISITION CORP., a
Delaware corporation (“FKI Acquisition”), and, on the other hand, FIFTH THIRD
BANK, an Ohio banking corporation (“Lender”), is as follows:

Preliminary Statements

A. Parent, Group and Borrowers (the “Loan Parties”) and Lender are parties to a
Credit Agreement dated as of December 29, 2005, as amended by the First
Amendment to Credit Agreement dated as of June 8, 2006 and the Second Amendment
to Credit Agreement dated as of February 28, 2007 (as amended, the “Credit
Agreement”). Capitalized terms which are used, but not defined, in this
Amendment will have the meanings given to them in the Credit Agreement.

B. The Loan Parties have requested that Lender: (i) consent to the FKI
Acquisition; (ii) increase the maximum Revolving Loan Commitment from
$20,000,000 to $30,000,000 (subject to availability); (iii) make an additional
term loan in the aggregate amount of $5,000,000 to finance, in part, the FKI
Acquisition; (iv) increase the maximum capital expenditures Financial Covenant
in Fiscal Year 2007 to $2,000,000 and commencing with Fiscal Year 2008 to
$2,500,000; (v) make certain changes to the incentive pricing with respect to
LOC Fee, to be based upon Borrowers’ Fixed Charge Coverage Ratio; and (vi) make
certain other amendments to the Credit Agreement and certain of the other Loan
Documents.

C. Lender is willing to consent to such requests and to so amend the Credit
Agreement and other Loan Documents, all on the terms, and subject to the
conditions, of this Amendment.

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Statement of Agreement

In consideration of the mutual covenants and agreements set forth in this
Amendment, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender and the Loan Parties hereby
agree as follows:

1. Amendments to Credit Agreement. Subject to the satisfaction of the conditions
of this Amendment, the Credit Agreement is hereby amended as follows:

1.1 Section 1.1 of the Credit Agreement is hereby amended by the addition of the
following definitions, in their proper alphabetical order, to provide in their
entirety as follows:

“CECO Environmental Mexico” means CECO Environmental Mexico, S. de R.L. de C.V.,
a company organized under the laws of Mexico.

“CECO Environmental Services” means CECO Environmental Services, S. de R.L. de
C.V., a company organized under the laws of Mexico.

“CECO Mexico LLC” means CECO Mexico Holdings LLC, a Delaware LLC.

“CECO India” means CECO Filters India Private Limited, a corporation organized
and existing under the laws of India.

“FKI Acquisition Corp.” means FKI Acquisition Corp., a Delaware corporation, and
its successors and assigns.

“FKI” means Fisher-Klosterman, Inc., a Kentucky corporation.

“FKI Acquisition” means the acquisition by FKI Acquisition Corp. of
substantially all of the assets of FKI, all in accordance with, and pursuant to
the terms of, the FKI Acquisition Documents.

“FKI Acquisition Agreement” means the Asset Purchase Agreement dated as of
February 1, 2008 by and among Parent, FKI Acquisition Corp., FKI, and the other
parties thereto.

“FKI Acquisition Documents” means the FKI Acquisition Agreement and every other
document or agreement executed or delivered by any Loan Party in connection with
the FKI Acquisition.

 

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“FKI Earn-out Payment” means any Earn-Out Payment (as defined in the FKI
Acquisition Agreement) paid by a Loan Party in accordance with the FKI
Acquisition Agreement.

“Fisher Klosterman Shanghai” means Fisher Klosterman Buell Shanghai Company,
Ltd., a company organized under the laws of China.

“FKI, LLC” means FKI, LLC, a Delaware limited liability company.

“GMD” means GMD Environmental Technologies, Inc., formerly known as GMD
Acquisition Corp., a Delaware corporation.

“Term Loan C” has the meaning given in Section 2.2(a).

“Term Loan Note C” has the meaning given in Section 2.2(a).

“Third Amendment” means the Third Amendment to this Agreement dated as of
February 29, 2008.

1.2 The following definitions in Section 1.1 of the Credit Agreement are hereby
amended in their entirety by substituting the following in their respective
steads:

“Affiliate” means, as to any Person (the “Subject Person”), any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, the Subject Person. For purposes of this definition,
“control” of a Person means the power, direct or indirect, (a) to vote 5% or
more of the securities (or other Ownership Interests) having voting power for
the election of directors (or managers in the case of a limited liability
company) of the Person or (b) otherwise to direct or cause the direction of the
management and policies of the Person, whether by contract or otherwise. Without
limiting the generality of the foregoing, each of the following will be deemed
an Affiliate of a Borrower for purposes of this Agreement, Parent, Group, FKI,
LLC, CECO Mexico LLC, CECO India, Fisher Klosterman Shanghai, CECO Environmental
Mexico, CECO Environmental Services and each officer and director of a Loan
Party.

