Document:

F-1/A

Exhibit 4.1  

 RIGHTS AGENT AGREEMENT 

         This
Rights Agent Agreement, made and entered into this _____ day of _______, 2007, by and
between B.O.S Better Online Solutions Ltd., a company organized under the laws of Israel
(the “Company”), and American Stock Transfer & Trust Company, a New York
trust company with offices at 59 Maiden Lane, New York, New York 10038 (“AST”). 

 RECITALS 

         WHEREAS
the Company has filed with the U.S. Securities and Exchange Commission a Registration
Statement on Form F-3 (the “Registration Statement”), which Registration
Statement has been declared effective and which includes a final prospectus (the
“Prospectus”) setting forth the terms of the proposed offering by the Company
(the “Rights Offering”) of rights (the “Rights”) to purchase its
ordinary shares nominal value NIS 4.00 per share (the “Ordinary Shares”). The
Rights will be evidenced by transferable certificates (the “Rights
Certificates”) in the form attached hereto as Exhibit A;   

         WHEREAS,
the Company has filed with the Israel Securities Authority, and such Authority has
approved, a prospectus which is substantially the same as the Prospectus (the
“Israeli Prospectus”); 

         WHEREAS,
the Rights will be transferable and an application has been made for the Rights to be
listed for trading on the NASDAQ Stock Market and the Tel Aviv Stock Exchange (the
“TASE”); 

         WHEREAS,
the Company will issue under the terms of the Rights Offering, one Ordinary Share for each
Right held by those persons that, as of 5:00 p.m., New York City time (midnight, Israel
time) on the date set forth in the Prospectus as the record date (the “Record
Date”) were shareholders of the Company; 

         WHEREAS,
the Company desires to engage AST to issue and deliver the Rights Certificates and to act
as transfer agent and registrar for the Rights, and AST is willing to act in such
capacities. 

         NOW,
THEREFORE, in consideration of the foregoing and of the mutual agreements set forth
herein, the parties agree as follows: 

 ARTICLE 1 

APPOINTMENT OF AGENT 

 AST is hereby appointed as transfer
agent and registrar for the Rights and to generally effect the Rights Offering in
accordance with the terms of the Rights, this Agreement and the Prospectus, and the Rights
Agent hereby accepts such appointment. Each reference to the “Rights Agent” in
this Agreement is to AST acting in its capacities as transfer agent and registrar for the
Rights. 

 ARTICLE 2 

DELIVERY OF DOCUMENTS
BY COMPANY TO RIGHTS AGENT 

         Section 2.1.
The Company will cause to be timely delivered to the Rights Agent sufficient copies of the
following documents for delivery to the holders of record of the Ordinary Shares at the
close of business on the Record Date (the “Rights Holders”): 

         (i)
                     the Prospectus, which includes instructions for exercise of the
Rights (the                     “Instructions”); 

         (ii)
blank transferable Rights Certificates, which                     include on the reverse
thereof forms to be completed in connection with the exercise or transfer of the Rights; 

         (iii)
Form W-9 and Form W-8; 

         (iv)
Form of Notice of Guaranteed Delivery.  

 ARTICLE 3 

DETERMINATION OF
RIGHTS HOLDERS AND RIGHTS 

 On or about the Record Date, the
Rights Agent shall create and maintain from the stock ledger and register maintained by
AST as transfer agent and registrar of the Ordinary Shares, a record of the names,
addresses and, where available, U.S. taxpayer identification numbers, of the Rights
Holders, and the number of Rights each Rights Holder is entitled to receive in the Rights
Offering (the “Rights Record”). The Rights Agent shall promptly send a copy of
the Rights Record to the Company by telecopy as soon as it is available. The number of
Rights to be issued to each Rights Holder shall be determined by dividing the number of
Ordinary Shares that such Rights Holder held of record as of the Record Date by 3.36, but
in lieu of issuing fractional Rights, the Rights Agent shall round each such fraction to
the next lower whole number of Rights. The Rights Record shall also include the number of
the Rights Certificate issued to each Rights Holder, the number of Rights evidenced on its
face by each of the Rights Certificates and the date of each of the Rights Certificates. 

 ARTICLE 4 

ISSUANCE OF THE RIGHTS
CERTIFICATES AND MAILING OF DOCUMENTS BY 
RIGHTS AGENT  

         Section 4.1. As
soon as practicable after delivery of the documents described in subparagraph 2.1 hereof
and receipt of written instructions from the Company, the Rights Agent will cause to be
issued Rights Certificates in the names of the Rights Holders and for the number of Rights
to which they are each entitled, as determined in accordance with Paragraph 3 above. The
Rights Agent shall either manually sign or affix a duly authorized facsimile signature on
all Rights Certificates. As soon as practicable after issuance of the Rights Certificates,
the Rights Agent shall mail or cause to be mailed, via first class mail, to each Rights
Holder the following: 

         (i)
                     a Rights Certificate, registered in the name of the Rights Holder
and dated the                     date of issuance thereof by the Rights Agent,
evidencing the Rights to which                     such Rights Holder is entitled;                       

         (ii)
a Prospectus, including the Instructions; 

         (iii)
a Form W-9 or Form W-8 (as applicable); and  

         (iv)
an envelope addressed to                     the Rights Agent.  

         Prior
to mailing, the Rights Agent shall make reasonable efforts to identify which of the Rights
Holders are likely to be nominee holders and to include the Instructions with the mailing
to such Rights Holders. 

         Section 4.2. The
Company and the Rights Agent may mutually agree that the Rights Agent shall use methods
other than first class mail, including personal delivery, delivery by International
Express Mail, or delivery by recognized expedited courier service such as Federal Express,
UPS, DHL or Courier Network. In addition, unless otherwise instructed by the Company in
writing, the Rights Agent shall deliver to the Company by expedited courier or by such
other means as the Company shall instruct the Rights Agent, all Rights Certificates and
other documents to be delivered to Rights Holders reflected on the Rights Record as having
a record address in the State of Israel (the “Israeli Rights Holders”),
including any Rights Certificates to be issued to Hevra Lerishumim of Bank Leumi which
acts as the nominee for the Ordinary Shares held through the facilities of the Clearing
House of the Tel Aviv Stock Exchange (the “TASE Nominee”). The Company
undertakes to make and shall be responsible for the further delivery of the rights
certificates and other documents to the Israeli Rights Holders. 

         Section 4.3. Promptly
after the Rights Certificates and other documents are mailed, the Rights Agent shall
execute and deliver to the Company a certificate or certificates substantially in the form
of Exhibit B hereto. 

         Section
4.4. Subsequent to their original issuance, no Rights Certificates shall be issued by
the Rights Agent except Rights Certificates issued upon any transfer, combination, split
up or exchange of Rights or issued in replacement of mutilated, destroyed, lost or stolen
Rights Certificates pursuant to Paragraph 6 hereof. 

 ARTICLE 5 

SUBSCRIPTION PROCEDURE 

         Section 5.1. Except
as provided in subparagraph 5.3 hereof, for a valid exercise of Rights to occur, the
Rights Agent must receive, by mail, hand delivery, or otherwise, prior to 5:00 P.M., New
York City time, on _________, 2007 (or on a later trading date if the Rights Agent
receives a written notice thereof from the Company on or prior to the original expiration
date) (the “Expiration Date”), (i) the Rights Certificate pertaining to the
Rights being exercised, which has been properly completed and endorsed for exercise as
provided in the instructions accompanying the Rights Certificate, or a Notice of
Guaranteed Delivery and (ii) payment in full of $2.50 per Ordinary Share (the
“Subscription Price”) for each Right being exercised in U.S. Dollars by wire
transfer or by check drawn on a bank located in the United States payable to the order of
“American Stock Transfer & Trust Company, as Rights Agent.” 

         Section 5.2. Upon
the proper exercise of Rights by a holder thereof made in accordance with subparagraphs
5.1 or 5.3 hereof, the Rights Agent shall, promptly after such exercise, send to the
Company written notice of such exercise, which shall set forth (i) the number of Rights
exercised by such holder; and (ii) the aggregate subscription payment and the amount of
Ordinary Shares subscribed for. The Rights Agent shall as soon as practicable after the
Expiration Date provide to the Company a summary of all the Rights exercises made in
accordance with subparagraph 5.1 hereof, which summary shall set forth (i) the name and
address of the Rights Holder that exercised the Rights, (ii) the number of Rights
exercised by each such Rights Holder, (iii) the total Subscription Price paid by such
Rights Holder, and (iv) the number of Ordinary Shares issued to such Rights Holder. 

         Section 5.3. The
TASE Nominee and other Israeli Rights Holders may elect to exercise their Rights by paying
the subscription payment in New Israeli Shekels as set forth in the Prospectus under the
caption “The Rights Offering–Method of Exercise of Rights for Record
Holders.” The TASE Nominee and/or these Israeli Rights Holders (as the case may be)
shall exercise their Rights by delivery directly to the Company on or prior to midnight
Israel time on the Expiration Date of payment in full of the Subscription Price for each
Right being exercised in New Israeli Shekels by check or wire transfer payable to the
Company, accompanied by such other notices and instructions which shall be certified or
confirmed as the Company may prescribe all in accordance with the procedures described in
the Prospectus. The Company will promptly notify the Rights Agent in writing of the
identity of the Israeli Rights Holders who exercised their Rights directly through the
Company and the number of Rights so exercised. Rights Holders, such as banks, securities
dealers and brokers, who receive Rights through the Depository Trust Company as nominees
for one or more beneficial owners shall be entitled to exercise their Rights Certificates
on behalf of the beneficial owners. 

