Exhibit 10.24

EXECUTION VERSION

AMENDED AND RESTATED CREDIT AGREEMENT

This Amended and Restated Credit Agreement (this “Agreement”), entered into as
of August 17, 2010 (the “Signature Date”) to be effective as of June 30, 2010
(the “Effective Date”), by and among, on the one hand, CECO ENVIRONMENTAL CORP.,
a Delaware corporation (“Parent”), CECO GROUP, INC., a Delaware corporation
(“Group”), FKI, LLC, a Delaware limited liability company (“FKI, LLC”), CECO
MEXICO HOLDINGS LLC, a Delaware limited liability company (“CECO Mexico LLC”),
and each of the following Subsidiaries of Parent as Borrowers under this
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., a Delaware corporation and
formerly known as CECO ACQUISITION CORP. (“Effox”), GMD ENVIRONMENTAL
TECHNOLOGIES, INC., a Delaware corporation and formerly known as GMD ACQUISITION
CORP. (“GMD”), FISHER-KLOSTERMAN, INC., a Delaware corporation and formerly
known as FKI ACQUISITION CORP. (“Fisher-Klosterman”), and AVC, INC., a Delaware
corporation (“AVC, Inc.”), and, on the other hand, FIFTH THIRD BANK, an Ohio
banking corporation (“Lender”), is as follows:

Preliminary Statements

A. Parent, Group, and the Existing Borrowers (as defined below) executed and
delivered to Lender that certain Credit Agreement dated as of December 29, 2005,
as amended by the First Amendment to Credit Agreement dated as of June 8, 2006,
the Second Amendment to Credit Agreement dated as of February 28, 2007, the
Third Amendment to Credit Agreement dated as of February 29, 2008, the Fourth
Amendment to Credit Agreement dated as of August 1, 2008, the Fifth Amendment to
Credit Agreement dated as of December 30, 2008, the Sixth Amendment to Credit
Agreement dated to be effective as of March 31, 2009, the Seventh Amendment to
Credit Agreement dated to be effective as of May 15, 2009, the Eighth Amendment
to Credit Agreement dated to be effective as of November 26, 2009, and the Ninth
Amendment to Credit Agreement dated to be effective as of December 31, 2009 (as
amended, the “Existing Credit Agreement”). FKI, LLC and CECO Mexico LLC are
additional parties to the Third Amendment, Fourth Amendment, Fifth Amendment,
Sixth Amendment, Seventh Amendment, Eighth Amendment, and Ninth Amendment to the
Existing Credit Agreement. AVC, Inc. is an additional party to the Sixth
Amendment, Seventh Amendment, Eighth Amendment, and Ninth Amendment to the
Existing Credit Agreement.

B. The Loan Parties have requested that Lender: (i) consent to the recognition
of AVC as a “Borrower” under the Existing Credit Agreement; (ii) extend the
stated Termination Date of (a) the Line of Credit to April 1, 2013 and (b) Term
Loan C to April 1, 2014; and (iii) make certain other amendments to the Existing
Credit Agreement and certain of the other Loan Documents, all as more
specifically set forth herein.

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

C. Lender is willing to consent to such requests and so amend the Existing
Credit Agreement and other Loan Documents to reflect such modifications, all on
the terms, and subject to the conditions, of this Agreement and the other Loan
Documents being amended by, or amended and restated in connection with, this
Agreement, including, without limitation, on the condition that certain changes
be made to the interest rates applicable to the Obligations.

Statement of Agreement

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

Amendment and Restatement

Effective on and after the Effective Date, the Existing Credit Agreement is
amended and restated in its entirety by this Agreement, and this Agreement, the
Exhibits and Schedules attached hereto, and the other Loan Documents will govern
the present relationship between Lender and Loan Parties. This Agreement,
however, is in no way intended, nor shall it be construed, to replace, impair or
extinguish the creation, attachment, perfection or priority of the security
interests in, and other Liens on, the Loan Collateral granted by any Loan Party
to, or held by, Lender, which security interests and other Liens each Loan
Party, by this Agreement, acknowledges, ratifies, reaffirms and confirms to
Lender as security for the Obligations. Each Loan Party further 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 priority and perfected Liens
on all of the Loan Collateral except to the extent, if any, of any Permitted
Liens.

The existing Loan Documents, except as amended (or, as applicable, as amended
and restated) by this Agreement or by a separate agreement or instrument, shall
remain in full force and effect, and each of them is hereby ratified and
confirmed by Loan Parties and Lender. References in any of the Loan Documents to
the Existing Credit Agreement shall, after the Effective Date, be deemed to be
references to this Agreement. In addition, all obligations, liabilities and
indebtedness created or existing under, pursuant to, or as a result of, the
Existing Credit Agreement shall continue in existence within the definition of
“Obligations” under this Agreement, which obligations, liabilities and
indebtedness each Loan Party, by this Agreement, acknowledges, reaffirms and
confirms. The principal balance outstanding under the Existing Credit Agreement
and the other Loan Documents shall continue in all respects to be outstanding
hereunder and under the other Loan Documents, and this Agreement shall not be
deemed to evidence a novation or payment and refunding of that outstanding
principal balance. Interest and fees (a) paid under the Existing Credit
Agreement and the other Loan Documents prior to the Signature Date will remain
paid and are non-refundable and (b) accrued and unpaid under the Existing Credit
Agreement and the other Loan Documents remain accrued and unpaid hereunder and
under the other Loan Documents and do not constitute any part of the principal
amount due hereunder.

 

-2-

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

Sections

Section 1. Definitions; Construction.

1.1 Definitions. Certain capitalized terms have the meanings set forth on any
exhibit hereto or in a Security Document. All financial terms used in this
Agreement but not defined on the exhibits or in the other Loan Documents have
the meanings given to them by GAAP. All other uncapitalized terms have the
meanings given to them in the Uniform Commercial Code, as now or hereafter
enacted in the State of Ohio. The following definitions are used herein:

“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; (b) minus the aggregate cash amount of the Parent and its Subsidiaries’
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 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 Parent and its Subsidiaries as earnings which relate to
adjustments made by the Parent and its Subsidiaries 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 and any other derivative assets or liabilities outstanding from
time to time, (ii) stock award 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 FKI Earn-out Payments,
A.V.C Earn-out Payments or Flextor Earn-out Payments made by the Parent and its
Subsidiaries 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 (A) Test Period in the case of
determining the Fixed Charge Coverage Ratio or the Maximum Total Funded Debt to
Adjusted EBITDA Ratio and (B) Fiscal Year in the case of determining Excess Cash
Flow.

“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.

 

-3-

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

“Applicable Unused Line 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, the Applicable
Unused Line Fee Percentage is 0.75% (i.e., Pricing Grid Level 1).

 

Pricing Grid

Level

  

Fixed Charge

Coverage Ratio

   Applicable Unused Line Fee
Percentage  

Level 1

   £ 1.50 to 1.0      0.75 % 

Level 2

   > 1.50 to 1.0 and £ 2.0 to 1.0      0.50 % 

Level 3

   > 2.0 to 1.0      0.50 % 

“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, the Applicable LOC Fee
Percentage is 3.0% (i.e., Pricing Grid Level 1).

 

Pricing Grid

Level

  

Fixed Charge

Coverage Ratio

   Applicable LOC Fee
Percentage  

Level 1

   £ 1.50 to 1.0      3.0%   

Level 2

   > 1.50 to 1.0 and £ 2.0 to 1.0      2.50%   

Level 3

   > 2.0 to 1.0      2.0%   

“A.V.C.” means Shideler, Inc., formerly known as A.V.C. Specialists, Inc., a
California corporation, and its successors and assigns.

“A.V.C. Acquisition” means the acquisition by Fisher-Klosterman of substantially
all of the assets of A.V.C., all in accordance with, and pursuant to the terms
of, the A.V.C. Acquisition Documents.

“A.V.C. Acquisition Agreement” means the Asset Purchase Agreement dated as of
August 1, 2008 by and among Fisher-Klosterman, A.V.C. and Tom Shideler and
Barbara Shideler.

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

 

-4-

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

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

“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended, 11 U.S.C. § 101
et seq.

“Borrower” means each of Filters, New Busch, K&B, Technic, Aire, Abatement, H.M.
White, Effox, GMD, Fisher-Klosterman, AVC, Inc., 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,
Technic, Aire, Abatement, H.M. White, Effox, GMD, Fisher-Klosterman, AVC, Inc.,
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 of FKI, LLC nor CECO
Mexico LLC shall be a Borrower.

“Borrower Guaranties” means each guaranty made by a Borrower in favor of Lender
and Lender’s Affiliates of the Obligations.

“Borrower’s Facilities” means, as to a Borrower, collectively, those facilities
described on Schedule 1.1 which are owned or leased by such Borrower.
“Borrower’s Facility” means each of the foregoing facilities.

“Borrowing Base” means, as of the relevant date of determination, the sum of:

(a) 70% of the then net amount of Eligible Accounts (i.e., less sales, excise or
similar taxes, and less returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed);

plus (b) the lesser of: (i) $2,000,000 or (ii) 50% of the then Eligible Net
Unbilled Revenue;

plus (c) the lesser of: (i) $7,500,000 or (ii) 50% of the then net amount of
Eligible Inventory; and

less (d) all then Borrowing Base Reserves.

“Borrowing Base Reserves” means those reserves against the Borrowing Base
implemented by Lender from time to time based on such credit and collateral
considerations as Lender may deem appropriate to reflect contingencies or risks
which may adversely affect any or all of the Loan Collateral, the business,
operations, or financial condition of a Loan Party or the security of the
Obligations, including (a) 100% of the aggregate mark-to-market exposure, as
determined by Lender, of all Rate Management Obligations then owing by a
Borrower to Lender or its Affiliate under a Rate Management Agreement and (b) a
reserve for rent for any of Borrower’s Facilities leased by a Borrower for which
Borrowers have not obtained a landlord’s waiver agreement on terms and in
substance satisfactory to Lender, such reserve to be in an amount which is the
longer of: (i) three months or (ii) the period under applicable law for which
such landlord has been granted a Lien, as determined by Lender in the exercise
of its discretion in good faith.

 

-5-

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

“Business Day” means (a) any day on which commercial banks in Cincinnati, Ohio
are required by law to be open for business and (b) with respect to all notices
and determinations in connection with, and payments of principal and interest
on, Loans bearing interest with reference to the Tranche LIBOR Rate or the Daily
LIBOR Rate, any day (other than a Saturday or Sunday) on which commercial banks
are open for business in New York, New York and Cincinnati, Ohio, which is also
a day on which dealings are conducted in the London Interbank Market. Periods of
days referred to in this Agreement will be counted in calendar days unless
Business Days are expressly prescribed.

“Canadian Acquisition Co.” means 9199-3626 Quebec Inc. a company organized under
the laws of the Province of Quebec, Canada, and its successors and assigns,
including the successor of the Flextor Amalgamation.

“Cash Dominion Triggering Event” has the meaning given in Section 2.4(b).

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

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

“Change in Control” means any of the following (or any combination of the
following) whether arising from any single transaction or event or any series of
transactions or events (whether as the most recent transaction in a series of
transactions) which, individually or in the aggregate, results in:

(a) the acquisition by any Person or two or more Persons acting in concert
(including a “group” as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934), of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
other than the DeZwirek Shareholders, of (i) 35% or more of the outstanding
voting Ownership Interests of Parent or (ii) the right to elect a majority of
the Board of Directors of Parent;

(b) the election of a director of Parent as a result of which at least a
majority of Parent’s Board of Directors does not consist of Continuing
Directors;

 

-6-

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

(c) Parent’s ceasing to own, free and clear of all Liens (except for Liens in
favor of Lender), 100% of the Ownership Interests of Group on a fully diluted
basis;

(d) Group’s ceasing to own, free and clear of all Liens (except for Liens in
favor of Lender), 100% of the Ownership Interests of K&B, Technic, Aire,
Abatement, H.M. White, Effox, GMD, Fisher-Klosterman, and CECO Mexico LLC on a
fully diluted basis;

(e) Group’s ceasing to own, free and clear of all Liens (except for Liens in
favor of Lender), 99% of the Ownership Interests of Filters on a fully diluted
basis;

(f) Filters’ ceasing to own, free and clear of all Liens (except for Liens in
favor of Lender), 100% of the Ownership Interests of New Busch on a fully
diluted basis;

(g) Fisher-Klosterman’s ceasing to own, free and clear of all Liens (except for
Liens in favor of Lender), 100% of the Ownership Interests of FKI, LLC and AVC,
Inc. on a fully diluted basis; or

(h) Richard J. Blum or his successor, Jeffrey Lang (or, as applicable, his
Approved Successor) ceasing, for any reason, (i) to serve as a senior executive
officer of Parent actively involved in Borrowers’ management or (ii) to be a
member of the Board of Directors of Parent. For purposes of the foregoing, an
“Approved Successor” is a senior executive officer of Parent elected by the
Continuing Directors of Parent not more than 30 days after Jeffrey Blum or his
Approved Successor ceases to serve in the senior executive management of Parent
and who is reasonably acceptable to Lender.

“Collection Account” has the meaning given in Section 2.4.

“Continuing Directors” means those directors on a Person’s Board of Directors as
of the Effective Date (“Current Board”) or those directors who are recommended
or endorsed for election to the Board of Directors of that Person by a majority
of the Current Board or their successors so recommended or endorsed.

“Copyright Security Agreement” means the Copyright Security Agreement dated as
of the Effective Date (as defined in the Third Amendment) between
Fisher-Klosterman and Lender.

“Daily LIBOR Rate” has the meaning given in the Revolving Note.

“Daily LIBOR Rate Loan” means that portion of the Loans which, as of any date,
bears interest at an interest rate per annum equal to the Daily LIBOR Rate plus
the applicable margin as set forth in the applicable Note.

“DeZwirek Shareholders” means, collectively, Phillip DeZwirek; Jason Louis
DeZwirek; IntroTech Investments, Inc., an Ontario corporation (“IntroTech”), to
the extent that IntroTech is controlled by Jason Louis DeZwirek; and Icarus
Investment Corp., a Delaware corporation (“Icarus”), to the extent that Icarus
is controlled by either Phillip DeZwirek or Jason Louis DeZwirek.

 

-7-

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

“Dollars” and “$” means dollars in lawful currency of the United States of
America unless otherwise indicated.

“Domestic Subsidiary” means an operating Subsidiary of Parent or Group that is
incorporated under the laws of a state of the United States or the District of
Columbia.

“EBITDA” means the total (without duplication), in Dollars, of Net Income for
the applicable period, plus (a) the aggregate amount of the Parent and its
Subsidiaries’ depreciation and amortization expense determined on a consolidated
basis in accordance with GAAP for such period to the extent deducted in the
determination of Net Income, plus (b) the aggregate amount of the Parent and its
Subsidiaries’ interest expense determined on a consolidated basis in accordance
with GAAP for such period to the extent deducted in the determination of Net
Income, and plus (c) the aggregate amount of the Parent and its Subsidiaries’
income and franchise tax expense for such period determined on a consolidated
basis in accordance with GAAP to the extent deducted in the determination of Net
Income. 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.

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

“Effox Acquisition Agreement” means the Asset Purchase Agreement dated as of
February 28, 2007 by and among Parent, CECO Acquisition, Effox, and the other
party thereto.

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

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

“Eighth Amendment” means the Eighth Amendment to this Agreement dated as of
November 26, 2009.

 

-8-

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

“Eligible Accounts” means, as of the relevant date of determination, those trade
accounts receivable owned solely by a Borrower, evidenced by such Borrower’s
standard invoice therefor, payable in cash in Dollars and which arise out of an
outright, bona fide, lawful and final sale of finished goods Inventory or the
provision of services in each case in the ordinary course of such Borrower’s
business as presently conducted by it to a Person who has issued a valid and
binding purchase order therefor to such Borrower, and with respect to which the
services covered thereby have been rendered and accepted by the account debtor
or its designee or the finished goods Inventory covered thereby have been
delivered to the account debtor or its designee and accepted by such account
debtor or designee, (a) that are due and payable within 30 days after the
invoice date, (b) that are subject to the first priority security interest of
Lender and are not subject to any Lien of any other Person, (c) that comply with
all of Borrowers’ warranties and representations to Lender in the Loan
Documents, and (d) with regard to which Borrowers comply with their covenants
with Lender in the Loan Documents; provided that Eligible Accounts shall not
include the following:

(i) Accounts with respect to which more than 90 days have elapsed since the date
of the original invoice applicable thereto;

(ii) Accounts with respect to which the account debtor is a shareholder, member,
partner, officer, employee or agent of a Borrower or any other Affiliate of a
Borrower;

(iii) Accounts with respect to which the account debtor is (A) not a resident or
citizen of the United States with respect to an individual or (B) with respect
to a Person, other than an individual, (x) is not organized or qualified to do
business under the laws of any State of the United States or (y) has its
principal place of business or chief executive office outside of the United
States unless, in either or both of such events (A) or (B), the Account is
supported by (1) an irrevocable, clean letter of credit issued (I) by a
financial institution satisfactory to Lender in its discretion exercised in good
faith and (II) on terms acceptable to Lender in its discretion exercised in good
faith, and, if so requested by Lender, delivered to Lender in pledge for
negotiation and presentment or (2) foreign credit insurance (and from an
insurer) satisfactory to Lender in its discretion exercised in good faith and as
to which Lender is named as the loss payee on terms satisfactory to Lender in
its discretion exercised in good faith;

(iv) Accounts with respect to which the account debtor is the United States or
any department, agency or instrumentality of the United States unless the
applicable Borrower has assigned its interests in such Accounts to Lender
pursuant to any applicable governmental or regulatory rule or regulation,
including the Federal Assignment of Claims Act of 1940, if applicable, so that
Lender is recognized by the account debtor to have all the rights of an assignee
with respect to such Accounts, or Lender has expressly waived that requirement
with respect to specific Accounts;

(v) Accounts with respect to which the account debtor is any State of the United
States or any city, town municipality or division thereof that requires (if
applicable to an Account of a Borrower) (A) a Borrower to support its
obligations to such account debtor with a Surety Bond issued by a Surety (as
defined below) unless such Surety Bond is obtained or (B) Lender to comply with
any State or municipal assignment of claims law or equivalent unless Lender is
able to comply with such law;

(vi) Accounts that are subject to set-off by the account debtor or contras
(except discounts allowed for prompt payment); provided that the net amount owed
by such account debtor to Borrowers in respect of such Account, as determined by
Lender in its discretion exercised in good faith, will, if otherwise eligible,
be an Eligible Account;

 

-9-

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

(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;

(viii) Accounts owed by a particular account debtor when 50% or more of the
total Accounts of such account debtor are more than ninety (90) days past the
invoice date thereof or are otherwise ineligible under the terms of this
definition;

(ix) Accounts owed by an account debtor which does not meet Lender’s standards
of creditworthiness, in Lender’s judgment exercised in good faith;

(x) Accounts owed by any account debtor which has filed or has had filed against
it or its Affiliates a petition for relief under the Bankruptcy Code or suffered
a receiver or a trustee to be appointed for any of its assets or affairs;

(xi) Accounts owed by an account debtor which has made an assignment for the
benefit of creditors;

(xii) Accounts with respect to which the account debtor (the “Subject Customer”)
is located in any one or more of New Jersey, Minnesota, or West Virginia,
unless, (A) with respect to Accounts with respect to which the Subject Customer
is located in New Jersey, the applicable Borrower has properly qualified to do
business as a foreign corporation in New Jersey, has filed a Notice of Business
Activities Report with the New Jersey Division of Taxation for the then current
year or is expressly exempt from such reporting requirements under the laws of
such State, (B) with respect to Accounts with respect to which the Subject
Customer is located in Minnesota, the applicable Borrower has properly qualified
to do business as a foreign corporation in Minnesota, has filed a Notice of
Business Activities Report with the Minnesota Division of Taxation for the then
current year or is expressly exempt from such reporting requirements under the
laws of such State, or (C) with respect to Accounts with respect to which the
Subject Customer is located in West Virginia, the applicable Borrower has filed,
or is exempt from filing, a Business Activity Report with the Tax Commissioner
of the State of West Virginia for the then current year;

(xiii) Accounts with respect to which the terms or conditions prohibit or
restrict assignment or collection rights or which are evidenced by a promissory
note, chattel paper or other instrument;

(xiv) Accounts for which a Borrower was required to have issued a surety bond
(whether bid, performance or otherwise) (“Surety Bond”) with respect to such
Borrower’s performance of the services giving rise to the Account and, with
respect to such Surety Bond, (A) the surety issuing such Surety Bond (“Surety”)
has declared a default by such Borrower under the applicable agreements,
instruments, or other documents evidencing, governing, or otherwise relating to
the issuance of such Surety Bond, (B) such Borrower’s customer, to which, or for
whose benefit, such Surety Bond was issued, has notified the Surety that such
Borrower is in default of its obligations to such customer or the owner of the
project with respect to which such Surety Bond was issued, or (C) the Surety has
asserted any rights to such Accounts; and

 

-10-

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

(xv) Accounts deemed to be ineligible by Lender based upon such other credit and
collateral considerations as Lender may deem appropriate, in Lender’s judgment
exercised in good faith. Accounts which are deemed to be Eligible Accounts, but
which subsequently fail to meet the foregoing criteria for Eligible Accounts,
shall immediately cease to be Eligible Accounts for the purpose of determining
the Borrowing Base.

“Eligible Inventory” means, as of the relevant date of determination, Inventory
owned solely by a Borrower and held at a Borrower’s Facility which is comprised
of: (a) finished goods sold by such Borrower in the ordinary course of business
as presently conducted by it, (b) raw materials that will be converted or
fabricated into finished goods in the ordinary course of such Borrower’s
business as presently conducted by it, and (c) replacement parts held for sale
by a Borrower in the ordinary course of business as presently conducted by it,
and excluding:

(i) raw materials comprised of hazardous materials and any work-in-process;

(ii) obsolete, slow-moving or unsalable items of Inventory or any reserves
established in Borrowers’ financial statements delivered to Lender in respect of
any Inventory;

(iii) any Inventory which is not subject to a first priority and fully perfected
security interest in favor of Lender;

(iv) Inventory located outside the continental United States;

(v) any Inventory (A) not in the actual possession and control of a Borrower or
(B) located at any leased location, public warehouse or any other location owned
or controlled by a third party except (subject to any additional requirements
imposed by Lender, in its discretion exercised in good faith, to protect such
Borrower’s title thereto or Lender’s Lien thereon): (1) Eligible Inventory in
the possession of a warehouseman or other bailee (including an Inventory
processor) if Lender has received a bailee waiver letter acceptable to Lender
from such warehouseman or bailee and such warehousemen or bailee has not issued
a negotiable document of title as to any of the Eligible Inventory and
(2) Eligible Inventory located on premises leased by a Borrower if Lender has
received a landlord’s waiver acceptable to Lender with respect to such premises;

(vi) any Inventory subject to a Lien (exclusive of any Permitted Liens) or
subject to a claim of title by a government authority under 48 C.F.R.
Section 52.232.16;

 

-11-

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

(vii) Inventory which consists of supplies, packaging or hazardous substances
under applicable law;

(viii) Inventory which has been consigned to or by a Borrower or has been sold
to a Borrower in any sale on approval or sale and return transaction;

(ix) Inventory that is in transit to or from a Borrower’s Facility other than
Inventory that is in transit from a Borrower’s Facility to another Borrower’s
Facility and that is in transit for less than 3 days;

(x) Inventory (A) with respect to which insurance proceeds are not payable to
Lender as loss payee in accordance with the Loan Documents or (B) which is
subject to a negotiable warehouse receipt or other negotiable instrument;

(xi) Inventory that is subject to any trademark, trade name, patent or licensing
arrangement, any contractual arrangement, or any law, rule or regulation that
could, in any instance in Lender’s judgment exercised in good faith, limit or
impair the ability of Lender to promptly exercise any of its rights with respect
thereto; and

(xii) any other Inventory deemed ineligible by Lender, in its discretion
exercised in good faith, based on such credit and collateral considerations as
Lender may deem appropriate. Inventory which is deemed to be Eligible Inventory,
but which subsequently fails to meet the foregoing criteria for Eligible
Inventory, shall immediately cease to be Eligible Inventory for the purpose of
determining the Borrowing Base.

“Eligible Net Unbilled Revenue” means, as of the relevant date of determination,
the positive difference, if any, between (a) Borrowers’ aggregate costs and
estimated earnings in excess of billings on uncompleted contracts (“Unbilled
Revenue”) and (b) Borrowers’ aggregate billings in excess of costs and estimated
earnings on uncompleted contracts, all as determined by GAAP. Unbilled Revenue
will be “Eligible Net Unbilled Revenue” to the extent (assuming it were an
invoiced amount and therefore an account receivable) it would otherwise
constitute an Eligible Account; however, as soon as the Unbilled Revenue is
invoiced by a Borrower to its customer, it will be automatically become
ineligible as “Eligible Net Unbilled Revenue”, but, assuming that such formerly
Eligible Net Unbilled Revenue (once invoiced by a Borrower) otherwise meets the
criteria for Eligible Accounts, such aggregate Unbilled Revenue (once invoiced
by a Borrower) will constitute Eligible Accounts subject to the terms of this
Agreement.

“Environmental Laws” means all federal, state, local and foreign laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial toxic or hazardous substances or wastes
into the environment (including ambient air, surface water, ground water or
land), or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes, and any and
all regulations, codes, plans, orders, decrees, judgments, injunctions, notices
or demand letters issued, entered promulgated or approved thereunder.

 

-12-

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

“ERISA” means the federal Employee Retirement Income Security Act of 1974.

“Event of Loss” means, with respect to any Equipment or the Mortgaged Property,
any of the following: (a) any loss, destruction or damage of such Equipment or
Mortgaged Property or (b) any condemnation or taking by exercise of the power of
eminent domain of such Equipment or Mortgaged Property by any governmental
authority.

“Excess Cash Flow” means, for the applicable Fiscal Year, an amount equal to the
sum of (a) the Adjusted EBITDA solely of the Loan Parties for the applicable
Fiscal Year minus (b) the aggregate Fixed Charges solely of the Loan Parties for
such Fiscal Year, provided, however, solely for the purposes of determining
Excess Cash Flow, the principal and Suspended Interest (as defined in the
Subordination Agreement) paid on the Subordinated Debt shall be excluded for
purposes of determining Fixed Charges. All of the foregoing amounts will be
determined based on the annual audited financial statements required to be
delivered to Lender pursuant to Section 4.3(b).

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

“Existing Borrowers” means, collectively, Filters, New Busch, K&B, Technic,
Aire, Abatement, H.M. White, Effox, GMD, and Fisher-Klosterman.

“FCCR Adjustment Amount” means: (a) for the Test Period ending on June 30, 2010,
an amount equal to $6,300,000, and (b) for any Test Period ending on or after
September 30, 2010, an amount equal to zero Dollars.

“FIFO” means a first-in, first-out method of inventory cost accounting in
accordance with GAAP.

“Filters Pledge Agreement” means the Pledge Agreement dated as of December 29,
2005 between Filters and Lender.

“Financial Covenants” means each of the financial covenants contained in
Section 5.3, 5.10 and 5.11.

“First Amendment” means the First Amendment to this Agreement dated as of
June 8, 2006.

“Fiscal Quarter” means, in respect of a date as of which the applicable
Financial Covenant is being calculated, any fiscal quarter of a Fiscal Year, the
first Fiscal Quarter beginning on January 1 and ending on March 31, the second
Fiscal Quarter beginning on April 1 and ending on June 30, the third Fiscal
Quarter beginning on July 1 and ending on September 30, and the fourth Fiscal
Quarter beginning on October 1 and ending on December 31.

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

 

-13-

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

“Fiscal Year” means the Parent’s fiscal year for financial accounting purposes,
beginning on January 1st and ending on December 31st.

“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 Parent and its
Subsidiaries’ long-term Indebtedness, in each case paid in cash during the
applicable period, including those under Term Loan Note C (other than any Excess
Cash Flow Payment with respect to Term Loan C) and the Subordinated Debt Notes
(as defined in the Subordination Agreement) (whether classified, as of any date,
as long-term Indebtedness); plus (b) scheduled capital lease payments by the
Parent and its Subsidiaries during the applicable period; and plus (c) the
Parent and its Subsidiaries’ aggregate cash payments of interest 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: (i) that portion of the
Subordinated Debt which, with Lender’s prior consent, is converted into shares
of the Parent as a result of the exercise of the conversion rights of a
Subordinated Creditor under a Subordinated Debt Note and (ii) the Existing
Subordinated Debt Repayment (as defined in the Eighth Amendment) in an amount
equal to $4,508,452.66, made by Parent on or about November 26, 2009 in
accordance with Section 2 of the Eighth Amendment. The term “applicable period”
in this definition means (A) Test Period in the case of determining the Fixed
Charge Coverage Ratio or the Maximum Total Funded Debt to Adjusted EBITDA Ratio
and (B) Fiscal Year in the case of determining Excess Cash Flow.

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

“FKI Acquisition” means the acquisition by Fisher-Klosterman 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, Fisher-Klosterman, 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.

“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.

“Flextor” means Flextor Inc., a Québec company, and its successors and assigns,
including the successor of the Flextor Amalgamation.

“Flextor Acquisition” means the acquisition by Canadian Acquisition Co. of all
of the shares of stock of Flextor, all in accordance with, and pursuant to the
terms of, the Flextor Acquisition Documents,

 

-14-

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

“Flextor Acquisition Agreement” means the Stock Purchase Agreement dated as of
August 1, 2008, by and among Parent, Canadian Acquisition Co., Michael dos
Santos, an individual resident of Quebec, The Dos Santos Family Trust, a Québec
trust and, 9162-2563 Québec Inc., a Québec company.

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

“Flextor Amalgamation” means the amalgamation of Canadian Acquisition Co. and
Flextor under the laws of Canada.

“Flextor Brazil” means Flextor do Brasil Importacao e Exportacao Ltda., a
company organized under the laws of Brazil.

“Flextor Chile” means Flextor Chile S.A., a company organized under the laws of
Chile.

“Flextor Earn-out Payment” means any Earn-out Amount (as defined in the Flextor
Acquisition Agreement) paid by a Loan Party, Canadian Acquisition Co. or Flextor
in accordance with the Flextor Acquisition Agreement.

“Flextor Loan” has the meaning given in Section 5.9(a)(F).

“Fourth Amendment” means the Fourth Amendment to this Agreement dated as of
August 1, 2008.

“Funded Debt” means, as of any date, all Indebtedness of the Parent and its
Subsidiaries: (a) in respect of any money borrowed, including the undrawn face
amount (and any unreimbursed drawings under) any letters of credit or acceptance
facilities (other than the Subordinated Debt); (b) evidenced by any loan or
credit agreement, promissory note, debenture, bond (other than a Surety Bond),
guaranty or other similar written obligation to pay money (other than the
Subordinated Debt Documents); (c) under any capitalized lease, synthetic lease
or any form of off-balance sheet financing; and (d) for the deferred and unpaid
purchase price of any property or business or any services (other than trade
accounts payable incurred in the ordinary course of business and constituting
current liabilities not more than ninety (90) days in arrears measured from the
date of billing), all as determined in accordance with GAAP.

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied, as in effect at the time any determination is
made or financial statement or information is required or furnished under this
Agreement.

“Group Guaranty” means the guaranty made by Group in favor of Lender and
Lender’s Affiliates of the Obligations.

 

-15-

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

“Group Pledge Agreement” means the Pledge Agreement dated as of the December 29,
2005 between Group, Richard J. Blum as Voting Trustee under the KBD/Technic,
Inc. Voting Trust Agreement dated December 7, 1999 and Lender.

“Guaranties” means, collectively, the Borrower Guaranties, the Group Guaranty,
the Parent Guaranty and each guaranty made by FKI, LLC or CECO Mexico LLC in
favor of Lender and Lender’s Affiliates of the Obligations.

“Guarantors” means, collectively, each of the guarantors party to any of the
Guaranties.

“Icarus” means Icarus Investment Corp., formerly known as Can-Med Technology,
Inc. and formerly doing business as Green Diamond Oil Corporation, an Ontario
corporation.

“Indebtedness” means all of a Person’s indebtedness, obligations, and
liabilities to any other Person, including: (a) the Obligations in respect of
Borrowers, including any and all Rate Management Obligations, (b) all
indebtedness, obligations, and liabilities of Guarantors under the Guaranties,
(c) all indebtedness, obligations, and liabilities of any Person secured by a
Lien on property owned by a Person, even though such Person has not assumed or
become liable for the payment therefor, (d) all indebtedness, obligations, or
liabilities created or arising under any guaranty or any lease of real or
personal property, or conditional sales contract or other title retention
agreement with respect to property used or acquired by a Person, even though the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property, and (e) all other debts, claims and indebtedness,
contingent, fixed or otherwise, heretofore, now and from time to time hereafter
owing, due or payable, however evidenced, created, incurred, acquired or owing
and however arising, whether under written or oral agreement, operation of law,
or otherwise.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as codified at
26 U.S.C. §1 et seq.

“Letter of Credit” means a Standby Letter of Credit issued by Lender pursuant to
Section 2.3.

“Letter of Credit Availability” means, as at any time, an amount equal to the
lesser of (a) an amount equal to (i) $10,000,000 less (ii) the then Letter of
Credit Exposure and (b) the then Revolving Loan Availability.

“Letter of Credit Collateral Account” has the meaning given in Section 6.6.

“Letter of Credit Deficiency” means any failure of the Letter of Credit
Availability to be greater than or equal to zero Dollars.

“Letter of Credit Documents” means, with respect to each and every Letter of
Credit, (a) a letter of credit application and agreement on Lender’s then
customary form (the “Letter of Credit Application”) and (b) any other
agreements, certificates, documents and information as Lender may reasonably
request relating to a Letter of Credit.

 

-16-

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

“Letter of Credit Exposure” means, as at any time, the sum of (a) the Letter of
Credit Face Amount of all outstanding Letters of Credit and (b) all unreimbursed
drawings under any Letters of Credit (whether or not outstanding).