“Adjusted EBITDA” means the total (without duplication and all as determined on
a consolidated basis in accordance with GAAP), in Dollars, of EBITDA for the
applicable period, (a) minus Non-financed Capital Expenditures for that same
period, exclusive of Excluded Capital Expenditures (as defined in Section 5.3);
(b) minus the aggregate cash amount of the Loan Parties’ income and franchise
tax expense for that same period to the extent deducted in the determination of
Net Income; (c) minus any gain or plus any non-cash loss arising from the sale
of capital assets to the extent included or

 

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deducted in the determination of Net Income; (d) minus any gain arising from the
write-up of any assets (excluding inventory) or plus any non-cash loss from the
write-down of any assets, each to the extent included (or deducted in the case
of non-cash losses) in the determination of Net Income; (e) minus any
extraordinary gains and items of income to the extent included in the
determination of Net Income or plus any non-cash extraordinary items of loss to
the extent deducted in the determination of Net Income; (f) minus any gains (or
plus any non-cash losses) recognized by the Loan Parties as earnings which
relate to adjustments made by the Loan Parties as a result of any extraordinary
accounting adjustment to the extent included (or deducted in the case of
non-cash losses) in the determination of Net Income; (g) minus non-operating,
non-recurring gains (or plus any non-cash losses) from time to time occurring to
the extent included (or deducted in the case of non-cash losses) in the
determination of Net Income; (h) plus any non-cash expense or minus any non-cash
gain or income during such period resulting from (i) a change in the price of
Parent’s common stock opposite the strike price of its options and warrants
outstanding from time to time, (ii) stock option expenses, and (iii) impairment
of goodwill; (i) minus the aggregate amount of any dividends to Parent’s
stockholders, if any, permitted expressly by Lender which are paid in cash by
Parent during the applicable period; and (j) minus the aggregate amount of Effox
Earn-out Payments and FKI Earn-out Payments made by any Loan Party in cash
during the applicable period to the extent not deducted in the determination of
Net Income which was used to determine such EBITDA. The term “applicable period”
in this definition means Test Period in the case of determining the Fixed Charge
Coverage Ratio or the Maximum Total Funded Debt to Adjusted EBITDA Ratio and
Fiscal Year in the case of determining Excess Cash Flow.

“Applicable LOC Fee Percentage” means, as of any date, the applicable percentage
shown in the applicable column in the table below based on the then applicable
Fixed Charge Coverage Ratio. As of the Effective Date (as defined in the Third
Amendment), the Applicable LOC Fee Percentage is 1.0% (i.e., Pricing Grid Level
3).

 

Pricing Grid

Level

  

Fixed Charge

Coverage Ratio

   Applicable LOC Fee
Percentage

Level 1

   £ 1.50 to 1.0    2.50%

Level 2

   > 1.50 to 1.0 and £ 2.0 to 1.0    1.50%

Level 3

   > 2.0 to 1.0    1.00%

“Borrower” means each of Filters, New Busch, K&B, Technic, Aire, Abatement, H.M.
White, CECO Acquisition (now known as Effox Inc.), GMD, FKI Acquisition and the
Domestic Subsidiaries of Parent or Group hereafter becoming a party to this
Agreement pursuant to Section 5.9(b), and “Borrowers” means, collectively,
Filters, New Busch, K&B,

 

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Technic, Aire, Abatement, H.M. White, CECO Acquisition (now known as Effox
Inc.), GMD, FKI Acquisition and such additional Domestic Subsidiaries. To the
extent a term or provision of this Agreement or any of the other Loan Documents
is applicable to a “Borrower”, it is applicable to each and every Borrower
unless the context expressly indicates otherwise. For the avoidance of doubt,
neither FKI, LLC nor CECO Mexico LLC shall be a Borrower.

“Excess Cash Flow Payment” has the meaning given in Section 2.2(c)(iv).

“Fixed Charges” means, for the applicable period, the total (without
duplication), in Dollars, of (all as determined on a consolidated basis in
accordance with GAAP): (a) the principal amount of the Loan Parties’ long-term
Indebtedness, in each case paid during the applicable period, including those
under Term Loan Note C (other than any Excess Cash Flow Payment with respect to
Term Loan C), the ICS Note, the Sandler Note, and the Subordinated Debt Notes
(as defined within the definition of Subordinated Debt Documents) (whether
classified, as of any date, as long-term Indebtedness); plus (b) scheduled
capital lease payments by the Loan Parties during the applicable period; and
plus (c) the Loan Parties’ aggregate cash interest expense for the applicable
period, including interest paid on the Obligations, all capital lease
obligations, the Subordinated Debt, and any other Indebtedness for the
applicable period; provided, however, that the following amounts will be
excluded for purposes only of determining Fixed Charges, that the portion of the
ICS Debt, the Sandler Debt, and the Subordinated Debt which is repaid, with
Lender’s prior consent, solely from the net cash proceeds received from the
exercise of certain warrants issued Parent. The term “applicable period” in this
definition means Test Period in the case of determining the Fixed Charge
Coverage Ratio or the Maximum Total Funded Debt to Adjusted EBITDA Ratio and
Fiscal Year in the case of determining Excess Cash Flow.

“Letter of Credit Availability” means, as at any time, an amount equal to the
lesser of (a) an amount equal to (i) $5,000,000 less (ii) the then Letter of
Credit Exposure and (b) the then Revolving Loan Availability.

“Loans” means the Revolving Loans (including the Letter of Credit Exposure),
Term Loan C and any other loans or other extensions of credit or financial
accommodations from time to time from Lender or its Affiliates to any one or
more of Borrowers.

 

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“Loan Party” and “Loan Parties” mean each of Borrowers, Group, Parent, FKI, LLC,
and CECO Mexico LLC and collectively, Borrowers, Group, Parent, FKI, LLC and
CECO Mexico LLC, respectively.

“Notes” means the Revolving Note (as defined in Section 2.1), Term Loan Note C
(as defined in Section 2.2) and any other promissory note made from time to time
by a Borrower in favor of Lender to evidence any of the Obligations.