         Section
5.4. To the extent that any Rights Certificates remain unexercised or outstanding at
5:01 P.M., New York City time, on the Expiration Date such outstanding Rights Certificates
shall be automatically deemed cancelled and of no further force and effect. 

 ARTICLE 6 

DEFECTIVE
EXERCISE OF RIGHTS; TRANSFER, ETC. OF RIGHTS 

CERTIFICATES; LOST RIGHTS CERTIFICATES.

         Section 6.1. Upon
receipt by the Company from the Rights Agent of evidence of a defective exercise of
Rights, the Company shall have the right to reject any such defective exercise or to waive
the defect in exercise. If the Company delivers to the Rights Agent a notice that the
Company rejects any defective exercise of Rights, the Rights Agent shall as soon as
practicable (i) if the defect and the necessary correction can be adequately explained by
telephone and the holder can correct the defect without possession of the Rights
Certificate(s), attempt to contact the holder of such Rights by telephone to explain the
nature of the defect or (ii) mail the Rights Certificate, together with a letter
explaining the nature of the defect in exercise and how to correct the defect. If an
exercise is not defective except that there is a partial payment of the Subscription
Price, the Rights Agent shall so notify the Company in writing as to the number Ordinary
Shares for which payment has been made and the Company shall thereafter effectuate the
issuance of such Ordinary Shares. Any Rights Certificate with respect to which defects in
exercise are not corrected prior to 5:00 P.M., New York City time, on the Expiration Date,
or which are received after such time, shall be returned to the holder of such Rights
Certificate. 

         Section
6.2. Upon the receipt by the Rights Agent and the Company of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and upon receipt of indemnity or security reasonably satisfactory to them and
reimbursement of all expenses incidental thereto, and upon surrender and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new Rights
Certificate of like tenor to the Rights Agent for delivery to the registered owner in lieu
of the Rights Certificate so lost, stolen, destroyed or mutilated. The Rights Agent may,
at the direction of the Company and with the consent of the registered holder of the lost,
stolen or destroyed Rights Certificate, permit the exercise of the Rights evidenced by
such certificate without a replacement of such certificate. 

 ARTICLE 7 

SUBDIVISION, SALE OR
TRANSFER OF RIGHTS 

         Section 7.1. The
Rights Certificate may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates. Any Rights Holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the Rights Holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of the Rights
Certificate. 

         Section 7.2.
 The Rights Agent shall facilitate subdivisions of the Rights by issuing new
          Rights Certificates in accordance with the instructions set forth on the
reverse           side of the Rights Certificates at any time on or prior to the
Expiration Date.           Until 5:00 p.m., New York City time, on the third business day
prior to the           Expiration Date (the “Cut-Off Date”), the Rights Agent
shall           facilitate subdivision or transfers of Rights Certificates by issuing new
Rights           Certificates in accordance with the instructions set forth on the
reverse side           of the Rights Certificates. After the Cut Off Date, the Rights
Agent may           facilitate subdivision or transfers of the Rights Certificate up
until 5:00           p.m., New York City time, on the Expiration Date if the Rights
Holder has           delivered to the Rights Agent a properly executed Notice of
Guaranteed Delivery.  

 ARTICLE 8 

CANCELLATION AND
DESTRUCTION OF RIGHTS CERTIFICATES 

 All Rights Certificates surrendered
for the purpose of exercise shall, if surrendered to the Company or to any of its agents,
be delivered to the Rights Agent for cancellation or in cancelled form, or if surrendered
to the Rights Agent shall be cancelled by it, and no Rights Certificates shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this Agreement.
The Rights Agent may deliver all cancelled Rights Certificates to the Company, and if
delivered to the Company, it shall make available to the Rights Agent the cancelled Rights
Certificates for its inspection. 

 ARTICLE 9 

TAXES 

 The Company covenants and agrees that
it will pay when due and payable any taxes and charges (including those in the United
States and Israel) which may be payable in respect of the issuance or delivery of the
Rights Certificates. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer or other assignment of Rights Certificates or the
issuance of any Ordinary Shares in a name other than that of the registered holder of the
Rights Certificate evidencing Rights surrendered for exercise or to issue or deliver any
Ordinary Shares upon the exercise of any Right until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company’s satisfaction that no
such tax is due. 

 ARTICLE 10 

DISBURSEMENT OF FUNDS 

 Any funds received by the Rights
Agent as payments in connection with the subscriptions for Ordinary Shares pursuant to the
Rights Offering shall be held in a segregated interest bearing money market account by the
Rights Agent pending receipt of written disbursement instructions from the Company, from
time to time, after which the funds and any interest earned thereon shall be promptly
disbursed in accordance with each such written instructions from the Company. The Rights
Agent is hereby authorized and directed to endorse, negotiate and deposit all subscription
payments into an interest bearing money market account to be maintained with the Rights
Agent. The Rights Agent shall provide an accounting to the Company from time to time, as
the Company may reasonably request, regarding the subscription payments deposited into
such account   

 ARTICLE 11 

DUTIES OF RIGHTS AGENT. 

 The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound: 

         (a) the
Rights Agent may consult with legal counsel (who may be legal counsel for           the
Company) and the opinion of such counsel shall be full and complete
          authorization to the Rights Agent.  

         (b)
          Whenever in the performance of its duties under this Agreement the Rights Agent
          shall deem it necessary or desirable that any fact or matter be proved or
          established by the Company prior to taking or suffering any action hereunder,
          such fact or matter (unless other evidence in respect thereof be herein
          specifically prescribed) may be deemed to be conclusively proved and
established           by a certificate signed by the Chief Executive Officer or Chief
Financial           Officer of the Company and delivered to the Rights Agent; and such
certificate           shall be full authorization to the Rights Agent for any action
taken or suffered           in good faith by it under the provisions of this Agreement in
reliance upon such           certificate.  

         (c)
          The Rights Agent shall be liable hereunder only for its own gross negligence or
          willful misconduct.  

         (d)
          The Rights Agent shall not be liable for or by reason of any of the statements
          of fact or recitals contained in this Agreement by the Company, in the Rights
          Certificates or in the Prospectus, or be required to verify the same, but all
          such statements and recitals are and shall be deemed to have been made by the
          Company only.  

         (e)
          Nothing herein contained shall preclude the Rights Agent from acting in another
          capacity for the Company or for any other person or entity.  

         (f)
          The Rights Agent shall not be under any responsibility in respect of the
          validity of this Agreement or the execution and delivery hereof (except the due
          authorization and execution hereof by such Rights Agent) or in respect of the
          validity or execution of any Rights Certificate; nor shall it be responsible
for           any breach by the Company of any covenant or condition contained in this
          Agreement or in any Rights Certificate; nor shall it by any act hereunder be
          deemed to make any representation or warranty as to the authorization of any
          Rights Certificate.  

         (g)
          With respect to each Rights Certificate that the Rights Agent is required to
          mail hereunder, the Rights Agent shall maintain a blanket surety bond
protecting           the Company and the Rights Agent from loss or liability arising out
of           non-receipt or non-delivery of such certificates. (h) Promptly after the
          Expiration Date, the Rights Agent shall execute and deliver to the Company a
          certificate or certificates substantially in the form of Exhibit C hereto.  

 ARTICLE 12 

PAYMENT OF EXPENSES 

 The Company will pay the Rights Agent
compensation for its services under this Agreement in accordance with Schedule 1 hereto,
and will reimburse the Rights Agent for all reasonable and necessary expenses incurred by
it in so acting. 

 ARTICLE 13 

INDEMNIFICATION  

      Section 13.1.
           The Company covenants and agrees to indemnify and hold the Rights Agent
          harmless against any costs, expenses (including reasonable fees for legal
          counsel), losses or damages, which may be paid, incurred or suffered by or to
          which the Rights Agent may become subject, arising from or out of, directly or
          indirectly, any claim or liability resulting from its actions pursuant to this
          Agreement other than costs, expenses, losses and damages incurred or suffered by
          the Rights Agent as a result of, or arising out of, its gross negligence or
          willful misconduct in connection with performance of its duties hereunder. 

 Section 13.2. If the
indemnification provided for in this Paragraph 13 is applicable, but for any reason is
held to be unavailable, the Company shall contribute such amount as is just and equitable
to pay, or to reimburse the Rights Agent for, the aggregate of any and all losses,
liabilities, costs, damages and expenses, including reasonable counsel fees, actually
incurred by the Rights Agent as a result of or in connection with, and any amount paid in
settlement of, any action, claim or proceeding arising out of or relating in any way to
any actions or omissions of the Company. 

 Section 13.3. If any action is
brought against the Rights Agent in respect of which indemnity may be sought against the
Company pursuant to this Paragraph 13, the Rights Agent shall promptly notify the Company
in writing of the institution of such action and the Company may, at its option, assume
the defense of such action, including the employment and fees of counsel (which counsel
shall be reasonably satisfactory to the Rights Agent) and payment of expenses. The Rights
Agent shall have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Rights Agent unless the employment
of such counsel shall have been authorized in writing by the Company in connection with
the defense of such action or the Company shall not have employed counsel to have charge
of the defense of the action or the Rights Agent shall have reasonably concluded that
there may be defenses available to it which are different from or additional to those
available to the Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the Rights Agent), in any of which events the fees and
expenses of not more than one additional firm of attorneys for the Rights Agent shall be
borne by the Company. 