“Letter of Credit Face Amount” of any Letter of Credit means, as at any time,
the face amount of the Letter of Credit, after giving effect to all drawings
paid thereunder and other reductions of the face amount and to all
reinstatements of the face amount effected, pursuant to the terms of the Letter
of Credit, prior to such time.

“Letter of Credit Obligations” means, as at any time, the sum of (a) the
aggregate Letter of Credit Face Amount for all Letters of Credit plus (b) the
aggregate amount of Borrowers’ unpaid obligations in respect of all Letters of
Credit (whether or not outstanding) under this Agreement and the Letter of
Credit Documents, including any Indebtedness incurred or arising in connection
with any Letters of Credit (including any drafts or acceptances thereunder, all
amounts charged or chargeable to a Borrower or Lender, including any and all
Lender charges, expenses, fees and commissions, and all duties and taxes and
costs of insurance which may pertain either directly or indirectly to such
Letters of Credit).

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, charge, security interest, encumbrance, lien (statutory or
other), or any preference, priority or other security agreement or any
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any lease deemed under the
Uniform Commercial Code to be intended for security, and the authorized filing
by or against a Person as debtor of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).

“Life Insurance” means the life insurance policies owned by K&B and set forth on
Schedule 2 attached in respect of David D. Blum, Lawrence J. Blum, and Richard
J. Blum, having a death benefit in the face amounts set forth on Schedule 2 with
the insurance companies listed on Schedule 2.

“Life Insurance Assignments” means, collectively, each assignment of the Life
Insurance in favor of Lender pursuant to an assignment thereof duly executed and
delivered by K&B, all on terms, in a form and in substance reasonably
satisfactory to Lender.

“Loan Collateral” means, collectively, the Collateral (as defined in each
Security Agreement), the Life Insurance, the Patent Collateral (as defined in
each Patent Security Agreement), the Pledged Collateral (as defined in each
Pledge Agreement), the Mortgaged Property, the Trademark Collateral (as defined
in the Trademark Security Agreement), and any other security or collateral
provided from time to time by, or on behalf of, a Loan Party or any other Person
for the Obligations.

 

-17-

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

“Loan Documents” means, collectively, this Agreement, each Guaranty, the Letter
of Credit Documents, the Notes, each Rate Management Agreement between a Loan
Party and Lender or any of the other Affiliates of Fifth Third Bancorp, the
Security Documents, and every other document or agreement executed by any Person
evidencing, governing, guarantying or securing any of the Obligations, and “Loan
Document” means any one of the Loan Documents, and as now in effect or as at any
time after the date of this Agreement amended, modified, supplemented, restated,
or otherwise changed and any substitute or replacement agreements, instruments,
or documents accepted by Lender or an Affiliate of Lender.

“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.

“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.

“Material Adverse Effect” means a material adverse effect, as determined by
Lender in good faith, on (a) Borrowers’ (taken as whole): (i) business,
property, assets, operations, prospects or condition, financial or otherwise or
(ii) ability to perform any of their respective payment, Financial Covenant or
other negative covenants in Section 5, or other material obligations under this
Agreement or any of the other Loan Documents, (b) the recoverable value of the
Loan Collateral or Lender’s rights or interests therein, (c) the enforceability
of any of the Loan Documents, or (d) the ability of Lender to exercise any of
its rights or remedies under the Loan Documents or under applicable law.

“Mortgages” means (a) a Mortgage, Security Agreement and Fixture Filing dated as
of December 29, 2005 granted by K&B to Lender on K&B’s fee simple interest in
the real property described therein situated in Marion County, Indiana (commonly
known as 3501 West Kelly Street, Indianapolis, Indiana 46241), (b) a Mortgage,
Security Agreement and Fixture Filing dated as of December 29, 2005 granted by
K&B to Lender on K&B’s fee simple interest in the real property described
therein situated in Fayette County, Kentucky (commonly known as 550 Horton
Court, Lexington, Kentucky 40511), and (c) a Mortgage, Security Agreement and
Fixture Filing dated as of December 29, 2005 granted by K&B to Lender on K&B’s
fee simple interest in the real property described therein situated in Jefferson
County, Kentucky (commonly known as 1450 South 15th Street, Louisville, Kentucky
40210).

“Mortgaged Property” means each Property, as defined in each of the Mortgages.

“Multiemployer Plan” means a “multiemployer plan” as defined in ERISA.

“Net Proceeds” means any payments, proceeds, or other amounts received by a Loan
Party, with respect to any of the matters described in Sections 2.2(c) or
2.2(e), net of (a) any applicable tax paid by a Loan Party, (b) any payment
required on any Permitted Purchase Money Indebtedness secured by a Lien on any
Equipment on which Lender does not have a first priority security interest to
the extent permitted by this Agreement, and (c) any reasonable out- of-pocket
expense incurred by a Loan Party, including reasonable attorneys’ fees, to
obtain such payment, proceed or other amount.

 

-18-

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

“Net Income” means, for the applicable 12 Month Period, the Parent and its
Subsidiaries after tax net income as determined on a consolidated basis in
accordance with GAAP.

“Ninth Amendment” means the Ninth Amendment to this Agreement dated to be
effective as of December 31, 2009.

“Non-financed Capital Expenditures” means the total amount of capital
expenditures for any period, as determined in accordance with GAAP, made by the
Parent and its Subsidiaries on a consolidated basis determined exclusive of
those capital expenditures made from (a) funds borrowed by the Parent or its
Subsidiaries (for purposes of this clause (a) “funds borrowed” will not include
funds borrowed from Lender as a Revolving Loan or from any other bank or lender
as a revolving or working capital facility) or pursuant to any capitalized lease
or (b) the proceeds of condemnation or eminent domain proceedings or any
insurance proceeds resulting from any Event of Loss.

“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.

“Obligations” means the Loans, the Letter of Credit Obligations, the Rate
Management Obligations, all other loans, advances, and Indebtedness of any one
or more of the Loan Parties owed to any one or more of Lender, the Affiliates of
Lender and the other Affiliates of Fifth Third Bancorp of every kind and
description, whether now existing or hereafter arising, including those owed by
a Loan Party to others and acquired by Lender or any Affiliate of Fifth Third
Bancorp, by purchase, assignment or otherwise, whether direct or indirect,
primary or as guarantor or surety, absolute or contingent, liquidated or
unliquidated, matured or unmatured, related or unrelated, whether arising out of
overdrafts on checking, deposit or other accounts or electronic funds transfers
(whether through wire transfers, automatic clearing houses or otherwise) or out
of Lender’s non-receipt of, or inability to collect, funds or otherwise not
being made whole in connection with depository transfer checks or other similar
arrangements, and whether or not secured by additional collateral, and including
all liabilities, obligations and Indebtedness arising under this Agreement and
the other Loan Documents, all obligations under all treasury and cash management
agreements, all obligations with respect to any credit or debit cards issued by
Lender (or any Affiliate of Lender), all obligations to perform or forbear from
performing acts, all amounts represented by letters of credit now or hereafter
issued by Lender for the benefit of or at the request of a Borrower, and all
expenses and reasonable attorneys’ fees incurred by Lender and any Affiliate of
Fifth Third Bancorp under this Agreement or any other Loan Document.

“Other Taxes” means any present or future stamp or documentary taxes and any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or under the Notes or from the execution or delivery of,
or otherwise with respect to, this Agreement, the Notes, or any other Loan
Document.

 

-19-

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

“Ownership Interest” means all shares, interests, participations, rights to
purchase, options, warrants, general or limited partnership interests, limited
liability company interests or other equivalents (regardless of how designated)
of or in a corporation, partnership, limited liability company or equivalent
entity, whether voting or nonvoting, including common stock, preferred stock or
any other “equity security” (as such term is defined in Rule 3a11-1 of the Rules
and Regulations promulgated by the Securities and Exchange Commission (17 C.F.R.
§ 240.3a11-1) under the Securities and Exchange Act of 1934, as amended).

“Parent Guaranty” means the guaranty, dated as of December 29, 2005, made by
Parent in favor of Lender and Lender’s Affiliates of the Obligations.

“Parent Pledge Agreement” means the Pledge Agreement dated as of December 29,
2005 between Parent and Lender.

“Patent Security Agreements” means, collectively, (a) the Patent Assignment and
Security Agreement dated as of December 29, 2005 between Filters and Lender,
(b) the Patent Assignment and Security Agreement dated as of December 29, 2005
between K&B and Lender, (c) the Patent Assignment and Security Agreement dated
as of December 29, 2005 between New Busch and Lender, (d) the Patent Assignment
and Security Agreement dated as of the Effective Date (as defined in the Third
Amendment) between Fisher-Klosterman and Lender, and (e) the Patent Assignment
and Security Agreement dated as of the Effective Date (as defined in the Third
Amendment) between GMD and Lender.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Pension Plan” means an “employee pension benefit plan”, as defined in ERISA.

“Permitted Liens” means (a) current taxes and assessments not yet due and
payable; (b) any Liens granted to Lender or its Affiliates to secure the
repayment or performance of the Obligations; (c) any Liens arising from a
Contested Claim in the manner, and to the extent, provided for in Section 4.6;
(d) purchase money security interests granted by, or capital lease obligations
incurred by, a Borrower in connection with Permitted Purchase Money
Indebtedness; (e) the Liens listed on Schedule 3.9; (f) Liens of mechanics
(including those Persons having the right to file a mechanics’ lien),
materialmen, shippers and warehousemen for services or materials incurred in the
ordinary course of business for which payment is not yet due; (g) Liens on cash
deposits in connection with bids, tenders or real property leases or as security
for surety or appeal bonds in the ordinary course of business; (h) Liens
resulting from any judgment that is not an Event of Default; and (i) easements,
rights of way and other restrictions that do not materially interfere with or
impair the use or operation of any of Borrower’s Facilities.

“Permitted Purchase Money Indebtedness” means purchase money or capital lease
Indebtedness incurred by a Borrower in connection with the acquisition of any
Equipment if each of the following conditions is satisfied: (a) the total
outstanding amount of purchase money and capital lease Indebtedness incurred by
Borrowers does not, as of any date, exceed an aggregate amount equal to
$250,000, (b) such purchase money and capital lease Indebtedness will not be
secured by any of the Loan Collateral other than the specific Equipment financed
thereby and the identifiable cash proceeds thereof, and (c) the principal amount
of such purchase money and capital lease Indebtedness will not, at the time of
the incurrence thereof, exceed the value of the property so acquired.

 

-20-

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

“Permitted Subordinated Debt Payments” has the meaning given in the
Subordination Agreement.

“Person” means any individual, partnership, joint venture, trust, limited
liability company, business trust, joint stock company, unincorporated
association, corporation, institution, entity, or any governmental authority.

“Pledge Agreements” means, collectively, the Parent Pledge Agreement, the Group
Pledge Agreement and the Filters Pledge Agreement.

“Prime Rate” has the meaning given in the Revolving Note.

“Rate Management Agreement” means any agreement, device or arrangement providing
for payments which are related to fluctuations of interest rates, exchange
rates, forward rates, or equity prices, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants, and any
agreement pertaining to equity derivative transactions (e.g., equity or equity
index swaps, options, caps, floors, collars and forwards), including any ISDA
Master Agreement between a Borrower and Lender or any Affiliate of Fifth Third
Bancorp, and any schedules, confirmations and documents and other confirming
evidence between the parties confirming transactions thereunder, all whether now
existing or hereafter arising, and in each case as amended, modified or
supplemented from time to time.

“Rate Management Obligations” means any and all obligations of a Borrower to
Lender or any Affiliate of Fifth Third Bancorp, whether absolute, contingent or
otherwise and howsoever and whensoever (whether now or hereafter) created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under or in connection with
(i) any and all Rate Management Agreements, and (ii) any and all cancellations,
buy-backs, reversals, terminations or assignments of any Rate Management
Agreement.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew,
defease, amend, modify, supplement, restructure, replace, refund or repay (in
full), or to issue other Indebtedness in exchange or replacement for, such
Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have
correlative meanings.

 

-21-

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

“Refinancing Debt” means, as to any Indebtedness, the Refinancing of such
Indebtedness, provided that the following conditions are satisfied:

(a) the weighted average life to maturity of such Refinancing Debt shall be
greater than or equal to the weighted average life to maturity of the
Indebtedness being refinanced;

(b) the principal amount of such Refinancing Debt shall be less than or equal to
the sum of the principal amount then outstanding of, plus accrued and unpaid
interest on and financing fees related to, the Indebtedness being refinanced;

(c) the respective obligor or obligors shall be the same on the Refinancing Debt
as on the Indebtedness being refinanced;

(d) the priority of payment of such Refinancing Debt shall be the same as or
lower than the ranking of the Indebtedness being Refinanced;

(e) the security, if any, for the Refinancing Debt shall be the same as that for
the Indebtedness being refinanced (except to the extent that less security is
granted to holders of the Refinancing Debt);

(f) the terms of such Refinancing Debt (including covenants, events of default
and remedies) are no less favorable to the Loan Parties than the terms of this
Agreement at the time such Indebtedness is being Refinanced;

(g) The Parent and its Subsidiaries are in compliance with the Financial
Covenants, on a pro forma basis, after giving effect to the incurrence of such
Refinancing Debt and the repayment of the Indebtedness being Refinanced. To
determine whether there is pro forma compliance with the Financial Covenants,
the Parent will, on a pro forma basis, provide a worksheet to Lender at least 10
days before incurring such Refinancing Debt, which (i) restates the financial
statements received by Lender for the Fiscal Quarter or the Fiscal Year, as
applicable, ended most closely before the date such Refinancing Debt is proposed
to be incurred as if the proposed Refinancing Debt had been made, and the
Indebtedness had been Refinanced, at the beginning of the applicable Test Period
and (ii) calculate the Maximum Total Funded Debt to Adjusted EBITDA Ratio under
Section 5.11 and the Fixed Charge Coverage Ratio under Section 5.10 taking into
account such proposed Refinancing Debt as if the proposed Refinancing Debt had
been made, and the Indebtedness had been refinanced, at the beginning of the
applicable Test Period; and

(h) in the case of any Refinancing of the Subordinated Debt, the holders of the
Refinancing Debt have entered into a subordination agreement with Lender on the
then current terms of the Subordination Agreement.

“Revolving Credit Exposure” means, as of any date, the sum of the then Revolving
Loans, the Letter of Credit Obligations, and all other Obligations related to
the Revolving Loans and the Letter of Credit Obligations.

 

-22-

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

“Revolving Commitment” means $20,000,000 subject to Section 2.2(d) and 2.2(e).

“Revolving Loan Availability” means, as at any time, an amount, in Dollars,
equal to:

(a) an amount equal to the lesser of: (i) the then Borrowing Base or (ii) the
Revolving Commitment;

less (b) the then aggregate outstanding principal amount of all Revolving Loans
and all due but unpaid interest on the Loans, and all fees, commissions,
expenses and other charges posted to Borrowers’ loan accounts with Lender; and

less (c) the then Letter of Credit Exposure.

“Revolving Loans” has the meaning given in Section 2.1(a).

“Second Amendment” means the Second Amendment to this Agreement dated as of
February 28, 2007.

“Security Agreements” means, collectively, (i) each Security Agreement dated as
of December 29, 2005 between a Borrower and Lender, (ii) the Security Agreement
dated as of December 29, 2005 between Group and Lender, (iii) the Security
Agreement dated as of December 29, 2005 between Parent and Lender, (iv) the
Security Agreement dated as of the Effective Date (as defined in the First
Amendment) between H.M. White and Lender, (v) the Security Agreement dated as of
the Effective Date (as defined in the Second Amendment) between Effox and
Lender, (vi) the Security Agreement dated as of the Effective Date (as defined
in the Third Amendment) between Fisher-Klosterman and Lender, (vii) the Security
Agreement dated as of the Effective Date (as defined in the Third Amendment)
between GMD and Lender, and (viii) the Security Agreement dated as of the
Effective Date between AVC, Inc. and Lender.

“Security Documents” means the Life Insurance Assignments, the Mortgages, the
Patent Security Agreements, the Pledge Agreements, the Security Agreements, the
Trademark Security Agreements, the Copyright Security Agreement, and all
security agreements, pledge agreements, collateral assignments, mortgages, deeds
of trust and other documents executed in connection with this Agreement and
granting to Lender or Lender’s Affiliates Liens on the Loan Collateral, together
with all financing statements and other documents necessary to record or perfect
the Liens granted by any of the foregoing.

“Seventh Amendment” means the Seventh Amendment to this Agreement dated as of
August 17, 2009, to be effective as of May 15, 2009.

“Sixth Amendment” means the Sixth Amendment to this Agreement dated as of May 1,
2009, to be effective as of March 31, 2009.

 

-23-

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

“Subsidiary” means any Person as to which any Person owns, directly or
indirectly at least 50% of the outstanding shares of Ownership Interests or
other interests having ordinary voting power for the election of directors,
officers, managers, trustees or other controlling Persons.

“Subordinated Creditors” means each of, and collectively, (a) the Subordinated
Lenders (as defined in the Subordination Agreement), (b) subject to the
Subordination Agreement, each of such Subordinated Lender’s successors and
assigns of the Subordinated Debt, and (c) any Person holding Refinancing Debt of
the Subordinated Debt as permitted under this Agreement. Any reference in this
Agreement or any other Loan Document to “Subordinated Creditor” shall be deemed
to be a reference to each of the Subordinated Creditors.

“Subordinated Debt” means the Subordinated Debt, as defined in the Subordination
Agreement.

“Subordinated Debt Default” means any of the following (or any combination of
the following): (i) a default or breach of or under any of the Subordinated Debt
Documents, (ii) any event or circumstance that would become a default or breach
on the Subordinated Creditor’s election or would become a default or breach
after notice, the lapse of time, or on the satisfaction of any other condition,
or all of the foregoing, (iii) the acceleration of any or all of the
Subordinated Debt, or (iv) the maturity of the Subordinated Debt having a
maturity date earlier than six months past the then Termination Date with
respect to the Line of Credit.

“Subordinated Debt Documents” means, collectively, (i) the Subordinated Debt
Notes (as defined in the Subordination Agreement), (ii) the Subordinated Debt
Documents (as defined in the Subordination Agreement), and (iii) all other
agreements, instruments, and documents signed or delivered by or on behalf of a
Loan Party in connection with the Subordinated Debt, as any or all of the
foregoing documents, instruments, and agreements are now in effect or, subject
to Section 5.2, as at any time after the date of this Agreement amended,
modified, supplemented, restated, renewed, extended, or otherwise changed and
any documents, instruments, or agreements given, subject to Section 5.2, in
substitution of any of them.

“Subordination Agreement” means the Subordination Agreement among Subordinated
Creditors and Lender dated as of November 26, 2009.

“Surety Bond” has the meaning given in the definition of Eligible Accounts.

“Tax Refund” means any refund of any taxes, or fees or interest in respect
thereof which (a) are paid to Parent by any governmental authority and are
attributable to losses, deductions, credits, or payments of, or by, any Loan
Party or (b) are paid directly to any Borrower by any governmental authority.

“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).

 

-24-

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

“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) April 1, 2013 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) April 1, 2014, (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; provided, however, that Borrowers specifically
acknowledge and agree, without limiting the generality of the foregoing, that
Borrowers’ failure to permanently repay in full all of the Obligations (other
than Term Loan C) by April 1, 2013 shall result in Term Loan C being immediately
due and payable on such date notwithstanding the stated maturity date of
April 1, 2014.

“Test Period” means each 12 Month Period ending at the end of each Fiscal
Quarter or Fiscal Year commencing with the Fiscal Quarter ending on June 30,
2010.

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

“Trademark Security Agreements” means, collectively, (i) the Trademark Security
Agreement dated as of December 29, 2005 between Filters and Lender, (ii) the
Trademark Security Agreement dated the Effective Date (as defined in the Second
Amendment) between Effox and Lender, (iii) the Trademark Security Agreement
dated the Effective Date (as defined in the Third Amendment) between
Fisher-Klosterman and Lender, and (iv) the Trademark Security Agreement dated
the Effective Date (as defined in the Third Amendment) between GMD and Lender.

“Tranche LIBOR Rate” has the meaning given in the Revolving Note.

“Tranche LIBOR Rate Loan” means that portion of the Loans which, as of any date,
bears interest at an interest rate per annum equal to the Tranche LIBOR Rate
plus the applicable margin as set forth in the applicable Note.

“12 Month Period” means, in respect of a date as of which the applicable
Financial Covenant is being calculated, the four consecutive Fiscal Quarters
immediately preceding the date as of which the Financial Covenant is being
calculated (i.e., a rolling four Fiscal Quarter (or 12 month) period).

1.2 Construction. “Hereunder,” “herein,” “hereto,” “this Agreement” and words of
similar import refer to this entire document; “including” is used by way of
illustration and not by way of limitation, unless the context clearly indicates
the contrary; the singular includes the plural and conversely; and any action
required to be taken by a Person is to be taken promptly, unless the context
clearly indicates the contrary. The term “good faith” means honesty in fact in
the conduct or transaction concerned. The definition of any agreement, document
or instrument includes all schedules, attachments and exhibits thereto and all
renewals, extensions, supplements, modifications, restatements and amendments
thereof but only to the extent such renewals, extensions, supplements,
modifications, restatements or amendments thereof are not prohibited by the
terms of any Loan Document. All references to statutes include (a) all
regulations promulgated thereunder, (b) any amendments of such statutes or
regulations promulgated thereunder, and (c) any successor statutes and
regulations, including any comparable provision of the applicable statute,
ordinance, code, regulation or other law as amended or superseded after the date
of this Agreement.

 

-25-

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

Section 2. Loans.

2.1 Revolving Loans. (a) Subject to the terms and conditions hereof and in
reliance upon the representations and warranties of Borrowers herein, Lender
hereby extends to Borrowers a line of credit facility (the “Line of Credit”)
pursuant to which Lender will make loans to Borrowers on a revolving basis upon
Borrowers’ request from time to time during the term of this Agreement (the
“Revolving Loans”) in an amount not exceeding, in the aggregate, the lesser of:
(i) the Revolving Commitment or (ii) the Borrowing Base. Borrowers may borrow,
repay, in whole or in part, and reborrow under the Line of Credit; provided that
if Revolving Loan Availability shall at any time be less than zero dollars (such
condition being an “Overadvance”), Borrowers shall immediately, without demand
or notice, reduce the then outstanding balance of the Revolving Loans so that
such Overadvance shall no longer exist. Lender may create and maintain Borrowing
Base Reserves against the Borrowing Base. If, at any time, Lender implements a
Borrowing Base Reserve in excess of $100,000 (“Borrowing Base Reserve
Implementation”), Lender will give Parent 5 Business Days advance written notice
of such Borrowing Base Reserve Implementation unless an Event of Default then
exists, in which case Lender will give Parent contemporaneous oral or written
notice of such Borrowing Base Reserve Implementation.

(b) On and after the Effective Date, the Line of Credit may be used by Borrowers
solely for general working capital and corporate purposes.

(c) On the Signature Date, Borrowers shall execute and deliver to Lender a Sixth
Amended and Restated Revolving Credit Promissory Note in the form of Exhibit 2.1
to this Agreement (as amended, the “Revolving Note”), dated as of the Effective
Date, 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.

(d) The entire unpaid balance of the Line of Credit, plus all accrued and unpaid
interest, any other charges, advances and fees, if any, outstanding with respect
to the Revolving Loans, the Letter of Credit Obligations, and all other
Obligations related to the Revolving Loans and the Letter of Credit Obligations
shall be due and payable in full on the Termination Date with respect to the
Line of Credit. Subject to the terms of the Revolving Note, Borrowers may prepay
the Revolving Note in whole or part at any time.

(e) The dilution percentage with respect to Eligible Accounts (i.e., reductions
in the amount of Accounts because of returns, discounts, price adjustments,
credit memoranda, credits, contras, allowances and other offsets) may not
increase above 5%. If the dilution percentage increases above 5%, then Lender
will have the right, to be exercised in good faith, to decrease the advance rate
against Eligible Accounts during that time period that the dilution percentage
is above 5%. If, at any time, Lender decreases the then stated advance rate
against Eligible Accounts as a result of an increase in the dilution percentage
(“Dilution Advance Rate Decrease”), Lender will give Parent 5 Business Days
advance written notice of such Dilution Advance Rate Decrease, unless an Event
of Default then exists, in which case Lender will give Parent contemporaneous
oral or written notice of such Dilution Advance Rate Decrease.

 

-26-

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

(f) Anything to the contrary in this Agreement notwithstanding, only Borrowers
may request or receive from Lender advances of Revolving Loans or other
extensions of credit from Lender; provided, however, that:

(i) Parent may request and receive Revolving Loan advances (“Parent Advances”)
to pay directly amounts owed by Borrowers for operating expenses incurred in the
ordinary course of business (“Borrower Common Expenses”) so long as (A) all
Parent Advances are allocated to each Borrower by the last day of each calendar
month with respect to Parent Advances made during that calendar month, and
(B) Borrowers have supporting documentation in existence at the time of the
Parent Advances to effect the allocation referred to in the immediately
preceding clause (A). If either of the preceding conditions are not met, or if
an Event of Default has occurred and is continuing, and without limiting any of
the other rights or remedies of Lender as a result of such Event of Default,
Parent may no longer request or receive any Parent Advances; and

(ii) Parent may request and receive Revolving Loan advances to pay the direct
out-of-pocket costs incurred by Parent with respect to general and
administrative expenses of Borrowers (“Overhead Expenses”) so long as (A) all
Overhead Expenses are allocated to each Borrower by the last day of each
calendar month with respect to Overhead Expenses paid during that calendar
month, (B) the aggregate amount of Revolving Loan advances made to pay Overhead
Expenses in any month does not exceed a rate equal to two percent (2%) per annum
of the aggregate revenue of Borrowers for that month, and (C) no Event of
Default has occurred and is continuing or is created thereby.

2.2 Term Loans/Mandatory Prepayments.

(a) On December 29, 2005, Lender made a loan to the Existing Borrowers in an
original aggregate amount equal to $3,100,000 (“Term Loan A”). On February 28,
2007, Lender made a loan to the Existing Borrowers in an original aggregate
amount equal to $5,000,000 (“Term Loan B”). The Existing Borrowers repaid in
full Term Loan A and Term Loan B. On the Effective Date (as defined in the Third
Amendment), Lender made a loan to the Existing Borrowers in an original
aggregate 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. On the Signature Date, Borrowers shall execute and deliver to
Lender an Amended and Restated Term Promissory Note in the form of Exhibit 2.2
to this Agreement (as amended, “Term Loan Note C”), dated as of the Effective
Date, in the original principal amount of $1,978,466.70, and bearing interest at
such rates, and payable upon such terms, as specified in Term Loan Note C.

 

-27-

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

(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.

(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
(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, 2011 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 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 $500,000, but Borrowers may make a voluntary prepayment of Term
Loan C in excess of such $500,000. 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.

 

-28-

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

(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 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 Effective 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.

2.3 Letters of Credit.

(a) Until the Termination Date with respect to the Line of Credit and subject to
the other terms and conditions of this Agreement, Borrowers may request Lender
to issue one or more of its standard standby letters of credit (“Standby Letter
of Credit”) in favor of such beneficiary(ies) as are designated by Borrowers by
delivering to Lender: (i) a Letter of Credit Application completed to the
reasonable satisfaction of Lender, together with the proposed form of the Letter
of Credit (which, in all respects, will comply with the applicable requirements
of Section 2.3(b)), (ii) a Borrowing Base Certificate which calculates the
Letter of Credit Availability by giving effect to the proposed Letter of Credit,
and (iii) such other Letter of Credit Documents that Lender then customarily
requires in the issuance of letters of credit. Lender, in addition to the other
terms of this Agreement, will have no obligation to issue the proposed Letter of
Credit if, after giving effect to the proposed Letter of Credit, there would
exist a Letter of Credit Deficiency. The making of each Letter of Credit request
by Borrowers will be deemed to be a representation by Borrowers that the Letter
of Credit may be issued in accordance with, and will not violate the terms of,
this Section 2.3.

 

-29-

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

(b) Each Letter of Credit issued under this Agreement will, among other things,
(i) be in such form requested by Borrowers as is acceptable to Lender in its
discretion exercised in good faith, (ii) be denominated in Dollars, and (iii) be
issued to support Borrowers’ obligations that finance its business needs
incurred in the ordinary course of Borrowers’ respective businesses as presently
conducted by them. In no event will any Letter of Credit have a term of more
than one year; furthermore, and, in addition to the foregoing term limitation,
Lender will have no obligation to issue any Letter of Credit with an expiry date
later than the date that is 30 days prior to the stated Termination Date
applicable to the Line of Credit. Each Letter of Credit Application and each
Letter of Credit will set forth which rules or customs apply to the Letter of
Credit. Such rules and customs may include, but are not limited to, the
International Standby Practices, as published by the International Chamber of
Commerce (“ISP”) or the Uniform Customs and Practice for Documentary Credits, as
published by ISP. In any event, the Letter of Credit shall be governed by
(A) the rules or customs set forth in the Letter of Credit and (B) the internal
laws of the State of Ohio and the United States of America, except to the extent
such laws are inconsistent with the rules or customs adopted in the Letter of
Credit Documents and Letter of Credit as set forth above.

(c) Upon receipt of a request from Borrowers to open any Letter of Credit and of
all attendant Letter of Credit Documents completed to Lender’s reasonable
satisfaction, Lender, within three (3) Business Days, may either (i) issue the
requested Letter of Credit to the beneficiary thereof and transmit a copy to
Borrowers, or (ii) elect, in its discretion exercised in good faith, not to
issue the proposed Letter of Credit. If Lender elects not to issue such Letter
of Credit, Lender will communicate in writing to Borrowers the reason(s) why
Lender has declined such request.

(d) All Letter of Credit Obligations are payable on Lender’s demand or payable
as otherwise set forth in the applicable Letter of Credit Documents. Borrowers
jointly and severally promise to pay Lender the amount of all other Letter of
Credit Obligations immediately when due, irrespective of any claim, setoff,
defense or other right which any Borrower may have at any time against Lender or
any other Person. Subject to the terms of Section 6.6, Borrowers hereby
irrevocably instruct Lender, on the same Business Day that Lender is obligated
to fund a drawing or make any expenditure or any other payment under a Letter of
Credit or incurs any cost or expense under any Letter of Credit, to reimburse
Lender for any drawing, expenditure or other payment made, or cost or expense
incurred, by Lender debiting any Borrower’s loan account(s) with Lender as an
advance of the Revolving Loans pursuant to Section 2.1. If the advance of a
Revolving Loan to reimburse Lender for any drawing, expenditure or other payment
made, or cost or expense incurred, by Lender in respect of any Letter of Credit
results (or to the extent that it results) in any Letter of Credit Deficiency,
then Borrowers will immediately eliminate any Letter of Credit Deficiency in
accordance with the terms of Section 2.1(a).

 

-30-

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

(e) All Letter of Credit Obligations will constitute part of the Obligations and
be secured by the Loan Collateral.

(f) In determining whether to pay under any Letter of Credit, Lender will be
responsible only to confirm in good faith that any documents required to have
been delivered under a Letter of Credit appear to comply substantially on their
face with the requirements of the Letter of Credit, and any action taken or
omitted by Lender in good faith under or in connection with any Letter of Credit
will not subject Lender to any liability to any Borrower; provided, however,
nothing in this Section 2.3(f) will relieve Lender of any liability it may have
to Borrowers to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by Borrowers from Lender’s gross negligence or
willful misconduct. Lender shall not be obligated to cause any Letter of Credit
to be extended or amended unless the requirements of this Section 2.3 are met as
though a new Letter of Credit were being requested and issued.

(g) In addition to amounts payable as elsewhere provided in this Section 2.3,
Borrowers will protect, indemnify, pay and save Lender harmless from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys’ fees) which Lender (provided that it
acts (or omits to act) in good faith and except for Lender’s gross negligence or
willful misconduct) may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit or the provision of any credit
support or enhancement in connection therewith exclusive of claims, demands,
liabilities, damages, losses, costs, charges and expenses to the extent caused
by the gross negligence or willful misconduct of Lender. The agreement in this
Section 2.3(g) shall survive repayment of all other Obligations.

(h) As between Borrowers and Lender, Borrowers assume all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, Lender shall not be responsible for: (i) the existence of any
claim, set-off, defense or other right which any Borrower may have at any time
against any beneficiary, or any transferee, of any Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be acting),
Lender or any other Person, whether in connection with this Agreement or the
other Loan Documents, the transactions contemplated in this Agreement, or any
unrelated transaction; (ii) any statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; (iii) any default, negligence, misfeasance, suspension, insolvency, or
bankruptcy of any shipper or any other Person involved in any transaction
covered thereby or any correspondent or agent of Lender to whom any drafts,
documents or instruments may be entrusted; (iv) any delay, interruption,
omission or error in transmission or delivery of any document, certificate,
draft, or message; (v) payment by Lender under any Letter of Credit against
presentation of a draft or certificate which substantially complies with the
terms of such Letter of Credit; (vi) the invalidity or unenforceability of the
Letter of Credit; (vii) the examination of documents presented under a Letter of
Credit exclusively by electronic or electro-optical means; or (viii) any other
circumstances or happening whatsoever, whether or not similar to any of the
foregoing, including any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto governmental authority. None of the
foregoing shall affect, impair or prevent the vesting of any rights or powers of
Lender under this Section 2.3.

 

-31-

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

(i) In furtherance and extension, and not in limitation, of the specific
provisions set forth above, any action taken or omitted by Lender under or in
connection with any of the Letters of Credit or any related certificates, if
taken or omitted in good faith in the absence of gross negligence or willful
misconduct, shall not put Lender under any resulting liability to Borrowers or
relieve Borrowers of any of their obligations hereunder to Lender.