“Revolving Commitment” means $30,000,000 subject to Section 2.2(d) and 2.2(e).

“Subordination Agreement” means the Subordination Agreement between the
Subordinated Creditor and Lender dated as of the Closing Date, as amended by the
First Amendment to Subordination Agreement dated as of the Effective Date (as
defined in the Second Amendment) and the Second Amendment to Subordination
Agreement dated as of the Effective Date (as defined in the Third Amendment).

“Termination Date” means: (a) with respect to the Line of Credit, the Letter of
Credit Obligations and the other Obligations (other than Term Loan C), the
earlier of (i) January 31, 2010 and (ii) the date upon which the entire
outstanding balance under the Revolving Note shall become due pursuant to the
provisions hereof (whether as a result of acceleration by Lender or otherwise);
and (b) with respect to Term Loan C, the earliest of (i) January 31, 2010,
(ii) the date upon which the entire outstanding balance under Term Loan Note C
shall become due pursuant to the provisions hereof (whether as a result of
acceleration by Lender or otherwise), and (iii) the date upon which Term Loan C
shall be repaid in full.

1.3 Clause (vii) of the definition of “Eligible Accounts” in Section 1.1 of the
Credit Agreement is hereby amended in its entirety by substituting the following
in its place:

(vii) Accounts owing from any single account debtor to the extent, as of any
date, that the total amount of such account debtor’s Indebtedness to any one or
more Borrowers exceeds 35% of the face amount (less maximum discounts, credits
and allowances which may be taken by, or granted to, such account debtor in
connection therewith) of the then outstanding Eligible Accounts of such Borrower
or Borrowers; provided, however, that for Accounts (which are otherwise
eligible) owing from General Motors Corporation, the foregoing percentage is
40%;

1.4 The following definitions in Section 1.1 of the Credit Agreement are hereby
deleted: Foreign Affiliate, Term Loan, Term Loan A, Term Loan B, Term Loan Note,
Term Loan Note A and Term Loan Note B.

 

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1.5 Section 2.1(c) of the Credit Agreement is hereby amended in its entirety by
substituting the following in its place:

(c) On the Effective Date (as defined in the Third Amendment) of the Third
Amendment, Borrowers shall execute and deliver to Lender a Third Amended and
Restated Revolving Credit Promissory Note in the form of Exhibit 2.1 attached to
the Third Amendment (as amended, the “Revolving Note”), dated as of the
Effective Date (as defined in the Third Amendment), in the principal amount of
the Revolving Commitment, and bearing interest at such rates, and payable upon
such terms, as specified in the Revolving Note.

1.6 Section 2.2 of the Credit Agreement is hereby amended in its entirety by
substituting the following in its place:

2.2 Term Loans /Mandatory Prepayments.

(a) On December 29, 2005, Lender made a loan to Borrowers in an original
aggregate amount equal to $3,100,000 (“Term Loan A”). On February 28, 2007,
Lender made a loan to Borrowers in an original aggregate amount equal to
$5,000,000 (“Term Loan B”). Borrowers repaid in full Term Loan A and Term Loan
B. Subject to the terms and conditions of this Agreement and the effectiveness
of the Third Amendment, Lender will make an additional term loan to Borrowers in
an amount equal to $5,000,000 (“Term Loan C”). No part of Term Loan C may, on
the repayment thereof, be redrawn or reborrowed by a Borrower. The entire unpaid
principal balance of, and accrued interest on, Term Loan C, if not sooner
repaid, will be due and payable on the Termination Date with respect to Term
Loan C. Borrowers shall execute and deliver to Lender a Term Promissory Note in
the form of Exhibit 2.2 to the Third Amendment (“Term Loan Note C”), dated as of
the Effective Date (as defined in the Third Amendment), in the principal amount
of $5,000,000, and bearing interest at such rates, and payable upon such terms,
as specified in Term Loan Note C. The proceeds of Term Loan C shall be used
(i) to consummate the FKI Acquisition and (ii) for general working capital and
corporate purposes.

(b) Subject to the terms of Term Loan Note C and this Agreement, Borrowers may
prepay Term Loan C in whole or part at any time. Any prepayment of Term Loan C
will be applied to the last to mature of the payments required under Term Loan
Note C. Except as provided in the preceding sentence, no partial prepayment will
change the due dates or the amount of the monthly principal payments otherwise
required by Term Loan Note C.

 

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(c) In addition to the scheduled payments of principal on Term Loan C set forth
in Term Loan Note C, the following payments shall be made to, or retained by,
Lender and applied as provided in Section 2.2(d):

(i) Within three Business Days after the date of receipt thereof by any Loan
Party, an amount equal to 100% of the Net Proceeds from any sale of any asset,
including from the sale of the Cincinnati Facility as contemplated by
Section 5.7 (exclusive of (A) sales of Inventory in the ordinary course of
business or (B) sales or other dispositions of Equipment, the proceeds of which
are used for the replacement of such Equipment as contemplated by Section 5.7);

(ii) Within three Business Days after the date of receipt thereof by any Loan
Party, 100% of the Net Proceeds from any insurance or condemnation proceeds
payable in respect of, or arising out of, any loss or damage to any of any
Borrower’s properties (other than (A) dispositions of Equipment, which is the
subject of an Event of Loss, in connection with the replacement of such
Equipment as contemplated by Section 5.7 or (B) repairs or replacements of any
Mortgaged Property, which is the subject of an Event of Loss, to the extent set
forth in the Mortgages); and