 ARTICLE 14 

FURTHER ASSURANCES 

 The Company agrees to do such further
acts and things and to execute and deliver such statements, assignments, agreements,
instruments and other documents as the Rights Agent from time to time reasonably may
request in connection with the administration, maintenance, enforcement or adjudication of
this Agreement in order (a) to give the Rights Agent confirmation and assurance of the
Rights Agent’s rights, powers, privileges remedies and interests under this Agreement
and applicable law, (b) to better enable the Rights Agent to exercise any such right,
power, privilege or remedy, or (c) to otherwise effectuate the purpose and the terms and
provisions of this Agreement, each in such form and substance as may be acceptable to the
Rights Agent. 

 ARTICLE 15 

ASSIGNMENT AND
DELEGATION 

         Section 15.1. No
Assignment; Delegation. Neither this Agreement nor any rights
or obligations hereunder may be assigned or delegated by either party without the prior
written consent of the other party.  

         Section 15.2. Binding
Nature. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns. Nothing in
this Agreement is intended or shall be construed to confer upon any other person any
right, remedy or claim or to impose upon any other person any duty, liability or
obligation. 

 ARTICLE 16 

PROOF OF AUTHORITY TO
SIGN 

 The Rights Agent need not procure
supporting legal papers, and is authorized to dispense with proof of authority to sign
(including all proof of appointment or authority to sign of any fiduciary, custodian for a
minor, or other person acting in a representative capacity), and to dispense with the
signatures of co-fiduciaries, in connection with exercise of Rights in the following
cases: 

 (a) where the Rights Certificate is
registered in the name of an executor, administrator, trustee, custodian for a minor or
other fiduciary, and the subscription form thereof is executed by such executor,
administrator, trustee, custodian for a minor or other fiduciary, then the Rights Agent
shall advise the Company in writing that the Ordinary Shares are to be issued in the name
of the registered holder of the Rights Certificate, as appropriate; and  

 

 (b) where the Rights Certificate is
in the name of a corporation and the subscription form thereof is executed by an officer
of such corporation, then the Rights Agent shall advise the Company in writing that the
Ordinary Shares are to be issued in the name of such corporation. 

 In all of the cases set forth in
this Paragraph 16 and notwithstanding anything contained in this Agreement to the
contrary, the check tendered in payment of the Subscription Price must be drawn for the
amount of the Subscription Price for the number of Rights being exercised, to the order
of the Rights Agent and otherwise be in proper form (subject to the provisions of Section
6.1 hereof regarding partial payment of the Subscription Price), and there must be no
evidence indicating that the subscriber is not the duly authorized representative he
purports to be.  

 ARTICLE 17 

REPORTS 

 The Rights Agent shall make available
to the Company, upon the Company’s request, the following information: (i) the number
of Ordinary Shares validly subscribed for, and (ii) the number Ordinary Shares for which
defective subscriptions have been received. As soon as practicable after the Expiration
Date, or upon the request from the Company from time to time thereafter, the Rights Agent
shall certify in writing to the Company the cumulative totals through the Expiration Date
of all the information set forth in clauses (i) and (ii) above. The Rights Agent shall
also maintain and update a record of holders who have fully or partially exercised their
Rights and holders who have not exercised their Rights. The Rights Agent shall provide the
Company or its designees with such information compiled by the Rights Agent pursuant to
this Paragraph 17 as the Company shall request from time to time. 

 ARTICLE 18 

NOTICES TO THE
COMPANY, HOLDERS, INFORMATION AGENT AND AGENT 

 All notices and other communications
provided for or permitted hereunder shall be made by hand delivery, prepaid certified
first-class mail (return receipt requested), or telecopier or facsimile machines (with
written confirmation of receipt): 

	 	
If
to the Company, to: 

	 	
 B.O.S Better Online Solutions Ltd.

20 Freiman St. POB 198

Rishon Lezion, 75101

Israel

Tel.:       (+972) 4-990-7555

Fax:       (+972) 4-999-0334

Attn.:     Eyal Cohen, CFO

	 	
with
copy to: 

	 	
 Brian Brodrick, Esq.

Phillips Nizer LLP

666 Fifth Avenue

New York, New York 10103

Fax: 212-262-5152

	 	
and
to: 

	 	
Shlomo Landress, Adv.

Amit, Pollak, Matalon & Co.

NYP Tower, 17 Yitzhak Sadeh Street

Tel Aviv 67775, Israel

Fax: 972-3-561-3620
 

	 	
if
to the Agent, to: 

	 	
American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention: Exchange Department

Fax: 718-234-5001
 

	 	
with
a copy to: 

	 	
___________________

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Fax: 718-331-1852
 

         All
such notices and communications shall be deemed to have been duly given: when delivered
by hand, if personally delivered; when by certified mail, two business days after being
deposited in the mail, postage prepaid, if mailed as aforesaid; and when receipt is
acknowledged, if faxed. 

 ARTICLE 19

MISCELLANEOUS PROVISIONS 

         Section
19.1. Governing Law. Except as hereinafter provided, this Agreement shall be
construed, interpreted and enforced in accordance with and shall be governed by the laws
of the State of Israel without regard to the principles of conflicts of laws.
Notwithstanding the foregoing, Paragraph 13 of this Agreement shall be construed,
interpreted and enforced with and shall be governed by the laws of the State of New York.  

         Section
19.2. Severability. The parties hereto agree that if any of the provisions
contained in the Agreement shall be determined invalid, unlawful or unenforceable to any
extent, such provisions shall be deemed modified to the extent necessary to render such
provisions enforceable. The parties hereto further agree that this Agreement shall be
deemed severable, and the invalidity, unlawfulness or unenforceability of this Agreement
or of any term or provision hereof.  

         Section
19.3. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be considered
one and the same agreement.  

         Section
19.4. Captions. The captions and descriptive heading herein are for the convenience
of the parties only. They do not in any way modify, amplify, alter or give full notice of
the provisions hereof.  

         Section
19.5. Facsimile Signatures. Any facsimile signature of any party hereto shall
constitute a legal, valid and binding execution hereof by such party.  

         Section
19.6. Further Actions. Each party agrees to perform such further acts and execute
such further documents as are necessary to effect the purposes of this Agreement.  

         Section
19.7. Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any party to this Agreement, upon any breach or default of any other
party under this Agreement, shall impair any such right, power, or remedy; nor shall it
be construed to be a waiver of, or an acquiescence in any such breach or default or any
similar breach or default thereafter occurring; nor shall any waiver of any single breach
or default be deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character, on the part
of any party, of any breach or default under the Agreement, or any waiver, on the part of
any party, of any provisions or conditions of the Agreement, must be made in writing and
shall be effective only to the extent specifically set forth in such writing. All
remedies, either under the Agreement or by law and otherwise afforded to any party, shall
be cumulative and not alternative.  

         Section
19.8. Section Headings. Section headings are for the convenience of the parties and
do not form a part of this Agreement.  

         Section
19.9. Exhibits; Entire Agreement. All Exhibits referred to herein or attached
hereto are hereby incorporated by reference into, and made a part of, this Agreement.
This Agreement, together with the Exhibits hereto, contains the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with respect to
the subject matter hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof. The
Agreement may not be modified or amended other than by an agreement in writing.  

         IN
WITNESS WHEREOF,  the parties have hereunto set their hands and seals, as of the day and
year first above written.  

 B.O.S BETTER ONLINE SOLUTIONS LTD. 

 By:___________________________

Name:_________________________

Title:__________________________

	 AMERICAN STOCK TRANSFER

& TRUST COMPANY

By:
——————————————

Name:
Title: 	 	 

 

			
	 Rights Certificate No.: 	
 THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S
PROSPECTUS DATED MARCH __, 2007 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY
REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE ALTMAN
GROUP, THE INFORMATION AGENT. 
	 NUMBER OF RIGHTS: 

 B.O.S BETTER ONLINE SOLUTIONS LTD.

Incorporated under the laws of the State of Israel 

 TRANSFERABLE PURCHASE
RIGHTS CERTIFICATE 

 Evidencing Transferable Rights to Purchase Ordinary Shares of B.O.S BETTER ONLINE SOLUTIONS LTD.

Subscription Price: $2.50 per Ordinary Share 

 THE PURCHASE RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME,

ON _______ __, 2007, UNLESS EXTENDED BY THE COMPANY 

	 	
 REGISTERED
OWNER:  

	 		
	
THIS CERTIFIES THAT the registered owner whose name is
inscribed hereon is the owner of the number of transferable
purchase rights ("Rights") set forth above. Each whole
Right entitles the holder thereof to subscribe for and
purchase one ordinary share, with a nominal value of NIS
4.00 per ordinary share, of B.O.S BETTER ONLINE SOLUTIONS
LTD., an Israeli corporation, at a subscription price of
$2.50 per share, pursuant to a rights offering (the "Rights
Offering"), on the terms and subject to the conditions set
forth in the Prospectus. There is no over-subscription
privilege. 	 	
The Rights represented by this Rights Certificate may
be exercised by completing Form 1 and any other
appropriate forms on the reverse side hereof and by
retuning the full payment of the subscription price
for each ordinary share in accordance with the
instructions set forth in the Prospectus. 

	 	
 COUNTERSIGNED AND REGISTERED:

AMERICAN STOCK TRANSFER & TRUST COMPANY,

(New York, N.Y.)

