Exhibit 10.45

 

THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT (AS DEFINED
HEREIN IN SECTION 6) IN FAVOR OF PNC BANK, NATIONAL ASSOCIATION, AS AGENT FOR
CERTAIN BANKS. NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN
CONNECTION WITH THIS INSTRUMENT OR ANY RELATED AGREEMENT (WHETHER OF PRINCIPAL,
INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED EXCEPT IN
ACCORDANCE WITH THE TERMS OF THE SUBORDINATION AGREEMENT.

 

CECO Environmental Corp.

 

PROMISSORY NOTE

 

$1,200,000

September 30, 2003

 

FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the “Company”), a
Delaware corporation, hereby promises to pay to the order of Green Diamond Oil
Corp. or registered assigns (“Holder”), the principal sum of ONE MILLION TWO
HUNDRED THOUSAND DOLLARS ($1,200,000.00) on the Maturity Date, as defined in
Section 1 below. This Note is subordinate to certain bank financing of the
Company further described herein and to a series of promissory notes in the
original principal amount of $5,000,000 originally issued on December 2, 1999
and subsequently amended and restated (the “December 1999 Notes”).

 

1. Maturity. This Note shall be due and payable upon the earlier to occur of the
following events (the “Maturity Date”): (i) April 30, 2005 or (ii) the closing
(any such closing referred to as the “Closing”) of a Sale Transaction. For
purposes of this Note, a Sale Transaction shall mean (i) a merger,
consolidation, corporate reorganization, or sale of shares of stock of the
Company as a result of which there is a change in control and/or the
shareholders of the Company on the date hereof (“Current Shareholders”) own 50%
or less of the outstanding shares of the Company on a fully-diluted basis
immediately after the transaction and, including as outstanding for purposes of
such calculation, any warrants, options or other instruments convertible or
exchangeable into equity securities of the Company issued to persons other than
the Current Shareholders in connection with the transaction or (ii) the sale of
(A) fifty percent or more of the assets of the Company or (B) any subsidiary,
division or line of business of the Company for total consideration in excess of
$5 million.

 

2. Interest. Interest shall accrue on the unpaid principal balance hereof and on
any interest payment that is not made when due at the simple compounded rate of
six percent (6%) per annum from the date hereof. Accrued interest shall be due
and payable on March 31 and September 30 of each year commencing March 31, 2004
and on the Maturity Date. It shall not be a default hereunder and interest will
not accrue on any portion of such interest payments deferred pursuant to

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the Subordination Agreement (“Deferred Interest”) so long as the Deferred
Interest is paid at the time and in the manner allowed by the Subordination
Agreement (as defined herein). In the Event of Default (as defined herein),
interest shall accrue on all unpaid amounts due hereunder including without
limitation, interest, at the rate of fifteen percent (15%) per annum. If a
judgment is entered against the Company on this Note, the amount of the judgment
so entered shall bear interest at the highest rate authorized by law as of the
date of the entry of the judgment.

 

3. Payments. Payments of both principal and interest shall be made at the
Company’s office in Toronto, Ontario, or such other place as the holder hereof
shall designate to the Company in writing, in lawful money of the United States
of America.

 

So long as no Event of Default has occurred in this Note, all payments hereunder
shall first be applied to interest, then to principal. Upon the occurrence of an
Event of Default in this Note, all payments hereunder shall first be applied to
costs pursuant to Section 10.5, then to interest and the remainder to principal.

 

4. Registered Owner. Prior to due presentation for registration of transfer, the
Company may treat the person in whose name any Note is registered as the owner
and holder of such Note for the purpose of receiving payment of principal of,
and interest on, such Note and for all other purposes.

 

5. Prepayment.

 

5.1 Optional Prepayment. The Company, at its option and without any premium, may
prepay in whole or in part the principal amount of this Note at any time. The
Company shall, at the time of any such prepayment, pay to the holder of this
Note all interest accrued and unpaid to the Prepayment Date (defined below).
Notwithstanding the foregoing, once a notice of the Closing of a Sale
Transaction pursuant to Section 10.4 has been sent to the Holder, the Company
may not prepay this Note prior to the Closing of a Sale Transaction, or until
the Sale Transaction has been formally abandoned.