(iii) On the date of receipt thereof by any Loan Party, an amount equal to 100%
of the Net Proceeds payable or owing to any Loan Party under, or arising out of,
the Effox Acquisition Agreement, the Effox Acquisition, the FKI Acquisition
Agreement or the FKI Acquisition, including any purchase price adjustment
payment or indemnification or reimbursement payment made after the Effective
Date (as defined in the Third Amendment) with respect to the Effox Acquisition
or the FKI Acquisition. Notwithstanding anything to the contrary in this clause
(iii), if a Loan Party incurs any out-of-pocket cost or expense for which it
receives reimbursement from Effox under the Effox Acquisition Agreement
(“Out-of-Pocket Effox Reimbursement”) or from FKI under the FKI Acquisition
Agreement (“Out-of-Pocket FKI Reimbursement”), then the Loan Parties will
(A) apply such Out-of-Pocket Effox Reimbursement or Out-of-Pocket FKI
Reimbursement, as applicable, against the then outstanding Revolving Loans and
(B) not be obligated to apply such Out-of-Pocket Effox Reimbursement or
Out-of-Pocket FKI Reimbursement, as applicable, as a mandatory prepayment of
Term Loan C.

(iv) Beginning on May 1, 2009 and continuing on the same date thereafter
occurring in each subsequent Fiscal Year until the payment in full of Term Loan
C, Borrowers will make a payment to Lender in an aggregate amount equal to 50%
of Excess Cash Flow for the immediately preceding Fiscal Year of Borrowers

 

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then ended (each, an “Excess Cash Flow Payment”); provided that Lender will not
require an Excess Cash Flow Payment, in any Fiscal Year, in an aggregate amount
greater than $1,000,000, but Borrowers may make a voluntary prepayment of Term
Loan C in excess of such $1,000,000. Each Excess Cash Flow Payment shall, absent
the occurrence and continuance of an Event of Default, be applied to the
remaining installments of principal under Term Loan Note C, in the inverse order
of maturity.

(d) With respect to mandatory prepayments described in Sections 2.2(c)(i)
through 2.2(c)(iv), such prepayments shall, absent the occurrence and
continuance of an Event of Default: (i) first, be applied to the remaining
installments of principal under Term Loan C, in the inverse order of maturity,
until Term Loan C has been paid in full, (ii) second, at any time after the Term
Loan C shall have been repaid in full, such payments shall be applied to the
outstanding balance of the Revolving Loans, (iii) third, after the Revolving
Loans have been paid in full, such payments shall be applied to cash
collateralize outstanding Letter of Credit Obligations, and (iv) fourth, after
all Letter of Credit Obligations are fully cash collateralized, in repayment of
any of the other Obligations then due and payable, and the Revolving Commitment
will, at Lender’s sole option, be contemporaneously reduced by an amount deemed
appropriate by Lender in the exercise of its discretion in good faith. Nothing
in this Section 2.2 shall be construed to constitute Lender’s consent to any
transaction that is not permitted by other provisions of this Agreement or the
other Loan Documents. No partial prepayment under Section 2.2(c) will change the
due dates or the amount of the monthly principal payments otherwise required by
Term Loan Note C.

(e) Within three Business Days after the date of receipt thereof by any Loan
Party, the Loan Parties shall deliver to Lender: (i) 100% of the Net Proceeds
payable under any Life Insurance, including any death benefit, (ii) an amount
equal to 100% of: (A) any Net Proceeds from the issuance by Parent of any
Ownership Interests after the Closing Date or (B) any dividend or distribution
to a Loan Party from a Person other than a Loan Party, or (iii) 100% of the Net
Proceeds from any Tax Refund. Such amounts shall, in each case, be applied by
Lender to the Obligations as follows: (1) first, to the outstanding balance of
the Revolving Loans, (2) second, after the Revolving Loans have been paid in
full, such payments shall be applied to cash collateralize outstanding Letter of
Credit Obligations, and (3) third, after all Letter of Credit Obligations are
fully cash collateralized, in repayment of any of the other Obligations (other
than Term Loan C absent the existence and continuation of an Event of Default)
then due and payable, and the Revolving Commitment will, at Lender’s sole
option, be contemporaneously reduced by an amount deemed appropriate by Lender
in the exercise of its discretion in good faith.

 

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1.7 Section 2 of the Credit Agreement is hereby amended by deleting Section 2.12
in its entirety.

1.8 Section 5.3 of the Credit Agreement is hereby amended in its entirety by
substituting the following in its place:

5.3 Capital Expenditures. No Loan Party will make or incur any expenditures for
real estate, plant, machinery, equipment, or other similar expenditure
(including all renewals, improvements and replacements thereto, and all
obligations under any lease of any of the foregoing) that would be capitalized
on the balance sheet of a Loan Party in accordance with GAAP in excess of
(a) $750,000 for the Fiscal Year ending on December 31, 2006, (b) $2,000,000 for
the Fiscal Year ending on December 31, 2007, or (c) $2,500,000 for any Fiscal
Year ending on or after December 31, 2008; provided that (i) (a) the Purchase
Price (as defined in the Effox Acquisition Agreement) paid by any Loan Party in
accordance with the Effox Acquisition Agreement and (b) the Purchase Price (as
defined in the FKI Acquisition Agreement) paid by any Loan Party in accordance
with the FKI Acquisition Agreement, will each be excluded from the foregoing
limitation on capital expenditures and (ii) if (A) the Cincinnati Facility is
sold and (B) Lender, pursuant to an amendment of this Agreement executed by it,
consents to the re-investment of the Net Proceeds from the sale of the
Cincinnati Facility into a replacement facility, which becomes a Borrower’s
Facility under terms and conditions acceptable to Lender, then the amount of
such Net Proceeds used for such replacement facility will be excluded from the
foregoing limitation on capital expenditures (the amounts excluded from the
foregoing limitation on capital expenditures in clauses (i) and (ii) of this
proviso being “Excluded Capital Expenditures”).