TRANSFER AGENT AND REGISTRAR

By:

__________________________________

AUTHORIZED SIGNATURE 

 This Rights Certificate is not valid
unless countersigned by the rights agent and registered by the registrar.  Witness the
seal of B.O.S. BETTER ONLINE SOLUTIONS LTD. and the signatures of its duly authorized
officers. 

 Dated: 

		
	 
 	 
 
	
 Shmuel Koren

President, Chief Executive Officer

and Principal Executive Officer 	
 Eyal Cohen

Chief Financial Officer

and Principal Financial and Accounting Officer 

 DELIVERY OPTIONS FOR
RIGHTS CERTIFICATE 

 For
delivery by mail, hand delivery or over night courier: 

 American Stock Transfer & Trust Company

59 Maiden Lane, Plaza Level

New York, NY 10038 

 Delivery
other than in the manner or to the address listed above will not constitute valid
delivery. 

 PLEASE
PRINT ALL INFORMATION CLEARLY AND LEGIBLY. 

	 FORM 1-EXERCISE OF PURCHASE RIGHTS                                      

To subscribe for ordinary shares, please complete lines (a) and (b) and 

sign under Form 4 below.                                                     

                                                                        

(a) EXERCISE OF PURCHASE RIGHTS:

I apply for ______________ shares x $2.50 = $_______________            

(no. of new shares) x (subscription price) = (amount enclosed)          

                                                                        

(b) METHOD OF PAYMENT (CHECK ONE)

                                                                        

o
 Cashier's check or money order drawn on a U.S. bank, payable to

"American  Stock Transfer & Trust Company, as Rights Agent."                       

                                                                        

o
 Wire transfer of immediately available funds directly to the account
maintained
by American Stock Transfer & Trust Company, as Rights Agent, for
purposeses of accepting subscriptions in this Rights Offering at
JPMorgan
Chase Bank, 55 Water Street, New York, New York 10005, ABA
#021000021, Account #323-113052.                                        

                                                                        

o
 For Israeli Residents

Payment of New Israeli Shekels according to the representative exchange
rate published by the Bank of Israel on the day prior to payment by
cashier's check drawn on a bank located in Israel payable to B.O.S
Better
Online Solutions Ltd. or wire transfer of immediately available funds
directly to United Mizrahi Bank Ltd. Haifa Business Cener, 2 Pal Yam St.
Haifa, Israel, Branch # 444, Account # 125542, Swift Code MIZBILIT

                                                                        

FORM 2-SALE OR TRANSFER TO DESIGNATED TRANSFEREE OR                     

THROUGH BANK OR BROKER                                                  

To sell or transfer your purchase rights to another person, complete
this form and
have your signature guaranteed under Form 5. To sell your purchase
rights through
your bank or broker, sign below under this Form 2 and have your
signature guaranteed
under Form 5, but leave the rest of this Form 2 blank.

For value received, ______________ of the purchase rights represented

by this
Rights Certificate are assigned to:

_________________________________________________________________

(Print Full Name of Assignee)

_________________________________________________________________

(Print Full Address)

_________________________________________________________________

Tax ID or Social Security No.

_________________________________________________________________

Signature(s)

IMPORTANT: The signature(s) must correspond with the name(s) as printed

on
the reverse of this Rights Certificate in every particular, without

alteration or
enlargement, or any other change whatsoever.
	   	 FORM 3-DELIVERY TO DIFFERENT ADDRESS

If you wish for the ordinary shares underlying your rights to be
delivered to an address different from that shown on the face of this
Rights Certificate, please enter the alternate address below, sign under
Form 4 and have your signature guaranteed under Form 5.

_________________________________________________________________

_________________________________________________________________

_________________________________________________________________

FORM 4-SIGNATURE

TO SUBSCRIBE: I acknowledge that I have received the Prospectus for this
Rights
Offering and I hereby irrevocably subscribe for the number of shares
indicated
above on the terms and conditions specified in the Prospectus.

__________________________________________________________________

Signature(s)

IMPORTANT: The signature(s) must correspond with the name(s) as printed

on
the reverse of this Rights Certificate in every particular, without
alteration or
enlargement, or any other change whatsoever.

FORM 5-SIGNATURE GUARANTEE

This form must be completed if you have completed any portion of Forms 2
or 3.

Signature Guaranteed:_______________________________________________

(Name of Bank or Firm)

By:______________________________________________________________

(Signature of Officer)

IMPORTANT: The signature(s) should be guaranteed by an eligible guarantor
institution (bank, stock broker, savings & loan association or credit
union) with
membership in an approved signature guarantee medallion program pursuant
to
Securities and Exchange Commission Rule 17Ad-15.

 FOR INSTRUCTIONS ON THE USE OF B.O.S BETTER ONLINE SOLUTIONS LTD. PURCHASE RIGHTS CERTIFICATES, CONSULT THE ALTMAN GROUP, THE
INFORMATION AGENT, AT
(800) 330-5136. 

 B.O.S. BETTER ONLINE SOLUTIONS LTD. 

 INSTRUCTIONS FOR USE OF B.O.S. BETTER                ONLINE SOLUTIONS LTD.
 ORDINARY SHARE RIGHTS
CERTIFICATES 

         THE
RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME (MIDNIGHT ISRAEL TIME), ON
____________ __ 2007, UNLESS EXTENDED AS DESCRIBED IN THE PROSPECTUS. 

         The
following instructions relate to a rights offering (the “Rights Offering”) by
B.O.S. Better Online Solutions Ltd., an Israeli corporation (the “Company”
“us” or “our”), to the holders of ordinary shares of the Company as
described in the Company’s prospectus, dated ____________ 2007 (the
“Prospectus”). Shareholders of record at the close of business on
_________________ 2007 (the “Record Date”), are receiving one transferable
subscription right for each 3.3724 ordinary shares held by them at the Record Date. Your
rights will be aggregated for all the shares that you own on the record date and then
rounded down to the nearest whole number, so that you will not receive fractional rights.
For example, if you own 4 shares on the record date, you will receive one Right, and if
you own 10,000 shares on the record date, you will receive 2,965 Rights. 

         The
subscription price for each ordinary share is $2.50 and must be paid to American Stock
Transfer & Trust Co., as Rights Agent, or directly to us under the procedures
described herein. If you hold your shares through an Israeli brokerage company that holds
the Rights through the Company’s nominee company (Hevra Le-Rishumim of Bank Leumi
Le-Israel Ltd.), the subscription price may be paid in New Israeli Shekels according
to the representative exchange rate that will be published by the Bank of Israel on the
day before payment of the subscription price. 

         The
rights will expire at 5:00 p.m., New York City time (midnight Israeli time), on
_____________, 2007, unless extended by the Company as described in the Prospectus (the
“Expiration Date”). 

         The
number of rights to which a holder of a rights certificate (“Rights
Certificate”) is entitled is printed on the face of that holder’s Rights
Certificate. You should indicate your wishes with regard to the exercise of your rights by
completing the Rights Certificate and returning it to the Rights Agent in the envelope
provided. 

         YOUR
RIGHTS CERTIFICATE MUST BE RECEIVED BY THE RIGHTS AGENT, OR GUARANTEED DELIVERY
REQUIREMENTS WITH RESPECT TO YOUR RIGHTS CERTIFICATE MUST BE COMPLIED WITH, AND PAYMENT OF
THE SUBSCRIPTION PRICE MUST BE RECEIVED, AS MORE SPECIFICALLY DESCRIBED IN THE PROSPECTUS,
BY THE RIGHTS AGENT ON OR BEFORE THE EXPIRATION DATE. YOU MAY NOT REVOKE ANY EXERCISE
OF A RIGHT. 

	 1.  	 Subscription
Privilege.  

         If
you are a record owner of our ordinary shares, you may exercise your rights by delivering
a signed exercise form on the back of your rights certificate or a notice of guaranteed
delivery to American Stock Transfer & Trust Co., our Rights Agent, at the address
noted below together with payment in full of the subscription price for each right being
exercised, by 5:00 p.m., New York City time (midnight Israel time), on ____________, 2007. 

         If
you are a record owner and reside in Israel, you may also exercise your rights by
delivering a signed exercise form on the back of your rights certificate to us at the
address noted below, together with payment in full of the subscription price in New
Israeli Shekels for each right being exercised, by midnight, Israel time, on ____________,
2007 . If you are a record owner who resides in Israel, we may accept payments in U.S.
dollars if requested and agreed to by us. 

         We
and American Stock Transfer & Trust Co., our Rights Agent, as applicable, may refuse
to accept improperly completed or delivered or unexecuted exercise forms. We and American
Stock Transfer & Trust Co., our Rights Agent, as applicable, must receive payment in
full of the subscription price for each right being exercised together with the exercise
form (or notice of guaranteed delivery). 

         If
you are delivering your completed exercise form (or notice of guaranteed delivery) and
payment for the exercise of your rights to American Stock Transfer & Trust Co., our
Rights Agent, please do so by mail, overnight or hand delivery to one of the following
addresses: 

			
	
 
	
Hand delivery

American Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10038

Attention: Reorganization Department 	
 Mail and Overnight mail

American Stock Transfer & Trust Company

6201 15th Avenue

Brooklyn, New York 11219

Attention: Reorganization Department 

         Record
owners who reside in Israel, and who wish to deliver their completed exercise form and
subscription payment in New Israeli Shekels for the exercise of their rights directly to
us, should do so by mail, overnight or hand delivery to the following address: 

		
	 	
B.O.S Better Online Solutions Ltd.