(j) (i) Borrowers will pay to Lender, with respect to each Letter of Credit, a
fee (“LOC Fee”) equal to the Applicable LOC Fee Percentage per annum on the
amount available to be drawn under each Letter of Credit from, and including,
the issuance date of the Letter of Credit to and including the expiry date
thereof (or, if earlier, the date on which the Letter of Credit is returned to
Lender and is canceled). In addition, Borrowers will pay to Lender, on its
demand for payment, Lender’s then current issuance, opening, closing, transfer,
amendment, draw, renewal, negotiation and other letter of credit administration
fees, charges and out of pocket expenses with respect to each Letter of Credit.
The LOC Fee is fully earned by Lender when paid and will be due and payable on
the issuance of each Letter of Credit. The LOC Fee will be calculated on the
basis of the actual number of days elapsed in a 360-day year. If any Letter of
Credit is cancelled for any reason before the stated expiry date thereof, any
LOC Fee paid in advance will not be refunded and will be retained by Lender
solely for its account.

(ii) For purposes of determining the Applicable LOC Fee Percentage, the Fixed
Charge Coverage Ratio will, on and after the First Pricing Grid Determination
Date, be determined as of June 30th and December 31st of each Fiscal Year ending
on and after the First Pricing Grid Determination Date (each such date being a
“Determination Date”). The “First Pricing Grid Determination Date” occurring
after the Effective Date will be December 31, 2010. On Lender’s receipt of the
financial statements and Compliance Certificate required to be delivered to
Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as applicable) of this
Agreement for the applicable Fiscal Quarter or Fiscal Year then ended, the LOC
Fee will be subject to adjustment in accordance with the table set forth in the
definition of “Applicable LOC Fee Percentage” based on the Fixed Charge Coverage
Ratio as of the end of such Fiscal Quarter or Fiscal Year then ended so long as
no Event of Default is existing as of the applicable effective date of
adjustment. The foregoing adjustment, if applicable, (A) will become effective
with respect to all Letters of Credit that are issued or renewed on and after
the first day of the first calendar month following delivery to Lender of the
financial statements and Compliance Certificate required to be delivered to
Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as applicable) of this
Agreement for the applicable Fiscal Quarter or Fiscal Year then ended and
(B) will remain in effect until the next succeeding effective date of adjustment
pursuant to this clause (ii) of Section 2.3(j). Each of the financial statements
and Compliance Certificate required to be delivered to Lender must be delivered
to Lender in compliance with Section 4.3 of this Agreement. If, however, either
the financial statements or the Compliance Certificate required to be delivered
to Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as applicable) of this
Agreement have not been delivered in accordance with Section 4.3 of this
Agreement, then, at Lender’s option, commencing on the date upon which such
financial statements or Compliance Certificate should have been delivered in
accordance with Section 4.3 of this Agreement and continuing until such
financial statements or Compliance Certificate are actually delivered in
accordance with Section 4.3 of this Agreement, it shall be assumed for purposes
of determining the Applicable LOC Fee Percentage, that the Fixed Charge Coverage
Ratio was £ 1.50 to 1.0 and the pricing associated therewith (i.e., Pricing Grid
Level 1) will be applicable on the then applicable Determination Date.

 

-32-

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

(l) If (i) any law, treaty, rule, regulation, guideline or determination of a
central bank or a governmental authority or interpretation or application
thereof by a central bank or governmental authority or (ii) compliance by Lender
with any request or directive (whether having the force of law) from, or
compliance by Lender with any official pronouncement or statement of, or as a
result of any audit, investigation, or enforcement action (whether or not
against Lender) by, a central bank or other government authority shall either
(A) impose, modify, deem or make applicable any reserve, special deposits,
assessment or similar requirement against letters of credit issued by Lender or
(B) impose on Lender any other condition regarding this Agreement or any Letter
of Credit, and, in Lender’s judgment exercised in good faith, the result of any
event referred to in clause (A) or (B) above is the increase of the cost to
Lender of issuing or maintaining any Letter of Credit, then, within 10 Business
Days after the demand therefor by Lender, Borrowers will immediately pay to
Lender, from time to time as specified by Lender, additional amounts sufficient
to compensate Lender for such increased cost (the “Increased LOC Costs”),
together with interest on each such amount from the date demanded until payment
in full thereof at a rate per annum equal to the then applicable interest rate
on the Revolving Loans; provided, however, that Lender may charge Borrowers for
such Increased LOC Costs only to the extent that such cost is generally charged
by Lender to its other similarly situated borrowers assuming Lender is legally
empowered to do so. A certificate as to such Increased LOC Costs incurred by
Lender, submitted by Lender to Borrowers, shall be conclusive, absent manifest
error, as to the amount thereof.

2.4 Funding of Revolving Loans; Lock Box; Collections.

(a) Prior to the Termination Date with respect to the Line of Credit and subject
to the other terms and conditions of this Agreement, all disbursements of
Revolving Loans will initially be made into a non-interest bearing, disbursement
funding account maintained at Lender or an Affiliate of Lender (the “Funding
Account”) structured and utilized for that purpose in accordance with Lender’s
(or as applicable, the applicable Lender Affiliate’s) policies and procedures,
current account number 99903372. Prior to the Termination Date with respect to
the Line of Credit and subject to the other terms and conditions of this
Agreement, funds in the Funding Account will then be made available to Borrowers
via non-interest bearing controlled disbursement accounts maintained by
Borrowers at Lender or an Affiliate of Lender (collectively, the “Controlled
Disbursement Account”) in accordance with Lender’s (or as applicable, the
applicable Lender’s Affiliate’s) policies and procedures (current account
numbers: 73352576 and 73355646); however, Lender may, at any time hereafter,
elect not to credit proceeds of Revolving Loans to the Controlled Disbursement
Account, but Lender instead may establish non-controlled disbursement account or
accounts (such as an operating account but exclusive of the Funding Account) for
Borrowers at Lender or an Affiliate of Lender and disburse proceeds of the
Revolving Loans by crediting such non-controlled disbursement account(s) of
Borrower(s) at Lender or an Affiliate of Lender. Borrowers hereby authorize
Lender without any further written or oral request of Borrowers to make advances
of Revolving Loans to Borrowers in amounts necessary for the payment of checks
and other items drawn on, and debits by Lender of, the Controlled Disbursement
Account as such checks and other items (“Presentments”) are presented to Lender
or the applicable Lender Affiliate for payment, and debits are made by Lender,
subject to the terms and conditions of this Agreement. In addition to advances
of Revolving Loans made pursuant to Lender’s (or as applicable, Lender’s
Affiliate’s) controlled disbursement account system, Lender will, from time to
time prior to the Termination Date with respect to the Line of Credit and
subject to the other terms and conditions of this Agreement, make advances of
Revolving Loans via wire transfers or ACH payments so long as a Borrower has
given Lender written notice, via facsimile transmission, electronic mail or
otherwise, no later than 1:00 p.m. Cincinnati, Ohio time on the date Borrowers
shall request that such Revolving Loan be advanced in the case of wire transfers
and any other deadline imposed by Lender from time to time for ACH payments. The
making of each Revolving Loan, whether via the controlled disbursement account
system or a written request by a Borrower, will be deemed to be a representation
by Borrowers that (i) the Revolving Loan will not violate the terms of
Section 2.1 and (ii) all Eligible Inventory and Eligible Accounts then
comprising the Borrowing Base meet all of Lender’s criteria for Eligible
Inventory and for Eligible Accounts.

 

-33-

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

(b) Borrowers have established through Lender, and will continue at all times on
and after the occurrence of a Cash Dominion Triggering Event (as defined below),
the use of, the post office box at the U.S. Post Office bearing the address: PO
Box 630202, Cincinnati, Ohio 45263-0202, or such other address or addresses as
Lender may notify Borrowers from time to time (the “Lock Box”). At all times on
and after the occurrence of a Cash Dominion Triggering Event, Borrowers will
notify all of their respective customers and account debtors, which forward
their Remittances in paper form to the applicable Borrower, to forward all
checks, drafts, money orders, and other items, cash and other remittances of
every kind due the applicable Borrower (“Remittances”) to the Lock Box (such
notices to be in such form and substance as Lender may reasonably require from
time to time). Lender will have sole access to the Lock Box at all times, and
Borrowers will take all action necessary to grant Lender such sole access. At no
time will any Borrower remove any item from the Lock Box without Lender’s prior
written consent, and no Borrower will notify any customer or account debtor to
pay any Remittance to any other place or address, other than the address of
Borrowers’ headquarters at times prior to the occurrence of a Cash Dominion
Triggering Event, without Lender’s prior written consent. If a Borrower should
neglect or refuse to notify any customer or account debtor to pay any Remittance
to the Lock Box, Lender will be entitled to make such notification. At all times
on and after the occurrence of a Cash Dominion Triggering Event, Borrowers will
notify all of their respective customers and account debtors, which pay their
Accounts by electronic funds transfer, to forward all Remittances directly to
the Collection Account (as defined below) by wire transfer or automated
clearinghouse funds transfer (ACH) (such notices to be in such form and
substance as Lender may require in good faith from time to time). Prior to the
occurrence of a Cash Dominion Triggering Event, Borrowers will notify all of
their respective customers and account debtors, which pay their Accounts by
electronic funds transfer, to forward all Remittances directly to the Funding
Account or, at Borrowers’ option, the Collection Account by wire transfer or
automated clearinghouse funds transfer (ACH). Upon retrieval of Remittances and
other proceeds of Accounts and other Loan Collateral from the Lock Box, Lender
will deposit the same into the Funding Account until such time as an Event of
Default shall occur (such occurrence of an Event of Default being, the “Cash
Dominion Triggering Event”) at which time all funds will thereafter be deposited
by Lender into a collection, non-interest bearing DDA depository account
maintained at Lender, current account number 702-3362598 (“Collection Account”).
Any Remittance or other proceeds of Accounts or other Loan Collateral received
by a Borrower shall be deemed held by such Borrower in trust and as fiduciary
for Lender, and such Borrower immediately shall deliver the same, in its
original form, to Lender by overnight delivery for deposit into the Lock Box (or
the Funding Account prior to the occurrence of a Cash Dominion Triggering
Event). Pending such deposit, such Borrower will not commingle any such
Remittance or other proceeds of Accounts or other Loan Collateral with any of
any Borrower’s other funds or property, but such Borrower will hold it separate
and apart therefrom in trust for Lender until delivery is made to Lender as
described above. All deposits to the Lock Box and the Collection Account will be
Lender’s property to be applied, following a Cash Dominion Triggering Event,
against the Obligations in such order and method of application as may be
elected by Lender in its discretion exercised in good faith and will be subject
only to the signing authority designated from time to time by Lender, and
Borrowers shall have no interest therein or control over such deposits or funds.
Borrowers shall have no interest in the Lock Box or the Collection Account nor
control over the deposits or funds therein, and Lender shall have sole access to
the Collection Account and the Lock Box. Notwithstanding that Borrowers’
obligations with respect to the Lock Box and automatic sweep to the Collection
Account become mandatory at all times on and after a Cash Dominion Triggering
Event occurs, Borrowers may not collect any Remittances through any provider of
lock box or other cash management and treasury services other than Lender or its
Affiliates or deposit any Remittances at any bank or other financial institution
other than Lender or its Affiliates.

 

-34-

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

(c) Each Business Day following a Cash Dominion Triggering Event, Lender will,
or will cause the applicable Lender Affiliate, automatically and without notice,
request or demand by Borrowers, in accordance with Lender’s (or as applicable,
the applicable Lender Affiliate’s) automatic sweep program, transfer all
collected and available funds in the Collection Account: (i) for application
against the unpaid principal balance of all Revolving Loans bearing interest
based on the Daily LIBOR Rate or the Prime Rate, as applicable, and (ii) to be
held in the Collection Account to the extent of any Revolving Loans bearing
interest based on the Tranche LIBOR Rate. Pursuant to that automatic sweep
program, Lender will either make Revolving Loans to the extent necessary to
cover Presentments to the Controlled Disbursement Account or to maintain a
minimum collected, positive (i.e., “peg”) balance in the Funding Account of
$500,000 at all times; however, in no event will the principal amount of the
Revolving Loans advanced pursuant to the herein described automatic sweep
program exceed the maximum available amount provided for in Section 2.1(a). If
such automatic sweep program is not then active, it shall be Borrowers’
responsibility to maintain a minimum collected, positive (i.e., “peg”) balance
in the Funding Account of $500,000 at all times. Until a Cash Dominion
Triggering Event occurs, Borrowers shall have the right to issue orders and
instructions, from time to time, to Lender with respect to the disposition of
the available and collected funds in the Funding Account, including whether or
not to apply such funds against the outstanding Revolving Loan balance. Without
limitation of the provisions in the Security Agreement, and without limitation
to the provisions below relating to the ownership of the Lock Box, the
Collection Account and the deposits and funds therein, Lender shall have, and
Borrowers hereby grant to Lender, a Lien on all funds held in the Funding
Account, the Controlled Disbursement Account, the Collection Account and Lock
Box as security for the Obligations. The Funding Account, Controlled
Disbursement Account, and Collection Account will not be subject to any
deduction, set-off, banker’s lien or any other right in favor of any Person
other than Lender or an Affiliate of Lender and its Affiliates. If any
Remittance deposited in the Collection Account is dishonored or returned unpaid
for any reason, Lender, in its discretion, may charge the amount of such
dishonored or returned Remittance directly against Borrowers and any account
maintained by any Borrower with Lender or the applicable Lender Affiliate and
such amount shall be deemed part of the Obligations. Neither Lender nor the
applicable Lender Affiliate shall be liable for any loss or damage resulting
from any error, omission, failure or negligence on the part of Lender or the
applicable Lender Affiliate with respect to the operation of the Funding
Account, Controlled Disbursement Account, Collection Account, the Lock Box, or
the services to be provided by Lender or the applicable Lender Affiliate under
this Agreement except to the extent, but only to the extent, of any direct
damages, as opposed to any consequential, special or lost profit damages
suffered by a Borrower from gross negligence or willful misconduct of Lender or
the applicable Lender Affiliate. Until a payment is received by Lender for
Lender’s account in finally collected funds, all risks associated with such
payment will be borne solely by Borrowers.

 

-35-

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

(d) For the purposes of calculating interest, determining Revolving Loan
Availability and the amount of Eligible Accounts, all Remittances and other
proceeds of Accounts and other Loan Collateral deposited into the Collection
Account shall be credited (conditional on final collection) against the
outstanding Revolving Loan balance and the then Eligible Accounts as funds
become collected and available in accordance with Lender’s funds availability
policies from time to time in effect.

(e) From time to time, Lender or the applicable Lender Affiliate may adopt such
regulations and procedures and changes as it may deem reasonable and appropriate
with respect to the operation of the Funding Account, the Controlled
Disbursement Account, the Collection Account, the Lock Box, the automatic sweep
program and the other services to be provided by Lender or the applicable Lender
Affiliate under this Agreement, and such regulations, procedures and changes
need not be reflected by an amendment to this Agreement in order to be
effective.

(f) All service charges and costs related to the establishment and maintenance
of the Funding Account, the Controlled Disbursement Account, Collection Account,
the Lock Box, the automatic sweep program, and Lender’s and its Affiliates’
treasury and cash management services shall be the sole responsibility of
Borrowers, whether the same are incurred by Lender, Lender’s Affiliates or
Borrowers, and Lender, at its discretion, may charge the same against Borrowers
and any account maintained by Borrowers with Lender or the applicable Lender
Affiliate and the same shall be deemed part of the Obligations.

 

-36-

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

2.5 Payment; Time of Payment; Late Payments.

(a) Borrowers jointly and severally promise to pay and to perform, observe and
comply with when due all of the Obligations. All payments to be made by
Borrowers on account of the Obligations will be made by Borrowers without
setoff, deduction, offset, recoupment or counterclaim in immediately available
funds. Borrowers shall make all payments of principal, interest and all other
Obligations no later than 2:00 p.m., Cincinnati, Ohio time, on the Business Day
such payments are due; any and all amounts paid after such time shall be
credited on the next Business Day. As an accommodation to Borrowers, on the date
any payment of interest or principal of the Loans, or any fee, charge or other
Obligation is due, Lender is hereby authorized, in its discretion, to charge
such amounts to the loan account with Lender as an advance of the Revolving
Loans. All payments by Borrowers under this Agreement will be in lawful money of
the United States of America, and, unless otherwise provided in this Agreement
or instructed by Lender in writing from time to time, Borrowers will make all
payments required under this Agreement and under any of the other Loan Documents
in immediately available funds to an account designated by Lender from time to
time.

(b) If any payment is not made when due under this Agreement or any of the other
Loan Documents and, at the time payment was due, there was insufficient
Revolving Loan Availability to charge such payment to the loan account with
Lender as an advance of the Revolving Loans, Borrowers shall pay to Lender a
late payment fee equal to two percent (2%) of any payment not paid when due
(whether by maturity, acceleration or otherwise). In addition, all Obligations
shall, after the occurrence and during the continuance of an Event of Default,
bear interest at the Default Rate without notice to Borrowers; provided that
this Section 2.5(b) shall not be deemed to constitute a waiver of any Event of
Default or an agreement by Lender to permit any late payments whatsoever.
“Default Rate” means the applicable rates of interest set forth in the Notes
plus an additional 2.0% per annum. In no event shall the interest rate accruing
under the Notes be increased to be in excess of the maximum interest rate
permitted by applicable state or federal usury laws then in effect.

2.6 One General Obligation; Cross-Collateralized. All advances of credit to, or
for the benefit of, Borrowers under this Agreement and under any other Loan
Document constitute one loan, and all of the Obligations constitute one
obligation. The Loans and all other advances or extensions of credit to, or for
the benefit of, Borrowers under this Agreement or the other Loan Documents and
all other Obligations are made on the security of all of the Loan Collateral.
The limits on outstanding advances against the Borrowing Base are not intended
and shall not be deemed to limit in any way Lender’s security interest in, or
other Liens on, the Accounts, Inventory, Equipment, General Intangibles, or any
other Loan Collateral.

2.7 Unused Line Fee. (a) Commencing on July 1, 2010 and continuing on the first
day of each and every calendar month thereafter until the Obligations are fully
paid and satisfied (and, as applicable, on the date this Agreement is
terminated), Borrowers will pay to Lender a fee (“Unused Line Fee”) in an amount
equal to the result obtained by multiplying (i) the difference between (A) the
Revolving Commitment and (B) the average daily Revolving Loans advanced to
Borrowers during the preceding calendar month (or portion thereof during which
any portion of the Revolving Loans was outstanding or during which this
Agreement was in full force and effect) for which the Unused Line Fee is being
determined by (ii) the result obtained (expressed as a percentage) by
multiplying the Applicable Unused Line Fee Percentage by a fraction, the
numerator of which is the sum of days in such calendar month during which this
Agreement was in full force and effect (or during which any portion of the
Revolving Loans was outstanding) and the denominator of which is 360. The Unused
Line Fee is payable in arrears by Borrowers.

 

-37-

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

(b) For purposes of determining the Applicable Unused Line Fee Percentage, the
Fixed Charge Coverage Ratio will, on and after the First Pricing Grid
Determination Date, be determined as of June 30th and December 31st of each
Fiscal Year ending on and after the First Pricing Grid Determination Date (each
such date being a “Determination Date”). The “First Pricing Grid Determination
Date” occurring after the Effective Date will be December 31, 2010. On Lender’s
receipt of the financial statements and Compliance Certificate required to be
delivered to Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as
applicable) of this Agreement for the applicable Fiscal Quarter or Fiscal Year
then ended, the Unused Line Fee will be subject to adjustment in accordance with
the table set forth in the definition of “Applicable Unused Line Fee Percentage”
based on the Fixed Charge Coverage Ratio as of the end of such Fiscal Quarter or
Fiscal Year then ended so long as no Event of Default is existing as of the
applicable effective date of adjustment. The foregoing adjustment, if
applicable, will become effective on and after the first day of the first
calendar month following delivery to Lender of the financial statements and
Compliance Certificate required to be delivered to Lender pursuant to Sections
4.3(a), 4.3(b) and 4.3(d) (as applicable) of this Agreement for the applicable
Fiscal Quarter or Fiscal Year then ended until the next succeeding effective
date of adjustment pursuant to this Section 2.7. Each of the financial
statements and Compliance Certificate required to be delivered to Lender must be
delivered to Lender in compliance with Section 4.3 of this Agreement. If,
however, either the financial statements or the Compliance Certificate required
to be delivered to Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as
applicable) of this Agreement have not been delivered in accordance with
Section 4.3 of this Agreement, then, at Lender’s option, commencing on the date
upon which such financial statements or Compliance Certificate should have been
delivered in accordance with Section 4.3 of this Agreement and continuing until
such financial statements or Compliance Certificate are actually delivered in
accordance with Section 4.3 of this Agreement, it shall be assumed for purposes
of determining the Applicable Unused Line Fee Percentage, that the Fixed Charge
Coverage Ratio was £ 1.50 to 1.0 and the pricing associated therewith (i.e.,
Pricing Grid Level 1) will be applicable on the then applicable Determination
Date.

2.8 [Intentionally Omitted].

2.9 [Intentionally Omitted].

2.10 Consolidated Borrowings. To induce Lender to enter into this Agreement and
to make Loans in the manner set forth in this Agreement, each Borrower hereby
represents, warrants, covenants and states to Lender that: (i) Borrowers are
substantially dependent upon each other for their respective working capital,
strategic management, financial needs and technology; (ii) Borrowers desire to
utilize their borrowing potential on a consolidated basis, to the extent(s)
possible as if they were merged into a single entity and, consistent with
realizing such potential, to make available to Lender security commensurate with
the amount and nature of their aggregate borrowings; (iii) each of Borrowers has
determined that it will benefit specifically and materially from the advances of
credit contemplated by this Agreement and that under a joint and several loan
facility it is able to obtain financing on terms more favorable than otherwise
available to it separately; and (iv) Borrowers have requested and bargained for
the structure and terms of and security for the advances contemplated by this
Agreement.

 

-38-

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

2.11 Joint Obligations. The obligations of Borrowers under the Loan Documents
are joint, several and primary. No Borrower will be or be deemed to be an
accommodation party with respect to any of the Loan Documents. Each Borrower
hereby irrevocably designates Parent as its representative and agent on its
behalf for the purposes of issuing requests for advances of Loans, giving
instructions with respect to the disbursement of the proceeds of the Loans,
selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents
which are permitted to be taken by a Borrower. Parent hereby accepts such
appointment. Lender may regard any notice or other communication pursuant to any
Loan Document from Parent as a notice or communication from all Borrowers, and
may give any notice or communication required or permitted to be given to any
Borrower or Borrowers hereunder to Parent on behalf of such Borrower or
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Parent shall
be deemed for all purposes to have been made by such Borrower and shall be
binding upon and enforceable against such Borrower to the same extent as if the
same had been made directly by such Borrower.

Section 3. Representations and Warranties.

Each Loan Party hereby warrants and represents to Lender the following:

3.1 Organization and Qualification; Status. Each Loan Party is a duly organized
and validly existing corporation under the laws of the State set forth in
Schedule 3.1, has the power and authority to carry on its business as now
conducted and to execute and perform this Agreement and the other Loan Documents
to which it is a party or otherwise bound, and is qualified and licensed to do
business in each jurisdiction in which the failure to be so qualified and in
good standing could reasonably be expected to have a Material Adverse Effect. No
Loan Party is (a) an “investment company”, (b) an “investment adviser”, or (c) a
company “controlled” by an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended.

3.2 Due Authorization. The execution, delivery and performance by each Loan
Party of this Agreement and the other Loan Documents to which it is a party or
otherwise bound have been duly authorized by all necessary corporate action, and
shall not contravene any law or any governmental rule or order binding on any
Loan Party, certificate of incorporation/articles of incorporation,
bylaws/regulations or other governing documents of any Loan Party, nor violate
any agreement or instrument by which any Loan Party is bound (the performance or
non-performance of which could reasonably be expected to have a Material Adverse
Effect) nor result in the creation of a Lien on any assets of any Loan Party
except the Lien granted to Lender under the Loan Documents. Each Loan Party has
duly executed and delivered to Lender this Agreement and the other Loan
Documents to which it is a party or otherwise bound and they are valid and
binding obligations of each Loan Party enforceable according to their respective
terms, except as limited by equitable principles and by bankruptcy, insolvency
or similar laws affecting the rights of creditors generally. No notice to, or
consent by, any governmental body is needed in connection with this transaction.

 

-39-

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

3.3 Litigation. Except as set forth on Schedule 3.3, as of the Signature Date,
(i) there are no suits or proceedings pending or, to the knowledge of any Loan
Party, threatened against or affecting any Loan Party, and (ii) no proceedings
before any governmental body are pending or, to the knowledge of any Loan Party,
threatened against any Loan Party in any case, which, if adversely determined
against a Loan Party, could reasonably be expected to have a Material Adverse
Effect.

3.4 Margin Stock. No part of the Loans shall be used to purchase or carry, or to
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin stock. If requested by Lender, Loan
Parties shall furnish to Lender statements in conformity with the requirements
of Federal Reserve Form U-1.

3.5 Business; Supplier and Distribution Agreements. No Loan Party is a (a) party
to or subject to any contract or agreement containing a covenant made by a Loan
Party not to compete in any line of business with any Person or (b) party to a
distribution or supplier agreement with any supplier of Inventory to a Loan
Party which limits the disposition of Inventory by such Loan Party or its
successors, assigns or creditors.

3.6 Licenses, etc. Each Loan Party has obtained any and all licenses, permits,
franchises, governmental authorizations, patents, trademarks, copyrights or
other rights necessary for the ownership of its properties and the conduct of
its business as currently conducted, which, if not so obtained by each Loan
Party, could reasonably be expected to have a Material Adverse Effect. All of
the foregoing are in full force and effect, and none of the foregoing are, to
the knowledge of any Loan Party, in conflict with, or an infringement of, the
rights of others such that it would have a Material Adverse Effect. All of each
Loan Party’s patents, copyrights, trademarks and trade names and all licenses of
any patents, trademarks, and copyrights in any case material to Borrowers’
respective businesses and existing as of the Signature Date are described on
Schedule 3.6.

3.7 Laws and Taxes. Each Loan Party is in compliance with all laws, regulations,
rulings, orders, injunctions, decrees, conditions or other requirements
applicable to or imposed upon a Loan Party by any law or by any governmental
authority, court or agency except for such violations which could not reasonably
be expected to have a Material Adverse Effect. Each Loan Party has filed all
required tax returns and reports (or filed appropriate extensions therefor) that
are now required to be filed by it in connection with any federal, state and
local tax, duty or charge levied, assessed or imposed upon such Loan Party or
its assets, including unemployment, social security, and real estate taxes. Each
Loan Party has paid all taxes which are now due and payable except to the extent
contested in the manner permitted by Section 4.6. No taxing authority has
asserted or assessed any additional tax liabilities against any Loan Party which
are outstanding on the Signature Date, and no Loan Party has filed for any
extension of time for the payment of any tax. There are not in effect any
waivers of applicable statutes of limitations for federal, foreign, state or
local taxes for any period. No Loan Party is a party to any tax-sharing
agreement or arrangement. Each Loan Party’s fiscal year is from January 1 to
December 31.

 

-40-

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

3.8 Financial Condition. All financial statements relating to Loan Parties which
have been, or may hereafter be delivered, by Loan Parties or on their behalf to
Lender are, and will be, true and correct and fairly present, and will present,
in all material respects the financial condition and results of operations of
Loan Parties at the date and for the period indicated therein and has been
prepared in accordance with GAAP. No Loan Party has any Indebtedness of any kind
that is prohibited by the terms of this Agreement. As of the Signature Date,
there has not occurred any change in the financial condition of any Loan Party
which has had a Material Adverse Effect. No Loan Party has suffered any damage,
destruction or loss which has had a Material Adverse Effect since the submission
of the most recent audited financial statements of the Loan Parties to Lender.

3.9 Title. Each Borrower has good title to its property (exclusive of that
property for which it has only a leasehold estate), free and clear of all Liens
and encumbrances of any kind except for any Permitted Liens. Except as
specifically set forth on Schedule 3.9, none of the equipment, included in the
appraisal, which Lender has made eligible for purposes of the Loans is the
subject of any Lien, capitalized lease, or operating lease of any Person.

3.10 Defaults. Each Loan Party is in compliance with all agreements to which it
is a party or by which any of its property is bound, a default under which could
reasonably be expected to have a Material Adverse Effect. There does not now
exist any default or violation by any Loan Party of or under any of the terms,
conditions or obligations of: (a) its certificate of incorporation/articles of
incorporation, bylaws/regulations, other charter documents, or (b) any
indenture, mortgage, deed of trust, franchise, permit, contract, agreement or
other instrument to which any Loan Party is a party or by which it is bound, the
performance of non-performance of which could reasonably be expected to have a
Material Adverse Effect. The consummation of the transactions contemplated by
this Agreement shall not result in such default or violation.

3.11 Environmental Laws.

(a) Each Borrower has obtained all permits, licenses and other authorizations or
approvals which are required under Environmental Laws which, if not so obtained
by such Borrower, could reasonably be expected to have a Material Adverse
Effect. Each Borrower is in compliance with (i) all terms and conditions of such
required permits, licenses, authorizations and approvals, and (ii) all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws
except, in each case, for such violations which could not be reasonably expected
to have a Material Adverse Effect.

(b) To the knowledge of any Loan Party, no Loan Party has received any notice of
any past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which could, with reasonable certainty,
either (i) interfere with or prevent compliance or continued compliance, with
any Environmental Laws in a manner which, individually or collectively, could
reasonably be expected to have a Material Adverse Effect, or (ii) give rise to
any common law or legal liability, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing, study or investigation, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant,
chemical, or industrial, toxic or hazardous substance or waste which,
individually or collectively, could reasonably be expected to have a Material
Adverse Effect.

 

-41-

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

(c) There is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or, to the knowledge of any Borrower, threatened against any
Borrower, relating in any way to Environmental Laws except that which is within
any applicable insurance coverage with respect to which the insurer has admitted
liability and which does not have a Material Adverse Effect.

3.12 Subsidiaries; Partnerships; Affiliates. No Loan Party has any Subsidiaries
other than as set forth on Schedule 3.12, and, except as set forth on Schedule
3.12, no Loan Party is a party to any partnership agreement or joint venture
agreement. Except as set forth on Schedule 3.12, no Affiliate of any Borrower:
(a) sells or leases any goods or real property to any Borrower, (b) sells any
services to any Borrower, (c) purchases or leases any goods or real property, or
purchases any services from, any Borrower, or (d) is a party to any contract or
commitment with any Borrower.

3.13 ERISA. The Loan Parties and all Persons that, along with the Loan Parties,
would be treated as a single employer under ERISA or the Internal Revenue Code
(an “ERISA Affiliate”), are in compliance with all of their obligations arising
out of, or in connection with, any “employee benefit plan”, as that term is
defined in Section 3(3) of ERISA which a Loan Party or an ERISA Affiliate
sponsors or maintains or for which a Loan Party has an obligation to contribute
except: (a) as set forth on Schedule 3.13 and (b) for such violations which
would not reasonably be expected to have a Material Adverse Effect. Neither any
Loan Party nor any of its ERISA Affiliates (each, a “Subject Plan”):
(i) maintains a Pension Plan subject to Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code as to
which a Loan Party or any ERISA Affiliate may have any liability, except, in
each case, as set forth on Schedule 3.13 or (ii) is obligated to contribute to
any Multiemployer Plan except as set forth on Schedule 3.13. Each Pension Plan
that a Loan Party or any of its ERISA Affiliates sponsors, maintains, or for
which a Loan Party or any of its ERISA Affiliates is required to make
contributions, as of the Signature Date, is set forth on Schedule 3.13. Neither
any Loan Party nor any other ERISA Affiliate has withdrawn from any Subject Plan
or initiated steps to do so, and no steps have been taken to reorganize or
terminate any Subject Plan.

3.14 Capitalization. Schedule 3.14 sets forth the number of Ownership Interests
of each Loan Party which are authorized and outstanding. All outstanding
Ownership Interests of each Loan Party are duly authorized, validly issued, and
fully paid and nonassessable. Set forth in Schedule 3.14 is a complete and
accurate list of all Persons who are record and beneficial owners of (a) the
Ownership Interests of each Loan Party (other than Parent) as of the Signature
Date and (b) greater than 10% of the Ownership Interests of Parent as of
April 1, 2010. All warrants, subscriptions, options, instruments, agreements and
rights under which any Ownership Interests of each Loan Party are or may be
redeemed, retired, converted, encumbered, bought, sold or issued are described
in Schedule 3.14.

 

-42-

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

3.15 Restrictions; Labor Disputes; Labor Contracts. No Loan Party is a party or
subject to, any charge, corporate restriction, judgment, decree or order, for
which a Loan Party’s compliance or non-compliance could reasonably be expected
to have a Material Adverse Effect. Except as set forth on Schedule 3.15, no Loan
Party is, as of the Signature Date, (a) a party to any collective bargaining
agreement or other labor contract or (b) the subject of any labor dispute which
could reasonably be expected to have a Material Adverse Effect. Except as set
forth on Schedule 3.15, no union or other labor organization is, to any Loan
Party’s knowledge, seeking to organize, or to be recognized as, a collective
bargaining unit of employees of any Loan Party or any of its Subsidiaries or for
any similar purpose. To any Loan Party’s knowledge, no key employee of such Loan
Party is subject to any agreement in favor of anyone other than such Loan Party
which restricts or limits that individual’s right to engage in the type of
business activity conducted by such Loan Party in any manner which could
materially impair the ability of such individual to carry out his or her duties
with such Loan Party or to use any property or confidential information or which
grants to any Person, other than such Loan Party, any rights to inventions or
other ideas susceptible to legal protection developed or conceived by any such
key employee of such Loan Party.

3.16 Specifically Designated National and Blocked Persons. No Loan Party nor any
of its Affiliates is a country, individual, or entity named on the Specifically
Designated National and Blocked Persons (SDN) list issued by the Office of
Foreign Asset Control of the Department of the Treasury of the United States.

