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                                                                   EXHIBIT 10.39

NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON THE EXERCISE OF
THE WARRANTS HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW.
NEITHER THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION
OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER
QUALIFICATION IS NOT REQUIRED.

THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT (AS DEFINED
HEREIN IN SECTION 8) IN FAVOR OF PNC BANK, NATIONAL ASSOCIATION, AS AGENT FOR
CERTAIN BANKS. NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN
CONNECTION WITH THE WITHIN INSTRUMENT OR ANY RELATED AGREEMENT (WHETHER OF
PRINCIPAL, INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED
EXCEPT IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION AGREEMENT.

                            CECO Environmental Corp.
                                   REPLACEMENT
                                 PROMISSORY NOTE

$500,000                                                          March 12, 2001

         WHEREAS, Harvey Sandler ("Sandler") has prior to this date advanced
$500,000 (the "Advance") to CECO Environmental Corp.

         WHEREAS, the terms of the Advance are set forth in a Promissory Note
dated December 7, 1999, (the "Original Note"), which Original Note shall be
cancelled and replaced by this Replacement Promissory Note.

         FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of
Sandler or registered assigns ("Holder"), the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) on the Maturity Date, as defined in Section 1 below.
This Note is part of a series of Notes of like tenor and effect to this Note in
the aggregate principal amount of $5,000,000 issued in connection with a
financing by the Company (the "1999 Subordinated Notes").

         1. Maturity. This Note shall be due and payable upon the earlier to
occur of the following events (the "Maturity Date"): (i) six and one-half (6
1/2) years from the December 7, 1999; (ii) six (6) months after repayment of the
Superior Debt (as defined in Section 8 below); or (iii) the closing (any such
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closing referred to as the "Closing") of a Sale Transaction. For purposes of
this Note, a Sale Transaction shall mean (i) a merger, consolidation, corporate
reorganization, or sale of shares of stock of the Company as a result of which
there is a change in control and/or the shareholders of the Company on the date
hereof ("Current Shareholders") own 50% or less of the outstanding shares of the
Company on a fully-diluted basis immediately after the transaction and,
including as outstanding for purposes of such calculation, any warrants, options
or other instruments convertible or exchangeable into equity securities of the
Company issued to persons other than the Current Shareholders in connection with
the transaction or (ii) the sale of (A) fifty percent or more of the assets of
the Company or (B) any subsidiary, division or line of business of the Company
for total consideration in excess of $5 million.

         2. Interest. Interest shall accrue on the unpaid principal balance
hereof and on any interest payment that is not made when due at the simple
compounded rate of twelve percent (12%) per annum from the date hereof. Accrued
Interest shall be due and payable on June 30 and December 31 of each year
commencing June 30, 2000 and on the Maturity Date. Notwithstanding the
foregoing, interest due under this Note on June 30, 2000 and December 31, 2000,
will be paid in accordance with the terms of the Subordination Agreement. It
shall not be a default hereunder and interest will not accrue on any portion of
such interest payments deferred pursuant to the Subordination Agreement
("Deferred Interest") so long as the Deferred Interest is paid at the time and
in the manner allowed by the Subordination Agreement. In the Event of Default
(as defined herein), interest shall accrue on all unpaid amounts due hereunder
including without limitation, interest, at the rate of fifteen percent (15%) per
annum. If a judgment is entered against the Company on this Note, the amount of
the judgment so entered shall bear interest at the highest rate authorized by
law as of the date of the entry of the judgment.

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

            So long as no Event of Default has occurred in this Note, all
payments hereunder shall first be applied to interest, then to principal. Upon
the occurrence of an Event of Default in this Note, all payments hereunder shall
first be applied to costs pursuant to Section 13.5, then to interest and the
remainder to principal.

         4. Registration, Transfer and Exchange of Notes. The Company will keep
at its principal office a register in which it will provide for the registration
of and transfer of this Note, at its own expense (excluding transfer taxes). If
any Note is surrendered at said office or at the place of payment named in the
Note for registration of transfer or exchange (accompanied in the case of
registration of transfer or exchange by a written instrument of transfer in form
satisfactory to the Company duly executed by or on behalf of the holder), the
Company, at its expense, will deliver in exchange one or more new Notes in
denominations of $10,000 or larger multiples of $1,000, as requested by the
holder for the aggregate unpaid principal amount. Any Note or Notes issued in a
transfer or exchange shall carry the same rights to increase Notes surrendered.
The Holder agrees that prior to making any sale, transfer, pledge, assignment,
hypothecation, or other disposition (each, a "Transfer") of the Note, the Holder
shall give written notice to the Company describing the manner in which any such
proposed Transfer is to be made and providing such additional information and
documentation regarding the Transfer as the Company reasonably requests. If the
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Company so requests, the Holder shall at his expense provide the Company with an
opinion of counsel (which counsel must be reasonably satisfactory to the
Company, to the holder, in form and substance satisfactory to the Company) that
the proposed Transfer complies with applicable federal and state securities
laws. The Company shall have no obligation to Transfer any Notes unless the
holder thereof has complied with the foregoing provisions, and any such
attempted Transfer shall be null and void.

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

            6. Conversion.

               a. Conversion Procedure.

                  (1) At any time and from time to time, the Company may elect
            to convert all or any portion of the unpaid principal balance on any
            1999 Subordinated Note into the number of shares of common stock of
            the Company, $0.01 par value per share ("Common Stock") computed by
            multiplying the unpaid principal balance to be converted times $1.00
            per share and dividing the result by the 1999 Subordinated Note
            Conversion Price determined pursuant to Section 6.b. The Company
            shall pay to the holder of each 1999 Subordinated Note so converted,
            all accrued and unpaid interest in cash or, at the Company's option,
            in Common Stock valued at Fair Market Value, at the time of
            conversion with respect to such 1999 Subordinated Note so converted
            with no further interest accruing or payable on the converted
            portion of the 1999 Subordinated Note.

                  (2) Each conversion of all or any portion of a 1999
            Subordinated Note will be deemed to have been effected as of the
            close of business on the date on which the Company gives written
            notice to a holder of such 1999 Subordinated Note that the Company
            shall convert all or part of such 1999 Subordinated Note. At such
            time as such conversion has been effected, the rights of the holder
            of such 1999 Subordinated Note as provided hereunder with respect to
            the portion of the 1999 Subordinated Note to be converted will
            cease, and the Person or Persons in whose name or names any
            certificate or certificates for shares of Common Stock are to be
            issued upon such conversion will be deemed to have become the holder
            or holders of record of the shares of Common Stock represented
            thereby.

                  (3) As soon as possible after a conversion has been effected
            and in no event later than twenty (20) business days thereafter, the
            Company will deliver to the converting holder:

                      (a) a certificate or certificates representing the number
            of shares of Common Stock issuable by reason of such conversion in
            such name or names and such denomination or denominations as the
            holder of the converted 1999 Subordinated Note has specified;
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                      (b) payment of all accrued and unpaid interest on such
            converted portion of the 1999 Subordinated Note;

                      (c) the amount payable under Subsection 6.a.(6) below with
            respect to such conversion; and

                      (d) if applicable, a replacement 1999 Subordinated Note
            representing any portion of the 1999 Subordinated Note which was not
            converted.