20 Freiman St., POB 198

Rishon Lezion, 75101

Israel

Attention: Mr. Eyal Cohen, CFO

         Any
payments to American Stock Transfer & Trust Co., as Rights Agent, must be made in U.S.
dollars by check drawn on a bank located in the United States and payable to
“American Stock Transfer & Trust Co., as Rights Agent,” or by wire transfer
of funds to the account maintained by American Stock Transfer & Trust Co., our Rights
Agent, for this rights offering at JP Morgan Chase, 55 Water Street, New York, New York
10005, ABA No. 021000021, Account No. 323-113052, reference B.O.S Better Online Solutions
Ltd., Attention: Reorganization Department. 

         Any
payments to us shall be made in New Israeli Shekels according to the representative
exchange rate published by the Bank of Israel on the day before payment of the
subscription price and shall be by wire transfer or by check drawn on a bank located in
Israel, and payable to “B.O.S Better Online Solutions Ltd.” Any wire transfer to
us should be made to United Mizrahi Bank Ltd., Haifa Business Center, 2 Palyam St., Haifa,
Israel, Branch # 444, Account # 125542, Swift Code: MIZBILIT. We may accept
other forms of payment or payments in U.S. dollars if requested and agreed to by us. 

2

         You
will choose the method of delivery of exercise forms and payment of the subscription price
and will bear the risk of such election. 

         IF
YOU SEND YOUR COMPLETED EXERCISE FORM AND PAYMENTS BY MAIL, WE URGE YOU TO USE REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, AND TO ALLOW A SUFFICIENT NUMBER OF
DAYS TO ENSURE DELIVERY AND CLEARANCE OF PAYMENT PRIOR TO THE EXPIRATION DATE. WE STRONGLY
URGE YOU TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF A CHECK DRAWN ON A BANK LOCATED IN
THE UNITED STATES OR IN ISRAEL. We will not consider any payment by check, other than a
cashier’s check or a money order, to have been made until the check clears through
the account of American Stock Transfer & Trust Co., our Rights Agent, or to our
account, as applicable, before the expiration date. If you do not exercise your rights by
the date and in accordance with the procedures applicable to you, your ability to exercise
the rights and purchase the ordinary shares will expire. Record holders exercising their
rights shall be entitled to receive the ordinary shares promptly following such exercise. 

         Payments
for the exercise of your rights made to American Stock Transfer & Trust Co., our
Rights Agent, will be held in a segregated interest bearing money market account, and will
be sent to us in accordance with our written instructions. 

         If
you exercise less than all of the rights evidenced by your Rights Certificate, the Rights
Agent will issue you a new Rights Certificate evidencing the unexercised rights. If you
choose to have a new Rights Certificate sent, you may not receive any such new Rights
Certificate in sufficient time to permit the exercise of the rights evidenced thereby. 

         If
you have not indicated the number of ordinary shares being purchased, or if you have not
forwarded full payment of the subscription price for the number of ordinary shares that
you have indicated are being purchased, you will be deemed to have exercised the
Subscription Privilege with respect to the maximum number of ordinary shares which may be
purchased for the subscription price transmitted or delivered by you. To the extent that
the subscription price transmitted or delivered by you exceeds the product of the
subscription price multiplied by the number of ordinary shares you are entitled to
purchase as evidenced by the Rights Certificate(s) transmitted or delivered by you, the
excess (such excess being the “Subscription Excess”) will be returned to you
following the expiration of the Rights Offering. No interest shall be paid on the
Subscription Excess, if any. 

	 2.  	 Execution.  

          (a)       
          Execution by Registered Holder(s). The signature on the Rights
          Certificate must correspond with the name of the registered holder exactly as it
          appears on the face of the Rights Certificate without any alteration or change
          whatsoever. If the Rights Certificate is registered in the names of two or more
          joint owners, all of such owners must sign. Persons who sign the Rights
          Certificate in a representative or other fiduciary capacity must indicate their
          capacity when signing and, unless waived by the Company in its sole and absolute
          discretion, must present to the Rights Agent satisfactory evidence of their
          authority to so act. 

          (b)       
          Execution by Person Other than Registered Holder. If the Rights
          Certificate is executed by a person other than the holder named on the face of
          the Rights Certificate, proper evidence of authority of the person executing the
          Rights Certificate must accompany the same unless, for good cause, the Company
          dispenses with proof of authority, in its sole and absolute discretion. 

3

          (c)       
          Signature Guarantee. Your signature must be guaranteed by an Eligible
          Institution if you wish to transfer all or less than all of your unexercised
          rights to a designated transferee. 

	 3.  	 Guaranteed
Delivery Procedures in the United States.  

         If
you want to exercise your rights, but time will not permit your rights certificate to
reach American Stock Transfer & Trust Co., our Rights Agent, prior to 5:00 p.m., New
York City time (midnight, Israel time), on ______________, 2007, you may exercise your
subscription rights if you send, and the Rights Agent receives, (1) payment in full for
each right being exercised, (2) a notice of guaranteed delivery, substantially in the form
provided to you with your rights certificate, from a member firm of a registered national
securities exchange or a member of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or correspondent in the United
States, and (3) your properly completed and duly executed rights certificate, including
any required signature guarantees, within three NASDAQ trading days following the date of
your notice of guaranteed delivery. The notice of guaranteed delivery may be delivered to
the Rights Agent in the same manner as your rights certificate as set forth herein, or may
be transmitted to the Rights Agent by facsimile transmission, to facsimile number
718-234-5001. You can obtain additional copies of the form of notice of guaranteed
delivery by requesting them from the Rights Agent. 

	 4.  	 Transferability
of Rights  

         The
rights are transferable. You may sell or otherwise transfer them to others. The
unexercised rights will be eligible for trading on the NASDAQ Global Market and the Tel
Aviv Stock Exchange for one day only on _______________, 2007. If you are one of our
affiliates, you may transfer your rights only if there is an effective registration
statement or exemption covering such transfer under the United States securities laws. 

         Record
holders wishing to transfer their rights to another person may do so by executing the
rights transfer form on the back of the rights certificate and submitting it to American
Stock Transfer & Trust Co. prior to __________, 2007. Record holders wishing to sell
their rights on the NASDAQ Global Market or the Tel Aviv Stock Exchange, should
independently engage a broker to execute this sale on their behalf. 

         If
no contrary instructions have been received by ______________, 2007 and your rights remain
unexercised, your rights will expire. If you hold your shares through an Israeli brokerage
company that holds the rights through the Company’s nominee company (Hevra
Le-Rishumim of Bank Leumi Le-Israel Ltd.), the rules of the Tel Aviv Stock Exchange
provide that if no contrary instructions have been received from you by the time
determined by your broker on _______________, 2007, you will be considered to have
instructed your broker to sell all your rights on the Tel Aviv Stock Exchange with no
price limit. 

         You
are responsible for all commissions, fees and other expenses, including brokerage
commissions and transfer taxes, incurred in connection with the purchase, sale or exercise
of rights. 

	 5.  	 Ambiguities
in Exercise of Rights  

         If
you do not specify the number of rights being exercised, or if your payment is not
sufficient to pay the total subscription price for all of the shares that you indicated
you wished to purchase, you will be deemed to have exercised the maximum number of rights
that could be exercised for the amount of the payment received from you. If your payment
exceeds the total subscription price for all of the rights you have elected to exercise,
we will promptly refund to you the balance with no interest. 

4

	 6.  	 Beneficial
Owners Who Are Not Record Holders  

         If
you are a beneficial owner of our ordinary shares and hold them through a broker, dealer
or other nominee (including a member of the Tel Aviv Stock Exchange), you should expect
your broker, dealer or other nominee to notify you of this rights offering and the
procedures for exercising or transferring your rights. If you wish to exercise your
rights, you will need to have your broker, dealer or other nominee act for you. To
indicate your decision with respect to your rights, you should complete and return to your
broker, dealer or other nominee the form provided to you accompanied by the subscription
payment. You should receive this form from your broker, dealer or other nominee with the
other rights offering materials. You should NOT return your subscription form or transfer
the subscription payment directly to us. 

         Summarized
below are the procedures for exercising your rights if you are a beneficial owner whose
ordinary shares are held through the Company’s nominee company (Hevra Le-Rishumim
of Bank Leumi Le-Israel Ltd.). 

 Procedures
Applicable to Holders of Shares Through a Nominee Company. 

         If
you hold your ordinary shares through an Israeli brokerage company that holds the rights
through the Company’s nominee company (Hevra Le-Rishumim of Bank Leumi Le-Israel
Ltd.), you should expect to receive a letter regarding this rights offering from the
member of the Tel Aviv Stock Exchange through which you hold your shares (the brokerage
company). In that letter, you will be requested to make ONE of the following three
elections: 

          (1)       
          your rights and subscribe for our ordinary shares. If this alternative is
          elected, you may give a member of the Tel Aviv Stock Exchange through which you
          hold your shares an exercise notice commencing after 5:00 p.m., New York City
          time (midnight, Israel time), on _________________ , 2007 (the record date) and
          no later than the time determined by your broker on ________________, 2007. You
          must attach the subscription payment to your notice. You will need to arrange
          with your broker the method of payment of your subscription payment. The
          subscription price is to be paid in New Israeli Shekels according to the
          representative exchange rate published by the Bank of Israel on the day before
          payment of the subscription price; or 

          (2)       
          the rights or any part of them on the Tel Aviv Stock Exchange. If you select
          this alternative, you may give your broker price limit instructions as to the
          sale of the rights; or 

          (3)       
          from exercising your rights and from selling them. 