3.17 Tax Shelter Regulations. Loan Parties do not intend to treat the Loans
and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4). If
any Loan Party determines to take any action inconsistent with such intention,
it will promptly notify Lender thereof and deliver to Lender a duly completed
IRS Form 8886 or any successor form. If any Loan Party so notifies Lender, Loan
Parties acknowledge that (a) Lender may treat the Loans and/or Letters of Credit
as part of a transaction that is subject to Treasury Regulation
Section 301.6112-1, and Lender will maintain the lists and other records
required by such Treasury Regulation and (b) Lender may disclose without
limitation of any kind, any information with respect to the “tax treatment” and
“tax structure” (in each case, within the meaning of Treasury Regulation
Section 1.6011-4) of the transactions contemplated hereby and all materials of
any kind (including opinions or other tax analyses) that are provided to Lender
relating to such tax treatment and tax structure.

3.18 Full Disclosure. No representation or warranty made by any Loan Party or
any of its Affiliates, as the case may be, in this Agreement, any other Loan
Document to which they are a party, or in any other document furnished from time
to time in connection herewith or therewith contains or will contain at the time
such representation is made or such document furnished, any untrue statement of
a material fact or omits or will omit to state any material fact necessary to
make the statements herein or therein not misleading.

 

-43-

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

3.19 Updating Representations and Warranties. To the extent necessary to cause
the representations and warranties set forth in Section 3 to remain true,
complete and accurate as of the date hereof and as of each day on which a Loan
is made hereunder, the Loan Parties shall update in writing any Schedules
provided for in Section 3 promptly upon learning of any circumstance which may
have the effect of making any such representation or warranty contained in
Section 3 untrue or misleading. Such Schedules, upon being updated by a Loan
Party in accordance with this Agreement, will become the Schedules referenced in
this Agreement. The requirement of the Loan Parties to update any Schedule
provided for herein is not, and may not be construed to be, a modification of
any of the covenants of this Agreement or a cure of any Event of Default
occurring prior to any such update, as result of, or existing at the time of any
such update without the waiver of such Event of Default by Lender.

Section 4. Affirmative Covenants. Loan Parties covenant with, and represent and
warrant to, Lender that, from and after the Effective Date until the Obligations
are paid and satisfied in full:

4.1 Access to Business Information. Each Loan Party shall maintain proper books
of account and records sufficient to permit the preparation of financial
statements in accordance with GAAP in which complete and accurate entries and
records of all of its transactions in accordance with GAAP shall be made and
give representatives of Lender access thereto at all reasonable times, including
permission to: (a) examine, copy and make abstracts from any such books and
records and such other information which might be helpful to Lender in
evaluating the status of the Loans as it may reasonably request from time to
time, and (b) communicate directly with any Loan Party’s employees, officers,
managers, members, partners, accountants or other financial advisors and agents
with respect to the business, financial conditions and other affairs of any
Borrower.

4.2 Inspection of Collateral. Each Loan Party shall give Lender access during
normal business hours and upon reasonable advance notice (in the absence of an
Event of Default) from Lender to the Loan Collateral and the other property
securing the Obligations for the purpose of performing examinations thereof and
to verify its condition or existence.

4.3 Financial Information; Reporting. Parent shall furnish to Lender:

(a) Within 45 days after the end of each month and Fiscal Quarter, a copy of the
Parent and its Subsidiaries’ consolidated and consolidating financial statements
for that month and, as applicable, Fiscal Quarter and for the year to date in a
form reasonably acceptable to Lender, prepared and certified, subject to changes
resulting from normal year-end adjustments and the omission of footnote
disclosures, by the principal financial officer of the Parent;

(b) Within 90 days after the end of each Fiscal Year, a copy of the Parent and
its Subsidiaries’ (i) consolidated financial statements for that year audited by
a firm of independent certified public accountants selected by Parent and
acceptable to Lender (which acceptance shall not be unreasonably withheld) (the
“Auditors”) and accompanied by a standard audit opinion of such Auditors,
(ii) unaudited, consolidating financial statements for that year, and (iii) any
management letter prepared by such Auditors;

 

-44-

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

(c) All of the statements referred to in (a) and (b) above shall be in
conformance with GAAP;

(d) With the month-end and Fiscal Quarter-end statements submitted under
(a) above and the Fiscal Year end statements submitted under (b) above, a
Compliance Certificate in the form attached hereto as Exhibit 4.3(d) signed by
the principal financial officer of Parent and the other Loan Parties,
(i) stating among other things, that he or she is familiar with all Loan
Documents and that to the knowledge of such principal financial officer no Event
of Default specified in this Agreement or in any of the other Loan Documents,
nor any event which upon notice, lapse of time, the satisfaction of any other
condition, or all of them, would constitute such an Event of Default, has
occurred and is continuing, or, if any such condition or event existed or
exists, specifying it and describing what action Loan Parties have taken or
proposes to take with respect thereto and (ii) setting forth in summary form,
with respect to the Fiscal Quarter-end and Fiscal Year-end statements, figures
showing the financial status of the Parent and its Subsidiaries in respect of
the Financial Covenants and restrictions contained in this Agreement, including
showing the following amounts on a per Fiscal Quarter basis: Fixed Charges,
Adjusted EBITDA, Funded Debt, the gross amount of capital expenditures, and the
amount of capital expenditures which are financed;

(e) No later than 10 days after the beginning of each Fiscal Year, a projected
balance sheet, cash flow, and income statement for the subsequent Fiscal Year;

(f) Upon request, copies of all federal, state and local income tax returns and
such other information as Lender may reasonably request;

(g) Within 30 days after the end of each month, or sooner if available, and more
frequently if Lender shall require or Borrowers shall so elect: a borrowing base
certificate substantially in the form of Exhibit 4.3(g) (“Borrowing Base
Certificate”) and any related documents required by Lender, (A) containing a
summary of Accounts created since the last Borrowing Base Certificate,
(B) containing a summary and calculation of the Eligible Net Unbilled Revenue
created since the last Borrowing Base Certificate, and (C) reporting the value
of each Borrower’s Inventory since the last Borrowing Base Certificate which is
listed separately for each Borrower’s Facility. Values shown on reports of
Inventory shall be at the lower of fair market value or cost based on FIFO in
accordance with GAAP;

(h) Within 30 days after the end of each month, or sooner if available,
(A) monthly agings of Accounts, broken down by invoice date, in each case
reconciled to the Borrowing Base Certificate for the end of such month and each
Borrower’s general ledger, and setting forth any changes in the reserves made
for bad debts or any extensions of the maturity of, any refinancing of, or any
other material changes in the terms of any Accounts, together with such further
information with respect thereto as Lender may require; and (B) monthly agings
of accounts payable listed by invoice date, in each case reconciled to each
Borrower’s general ledger for the end of such month;

 

-45-

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

(i) Promptly upon the filing thereof and in any event within 10 days after
filing therewith, Parent shall deliver to Lender copies of all registration
statements and other reports or filings which Parent files with the Securities
and Exchange Commission; and

(j) Such other information (including non-financial information) as Lender may
from time to time reasonably request.

4.4 Condition and Repair. Each Borrower shall maintain its Equipment and all of
the other Loan Collateral used in the operation of its business in good repair
and working order subject to reasonable wear and tear, and shall make all
appropriate repairs, improvements and replacements thereof so that the business
carried on in connection therewith may be properly conducted at all times.

4.5 Property & Casualty Insurance; Life Insurance.

(a) At its own cost, each Borrower shall obtain and maintain: (i) insurance
against loss, destruction or damage to its properties and business of the kinds
and in the amounts customarily insured against by firms with businesses engaged
in the same or similar business as such Borrower and, in any event, sufficient
to fully protect Lender’s interest in the Loan Collateral and (ii) insurance
against public liability and third party property damage of the kinds and in the
amounts customarily insured against by firms with businesses engaged in the same
or similar business as such Borrower. All such policies shall (A) be issued by
financially sound and reputable insurers, (B) name Lender as an additional
insured and, where applicable, as loss payee under a lender loss payable
endorsement satisfactory to Lender, and (C) shall provide for thirty (30) days
written notice to Lender before such policy is altered or canceled. All of the
insurance policies required hereby (1) may be subject to reasonable deductible
amounts and (2) shall be evidenced by one or more certificates of insurance
delivered to Lender by such Borrower on or before the Effective Date and at such
other times as Lender may reasonably request from time to time.

(b) Borrowers will promptly take all actions after the Effective Date necessary
or appropriate in Lender’s judgment, reasonably exercised, to cause the
applicable life insurer to acknowledge and confirm Lender’s assignment and, as
appropriate, consent to the assignment of the Life Insurance to Lender pursuant
to the terms of this Agreement and the other Loan Documents in accordance with
the terms of the Life Insurance Assignments. The Life Insurance Assignments in
favor of Lender will be prior to all other assignments or other Liens except to
the extent of any Policy Loans (as defined below). All right, title, and
interest in, to and under the Life Insurance will, on execution of the Life
Insurance Assignments by K&B, become a part of the Loan Collateral as security
for the Obligations. Until the Obligations are fully and finally paid, Borrowers
will not: (i) make or grant any further assignments, transfers, or other
dispositions of any portion of the Life Insurance or any right or interest
therein or grant or permit to exist any Lien on any portion of the Life
Insurance or any right or interest therein except in favor of Lender and to the
extent of any Policy Loans, (ii) make any borrowings or withdrawals of, or
accept any loans or advances of, the cash surrender value of any Life Insurance
except as set forth on Schedule 5.1 (“Policy Loans”), or (iii) make or seek any
changes to any of the terms or conditions of any of the Life Insurance.

 

-46-

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

4.6 Taxes; Contested Claims. Each Loan Party shall pay when due all taxes,
assessments and other governmental charges imposed upon it or its respective
assets, franchises, business, income or profits before any penalty or interest
accrues thereon, and all claims (including claims for labor, services, materials
and supplies) for sums which by law might be a Lien or charge upon any of its
assets, provided that no such charge or claim need be paid if and for so long as
each of the following conditions continue to be met (“Contested Claims”):
(a) such Contested Claim is being diligently contested in good faith so long as
Lender is notified in advance of such contest, (b) such Loan Party establishes
an adequate reserve or other appropriate provision for the payment of such
Contested Claim and all other Contested Claims required by GAAP, (c) any Lien
arising from such Contested Claim does not, when added to all amounts secured by
all other then Contested Claims, secure amounts in excess of $250,000 in the
aggregate as of any date, (d) no material property would be lost, forfeited or
materially damaged as a result of such Contested Claim; and (e) any Lien arising
from such Contested Claim, or from any other then Contested Claim, do not
prevent Lender from having a perfected first priority security interest in, or
as applicable, mortgage Lien on, the Loan Collateral or with respect to future
advances made hereunder.

4.7 Existence; Business. Each Loan Party shall (a) do all things necessary to
maintain its existence as a corporation in the jurisdiction of its present
organization, (b) continue to engage primarily in business of the same general
character as that now conducted, and (c) refrain from entering into any lines of
business substantially different from the business or activities in which such
Loan Party is presently engaged if, as a result, the general nature of the
business which would then be engaged in by Borrowers, considered as a whole,
would be materially changed from the general nature of the business engaged in
by Borrowers, considered as a whole, as of the date of this Agreement.

4.8 Compliance with Laws. Each Loan Party shall comply with all federal, state
and local laws, regulations and orders applicable to it or its assets, including
all Environmental Laws, in all respects applicable to such Loan Party’s business
or assets except, in each case, for such violations which could not be
reasonably expected to have a Material Adverse Effect. Each Loan Party shall
promptly notify Lender of any material violation of any rule, regulation,
statute, ordinance, order or law relating to the public health or the
environment and of any complaint or notifications received by any Loan Party
with regard to any material environmental or safety and health rule, regulation,
statute, ordinance or law. Each Loan Party shall obtain and maintain any and all
licenses, permits, franchises, governmental authorizations, patents, trademarks,
copyrights or other rights necessary for the ownership of its properties and
necessary for the conduct of its business and as may be required from time to
time by applicable law, the violation of which could be reasonably expected to
have a Material Adverse Effect.

4.9 Notice of Default and Labor Matters. Each Loan Party shall, within three
(3) Business Days after any officer of a Loan Party has knowledge thereof, give
notice to Lender of: (a) the occurrence of any event or the existence of any
condition which would be, after notice or the lapse of any applicable grace
periods, an Event of Default, (b) the occurrence of any event or the existence
of any condition which would prohibit or limit the ability of any Loan Party to
reaffirm any of the representations or warranties, or to perform any of the
covenants, set forth in this Agreement, (c) any labor dispute to which such Loan
Party may become a party and which may have a Material Adverse Effect, (d) any
strikes, walkouts, or lockouts relating to any of its plants or other
facilities, and (e) the entering into of any labor contract relating to any of
its plants or other facilities.

 

-47-

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

4.10 Costs. Loan Parties shall reimburse Lender for any and all Other Taxes upon
Lender’s request for payment. Loan Parties shall reimburse Lender for any and
all fees, costs and expenses including reasonable attorneys’ fees, other
professionals’ fees, appraisal fees, environmental assessment fees (including
Phase I and Phase II assessments) if a Loan Party has received notice that it
may have violated any applicable Environmental Law, expert fees, court costs,
litigation and other expenses (collectively, the “Costs”) all of which shall be
reasonable in amount and reasonably incurred or paid by Lender or any of its
officers, employees, Affiliates or agents in connection with: (a) the
preparation, negotiation, procurement, review, administration or enforcement of
this Agreement, any of the other Loan Documents or any instrument, agreement,
document, policy, consent, waiver, subordination, release of lien, termination
statement, satisfaction of mortgage, financing statement or other lien search,
recording or filing related thereto (or any amendment, modification or extension
to, or any replacement or substitution for, any of the foregoing), whether or
not any particular portion of the transactions contemplated during such
negotiations is ultimately consummated, and (b) the defense, preservation and
protection of Lender’s rights and remedies thereunder, including its security
interest in the Loan Collateral or any other property pledged to secure the
Loans, whether incurred in bankruptcy, insolvency, foreclosure or other
litigation or proceedings or otherwise. The Costs shall be due and payable upon
demand by Lender. If any Loan Party fails to pay the Costs upon such demand,
Lender is entitled to disburse such sums as an advance under the Line of Credit.
If there is insufficient Revolving Loan Availability to charge such Costs to the
loan account with Lender as an advance of the Revolving Loans, the Costs shall
bear interest from the date Borrowers receive demand for payment at the Default
Rate. This provision shall survive the termination of this Agreement and/or the
repayment of any amounts due or the performance of any Obligation.
Notwithstanding anything to the contrary in this Section 4.10, in connection
with each field examination or verification by Lender of any of the Loan
Collateral or a Loan Party conducted after the Effective Date, Loan Parties will
pay to Lender (i) a fee at the then current rate (currently $850.00) per day
(based on an 8 hour day plus reasonable out-of-pocket expenses incurred,
including travel, lodging and meals) per auditor or field examiner for the
services of Lender’s auditors and field examiners and (ii) the out-of-pocket
fees, costs and expenses paid to third party auditors which conduct the field
examination or verification.

4.11 Depository/Banking Services. So long as this Agreement is in effect, Lender
shall be the principal depository in which substantially all of Loan Parties’
funds are deposited, and the principal bank of account of Loan Parties, and Loan
Parties shall grant Lender an opportunity to provide any corporate banking
services required by Loan Parties, including payroll and employee benefit plan
services.

4.12 Other Amounts Deemed Loans. If any Loan Party fails to pay any tax,
assessment, governmental charge or levy or to maintain insurance within the time
permitted or required by this Agreement, but subject to Section 4.6, or to
discharge any Lien prohibited hereby, or to comply with any other Obligation,
Lender may, but shall not be obligated to, pay, satisfy, discharge or bond the
same for the account of Loan Parties, and to the extent permitted by law and at
the option of Lender, all monies so paid by Lender on behalf of a Loan Party
shall be deemed Loans and Obligations.

 

-48-

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

4.13 Further Assurances. Loan Parties shall execute, acknowledge and deliver, or
cause to be executed, acknowledged or delivered, all such further assurances and
other agreements or instruments, and take or cause to be taken all such other
action, as shall be reasonably necessary from time to time to give full effect
to the Loan Documents and the transactions contemplated thereby.

Section 5. Negative Covenants. Loan Parties covenant with, and represent and
warrant to, Lender that, from and after the Effective Date until the Obligations
are paid and satisfied in full:

5.1 Indebtedness. No Loan Party will incur, create, assume or permit to exist
any:

(a) Indebtedness for borrowed money other than: (i) the Obligations; (ii) the
Subordinated Debt and any Refinancing Debt thereof; (iii) such Indebtedness for
borrowed money to the Persons described on Schedule 5.1 in existence as of the
Signature Date and any Refinancing Debt thereof; (iv) Permitted Purchase Money
Indebtedness and any Refinancing Debt thereof; (v) such Rate Management
Obligations and credit card Obligations to Lender or its Affiliates pursuant to
such terms and conditions as agreed to by Lender and the applicable Loan Party;
(vi) Indebtedness of one Borrower to, and held by, another Borrower that is
unsecured and subordinated in right of payment to the Obligations if that
Indebtedness is permitted pursuant to the terms of Section 5.9; and (vii) other
Indebtedness not otherwise authorized by this Section 5.1 that has been
specifically approved in writing by Lender and any Refinancing Debt thereof;

(b) Indebtedness under a Rate Management Agreement except (i) for Rate
Management Agreements entered into with Lender or an Affiliate of Lender or
(ii) as approved in writing by Lender;

(c) Indebtedness representing reimbursement obligations and other liabilities of
a Loan Party with respect to Surety Bonds (except those Surety Bonds obtained by
a Borrower in the ordinary course of its business as presently conducted by it),
letters of credit, banker’s acceptances, drafts or similar documents or
instruments issued for a Loan Party’s account except for Letters of Credit
issued by Lender;

(d) Indebtedness secured by a Lien on or payable out of the proceeds or
production from any property of a Loan Party regardless of whether such
liability has been assumed by a Loan Party;

(e) Indebtedness representing the balance deferred and unpaid of the purchase
price of any property or services except (i) Permitted Purchase Money
Indebtedness and (ii) any such balance that constitutes an account payable to a
trade creditor created, incurred, assumed or guaranteed by a Loan Party in the
ordinary course of business of a Borrower in connection with obtaining goods,
materials or services that is not more than ninety (90) days in arrears as
measured from the date of billing, unless the trade payable is being contested
in good faith; or

 

-49-

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

(f) Indebtedness evidenced by notes, bonds, debentures, installment contracts,
capitalized leases, synthetic leases, or similar obligations except to the
extent permitted under Section 5.1(a).

5.2 Prepayments; Subordinated Debt.

(a) No Loan Party will voluntarily prepay any Indebtedness owing by a Loan Party
prior to the stated maturity date thereof other than (i) the Obligations;
(ii) Indebtedness to trade creditors where the prepayment shall result in a
discount on the amount due or other benefit to such Loan Party deemed material
by it; and (iii) the Permitted Subordinated Debt Payments to the extent, and in
the manner, expressly permitted by the Subordination Agreement.

(b) No Loan Party will (i) make any payment (including any principal, premium,
interest, fee or charge) with respect to any Subordinated Debt except, in each
instance, the Permitted Subordinated Debt Payments to the extent, and in the
manner, expressly permitted by the Subordination Agreement or (ii) repurchase,
redeem, defease, acquire or reacquire for value any of the Subordinated Debt.

(c) No Loan Party will seek, agree to or permit, directly or indirectly, the
amendment, waiver or other change to (i) any of the terms of payment (including,
principal, interest or premium provisions) of or applicable to, or the
provisions governing the priority of or security for the payment and performance
of the obligations under or applicable to, or acceleration, termination, or
default provisions of or applicable to, any of the Subordinated Debt Documents,
(ii) increase the total amount of Indebtedness owing to the Subordinated
Creditors from that which exists on the Effective Date, or (iii) any other
material term of or applicable to any of the Subordinated Debt Documents except
(A) as otherwise permitted pursuant to Section 5.1(a) in respect of a
Refinancing thereof and (B) that the Loan Parties shall be permitted to amend
the Subordinated Debt Documents to add accrued but unpaid interest due and owing
the Subordinated Creditors to the principal amount due and owing such
Subordinated Creditors under the Subordinated Debt Documents. For purposes of
this Section 5.2(c), “material” means any modification, waiver, or amendment of
any of the Subordinated Debt Documents, which, in the judgment of Lender
exercised in good faith, could (1) 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) or (2) create or result in an Event of Default.

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
$2,500,000 for any Fiscal Year ending on or after December 31, 2010.

5.4 Pledge or Encumbrance of Assets. Other than the Permitted Liens, no Loan
Party will create, incur, assume or permit to exist, arise or attach any Lien in
any present or future asset. No Loan Party will create or permit, directly or
indirectly, any prohibition or restriction on the creation or existence of a
Lien in favor of Lender upon the assets of any Loan Party, nor create any
contractual obligation which may restrict or inhibit Lender’s rights or
abilities to sell or otherwise dispose of all or any part of the Loan Collateral
after the occurrence of an Event of Default.

 

-50-

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

5.5 Guarantees. No Loan Party will enter into any direct or indirect indemnities
or guarantees other than (a) in favor of Lender or (b) by indorsement of checks
for deposit in the ordinary course of business.

5.6 Dividends and Distributions. No Loan Party shall, without Lender’s prior
consent (which consent Lender, in good faith, shall have no obligation to
provide): (a) declare or pay any dividend or distributions on its Ownership
Interests (including any return of capital), (b) make any payments of any kind
to its shareholders (including debt repayments (exclusive of the Subordinated
Debt as provided in Section 5.2), payments for goods or services or otherwise,
but excluding ordinary salary and consulting payments to shareholders employed
by a Borrower) or (c) redeem, retire, purchase, repurchase or otherwise acquire,
directly or indirectly, or exercise any call rights relating to, any of its
Ownership Interests in any Fiscal Year except Borrowers may make cash payments
to Group which, in turn, will pay such amounts to Parent solely in order, and in
such amounts sufficient, to pay (i) the federal, state and local income tax
liabilities of Borrowers which are then due and any state franchise taxes of
Parent and Group which are then due and (ii) Borrower Common Expenses and
Overhead Expenses (as each is defined in Section 2.1(f)).

5.7 Merger; Amendment of Material Documents; Disposition of Assets. No Loan
Party will amend or change, or allow to be amended or changed, such Loan Party’s
certificate of incorporation/articles of incorporation, bylaws/regulations,
organizational or other governing documents to the extent prohibited by any of
the other Loan Documents. The Loan Parties will promptly provide notice and a
copy of such changes to Lender. No Loan Party shall without Lender’s prior
consent (which consent Lender, in good faith, shall have no obligation to
provide): (a) change its capital structure or Fiscal Year, (b) merge or
consolidate with any Person or otherwise reorganize, liquidate or wind-up or
dissolve itself; provided, however, that so long as (i) no Event of Default
exists immediately before or immediately after giving effect to such merger or
such consolidation and (ii) the Loan Parties execute all necessary amendments or
modifications to the Loan Documents specified by Lender reasonably and in good
faith contemporaneously with such merger or consolidation, any wholly-owned
Domestic Subsidiary of Borrowers may merge or consolidate with or into a
Borrower or any other wholly-owned Domestic Subsidiary of a Borrower, or
(c) sell, lease, transfer or otherwise dispose of, or grant any Person an option
to acquire, or sell and leaseback, any of its assets, whether now owned or
hereafter acquired, except the following:

(i) Bona fide sales of Inventory in the ordinary course of business; provided,
however, a sale in the ordinary course of business will not include a transfer
in total or partial satisfaction of Indebtedness; and

 

-51-

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

(ii) Dispositions of Equipment (A) which has suffered an Event of Loss or
(B) with a net book value of less than (x) $100,000 with respect to any single
piece of Equipment or (y) $250,000 in the aggregate per year with respect to
multiple pieces of Equipment (as to all Borrowers), which, in each instance, is
obsolete and not used or useful in its business so long as, in each instance
(i.e., under clauses (A) and (B)), all proceeds thereof (“Disposition Proceeds”)
are paid to Lender (exclusive of any Equipment which is the subject of a
Permitted Lien on which Lender does not have a first priority security interest)
to be applied by Lender in accordance with Section 2.2(d); provided that
Borrowers may use Disposition Proceeds to purchase replacement Equipment so long
as: (i) such replacement Equipment is either (A) new and is of equal or greater
value than the Equipment which was sold or otherwise disposed of by a Borrower
or (B) used and is not materially less in value than the Equipment which was
sold or otherwise disposed of by a Borrower, (ii) no Event of Default then
exists, (iii) such replacement Equipment (A) is free and clear of all Liens
except: (1) a first priority security interest in favor of Lender and (2) any
other Permitted Lien exclusive of a Lien arising from any Permitted Purchase
Money Indebtedness and (B) will not be a fixture under applicable law,
(iv) Borrowers effect the replacement within 180 days after such disposition and
provides notices thereof to Lender, and (v) all Disposition Proceeds with
respect to any Equipment (exclusive of any Equipment which is the subject of a
Permitted Lien on which Lender does not have a first priority security interest
to the extent permitted by this Agreement) are paid to Lender for application to
the Revolving Loans (subject to the establishment of a Borrowing Base Reserve
therefor in the amount thereof) pending such replacement by Borrowers.

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 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, CECO Environmental
Services, Canadian Acquisition Co., Flextor, Flextor Brazil or Flextor Chile
during any time that the total Indebtedness of CECO India and (exclusive of
loans, advances or equity investments permitted by Section 5.9(a)(E) or (F))
CECO Environmental Mexico, CECO Environmental Services, Fisher Klosterman
Shanghai, Canadian Acquisition Co., Flextor, Flextor Brazil or Flextor Chile to
Borrowers, in the aggregate exceeds $1,000,000; 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.

5.9 Investments.

(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;

 

-52-

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

(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;

(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;

(E) loans, advances or equity investments in Fisher Klosterman Shanghai, CECO
Environmental Mexico, CECO Environmental Services, Canadian Acquisition Co.,
Flextor, Flextor Brazil or Flextor Chile (other than transactions contemplated
by clause (b) of Section 5.8), so long as (1) the aggregate amount of such
investments does not exceed $1,000,000 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, Parent, Group and
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. Parent, Group and Borrowers will deliver such pro
forma analysis to Lender at least 10 Business Days prior to making each such
investment; and

 

-53-

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

(F) (i) the equity investment of 2,800,000 Canadian Dollars made by Parent in
Canadian Acquisition Co. and (ii) the loan of 4,200,000 Canadian Dollars made by
Parent to Canadian Acquisition Co. (the “Flextor Loan”), in each case to fund
the Flextor Acquisition.

(b) To the extent that Lender consents to the acquisition or formation of any
Domestic Subsidiary after the Effective Date, Parent or, if applicable, Group,
if requested by Lender, will cause such Subsidiary to become a Borrower
hereunder and a party to the other Loan Documents to which any Borrower is then
a party, pursuant to a written joinder agreement on terms and in substance
satisfactory to Lender.

5.10 Fixed Charge Coverage Ratio. Borrowers will not permit the ratio (“Fixed
Charge Coverage Ratio”) resulting from dividing: (a) the sum of (i) Adjusted
EBITDA for the applicable Test Period plus (ii) the then FCCR Adjustment Amount
by (b) Fixed Charges for that same Test Period to be less than: (A) 2.50 to 1
for the Test Period ending as of the end of the Fiscal Quarter ending on
June 30, 2010, or (B) 1.25 to 1 for any Test Period ending as of the end of any
Fiscal Quarter or Fiscal Year ending on or after September 30, 2010.

5.11 Maximum Total Funded Debt to Adjusted EBITDA Ratio. Borrowers will not
permit the ratio (“Maximum Total Funded Debt to Adjusted EBITDA Ratio”)
resulting from dividing (a) Parent and its Subsidiaries’ total Funded Debt as of
the end of the applicable Test Period by (b) Parent and its Subsidiaries’
Adjusted EBITDA for the applicable Test Period to exceed 3.0 to 1 for any Test
Period ending as of the end of any Fiscal Quarter or Fiscal Year ending on or
after June 30, 2010.

5.12 Effox Acquisition; Effox 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 Effox Acquisition
Documents. For purposes of this Section 5.12, “material” means any modification,
waiver, or amendment of any of the Effox 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 Effox Acquisition
Documents or the Indebtedness to be incurred by any Loan Party under the Effox
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.

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.

 

-54-

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

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.

5.16 A.V.C. Acquisition; A.V.C. 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 A.V.C. Acquisition
Documents. For purposes of this Section 5.16, “material” means any modification,
waiver, or amendment of any of the A.V.C. 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 A.V.C. Acquisition
Documents or the Indebtedness to be incurred by any Loan Party under the A.V.C.
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.

5.17 Flextor Acquisition; Flextor 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 Flextor
Acquisition Documents. For purposes of this Section 5.16, “material” means any
modification, waiver, or amendment of any of the Flextor 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 Flextor
Acquisition Documents or the Indebtedness to be incurred by any Loan Party under
the Flextor 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.

 

-55-

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

5.18 Canadian Acquisition Co. Notwithstanding anything to the contrary set forth
in this Agreement, Canadian Acquisition Co. (A) is, and will remain until the
Flextor Amalgamation, a holding company, whose only business will be the holding
of the ownership interest of Flextor, and (B) will not, until the Flextor
Amalgamation, own or have any interest in property other than the Ownership
Interests of Flextor, and the distributions received from Flextor on such
Ownership Interests.

5.19 AVC, Inc. Notwithstanding anything to the contrary set forth in this
Agreement, AVC, Inc. is, and will remain, a wholly-owned Subsidiary of
Fisher-Klosterman.

Section 6. Events of Default and Remedies.