                  (4) The issuance of certificates for shares of Common Stock
            upon conversion of a 1999 Subordinated Note will be made without
            charge to the holders of such 1999 Subordinated Note for any
            issuance tax in respect thereof or other cost incurred by the
            Company in connection with such conversion and the related issuance
            of shares of Common Stock. Upon conversion of all or any portion of
            a 1999 Subordinated Note, the Company will take all such actions as
            are necessary in order to insure that the Common Stock issued as a
            result of such conversion is validly issued, fully paid and
            nonassessable.

                  (5) The Company will not close its books against the transfer
            of Common Stock issued or issuable upon conversion of the 1999
            Subordinated Notes in any manner which interferes with the timely
            conversion of the 1999 Subordinated Notes.

                  (6) If any fractional interest in a share of Common Stock
            would, except for the provisions of this Subsection 6.a.(6), be
            deliverable upon any conversion of any 1999 Subordinated Note, the
            Company, in lieu of delivering the fractional share therefor, shall
            pay an amount to the holder thereof equal to the Fair Market Value
            of such fractional interest as of the date of conversion.

                  (7) Any 1999 Subordinated Notes which are converted shall be
            canceled and will not be reissued or otherwise transferred.

                  (8) The Company will take such corporate action as may be
            necessary from time to time so that at all times it will have
            authorized, and reserved out of its authorized but unissued Common
            Stock for the sole purpose of issuance upon conversion the 1999
            Subordinated Notes, a sufficient number of shares of Common Stock to
            permit the conversion in full of the sum of the aggregate unpaid
            principal balances and accrued but unpaid interest due on all 1999
            Subordinated Notes.

                  (9) For purposes of this Section 6, "Fair Market Value" means
            the average of the last reported sales price of the Common Stock on
            the Nasdaq Stock Market or on any national or regional securities
            exchange on which the Common Stock is listed or admitted to unlisted
            trading privileges and on which the Common Stock is principally
            traded or quoted, as reported for each of the 10 consecutive trading
            days ending on the 10th trading date prior to any dividend payment
            date; or if there is no public market for the Common Stock of the
            Company, the Fair Market Value shall be calculated based on the
            price paid per share of Common Stock or the valuation of the Company
            in the Company's most recent equity financing transaction with a
            third party, or, if in the judgment of the Board of Directors of the
<PAGE>

            Company, the fair market value is materially different from that
            reflected by such valuation, then the Fair Market Value shall be
            determined by the Board of Directors in good faith.

               b. Adjustments to  1999 Subordinated Notes Conversion Price.

                  (1) In order to prevent dilution of the interests of the
            holders of the 1999 Subordinated Notes as a result of the conversion
            right granted to the Company under this subsection 6, the 1999
            Subordinated Note Conversion Price will be subject to adjustment
            from time to time pursuant to this Section 6.b. The term "1999
            Subordinated Note Conversion Price" initially means $2.00, as
            subsequently adjusted as provided below.

               (2) If the Company issues or sells, or in accordance with Section
            6.c. is deemed to have issued or sold, any shares of its Common
            Stock (except as set forth in Section 6.c.(9)) without consideration
            or for a consideration per share less than the 1999 Subordinated
            Note Conversion Price in effect immediately prior to the time of
            such issuance or sale, then upon such issuance or sale the 1999
            Subordinated Note Conversion Price will be reduced to the conversion
            price determined by dividing (a) the sum of (1) the product derived
            by multiplying the 1999 Subordinated Conversion Price in effect
            immediately prior to such issuance or sale times the number of
            fully-diluted shares of Common Stock outstanding immediately prior
            to such issuance or sale, and (2) the consideration, if any,
            received by the Company upon such issuance or sale, by (b) the
            number of shares of fully-diluted Common Stock outstanding
            immediately prior to such issuance or sale plus the number of shares
            of Common Stock issued or deemed to have been issued in such sale
            pursuant to this Section 6.

               c. Effect on 1999 Subordinated Note Conversion Prices of Certain
                  Events.

                  (1) For purposes of determining the adjusted 1999 Subordinated
            Note Conversion Prices under Section 6.b., the following will be
            applicable:

                      (a) Issuance of Rights or Options. If the Company grants,
            issues or sells Options to acquire Common Stock or Convertible
            Securities and the price per share for which Common Stock is
            issuable upon the exercise of such Options or upon conversion or
            exchange of any Convertible Securities issuable upon the exercise of
            such Options is less than the 1999 Subordinated Note Conversion
            Price in effect immediately prior to the time of the granting,
            issuance or sale of such Options, then the total maximum number of
            shares of Common Stock issuable upon the exercise of such Options or
            upon conversion or exchange of the total maximum amount of such
            Convertible Securities issuable upon the exercise of such Options
            shall be deemed to be outstanding and to have been issued and sold
            by the Company at the time of the granting of such Options for such
            price per share. For purposes of this Section, the "price per share
            for which Common Stock is issuable" shall be determined by dividing
            (A) the sum of (i) the amount, if any, received or receivable by the
            Company as consideration for the granting of such Options, plus (ii)
            the minimum aggregate amount of additional consideration payable to
            the Company upon exercise of all such Options, plus (iii) in the
            case of such Options which relate to Convertible Securities, the
            minimum aggregate amount of additional consideration, if any,
<PAGE>

            payable to the Company upon the issuance or sale of such Convertible
            Securities and the conversion or exchange thereof, by (B) the total
            maximum number of shares of Common Stock issuable upon the exercise
            of such Options or upon the conversion or exchange of all such
            Convertible Securities issuable upon the exercise of such Options.
            No further adjustment of the 1999 Subordinated Note Conversion Price
            shall be made when Convertible Securities are actually issued upon
            the exercise of such Options or when Common Stock is actually issued
            upon the exercise of such Options or the conversion or exchange of
            such Convertible Securities.

                      (b) Issuance of Convertible Securities. If the Company in
            any manner issues or sells any Convertible Securities and the price
            per share for which Common Stock is issuable upon such conversion or
            exchange thereof is less than the 1999 Subordinated Note Conversion
            Price in effect immediately prior to the time of such issue or sale,
            then the maximum number of shares of Common Stock issuable upon
            conversion or exchange of such Convertible Securities shall be
            deemed to be outstanding and to have been issued and sold by the
            Company at the time of the issuance or sale of such Convertible
            Securities for such price per share. For the purposes of this
            Section, the "price per share for which Common Stock" shall be
            determined by dividing (A) the sum of (i) the amount received or
            receivable by the Company as consideration for the issue or sale of
            such Convertible Securities, plus (ii) the minimum aggregate amount
            of additional consideration, if any, payable to the Company upon the
            conversion or exchange thereof, by (B) the total maximum number of
            shares of Common Stock issuable upon the conversion or exchange of
            all such Convertible Securities. No further adjustment of the 1999
            Subordinated Note Conversion Price shall be made when Common Stock
            is actually issued upon the conversion or exchange of such
            Convertible Securities, and if any such issue or sale of such
            Convertible Securities is made upon exercise of any Options for
            which adjustments of the 1999 Subordinated Note Conversion Price had
            been or are to be made pursuant to other provisions of this Section
            6, no further adjustment of the 1999 Subordinated Note Conversion
            Price shall be made by reason of such issue or sale.

                      (c) Change in Option Price or Conversion Rate. If the
            purchase price provided for in any Options, the additional
            consideration, if any, payable upon the issue, conversion or
            exchange of any Convertible Securities, or the rate at which any
            Convertible Securities are convertible into or exchangeable for
            Common Stock change at any time, the 1999 Subordinated Note
            Conversion Price in effect at the time of such change shall be
            readjusted to the 1999 Subordinated Note Conversion Price which
            would have been in effect at such time had such Options or
            Convertible Securities originally provided for such changed purchase
            price, additional consideration or changed conversion rate, as the
            case may be, at the time initially granted, issued or sold.