         Your
notice should reach the member of the Tel Aviv Stock Exchange through which you hold your
shares by no later than ______________________, 2007 (the rights trading day) at the time
determined by your broker. If notice is not received from you by such time, you will be
considered to have instructed your broker to sell your rights on the Tel Aviv Stock
Exchange, with no price limit. 

         If
you hold rights and wish to transfer them to another person, you may do so by executing
the rights transfer form that will be made available to you by your broker. The shares issuable upon exercise of
the rights shall be freely tradeable.  

5

         The
rights will trade on the Tel Aviv Stock Exchange for one trading day, ________________,
2007. Pursuant to the Tel Aviv Stock Exchange rules, if the trading of our ordinary shares
or the rights is halted for a period in excess of 45 minutes, and the trading does not
resume for the remainder of that day upon which the rights are traded on the Tel Aviv
Stock Exchange, an additional trading day for the rights will take place, and the last day
to exercise the rights will be accordingly extended. If on the day upon which the rights
are traded on the Tel Aviv Stock Exchange the trading of our ordinary shares is halted,
yet the cessation of trade continues for fewer than five consecutive trading days, your
instructions with respect to the rights delivered to your broker shall remain in effect
unless contrary instructions have been received by your broker from you. If the trading of
our ordinary shares on the day upon which the rights are traded on the Tel Aviv Stock
Exchange is halted for a period of more than five consecutive trading days, all prior
instructions received by your broker will be cancelled. 

         Holders
of unexercised rights following the Tel Aviv Stock Exchange rights trading day may
exercise them and subscribe for our ordinary shares by notifying their broker and
transferring the subscription payment. This notice must reach the broker by no later than
________________, 2007 at the time determined by the broker. If this notice is not
received on time, it will not be possible to exercise these rights. 

         Under
the Tel Aviv Stock Exchange rules, Tel Aviv Stock Exchange members must submit to the Tel
Aviv Stock Exchange Clearing House a written rights exercise (subscription) notice on
behalf of all their clients wishing to exercise rights no later than 9:00 a.m. Israel time
(2:00 a.m., New York City time) on _____________________, 2007 . The rights of holders of
our ordinary shares through our nominee company will expire if the brokers of these
holders do not provide an exercise notice as described above. The Tel Aviv Stock Exchange
rules further require brokers to transfer, on the same date, to the Tel Aviv Stock
Exchange Clearing House the subscription payments with respect to their clients’
exercised rights, and the Tel Aviv Stock Exchange Clearing House thereafter will transfer
these payments to us. Under the Tel Aviv Stock
Exchange rules, during the period of ________, 2007 until
_______, 2007, an exercise notice submitted by a shareholder who holds ordinary shares
through a broker, dealer or other nominee in Israel, by 12:00 p.m. Israel time, shall be
transferred to the Tel Aviv Stock Exchange Clearing House by 12:00 p.m. Israel time on the
next trading day, and shall be cleared by 12:00 p.m. Israel time on the trading day
thereafter. 

	 7.  	 Nominee
Holders  

         If
you are a broker, a trustee or a depositary for securities that holds our ordinary shares
for the account of others as a nominee holder, you should notify the respective beneficial
owners of such shares as soon as possible of the issuance of the rights to find out such
beneficial owners’ intentions. You should obtain instructions from the beneficial
owner with respect to the rights, as set forth in the instructions we have provided to you
for your distribution to beneficial owners. If the beneficial owner so instructs, you
should complete the appropriate subscription certificates. A nominee holder that holds
shares for the account(s) of more than one beneficial owner may exercise the number of
rights to which all such beneficial owners in the aggregate otherwise would have been
entitled if they had been direct record holders of our ordinary shares on the record date,
so long as the nominee submits the appropriate subscription certificates and
certifications and proper payment to us. If you are a member of the Tel Aviv Stock
Exchange, you must comply with the rules of the Tel Aviv Stock Exchange with respect to
providing notices to and receiving instructions from your clients. 

	 8.  	 Procedures
For DTC (The Depository Trust Company) Participants  

          
We expect that your exercise of your subscription privilege with respect to rights may be
made through the facilities of DTC. If you exercise your subscription privilege with
respect to rights through DTC we refer to your rights as DTC Exercised Rights. Please call
the Information Agent, The Altman Group, at 800-330-5136 to obtain copies of the DTC
participant exercise form and the nominee holder certification. 

6

	 9.  	 Rights
Agent and Information Agent  

         We
have appointed American Stock Transfer & Trust Company as Rights Agent and The Altman
Group Inc. as the Information Agent for the rights offering. 

         If
you have questions or need assistance, please contact the Information Agent at the Altman
Group. If you are calling from the United States, you may call Toll Free: 800-330-5136.
For all other calls: 201-806-7300. The Information Agent’s fax number is
201-460-0050; Attention: Mr. Domenick DeRobertis, Managing Director. 

         Subscription
Privilege. As soon as practicable after the Expiration Date,
the Rights Agent will deliver to each validly exercising Rightsholder the ordinary shares
purchased pursuant to such exercise. Such ordinary shares will be issued in the same form,
certificated or book-entry, as the Rights exercised by that Rightsholder. 

	 10.  	 Form W-9.  

         Each
Rightsholder who elects to exercise their rights through the Rights Agent should provide
the Rights Agent with a correct Taxpayer Identification Number (“TIN”) and,
where applicable, certification of such Rightsholder’s exemption from backup
withholding on a Form W-9. Each foreign Rightsholder who elects to exercise their
rights through the Rights Agent should provide the Rights Agent with certification of
foreign status on a Form W-8. Copies of Form W-8 and additional copies of
Form W-9 may be obtained upon request from the Rights Agent at the address, or by
calling the telephone number, indicated above. Failure to provide the information on the
form may subject such holder to 30% federal income tax withholding with respect to any
proceeds received by such Rightsholder. 

7DC689.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

	
EXECUTION VERSION

	
SECOND AMENDMENT

TO

CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of February 28, 2007 (the “Effective Date”), by and among, on the one hand, CECO ENVIRONMENTAL CORP., a Delaware corporation (“Parent”), CECO GROUP, INC., a Delaware corporation (“Group”) and each of
the following Subsidiaries of Parent as Borrowers under this Amendment and the Credit Agreement: CECO FILTERS, INC., a Delaware corporation (“Filters”), NEW BUSCH CO., INC., a Delaware corporation (“New Busch”),

THE KIRK & BLUM MANUFACTURING COMPANY, an Ohio corporation (“K&B”),

KBD/TECHNIC, INC., an Indiana corporation (“Technic”), CECOAIRE, INC., a Delaware corporation (“Aire”), CECO ABATEMENT SYSTEMS, INC., a Delaware corporation

(“Abatement”), H.M. WHITE, INC., a Delaware corporation (“H.M.
White”), CECO

ACQUISITION CORP., a Delaware corporation (“CECO Acquisition”), and, on the other hand, FIFTH THIRD
BANK, an Ohio banking corporation (“Lender”), is as follows:

	
Preliminary Statements

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

     B. The Loan Parties have requested that Lender: (i) consent to the Effox Acquisition; (ii) increase the maximum Revolving Loan Commitment from $13,000,000 to
$20,000,000 (subject to availability); (iii) increase the inventory sublimit from $5,000,000 to $7,500,000 (subject to availability); (iv) make an additional term loan in the aggregate amount of $5,000,000 to finance, in part, the
Effox Acquisition; (v) increase the maximum capital expenditures Financial Covenant commencing with Fiscal Year 2007 from $750,000 to $1,500,000; (vi) increase the minimum Fixed Charge Coverage Ratio from 1.10 to 1.0 to 1.25 to 1.0; (vii)
extend the stated Termination Date of the Line of Credit from January 31, 2009 to January 31, 2010; (viii) make certain changes to the incentive pricing with respect to the Line of Credit, Term Loan A, Unused Line Fee and LOC Fee, each to be based
upon Borrowers’ Fixed Charge Coverage Ratio; (ix) make certain changes to the required Financial Covenant levels with respect to the Maximum Total Funded Debt to Adjusted EBITDA Ratio; and (x) make certain other amendments to the Credit
Agreement and certain of the other Loan Documents. 

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

	
Statement of Agreement

111601v1

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

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

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

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

	
“Effox” means Effox, Inc., an Ohio corporation.

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

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

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

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

     “Excess Cash Flow” means, for the applicable Fiscal Year, an amount equal to the sum of (a) the Loan Parties’ Adjusted EBITDA
for the applicable Fiscal Year minus (b) the Loan Parties’ aggregate Fixed Charges for such Fiscal Year.  All of the foregoing amounts will be determined based on the annual audited
financial statements required to be delivered to Lender pursuant to Section 4.3(b).

     “Excess Cash Flow Payment” has the meaning given in Section 2.12(c).

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

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

-2-

“Term Loan Note A” has the meaning given in Section 2.2(a). “Term
Loan B” has the meaning given in Section 2.12(a). “Term Loan Note B” has the meaning
given in Section 2.12(a).