6.1 Events of Default. The occurrence and continuation of any of the following
events, whether or not caused by or within the control of Borrowers, shall be an
event of default under this Agreement (each, an “Event of Default”):

(a) Any representation or warranty made by or on behalf of any Borrower, or any
of their respective Affiliates, in any of the Loan Documents or in any other
statement, certificate or document delivered to Lender pursuant to any such Loan
Document, is misleading in any material respect when made or reaffirmed; or

(b) (i) any Loan Party defaults in the payment of any of the Obligations when
due and payable, by acceleration or otherwise (except as provided in clause
(ii) below of this subparagraph(b)); provided that with respect to any sum
payable under this Agreement or the Notes, other than any payment of principal,
interest or any other fee expressly set forth herein, it will not be an Event of
Default for failure to pay such sum unless such sum is not paid to Lender within
three Business Days after the date Lender notifies the Loan Parties of the
failure to make such payment or (ii) any Loan Party fails to cure any
Overadvance (as defined in Section 2.1(a)) in accordance with Section 2.1(a); or

(c) Any Loan Party fails to observe, comply with or perform any other covenant,
condition or agreement herein or in any of the other Loan Documents (i.e.,
exclusive of those defaults covered by the other clauses (a), (b), and
(d) through (w) of this Section 6.1) and fails to cure such default by the date
that is 30 days after the earlier of the date: (i) Lender notifies any Loan
Party of such default or (ii) on which any officer of any Loan Party has
knowledge of such default; provided that such 30-day grace period shall not
apply to: (A) a breach of any covenant that, in Lender’s good faith judgment,
cannot be cured; (B) any failure to maintain insurance in accordance with
Section 4.5 or any Security Document or to permit inspection by Lender, or its
agent, of the Loan Collateral or of the books and records of any Loan Party in
accordance with Sections 4.1 or 4.2, (C) any breach of Sections 4.3(g), 4.9(a)
or 4.9(b), (D) any breach in any negative covenant set forth in Section 5; (E) a
breach or default of any other Loan Document if a period of cure is expressly
provided for in such other Loan Document with respect to a breach or default
under such other Loan Document; or (F) any breach if, within the 12 calendar
months immediately preceding the occurrence of such current breach, any Loan
Party has previously breached the same provision of this Agreement or any other
applicable Loan Document; or

 

-56-

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

(d) A court enters a decree or order for relief with respect to a Loan Party or
the Individual Guarantor in an involuntary case under any applicable bankruptcy,
insolvency or other similar law then in effect, including the Bankruptcy Code
(“Insolvency Law”), or appoints a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of Loan Party or the
Individual Guarantor for any substantial part of their respective property, or
orders the wind-up or liquidation of its, his or their affairs; or a petition
initiating an involuntary case under any such Insolvency Law is filed and is
pending for sixty (60) days without dismissal; or

(e) Any Loan Party or the Individual Guarantor commences a voluntary case under
any applicable Insolvency Law in effect, or makes any general assignment for the
benefit of creditors, or fails generally to pay their respective debts as such
debts become due, or takes any authorizing action in furtherance of any of the
foregoing; or

(f) (i) There occurs a Subordinated Debt Default, and the Subordinated Creditors
have taken any action to declare such Subordinated Debt Default or have taken
any action to enforce any of their rights or remedies with respect to such
Subordinated Debt Default or (ii) (A) any Loan Party defaults under the terms of
any other Indebtedness or lease that, individually or in the aggregate (when
added to all other Indebtedness, if any, of any one or more Loan Party then in
default), involves Indebtedness in excess of $100,000, (B) such default is not
cured within any applicable cure period or waived by the applicable creditor,
and (C) such default gives any creditor or lessor the right to accelerate the
maturity of any such Indebtedness or lease payments, which right is not
contested by such Loan Party or is determined by any court of competent
jurisdiction to be valid; or

(g) Any final judgment, award, order or decree for the payment of money in
excess of $500,000 is rendered against a Loan Party (or any number of final
judgments, awards, orders, or decrees outstanding, as of any date, in excess of
$500,000 in the aggregate with respect to any one or more Loan Party) by a court
or courts or arbitrator having jurisdiction in the premises, which judgment,
award, order, or decree shall not have been either (i) appealed in good faith
(and execution of such judgment(s) are completely stayed, vacated or discharged
during such appeal) or (ii) satisfied by a Loan Party. The above limits of
$500,000 will be determined after giving effect to (i.e., deducting) that
portion of such judgment, award, order, or decree which is covered by insurance,
as determined by Lender in its discretion exercised in good faith, that is in
effect and available to satisfy such judgment, award, order, or decree for which
the insurer has not denied in writing its liability for the full insurable
amount thereof; or

(h) Any event occurs which could, in Lender’s opinion exercised in good faith,
with reasonable certainty have a Material Adverse Effect; or

(i) There occurs a Change of Control; or

(j) The dissolution of any Loan Party without Lender’s prior consent (which
consent Lender shall have no obligation to provide); or

 

-57-

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

(k) The commencement of any foreclosure proceedings, proceedings in aid of
execution, attachment actions, or levies by any Person against, or the filing by
any taxing authority of a Lien against any of the Loan Collateral or any
property securing the repayment of any of the Obligations which have not been
vacated, discharged or stayed within 10 days after the commencement thereof; or

(l) There occurs an uninsured casualty loss with respect to any of the Loan
Collateral having an aggregate fair market value greater than $250,000; or

(m) Lender ceases to be any Loan Party’s (i) principal depository bank in which
substantially all of such Loan Party’s funds are deposited or (ii) principal
bank of account; or

(n) (i) The validity or effectiveness of any of the Loan Documents or its
transfer, grant, pledge, mortgage, or assignment by the party executing such
Loan Document is materially impaired; (ii) any party executing any of the Loan
Documents asserts that any of such Loan Documents is not a legal, valid and
binding obligation of the party thereto enforceable in accordance with its
terms; (iii) the security interest or other Lien purporting to be created by any
of the Loan Documents shall for any reason cease to be a valid, perfected Lien
subject to no other Liens other than any Permitted Liens unless solely because
of the action or inaction of Lender; or (iv) any Loan Document is amended,
hypothecated, subordinated, terminated or discharged, or any Person is released
from any of its covenants or obligations under any of the Loan Documents except
as permitted by Lender in writing; or

(o) (i) A contribution failure occurs with respect to any Pension Plan
maintained by any Loan Party or any Loan Party’s ERISA Affiliate (or with
respect to any Pension Plan to which a Loan Party or any Loan Party’s ERISA
Affiliate has an obligation to contribute) sufficient to give rise to a Lien
under Section 303(k) of ERISA, (ii) (A) the PBGC takes any action to terminate a
Pension Plan (including a Multiemployer Plan) maintained by a Loan Party or any
Loan Party’s ERISA Affiliate (or to which any Loan Party or any Loan Party’s
ERISA Affiliate has an obligation to contribute) or (B) any Loan Party or any
Loan Party’s ERISA Affiliate terminates or withdraws from any Pension Plan
(including a Multiemployer Plan) which is subject to Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code as to which a Loan Party or any ERISA Affiliate may have any
liability, or (iii) liability is imposed on any Loan Party or any Loan Party’s
ERISA Affiliate pursuant to Section 4069 of ERISA; or

(p) The filing of any Lien against the Loan Collateral or any part thereof
(exclusive of Permitted Liens) which is not removed to the satisfaction of
Lender within a period of 10 Business Days thereafter; or

(q) Subject to Section 5.7 with respect to a permitted disposition of Equipment
thereunder, the abandonment by any Borrower of any Loan Collateral having an
aggregate net book value of greater than $50,000; or

(r) (i) a Guarantor defaults under its or his Guaranty or demand for payment is
made on a Guarantor under its or his Guaranty, (ii) a Guarantor denies its or
his obligation to guarantee the Obligations or attempts to limit or terminate
its or his obligation to guarantee the Obligations subject to the terms of its
Guaranty, or (iii) the Individual Guarantor dies or becomes legally incompetent;
or

 

-58-

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

(s) There occurs a nonpayment by a Borrower of any Rate Management Obligation
when due or the breach by a Borrower of any term, provision or condition
contained in any Rate Management Agreement, and such nonpayment or breach is not
cured within the applicable cure period described in the applicable Rate
Management Agreement; or

(t) (i) the Subordination Agreement is terminated or ceases, for any reason, to
be in full force and effect, (ii) the Subordinated Creditors deny their
obligations under the Subordination Agreement or attempt to limit or terminate
or revoke their obligations under the Subordination Agreement, (iii) 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, (iv) 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, (v) there is a default or an event of default
under any of the A.V.C Acquisition Documents by any Person which has a Material
Adverse Effect; or (vi) there is a default or an event of default under any of
the Flextor Acquisition Documents by any Person which has a Material Adverse
Effect; or

(u) Canadian Acquisition Co. or Flextor defaults under the terms of any other
Indebtedness or lease that, individually or in the aggregate (when added to all
other Indebtedness, if any, of either of Canadian Acquisition Co. or Flextor
then in default), involves Indebtedness in excess of $100,000, (B) such default
is not cured within any applicable cure period or waived by the applicable
creditor, and (C) such default gives any creditor or lessor the right to
accelerate the maturity of any such Indebtedness or lease payments, which right
is not contested by Canadian Acquisition Co. or Flextor or is determined by any
court of competent jurisdiction to be valid; or

(v) Any final judgment, award, order or decree for the payment of money in
excess of $500,000 is rendered against Canadian Acquisition Co. or Flextor (or
any number of final judgments, awards, orders, or decrees outstanding, as of any
date, in excess of $500,000 in the aggregate with respect to either Canadian
Acquisition Co. or Flextor) by a court or courts or arbitrator having
jurisdiction in the premises, which judgment, award, order, or decree shall not
have been either (i) appealed in good faith (and execution of such judgment(s)
are completely stayed, vacated or discharged during such appeal) or
(ii) satisfied by Canadian Acquisition Co. or Flextor. The above limits of
$500,000 will be determined after giving effect to (i.e., deducting) that
portion of such judgment, award, order, or decree which is covered by insurance,
as determined by Lender in its discretion exercised in good faith, that is in
effect and available to satisfy such judgment, award, order, or decree for which
the insurer has not denied in writing its liability for the full insurable
amount thereof; or

(w) (i) A court enters a decree or order for relief with respect to Canadian
Acquisition Co. or Flextor in an involuntary case under any Insolvency Law, or
appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of Canadian Acquisition Co. or Flextor for any
substantial part of their respective property, or orders the wind-up or
liquidation of its, his or their affairs; or a petition initiating an
involuntary case under any such Insolvency Law is filed and is pending for sixty
(60) days without dismissal; or (ii) either Canadian Acquisition Co. or Flextor
commences a voluntary case under any applicable Insolvency Law in effect, or
makes any general assignment for the benefit of creditors, or fails generally to
pay their respective debts as such debts become due, or takes any authorizing
action in furtherance of any of the foregoing.

 

-59-

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

6.2 Remedies. If any Event of Default occurs and after the lapse of any
applicable cure, Lender may cease advancing money hereunder, and Lender may
elect to exercise any one or more of the following remedies, all without
presentment, demand, protest or notice of any kind, as the same are hereby
expressly waived by each Borrower, unless otherwise required by applicable law:

(a) cease advancing any Revolving Loans, declare all Obligations to be
immediately due and payable, whereupon such Obligations shall immediately become
due and payable, and terminate this Agreement and all obligations of Lender
under this Agreement;

(b) proceed to enforce payment of the Obligations and to realize upon the Loan
Collateral or any property securing the Obligations, including causing all or
any part of the Loan Collateral to be transferred or registered in its name or
in the name of any other Person, with or without designation of the capacity of
such nominee, and Borrowers shall be liable for any deficiency remaining after
disposition of any Loan Collateral;

(c) offset and apply to all or any part of the Obligations all moneys, credits
and other property of any nature whatsoever of any Borrower now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with (whether held by a Borrower individually or
jointly with another Person), Lender or its Affiliates, including certificates
of deposit; and/or

(d) exercise any and all rights and remedies provided by applicable law and the
Loan Documents.

6.3 No Remedy Exclusive. No remedy set forth herein is exclusive of any other
available remedy or remedies, but each is cumulative and in addition to every
other remedy available under this Agreement, the Loan Documents or as may be now
or hereafter existing at law, in equity or by statute, and each may be exercised
together, separately and in any order. Borrowers waive any requirement of
marshaling of assets that may be secured by any of the Loan Documents.

6.4 Effect of Termination; Voluntary Termination.

(a) Any termination of this Agreement shall not affect any rights of any party
or any obligation of any party to the other, arising prior to the effective date
of such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into, rights created or Obligations
incurred prior to such termination have been fully disposed of, concluded or
liquidated. The security interest, other Liens and rights granted to Lender
hereunder and under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that no Loans are
outstanding to Borrowers, until all of the Obligations have been paid in full
and satisfied.

 

-60-

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

(b) Borrowers may terminate this Agreement (i) by giving Lender written notice
(“Termination Notice”) of the date on which this Agreement is to terminate
(“Voluntary Termination Date”) at least 30 days before the Voluntary Termination
Date, and (ii) by paying on any such Voluntary Termination Date all of the
Obligations. Upon the Voluntary Termination Date, (1) all Loans and all other
Obligations will automatically and immediately become due and payable,
(2) Borrowers will cause all Letters of Credit to be replaced or cash
collateralized on terms satisfactory to Lender; and (3) Lender’s obligations
under this Agreement and the other Loan Documents arising on and after that
effective date of termination will automatically terminate immediately, without
notice or demand, which the Loan Parties hereby expressly waive.

6.5 No Adequate Remedy at Law. Borrowers recognize that no remedy at law shall
provide adequate relief to Lender in the event that a Loan Party shall fail to
pay, perform, observe or discharge any of the Obligations under this Agreement
or the other Loan Documents to which it is a party or otherwise bound, and,
accordingly, Lender and the Loan Parties agree that Lender shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that it has incurred actual damages.

6.6 Actions in Respect of Letters of Credit. If any Event of Default shall have
occurred and be continuing, Lender may, whether in addition to taking any of the
actions described in this Section 6 or otherwise, if any Letters of Credit shall
have been issued, make demand upon any Borrower to, and forthwith upon such
demand Borrowers will, pay to Lender in same day funds at Lender’s office
designated in such demand, for deposit in a special non-interest bearing cash
collateral account (the “Letter of Credit Collateral Account”) to be maintained
at such office of Lender, an amount equal to the Letter of Credit Exposure from
time to time in existence. The Letter of Credit Collateral Account shall be in
the name of Lender (as a cash collateral account), and under the sole dominion
and control of Lender exercised in good faith (with sole right of withdrawal)
and subject to the terms of this Agreement and the other Loan Documents. On each
drawing under a Letter of Credit, Lender shall seek reimbursement from any
amounts then on deposit in the Letter of Credit Collateral Account; however, if
(a) no amounts are then on deposit in the Letter of Credit Collateral Account,
(b) the amount then on deposit in the Letter of Credit Collateral Account is
insufficient to pay the amount of such drawing, or (c) Lender is legally
prevented or restrained from immediately applying amounts on deposit in the
Letter of Credit Collateral Account, then the amount of each unreimbursed
drawing under such Letter of Credit and payment required to be made under this
Section 6.6 shall automatically be converted into a Revolving Loan made on the
date of such drawing for all purposes of this Agreement. To the extent that
Lender applies amounts on deposit in the Letter of Credit Collateral Account as
provided in this Section 6.6, and, thereafter, such application (or any portion
thereof) is rescinded or any amount so applied must otherwise be returned by
Lender upon the insolvency, bankruptcy or reorganization of a Borrower or
otherwise, then the amount so rescinded or returned shall automatically be
converted into a Revolving Loan made on the date of such drawing for all
purposes of this Agreement.

 

-61-

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

Section 7. Conditions Precedent.

7.1 Conditions to Initial Loans. Lender shall have no obligation to make or
advance the Revolving Loans to be made on the Signature Date until each of the
following conditions precedent shall have been satisfied:

(a) Each Loan Party shall execute and deliver, or cause to be executed and
delivered by the applicable Person, as applicable, to Lender, in form and
substance satisfactory to Lender, each of the following:

(i) The Notes and the other Loan Documents to be executed by the Loan Parties on
the Signature Date (together with this Agreement, collectively, the “Amendment
Documents”);

(ii) A Borrowing Base Certificate completed as of the Effective Date;

(iii) A certification by an officer of the Loan Parties, in a form acceptable to
Lender, that the applicable resolutions, which authorize the execution, delivery
and performance of this Agreement and the Loan Documents, of the Loan Parties
previously delivered to Lender remain in full force and effect;

(iv) Certificates of insurance as described in Section 4.5;

(v) A Reaffirmation of Subordination, duly executed by the Subordinated
Creditors; and

(vi) Such additional information, materials and Loan Documents as Lender may
reasonably request.

(b) Borrowers shall reimburse Lender for any and all fees, costs and expenses
including reasonable attorneys’ fees and other professionals’ fees, appraisal
fees, and other expenses incurred or paid by Lender or any of its officers,
employees or agents in connection with the preparation, negotiation,
procurement, review or execution of this Agreement, the other Loan Documents and
all other instruments, agreements, documents, policies, consents, waivers,
subordinations, releases of liens, termination statements, satisfaction of
mortgages, financing statements, lien searches, recordings, or filings related
thereto, whether or not any particular portion of the transactions contemplated
during such negotiations is ultimately consummated.

7.2 Conditions to Each Revolving Loan and Letter of Credit. Lender shall have no
obligation to advance additional Revolving Loans or issue any Letters of Credit
unless, as to each such Loan, the following statements shall be true and
correct:

(a) Each of the representations and warranties contained herein and in the other
Loan Documents shall be correct in all material respects, and each shall be
deemed to be reaffirmed as of the date of each such Revolving Loan or Letter of
Credit with the same effect as though such representations and warranties had
been made again on and as of each day of the term of this Agreement subject to
such changes as are not prohibited hereby or do not constitute Events of
Default;

 

-62-

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

(b) No event shall have occurred and be continuing, or would result from such
Revolving Loan or Letter of Credit, which constitutes an Event of Default, or
would constitute an Event of Default but for the requirement that notice be
given or lapse of time or both;

(c) (i) The aggregate unpaid principal amount of the Revolving Loans after
giving effect to such Revolving Loan shall not violate the lending limits set
forth in Section 2.1 of this Agreement and (ii) the Letter of Credit
Availability, after giving effect to such Letter of Credit, is greater than zero
Dollars; and

(d) No law or regulation prohibits, and no order, judgment or decree of any
arbitrator or governmental authority enjoins or restrains Lender, from making
the requested advance.

The acceptance by a Loan Party of the proceeds of each Revolving Loan and the
execution and delivery of a Letter of Credit Application by a Loan Party shall
be deemed to constitute a representation and warranty by the Loan Parties that
the conditions in this Section 7.2, other than (i) those that have been waived
in writing by Lender, or (ii) the type described in clause (d) of this
Section 7.2, have been satisfied.

Section 8. Participations.

8.1 Participation. Lender, in the ordinary course of its commercial banking
business and in accordance with applicable law, may at any time after the
Effective Date, sell to one or more lenders or other entities (“Participants”)
participating interests in the Loans, the Loan Collateral or other security
provided to Lender, or any other interests of Lender under this Agreement or the
other Loan Documents.

8.2 Participant Consents. Each Loan Party acknowledges that Participants have
and will have certain rights under their respective participation agreements
with Lender that may, subject to the terms of the participation agreements,
require Lender to obtain the consent (collectively, “Participant Consents”) of
some or all of the Participants before Lender takes or refrains from taking
certain actions (other than as expressly required by the Loan Documents) or
grants certain waivers, consents or approvals in respect of the Loans, the Loan
Documents or the Loan Collateral. None of the Participants, however, will have
Participant Consent rights which are greater than those rights and remedies
Lender has under the Loan Documents. In addition, from time to time, Lender may
request instructions from the Participants in respect of the actions, waivers,
consents or approvals which by the terms of any of the Loan Documents Lender is
permitted or required to take or to grant or to not take or grant (“Participant
Instructions”). If the Participant Consents are, pursuant to the terms of the
respective participation agreements, required or Participant Instructions are
requested, Lender will (i) be absolutely empowered to take or refrain from
taking any action (other than as expressly required by the Loan Documents) or
withhold any waiver, consent or approval and (ii) not be under any liability
whatsoever to any Person, including any Borrower and any Participant, from
taking or refraining from taking any action or withholding any waiver, consent
or approval under any of the Loan Documents until it has received the requisite
Participant Consents or, as applicable, the Participant Instructions. Further,
in the event a Participant fails to fund its portion of any of the Loans, Lender
shall be under no obligation to fund any portion of any of the Loans that was
not funded by such Participant. Borrowers do hereby indemnify, defend, save and
hold Lender, its Affiliates, and their respective officers, directors,
attorneys, and employees harmless of, from and against all claims, demands,
liabilities, judgments, losses, damages, costs and expenses, joint or several
(including all accounting fees and reasonable attorneys’ fees), that Lender or
any such indemnified party may incur as a result of a Participant failing to
fund its portion of any Loan or failing to give a Participant Consent.

 

-63-

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

8.3 Information. Subject to the confidentiality provisions of Section 9.13, each
Loan Party authorizes Lender to disclose to any Participant or prospective
Participant or any assignee or prospective assignee of Lender’s rights under the
Loan Documents any and all financial information in Lender’s possession
concerning each Loan Party which has been delivered to Lender by a Loan Party
pursuant to the Loan Documents or in connection with Lender’s credit evaluation
of the Loan Parties or which has been obtained independently by Lender in its
credit evaluation or audit of the Loan Parties.

8.4 Law Requirements. Nothing in the Loan Documents will prohibit Lender from
pledging or assigning its interests in the Loans to any Federal Reserve Lender
in accordance with applicable law.

Section 9. Miscellaneous Provisions.

9.1 General. This Agreement, the exhibits and the other Loan Documents are the
complete agreement of the parties hereto and supersede all previous
understandings and agreements relating to the subject matter hereof. This
Agreement may be amended only in writing signed by the party against whom
enforcement of the amendment is sought. This Agreement may be executed in
counterparts. If any part of this Agreement is held invalid, illegal or
unenforceable, the remainder of this Agreement shall not in any way be affected.
This Agreement is and is intended to be a continuing agreement and shall remain
in full force and effect until (i) the Obligations are finally and irrevocably
paid in full and the Line of Credit is terminated and (ii) Lender has no further
obligations to make a Loan or issue any Letter of Credit under this Agreement.
Any documents delivered by, or on behalf of, any Person by fax transmission or
other electronic delivery of an image file reflecting the execution hereof:
(i) may be relied on by all Persons as if the document were a manually signed
original and (ii) will be binding on all Persons for all purposes of the Loan
Documents. If there is any conflict, ambiguity, or inconsistency, in Lender’s
judgment, between the terms of this Agreement or any of the other Loan
Documents, then the applicable terms and provisions, in Lender’s judgment,
providing Lender with greater rights, remedies, powers, privileges, or benefits
will control. With respect to each Loan Party, Lender is authorized to rely in
good faith on any telephonic or other oral communication which shall be received
by it from anyone reasonably believed by Lender to be an officer of a Loan Party
or any other authorized signer of a Loan Party as designated in any certificate
or letter given by a Loan Party to Lender from time to time.

 

-64-

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

9.2 Waiver by Borrowers. Each Loan Party waives notice of non-payment (except as
expressly required by this Agreement or the other Loan Documents), demand,
presentment, protest or notice of protest of any Accounts or other Loan
Collateral, the benefit of all valuation and appraisement laws following the
occurrence and during the continuance of an Event of Default, and all other
notices (except those notices specifically provided for in this Agreement). Each
Loan Party hereby waives all suretyship defenses, including all defenses set
forth in Section 3-605 of the Uniform Commercial Code (the “UCC”). Such waiver
is entered to the full extent permitted by Section 3-605(i) of the UCC. To the
fullest extent not prohibited by law, each Loan Party waives and agrees not to
assert any claim against Lender under any theory for consequential, special,
indirect or punitive damages.

9.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective legal representatives, successors and assigns of the
parties hereto; however, no Loan Party may assign or transfer any of its rights
or delegate any of its Obligations under this Agreement or any of the Loan
Documents to which it is a party or otherwise bound, by operation of law or
otherwise. Without any Loan Party’s consent, Lender (and any subsequent
assignee) may (i) transfer and assign any or all of its rights or delegate any
of its duties under this Agreement or (ii) transfer or assign partial interests
in the Loans or grant participations in the Loans to other Persons. Subject to
the confidentiality provisions of Section 9.13, Lender may disclose to all
prospective and actual assignees and Participants all financial, business and
other information about each Loan Party which Lender may possess at any time.

9.4 Subsidiaries. If a Borrower has any Subsidiaries at any time during the term
of this Agreement with the consent of Lender, the term “Borrower” in each
representation, warranty and covenant herein shall mean such Borrower and each
Subsidiary, individually and in the aggregate, and such Borrower shall cause
each Subsidiary to be in compliance therewith. The existence of references to a
Borrower’s Subsidiaries any place in this Agreement is for a matter of
convenience only. Any references to Subsidiaries of a Borrower set forth herein
shall not in any way be construed as consent by Lender to the establishment,
maintenance or acquisition of any Subsidiary.

9.5 Security. The Obligations are secured as provided in this Agreement, the
Security Documents, in the other Loan Documents and in each other document or
agreement that by its terms secures the repayment or performance of the
Obligations.

9.6 Survival. All representations, warranties, covenants and agreements made by
Borrowers herein and in the other Loan Documents shall survive the execution and
delivery of this Agreement, the other Loan Documents and the issuance of the
Notes.

9.7 Delay or Omission. No delay or omission on the part of Lender in exercising
any right, remedy or power arising from any Event of Default shall impair any
such right, remedy or power or any other right remedy or power or be considered
a waiver or any right, remedy or power or any Event of Default nor shall the
action or omission to act by Lender upon the occurrence of any Event of Default
impair any right, remedy or power arising as a result thereof or affect any
subsequent Event of Default of the same or different nature.

 

-65-

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

9.8 Notices. Any notice required, permitted or contemplated hereunder shall,
except as expressly provided in this Agreement, be in writing and addressed to
the party to be notified at the address set forth below or at such other address
as each party may designate for itself from time to time by notice hereunder and
shall be deemed duly sent: (a) when delivered in hand, (b) on completion of a
facsimile transmission to the number listed below, so long as (i) receipt of
confirmation of the telecopy is made by the sending party and (ii) an original
notice is also sent to the receiving party contemporaneously with facsimile by
overnight courier or certified U.S. mail as provided in this Section 9.8,
(c) the next Business Day after such notice was delivered to a regularly
scheduled overnight delivery carrier with delivery fees either prepaid or an
arrangement, satisfactory with such carrier, made for the payment of such fees,
or (d) when mailed by registered or certified mail, return receipt requested,
addressed as follows:

 

To Loan Parties:    c/o CECO Environmental Corp.    3120 Forrer Street   
Cincinnati, Ohio 45209    Attention: Dennis W. Blazer,                     Vice
President of Finance/Administration                     and Chief Financial
Officer    Fax: (513) 458-2644    with a copy to counsel of Loan Parties   
(“Loan Parties’ Counsel”):    Barnes & Thornburg, LLP    Suite 4400    One North
Wacker Drive    Chicago, Illinois 60606    Attention: Leslie J. Weiss, Esq.   
Fax: (312) 759-5646 To Lender:    Fifth Third Bank    38 Fountain Square Plaza
   MD #10AT63    Cincinnati, Ohio 45263    Attention: Structured Finance Group
   Fax: (513) 534-8400

Any party may change such address by sending written notice of the change to the
other party; provided, that (A) notice given to Loan Parties’ Counsel is not
deemed notice to such Loan Party, and (B) Lender’s failure to deliver any notice
to Loan Parties’ Counsel will not affect the validity or effectiveness of any
notice or notification given to such Loan Party.

9.9 No Partnership. Nothing contained herein or in any of the Loan Documents is
intended to create or shall be construed to create any partnership, joint
venture or other relationship between Lender and the Loan Parties other than as
expressly set forth herein or therein and shall not create any joint venture,
partnership or other relationship.

 

-66-

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

9.10 Electronic Communication. Lender may, in its discretion, elect, from time
to time, to receive certain information, including reports, otherwise required
by the terms of this Agreement or the other Loan Documents (“Reports”) from
Borrowers via electronic mail transmission (“e-mail”). Lender will designate
from time to time its e-mail address to Borrowers (the “Lender E-mail Address”).
All e-mail transmissions of Reports from Borrowers shall contain the information
as specified in this Agreement, shall be formatted or displayed in a manner and
order substantially similar to that shown in this Agreement or otherwise
required by Lender and shall conform to the specifications described in this
Agreement. Borrowers will be solely responsible for the confidentiality of the
contents of e-mail transmissions during transmission to the Lender E-mail
Address. Borrowers will be responsible for the accuracy of all information
provided to Lender via e-mail transmission to the Lender E-mail Address, and any
information so received by Lender will be deemed to have been submitted by and
received from Borrowers. In the event of a failure of the transmission of the
Reports, it is the responsibility of Borrowers to transmit the contents of any
pending transmission to Lender using an alternative method which is timely and
in accordance with this Agreement. Borrowers agree that, by sending Lender the
Reports via e-mail transmission, Borrowers are certifying the truthfulness and
accuracy in all material respects of the Reports submitted each and every time
Borrowers send Lender the Reports. Borrowers further agree that, on each
occasion when Borrowers send Lender e-mail transmissions containing Reports,
Borrowers are warranting and representing to Lender the truthfulness and
accuracy in all material respects of the representations and warranties relevant
to that Report set forth in the relevant Loan Document. Borrowers consent to and
represent that it is Borrowers’ intent that by Borrowers’ insertion of a
Borrower’s name in the subject line of the transmitting e-mail, or on the
Reports (including the header and/or the certification line), Borrowers intend
such to constitute a legally binding and enforceable signature of Borrowers, and
in all aspects the legal equivalent of Borrowers’ handwritten signatures.

9.11 Indemnification. If after receipt of any payment of all or part of the
Obligations, Lender is for any reason compelled to surrender such payment to any
Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, or diversion of trust funds, or for any other
reason, this Agreement shall continue in full force and effect and Borrowers
shall be liable to, and shall indemnify, save and hold Lender, its officers,
directors, attorneys, and employees harmless of and from the amount of such
payment surrendered. The provisions of this Section shall be and remain
effective notwithstanding any contrary action which may have been taken by
Lender in reliance on such payment, and any such contrary action so taken shall
be without prejudice to Lender’s rights under this Agreement and shall be deemed
to have been conditioned upon such payment becoming final, indefeasible and
irrevocable. In addition, Borrowers shall indemnify, defend, save and hold
Lender, its Affiliates, and their respective officers, directors, attorneys, and
employees harmless of, from and against all claims, demands, liabilities,
judgments, losses, damages, costs and expenses, joint or several (including all
accounting fees and reasonable attorneys’ fees), that Lender or any such
indemnified party may incur arising out of (a) this Agreement or any of the
other Loan Documents, (b) any act taken by Lender hereunder, (c) any transaction
financed by a Loan, or (d) any Other Taxes, except to the extent, as determined
by a court of competent jurisdiction in a final non-appealable judgment or
order: (i) of the willful misconduct or gross negligence of such indemnified
party, (ii) such claim for indemnification is based on a material breach by
Lender of its express duties or obligations to a Loan Party under the Loan
Documents, or (iii) such claim for indemnification is based on a willful
violation by Lender of its express duties or obligations under applicable law.
The provisions of this Section shall survive the termination of this Agreement.

 

-67-

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

9.12 Power of Attorney. Each Loan Party hereby appoints Lender, as its
attorney-in-fact to indorse its name on all instruments and other documents
payable to such Loan Party in order for Lender to perform its services under
this Agreement, including under Section 2.4. Upon the occurrence and during the
continuation of an Event of Default, Lender shall be entitled, but not required,
to perform any action or execute any document required to be taken or executed
by any Loan Party under this Agreement and the other Loan Documents; provided
that Borrowers shall not be relieved of such obligation under this Agreement and
the other Loan Documents. The powers of attorney described in this Section are
coupled with an interest and are irrevocable.

9.13 Confidentiality. Lender agrees that it will use reasonable efforts not to
disclose without the prior consent of Parent (other than to Lender’s employees,
auditors, advisors, consultants, Affiliates and counsel) any information with
respect to the Loan Parties to the extent and in the manner such information is
kept confidential in accordance with Lender’s privacy policies and procedures
with respect to its customers generally and as mandated by applicable law,
provided that Lender may disclose any such information: (a) as has become
generally available to the public unless such availability is as a result of the
breach by Lender of this Agreement, (b) as may be required or appropriate in any
report, statement or testimony submitted to or examination conducted by any
governmental authority having or claiming to have jurisdiction over Lender,
(c) as may be required or appropriate in response to any summons, subpoena, or
civil investigative demand or in connection with any litigation or governmental
investigation, (d) in order to comply with any requirement of applicable law,
(e) to any prospective or actual transferee or Participant in connection with
any contemplated transfer or participation of any of the Obligations or any
interest therein, provided that each such prospective or actual transferee or
Participant agrees to be bound by the confidentiality provisions contained in
this Section 9.13, (f) to other financial institutions or investment funds with
respect to which Lender has a contractual relationship in accordance with
Lender’s regular banking procedures in order to carry out the services to be
performed by Lender for a Loan Party, provided that each such other financial
institution or investment fund agrees to be bound by the confidentiality
provisions contained in this Section 9.13, (g) to any nationally recognized
rating agency that requires access to information regarding Lender’s investment
portfolio in connection with such rating agency’s issuance of ratings with
respect to Lender, provided that Lender advises such rating agency of the
confidential nature of such information, (h) as may be required or appropriate
in connection with protecting, preserving, exercising or enforcing (or planning
to exercise or enforce) any of Lender’s rights in, under or related to the Loan
Documents after the occurrence of an Event of Default; (i) as permitted by
Sections 3.17 and 9.10; (j) to respond to routine informational requests in
accordance with the Code of Ethics for the Exchange of Credit Information
promulgated by The Robert Morris Associates (or any successor thereto) or other
applicable industry standards relating to the exchange of credit information,
(k) if such information was available to or known by Lender prior to its
disclosure to Lender by a Loan Party or its representatives, and (l) which
became available to Lender from a source other than a Loan Party or its
representatives, provided that Lender does not have reason to know that such
source is bound by a confidentiality agreement regarding such information.

 

-68-

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

9.14 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and the
other Loan Documents shall be governed by the domestic laws of the State of
Ohio. Each Loan Party agrees that the state and federal courts in Hamilton
County, Ohio have exclusive jurisdiction over all matters arising out of the
Loan Documents, WITHOUT LIMITATION ON THE ABILITY OF LENDER, ITS SUCCESSORS AND
ASSIGNS, TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS
RELATED TO THE REPAYMENT AND COLLECTION OF THE OBLIGATIONS AND THE EXERCISE OF
ALL OF LENDER’S RIGHTS AGAINST THE LOAN PARTIES WITH RESPECT THERETO AND ANY
SECURITY OR PROPERTY OF THE LOAN PARTIES, INCLUDING DISPOSITIONS OF THE LOAN
COLLATERAL, and that service of process in any such proceeding shall be
effective if mailed to the Loan Parties at the address described in the Notices
section of this Agreement. LENDER AND THE LOAN PARTIES HEREBY WAIVE THE RIGHT TO
TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR ANY OF THE OTHER LOAN DOCUMENTS.

9.15 Reaffirmation of Guaranties.

(a) 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; dated
as of February 28, 2007 as it respects Effox; dated as of February 29, 2008 as
it respects GMD, Fisher-Klosterman, FKI, LLC and CECO Mexico LLC; or dated as of
March 31, 2009 as it respects AVC, Inc.) 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 Agreement or the other Loan
Documents being executed in connection herewith 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 Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, each
Loan Party acknowledges and agrees that all references in any Guaranty to the
Existing Credit Agreement or the other Loan Documents shall be deemed, as
applicable, to be references to this Agreement or such other Loan Document, as
amended by, or amended and restated in connection with, this Agreement.

(b) Without limiting anything contained in Section 9.15(a), each Loan Party
(other than AVC, Inc.) hereby acknowledges and agrees that the obligations of
such Loan Party under its Guaranty and such other Loan Documents extend, among
other Obligations of Borrowers to Lender, to the Obligations of AVC, Inc. under
this Agreement and the other Loan Documents. Accordingly, all references in any
Guaranty or any other Loan Document (other than AVC, Inc.’s Guaranty) to
(i) “Borrowers” shall be deemed to include AVC, Inc. and (ii) “Guaranteed
Obligations” shall be deemed to include the Obligations of AVC, Inc.

 

-69-

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

9.16 Joinder of AVC, Inc. as New Borrower. AVC, Inc. hereby assumes and agrees
to perform all of the terms, restrictions, obligations and conditions of a
Borrower under this Agreement, and, by execution of this Agreement is hereby
designated a “Borrower” for purposes of, and agrees to be bound by, each and all
terms of this Agreement. Lender confirms that AVC, Inc. is a Borrower under this
Agreement and all of the rights, obligations of a Borrower under this Agreement
shall inure to and bind, as a joint and several obligor, AVC, Inc. AVC, Inc.
expects to derive benefits from the transactions resulting in the creation of
the Obligations. Lender may rely conclusively on the continuing warranty, hereby
made, that AVC continues to be benefitted by Lender’s extension of credit
accommodations to Borrowers and Lender shall have no duty to inquire into or
confirm the receipt of any such benefits, and this Agreement and all other Loan
Documents to which AVC, Inc. is a party shall be effective and enforceable by
Lender without regard to the receipt, nature or value of any such benefits.

[Remainder of this Page left intentionally blank]

 

-70-

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

IN WITNESS WHEREOF, the Loan Parties and Lender have executed this Agreement by
their duly authorized officers as of the date first above written.

 

CECO ENVIRONMENTAL CORP.     CECO GROUP, INC. By:  

/s/ Dennis W. Blazer

    By:  

/s/ Dennis W. Blazer

  Dennis W. Blazer, Chief Financial Officer       Dennis W. Blazer, Chief
Financial Officer,   and Vice President       Secretary and Treasurer CECO
FILTERS, INC.       NEW BUSCH CO., INC.       THE KIRK & BLUM MANUFACTURING
COMPANY       KBD/TECHNIC, INC.       CECOAIRE, INC.       CECO ABATEMENT
SYSTEMS, INC.       EFFOX INC.       FISHER-KLOSTERMAN, INC.       H.M. WHITE,
INC.      