                  (2) For purposes of determining the adjusted 1999 Subordinated
            Note Conversion Price under Subsection 6.b.(2) and (3), the
            following will be applicable:
<PAGE>

                      (a) Calculation of Consideration Received. If any Common
            Stock, Options or Convertible Securities are issued or sold or
            deemed to have been issued or sold for cash, the consideration
            received therefor will be deemed to be the gross amount received by
            the Company therefor after deducting any discounts or commissions
            paid or incurred by the Company in connection with the issuance and
            sale. In case any Common Stock, Options or Convertible Securities
            are issued or sold for a consideration other than cash, the amount
            of the consideration other than cash received by the Company will be
            the Fair Market Value thereof as of the date of receipt. If any
            Common Stock, Options or Convertible Securities are issued in
            connection with any merger in which the Company is the surviving
            Company, the amount of consideration therefor will be deemed to be
            the Fair Market Value of such portion of the net assets and business
            of the non-surviving Company as is attributable to such Common
            Stock, Options or Convertible Securities, as the case may be.

                      (b) Integrated Transactions. In case any Options are
            issued in connection with the issue or sale of other securities of
            the Company, together comprising one integrated transaction in which
            no specific consideration is allocated to such Options by the
            parties thereto, the Options will be deemed to have been issued for
            a consideration of $0.01 each.

                      (c) Treasury Shares. The number of shares of Common Stock
            outstanding at any given time shall not include shares owned or held
            by or for the account of the Company, and the disposition of any
            shares so owned or held will be considered an issue or sale of
            Common Stock.

                      (d) Record Date. If the Company takes a record of the
            holders of Common Stock for the purpose of entitling them (i) to
            receive a dividend or other distribution payable in Common Stock,
            Options or Convertible Securities or (ii) to subscribe for or
            purchase Common Stock, Options or Convertible Securities, then such
            record date will be deemed to be the date of the issue or sale of
            the shares of Common Stock deemed to have been issued or sold upon
            the declaration of such dividend or upon the making of such other
            distribution or the date of the granting of such right of
            subscription or purchase, as the case may be.

                  (3) Subdivision or Combination of Common Stock. If the Company
            at any time subdivides one or more classes of its outstanding shares
            of Common Stock into a greater number of shares, the 1999
            Subordinated Note Conversion Price in effect immediately prior to
            such subdivision will be proportionately reduced, and if the Company
            at any time combines (by combination, reverse stock split or
            otherwise) one or more classes of its outstanding shares of Common
            Stock into a smaller number of shares, the 1999 Subordinated Note
            Conversion Price in effect immediately prior to such combination
            will be proportionately increased.

                  (4) Stock Dividends. In the event of any stock dividend or
            other distribution payable in shares of Common Stock, or other
            securities or property of the Company, including securities of a
            third party, then in each such event the 1999 Subordinated Note
            Conversion Price
<PAGE>

            shall be adjusted by multiplying the 1999 Subordinated Note
            Conversion Price then in effect by a fraction (i) the numerator of
            which is the total number of shares of Common Stock issued and
            outstanding immediately prior to the time of such issuance, and (ii)
            the denominator of which is the total number of shares of Common
            Stock issued and outstanding immediately prior to the time of such
            issuance plus the number of shares of Common Stock issuable in
            payment of such dividend or the number of shares of Common Stock
            which may be purchased at fair market value using the consideration
            equal to the aggregate Fair Market Value of the securities or other
            property of the Company to be distributed; provided, however, this
            adjustment shall exclude any such distributions to the extent a
            substantially similar distribution is made to the holders of the
            1999 Subordinated Notes.

                  (5) Distributions of Property. In the event that the Company
            makes a distribution of its property to the holders of Common Stock
            as a dividend in liquidation or partial liquidation or by way of
            return of capital or other than as a dividend payable out of funds
            legally available for dividends under the laws of the State of
            Delaware, the holders of 1999 Subordinated Notes Preferred Stock
            shall, upon conversion thereof, be entitled to receive, in addition
            to the number of shares of Common Stock receivable thereupon, and
            without payment of any consideration therefor, a sum equal to the
            amount of such property as would have been payable to them as owners
            of that number of shares of Common Stock receivable upon such
            conversion, had they been the holders of record of such Common Stock
            on the record date for such distribution; and an appropriate
            provision therefor shall be made a part of any such distribution;
            provided, however, this adjustment shall exclude any such
            distributions to the extent a substantially similar distribution is
            made to the holders of the 1999 Subordinated Notes.

                  (6) Reorganization, Reclassification, Merger or Consolidation.
            If at any time, as a result of:

                      (i) a capital reorganization or reclassification (other
                  than a subdivision, combination, dividend or distribution
                  provided for in Subsections (3), (4) or (5) above); or

                      (ii) a merger or consolidation of the Company with another
                  Company (whether or not the Company is the surviving Company),
                  the Common Stock issuable upon the conversion of the 1999
                  Subordinated Notes shall be changed into or exchanged for the
                  same or a different number of shares of any class or classes
                  of stock of the Company or any other Company, or other
                  securities convertible into such shares, then, as a part of
                  such reorganization, reclassification, merger or
                  consolidation, appropriate adjustments shall be made in the
                  terms of the 1999 Subordinated Notes (or of any instruments or
                  securities into which the 1999 Subordinated Notes are changed
                  or converted or for which the 1999 Subordinated Notes are
                  exchanged), so that:

               (x) the holders of shares of the 1999 Subordinated Notes or of
            such substitute securities shall thereafter be entitled to receive,
            upon conversion of the such 1999 Subordinated Notes or of such
<PAGE>

            substitute securities, the substantially equivalent kind and amount
            of shares of stock, other securities, money and property which such
            holders would have received at the time of such capital
            reorganization, reclassification, merger, or consolidation, if the
            Company had elected to convert such 1999 Subordinated Notes into
            Common Stock immediately prior to such capital reorganization,
            reclassification, merger, or consolidation, and

               (y) the 1999 Subordinated Notes or such substitute securities
            shall thereafter be adjusted on terms as nearly equivalent as may be
            practicable to the adjustments theretofore provided in this Section
            6.c.

         The provisions of this Subsection (6) shall similarly apply to
successive capital reorganizations, reclassifications, mergers, and
consolidations.

                  (7) Certain Events. If any event occurs of the type
         contemplated by the provisions of Section 6.c. but not expressly
         provided for by such provisions, then the Board of Directors will make
         an appropriate adjustment in the 1999 Subordinated Note Conversion
         Price so as to protect the rights of the holders of the 1999
         Subordinated Notes; provided, however, that, no such adjustment will
         increase the 1999 Subordinated Note Conversion Price as otherwise
         determined pursuant to Section 6.c. or decrease the number of shares of
         Common Stock issuable upon conversion of the 1999 Subordinated Notes.