     1.2 (i) The following definitions in Section 1.1 of the Credit Agreement are hereby amended in their
entirety by substituting the following in their respective steads and (ii) the reference to “the Maximum Total Debt to Adjusted EBITDA Ratio under Section 5.11” in clause (g) of
the definition of Refinancing Debt is amended to read in its entirety “the Maximum Total Funded Debt to Adjusted EBITDA Ratio under Section 5.11”:

     “Adjusted EBITDA” means the total (without duplication and all as determined on a consolidated basis in accordance with GAAP), in
Dollars, of EBITDA for the applicable period, (a) minus Non-financed Capital Expenditures for that same period; (b) minus the
aggregate cash amount of the Loan Parties’ income and franchise tax expense for that same period to the extent deducted in the determination of Net Income; (c) minus any gain or
plus any non-cash loss arising from the sale of capital assets to the extent included or deducted in the determination of Net Income; (d) minus any gain arising from the write-up of any assets (excluding inventory) or plus any non-cash loss from the write-down of any assets, each to the extent included (or deducted in
the case of non-cash losses) in the determination of Net Income; (e) minus any extraordinary gains and items of income to the extent included in the determination of Net Income or
plus any non-cash extraordinary items of loss to the extent deducted in the determination of Net Income; (f) minus any gains (or
plus any non-cash losses) recognized by the Loan Parties as earnings which relate to adjustments made by the Loan Parties as a result of any extraordinary accounting adjustment to the extent
included (or deducted in the case of non-cash losses) in the determination of Net Income; (g) minus non-operating, non-recurring gains (or plus any non-cash losses) from time to time occurring to the extent included (or deducted in the case of non-cash losses) in the determination of Net Income; (h) plus any non-cash
expense or minus any non-cash gain or income during such period resulting from (i) a change in the price of Parent’s common stock opposite the strike price of its options and warrants
outstanding from time to time, (ii) stock option expenses, and (iii) impairment of goodwill; (i) minus the aggregate amount of any dividends to Parent’s stockholders, if any, permitted
expressly by Lender which are paid in cash by Parent during the applicable period; and (j) minus the aggregate amount of Effox Earn-out Payments made by any Loan Party in cash during the
applicable period to the extent not deducted in the determination of Net Income which was used to determine such EBITDA.  The term “applicable period” in this definition means Test
Period in the case of determining the Fixed Charge

-3-

Coverage Ratio or the Maximum Total Funded Debt to Adjusted EBITDA Ratio and Fiscal Year in the case of determining Excess Cash Flow.

     “Applicable Unused Line Fee Percentage” means, as of any date, the applicable percentage shown in the applicable column in the
table below based on the then applicable Fixed Charge Coverage Ratio. As of the Effective Date (as defined in the Second Amendment), the Applicable Unused Line Fee Percentage is 0.125% (i.e., Pricing Grid Level 3).

	
Pricing Grid 
		
 		
Fixed Charge 
		
 		
Applicable Unused Line Fee 
	
	
Level 
		
 		
Coverage Ratio 
		
 		
Percentage 
	
	

		
		

		
		

	
	
Level 1 
		
 		
  1.50 to 1.0 
		
 		
0.25% 
	
	

		
		

		
		

	
	
Level 2 
		
 		
  1.50 to 1.0 and   2.0 to 1.0 
		
 		
0.125% 
	
	

		
		

		
		

	
	
Level 3 
		
 		
  2.0 to 1.0 
		
 		
0.125% 
	
	

		
		

		
		

	

     “Applicable LOC Fee Percentage” means, as of any date, the applicable percentage shown in the applicable column in the table below
based on the then applicable Fixed Charge Coverage Ratio.  As of the Effective Date (as defined in the Second Amendment), the Applicable LOC Fee Percentage is 2.0% (i.e., Pricing Grid Level
3).

	
Pricing Grid 
		
 		
Fixed Charge 
		
 		
Applicable LOC Fee 
	
	
Level 
		
 		
Coverage Ratio 
		
 		
Percentage 
	
	

		
		

		
		

	
	
Level 1 
		
 		
  1.50 to 1.0 
		
 		
2.25% 
	
	

		
		

		
		

	
	
Level 2 
		
 		
  1.50 to 1.0 and   2.0 to 1.0 
		
 		
2.0% 
	
	

		
		

		
		

	
	
Level 3 
		
 		
  2.0 to 1.0 
		
 		
2.0% 
	
	

		
		

		
		

	

     “Borrower” means each of Filters, New Busch, K&B, Technic, Aire, Abatement, H.M. White, CECO Acquisition, and the Domestic
Subsidiaries of Parent or Group hereafter becoming a party to this Agreement pursuant to Section 5.9(b), and “Borrowers”
means, collectively, Filters, New Busch, K&B, Technic, Aire, Abatement, H.M. White, CECO Acquisition, and such additional Domestic Subsidiaries. To the extent a term or provision of this Agreement or any of the other Loan Documents is applicable
to a “Borrower”, it is applicable to each and every Borrower unless the context expressly indicates otherwise.

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

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

plus (b) the lesser of: (i) $500,000 or (ii) 50% of the then

	
Eligible Net Unbilled Revenue;

-4-

plus (c) the lesser of: (i) $7,500,000 or (ii) 50% of the then

net amount of Eligible Inventory; and

less (d) all then Borrowing Base Reserves.

     “EBITDA” means the total (without duplication), in Dollars, of Net Income for the applicable period, plus (a) the aggregate amount of the Loan Parties’ depreciation and amortization expense determined on a consolidated basis in accordance with GAAP for such period to the extent deducted in the
determination of Net Income, plus (b) the aggregate amount of the Loan Parties’ interest expense determined on a consolidated basis in accordance with GAAP for such period to the extent
deducted in the determination of Net Income, and plus (c) the aggregate amount of the Loan Parties’ income and franchise tax expense for such period determined on a consolidated basis
in accordance with GAAP to the extent deducted in the determination of Net Income.  The term “applicable period” in this definition means Test Period in the case of determining the Fixed Charge Coverage Ratio or the Maximum Total Funded
Debt to Adjusted EBITDA Ratio and Fiscal Year in the case of determining Excess Cash Flow.

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

-5-

     “Letter of Credit Availability” means, as at any time, an amount equal to the lesser
of (a) an amount equal to (i) $4,000,000 less (ii) the then Letter of Credit Exposure and (b) the then Revolving Loan Availability.

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

     “Notes” means the Revolving Note (as defined in Section 2.1), Term Loan
Note A (as defined in Section 2.2), Term Loan Note B (as defined in Section 2.12), and any other promissory note made from time to
time by a Borrower in favor of Lender to evidence any of the Obligations.

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

     “Term Loan” means each of Term Loan A and Term Loan B, and “Term Loans” means, collectively, Term Loan A and Term Loan B. 

     “Term Loan Note” means each of Term Loan Note A and Term Loan Note B, and “Term Loan
Notes” means, collectively, Term Loan Note A and Term Loan Note B.

     “Termination Date” means: (a) with respect to the Line of Credit, the Letter of Credit Obligations and the other Obligations (other
than the Term Loans), the earlier of (i) January 31, 2010 and (ii) the date upon which the entire outstanding balance under the Revolving Note shall become due pursuant to the provisions hereof (whether as a result of acceleration by Lender or
otherwise); (b) with respect to Term Loan A, the earliest of (i) January 31, 2009, (ii) the date upon which the entire outstanding balance under Term Loan Note A shall become due pursuant to the provisions hereof (whether as a result of acceleration
by Lender or otherwise), and (iii) the date upon which Term Loan A shall be repaid in full; and (c) with respect to Term Loan B, the earliest of (i) January 31, 2010, (ii) the date upon which the entire outstanding balance under Term Loan Note B
shall become due pursuant to the provisions hereof (whether as a result of acceleration by Lender or otherwise), and (iii) the date upon which Term Loan B shall be repaid in full.  Notwithstanding the foregoing, the Loan Parties specifically
acknowledge and agree, without limiting the generality of the foregoing, that Borrowers’ failure to permanently repay in full all of Term Loan A by January 31, 2009 shall result in the Line of Credit, the Letter of Credit Obligations, Term Loan
B, and all other Obligations being immediately due and payable on such date

-6-

notwithstanding the stated maturity date of January 31, 2010 for the Line of Credit and Term Loan B.

     “Subordinated Debt Default” means any of the following (or any combination of the following): (i) a default or breach of or under
any of the Subordinated Debt Documents, (ii) any event or circumstance that would become a default or breach on the Subordinated Creditor’s election or would become a default or breach after notice, the lapse of time, or on the satisfaction of
any other condition, or all of the foregoing, (iii) the acceleration of any or all of the Subordinated Debt, or (iv) the maturity of the Subordinated Debt on July 1, 2008 without the maturity of such Indebtedness being extended, in a writing signed
by the Subordinated Creditor and Parent before July 1, 2008 on terms satisfactory to Lender, to a date beyond the Termination Date with respect to the Line of Credit.