GMD ENVIRONMENTAL TECHNOLOGIES, INC., formerly known as GMD ACQUISITION CORP.

     

CECO MEXICO HOLDINGS LLC

AVC, INC.

      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

SIGNATURE PAGE TO

AMENDED AND RESTATED CREDIT AGREEMENT

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

EXHIBIT 2.1

(Revolving Loan Note)

See attached.

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

EXECUTION VERSION

A FIFTH THIRD BANCORP BANK

SIXTH AMENDED AND RESTATED

REVOLVING CREDIT PROMISSORY NOTE

 

OFFICER NO. 4048    NOTE No.             

 

$20,000,000.00    December 29, 2005    First Amendment and Restatement June 8,
2006    Second Amendment and Restatement February 28, 2007    Third Amendment
and Restatement February 29, 2008    Fourth Amendment and Restatement March 31,
2009    Fifth Amendment and Restatement December 31, 2009    Sixth Amendment and
Restatement June 30, 2010    (Effective Date)

Promise to Pay. On or before April 1, 2013 (the “Maturity Date”), the
undersigned, CECO FILTERS, INC., a Delaware corporation, NEW BUSCH CO., INC., a
Delaware corporation, THE KIRK & BLUM MANUFACTURING COMPANY, an Ohio
corporation, KBD/TECHNIC, INC., an Indiana corporation, CECOAIRE, INC., a
Delaware corporation, CECO ABATEMENT SYSTEMS, INC., a Delaware corporation, H.M.
WHITE, INC., a Delaware corporation, EFFOX INC., formerly known as CECO
Acquisition Corp., a Delaware corporation, GMD ENVIRONMENTAL TECHNOLOGIES, INC.,
formerly known as GMD Acquisition Corp., a Delaware corporation,
FISHER-KLOSTERMAN INC., formerly known as FKI Acquisition Corp., a Delaware
corporation, and AVC, INC., a Delaware corporation (each, a “Borrower”, and,
collectively, the “Borrowers”), for value received, hereby jointly and severally
promise to pay to the order of FIFTH THIRD BANK, an Ohio banking corporation
(together with its successors and assigns, “Lender”), at 38 Fountain Square
Plaza, MD #10AT63, Cincinnati, Ohio 45263, or such other address as Lender may
provide from time to time, the sum of TWENTY MILLION AND 00/100 Dollars
($20,000,000.00), plus interest as provided herein, or so much thereof as is
loaned by Lender to Borrowers as Revolving Loans or for which credit is extended
by Lender as a Letter of Credit pursuant to the Amended and Restated Credit
Agreement among Lender, Borrowers, and certain of Borrowers’ affiliates dated as
of even date herewith (as amended and as the same may be further amended,
renewed, consolidated, restated or replaced from time to time, the “Credit
Agreement”). The outstanding balance of this Sixth Amended and Restated
Revolving Credit Promissory Note (this “Note”) shall appear on supplemental bank
records and is not necessarily the face amount of this Note, which records shall
evidence the balance due pursuant to this Note at any time. As used herein,
“Local Time” means the time at the office of Lender specified in this Note.

This Note, and any request by Borrowers from time to time for an advance of a
specified principal amount hereunder, shall be subject to the terms and
conditions of the Credit Agreement. Capitalized terms used herein which are not
otherwise defined in this Note shall have the meanings set forth in the Credit
Agreement. This Note is entitled to the benefits and security of the Credit
Agreement, including, without limitation, acceleration upon the terms provided
therein, and of the other Loan Documents.

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

The entire unpaid principal balance of this Note, together with all accrued and
unpaid interest and any other charges, advances and fees, if any, outstanding
hereunder, shall be due and payable in full on the earlier of the Maturity Date
or upon acceleration of the Indebtedness evidenced by this Note, notwithstanding
any other inconsistent or contradictory provisions contained in this Note.

Upon the occurrence and during the continuance of any Event of Default, the
entire unpaid principal balance of this Note, together with all accrued but
unpaid interest, and all other Obligations, shall, at Lender’s option, become
immediately due and payable, except that if there occurs an Event of Default of
the type described in Sections 6.1(d), 6.1(e), or 6.1(j) of the Credit
Agreement, the entire unpaid principal balance of this Note, together with all
accrued but unpaid interest, and all other Obligations shall become
automatically and immediately due and payable without notice, which Borrowers
hereby waive.

Interest. Principal amounts outstanding under this Note shall bear interest
commencing on the Effective Date at the rate or rates per annum set forth below,
which rate or rates shall be designated by Borrowers as more fully set forth
herein (the “Interest Rate”).

On and after the Effective Date, at any time and from time to time during the
term of this Note, so long as no Event of Default has occurred and is continuing
and so long as such outstanding principal amounts hereunder are not then subject
to a LIBOR Tranche Election, Borrowers may exercise their right to adjust the
Interest Rate on amounts of principal outstanding under this Note to one of the
rates set forth below upon notice to Lender as set forth below; provided,
however, that once the Interest Rate accruing against any amounts outstanding
hereunder is adjusted to a Tranche LIBOR Rate for a particular LIBOR Tranche
Interest Period, Borrowers may not elect to adjust such Interest Rate to a
different Interest Rate until the expiration of such LIBOR Tranche Interest
Period.

(a) Tranche LIBOR Rate. Upon telephonic notice to Lender by 10:00 a.m. Local
Time given at least two Business Days prior to the beginning of a LIBOR Tranche
Interest Period, Borrowers may, subject to the terms of this Note, elect to have
advances under this Note bear interest at a rate per annum equal to the Tranche
LIBOR Rate (as defined herein) plus the Applicable Tranche LIBOR Rate Margin (as
defined herein) (a “LIBOR Tranche Election”). The “Tranche LIBOR Rate” is the
rate of interest (rounded upwards, if necessary, to the next 1/8 of 1% and
adjusted for reserves if Lender is required to maintain reserves with respect to
relevant advances) fixed by the British Bankers’ Association at 11:00 a.m.,
London, England time, relating to quotations for the one month, two month, or
three month London InterBank Offered Rates, as selected by Borrowers in their
LIBOR Tranche Election, on U.S. Dollar deposits as published on Bloomberg LP,
or, if no longer provided by Bloomberg LP, such rate as shall be determined in
good faith by Lender from such sources as Lender shall determine to be
comparable to Bloomberg LP (or any successor) as determined by Lender at
approximately 10:00 a.m. Local Time on the date of request by Borrowers.
Notwithstanding anything to the contrary contained in this Note, at any time
during which a Rate Management Agreement with Lender is then in effect with
respect to any Tranche LIBOR Rate Loan under this Note, the provision contained
in the immediately preceding sentence that rounds up the Tranche LIBOR Rate to
the next 1/8 of 1% (as set forth in the definition of “Tranche LIBOR Rate” set
forth above) shall be disregarded and no longer of any force and effect with
respect to such Tranche LIBOR Rate Loan that is subject to such Rate Management
Agreement. Each

 

-2-

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

determination by Lender of the Tranche LIBOR Rate shall be conclusive in the
absence of manifest error. Interest accruing based on the Tranche LIBOR Rate
shall be: (i) calculated based on a 360-day year and charged for the actual
number of days elapsed and (ii) payable in arrears on the last day of the
applicable LIBOR Tranche Interest Period. The Interest Rate applicable to a
particular LIBOR Tranche Election shall remain at the rate elected for the
remainder of the subject LIBOR Tranche Interest Period.

The “LIBOR Tranche Interest Period” for each advance bearing interest with
respect to the Tranche LIBOR Rate (each such advance, a “Tranche LIBOR Rate
Loan”) is a period of one month, two months, or three months, at Borrowers’
election, which period shall commence on a Business Day selected by Borrowers
subject to the terms of this Note. If a LIBOR Tranche Interest Period would
otherwise end on a day that is not a Business Day, such LIBOR Tranche Interest
Period shall end on the next succeeding Business Day; provided that, if the next
succeeding Business Day falls in a new month, such LIBOR Tranche Interest Period
shall end on the immediately preceding Business Day.

On or before the date that is two Business Days before the making of any Tranche
LIBOR Rate Loan, and on or before the date which is two Business Days prior to
the expiration of any applicable LIBOR Tranche Interest Period, Borrowers shall
notify Lender of each of the following: (a) the LIBOR Tranche Interest Period
Borrowers have elected regarding any such Tranche LIBOR Rate Loan or any
continuation of a LIBOR Tranche Election with respect to a Tranche LIBOR Rate
Loan, (b) the amount of each such Tranche LIBOR Rate Loan or continuation, and
(c) the commencement date of each LIBOR Tranche Interest Period. Borrowers may
have Tranche LIBOR Rate Loans in minimum amounts of $1,000,000 (and integral
multiples of $100,000) and such Tranche LIBOR Rate Loans may bear interest at
the applicable Interest Rate for different LIBOR Tranche Interest Periods so
long as (i) the last day of any LIBOR Tranche Interest Period does not exceed
the Maturity Date hereof; (ii) no LIBOR Tranche Election with respect to any
Tranche LIBOR Rate Loan commences prior to the expiration of the applicable
LIBOR Tranche Interest Period in effect with respect to such Tranche LIBOR Rate
Loan; and (iii) at no time may Borrowers have more than three outstanding
Tranche LIBOR Rate Loans, in the aggregate, under all of their Notes. If, at any
time during the term hereof, Borrowers fail to designate a LIBOR Tranche
Interest Period or if Borrowers have not elected another LIBOR Tranche Interest
Period in accordance with this Note at least two Business Days prior to the
expiration of the LIBOR Tranche Interest Period then in effect, Lender may
assume that Borrowers have elected to have the principal amount applicable to
such expiring LIBOR Tranche Interest Period accrue interest based on the Daily
LIBOR Rate.

(b) Daily LIBOR Rate. All amounts outstanding under this Note, as of any date,
which are not then subject to a LIBOR Tranche Election, will automatically bear
interest at a floating rate equal to the Daily LIBOR Rate plus the Applicable
Daily LIBOR Rate Margin (as defined below). As used herein, “Daily LIBOR Rate”
means the rate of interest (rounded upwards, if necessary, to the next 1/8 of 1%
and adjusted for reserves if Lender is required to maintain reserves with
respect to relevant advances) fixed by the British Bankers’ Association at 11:00
a.m., London, England time, relating to quotations for the one month London
InterBank Offered Rate on U.S. Dollar deposits as published on Bloomberg LP, or,
if no longer provided by Bloomberg LP, such rate as shall be determined in good
faith by Lender from such sources as Lender shall determine to be comparable to
Bloomberg LP (or any successor) as determined by Lender at approximately 10:00
a.m. Local Time on the relevant date of determination. Notwithstanding

 

-3-

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

anything to the contrary contained in this Note, at any time during which a Rate
Management Agreement with Lender is then in effect with respect to any Daily
LIBOR Rate Loan under this Note, the provision contained in the immediately
preceding sentence that rounds up the Daily LIBOR Rate to the next 1/8 of 1% (as
set forth in the definition of “Daily LIBOR Rate” set forth above) shall be
disregarded and no longer of any force and effect with respect to such Daily
LIBOR Rate Loan subject to such Rate Management Agreement. Each determination by
Lender of the Daily LIBOR Rate shall be conclusive in the absence of manifest
error. The Daily LIBOR Rate shall be reset each Business Day by Lender based on
the Daily LIBOR Rate then in effect. Any adjustment in the Interest Rate
resulting from a change in the Daily LIBOR Rate shall become effective as of the
opening of business on the date of each change (or if not a Business Day, the
beginning of the day). Lender shall not be required to notify Borrowers of any
adjustment in the Daily LIBOR Rate; however, Borrowers may request a quote of
the prevailing Daily LIBOR Rate on any Business Day. Interest accruing based on
the Daily LIBOR Rate shall be: (i) calculated based on a 360-day year and
charged for the actual number of days elapsed and (ii) payable in arrears on the
first day of each calendar month.

(c) Pricing Grid. As used herein, the terms “Applicable Daily LIBOR Rate Margin”
and “Applicable Tranche LIBOR Rate Margin” (hereafter sometimes collectively
referred to as the “Applicable Margins”) mean, as of any date, the applicable
per annum rate shown in the applicable column in the table below based on the
then applicable Fixed Charge Coverage Ratio. “Fixed Charge Coverage Ratio” has
the meaning given in the Credit Agreement.

 

Pricing Grid
Level

  

Fixed Charge Coverage Ratio

   Applicable Daily LIBOR
Rate Margin     Applicable Tranche LIBOR Rate
Margin  

Level 1

   £ 1.50 to 1.0      4.00 %      3.50 % 

Level 2

   > 1.50 to 1.0 and £ 2.0 to 1.0      3.75 %      3.25 % 

Level 3

   > 2.0 to 1.0      3.50 %      3.00 % 

For purposes of determining the Applicable Margins: the Fixed Charge Coverage
Ratio will, on and after the First Pricing Grid Determination Date, be
determined (i) as of June 30th and December 31st of each Fiscal Year ending on
and after the First Pricing Grid Determination Date (each such date being a
“Determination Date”) and (ii) in the same manner used to determine the Fixed
Charge Coverage Ratio set forth in Section 5.10 of the Credit Agreement. The
“First Pricing Grid Determination Date” that occurs under this Note will be
December 31, 2010. On Lender’s receipt of the financial statements and
Compliance Certificate required to be delivered to Lender pursuant to Sections
4.3(a), 4.3(b) and 4.3(d) (as applicable) of the Credit Agreement for the
applicable Fiscal Quarter or Fiscal Year then ended, the Interest Rate will be
subject to adjustment in accordance with the table set forth above in this
subparagraph (c) based on the then Fixed Charge Coverage Ratio as of the end of
such Fiscal Quarter or Fiscal Year then ended so long as no Event of Default is
existing as of the applicable effective date of adjustment. The foregoing
adjustment, if applicable, will become effective for LIBOR Tranche Elections
made with respect to the Revolving Loans, the unpaid principal balance of the
Revolving Loans accruing interest based on the Daily LIBOR Rate and other
outstanding Obligations related to the Revolving Loans and the Letter of Credit
Obligations due with respect to Letters of Credit issued or renewed, on and
after the first day of the first calendar month following delivery to Lender of
the financial statements and Compliance Certificate required to be delivered to
Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as applicable) of the
Credit Agreement for the applicable Fiscal Quarter or Fiscal Year then ended
until the next succeeding effective date of adjustment pursuant to this
subparagraph (c). Each of the financial

 

- 4-

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

statements and Compliance Certificate required to be delivered to Lender must be
delivered to Lender in compliance with Section 4.3 of the Credit Agreement. If,
however, either the financial statements or the Compliance Certificate required
to be delivered to Lender pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as
applicable) of the Credit Agreement have not been delivered in accordance with
Section 4.3 of the Credit Agreement, then, at Lender’s option, commencing on the
date upon which such financial statements or Compliance Certificate should have
been delivered in accordance with Section 4.3 of the Credit Agreement and
continuing until such financial statements or Compliance Certificate are
actually delivered in accordance with Section 4.3 of the Credit Agreement, it
shall be assumed for purposes of determining the Applicable Margins, that the
Fixed Charge Coverage Ratio was £ 1.50 to 1.0 and the pricing associated
therewith (i.e., Pricing Grid Level 1) will be applicable on the then applicable
Determination Date. As of the Effective Date of this Note, the Applicable Daily
LIBOR Rate Margin is 4.0% per annum and the Applicable Tranche LIBOR Rate Margin
is 3.50% (i.e., Pricing Grid Level 1).

(d) LIBOR Rate Costs. Borrowers hereby agree to reimburse and indemnify Lender
from all costs or fees incurred by Lender subsequent to the date hereof relating
to the offering of rates of interest based upon the Tranche LIBOR Rate and Daily
LIBOR Rate. Without limiting the generality of the foregoing, if any change in
any law, regulation or official directive, or in the interpretation thereof, by
any governmental body charged with the administration thereof, shall:

(i) increase the cost to Lender, by an amount which Lender deems to be material,
of making, converting into, continuing or maintaining Tranche LIBOR Rate Loans
or Daily LIBOR Rate Loans, as applicable, or to reduce any amount receivable
hereunder in respect thereof, or

(ii) have the effect of reducing the rate of return on Lender’s capital as a
consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such change by an amount deemed by Lender to be
material,

then, in any such case, after submission by Lender to Borrowers of a written
request therefor, Borrowers shall pay Lender any additional amounts necessary to
compensate Lender for such increased cost or reduction. Lender agrees that, upon
the occurrence of any event giving rise to the operation of this paragraph, it
will use reasonable efforts to designate another lending office (if possible)
for any Tranche LIBOR Rate Loans or Daily LIBOR Rate Loans affected by such
event with the object of avoiding the consequences of such event; provided that
no such designation shall be required unless such designation can be made on
terms that, in the reasonable judgment of Lender, cause Lender and its lending
office(s) to suffer no material economic, legal or regulatory disadvantage.

In addition, if any amount as to which a LIBOR Tranche Election is in effect is
repaid on a day other than the last day of the applicable LIBOR Tranche Interest
Period, or becomes payable on a day other than the last day of the applicable
LIBOR Tranche Interest Period due to acceleration or otherwise, Borrowers,
whether or not a debtor in a proceeding under Title 11, United States Code,
shall pay, on demand by Lender, such amount (as determined by Lender) as is
required to compensate Lender for any losses, costs or expenses (“LIBOR Breakage
Fee”), which Lender may incur as a result of such payment or acceleration,
including, without limitation, any loss, cost or expense (including loss of
profit) incurred by reason of liquidation or reemployment of deposits or other
funds acquired by Lender to fund or maintain such amount bearing interest with
respect to the Tranche LIBOR Rate.

 

-5-

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

A certificate of Lender setting forth the amount or amounts necessary to
compensate Lender as specified in this paragraph (d) and delivered to Borrowers
shall be conclusive absent manifest error. Borrowers shall pay Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

(e) Availability of Tranche LIBOR Rate and Daily LIBOR Rate. Notwithstanding
anything herein contained to the contrary, if:

(i) any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful for Lender to fund or maintain its funding in
Eurodollars of any portion of the advances subject to the Tranche LIBOR Rate or
the Daily LIBOR Rate, as applicable, or otherwise to give effect to Lender’s
obligations as contemplated hereby, or

(ii) Lender, by telephonic notice, shall notify Borrowers that: (A) with respect
to Tranche LIBOR Rate Loans, Eurodollar deposits with a maturity corresponding
to the maturity of the LIBOR Tranche Interest Period, in an amount equal to the
advances to be subject to the LIBOR Tranche Election are not readily available
in the London Inter-Bank Offered Rate Market, (B) with respect to Daily LIBOR
Rate Loans, one-month Eurodollar deposits in an amount equal to the unpaid
principal balance of this Note not subject to a LIBOR Tranche Election are not
readily available in the London Inter-Bank Offered Rate Market, (C) by reason of
circumstances affecting the London Inter-Bank Offered Rate Market or other
economic conditions, adequate and reasonable methods do not exist for
ascertaining (1) the rate of interest applicable to such deposits for the
proposed LIBOR Tranche Interest Period or, as applicable, (2) the Daily LIBOR
Rate, or (D) the Tranche LIBOR Rate or, as applicable, the Daily LIBOR Rate as
determined by Lender will not adequately and fairly reflect the cost to Lender
of making or maintaining the unpaid principal balance of this Note at an
interest rate based on the Tranche LIBOR Rate or, as applicable, the Daily LIBOR
Rate, or

(iii) an Event of Default exists:

(1) Lender may, by written notice to Borrowers, declare Lender’s obligations in
respect of the Tranche LIBOR Rate and the Daily LIBOR Rate, as applicable, to be
immediately terminated (an “Immediate LIBOR Rate Termination”), and (2) upon
such Immediate LIBOR Rate Termination, (x) the Tranche LIBOR Rate and the Daily
LIBOR Rate, as applicable, with respect to Lender shall cease to be in effect
and (y) the unpaid principal balance of this Note shall bear interest from and
after such notice at a floating rate equal to the rate of interest per annum
established from time to time by Lender at its principal office as its “Prime
Rate” (the “Prime Rate”) plus 1.0% (it being understood by Borrowers that such
Prime Rate is established for reference purposes only and not as Lender’s best
loan rate) or such other rate of interest as may be agreed to between Lender and
Borrowers.

Any adjustment in the Interest Rate resulting from a change in Lender’s Prime
Rate shall become effective as of the opening of business on the date of change
(or if not a Business Day, the beginning of the day). Interest based on the
Prime Rate shall be calculated based on a 360-day year and charged for the
actual number of days elapsed, and shall be payable in arrears on the first day
of each calendar month.

 

-6-

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

Maximum Rate. In no event shall the Interest Rate provided for hereunder,
together with all fees and charges as provided for herein or in any other Loan
Document which are treated as interest under applicable law (collectively with
interest, the “Charges”), exceed the maximum rate legally chargeable by Lender
under applicable law for loans of the type provided for hereunder (the “Maximum
Rate”). If, in any month, the Charges, absent such limitation, would have
exceeded the Maximum Rate, then the Charges for that month shall be at the
Maximum Rate, and, if in future months, such Charges would otherwise be less
than the Maximum Rate, then such Charges shall remain at the Maximum Rate until
such time as the amount of Charges paid hereunder and under the other Loan
Documents equals the amount of Charges which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of Charges paid or accrued in respect
of the Indebtedness evidenced by this Note and the other Obligations is less
than the total amount of Charges which would, but for this paragraph, have been
paid or accrued if the Charges otherwise set forth in this Note and in the other
Loan Documents had at all times been in effect, then Borrowers shall, to the
extent permitted by applicable law, pay to Lender an amount equal to the
difference between: (a) the lesser of: (i) the amount of Charges which would
have been charged if the Maximum Rate had, at all times, been in effect or
(ii) the amount of Charges which would have accrued had such Charges otherwise
provided for in this Note and in the other Loan Documents at all times been in
effect and (b) the amount of Charges actually paid or accrued in respect of the
Indebtedness evidenced by this Note or any of the other Loan Documents. In the
event that a court of competent jurisdiction determines that Lender has received
any Charges in respect of the Indebtedness evidenced by this Note and the other
Loan Documents in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations owed to Lender other than any Charges, in the inverse order of
maturity, and if there are no Obligations to Lender outstanding, Lender shall
refund to Borrowers (or to such Person to which Lender is directed by a court of
competent jurisdiction) such excess.

Use of Proceeds. Borrowers certify that the proceeds of the Revolving Loans have
been, and will be, used for the purposes set forth in the Credit Agreement.

Default Rate; Fees. To the extent any payment is not made within 15 days after
the date when due under this Note and, at or before the end of such 15-day
period, there was insufficient Revolving Loan Availability to charge the full
amount of such payment to the loan account with Lender as an advance of the
Revolving Loans, Borrowers shall pay to Lender a late payment fee equal to two
percent (2%) of that portion of any payment not paid when due (whether by
maturity, acceleration or otherwise). After the occurrence and during the
continuation of an Event of Default, Borrowers agree that Lender may, without
notice, increase the Interest Rate by an additional 2.0% per annum (the “Default
Rate”); provided that this paragraph shall not be deemed to constitute a waiver
of any Event of Default or an agreement by Lender to permit any late payments
whatsoever.

Prepayment. Borrowers will make each mandatory prepayment of the principal of
this Note required by the Credit Agreement. Subject to Section 6.4(b) of the
Credit Agreement, Borrowers may prepay all of this Note at any time; provided
that if any prepayment results in any LIBOR Breakage Fee, Borrowers will pay
such LIBOR Breakage Fee due in accordance with this Note.

 

-7-

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

Entire Agreement. Borrowers agree that there are no conditions or understandings
which are not expressed in this Note or the other Loan Documents.

Severability. If any provision of this Note is held to be invalid by a court of
competent jurisdiction in a final order, the invalid provision will, subject to
the provisions of this Note with respect to the Maximum Rate, be deemed severed
from this Note and shall not affect any part of the remainder of the provisions
of this Note.

Joint Obligations. All of the obligations of Borrowers hereunder are joint,
several and primary. No Borrower shall be or be deemed to be an accommodation
party with respect to this Note.

Assignment. Borrowers agree not to assign any of any Borrower’s rights, remedies
or obligations described in this Note without the prior written consent of
Lender, which consent may be withheld in Lender’s sole discretion. Borrowers
agree that Lender may assign some or all of its rights and remedies described in
this Note without prior consent from Borrowers, provided that Lender will
promptly notify Borrowers of a total assignment of this Note.

Prior Note. This Note is issued, not as a refinancing or refunding of or payment
toward, but as a continuation of, the Obligations of Borrowers to Lender
pursuant to that certain Fifth Amended and Restated Revolving Credit Promissory
Note dated as of December 31, 2009 in the principal amount of $20,000,000 (as
amended, and together with all prior amendments thereto or restatements thereof,
the “Prior Note”), together with any and all additional Revolving Loans incurred
under this Note; provided that the unpaid principal balance of such Indebtedness
under the Prior Note, together with any and all such additional Revolving Loans
incurred under this Note, shall not exceed the maximum principal amount of this
Note (the “Principal Amount Cap”). Accordingly, this Note shall not be construed
as a novation or extinguishment of the Obligations arising under the Prior Note,
and its issuance shall not affect the priority of any Lien granted in connection
with the Prior Note. Interest accrued under the Prior Note prior to the date of
this Note remains accrued and unpaid under this Note and does not constitute any
part of the principal amount of the Indebtedness evidenced hereby. The entire
unpaid principal balance created or existing under, pursuant to, as a result of,
or arising out of, the Prior Note shall, together with any and all additional
Revolving Loans incurred under this Note, continue in existence under this Note
up to the Principal Amount Cap, which Obligations Borrowers acknowledge, affirm,
and confirm to Lender. The Indebtedness evidenced by this Note will continue to
be secured by all of the collateral and other security granted to Lender under
the Prior Note and the other Loan Documents.

Modification; Waiver of Lender. The modification or waiver of any of Borrowers’
obligations or Lender’s rights under this Note must be contained in a writing
signed by Lender and Borrowers. Lender may perform a Borrower’s obligations, or
delay or fail to exercise any of Lender’s rights or remedies, without causing a
waiver of those obligations or rights. A waiver on one occasion shall not
constitute a waiver on another occasion. Borrowers’ obligations under this Note
shall not be affected if Lender amends, compromises, exchanges, fails to
exercise, impairs or releases: (i) any of the obligations belonging to any
co-borrower, indorser or guarantor, (ii) any of its rights against any
co-borrower, guarantor or indorser, or (iii) any of the Loan Collateral.

 

-8-

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

Waivers of Borrowers. To the extent not prohibited by law or required by the
Credit Agreement, demand, presentment, protest and notice of dishonor, notice of
protest and notice of default are hereby waived by each Borrower, and any
indorser or guarantor hereof. Borrowers and all co-makers and accommodation
makers of this Note hereby waive all suretyship defenses, including, but not
limited to, all defenses based upon impairment of collateral and all suretyship
defenses described in Section 3-605 of the Uniform Commercial Code (the “UCC”).
Such waiver is entered to the fullest extent permitted by Section 3-605 of the
UCC.

Governing Law; Consent to Jurisdiction. This Note is delivered in, is intended
to be performed in, will be construed and enforceable in accordance with and
governed by the internal laws of, the State of Ohio, without regard to
principles of conflicts of law. Each Borrower agrees that the state and federal
courts in Hamilton County, Ohio shall, at Lender’s sole option, have exclusive
jurisdiction over all matters arising out of this Note, WITHOUT LIMITATION ON
THE ABILITY OF LENDER, ITS SUCCESSORS AND ASSIGNS, TO INITIATE AND PROSECUTE IN
ANY APPLICABLE JURISDICTION ACTIONS RELATED TO THE REPAYMENT AND COLLECTION OF
THE OBLIGATIONS AND THE EXERCISE OF ALL OF LENDER’S RIGHTS AGAINST EACH BORROWER
WITH RESPECT THERETO AND ANY SECURITY OR PROPERTY OF EACH BORROWER, INCLUDING,
WITHOUT LIMITATION, DISPOSITIONS OF THE LOAN COLLATERAL, and that service of
process in any such proceeding shall be effective if mailed to Borrowers in
accordance with the Credit Agreement.

JURY WAIVER. EACH BORROWER, ANY INDORSER OR GUARANTOR HEREOF, AND LENDER WAIVE
THE RIGHT TO A TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

[Signature Page Follows]

 

-9-

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

IN WITNESS WHEREOF, each Borrower has executed this Note by its duly authorized
officer as of the date first above written.

 

CECO FILTERS, INC. NEW BUSCH CO., INC. THE KIRK & BLUM MANUFACTURING COMPANY
KBD/TECHNIC, INC. CECOAIRE, INC. CECO ABATEMENT SYSTEMS, INC. EFFOX INC.,
formerly known as CECO Acquisition Corp. FISHER-KLOSTERMAN, INC., formerly
known as FKI Acquisition Corp. H.M. WHITE, INC. GMD ENVIRONMENTAL TECHNOLOGIES,
INC., formerly known
as GMD Acquisition Corp. AVC, INC. By:       Dennis W. Blazer, Secretary and
Treasurer

SIGNATURE PAGE TO

SIXTH AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE

(Amended and Restated Credit Agreement)

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

EXHIBIT 2.2

(Tem Loan Note C)

See attached.

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

EXECUTION VERSION

A FIFTH THIRD BANCORP BANK

AMENDED AND RESTATED TERM PROMISSORY NOTE

(TERM LOAN C)

 

OFFICER NO. 4048

   NOTE No.             

 

$1,978,466.70    February 29, 2008    First Amendment and Restatement March 31,
2009    Second Amendment and Restatement December 31, 2009    Third Amendment
and Restatement June 30, 2010    (Effective Date)

Promise to Pay. On or before April 1, 2014 (the “Maturity Date”), the
undersigned, CECO FILTERS, INC., a Delaware corporation, NEW BUSCH CO., INC., a
Delaware corporation, THE KIRK & BLUM MANUFACTURING COMPANY, an Ohio
corporation, KBD/TECHNIC, INC., an Indiana corporation, CECOAIRE, INC., a
Delaware corporation, CECO ABATEMENT SYSTEMS, INC., a Delaware corporation, H.M.
WHITE, INC., a Delaware corporation, EFFOX INC., formerly known as CECO
Acquisition Corp., a Delaware corporation, GMD ENVIRONMENTAL TECHNOLOGIES, INC.,
formerly known as GMD Acquisition Corp., a Delaware corporation,
FISHER-KLOSTERMAN INC., formerly known as FKI Acquisition Corp., a Delaware
corporation, and AVC, INC., a Delaware corporation (each, a “Borrower”, and,
collectively, the “Borrowers”), for value received, hereby jointly and severally
promise to pay to the order of FIFTH THIRD BANK, an Ohio banking corporation
(together with its successors and assigns, “Lender”), at 38 Fountain Square
Plaza, MD #10AT63, Cincinnati, Ohio 45263, or such other address as Lender may
provide from time to time, the sum of ONE MILLION NINE HUNDRED SEVENTY-EIGHT
THOUSAND FOUR HUNDRED SIXTY-SIX AND 70/100 Dollars ($1,978,466.70), plus
interest as provided herein. The outstanding balance of this Amended and
Restated Term Promissory Note (this “Note”) shall appear on supplemental bank
records and is not necessarily the face amount of this Note, which records shall
evidence the balance due pursuant to this Note at any time. As used herein,
“Local Time” means the time at the office of Lender specified in this Note.

Notwithstanding the Effective Date of this Note of June 30, 2010, the unpaid
principal balance of this Note reflects: (i) a principal payment made by
Borrowers on or about July 1, 2010 in an amount equal to $26,885.72 in
accordance with the Prior Note and (ii) a principal payment made by Borrowers on
or about August 1, 2010 in an amount equal to $26,885.72 in accordance with the
Prior Note.

This Note shall be subject to the terms and conditions of the Amended and
Restated Credit Agreement dated as of even date herewith (as amended and as the
same may be further amended, renewed, consolidated, restated or replaced from
time to time, the “Credit Agreement”). Capitalized terms used herein which are
not otherwise defined in this Note shall have the meanings set forth in the
Credit Agreement. This Note is entitled to the benefits and security of the
Credit Agreement, including, without limitation, acceleration upon the terms
provided therein, and of the other Loan Documents.

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

Borrowers shall make principal payments (each a “Scheduled Payment”) in the
amount of $26,885.72 each, commencing on September 1, 2010 and continuing on the
first day of each and every calendar month thereafter until this Note has been
paid in full.

The entire unpaid principal balance of this Note, together with all accrued and
unpaid interest and any other charges, advances and fees, if any, outstanding
hereunder, shall be due and payable in full on the earlier of the Maturity Date
or upon acceleration of the Indebtedness evidenced by this Note, notwithstanding
any other inconsistent or contradictory provisions contained in this Note. No
part of the Indebtedness evidenced by this Note may, on the repayment thereof,
be redrawn or reborrowed by Borrowers.

Upon the occurrence and during the continuance of any Event of Default, the
entire unpaid principal balance of this Note, together with all accrued but
unpaid interest, and all other Obligations, shall, at Lender’s option, become
immediately due and payable, except that if there occurs an Event of Default of
the type described in Sections 6.1(d), 6.1(e), or 6.1(j) of the Credit
Agreement, the entire unpaid principal balance of this Note, together with all
accrued but unpaid interest, and all other Obligations shall become
automatically and immediately due and payable without notice, which Borrowers
hereby waive.

Interest. Principal amounts outstanding under this Note shall bear interest
commencing on the Effective Date at the rate or rates per annum set forth below,
which rate or rates shall be designated by Borrowers as more fully set forth
herein (the “Interest Rate”).