                  (8) Notwithstanding the foregoing, no adjustment to the 1999
         Subordinated Note Conversion Price shall be made for:

                      (a) issuances of Common Stock occurring prior to the date
         of this replacement Note;

                      (b) the issuance of warrants to officers, directors,
         shareholders or other investors in the Company, provided such issuance
         is approved by the Board of Directors;

                      (c) the issuance of shares of Common Stock into which the
         1999 Subordinated Notes are convertible;

                      (d) the issuance of shares of Common Stock upon exercise
         of all options and warrants outstanding as of the date of this
         replacement Note;

                      (e) the issuance of options to acquire shares of Common
         Stock under the Company's incentive stock option or similar plans(or
         the issuance of such Common Stock upon the exercise thereof), provided
         each such plan has been approved by the Board of Directors;

                      (f) the issuance of shares of Common Stock under the
         Company's stock purchase or similar plans, provided each such plan has
         been approved by the Board of Directors;
<PAGE>

                      (g) the issuance of Common Stock or Options, warrants or
         rights to acquire Common Stock or the issuance of Common Stock upon the
         exercise thereof, in connection with (i) strategic transactions
         including acquisitions, joint ventures and similar arrangements, (ii)
         to vendors or suppliers or other business associates, (iii), in
         connection with debt financings or (iv) as compensation to service
         providers including without limitation, as brokers, finders and
         financial consultants, in connection with capital raising transactions.

               d. Notices. As soon as  practicable  (and in any case not later
         than  fifteen  (15) days) upon any adjustment of the 1999  Subordinated
         Note Conversion Price, the Company will give written notice thereof to
         all holders of 1999 Subordinate Notes.

               e. Definitions.

                  "Convertible Securities" means securities convertible into or
         exchangeable for Common Stock.

                  "Options" means any grant, issue or sale by the Corporation of
         any right or option to subscribe for or to purchase Common Stock or any
         Convertible Securities.

         7. Warrant Coverage. Holder has received, on December 7, 1999, ten-year
warrants (the "Warrants) to purchase 800,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants is $2.25 per share
of Common Stock of the Company. The Warrants are evidenced by Warrant
Certificates, issued in accordance with the terms of a Warrant Agreement.

         8. Subordination. The indebtedness evidenced by this Note shall at all
times be wholly subordinate and junior in right of payment to all obligations of
the Company under or in connection with the Credit Agreement of even date
herewith ("Superior Debt") among the Company as guarantor, the borrowers CECO
Group Inc., CECO Filters, Inc., Air Purator Corporation, New Bush Co., Inc.,
U.S. Facilities Management, Inc., The Kirk & Blum Manufacturing Company, and
kbd/Technic, Inc., and the lenders PNC Bank, National Association and various
other financial institutions, upon the terms and conditions contained in the
Subordination Agreement between Green Diamond Oil Corp., Harvey Sandler, ICS
Trustee Services, Ltd., and PNC Bank, National Association and various other
financial institutions of even date herewith (the "Subordination Agreement").

         9. Repayment of Notes. In the event the Company completes an equity
financing or offering or a series of equity financing or offerings for a total
consideration in excess of $10,000,000, then twenty-five percent (25%) of all
such consideration in excess of $10,000,000 shall be used immediately, upon
receipt by the Company, to pre-pay the 1999 Subordinated Notes, provided such
prepayment shall be made proportionately among the 1999 Subordinated Notes until
the 1999 Subordinated Notes are paid in full.
<PAGE>

         10. Covenants of the Company. The Company covenants and agrees that it
shall not, without the prior written approval of the Holders of a majority of
the aggregate principal amount outstanding of the 1999 Subordinated Notes
("Majority Holders"):

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

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

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

             d. Use the proceeds from the sale of the 1999 Subordinated Notes
         other than in the ordinary course of its business for general corporate
         purposes including lending monies to any of its subsidiaries. The
         Company also covenants and agrees that it shall operate its business in
         the ordinary course.

         11. Events of Default.

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

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

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

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

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

             take any corporate action in furtherance of any of the foregoing;
             or

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

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

         12. Investment Representations of the Holder. With respect to the
purchase of this Note, the Common Stock issuable upon the exercise of the
Warrants (collectively, the "Securities"), the Holder hereby represents and
warrants to the Company as follows:

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

             b. Investment. The Holder is acquiring the Securities for
         investment for its own account, not as a nominee or agent, and not with
         the view to, or for resale in connection with, any distribution
         thereof. The Holder understands that the Securities have not been, and
         will not be, registered under the Securities Act of 1933, as amended
         ("Securities Act"), by reason of a specific exemption from the
         registration provisions of the Securities Act, the availability of
         which depends upon, among other things, the bona fide nature of the
         investment intent and the accuracy of the Holder's representations as
         expressed herein. The holder is an "accredited investor" within the
         meaning of Regulation D, Section 501(a), promulgated by the Securities
         and Exchange Commission.

             c. Rule 144. The Holder acknowledges that the Securities must be
         held indefinitely unless subsequently registered under the Securities
         Act, or unless an exemption from such registration is available. The
         Holder understands that at this time the Company is not under any
         obligation to register any of the Securities. The Holder is aware of
         the provisions of Rule 144 promulgated under the Securities Act that
         permit limited resale of securities purchased in a private placement
         subject to satisfaction of certain conditions.

             d. No Public Market. The Holder understands that no public market
         now exists for any of the Securities issued by the Company and that the
         Company has made no assurances that a public market will ever exist for
         the Securities.
<PAGE>

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

             13. Miscellaneous.

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

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

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

             If to the Company:        CECO Environmental Corp.
                                       505 University Avenue, Suite 1400
                                       Toronto, Ontario M5G 1X3
                                       CANADA
                                       Attention: Phillip DeZwirek

                And if to the Holder, to the address or facsimile number of
         Holder as set forth on the Company's records, or such other address as
         the Holder has provided to the Company by notice duly given.

             d. Notice of a Sale Transaction. The Company shall give all Holders
         of Notes notice of the Closing of a Sale Transaction at least thirty
         (30) days prior to such Closing.

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

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

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

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

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

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

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

             l. No Waiver by Holder. The acceptance by Holder of any payment
         under this Note which is less than the amount then due or the
         acceptance of any amount after the due date thereof, shall not be
         deemed a waiver of any right or remedy available to Holder nor nullify
         the prior exercise of any such right or remedy by Holder. None of the
<PAGE>

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

             m. Submission to Jurisdiction. BORROWER, AND ANY ENDORSERS,
         SURETIES, GUARANTORS AND ALL OTHERS WHO ARE, OR WHO MAY BECOME, LIABLE
         FOR THE PAYMENT HEREOF SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY (A)
         AGREE THAT ANY SUIT, ACTION, OR OTHER LEGAL PROCEEDING ARISING OUT OF
         OR RELATING TO THIS NOTE OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
         DELIVERED PURSUANT TO, OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT
         AND MAINTAINED IN THE COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, OR
         IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
         YORK; (B) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH
         SUIT, ACTION OR PROCEEDING; AND (C) WAIVE ANY OBJECTION WHICH IT OR
         THEY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR
         PROCEEDING IN ANY OF SUCH COURTS.

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

                                      CECO ENVIRONMENTAL CORP.

                                      By: /s/ Phillip DeZwirek
                                          ------------------------------
                                          Phillip DeZwirek, President<PAGE>

                                                                   EXHIBIT 10.40

NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON THE EXERCISE OF
THE WARRANTS HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW.
NEITHER THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION
OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER
QUALIFICATION IS NOT REQUIRED.

THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT (AS DEFINED
HEREIN IN SECTION 8) IN FAVOR OF PNC BANK, NATIONAL ASSOCIATION, AS AGENT FOR
CERTAIN BANKS. NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN
CONNECTION WITH THE WITHIN INSTRUMENT OR ANY RELATED AGREEMENT (WHETHER OF
PRINCIPAL, INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED
EXCEPT IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION AGREEMENT.

                            CECO Environmental Corp.
                                   REPLACEMENT
                                 PROMISSORY NOTE

$500,000                                                          March 12, 2001

         WHEREAS, ICS Trustee Services, Ltd. ("ICS") has prior to this date
advanced $500,000 (the "Advance") to CECO Environmental Corp.

         WHEREAS, the terms of the Advance are set forth in a Promissory Note
dated December 7, 1999, (the "Original Note"), which Original Note shall be
cancelled and replaced by this Replacement Promissory Note.

         FOR VALUE RECEIVED, the undersigned, CECO Environmental Corp. (the
"Company"), a New York corporation, hereby promises to pay to the order of ICS
or registered assigns ("Holder"), the principal sum of FIVE HUNDRED THOUSAND
DOLLARS ($500,000) on the Maturity Date, as defined in Section 1 below. This
Note is part of a series of Notes of like tenor and effect to this Note in the
aggregate principal amount of $5,000,000 issued in connection with a financing
by the Company (the "1999 Subordinated Notes").

         1. Maturity. This Note shall be due and payable upon the earlier to
occur of the following events (the "Maturity Date"): (i) six and one-half
(6 1/2) years from the December 7, 1999; (ii) six (6) months after repayment of
the Superior Debt (as defined in Section 8 below); or (iii) the closing (any
such closing referred to as the "Closing") of a Sale Transaction. For purposes
of this Note, a Sale Transaction shall mean (i) a merger, consolidation,
corporate reorganization, or sale of shares of stock of the Company as a result
of which there is a change in control and/or the shareholders of the Company on
the date hereof ("Current Shareholders") own 50% or less of the outstanding
shares of the Company on a fully-diluted basis immediately after the transaction
and, including as outstanding for purposes of such calculation, any warrants,
options or other instruments convertible or exchangeable into equity securities
of the Company issued to persons other than the Current Shareholders in
connection with the transaction or (ii) the sale of (A) fifty percent or more of
the assets of the Company or (B) any subsidiary, division or line of business of
the Company for total consideration in excess of $5 million.

<PAGE>

         2. Interest. Interest shall accrue on the unpaid principal balance
hereof and on any interest payment that is not made when due at the simple
compounded rate of twelve percent (12%) per annum from the date hereof. Accrued
Interest shall be due and payable on June 30 and December 31 of each year
commencing June 30, 2000 and on the Maturity Date. Notwithstanding the
foregoing, interest due under this Note on June 30, 2000 and December 31, 2000,
will be paid in accordance with the terms of the Subordination Agreement. It
shall not be a default hereunder and interest will not accrue on any portion of
such interest payments deferred pursuant to the Subordination Agreement
("Deferred Interest") so long as the Deferred Interest is paid at the time and
in the manner allowed by the Subordination Agreement. In the Event of Default
(as defined herein), interest shall accrue on all unpaid amounts due hereunder
including without limitation, interest, at the rate of fifteen percent (15%) per
annum. If a judgment is entered against the Company on this Note, the amount of
the judgment so entered shall bear interest at the highest rate authorized by
law as of the date of the entry of the judgment.

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

            So long as no Event of Default has occurred in this Note, all
payments hereunder shall first be applied to interest, then to principal. Upon
the occurrence of an Event of Default in this Note, all payments hereunder shall
first be applied to costs pursuant to Section 13.5, then to interest and the
remainder to principal.

         4. Registration, Transfer and Exchange of Notes. The Company will keep
at its principal office a register in which it will provide for the registration
of and transfer of this Note, at its own expense (excluding transfer taxes). If
any Note is surrendered at said office or at the place of payment named in the
Note for registration of transfer or exchange (accompanied in the case of
registration of transfer or exchange by a written instrument of transfer in form
satisfactory to the Company duly executed by or on behalf of the holder), the
Company, at its expense, will deliver in exchange one or more new Notes in
denominations of $10,000 or larger multiples of $1,000, as requested by the
holder for the aggregate unpaid principal amount. Any Note or Notes issued in a
transfer or exchange shall carry the same rights to increase Notes surrendered.
The Holder agrees that prior to making any sale, transfer, pledge, assignment,
hypothecation, or other disposition (each, a "Transfer") of the Note, the Holder
shall give written notice to the Company describing the manner in which any such
proposed Transfer is to be made and providing such additional information and
documentation regarding the Transfer as the Company reasonably requests. If the
Company so requests, the Holder shall at his expense provide the Company with an
opinion of counsel (which counsel must be reasonably satisfactory to the
Company, to the holder, in form and substance satisfactory to the Company) that
the proposed Transfer complies with applicable federal and state securities
laws. The Company shall have no obligation to Transfer any Notes unless the
holder thereof has complied with the foregoing provisions, and any such
attempted Transfer shall be null and void.

<PAGE>

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

         6. Conversion.

            a. Conversion Procedure.

                           (1) At any time and from time to time, the Company
         may elect to convert all or any portion of the unpaid principal balance
         on any 1999 Subordinated Note into the number of shares of common stock
         of the Company, $0.01 par value per share ("Common Stock") computed by
         multiplying the unpaid principal balance to be converted times $1.00
         per share and dividing the result by the 1999 Subordinated Note
         Conversion Price determined pursuant to Section 6.b. The Company shall
         pay to the holder of each 1999 Subordinated Note so converted, all
         accrued and unpaid interest in cash or, at the Company's option, in
         Common Stock valued at Fair Market Value, at the time of conversion
         with respect to such 1999 Subordinated Note so converted with no
         further interest accruing or payable on the converted portion of the
         1999 Subordinated Note.

                           (2) Each conversion of all or any portion of a 1999
         Subordinated Note will be deemed to have been effected as of the close
         of business on the date on which the Company gives written notice to a
         holder of such 1999 Subordinated Note that the Company shall convert
         all or part of such 1999 Subordinated Note. At such time as such
         conversion has been effected, the rights of the holder of such 1999
         Subordinated Note as provided hereunder with respect to the portion of
         the 1999 Subordinated Note to be converted will cease, and the Person
         or Persons in whose name or names any certificate or certificates for
         shares of Common Stock are to be issued upon such conversion will be
         deemed to have become the holder or holders of record of the shares of
         Common Stock represented thereby.

                           (3) As soon as possible after a conversion has been
         effected and in no event later than twenty (20) business days
         thereafter, the Company will deliver to the converting holder:

                               (a) a certificate or certificates representing
         the number of shares of Common Stock issuable by reason of such
         conversion in such name or names and such denomination or denominations
         as the holder of the converted 1999 Subordinated Note has specified;

<PAGE>

                               (b) payment of all accrued and unpaid interest on
         such converted portion of the 1999 Subordinated Note;

                               (c) the amount payable under Subsection 6.a.(6)
         below with respect to such conversion; and

                               (d) if applicable, a replacement 1999
         Subordinated Note representing any portion of the 1999 Subordinated
         Note which was not converted.