1.9 The reference to “Term Loans” in Section 5.7(c)(iii) of the Credit Agreement
is hereby amended by substituting a reference to “Term Loan C” for the “Term
Loans” where it appears therein.

1.10 Section 5.8 of the Credit Agreement is hereby amended in its entirety by
substituting the following in its place:

5.8 Transactions with Affiliates. No Loan Party shall: (a) directly or
indirectly make any loans or advances to, or investments in, any of its
employees, officers, directors, shareholders or other Affiliates except (i) as
permitted by Section 5.9 and (ii) in respect of purchases by a Borrower or of
another Borrower’s Inventory in the ordinary course of business pursuant to the
reasonable requirements of a Borrower’s business and on fair and reasonable
terms which are fully disclosed to Lender; (b) enter into any transaction with
any of its Affiliates except for such transactions (other than

 

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transactions contemplated by clause (a) of this Section 5.8) entered into in the
ordinary course of business upon fair and commercially reasonable terms no less
favorable to such Loan Party than could be obtained in a comparable arms-length
transaction with an unaffiliated Person; provided that, a Borrower shall not
sell any goods to, or perform any services for or on behalf of, CECO India,
Fisher Klosterman Shanghai, CECO Environmental Mexico, or CECO Environmental
Services during any time that (i) the total Indebtedness of CECO India and
(exclusive of loans, advances or equity investments permitted by Section 5.9(E))
CECO Environmental Mexico, CECO Environmental Services and Fisher Klosterman
Shanghai, to Borrowers, in the aggregate exceeds $500,000 or (ii) the total
amount of Indebtedness of CECO India and (exclusive of loans, advances or equity
investments permitted by Section 5.9(E)) CECO Environmental Mexico, CECO
Environmental Services and Fisher Klosterman Shanghai to Borrowers, in the
aggregate, and that is past due, exceeds $500,000, or (c) divert (or permit
anyone to divert) any of its business opportunities to any Affiliate (other than
a Borrower to another Borrower) or any other Person in which any Loan Party or
its shareholders holds a direct or indirect interest.

1.11 Section 5.9(a) of the Credit Agreement is hereby amended in its entirety by
substituting the following in its place:

(a) No Loan Party shall, without Lender’s prior consent (which consent Lender,
in good faith, shall have no obligation to provide), purchase or otherwise
acquire: (i) all or substantially all of the assets of any Person or the assets
comprising any line of business or business unit or division, (ii) any
partnership, joint venture or limited liability company interest in or with any
Person, or (iii) the securities of, create, form or invest in any Person
(including a Subsidiary), or hold beneficially evidences of Indebtedness of, or
make any investment or acquire any interest in, or make any advance or loan to,
or assume any liability on behalf of, any other Person other than:

(A) as expressly provided in this Agreement;

(B) advances to officers and employees with respect to expenses incurred by
those officer and employees, which expenses are (1) in the usual and ordinary
course of business of a Borrower, (2) reimbursable by a Borrower, and (3) do not
exceed in the aggregate, $50,000, outstanding at any one time;

(C) Loans by one Borrower to, and held by, another Borrower that is unsecured
and subordinated in right of payment to the Obligations. Anything to the
contrary in this Agreement or the other Loan Documents notwithstanding, no
Borrower may receive Revolving Loans from Lender or loans or advances from any
other Borrower (each, a “Senior or Intercompany Advance” and collectively,
“Senior or Intercompany Advances”) if, when taking into account on a pro forma
basis the proposed Senior or Intercompany Advance, the applicable Borrower would
have Loans (either directly from Lender or indirectly from another Borrower)
that exceed the sum of (1) one hundred ten percent (110%) of the book value of
such Borrower’s accounts receivable and inventory and (2) one hundred twenty
five percent (125%) of the net book value of such Borrower’s owned Equipment and
real property;

 

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(D) short term investments of excess working capital in one or more of the
following so long as no Revolving Loans are then outstanding: (1) investments
(of one year or less) in direct or guaranteed obligations of the United States,
or any agencies thereof; and (2) investments (of one year or less) in
certificates of deposit of banks or trust companies organized under the laws of
the United States or any jurisdiction thereof, provided that such banks or trust
companies are insured by the Federal Deposit Insurance Corporation and have
capital in excess of $250,000,000; and

(E) loans, advances or equity investments in Fisher Klosterman Shanghai, CECO
Environmental Mexico and CECO Environmental Services (other than transactions
contemplated by clause (b) of Section 5.8), so long as (1) the aggregate amount
of such investments does not exceed $500,000 during the term of this Agreement,
(2) no Event of Default shall exist at the time of making each such investment,
(3) no Event of Default shall result, on a pro forma basis, from the making of
each such investment, and (4) after the making of each such investment,
Revolving Loan Availability is equal to or greater than $1,000,000. To determine
whether there is pro forma compliance with the Financial Covenants, Borrowers
will, on a pro forma basis, (x) restate the financial statements received by
Lender for the Fiscal Quarter or the Fiscal Year, as applicable, ended most
closely before the date such investment is proposed to be made as if the
proposed investment had been made at the beginning of the applicable Test Period
and (y) calculate the Financial Covenants taking into account such proposed
investment as if the proposed investment had been made at the beginning of the
applicable Test Period. Borrowers will deliver such pro forma analysis to Lender
at least 10 Business Days prior to making each such investment.