On and after the Effective Date, at any time and from time to time during the
term of this Note, so long as no Event of Default has occurred and is continuing
and so long as such outstanding principal amounts hereunder are not then subject
to a LIBOR Tranche Election, Borrowers may exercise their right to adjust the
Interest Rate on amounts of principal outstanding under this Note to one of the
rates set forth below upon notice to Lender as set forth below; provided,
however, that once the Interest Rate accruing against any amounts outstanding
hereunder is adjusted to a Tranche LIBOR Rate for a particular LIBOR Tranche
Interest Period, Borrowers may not elect to adjust such Interest Rate to a
different Interest Rate until the expiration of such LIBOR Tranche Interest
Period.

(a) Tranche LIBOR Rate. Upon telephonic notice to Lender by 10:00 a.m. Local
Time given at least two Business Days prior to the beginning of a LIBOR Tranche
Interest Period, Borrowers may, subject to the terms of this Note, elect to have
a portion or portions of the unpaid principal balance of this Note bear interest
at a rate per annum equal to the Tranche LIBOR Rate (as defined herein) plus the
Applicable Tranche LIBOR Rate Margin (as defined herein) (a “LIBOR Tranche
Election”). The “Tranche LIBOR Rate” is the rate of interest (rounded upwards,
if necessary, to the next 1/8 of 1% and adjusted for reserves if Lender is
required to maintain reserves with respect to portions of this Note subject to a
LIBOR Tranche Election) fixed by the British Bankers’ Association at 11:00 a.m.,
London, England time, relating to quotations for the one month, two month, or
three month London InterBank Offered Rates, as selected by Borrowers in their
LIBOR Tranche Election, on U.S. Dollar deposits as published on Bloomberg LP,
or, if no longer provided by Bloomberg LP, such rate as shall be determined in
good faith by Lender from such sources as Lender shall determine to be
comparable to Bloomberg LP (or any successor) as determined by Lender at
approximately 10:00 a.m. Local Time on the date of

 

- 2 -

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

request by Borrowers. Notwithstanding anything to the contrary contained in this
Note, at any time during which a Rate Management Agreement with Lender is then
in effect with respect to any Tranche LIBOR Rate Loan under this Note, the
provision contained in the immediately preceding sentence that rounds up the
Tranche LIBOR Rate to the next 1/8 of 1% (as set forth in the definition of
“Tranche LIBOR Rate” set forth above) shall be disregarded and no longer of any
force and effect with respect to such Tranche LIBOR Rate Loan that is subject to
such Rate Management Agreement. Each determination by Lender of the Tranche
LIBOR Rate shall be conclusive in the absence of manifest error. Interest
accruing based on the Tranche LIBOR Rate shall be: (i) calculated based on a
360-day year and charged for the actual number of days elapsed and (ii) payable
in arrears on the last day of the applicable LIBOR Tranche Interest Period. The
Interest Rate applicable to a particular LIBOR Tranche Election shall remain at
the rate elected for the remainder of the subject LIBOR Tranche Interest Period.

The “LIBOR Tranche Interest Period” for each portion or portions of the unpaid
principal balance of this Note bearing interest with respect to the Tranche
LIBOR Rate (each such portion or portions, a “Tranche LIBOR Rate Loan”) is a
period of one month, two months, or three months, at Borrowers’ election, which
period shall commence on a Business Day selected by Borrowers subject to the
terms of this Note. If a LIBOR Tranche Interest Period would otherwise end on a
day that is not a Business Day, such LIBOR Tranche Interest Period shall end on
the next succeeding Business Day; provided that, if the next succeeding Business
Day falls in a new month, such LIBOR Tranche Interest Period shall end on the
immediately preceding Business Day.

On or before the date that is two Business Days before the making of any Tranche
LIBOR Rate Loan, and on or before the date which is two Business Days prior to
the expiration of any applicable LIBOR Tranche Interest Period, Borrowers shall
notify Lender of each of the following: (a) the LIBOR Tranche Interest Period
Borrowers have elected regarding any such Tranche LIBOR Rate Loan or any
continuation of a LIBOR Tranche Election with respect to a Tranche LIBOR Rate
Loan, (b) the amount of each such Tranche LIBOR Rate Loan or continuation, and
(c) the commencement date of each LIBOR Tranche Interest Period. Borrowers may
have Tranche LIBOR Rate Loans in minimum amounts of $1,000,000 (and integral
multiples of $100,000) and such Tranche LIBOR Rate Loans may bear interest at
the applicable Interest Rate for different LIBOR Tranche Interest Periods so
long as (i) the last day of any LIBOR Tranche Interest Period does not exceed
the Maturity Date hereof; (ii) no LIBOR Tranche Election with respect to any
Tranche LIBOR Rate Loan commences prior to the expiration of the applicable
LIBOR Tranche Interest Period in effect with respect to such Tranche LIBOR Rate
Loan; and (iii) at no time may Borrowers have more than three outstanding
Tranche LIBOR Rate Loans, in the aggregate, under all of their Notes. If, at any
time during the term hereof, Borrowers fail to designate a LIBOR Tranche
Interest Period or if Borrowers have not elected another LIBOR Tranche Interest
Period in accordance with this Note at least two Business Days prior to the
expiration of the LIBOR Tranche Interest Period then in effect, Lender may
assume that Borrowers have elected to have the principal amount applicable to
such expiring LIBOR Tranche Interest Period accrue interest based on the Daily
LIBOR Rate.

(b) Daily LIBOR Rate. All amounts outstanding under this Note, as of any date,
which are not then subject to a LIBOR Tranche Election, will automatically bear
interest at a floating rate equal to the Daily LIBOR Rate plus the Applicable
Daily LIBOR Rate Margin (as defined below). As used herein, “Daily LIBOR Rate”
means the rate of interest (rounded upwards, if necessary, to the

 

- 3 -

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

next 1/8 of 1% and adjusted for reserves if Lender is required to maintain
reserves with respect to portions of this Note bearing interest based upon the
Daily LIBOR Rate) fixed by the British Bankers’ Association at 11:00 a.m.,
London, England time, relating to quotations for the one month London InterBank
Offered Rate on U.S. Dollar deposits as published on Bloomberg LP, or, if no
longer provided by Bloomberg LP, such rate as shall be determined in good faith
by Lender from such sources as Lender shall determine to be comparable to
Bloomberg LP (or any successor) as determined by Lender at approximately 10:00
a.m. Local Time on the relevant date of determination. Notwithstanding anything
to the contrary contained in this Note, at any time during which a Rate
Management Agreement with Lender is then in effect with respect to any Daily
LIBOR Rate Loan under this Note, the provision contained in the immediately
preceding sentence that rounds up the Daily LIBOR Rate to the next 1/8 of 1% (as
set forth in the definition of “Daily LIBOR Rate” set forth above) shall be
disregarded and no longer of any force and effect with respect to such Daily
LIBOR Rate Loan subject to such Rate Management Agreement. Each determination by
Lender of the Daily LIBOR Rate shall be conclusive in the absence of manifest
error. The Daily LIBOR Rate shall be reset each Business Day by Lender based on
the Daily LIBOR Rate then in effect. Any adjustment in the Interest Rate
resulting from a change in the Daily LIBOR Rate shall become effective as of the
opening of business on the date of each change (or if not a Business Day, the
beginning of the day). Lender shall not be required to notify Borrowers of any
adjustment in the Daily LIBOR Rate; however, Borrowers may request a quote of
the prevailing Daily LIBOR Rate on any Business Day. Interest accruing based on
the Daily LIBOR Rate shall be: (i) calculated based on a 360-day year and
charged for the actual number of days elapsed and (ii) payable in arrears on the
first day of each calendar month.

(c) Pricing Grid. As used herein, the terms “Applicable Daily LIBOR Rate Margin”
and “Applicable Tranche LIBOR Rate Margin” (hereafter sometimes collectively
referred to as the “Applicable Margins”) mean, as of any date, the applicable
per annum rate shown in the applicable column in the table below based on the
then applicable Fixed Charge Coverage Ratio. “Fixed Charge Coverage Ratio” has
the meaning given in the Credit Agreement.

 

Pricing Grid
Level

  

Fixed Charge Coverage Ratio

   Applicable Daily LIBOR
Rate Margin     Applicable Tranche LIBOR Rate
Margin  

Level 1

   £ 1.50 to 1.0      4.25 %      3.75 % 

Level 2

   > 1.50 to 1.0 and £ 2.0 to 1.0      4.00 %      3.50 % 

Level 3

   > 2.0 to 1.0      3.75 %      3.25 % 

For purposes of determining the Applicable Margins: the Fixed Charge Coverage
Ratio will, on and after the First Pricing Grid Determination Date, be
determined (i) as of June 30th and December 31st of each Fiscal Year ending on
and after the First Pricing Grid Determination Date (each such date being a
“Determination Date”) and (ii) in the same manner used to determine the Fixed
Charge Coverage Ratio set forth in Section 5.10 of the Credit Agreement. The
“First Pricing Grid Determination Date” that occurs under this Note will be
December 31, 2010. On Lender’s receipt of the financial statements and
Compliance Certificate required to be delivered to Lender pursuant to Sections
4.3(a), 4.3(b) and 4.3(d) (as applicable) of the Credit Agreement for the
applicable Fiscal Quarter or Fiscal Year then ended, the Interest Rate will be
subject to adjustment in accordance with the table set forth above in this
subparagraph (c) based on the then Fixed Charge Coverage Ratio as of the end of
such Fiscal Quarter or Fiscal Year then ended so

 

- 4 -

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

long as no Event of Default is existing as of the applicable effective date of
adjustment. The foregoing adjustment, if applicable, will become effective for
LIBOR Tranche Elections made with respect to the portion or portions of the
unpaid principal balance of this Note and the unpaid principal balance of this
Note accruing interest based on the Daily LIBOR Rate, on and after the first day
of the first calendar month following delivery to Lender of the financial
statements and Compliance Certificate required to be delivered to Lender
pursuant to Sections 4.3(a), 4.3(b) and 4.3(d) (as applicable) of the Credit
Agreement for the applicable Fiscal Quarter or Fiscal Year then ended until the
next succeeding effective date of adjustment pursuant to this subparagraph (c).
Each of the financial statements and Compliance Certificate required to be
delivered to Lender must be delivered to Lender in compliance with Section 4.3
of the Credit Agreement. If, however, either the financial statements or the
Compliance Certificate required to be delivered to Lender pursuant to Sections
4.3(a), 4.3(b) and 4.3(d) (as applicable) of the Credit Agreement have not been
delivered in accordance with Section 4.3 of the Credit Agreement, then, at
Lender’s option, commencing on the date upon which such financial statements or
Compliance Certificate should have been delivered in accordance with Section 4.3
of the Credit Agreement and continuing until such financial statements or
Compliance Certificate are actually delivered in accordance with Section 4.3 of
the Credit Agreement, it shall be assumed for purposes of determining the
Applicable Margins, that the Fixed Charge Coverage Ratio was £ 1.50 to 1.0 and
the pricing associated therewith (i.e., Pricing Grid Level 1) will be applicable
on the then applicable Determination Date. As of the Effective Date of this
Note, the Applicable Daily LIBOR Rate Margin is 4.25% per annum and the
Applicable Tranche LIBOR Rate Margin is 3.75% (i.e., Pricing Grid Level 1).

(d) LIBOR Rate Costs. Borrowers hereby agree to reimburse and indemnify Lender
from all costs or fees incurred by Lender subsequent to the date hereof relating
to the offering of rates of interest based upon the Tranche LIBOR Rate and Daily
LIBOR Rate. Without limiting the generality of the foregoing, if any change in
any law, regulation or official directive, or in the interpretation thereof, by
any governmental body charged with the administration thereof, shall:

(i) increase the cost to Lender, by an amount which Lender deems to be material,
of making, converting into, continuing or maintaining Tranche LIBOR Rate Loans
or Daily LIBOR Rate Loans, as applicable, or to reduce any amount receivable
hereunder in respect thereof, or

(ii) have the effect of reducing the rate of return on Lender’s capital as a
consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such change by an amount deemed by Lender to be
material,

then, in any such case, after submission by Lender to Borrowers of a written
request therefor, Borrowers shall pay Lender any additional amounts necessary to
compensate Lender for such increased cost or reduction. Lender agrees that, upon
the occurrence of any event giving rise to the operation of this paragraph, it
will use reasonable efforts to designate another lending office (if possible)
for any Tranche LIBOR Rate Loans or Daily LIBOR Rate Loans affected by such
event with the object of avoiding the consequences of such event; provided that
no such designation shall be required unless such designation can be made on
terms that, in the reasonable judgment of Lender, cause Lender and its lending
office(s) to suffer no material economic, legal or regulatory disadvantage.

 

- 5 -

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

In addition, if any amount as to which a LIBOR Tranche Election is in effect is
repaid on a day other than the last day of the applicable LIBOR Tranche Interest
Period, or becomes payable on a day other than the last day of the applicable
LIBOR Tranche Interest Period due to acceleration or otherwise, Borrowers,
whether or not a debtor in a proceeding under Title 11, United States Code,
shall pay, on demand by Lender, such amount (as determined by Lender) as is
required to compensate Lender for any losses, costs or expenses (“LIBOR Breakage
Fee”), which Lender may incur as a result of such payment or acceleration,
including, without limitation, any loss, cost or expense (including loss of
profit) incurred by reason of liquidation or reemployment of deposits or other
funds acquired by Lender to fund or maintain such amount bearing interest with
respect to the Tranche LIBOR Rate.

A certificate of Lender setting forth the amount or amounts necessary to
compensate Lender as specified in this paragraph (d) and delivered to Borrowers
shall be conclusive absent manifest error. Borrowers shall pay Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

(e) Availability of Tranche LIBOR Rate and Daily LIBOR Rate. Notwithstanding
anything herein contained to the contrary, if:

(i) any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful for Lender to fund or maintain its funding in
Eurodollars of any portion of unpaid principal balance of this Note subject to
the Tranche LIBOR Rate or the Daily LIBOR Rate, as applicable, or otherwise to
give effect to Lender’s obligations as contemplated hereby, or

(ii) Lender, by telephonic notice, shall notify Borrowers that: (A) with respect
to Tranche LIBOR Rate Loans, Eurodollar deposits with a maturity corresponding
to the maturity of the LIBOR Tranche Interest Period, in an amount equal to the
portion or portions of the unpaid principal balance of this Note to be subject
to the LIBOR Tranche Election are not readily available in the London Inter-Bank
Offered Rate Market, (B) with respect to Daily LIBOR Rate Loans, one-month
Eurodollar deposits in an amount equal to the unpaid principal balance of this
Note not subject to a LIBOR Tranche Election are not readily available in the
London Inter-Bank Offered Rate Market, (C) by reason of circumstances affecting
the London Inter-Bank Offered Rate Market or other economic conditions, adequate
and reasonable methods do not exist for ascertaining (1) the rate of interest
applicable to such deposits for the proposed LIBOR Tranche Interest Period or,
as applicable, (2) the Daily LIBOR Rate, or (D) the Tranche LIBOR Rate or, as
applicable, the Daily LIBOR Rate as determined by Lender will not adequately and
fairly reflect the cost to Lender of making or maintaining the unpaid principal
balance of this Note at an interest rate based on the Tranche LIBOR Rate or, as
applicable, the Daily LIBOR Rate, or

(iii) an Event of Default exists:

(1) Lender may, by written notice to Borrowers, declare Lender’s obligations in
respect of the Tranche LIBOR Rate and the Daily LIBOR Rate, as applicable, to be
immediately terminated (an “Immediate LIBOR Rate Termination”), and (2) upon
such Immediate LIBOR Rate Termination, (x) the Tranche LIBOR Rate and the Daily
LIBOR Rate, as applicable, with respect to Lender shall cease to be in effect
and (y) the unpaid principal balance of this Note shall bear interest from and
after such notice at a floating rate equal

 

- 6 -

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

to the rate of interest per annum established from time to time by Lender at its
principal office as its “Prime Rate” (the “Prime Rate”) plus 1.0% (it being
understood by Borrowers that such Prime Rate is established for reference
purposes only and not as Lender’s best loan rate) or such other rate of interest
as may be agreed to between Lender and Borrowers.

Any adjustment in the Interest Rate resulting from a change in Lender’s Prime
Rate shall become effective as of the opening of business on the date of change
(or if not a Business Day, the beginning of the day). Interest based on the
Prime Rate shall be calculated based on a 360-day year and charged for the
actual number of days elapsed, and shall be payable in arrears on the first day
of each calendar month.

Maximum Rate. In no event shall the Interest Rate provided for hereunder,
together with all fees and charges as provided for herein or in any other Loan
Document which are treated as interest under applicable law (collectively with
interest, the “Charges”), exceed the maximum rate legally chargeable by Lender
under applicable law for loans of the type provided for hereunder (the “Maximum
Rate”). If, in any month, the Charges, absent such limitation, would have
exceeded the Maximum Rate, then the Charges for that month shall be at the
Maximum Rate, and, if in future months, such Charges would otherwise be less
than the Maximum Rate, then such Charges shall remain at the Maximum Rate until
such time as the amount of Charges paid hereunder and under the other Loan
Documents equals the amount of Charges which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of Charges paid or accrued in respect
of the Indebtedness evidenced by this Note and the other Obligations is less
than the total amount of Charges which would, but for this paragraph, have been
paid or accrued if the Charges otherwise set forth in this Note and in the other
Loan Documents had at all times been in effect, then Borrowers shall, to the
extent permitted by applicable law, pay to Lender an amount equal to the
difference between: (a) the lesser of: (i) the amount of Charges which would
have been charged if the Maximum Rate had, at all times, been in effect or
(ii) the amount of Charges which would have accrued had such Charges otherwise
provided for in this Note and in the other Loan Documents at all times been in
effect and (b) the amount of Charges actually paid or accrued in respect of the
Indebtedness evidenced by this Note or any of the other Loan Documents. In the
event that a court of competent jurisdiction determines that Lender has received
any Charges in respect of the Indebtedness evidenced by this Note and the other
Loan Documents in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations owed to Lender other than any Charges, in the inverse order of
maturity, and if there are no Obligations to Lender outstanding, Lender shall
refund to Borrowers (or to such Person to which Lender is directed by a court of
competent jurisdiction) such excess.

Use of Proceeds. Borrowers certify that the proceeds of Term Loan C have been
used for the purposes set forth in the Credit Agreement.

Default Rate; Fees. To the extent any payment is not made within 15 days after
the date when due under this Note and, at or before the end of such 15-day
period, there was insufficient Revolving Loan Availability to charge the full
amount of such payment to the loan account with Lender as an advance of the
Revolving Loans, Borrowers shall pay to Lender a late payment fee equal to two

 

- 7 -

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

percent (2%) of that portion of any payment not paid when due (whether by
maturity, acceleration or otherwise). After the occurrence and during the
continuation of an Event of Default, Borrowers agree that Lender may, without
notice, increase the Interest Rate by an additional 2.0% per annum (the “Default
Rate”); provided that this paragraph shall not be deemed to constitute a waiver
of any Event of Default or an agreement by Lender to permit any late payments
whatsoever.

Prepayment. In addition to the Scheduled Payments set forth in this Note,
Borrowers will make each mandatory prepayment of the principal of this Note
required by the Credit Agreement, including, without limitation, the mandatory
prepayments of the principal of this Note in the form of Excess Cash Flow
Payments in the manner and to the extent set forth in the Credit Agreement.
Subject to Section 6.4(b) of the Credit Agreement, Borrowers may prepay all of
this Note at any time; provided that if any prepayment results in any LIBOR
Breakage Fee, Borrowers will pay such LIBOR Breakage Fee due in accordance with
this Note.

Entire Agreement. Borrowers agree that there are no conditions or understandings
which are not expressed in this Note or the other Loan Documents.

Severability. If any provision of this Note is held to be invalid by a court of
competent jurisdiction in a final order, the invalid provision will, subject to
the provisions of this Note with respect to the Maximum Rate, be deemed severed
from this Note and shall not affect any part of the remainder of the provisions
of this Note.

Joint Obligations. All of the obligations of Borrowers hereunder are joint,
several and primary. No Borrower shall be or be deemed to be an accommodation
party with respect to this Note.

Assignment. Borrowers agree not to assign any of any Borrower’s rights, remedies
or obligations described in this Note without the prior written consent of
Lender, which consent may be withheld in Lender’s sole discretion. Borrowers
agree that Lender may assign some or all of its rights and remedies described in
this Note without prior consent from Borrowers, provided that Lender will
promptly notify Borrowers of a total assignment of this Note.

Prior Note. This Note is issued, not as a refinancing or refunding of or payment
toward, but as a continuation of, the Obligations of Borrowers to Lender
pursuant to that certain Amended and Restated Term Promissory Note dated as of
December 31, 2009 in the original principal amount of $2,139,781.02 (as amended,
and together with all prior amendments thereto or restatements thereof, the
“Prior Note”). Accordingly, this Note shall not be construed as a novation or
extinguishment of the Obligations arising under the Prior Note, and its issuance
shall not affect the priority of any Lien granted in connection with the Prior
Note. Interest accrued under the Prior Note prior to the date of this Note
remains accrued and unpaid under this Note and does not constitute any part of
the principal amount of the Indebtedness evidenced hereby. The entire unpaid
principal balance created or existing under, pursuant to, as a result of, or
arising out of, the Prior Note shall continue in existence under this Note,
which Obligations Borrowers acknowledge, affirm, and confirm to Lender. The
Indebtedness evidenced by this Note will continue to be secured by all of the
collateral and other security granted to Lender under the Prior Note and the
other Loan Documents.

 

- 8 -

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

Modification; Waiver of Lender. The modification or waiver of any of Borrowers’
obligations or Lender’s rights under this Note must be contained in a writing
signed by Lender and Borrowers. Lender may perform a Borrower’s obligations, or
delay or fail to exercise any of Lender’s rights or remedies, without causing a
waiver of those obligations or rights. A waiver on one occasion shall not
constitute a waiver on another occasion. Borrowers’ obligations under this Note
shall not be affected if Lender amends, compromises, exchanges, fails to
exercise, impairs or releases: (i) any of the obligations belonging to any
co-borrower, indorser or guarantor, (ii) any of its rights against any
co-borrower, guarantor or indorser, or (iii) any of the Loan Collateral.

Waivers of Borrowers. To the extent not prohibited by law or required by the
Credit Agreement, demand, presentment, protest and notice of dishonor, notice of
protest and notice of default are hereby waived by each Borrower, and any
indorser or guarantor hereof. Borrowers and all co-makers and accommodation
makers of this Note hereby waive all suretyship defenses, including, but not
limited to, all defenses based upon impairment of collateral and all suretyship
defenses described in Section 3-605 of the Uniform Commercial Code (the “UCC”).
Such waiver is entered to the fullest extent permitted by Section 3-605 of the
UCC.

Governing Law; Consent to Jurisdiction. This Note is delivered in, is intended
to be performed in, will be construed and enforceable in accordance with and
governed by the internal laws of, the State of Ohio, without regard to
principles of conflicts of law. Each Borrower agrees that the state and federal
courts in Hamilton County, Ohio shall, at Lender’s sole option, have exclusive
jurisdiction over all matters arising out of this Note, WITHOUT LIMITATION ON
THE ABILITY OF LENDER, ITS SUCCESSORS AND ASSIGNS, TO INITIATE AND PROSECUTE IN
ANY APPLICABLE JURISDICTION ACTIONS RELATED TO THE REPAYMENT AND COLLECTION OF
THE OBLIGATIONS AND THE EXERCISE OF ALL OF LENDER’S RIGHTS AGAINST EACH BORROWER
WITH RESPECT THERETO AND ANY SECURITY OR PROPERTY OF EACH BORROWER, INCLUDING,
WITHOUT LIMITATION, DISPOSITIONS OF THE LOAN COLLATERAL, and that service of
process in any such proceeding shall be effective if mailed to Borrowers in
accordance with the Credit Agreement.

JURY WAIVER. EACH BORROWER, ANY INDORSER OR GUARANTOR HEREOF, AND LENDER WAIVE
THE RIGHT TO A TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

[Signature Page Follows]

 

- 9 -

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

IN WITNESS WHEREOF, each Borrower has executed this Note by its duly authorized
officer as of the date first above written.

 

CECO FILTERS, INC. NEW BUSCH CO., INC. THE KIRK & BLUM MANUFACTURING COMPANY
KBD/TECHNIC, INC. CECOAIRE, INC. CECO ABATEMENT SYSTEMS, INC. EFFOX INC.,
formerly known as CECO Acquisition Corp. FISHER-KLOSTERMAN, INC., formerly
known as FKI Acquisition Corp. H.M. WHITE, INC. GMD ENVIRONMENTAL TECHNOLOGIES,
INC., formerly known
as GMD Acquisition Corp. AVC, INC. By:       Dennis W. Blazer, Secretary and
Treasurer

SIGNATURE PAGE TO

AMENDED AND RESTATED TERM PROMISSORY NOTE

(Amended and Restated Credit Agreement)

(Term Loan C)

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

EXHIBIT 4.3(d)

(Officer’s Compliance Certificate)

For the [Quarterly] [Annual] Period

from                     , 20    

to                     , 20    

 

To: Fifth Third Bank pursuant to that certain Amended and Restated Credit
Agreement dated to be effective as of June 30, 2010, as amended from time to
time (as amended, the “Credit Agreement”) by and among Fifth Third Bank and CECO
Environmental Corp. (“Parent”), Ceco Group, Inc. (“Group”), CECO Filters, Inc.
(“Filters”), New Busch Co., Inc. (“New Busch”), The Kirk & Blum Manufacturing
Company (“K&B”), KDB/Technic, Inc. (“Technic”), CECOaire, Inc. (“Aire”), CECO
Abatement Systems, Inc. (“Abatement”), H.M. White, Inc. (“H.M. White”), Effox
Inc., formerly known as CECO Acquisition Corp. (“Effox”), GMD Environmental
Technologies, Inc., formerly known as GMD Acquisition Corp. (“GMD”), FKI, LLC
(“FKI, LLC”), Fisher-Klosterman, Inc., formerly known as FKI Acquisition Corp.
(“FKI”), CECO Mexico Holdings LLC (“CECO Mexico LLC”), and AVC, Inc. (“AVC,
Inc.”) (Parent, Group, Filters, New Busch, K&B, Technic, Aire, Abatement, H.M.
White, Effox, GMD, FKI, LLC, FKI, CECO Mexico LLC, and AVC, Inc. are sometimes,
collectively, the “Company”).

Ladies and Gentlemen:

This Officer’s Compliance Certificate (this “Certificate”) is delivered to you
pursuant to Section 4.3(d) of the Credit Agreement. Unless otherwise stated in
this Certificate, capitalized terms used in this Certificate are defined in the
Credit Agreement.

The undersigned hereby certifies to you as follows:

1. The undersigned is, and at all times mentioned herein has been, the duly
elected, qualified and acting chief executive officer or chief financial officer
of Parent.

2. The undersigned has reviewed the provisions of the Credit Agreement and the
other Loan Documents (collectively, the “Documents”), and has reviewed the
activities of the Company during the period from                     , 20     ,
to                     , 20     (the “Subject Period”), which are under the
supervision of the undersigned, with a view towards determining whether, during
the Subject Period, the Company has kept, observed, performed and fulfilled all
its obligations under the Documents.

3. The financial statements of the Company delivered to you concurrently
herewith have been prepared in accordance with generally accepted accounting
principles (“GAAP”) and fairly present in all material respects [(subject to
normal year-end adjustment and the omission of footnotes)] the financial
condition and results of operations of the Company at the date and for the
period indicated therein. [Delete parenthetical for Annual Certificate.]

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

4. To the actual knowledge of the undersigned, no Event of Default has occurred
and is continuing, nor any event which upon notice, the lapse of time, the
satisfaction of any other condition, or all of them, would constitute an Event
of Default, except for such defaults, if any, described on Schedule A attached.
[If any are described, state the nature and status thereof and actions proposed
to be taken with respect thereto.]

5. The calculations shown on Schedule B attached hereto demonstrate compliance
with Sections 5.3 (Capital Expenditures), 5.10 (Fixed Charge Coverage Ratio),
and 5.11 (Maximum Total Funded Debt to Adjusted EBITDA Ratio) of the Credit
Agreement.

6. [Annual:] Attached hereto as Schedule C are projections of the Company for
the period from                     , 20     to                     , 20    
(“Projections”). Schedule C states: (i) the assumptions on which the Projections
were prepared and (ii) that the assumptions, except as otherwise noted on
Schedule C, were prepared on a consistent basis with the operation of the
Company’s business during the immediately preceding Fiscal Year and with factors
known to exist as of the date of this Certificate or reasonably anticipated to
exist during the periods covered by the Projections. The undersigned certifies
that he or she has no reason to believe that the Projections, subject to the
assumptions stated on Schedule C, are false or misleading in any material
respect.

7. Attached hereto as Schedule D is a list of all Indebtedness for borrowed
money of the Company outstanding on the date hereof, including the outstanding
principal amount of each such debt issue or loan and the amount of unpaid and
accrued interest with respect to each such issue or loan.

The undersigned certifies to you that the foregoing Certificate is true and
correct and in accordance with the terms of the Credit Agreement.

 

By:     Name:       chief executive/chief financial officer

Schedules:

A – Defaults

B – Calculations

C – Projections

D – Indebtedness for Borrowed Money

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule A

to

Officer’s Compliance Certificate

Defaults

[See Attached]

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule B

to

Officer’s Compliance Certificate

Covenant Calculations

[See Attached]

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule B

to

Officer’s Compliance Certificate

For the [Fiscal Quarter/Fiscal Year] Ended                     , 20    

All calculations are in accordance with Credit Agreement definitions and
provisions:

 

A. Capital Expenditures § 5.3.

 

     During Fiscal
Year ending
on 12-31-10      During Fiscal
Year ending
on 12-31-11      During Fiscal
Year ending
on 12-31-12      During Fiscal
Year ending
on 12-31-13  

1.      Real Estate/Plant

           

2.      Maintenance (capitalized)

           

3.      Machinery

           

4.      Equipment

           

5.      Capital Lease obligations

           

6.      Capital Expenditures:
1+2+3+4+5=

           

Maximum Allowed Capital Expenditures:

   $ 2,500,000       $ 2,500,000       $ 2,500,000       $ 2,500,000   

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

B. Fixed Charge Coverage Ratio § 5.10.

 

Test Period: 12 Month Period ending on:

   06-30-10      09-30-10
and  thereafter  

1.      EBITDA:

     

a.      Net Income

     

b.      Depreciation and Amortization

     

c.      Interest Expense

     

d.      Income and Franchise Taxes

     

2.      EBITDA (1a + 1b + 1c + 1d) =

     

3.      Adjusted EBITDA

     

a.      Non-financed Capital Expenditures

     

b.      Cash Income and Franchise Taxes

     

c.      Sales of Capital Assets

     

d.      Write-ups of Assets

     

e.      Extraordinary Items

     

f.       Extraordinary Accounting Adjustments

     

g.      Non-operating, Non-recurring Items

     

h.      Items Re: Parent’s Stock Price vis-à-vis strike price of warrants and
options, Stock Option Expenses, and Impairment of Goodwill

     

i.       Permitted cash dividends to Parent’s stockholders

     

j.       Cash FKI Earn-Out Payments, A.V.C. Earn-out Payments and Flextor
Earn-out Payments (not deducted in Net Income)

     

4.      Adjustments to EBITDA: (3a + 3b ± 3c ± 3d ± 3e ± 3f ± 3g ± 3h + 3i + 3j)
=

     

5.      Adjusted EBITDA (2 – 4) =

     

6.      FCCR Adjustment Amount:

   $ 6,300,000         0   

7.      Adjusted EBITDA with FCCR Adjustment Amount (5 + 6):

     

8.      Fixed Charges:

     

a.      Principal payments (including those under the Subordinated Debt Notes
and Term Loan C, but excluding any Excess Cash Flow Payments, the Subordinated
Debt Payment of $3,000,000, and the Existing Subordinated Debt Repayment of
$4,508,452.66)

     

b.      Capital lease payments

     

c.      Cash Interest Expense

     

9.      Fixed Charges (8a + 8b + 8c) =

     

10.    Fixed Charge Coverage Ratio ([7] divided by [9]) =

     

11.    Required Ratio (not less than):

     2.50 to 1         1.25 to 1   

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

C. Maximum Total Funded Debt to Adjusted EBITDA Ratio § 5.11.

 

Test Period: 12 Month Period ending on:

   06-30-10
and  thereafter  

1.      Funded Debt

  

a.      Borrowed money (incl. letters of credit or acceptance facilities) (other
than the Subordinated Debt)

  

b.      Written obligations to pay money (other than a Surety Bond and the
Subordinated Debt)

  

c.      Capitalized leases, synthetic leases or off-balance sheet financing

  

d.      Deferred and unpaid purchase price (other than trade accounts payable in
ordinary course)

  

2.      Funded Debt: (1a + 1b + 1c + 1d) =

  

3.      EBITDA:

  

a.      Net Income

  

b.      Depreciation and Amortization

  

c.      Interest Expense

  

d.      Income and Franchise Taxes

  

4.      EBITDA (3a + 3b + 3c + 3d) =

  

5.      Adjusted EBITDA

  

a.      Non-financed Capital Expenditures

  

b.      Cash Income and Franchise Taxes

  

c.      Sales of Capital Assets

  

d.      Write-ups of Assets

  

e.      Extraordinary Items

  

f.       Extraordinary Accounting Adjustments

  

g.      Non-operating, Non-recurring Items

  

h.      Items Re: Parent’s Stock Price vis-à-vis strike price of warrants and
options, Stock Option Expenses, and Impairment of Goodwill

  

i.       Permitted cash dividends to Parent’s stockholders

  

j.       Cash FKI Earn-Out Payments, A.V.C. Earn-out Payments and Flextor
Earn-out Payments (not deducted in Net Income)

  

6. Adjustments to EBITDA: (5a + 5b ± 5c ± 5d ± 5e ± 5f ± 5g ± 5h + 5i + 5j) =

  

7. Adjusted EBITDA (4 – 6) =

  

8. Ratio (2 divided by 7) =

  

9. Required Covenant (not greater than):

     3.0 to 1   

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule C

to

Officer’s Compliance Certificate

Projections

[See Attached]

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule D

to

Officer’s Compliance Certificate

Indebtedness for Borrowed Money

[See Attached]

 

Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Officer’s Compliance Certificate

For the Monthly Period

from                     , 20    

to                     , 20    

 

To: Fifth Third Bank pursuant to that certain Amended and Restated Credit
Agreement dated to be effective as of June 30, 2010, as amended from time to
time (as amended, the “Credit Agreement”) by and among Fifth Third Bank and CECO
Environmental Corp. (“Parent”), Ceco Group, Inc. (“Group”), CECO Filters, Inc.
(“Filters”), New Busch Co., Inc. (“New Busch”), The Kirk & Blum Manufacturing
Company (“K&B”), KDB/Technic, Inc. (“Technic”), CECOaire, Inc. (“Aire”), CECO
Abatement Systems, Inc. (“Abatement”), H.M. White, Inc. (“H.M. White”), Effox
Inc., formerly known as CECO Acquisition Corp. (“Effox”), GMD Environmental
Technologies, Inc., formerly known as GMD Acquisition Corp. (“GMD”), FKI, LLC
(“FKI, LLC”), Fisher-Klosterman, Inc., formerly known as FKI Acquisition Corp.
(“FKI”), CECO Mexico Holdings LLC (“CECO Mexico LLC”), and AVC, Inc. (“AVC,
Inc.”) (Parent, Group, Filters, New Busch, K&B, Technic, Aire, Abatement, H.M.
White, Effox, GMD, FKI, LLC, FKI, CECO Mexico LLC, and AVC, Inc. are sometimes,
collectively, the “Company”).