                           (4) The issuance of certificates for shares of Common
         Stock upon conversion of a 1999 Subordinated Note will be made without
         charge to the holders of such 1999 Subordinated Note for any issuance
         tax in respect thereof or other cost incurred by the Company in
         connection with such conversion and the related issuance of shares of
         Common Stock. Upon conversion of all or any portion of a 1999
         Subordinated Note, the Company will take all such actions as are
         necessary in order to insure that the Common Stock issued as a result
         of such conversion is validly issued, fully paid and nonassessable.

                           (5) The Company will not close its books against the
         transfer of Common Stock issued or issuable upon conversion of the 1999
         Subordinated Notes in any manner which interferes with the timely
         conversion of the 1999 Subordinated Notes.

                           (6) If any fractional interest in a share of Common
         Stock would, except for the provisions of this Subsection 6.a.(6), be
         deliverable upon any conversion of any 1999 Subordinated Note, the
         Company, in lieu of delivering the fractional share therefor, shall pay
         an amount to the holder thereof equal to the Fair Market Value of such
         fractional interest as of the date of conversion.

                           (7) Any 1999 Subordinated Notes which are converted
         shall be canceled and will not be reissued or otherwise transferred.

                           (8) The Company will take such corporate action as
         may be necessary from time to time so that at all times it will have
         authorized, and reserved out of its authorized but unissued Common
         Stock for the sole purpose of issuance upon conversion the 1999
         Subordinated Notes, a sufficient number of shares of Common Stock to
         permit the conversion in full of the sum of the aggregate unpaid
         principal balances and accrued but unpaid interest due on all 1999
         Subordinated Notes.

                           (9) For purposes of this Section 6, "Fair Market
         Value" means the average of the last reported sales price of the Common
         Stock on the Nasdaq Stock Market or on any national or regional
         securities exchange on which the Common Stock is listed or admitted to
         unlisted trading privileges and on which the Common Stock is
         principally traded or quoted, as reported for each of the 10
         consecutive trading days ending on the 10th trading date prior to any
         dividend payment date; or if there is no public market for the Common
         Stock of the Company, the Fair Market Value shall be calculated based
         on the price paid per share of Common Stock or the valuation of the
         Company in the Company's most recent equity financing transaction with
         a third party, or, if in the judgment of the Board of Directors of the
         Company, the fair market value is materially different from that
         reflected by such valuation, then the Fair Market Value shall be
         determined by the Board of Directors in good faith.

<PAGE>

                  b.       Adjustments to 1999 Subordinated Notes Conversion
                           Price.

                           (1) In order to prevent dilution of the interests of
         the holders of the 1999 Subordinated Notes as a result of the
         conversion right granted to the Company under this subsection 6, the
         1999 Subordinated Note Conversion Price will be subject to adjustment
         from time to time pursuant to this Section 6.b. The term "1999
         Subordinated Note Conversion Price" initially means $2.00, as
         subsequently adjusted as provided below.

                            (2) If the Company issues or sells, or in accordance
         with Section 6.c. is deemed to have issued or sold, any shares of its
         Common Stock (except as set forth in Section 6.c.(9)) without
         consideration or for a consideration per share less than the 1999
         Subordinated Note Conversion Price in effect immediately prior to the
         time of such issuance or sale, then upon such issuance or sale the 1999
         Subordinated Note Conversion Price will be reduced to the conversion
         price determined by dividing (a) the sum of (1) the product derived by
         multiplying the 1999 Subordinated Conversion Price in effect
         immediately prior to such issuance or sale times the number of
         fully-diluted shares of Common Stock outstanding immediately prior to
         such issuance or sale, and (2) the consideration, if any, received by
         the Company upon such issuance or sale, by (b) the number of shares of
         fully-diluted Common Stock outstanding immediately prior to such
         issuance or sale plus the number of shares of Common Stock issued or
         deemed to have been issued in such sale pursuant to this Section 6.

                  c.       Effect on 1999 Subordinated Note Conversion Prices of
                           Certain Events.

                           (1) For purposes of determining the adjusted 1999
         Subordinated Note Conversion Prices under Section 6.b., the following
         will be applicable:

                               (a) Issuance of Rights or Options. If the Company
         grants, issues or sells Options to acquire Common Stock or Convertible
         Securities and the price per share for which Common Stock is issuable
         upon the exercise of such Options or upon conversion or exchange of any
         Convertible Securities issuable upon the exercise of such Options is
         less than the 1999 Subordinated Note Conversion Price in effect
         immediately prior to the time of the granting, issuance or sale of such
         Options, then the total maximum number of shares of Common Stock
         issuable upon the exercise of such Options or upon conversion or
         exchange of the total maximum amount of such Convertible Securities
         issuable upon the exercise of such Options shall be deemed to be
         outstanding and to have been issued and sold by the Company at the time
         of the granting of such Options for such price per share. For purposes
         of this Section, the "price per share for which Common Stock is
         issuable" shall be determined by dividing (A) the sum of (i) the
         amount, if any, received or receivable by the Company as consideration
         for the granting of such Options, plus (ii) the minimum aggregate
         amount of additional consideration payable to the Company upon exercise
         of all such Options, plus (iii) in the case of such Options which
         relate to Convertible Securities, the minimum aggregate amount of
         additional consideration, if any, payable to the Company upon the
         issuance or sale of such Convertible Securities and the conversion or
         exchange thereof, by (B) the total maximum number of shares of Common
         Stock issuable upon the exercise of such Options or upon the conversion
         or exchange of all such Convertible Securities issuable upon the
         exercise of such Options. No further adjustment of the 1999
         Subordinated Note Conversion Price shall be made when Convertible
         Securities are actually issued upon the exercise of such Options or
         when Common Stock is actually issued upon the exercise of such Options
         or the conversion or exchange of such Convertible Securities.

<PAGE>

                               (b) Issuance of Convertible Securities. If the
         Company in any manner issues or sells any Convertible Securities and
         the price per share for which Common Stock is issuable upon such
         conversion or exchange thereof is less than the 1999 Subordinated Note
         Conversion Price in effect immediately prior to the time of such issue
         or sale, then the maximum number of shares of Common Stock issuable
         upon conversion or exchange of such Convertible Securities shall be
         deemed to be outstanding and to have been issued and sold by the
         Company at the time of the issuance or sale of such Convertible
         Securities for such price per share. For the purposes of this Section,
         the "price per share for which Common Stock" shall be determined by
         dividing (A) the sum of (i) the amount received or receivable by the
         Company as consideration for the issue or sale of such Convertible
         Securities, plus (ii) the minimum aggregate amount of additional
         consideration, if any, payable to the Company upon the conversion or
         exchange thereof, by (B) the total maximum number of shares of Common
         Stock issuable upon the conversion or exchange of all such Convertible
         Securities. No further adjustment of the 1999 Subordinated Note
         Conversion Price shall be made when Common Stock is actually issued
         upon the conversion or exchange of such Convertible Securities, and if
         any such issue or sale of such Convertible Securities is made upon
         exercise of any Options for which adjustments of the 1999 Subordinated
         Note Conversion Price had been or are to be made pursuant to other
         provisions of this Section 6, no further adjustment of the 1999
         Subordinated Note Conversion Price shall be made by reason of such
         issue or sale.

                               (c) Change in Option Price or Conversion Rate. If
         the purchase price provided for in any Options, the additional
         consideration, if any, payable upon the issue, conversion or exchange
         of any Convertible Securities, or the rate at which any Convertible
         Securities are convertible into or exchangeable for Common Stock change
         at any time, the 1999 Subordinated Note Conversion Price in effect at
         the time of such change shall be readjusted to the 1999 Subordinated
         Note Conversion Price which would have been in effect at such time had
         such Options or Convertible Securities originally provided for such
         changed purchase price, additional consideration or changed conversion
         rate, as the case may be, at the time initially granted, issued or
         sold.