1.12 Section 5 of the Credit Agreement is hereby amended by the addition of a
new Section 5.13, in its proper numerical order, to provide in its entirety as
follows:

5.13 FKI Acquisition; FKI Acquisition Documents. The Loan Parties will not seek,
agree to or permit, directly or indirectly, the amendment, waiver or other
change to any material term of or applicable to any of the FKI Acquisition
Documents. For purposes of this Section 5.13, “material” means any modification,
waiver, or amendment of any of the FKI Acquisition Documents, which, in the
judgment of Lender exercised in good faith, could: (i) materially increase the
purchase price for the assets to be acquired under the FKI Acquisition Documents
or the Indebtedness to be incurred by any Loan Party under the FKI Acquisition
Documents, (ii) materially and adversely affect any of Lender’s rights or
remedies under the Loan Documents, the value of the Loan Collateral, or Lender’s
security interest in or other Lien on the Loan Collateral (including the
priority of Lender’s interests), (iii) have a Material Adverse Effect, or
(iv) create or result in an Event of Default.

 

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1.13 Section 5 of the Credit Agreement is hereby amended by the addition of a
new Section 5.14 and a new Section 5.15, in their proper numerical order, to
provide in their entirety as follows:

5.14 FKI, LLC. Notwithstanding anything to the contrary set forth in this
Agreement, FKI, LLC (A) is, and will remain, a holding company, whose only
business will be the holding of the ownership interest of Fisher Klosterman
Shanghai, (B) does not, and will not, have any Indebtedness except the
Obligations, and (C) will not own or have any interest in property other than
the Ownership Interests of Fisher Klosterman Shanghai, and the distributions
received from Fisher Klosterman Shanghai on such Ownership Interests.

5.15 CECO Mexico, LLC. Notwithstanding anything to the contrary set forth in
this Agreement, CECO Mexico LLC (A) is, and will remain, a holding company,
whose only business will be the holding of the ownership interest of CECO
Environmental Services and CECO Environmental Mexico, (B) does not, and will
not, have any Indebtedness except the Obligations, and (C) will not own or have
any interest in property other than the Ownership Interests of CECO
Environmental Services and CECO Environmental Mexico, and the distributions
received from CECO Environmental Services and CECO Environmental Mexico on such
Ownership Interests.

1.14 Section 6.1(t) of the Credit Agreement is hereby amended in its entirety by
substituting the following in its place:

(t)(i) there is a default or an event of default under any of the Effox
Acquisition Documents by any Person which has a Material Adverse Effect; or
(ii) there is a default or an event of default under any of the FKI Acquisition
Documents by any Person which has a Material Adverse Effect.

1.15 Exhibit 2.1 to the Credit Agreement is hereby amended in its entirety by
substituting the document attached hereto as Exhibit 2.1 in its stead. Exhibit
2.2 to the Credit Agreement is hereby amended in its entirety by substituting
the document attached hereto as Exhibit 2.2 in its stead. Exhibit 4.3(d) to the
Credit Agreement is hereby amended in its entirety by substituting the document
attached hereto as Exhibit 4.3(d) in its stead. Exhibit 4.3(g) to the Credit
Agreement is hereby amended in its entirety by substituting the document
attached hereto as Exhibit 4.3(g) in its stead. Schedule 1.1 to the Credit
Agreement is hereby amended in its entirety by substituting the document
attached hereto as Schedule 1.1 in its stead. Schedule 3.1 to the Credit
Agreement is hereby amended in its entirety by substituting the document
attached hereto as Schedule 3.1 in its stead. Schedule 3.12 to the Credit
Agreement is hereby amended in its entirety by substituting the document
attached hereto as Schedule 3.12 in its stead. Schedule 3.14 to the Credit
Agreement is hereby amended in its entirety by substituting the document
attached hereto as Schedule 3.14 in its stead.

 

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2. Consent by Lender to FKI Acquisition. The Loan Parties have requested that
Lender consent to the acquisition by FKI Acquisition of substantially all of the
assets of FKI and the recognition of FKI Acquisition as a Domestic Subsidiary of
Group (collectively, the “FKI Acquisition”), as required by Section 5.9(a) of
the Credit Agreement. Subject to the terms, and on the conditions, of this
Amendment, Lender hereby consents to the FKI Acquisition. The consent provided
in this Section 2, either alone or together with other consents which Lender may
give from time to time, shall not, by course of dealing, implication or
otherwise, obligate Lender to consent to any other creation, formation, purchase
or other acquisition of a Domestic Subsidiary of any Loan Party, past, present
or future, other than the FKI Acquisition specifically consented to by this
Amendment, or reduce, restrict or in any way affect the discretion of Lender in
considering any future consent requested by the Loan Parties.