Ladies and Gentlemen:

This Certificate (this “Certificate”) is delivered to you pursuant to
Section 4.3(a) of the Credit Agreement. Unless otherwise stated in this
Certificate, capitalized terms used in this Certificate are defined in the
Credit Agreement.

The undersigned hereby certifies to you as follows:

1. The undersigned is, and at all times mentioned herein has been, the duly
elected, qualified and acting chief executive officer or chief financial officer
of Parent.

2. The undersigned has reviewed the provisions of the Credit Agreement and the
other Loan Documents (collectively, the “Documents”), and has reviewed the
activities of Company during the period from                     , 20    , to
                    , 20     (the “Subject Period”) under the supervision of the
undersigned with a view towards determining whether, during the Subject Period,
the Company has kept, observed, performed and fulfilled all its obligations
under the Documents.

3. The financial statements of the Company delivered to you concurrently
herewith have been prepared in accordance with generally accepted accounting
principles (“GAAP”) and fairly present in all material respects, subject to
year-end adjustment and the omission of footnotes, the financial condition and
results of operations of the Company at the date and for the period indicated
therein.

 

Monthly Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

4. No Event of Default has occurred and is continuing, except for such defaults,
if any, described on Schedule A attached. [If any are described, state nature
and status thereof and actions proposed to be taken with respect thereto.]

5. Attached hereto as Schedule B are summaries of accounts payable agings,
accounts receivable agings, and inventory in each case reconciled to the
Company’s general ledger for the end of such month.

 

By:     Name:     Title:    

Schedules:

A – Defaults

B – Summaries of Accounts Receivable, Accounts Payables, Inventory Values

 

Monthly Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule A

to

Officer’s Compliance Certificate

Defaults

[See Attached]

 

Monthly Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

Schedule B

to

Officer’s Compliance Certificate

Summaries of Accounts Receivable, Accounts Payables and Inventory Value

[See Attached]

 

Monthly Compliance Certificate Exhibit 4.3(d)

CECO Environmental Corp., et al.

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

EXHIBIT 4.3(g)

(Borrowing Base Certificate)

See attached.

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

BORROWING BASE CERTIFICATE

 

Borrowers:

   CECO Filters.; New Busch Co. Inc.;    Certificate #:         The Kirk & Blum
Manufacturing Company;          KBD/Technic, Inc.; CECOaire, Inc.; CECO
Abatement, Inc.;          H.M. White, Inc.,          Effox, Inc.,
Fisher-Klosterman, Inc., and GMD Environmental Technologies, Inc. (collectively,
the “Company”).    Period Ended:     

To induce Fifth Third Bank (“Lender”) to make a Loan advance (or issue a Letter
of Credit) pursuant to the Credit Agreement dated as of
                            , as well as amendments thereto, between the
undersigned, certificate affiliates of the undersigned and Lender, we hereby
certify as of the above date, the following:

 

Collateral Balances:

     

[1]    Previous Certificate AR Balance (Item [2])

   $                           

a)      Gross Sales since last Certificate

   $                           

b)      Collections since last Certificate

   $                           

c)      Credits since last Certificate

   $ —                    

[2]    Total AR now being certified to Lender[1] + [a] minus [b] minus [c]

   $        

[3]    Total Inelibible AR (See attached breakdown)

   $                    

[4]    Net Amount of Eligible AR: [2] minus [3]

   $                    

[5]    Total Loan value of AR @ 70% of [4]

      $     

[6]    Previous Certificate Total Eligible Net Unbilled Revenue (Item [7])

   $        

d)      Unbilled Revenue since last Certificate

   $        

e)      Billings in excess of Unbilled Revenue since last Certificate

   $                    

[7]    Total Eligible Net Unbilled Revenue: [6] + [d] minus [e]

   $                    

[8]    Total value of Eligible Net Unbilled Revenue @ 50% of [7]

   $        

[9]    Total Loan value of Eligible Net Unbilled Revenue:

     

[8] or $1,000,000, whichever is less, but not less than $0.00

      $     

[10]  Total Inventory at Borrower's Facilities:

   $        

[11]  Total Eligible Inventory (See attached breakdown per category of Inventory

   $                    

[12]  Net Amount of Eligible Inventory: [10] minus [11]:

   $                    

[13]  Total value of Eligible Inventory @ 50% of [12]

   $        

[14]  Total Loan value of Eligible Inventory: [13] or $7,500,000, whichever is
less

      $     

[15]  Total Amount of Borrowing Base Reserves required by Lender (as determined
in accordance with the Credit Agreement)

      $                 

[16]  Borrowing Base: ([5] + [9] + [14] + [15], but no more than $20,000.000)
(BB total)

   $         $     

[17]  Revolving Loan Availability: (Borrowing base less

     

Revolving Loans principal amount

   $ —        

Unpaid interest on Revolving Loans

   $                           

Letter of Credits and Letter of Credit Exposure: *

     

            issue date expiration date

     

(see detailed worksheet for listing of letters of credits)

   $                            $                                          

  *        Not to exceed $10,000,000

      $                                    

As used herein, “AR” means “Eligible Accounts” and “Inventory” means “Eligible
Inventory”, each as defined in the Credit Agreement. Ineligible AR and
ineligible inventory should be calculated by reference to the respective
definitions of Eligible Accounts and Eligible Inventory. “Borrower's
Facilities”, “Eligible Net Unbilled Revenue,” “Unbilled Revenue”, “Borrowing
Base Reserves”, and “Letter of Credit Exposure” have herein the meanings given
the Credit Agreement.

The undersigned hereby certifies that the above representations are true and
correct and subject to all conditions of the Credit Agreement. The undersigned
also represents that to the best of our knowledge, there does not exist an Event
of Default, and there does not exist a condition which may precipitate an Event
of Default under the terms of the Credit Agreement

 

            Prepared By     Authorized Signature     Date:  

 

 

For Bank Use Only

 

Date of Advance:             Amount   $

 

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

BORROWERS’ DISCLOSURE SCHEDULES

Unless otherwise defined, or the context otherwise clearly requires, terms
defined in the Amended and Restated Credit Agreement (the “Agreement”) shall
have such meanings when used herein.

Certain of the representations and warranties in the Agreement are made subject
to the disclosures in these Disclosure Schedules as if the Disclosure Schedules
had been set forth in the Agreement. Although the section numbers set forth
below correspond to the section numbers in the Agreement, any information
disclosed herein shall be deemed to be disclosed with respect to all sections of
the Agreement to the extent that it is readily apparent from the face of the
Disclosure Schedules that such information would be relevant or appropriate.
Except as otherwise expressly indicated herein, all disclosures set forth herein
are made as of the date of the Agreement. Moreover, the statements or
disclosures made herein are solely for the purposes contemplated by the
Agreement.

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

Schedule 1.1

Borrowers’ Facilities

 

1. 3120 Forrer Street

Cincinnati, Ohio 45209

 

2. 3501 West Kelly Street

Indianapolis, Indiana 46241

 

3. 550 Horton Court

Lexington, Kentucky 40511

 

4.

1450 South 15th Street

Louisville, Kentucky 40210

 

5. 8735 West Market Street

Greensboro, North Carolina 27409

 

6. 1761 North Pointe Road

Columbia, Tennessee 38401

 

7. 3131 Disney Street

Cincinnati, Ohio 45209

 

8. 1712 Spruce Street

Defiance, Ohio 43512

 

9. 1027-1029 Conshohocken Road

Conshohocken, Pennsylvania 19428

 

10. 5201 Walnut Avenue, Suite 1

Downers Grove, Illinois 60515

 

11. 10431 Perry Highway, Suite 201

Wexford, Pennsylvania 15090

 

12. 9756 Inter Ocean Drive

Cincinnati, Ohio 45246

 

13. 822 South 15th Street

Louisville, KY 40251-0190

 

14. c/o Fisher-Klosterman-Buell Shanghai Co., Ltd.

No. 80, 1030 Lane

Heng’ An Road

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

Pudong New District

Shanghai, 2000137,P.R.C.

 

15. 305 West Arlington Avenue

Fort Worth, Texas 76110

 

16. 5146 North Commerce Avenue, Suite F/G

Moorpark, California 93021

 

17. 5146 First Street

Simi Valley, California 93065

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

Schedule 2

Life Insurance Policies

Pledged Insurance Policies of K&B (valued as of December 31, 2009)

 

Policy Number

  

Individual

  

Face Amount of Death Benefit

  

Insurance Company

6256502B    David D. Blum    $459,971    Northwestern Mutual Life Insurance
Company 6558722    David D. Blum    $276,899    Northwestern Mutual Life
Insurance Company 7541724    David D. Blum    $207,693    Northwestern Mutual
Life Insurance Company 10296275    David D. Blum    $1,000,000    Northwestern
Mutual Life Insurance Company 4543134B    Lawrence J. Blum    $198,995   
Northwestern Mutual Life Insurance Company 5563377A    Lawrence J. Blum   
$328,916    Northwestern Mutual Life Insurance Company 5725280A    Lawrence J.
Blum    $339,602    Northwestern Mutual Life Insurance Company 5725281A   
Lawrence J. Blum    $170,308    Northwestern Mutual Life Insurance Company
5821352A    Lawrence J. Blum    $192,679    Northwestern Mutual Life Insurance
Company 6557383    Lawrence J. Blum    $285,307    Northwestern Mutual Life
Insurance Company 7543596    Lawrence J. Blum    $440,769    Northwestern Mutual
Life Insurance Company 6256502D    Richard J. Blum    $409,247    Northwestern
Mutual Life Insurance Company

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

Policy Number

  

Individual

  

Face Amount of Death Benefit

  

Insurance Company

6557382    Richard J. Blum    $291,877    Northwestern Mutual Life Insurance
Company 7538042    Richard J. Blum    $444,310    Northwestern Mutual Life
Insurance Company 10031936    Richard J. Blum    $350,000    Northwestern Mutual
Life Insurance Company 02225998    Richard J. Blum    $192,870    The Union
Central Life Insurance Company 02225999    Richard J. Blum    $122,623    The
Union Central Life Insurance Company

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

Schedule 3.1

Organization and Qualification

 

Loan Party

  

State of Organization

  

State(s) of Qualification

CECO Environmental Corp.    Delaware    Ohio Ceco Group, Inc.    Delaware   
Ohio CECO Filters, Inc.    Delaware    Pennsylvania New Busch Co., Inc.   
Delaware    Pennsylvania The Kirk & Blum       Manufacturing Company    Ohio   
Illinois       Indiana       Kentucky       North Carolina       Tennessee
KBD/Technic, Inc.    Indiana    Ohio       South Carolina CECOaire, Inc.   
Delaware    Kentucky CECO Abatement Systems, Inc.    Delaware    Illinois      
Nebraska H.M. White, Inc.    Delaware    Michigan Effox, Inc.    Delaware   
Ohio GMD Environmental Technologies, Inc.    Delaware    Texas
Fisher-Klosterman, Inc.    Delaware    Kentucky       Pennsylvania FKI, LLC   
Delaware    Kentucky CECO Mexico Holdings LLC    Delaware    AVC, Inc.   
Delaware    California

 

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

Schedule 3.3

Litigation

A lawsuit was filed on September 10, 2009 in Marion County Superior Court, State
of Indiana. A wrongful death claim has been made by the estate of Terry David
Walk for an accident that occurred in March 2008 at the worksite of a customer
of the Loan Parties relating to a baghouse system. The defendants include Parent
and its subsidiaries, The Kirk & Blum Manufacturing Company, kbd/Technic, Inc.,
and CECO Abatement Systems, Inc. The complaint contains causes of action for
negligence and a cause of action for breach of implied warranties, and the
complainant is asking for unspecified compensatory damages and costs. The Loan
Parties’ insurance carriers have agreed to defend the claims, pursuant to
reservation of rights letters, and have retained counsel to defend the Loan
Parties. We record provisions in the consolidated financial statements for
pending litigation when we determine that an unfavorable outcome is probable and
the amount of the loss can be reasonably estimated. However, at this time the
Loan Parties cannot estimate any potential final range of loss resulting from
this litigation as it is still in discovery and accordingly, we have not
provided any amounts in the consolidated financial statements for unfavorable
outcomes, if any. At this time, we believe that the claims are without merit and
we intend to vigorously defend this suit.

There are no other material pending legal proceedings to which Parent or any of
its subsidiaries is a party or to which any of our properties is subject.

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

Schedule 3.6

Patents, Trademarks, Copyrights, Trade Names, and Licenses

 

Loan Party

  

Type of Intellectual Property

  

Reference Number

  

Description of Intellectual Property

CECO Filters, Inc.

   Patent    5,948,146    Hydrogenated fluoropolymer fiber bed for a mist
eliminator

CECO Filters, Inc.

   Patent    5,861,123    Ultraviolet light irradiated ebullating mass transfer
system

CECO Filters, Inc.

   Patent    5,795,369    Fluted filter media for a fiber bed mist eliminator

CECO Filters, Inc.

   Patent    5,730,786    Multiple in-duct filter system

CECO Filters, Inc.

   Patent    4,948,398    Multi-candle fiber mist eliminator

CECO Filters, Inc.

   Patent    4,838,903    Multi-phase thick-bed filter

CECO Filters, Inc.

   Patent    4,432,914    Mass transfer contact apparatus

New Busch Co., Inc.

   Patent    5,611,151    Strip cooling, heating, wiping or drying apparatus and
associated method

New Busch Co., Inc.

   Patent    5,201,132    Strip cooling, heating or drying apparatus and
associated method Kirk & Blum Manufacturing Company    Patent    4,113,117   
Article handling apparatus

CECO Filters, Inc.

   Registered Trademark    R2422881; S/N: 75-742751    CECO-SOLV

CECO Filters, Inc.

   Registered Trademark    R2078575; S/N: 75-026507    CECO

CECO Filters, Inc.

   Registered Trademark    R1578841; S/N: 73-689319    N-SERT

CECO Filters, Inc.

   Registered Trademark    R1520755; S/N: 73-689304    SITE-PAK

CECO Filters, Inc.

   Registered Trademark    R1517129; S/N: 73-727175    X-SERT

CECO Filters, Inc.

   Registered Trademark    R1792497; S/N: 74-280839    TWIN-PAK

New Busch Co., Inc.

   Fictitious Name Filing       Fictitious name filing of “Busch Co.” with the
Pennsylvania Secretary of State

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

Schedule 3.9

Permitted Liens

 

1. Outstanding judgment in the Hamilton County Court of Common Pleas in Ohio,
number A0300342, against Kirk & Blum Manufacturing Company. The judgment is for
$2,500 of attorney’s fees in a matter with Demerenne T. Hadley.

 

2.

UCC-1 financing statements naming a Loan Party as the debtor (see chart below).1

 

Loan Party

  

Creditor

  

Jurisdiction

  

Reference Number and
Type of Lien

  

Property Covered by Lien

CECO Filters    Kenco Group, Inc.    Pennsylvania    Equipment Lease
(No UCC Filed)    Toyota 6FGCO25 CECO Filters    Toyota Motor Credit Corporation
   Delaware    53711935    One (1) 1999 Toyota Forklift Model #6FGCU25 Serial
#76827 Fisher-Klosterman, Inc.    Shintech Louisiana LLC    Delaware    2008
2487609    Goods related to purchase order contract no. PQCVM-142901 covering
PM-1233 Oxy Reactor Cyclone Systems Fisher-Klosterman, Inc.    Shintech
Louisiana LLC    Delaware    2008 2487617    Goods related to purchase order
contract no. SPVCM-14902 covering CM-233 Oxy Reactor Cyclone Systems The Kirk &
Blum Manufacturing Company    Irwin Commercial Finance Corporation, Equipment
Finance    Ohio    OH00113432485    One (1) 2000 Skytrak 8042 Forklift, S/N
12461, contract #40206355 The Kirk & Blum Manufacturing Company    Dell
Financial Services L.L.C.    Ohio    OH00125767973    Certain computer equipment
and peripherals

 

1

The appearance of any filing on this Schedule of Permitted Liens is not an
acknowledgement of the validity, perfection and/or priority of any interest held
by the listed secured party.

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

Loan Party

  

Creditor

  

Jurisdiction

  

Reference Number and
Type of Lien

  

Property Covered by Lien

The Kirk & Blum Manufacturing Company    NMHG Financial Services, Inc.    Ohio
   OH00130227057    All equipment leased by lessor to lessee. The Kirk & Blum
Manufacturing Company    Orbian Financial Services II, LLC    Ohio   
OH00140111317    Accounts, general intangibles, and other receivables owing to
Debtor by Siemens Energy & Automation, Inc. and sold to Secured Party

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

Schedule 3.12

Subsidiaries, Affiliates, etc.

Subsidiaries

CECO Filters, Inc. has a wholly owned subsidiary, CECO Filters India Private
Limited, an Indian company.

H.M. White, Inc. owns 99% of CECO Environmental Mexico, S. de R.L. de C.V., a
Mexican company. CECO Mexico Holdings LLC owns the remaining 1%.

H.M. White, Inc. owns 99% of CECO Environmental Services, S. de R.L. de C.V., a
Mexican company. CECO Mexico Holdings LLC owns the remaining 1%.

FKI, LLC owns 100% of Fisher-Klosterman – Buell Shanghai Co., Ltd.

CECO Environmental Corp. owns 100% of 9199-3626 Quebec Inc., a company organized
under the laws of the Province of Quebec, Canada

9199-3626 Quebec Inc. owns 100% of Flextor Chile S.A., a company organized under
the laws of Chile.

9199-3626 Quebec Inc. owns 100% of Flextor do Brasil Importacao E Exportacao
LTDA, a company organized under the laws of Brazil.

All other subsidiaries are also Loan Parties, and are identified in Schedule
3.14.

Affiliate Transactions

 

1. CECO Environmental Corp. pays monthly fees of $30,000 to Can-Med Technology,
Inc., formerly known as Green Diamond Oil Corporation and now known as Icarus
Investment Corp., for management consulting services, provided by Phillip
DeZwirek.

 

2. CECO Environmental Corp. reimburses Can-Med Technology, Inc., formerly known
as Green Diamond Oil Corporation and now known as Icarus Investment Corp.,
$10,000.00 per month for use of the space and other expenses of the Toronto
office.

 

3. Icarus Investment Corp. has loaned $2,200,000 to CECO Environmental Corp. in
the form of convertible subordinated notes.

 

4. Jason DeZwirek has loaned $800,000 to CECO Environmental Corp. in the form of
convertible subordinated notes.

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

Schedule 3.13

ERISA

Employee Benefit Plans

 

1. K&B contributes to Kirk & Blum Manufacturing Company Post-Retirement Medical
Benefit Plan. It is 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. Retirement and health care plan
expense is based on valuations performed by plan actuaries as of the beginning
of each fiscal year.

Pension Plans contributed to by Loan Parties

 

1. K&B sponsors the Kirk & Blum Manufacturing Company Sheet Metal Workers Local
Union 183 Pension Plan (the “Plan”). It is a non-contributory defined benefit
pension plan for certain union employees. The plan is funded in accordance with
the funding requirements of ERISA.

As of June 30, 2010, $111,000 had been contributed to the Plan in 2010, and it
was expected that $157,000 more would be contributed between June 1, 2010 and
December 31, 2010.

 

2. Multi-Employer Plans. Except as otherwise set forth in this Schedule 3.13,
none of the Borrowers sponsor a Multi-Employer Plan that is specific to that
Borrower; however, when a Borrower retains services from a labor union pursuant
to one of the agreements set forth in Schedule 3.15 of this Agreement, the
Borrower makes contributions to the Multi-Employer Plan of such labor union.

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

Schedule 3.14

Capitalization

CECO Environmental Corp. (as of April 1, 2010)

 

   Shares Authorized:   

100,010,000 Total Shares

100,000,000 Common Shares, $.01 par value

10,000 Preferred Shares, $.01 par value

   Shares Issued:    14,282,331 Common Shares    Owners:   

 

  1. Phillip DeZwirek beneficially owns 3,591,549 shares of Common Stock,
amounting to 23.8% of CECO Environmental Corp., assuming exercise of the
warrants beneficially held by him and conversion of the convertible debenture
held by Icarus Investment Corp. (an Ontario corporation) The convertible
debenture held by Icarus Investment Corp. enables it to convert the amount owed
thereunder to 550,000 shares of Common Stock (using a $4.00 per share conversion
rate).

 

  2. Jason Louis DeZwirek beneficially owns 3,517,693 shares of Common Stock,
amounting to 23.0% of CECO Environmental Corp., assuming exercise of the
warrants beneficially held by him and conversion of the convertible debenture
held by him.

 

  3. Icarus Investment Corp. (a Delaware corporation) beneficially owns
2,307,693 shares of Common Stock, amounting to 15.3% of CECO Environmental
Corp., assuming exercise of the warrants beneficially held by it and the
conversion of the convertible debenture described in 1 above.

 

  4. Harvey Sandler Revocable Trust beneficially owns 1,991,903 shares of Common
Stock, amounting to 13.7% of CECO Environmental Corp., based on such Trust’s
filings with the SEC.

Ceco Group, Inc.

 

   Shares Authorized:    1,000 Common Shares, $.01 par value    Shares Issued:
   100 Common Shares    Owners:    CECO Environmental Corp. owns 100% of Ceco
Group, Inc.

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

CECO Filters, Inc.

 

   Shares Authorized:   

100,000,000 Total Shares

99,000,000 Common Shares, $.01 par value

1,000,00 Preferred Shares, $.001 par value

   Shares Issued to Ceco Group, Inc:         37,978,312 Common Shares

Owners: Ceco Group, Inc. owns approximately 99% of CECO Filters, Inc. The other
approximate 1% is owned by a small number of shareholders who did not trade in
their shares when CECO Filters was purchased by CECO Environmental Corp.

New Busch Co., Inc.

 

   Shares Authorized:    1,000 Common Shares, no par value    Shares Issued:   
10 Common Shares    Owners:    CECO Filters, Inc. owns 100% of New Busch
Company, Inc.

CECOaire, Inc.

 

   Shares Authorized:    100,000 Common Shares, $.001 par value    Shares
Issued:    100 Common Shares    Owners:    Ceco Group, Inc. owns 100% of
CECOAIRE, Inc.

The Kirk & Blum Manufacturing Company

 

   Shares Authorized:   

330,000 Total Shares;

105,000 Class A Voting Common Stock, no par value;

225,000 Class B Voting Common Stock, no par value;

   Shares Issued:   

62,670 Class A Common Shares

188,010 Class B Non-Voting Common Shares

   Owners:    Ceco Group, Inc. owns 100% of The Kirk & Blum Manufacturing
Company.

KBD/Technic, Inc.

 

   Shares Authorized:    1,000 Common Shares, no par value    Shares Issued:   
930 Common Shares

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

Owners: The legal owner of 100% of kbd/Technic, Inc.’s stock is Richard J. Blum,
as Voting Trustee of the kbd/Technic, Inc. Voting Trust Agreement dated as of
December 7, 1999. The beneficial owner of 100% of kbd/Technic, Inc.’s stock is
Ceco Group, Inc.

CECO Abatement Systems, Inc.

 

   Shares Authorized:    100,000 Common Shares, $.01 par value    Shares Issued:
   100 Common Shares    Owners:    Ceco Group, Inc. owns 100% of CECO Abatement
Systems, Inc.

H.M. White, Inc.

 

   Shares Authorized:    100,000 Common Shares, $.001 par value    Shares
Issued:    100 Common Shares    Owners:    Ceco Group, Inc. owns 100% of H.M.
White, Inc.

Effox, Inc., formerly known as CECO Acquisition Corp.

 

   Shares Authorized:    10,000 Common Shares, $.01 par value    Shares Issued:
   100 Common Shares    Owners:    Ceco Group, Inc. owns 100% of Effox, Inc.

GMD Environmental Technologies, Inc., formerly known as GMD Acquisition Corp.

 

   Shares Authorized:    1,000 Common Shares, $.01 par value    Shares Issued:
   1,000 Common Shares    Owners:    Ceco Group, Inc. owns 100% of GMD
Environmental Technologies, Inc.

Fisher-Klosterman, Inc.

 

   Shares Authorized:    1,000 Common Shares, $.01 par value    Shares Issued:
   1,000 Common Shares    Owners:    Ceco Group, Inc. owns 100% of
Fisher-Klosterman

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

FKI, LLC

Fisher-Klosterman, Inc. owns 100% of the limited liability company membership
interests of FKI, LLC.

CECO Mexico Holdings LLC

Ceco Group, Inc. owns 100% of the limited liability company membership interests
of CECO Mexico Holdings LLC.

AVC, Inc.

 

   Shares Authorized:    1,000 Common Shares, $.01 par value    Shares Issued:
   1,000 Common Shares    Owners:    Fisher-Klosterman, Inc. owns 100% of AVC,
Inc.

Outstanding Warrants

As of June 30, 2010, CECO Environmental Corp. had the following warrants
outstanding:

 

Name

  

Number of Warrants

  

Grant Date

Icarus Investment Corp.

d/b/a Green Diamond Oil

Corporation

   250,000    12/29/2006

Stock Options

As of June 30, 2010, CECO Environmental Corp. had the following stock options
outstanding:

 

Name

  

Number of Options

  

Grant Date

Richard Blum    25,000    10/5/2001 Don Wright    15,000    6/21/2006 Don Wright
   15,000    1/5/2005 T.J. Flaherty    30,105    5/10/2004 T.J. Flaherty   
5,000    1/5/2005 T.J. Flaherty    15,000    6/21/2006 D. Blazer    12,500   
12/13/2004 D. Blazer    10,000    6/21/2006 Ron Krieg    25,000    4/20/2005 Ron
Krieg    15,000    6/21/2006 Arthur Cape    5,000    5/25/2005 Arthur Cape   
15,000    6/21/2006 Robert Cloud    20,000    6/21/2006

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

Name

  

Number of Options

  

Grant Date

Steve McDaniel    5,000    6/21/2006 William White    10,000    6/21/2006 2000
Employee Grants    10,000    4/28/2000 Benton Cook    10,000    1/16/2007 James
Glesige    10,000    1/16/2007 Hal Menz    7,500    1/16/2007 Rhonda Dutlinger
   5,000    1/16/2007 Wilma Girdner    7,500    1/16/2007 Jack Neiser    25,000
   2/28/2007 Jeff Korth    15,000    2/28/2007 Gerald Reier    50,000   
10/31/2007 Michael dos Santos    25,000    8/1/2008 Thierry Allegrucci    10,000
   8/1/2008 Francois Rouviere    10,000    8/1/2008 Jack Neiser    25,000   
12/01/08 Jeff Korth    15,000    12/01/08 Jamie Samm    1,000    12/01/08 Wilma
Girdner    5,000    12/01/08 Hal Menz    5,000    12/01/08 Jim Glesige    5,000
   12/01/08 Benton Cook    5,000    12/01/08 Kathy Duclaux    3,000    12/01/08
Hillary Jeffries    3,000    12/01/08 J. Bertolli    5,000    12/01/08 Roland
Bollman    5,000    12/01/08 John Witkowski    5,000    12/01/08 Tad Heath   
3,000    12/01/08 Tom Kroeger    5,000    12/01/08 Bill Wells    5,000   
12/01/08 Danny Smith    5,000    12/01/08 Steve McDaniel    5,000    12/01/08
Bill Frank    5,000    12/01/08 Mary Keenan    5,000    12/01/08 Russ Lewis   
5,000    12/01/08 Gerry Lanham    5,000    12/01/08

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

            Jeff lang    600,000    2/15/2010 Jack Neiser    15,000    4/29/2010
Tom Kroeger    10,000    4/29/2010 Jeff Korth    6,000    4/29/2010 Hilliary
Jeffries    6,000    4/29/2010 Steve McDaniel    6,000    4/29/2010 Bill Frank
   6,000    4/29/2010 Mary Keenan    6,000    4/29/2010 Bob Cloud    6,000   
4/29/2010 Tom Lugar    6,000    4/29/2010 Jim Glesige    6,000    4/29/2010
Benton Cook    6,000    4/29/2010 Jay Shaw    4,000    4/29/2010 Bruce Brashear
   4,000    4/29/2010 Jamie Samm    4,000    4/29/2010 Rhonda Dutlinger    4,000
   4/29/2010 Roland Bollman    4,000    4/29/2010 Danny Smith    4,000   
4/29/2010 Dennis Woodard    4,000    4/29/2010 Ed Hacker    4,000    4/29/2010
Ryan Bruner    4,000    4/29/2010 Josh Jacobs    4,000    4/29/2010 Tad Heath   
4,000    4/29/2010 Rob Fletcher    4,000    4/29/2010

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

Schedule 3.15

Labor Unions

 

1. Working Agreement between Sheet Metal Workers Local Union #177, Nashville,
Tennessee and The Nashville District Sheet Metal Contractors Association
(effective May 1, 2010)

 

2. Standard Form of Union Agreement between Local Union No. 5 of Sheet Metal
Workers’ International Association (North Carolina) and The Kirk & Blum
Manufacturing Company (entered May 15, 2010).

 

3. Standard Form of Union Agreement between Local Union No. 5 of Sheet Metal
Workers’ International Association (Bledsoe, Bradley, Cannon, Clay, Coffee,
Cumberland, Dekalb, Fentress, Franklin, Grundy, Hamilton, Jackson, Marion,
Overton, Pickett, Polk, Putnam, Sequatachie, VanBuren, Warren and White Counties
in State of Tennessee and Catoosa, Dade and Walker Counties in State of Georgia)
and The Kirk & Blum Manufacturing Company (entered May 15, 2010).

 

4. Agreement between Local Union No. 433, affiliated with the International
Sheet Metal Workers’ Union of Bowling Green, Kentucky, and The Kirk & Blum
Manufacturing Company (entered August 19, 2009).

 

5. Standard Form of Union Agreement between Local Union No. 20, affiliated with
the International Sheet Metal Workers’ Union of Indiana (June 1, 2010).

 

6. Agreement between Sheet Metal Workers’ International Association Local Union
No. 183 and The Kirk & Blum Manufacturing Company (April 1, 2008 – August 31,
2011).

 

7. Agreement between The Sheet Metal Contractors Association of Greater
Cincinnati, Inc. and Sheet Metal Workers International Association Local Union
No. 24 Cincinnati (June 1, 2010 through May 31, 2011)

 

8. Standard Form of Union Agreement (Form A-7-01) by and between Kentucky Sheet
Metal Contractors’ Association and Local Union No. 110 Sheet Metal Workers’
International Association of Louisville, Kentucky (effective June 1, 2010)

 

9. Standard Form of Union Agreement between Local Union 214, affiliated with the
International Sheet Metal Workers’ Union of Mississippi (August 1, 2010)

 

10. Agreement between Piping Division of the United Association of Journeymen
and Apprentices of Local Union No. 619 (January 1, 2007).

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

Schedule 5.1

Persons to whom Indebtedness is Owed

CECO Environmental Corp. is the debtor on the following promissory notes:

Policy Loans:

 

1. Loan in the amount of $169,706.94 (not including interest from February 28,
2010) from The Union Central Life Insurance Company (“Union Central”) against
Union Central Life Insurance Policy No. 2225998

 

2. Loan in the amount of $67,297.26 (not including interest from February 28,
2010) from Union Central against Union Central Life Insurance Policy No. 2225999

 

3. Loan in the amount of $52,629.20 (not including interest from December 8,
2009) from Northwestern Mutual Life Insurance Company (“Northwestern”) against
Northwestern Life Policy No. 10-031-936

 

4. Loan in the amount of $211,776.77 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 7-538-042

 

5. Loan in the amount of $146,752.86 (not including interest from December 8,
2009) from Northwestern against Northweste14 Life Policy No. 6-557-382

 

6. Loan in the amount of $202,303.34 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 6-256-502D

 

7. Loan in the amount of $189,466.79 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 7-543-596

 

8. Loan in the amount of $131,874.07 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 6-557-383

 

9. Loan in the amount of $88,625.95 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 5-821-352A

 

10. Loan in the amount of $83,276.42 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 5-725-281A

 

11. Loan in the amount of $166,125.05 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 5-725-280A

 

12. Loan in the amount of $166,572.44 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 5-563-377A

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

13. Loan in the amount of $95,962.47 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 4-543-134B

 

14. Loan in the amount of $252,247.95 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 10-296-275

 

15. Loan in the amount of $75,621.69 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 7-541-724

 

16. Loan in the amount of $113,534.05 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 6-558-722

 

17. Loan in the amount of $195,344.65 (not including interest from December 8,
2009) from Northwestern against Northwestern Life Policy No. 6-256-502B