 

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

 

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5.3 Cessation of Rights. From and after the Prepayment Date, unless there has
been a default under the Prepayment Notice, all interest on the redeemed
principal amount shall cease to accrue and all rights of Holder as a Holder of
this Note shall cease with respect to the principal amount prepaid and, with
respect to such amount, this Note thereafter shall not be deemed to be
outstanding for any purpose whatsoever. By acceptance of this Note, Holder
agrees to execute and deliver such documents as may be reasonably requested from
time to time by the Company in order to implement the foregoing provisions of
this Section.

 

6. Subordination. The indebtedness evidenced by this Note shall at all times be
wholly subordinate and junior in right of payment to all obligations of the
Company under or in connection with the Credit Agreement dated December 7, 1999,
and all amendments thereto (“Superior Debt”) among the Company as guarantor, the
borrowers CECO Group Inc., CECO Filters, Inc., Air Purator Corporation, New Bush
Co., Inc., The Kirk & Blum Manufacturing Company, kbd/Technic, Inc., and CECO
Abatement Systems and the lenders PNC Bank, National Association and various
other financial institutions, upon the terms and conditions contained in the
Subordination Agreement between Green Diamond Oil Corp., Harvey Sandler, ICS
Trustee Services, Ltd., and PNC Bank, National Association and various other
financial institutions dated December 7, 1999 (the “Subordination Agreement”).
This Note also is subordinate to the December 1999 Notes, and no payments of
principal or interest shall be made under this Note, if an Event of Default (as
defined in the December 1999 Notes) is existing under any of the December 1999
Notes.

 

7. Covenants of the Company. The Company covenants and agrees that it shall not,
without the prior written approval of the Holder:

 

7.1 Obtain or incur any indebtedness or other monetary obligations that are
senior to or on parity with this Note, other than the Superior Debt and the
December 1999 Notes.

 

7.2 Allow, suffer or cause to exist any lien, claim, security interest or
encumbrance on the Company’s property or assets, other than with respect to the
Superior Debt and purchase money indebtedness incurred in the ordinary course of
business.

 

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

 

7.4 Use the proceeds from this Note other than in the ordinary course of its
business for general corporate purposes including lending monies to any of its
subsidiaries. The Company also covenants and agrees that it shall operate its
business in the ordinary course.

 

8. Events of Default.

 

8.1 Occurrences of Events of Default. Each of the following events shall
constitute an “Event of Default” for purposes of this Note:

 

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

 

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

 

(c) the commencement of an involuntary case against the Company or its
subsidiary or any of its subsidiaries under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointing of
a receiver, liquidator, assignee, custodian, trustee or similar official of the
Company or for any substantial part of the Company or one of its subsidiary’s
property, or ordering the winding-up or liquidation of the Company or one of its
subsidiary’s affairs;

 

(d) if the Company or any of its subsidiaries shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian or
similar official of the Company or its subsidiary or for any substantial part of
the Company or one of its subsidiary’s property, or shall make any general
assignment for the benefit of creditors, or shall take any corporate action in
furtherance of any of the foregoing; or

 

(e) if the Company’s business shall fail, as determined in good faith by the
Holder and evidenced by the Company’s inability to pay its ongoing debts as such
debts become due.

 

8.2 Acceleration Upon Event of Default. If any Event of Default shall have
occurred and be continuing, for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise), the unpaid principal amount of, and the accrued
interest on, this Note shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Company.

 

9. Investment Representations of the Holder. With respect to the purchase of
this Note, the Holder hereby represents and warrants to the Company as follows:

 

9.1 Experience. The Holder has substantial experience in evaluating and
investing in private transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.

 

9.2 Status. The Holder is an “accredited investor” within the meaning of
Regulation D, Section 501(a), promulgated by the Securities and Exchange
Commission, and is acquiring this Note for investment for its own account, not
as a nominee or agent, and not with a view to, or for resale or transfer.

 

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9.3 Access to Data. The Holder has had an opportunity to discuss the Company’s
business, management and financial affairs with the Company’s management and has
also had an opportunity to ask questions of the Company’s officers, which
questions were answered to its satisfaction.

 

10. Miscellaneous.

 

10.1 Invalidity of Any Provision. If any provision or part of any provision of
this Note shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Note and this Note shall be construed as if such
invalid, illegal or unenforceable provisions or part hereof had never been
contained herein, but only to the extent of its invalidity, illegality or
unenforceability.

 

10.2 Governing Law. The Note shall be governed in all respects by the laws of
the State of Delaware, excluding its conflict of laws.