3. Other Documents. As a condition of this Amendment, Borrowers, with the
signing of this Amendment, will deliver or, as applicable, shall cause to be
delivered to Lender: (a) the Third Amended and Restated Revolving Credit
Promissory Note (“Amended and Restated Revolving Note”) in the form of Exhibit
2.1 attached hereto; (b) the Term Promissory Note (“Term Loan Note C”) in the
form of Exhibit 2.2 attached hereto (c) the Joinder Agreement, the Security
Agreement, and the Guaranty, each executed by GMD and FKI Acquisition and, with
respect to the Guaranty, FKI, LLC and CECO Mexico LLC, each in the forms of
Exhibit 3 attached hereto; (d) amendments to each Mortgage in form and substance
satisfactory to Lender; (e) the Third Amendment to Pledge Agreement executed by
Group in form and substance satisfactory to Lender; (f) copies, certified by the
directors of each Borrower, of resolutions of such directors authorizing the
execution of this Amendment and all other documents executed in connection
herewith, which certificates and resolutions will be in form and substance
satisfactory to Lender; (g) the Second Amendment to Subordination Agreement
executed by Green Diamond, in form and substance satisfactory to Lender; (h) a
Trademark Security Agreement, Patent Assignment and Security Agreement and
Copyright Security Agreement executed by GMD and FKI Acquisition and Lender in
the form of Exhibit 3 attached hereto; and (i) such other documents,
instruments, and agreements deemed necessary or desirable by Lender to effect
the amendments to Borrowers’ credit facilities with Lender contemplated by this
Amendment.

4. Representations. To induce Lender to accept this Amendment, the Loan Parties
hereby represent and warrant to Lender as follows:

4.1 Each Loan Party has full power and authority to enter into, and to perform
its obligations under, this Amendment, the Amended and Restated Revolving Note,
Term Loan Note C and the other Loan Documents being amended or entered into in
connection herewith, and the execution and delivery of, and the performance of
their obligations under and arising out of, this Amendment, the Amended and
Restated Revolving Note, Term Loan Note C and the other Loan Documents being
amended or entered into in connection herewith, respectively, have been duly
authorized by all necessary corporate action.

 

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4.2 This Amendment, the Amended and Restated Revolving Note, Term Loan Note C,
and the other Loan Documents being amended or entered into in connection
herewith constitute the legal, valid and binding obligations of each Loan Party,
as applicable, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally.

4.3 The Loan Parties’ representations and warranties contained in the Loan
Documents are complete and correct as of the date of this Amendment with the
same effect as though such representations and warranties had been made again on
and as of the date of this Amendment, subject to those changes as are not
prohibited by, or do not constitute Events of Default under, the Credit
Agreement.

4.4 No Event of Default has occurred and is continuing.

4.5 As of the closing of the FKI Acquisition:

4.5.1 Each Loan Party has adequate power and authority and has full legal right
to enter into each of the FKI Acquisition Documents to which it is a party, and
to perform, observe and comply with all of its agreements and obligations under
each of the FKI Acquisition Documents.

4.5.2 The execution and delivery by each Loan Party of the FKI Acquisition
Documents to which it is a party, the performance by each Loan Party of all of
its agreements and obligations under the FKI Acquisition Documents to which it
is a party, and the consummation of the FKI Acquisition pursuant to the FKI
Acquisition Agreement have been duly authorized by all necessary corporate
action on the part of such Loan Party and do not and will not: (i) contravene
any provision of such Loan Party’s Certificate/Articles of Incorporation or
Bylaws/Code of Regulations; (ii) conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
the creation of any Lien (other than a Permitted Lien) upon any of the property
of such Loan Party under, any agreement or instrument to which such Loan Party
is a party or by which its assets are bound, except for such violations and/or
defaults which could not reasonably be expected to have a Material Adverse
Effect; (iii) violate or contravene any provision of any law, rule or regulation
or any order or ruling thereunder or any decree, order or judgment of any
governmental authority except for such violations and/or defaults which could
not reasonably be expected to have a Material Adverse Effect; (iv) require any
waivers, consents or approvals by any of the creditors or trustees for creditors
of such Loan Party or any other Person except those waivers, consents, or
approvals which are obtained as of the Effective Date or which are not required
to consummate the FKI Acquisition; or (v) require any Person to make any filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or
the rules of the Federal Trade Commission thereunder, to give effect to the
Effox Acquisition.

4.5.3 There are no proceedings pending or, to the knowledge of any Loan Party,
threatened, against any Loan Party which call into question the validity or
enforceability of any of the FKI Acquisition Documents.

 

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4.5.4 The FKI Acquisition has been consummated in accordance with the terms and
conditions of the FKI Acquisition Documents and all applicable laws, and FKI
Acquisition became the owner, free and clear of any Liens (except any Permitted
Liens) of substantially all of the assets of FKI pursuant to the FKI Acquisition
Documents. All consents and approvals of, and filings and permits with, and all
other actions in respect of, all governmental authorities required in order to
consummate the FKI Acquisition in accordance with the terms and conditions of
the FKI Acquisition Documents and all applicable laws have been, or prior to the
time required, will have been, obtained, given, filed, taken or waived, and are
in full force and effect. All applicable waiting periods with respect thereto
have, or prior to the time when required, will have, expired without, in all
such cases, any action being taken by any competent authority which restrains,
prevents or imposes material adverse conditions upon the consummation of the FKI
Acquisition.

4.6 The Subordinated Debt, the Sandler Debt and the ICS Debt have each been paid
in full and not Refinanced.

5. Costs and Expenses; Amendment Fee. As a condition of this Amendment,
(i) Borrowers will pay to Lender an amendment fee of $20,000, payable in full on
the Effective Date; such amendment fee, when paid, will be fully earned and
non-refundable under all circumstances, and (ii) Borrowers will promptly on
demand pay or reimburse Lender for the costs and expenses incurred by Lender in
connection with this Amendment, including, without limitation, reasonable
attorneys’ fees.