                           (2) For purposes of determining the adjusted 1999
         Subordinated Note Conversion Price under Subsection 6.b.(2) and (3),
         the following will be applicable:

<PAGE>

                               (a) Calculation of Consideration Received. If any
         Common Stock, Options or Convertible Securities are issued or sold or
         deemed to have been issued or sold for cash, the consideration received
         therefor will be deemed to be the gross amount received by the Company
         therefor after deducting any discounts or commissions paid or incurred
         by the Company in connection with the issuance and sale. In case any
         Common Stock, Options or Convertible Securities are issued or sold for
         a consideration other than cash, the amount of the consideration other
         than cash received by the Company will be the Fair Market Value thereof
         as of the date of receipt. If any Common Stock, Options or Convertible
         Securities are issued in connection with any merger in which the
         Company is the surviving Company, the amount of consideration therefor
         will be deemed to be the Fair Market Value of such portion of the net
         assets and business of the non-surviving Company as is attributable to
         such Common Stock, Options or Convertible Securities, as the case may
         be.

                               (b) Integrated Transactions. In case any Options
         are issued in connection with the issue or sale of other securities of
         the Company, together comprising one integrated transaction in which no
         specific consideration is allocated to such Options by the parties
         thereto, the Options will be deemed to have been issued for a
         consideration of $0.01 each.

                               (c) Treasury Shares. The number of shares of
         Common Stock outstanding at any given time shall not include shares
         owned or held by or for the account of the Company, and the disposition
         of any shares so owned or held will be considered an issue or sale of
         Common Stock.

                               (d) Record Date. If the Company takes a record of
         the holders of Common Stock for the purpose of entitling them (i) to
         receive a dividend or other distribution payable in Common Stock,
         Options or Convertible Securities or (ii) to subscribe for or purchase
         Common Stock, Options or Convertible Securities, then such record date
         will be deemed to be the date of the issue or sale of the shares of
         Common Stock deemed to have been issued or sold upon the declaration of
         such dividend or upon the making of such other distribution or the date
         of the granting of such right of subscription or purchase, as the case
         may be.

                           (3) Subdivision or Combination of Common Stock. If
         the Company at any time subdivides one or more classes of its
         outstanding shares of Common Stock into a greater number of shares, the
         1999 Subordinated Note Conversion Price in effect immediately prior to
         such subdivision will be proportionately reduced, and if the Company at
         any time combines (by combination, reverse stock split or otherwise)
         one or more classes of its outstanding shares of Common Stock into a
         smaller number of shares, the 1999 Subordinated Note Conversion Price
         in effect immediately prior to such combination will be proportionately
         increased.

                           (4) Stock Dividends. In the event of any stock
         dividend or other distribution payable in shares of Common Stock, or
         other securities or property of the Company, including securities of a
         third party, then in each such event the 1999 Subordinated Note
         Conversion Price shall be adjusted by multiplying the 1999 Subordinated
         Note Conversion Price then in effect by a fraction (i) the numerator of
         which is the total number of shares of Common Stock issued and
         outstanding immediately prior to the time of such issuance, and (ii)
         the denominator of which is the total number of shares of Common Stock
         issued and outstanding immediately prior to the time of such issuance
         plus the number of shares of Common Stock issuable in payment of such
         dividend or the number of shares of Common Stock which may be purchased
         at fair market value using the consideration equal to the aggregate
         Fair Market Value of the securities or other property of the Company to
         be distributed; provided, however, this adjustment shall exclude any
         such distributions to the extent a substantially similar distribution
         is made to the holders of the 1999 Subordinated Notes.

<PAGE>

                           (5) Distributions of Property. In the event that the
         Company makes a distribution of its property to the holders of Common
         Stock as a dividend in liquidation or partial liquidation or by way of
         return of capital or other than as a dividend payable out of funds
         legally available for dividends under the laws of the State of
         Delaware, the holders of 1999 Subordinated Notes Preferred Stock shall,
         upon conversion thereof, be entitled to receive, in addition to the
         number of shares of Common Stock receivable thereupon, and without
         payment of any consideration therefor, a sum equal to the amount of
         such property as would have been payable to them as owners of that
         number of shares of Common Stock receivable upon such conversion, had
         they been the holders of record of such Common Stock on the record date
         for such distribution; and an appropriate provision therefor shall be
         made a part of any such distribution; provided, however, this
         adjustment shall exclude any such distributions to the extent a
         substantially similar distribution is made to the holders of the 1999
         Subordinated Notes.

                           (6) Reorganization, Reclassification, Merger or
         Consolidation. If at any time, as a result of:

                                    (i) a capital reorganization or
                           reclassification (other than a subdivision,
                           combination, dividend or distribution provided for in
                           Subsections (3), (4) or (5) above); or

                                    (ii) a merger or consolidation of the
                           Company with another Company (whether or not the
                           Company is the surviving Company), the Common Stock
                           issuable upon the conversion of the 1999 Subordinated
                           Notes shall be changed into or exchanged for the same
                           or a different number of shares of any class or
                           classes of stock of the Company or any other Company,
                           or other securities convertible into such shares,
                           then, as a part of such reorganization,
                           reclassification, merger or consolidation,
                           appropriate adjustments shall be made in the terms of
                           the 1999 Subordinated Notes (or of any instruments or
                           securities into which the 1999 Subordinated Notes are
                           changed or converted or for which the 1999
                           Subordinated Notes are exchanged), so that:

                  (x) the holders of shares of the 1999 Subordinated Notes or of
         such substitute securities shall thereafter be entitled to receive,
         upon conversion of the such 1999 Subordinated Notes or of such
         substitute securities, the substantially equivalent kind and amount of
         shares of stock, other securities, money and property which such
         holders would have received at the time of such capital reorganization,
         reclassification, merger, or consolidation, if the Company had elected
         to convert such 1999 Subordinated Notes into Common Stock immediately
         prior to such capital reorganization, reclassification, merger, or
         consolidation, and

<PAGE>

                  (y) the 1999 Subordinated Notes or such substitute securities
         shall thereafter be adjusted on terms as nearly equivalent as may be
         practicable to the adjustments theretofore provided in this Section
         6.c.

         The provisions of this Subsection (6) shall similarly apply to
successive capital reorganizations, reclassifications, mergers, and
consolidations.

                           (7) Certain Events. If any event occurs of the type
         contemplated by the provisions of Section 6.c. but not expressly
         provided for by such provisions, then the Board of Directors will make
         an appropriate adjustment in the 1999 Subordinated Note Conversion
         Price so as to protect the rights of the holders of the 1999
         Subordinated Notes; provided, however, that, no such adjustment will
         increase the 1999 Subordinated Note Conversion Price as otherwise
         determined pursuant to Section 6.c. or decrease the number of shares of
         Common Stock issuable upon conversion of the 1999 Subordinated Notes.