 

10.3 Notices. Any notice or other communication required or permitted hereunder
shall be in writing and shall be deemed to have been duly given (i) on the date
of delivery if delivered personally, (ii) one (1) business day after
transmission by facsimile transmission with a written confirmation copy sent by
first class mail, or (iii) five (5) days after mailing if mailed by first class
mail, to the following addresses:

 

If to the Holder:

 

Green Diamond Corp.

   

505 University Avenue, Suite 1400

   

Toronto, Ontario M5G 1X3

   

Canada

   

Attention: Phillip DeZwirek

If to the Company:

 

CECO Environmental Corp.

   

3120 Forrer Street

   

Cincinnati, Ohio 45209

   

Attention: Marshall Morris

 

10.4 Notice of a Sale Transaction. The Company shall give the Holder of this
Note notice of the Closing of a Sale Transaction at least thirty (30) days prior
to such Closing.

 

10.5 Collection. If the indebtedness represented by this Note or any part
thereof is collected at law or in equity or in bankruptcy, receivership or other
judicial proceedings or if this Note is placed in the hands of attorneys for
collection after the occurrence of an Event of Default, the Company agrees to
pay, in addition to the outstanding principal and accrued interest payable
hereon, reasonable attorneys’ fees and costs incurred by the Holder, or on
behalf of the Holder by a representative of the Holder.

 

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10.6 Successors and Assigns. The rights and obligations of the Company and the
Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.

 

10.7 Waivers. The Company and any endorsers, sureties, guarantors, and all
others who are, or may become liable for the payment hereof severally: (a) waive
presentment for payment, demand, notice of demand, notice of nonpayment or
dishonor, protest and notice of protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default, or enforcement
of the payment of this Note, (b) consent to all extensions of time, renewals,
postponements of time of payment of this Note or other modifications hereof from
time to time prior to or after the maturity date hereof, whether by acceleration
or in due course, without notice, consent or consideration to any of the
foregoing, (c) agree to any substitution, exchange, addition, or release of any
of the security for the indebtedness evidenced by this Note or the addition or
release of any party or person primarily or secondarily liable hereon, (d) agree
that Holder shall not be required first to institute any suit, or to exhaust its
remedies against the Company or any other person or party to become liable
hereunder or against the security in order to enforce the payment of this Note
and (e) agree that, notwithstanding the occurrence of any of the foregoing
(except by the express written release by Holder of any such person), the
Company shall be and remain, directly and primarily liable for all sums due
under this Note.

 

10.8 Time. Time is of the essence in this Note.

 

10.9 Captions. The captions of sections of this Note are for convenient
reference only, and shall not affect the construction or interpretation of any
of the terms and provisions set forth in this Note.

 

10.10 Number and Gender. Whenever used in this Note, the singular number shall
include the plural, and the masculine shall include the feminine and the neuter,
and vice versa.

 

10.11 Remedies. All remedies of the Holder shall be cumulative and concurrent
and may be pursued singly, successively, or together at the sole discretion of
the Holder and may be exercised as often as occasion therefor shall arise. No
act of omission or commission of the Holder, including specifically any failure
to exercise any right, remedy or recourse shall be effective unless it is set
forth in a written document executed by the Holder and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing as a bar to or as a waiver or release of
any subsequent right, remedy, or recourse as to any subsequent event.

 

10.12 No Waiver by Holder. The acceptance by Holder of any payment under this
Note which is less than the amount then due or the acceptance of any amount
after the due date thereof, shall not be deemed a waiver of any right or remedy
available to Holder nor nullify the prior exercise of any such right or remedy
by Holder. None of the terms or provisions of this Promissory Note may be
waived, altered, modified or amended except by a

 

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written document executed by Holder and then only to the extent specifically
recited therein. No course of dealing or conduct shall be effective waive,
alter, modify or amend any of the terms or provisions hereof. The failure or
delay to exercise any right or remedy available to Holder shall not constitute a
waiver of the right of the Holder to exercise the same or any other right or
remedy available to Holder at that time or at any subsequent time.

 

10.13 Waiver of Trial by Jury. HOLDER AND BORROWER HEREBY KNOWINGLY,
IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS
NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER
DOCUMENT EXECUTED IN CONNECTION THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER TO MAKE THE LOAN EVIDENCED BY
THIS NOTE.

 

CECO ENVIRONMENTAL CORP.

By:

 

/s/ Marshall J. Morris

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Marshall J. Morris

Title:

 

Vice President-Finance and Administration

and Chief Financial Officer

 

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