6. Entire Agreement. This Amendment, together with the other Loan Documents,
sets forth the entire agreement of the parties with respect to the subject
matter of this Amendment and supersedes all previous understandings, written or
oral, in respect of this Amendment and the other Loan Documents.

7. Default. Any default by a Loan Party in the performance of its obligations
under this Amendment or the other Loan Documents shall constitute an Event of
Default under the Credit Agreement if not cured after any applicable notice and
cure period under the Credit Agreement.

8. Continuing Effect of Credit Agreement. Except as expressly amended hereby,
all of the provisions of the Credit Agreement are ratified and confirmed and
remain in full force and effect.

9. One Agreement; References; Fax Signature. The Credit Agreement, as amended by
this Amendment, will be construed as one agreement. Any reference in any of the
Loan Documents to: (i) the Credit Agreement will be deemed to be a reference to
the Credit Agreement as amended by this Amendment, and (ii) the Revolving Note
will be deemed to be a reference to the Amended and Restated Revolving Note.
This Amendment and the other Loan Documents may be signed by facsimile
signatures or other electronic delivery of an image file reflecting the
execution hereof, and, if so signed: (a) may be relied on by each party as if
the document were a manually signed original and (b) will be binding on each
party for all purposes.

 

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10. Captions. The headings to the Sections of this Amendment have been inserted
for convenience of reference only and shall in no way modify or restrict any
provisions hereof or be used to construe any such provisions.

11. Counterparts. This Amendment may be executed in multiple counterparts, each
of which shall be an original but all of which together shall constitute one and
the same instrument.

12. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Ohio (without regard to Ohio
conflicts of law principles).

13. Reaffirmation of Security. Loan Parties and Lender hereby expressly intend
that this Amendment shall not in any manner (a) constitute the refinancing,
refunding, payment or extinguishment of the Obligations evidenced by the
existing Loan Documents; (b) be deemed to evidence a novation of the outstanding
balance of the Obligations; or (c) affect, replace, impair, or extinguish the
creation, attachment, perfection or priority of the Liens on the Loan Collateral
granted pursuant to any Security Document evidencing, governing or creating a
Lien on the Loan Collateral. Each Loan Party ratifies and reaffirms any and all
grants of Liens to Lender on the Loan Collateral as security for the
Obligations, and each Loan Party acknowledges and confirms that the grants of
the Liens to Lender on the Loan Collateral: (i) represent continuing Liens on
all of the Loan Collateral, (ii) secure all of the Obligations, and
(iii) represent valid, first and best Liens on all of the Loan Collateral except
to the extent, if any, of any Permitted Liens.

14. Reaffirmation of Guaranties. Each Loan Party hereby: (i) ratifies and
reaffirms its Guaranty dated as of December 29, 2005 (or dated as of June 8,
2006 as it respects H.M. White or February 28, 2007 as it respects Effox) made
by such Loan Party to Lender and (ii) acknowledges and agrees that no Loan Party
is released from its obligations under its respective Guaranty by reason of this
Amendment or the other Loan Documents and that the obligations of each Loan
Party under its respective Guaranty extend, among other Obligations of Borrowers
to Lender, to the Obligations of Borrowers under this Amendment, the Amended and
Restated Revolving Note, Term Loan Note C and the other Loan Documents being
executed or amended in connection herewith. Without limiting the generality of
the foregoing, each Loan Party acknowledges and agrees that all references in
any Guaranty to (a) the Credit Agreement or the other Loan Documents shall be
deemed to be references to the Credit Agreement or such other Loan Document, as
amended by, or amended and restated in connection with, this Amendment and
(b) “Borrower” or “Borrowers” shall be deemed to include a reference to GMD and
FKI Acquisition, as an additional Borrower under the Credit Agreement.

[Signature Page Follows]

 

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EXECUTION VERSION

IN WITNESS WHEREOF, the Loan Parties and Lender have executed this Amendment by
their duly authorized representatives as of the Effective Date.

 

CECO ENVIRONMENTAL CORP.     CECO GROUP, INC. By:   /s/ Dennis W. Blazer     By:
  /s/ Dennis W. Blazer  

Dennis W. Blazer, Chief Financial Officer

and Vice President

     

Dennis W. Blazer, Chief Financial Officer,

Secretary and Treasurer

CECO FILTERS, INC.     H.M. WHITE, INC. NEW BUSCH CO., INC.     GMD
ENVIRONMENTAL THE KIRK & BLUM     TECHNOLOGIES, INC., formerly known
MANUFACTURING COMPANY     as GMD ACQUISITION CORP. KBD/TECHNIC, INC.     CECO
MEXICO HOLDINGS LLC CECOAIRE, INC.     CECO ABATEMENT SYSTEMS, INC.     EFFOX
INC., formerly known as CECO     By:   /s/ Dennis W. Blazer ACQUISITION CORP.  
    Dennis W. Blazer, Treasurer FKI ACQUISITION CORP.      

 

By:   /s/ Dennis W. Blazer   Dennis W. Blazer, Secretary and Treasurer FKI, LLC
By:   /s/ Dennis W. Blazer   Dennis W. Blazer, Manager

 

FIFTH THIRD BANK By:   /s/ Donald K. Mitchell   Donald K. Mitchell, Vice
President