                           (8) Notwithstanding the foregoing, no adjustment to
         the 1999 Subordinated Note Conversion Price shall be made for:

                               (a) issuances of Common Stock occurring prior to
         the date of this replacement Note;

                               (b) the issuance of warrants to officers,
         directors, shareholders or other investors in the Company, provided
         such issuance is approved by the Board of Directors;

                               (c) the issuance of shares of Common Stock into
         which the 1999 Subordinated Notes are convertible;

                               (d) the issuance of shares of Common Stock upon
         exercise of all options and warrants outstanding as of the date of this
         replacement Note;

                               (e) the issuance of options to acquire shares of
         Common Stock under the Company's incentive stock option or similar
         plans(or the issuance of such Common Stock upon the exercise thereof),
         provided each such plan has been approved by the Board of Directors;

                               (f) the issuance of shares of Common Stock under
         the Company's stock purchase or similar plans, provided each such plan
         has been approved by the Board of Directors;

<PAGE>

                               (g) the issuance of Common Stock or Options,
         warrants or rights to acquire Common Stock or the issuance of Common
         Stock upon the exercise thereof, in connection with (i) strategic
         transactions including acquisitions, joint ventures and similar
         arrangements, (ii) to vendors or suppliers or other business
         associates, (iii), in connection with debt financings or (iv) as
         compensation to service providers including without limitation, as
         brokers, finders and financial consultants, in connection with capital
         raising transactions.

                  d. Notices. As soon as practicable (and in any case not later
         than fifteen (15) days) upon any adjustment of the 1999 Subordinated
         Note Conversion Price, the Company will give written notice thereof to
         all holders of 1999 Subordinate Notes.

                  e. Definitions.

                     "Convertible Securities" means securities convertible into
                  or exchangeable for Common Stock.

                  "Options" means any grant, issue or sale by the Corporation of
         any right or option to subscribe for or to purchase Common Stock or any
         Convertible Securities.

         7. Warrant Coverage. Holder has received, on December 7, 1999, ten-year
warrants (the "Warrants) to purchase 800,000 shares of common stock of the
Company ("Common Stock"). The exercise price of the Warrants is $2.25 per share
of Common Stock of the Company. The Warrants are evidenced by Warrant
Certificates, issued in accordance with the terms of a Warrant Agreement.

         8. Subordination. The indebtedness evidenced by this Note shall at all
times be wholly subordinate and junior in right of payment to all obligations of
the Company under or in connection with the Credit Agreement of even date
herewith ("Superior Debt") among the Company as guarantor, the borrowers CECO
Group Inc., CECO Filters, Inc., Air Purator Corporation, New Bush Co., Inc.,
U.S. Facilities Management, Inc., The Kirk & Blum Manufacturing Company, and
kbd/Technic, Inc., and the lenders PNC Bank, National Association and various
other financial institutions, upon the terms and conditions contained in the
Subordination Agreement between Green Diamond Oil Corp., Harvey Sandler, ICS
Trustee Services, Ltd., and PNC Bank, National Association and various other
financial institutions of even date herewith (the "Subordination Agreement").

         9. Repayment of Notes. In the event the Company completes an equity
financing or offering or a series of equity financing or offerings for a total
consideration in excess of $10,000,000, then twenty-five percent (25%) of all
such consideration in excess of $10,000,000 shall be used immediately, upon
receipt by the Company, to pre-pay the 1999 Subordinated Notes, provided such
prepayment shall be made proportionately among the 1999 Subordinated Notes until
the 1999 Subordinated Notes are paid in full.

<PAGE>

         10. Covenants of the Company. The Company covenants and agrees that it
shall not, without the prior written approval of the Holders of a majority of
the aggregate principal amount outstanding of the 1999 Subordinated Notes
("Majority Holders"):

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

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

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

                  d. Use the proceeds from the sale of the 1999 Subordinated
         Notes other than in the ordinary course of its business for general
         corporate purposes including lending monies to any of its subsidiaries.
         The Company also covenants and agrees that it shall operate its
         business in the ordinary course.

         11.      Events of Default.

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

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

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

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

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

<PAGE>

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

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

         12. Investment Representations of the Holder. With respect to the
purchase of this Note, the Common Stock issuable upon the exercise of the
Warrants (collectively, the "Securities"), the Holder hereby represents and
warrants to the Company as follows:

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

                  b. Investment. The Holder is acquiring the Securities for
         investment for its own account, not as a nominee or agent, and not with
         the view to, or for resale in connection with, any distribution
         thereof. The Holder understands that the Securities have not been, and
         will not be, registered under the Securities Act of 1933, as amended
         ("Securities Act"), by reason of a specific exemption from the
         registration provisions of the Securities Act, the availability of
         which depends upon, among other things, the bona fide nature of the
         investment intent and the accuracy of the Holder's representations as
         expressed herein. The holder is an "accredited investor" within the
         meaning of Regulation D, Section 501(a), promulgated by the Securities
         and Exchange Commission.

                  c. Rule 144. The Holder acknowledges that the Securities must
         be held indefinitely unless subsequently registered under the
         Securities Act, or unless an exemption from such registration is
         available. The Holder understands that at this time the Company is not
         under any obligation to register any of the Securities. The Holder is
         aware of the provisions of Rule 144 promulgated under the Securities
         Act that permit limited resale of securities purchased in a private
         placement subject to satisfaction of certain conditions.

                  d. No Public Market. The Holder understands that no public
         market now exists for any of the Securities issued by the Company and
         that the Company has made no assurances that a public market will ever
         exist for the Securities.

<PAGE>

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

     13.          Miscellaneous.

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

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

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

                  If to the Company: CECO Environmental Corp.
                                     505 University Avenue, Suite 1400
                                     Toronto, Ontario M5G 1X3
                                     CANADA
                                     Attention: Phillip DeZwirek

                  And if to the Holder, to the address or facsimile number of
         Holder as set forth on the Company's records, or such other address as
         the Holder has provided to the Company by notice duly given.

                  d. Notice of a Sale Transaction. The Company shall give all
         Holders of Notes notice of the Closing of a Sale Transaction at least
         thirty (30) days prior to such Closing.

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

<PAGE>

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

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

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

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

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

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

                  l. No Waiver by Holder. The acceptance by Holder of any
         payment under this Note which is less than the amount then due or the
         acceptance of any amount after the due date thereof, shall not be
         deemed a waiver of any right or remedy available to Holder nor nullify
         the prior exercise of any such right or remedy by Holder. None of the
         terms or provisions of this Promissory Note may be waived, altered,
         modified or amended except by a written document executed by Holder and
         then only to the extent specifically recited therein. No course of
         dealing or conduct shall be effective waive, alter, modify or amend any
         of the terms or provisions hereof. The failure or delay to exercise any
         right or remedy available to Holder shall not constitute a waiver of
         the right of the Holder to exercise the same or any other right or
         remedy available to Holder at that time or at any subsequent time.

<PAGE>

                  m. Submission to Jurisdiction. BORROWER, AND ANY ENDORSERS,
         SURETIES, GUARANTORS AND ALL OTHERS WHO ARE, OR WHO MAY BECOME, LIABLE
         FOR THE PAYMENT HEREOF SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY (A)
         AGREE THAT ANY SUIT, ACTION, OR OTHER LEGAL PROCEEDING ARISING OUT OF
         OR RELATING TO THIS NOTE OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
         DELIVERED PURSUANT TO, OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT
         AND MAINTAINED IN THE COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, OR
         IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
         YORK; (B) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH
         SUIT, ACTION OR PROCEEDING; AND (C) WAIVE ANY OBJECTION WHICH IT OR
         THEY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR
         PROCEEDING IN ANY OF SUCH COURTS.

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

                                            CECO ENVIRONMENTAL CORP.

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

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