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

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

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

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

	
2.2      		
Term Loan A.	
	 
	 	
(a) On December 29, 2005, Lender made a loan to	
	 

Borrowers in an original aggregate amount equal to $3,100,000 (“Term Loan A”). No part of Term Loan A may, on the repayment thereof, be redrawn or reborrowed
by a Borrower.  The entire unpaid principal balance of, and accrued interest on, Term Loan A, if not sooner repaid, will be due and payable on the Termination Date with respect to Term Loan A. As of the Effective Date (as defined in the Second
Amendment)

-7-

of the Second Amendment, (i) the outstanding principal balance of Term Loan A is $2,428,333.29 and (ii) Borrowers shall execute and deliver to Lender a Second Amended and Restated Term Promissory Note in the form of
Exhibit 2.2 attached to the Second Amendment (as amended, “Term Loan Note A”), dated as of the Effective Date (as defined
in the Second Amendment), in the principal amount of $2,428,333.29, and bearing interest at such rates, and payable upon such terms, as specified in Term Loan Note A.

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

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

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

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

     (iii) On the date of receipt thereof by any Loan Party, an amount equal to 100% of the Net Proceeds payable or owing to any Loan Party under, or arising out of, the Effox Acquisition Agreement or the
Effox Acquisition, including any purchase price adjustment payment or indemnification or reimbursement payment made after the Effective Date (as defined in the Second Amendment) with respect to the

-8-

Effox Acquisition. Notwithstanding anything to the contrary in this clause (iii), if a Loan Party incurs any out-of-pocket cost or expense for which it receives
reimbursement from Effox under the Effox Acquisition Agreement (“Out-of-Pocket Effox Reimbursement”), then the Loan Parties will (A) apply such Out-of-Pocket Effox Reimbursement
against the then outstanding Revolving Loans and (B) not be obligated to apply such Out-of-Pocket Effox Reimbursement as a mandatory prepayment of the Term Loans.

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

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

-9-

Revolving Commitment will, at Lender’s sole option, be contemporaneously reduced by an amount deemed appropriate by Lender in the exercise of its discretion in good faith.

     1.5 The reference to the date of “January 1, 2007” in Section 2.3(b) of the Credit Agreement is
hereby amended by substituting a reference to “January 1, 2010” for “January 1, 2007” where it appears therein.

     1.6 Section 2.3(j)(ii) of the Credit Agreement is hereby amended in its entirety by substituting the following in its place:

     (ii) For purposes of determining the Applicable LOC Fee Percentage, the Fixed Charge Coverage Ratio will, on and after the First Pricing Grid Determination Date, be determined as of the end of each
Fiscal Year ending on and after the First Pricing Grid Determination Date (each such date being a “Determination Date”). The “First Pricing Grid
Determination Date” will be December 31, 2007. On Lender’s receipt of the financial statements and Compliance Certificate required to be delivered to Lender pursuant to Sections
4.3(b) and 4.3(d) of this Agreement for the Fiscal Year then ended, the LOC Fee will be subject to adjustment in accordance with the table set forth in the
definition of “Applicable LOC Fee Percentage” based on the Fixed Charge Coverage Ratio for such Fiscal Year then ended so long as no Event of Default is existing as of the applicable effective date of adjustment. The foregoing adjustment,
if applicable, will become effective on and after the first day of the first calendar month following delivery to Lender of the financial statements and Compliance Certificate required to be delivered to Lender pursuant to Sections 4.3(b) and 4.3(d) of this Agreement for the Fiscal Year then ended until the next succeeding effective date of adjustment pursuant to this
clause (ii) of Section 2.3(j).  Each of the financial statements and Compliance Certificate required to be delivered to Lender must be delivered to Lender in compliance with Section 4.3 of this Agreement. If, however, either the financial statements or the Compliance Certificate required to be delivered to Lender pursuant to Sections 4.3(b)
and 4.3(d) of this Agreement have not been delivered in accordance with Section 4.3 of this
Agreement, then, at Lender’s option, commencing on the date upon which such financial statements or Compliance Certificate should have been delivered in accordance with Section 4.3 of
this Agreement and continuing until such financial statements or Compliance Certificate are actually delivered in accordance with Section 4.3 of this Agreement, it shall be assumed for
purposes of determining the Applicable Margins, that the Fixed Charge Coverage Ratio was   1.50 to 1.0 and the pricing associated therewith (i.e., Pricing Grid Level 1) will be applicable on the then applicable Determination Date.

-10-

     1.7 Section 2.7(b) of the Credit Agreement is hereby amended in its entirety by substituting the following in its place:

     (b) For purposes of determining the Applicable Unused Line Fee Percentage, the Fixed Charge Coverage Ratio will, on and after the First Pricing Grid Determination Date, be determined as of the end of
each Fiscal Year ending on and after the First Pricing Grid Determination Date (each such date being a “Determination Date”). The “First Pricing
Grid Determination Date” will be December 31, 2007. On Lender’s receipt of the financial statements and Compliance Certificate required to be delivered to Lender pursuant to Sections 4.3(b) and 4.3(d) of this Agreement for the Fiscal Year then ended, the Unused Line Fee will be subject to adjustment in accordance with
the table set forth in the definition of “Applicable Unused Line Fee Percentage” based on the Fixed Charge Coverage Ratio for such Fiscal Year then ended so long as no Event of Default is existing as of the applicable effective date of
adjustment.  The foregoing adjustment, if applicable, will become effective on and after the first day of the first calendar month following delivery to Lender of the financial statements and Compliance Certificate required to be delivered to Lender
pursuant to Sections 4.3(b) and 4.3(d) of this Agreement for the Fiscal Year then ended until the next succeeding effective date of
adjustment pursuant to this Section 2.7.  Each of the financial statements and Compliance Certificate required to be delivered to Lender must be delivered to Lender in compliance with
Section 4.3 of this Agreement.  If, however, either the financial statements or the Compliance Certificate required to be delivered to Lender pursuant to Sections 4.3(b) and 4.3(d) of this Agreement have not been delivered in accordance with Section 4.3 of this Agreement, then, at Lender’s option, commencing on the date upon which such financial statements or Compliance Certificate should have been delivered in accordance with Section
4.3 of this Agreement and continuing until such financial statements or Compliance Certificate are actually delivered in accordance with Section 4.3 of this
Agreement, it shall be assumed for purposes of determining the Applicable Margins, that the Fixed Charge Coverage Ratio was   1.50 to 1.0 and the pricing associated therewith (i.e., Pricing Grid Level 1) will be applicable on the then applicable Determination Date.

     1.8 Section 2 of the Credit Agreement is hereby amended by the addition of a new Section
2.12, in its proper numerical order, to provide in its entirety as follows: 

	 	
2.12 Term Loan B.

-11-

     (a) Subject to the terms and conditions of this Agreement, Lender will make a loan to Borrowers in an amount equal to $5,000,000 (“Term Loan B”).  No part of Term Loan B may, on the repayment thereof, be redrawn or reborrowed by a Borrower. The entire unpaid principal balance of, and accrued interest on, Term Loan B, if not sooner repaid, will be due and payable on the
Termination Date with respect to Term Loan B. Borrowers shall execute and deliver to Lender a Term Promissory Note in the form of Exhibit 2.12 (“Term Loan
Note B”), dated as of the Effective Date (as defined in the Second Amendment), in the principal amount of $5,000,000, and bearing interest at such rates, and payable upon such terms, as specified in Term Loan
Note B.  The proceeds of Term Loan B shall be used (i) to consummate the Effox Acquisition and (ii) for general working capital and corporate purposes.

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

     (c) In addition to the scheduled payments of principal on Term Loan B set forth in Term Loan Note B:

     (i) The payments set forth in Section 2.2(c) shall be made to, or retained by, Lender and applied as provided in Section 2.2(d); and

     (ii) Beginning on May 1, 2008 and continuing on the same date thereafter occurring in each subsequent Fiscal Year until the payment in full of Term Loan B, Borrowers will make a payment to Lender in
an aggregate amount equal to 50% of Excess Cash Flow for the immediately preceding Fiscal Year of Borrowers then ended (each, an “Excess Cash Flow Payment”); provided that Lender will not require an Excess Cash Flow Payment, in any Fiscal Year, in an aggregate amount greater than $1,000,000, but Borrowers may make a voluntary prepayment of Term Loan B in
excess of such $1,000,000. Each Excess Cash Flow Payment shall, absent the occurrence and continuance of an Event of Default, be applied to the remaining installments of principal under Term Loan Note B, in the inverse order of
maturity.

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

-12-

     5.3 Capital Expenditures.  No Loan Party will make or incur any expenditures for real estate, plant, machinery, equipment, or other similar
expenditure (including all renewals, improvements and replacements thereto, and all obligations under any lease of any of the foregoing) that would be capitalized on the balance sheet of a Loan Party in accordance with GAAP in excess of (a)
$750,000 for the Fiscal Year ending on December 31, 2006 or (b) $1,500,000 for any Fiscal Year ending on or after December 31, 2007; provided that (i) the Purchase Price (as defined
in the Effox Acquisition Agreement) paid by any Loan Party in accordance with the Effox Acquisition Agreement will be excluded from the foregoing limitation on capital expenditures and (ii) if (A) the Cincinnati Facility is sold and (B) Lender,
pursuant to an amendment of this Agreement executed by it, consents to the re-investment of the Net Proceeds from the sale of the Cincinnati Facility into a replacement facility, which becomes a Borrower’s Facility under terms and conditions
acceptable to Lender, then the amount of such Net Proceeds used for such replacement facility will be excluded from the foregoing limitation on capital expenditures.

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

     1.11 Section 5.10 of the Credit Agreement is hereby amended in its entirety by substituting the following in its place:

     5.10 Fixed Charge Coverage Ratio. Borrowers will not permit the ratio (“Fixed Charge Coverage
Ratio”) resulting from dividing Adjusted EBITDA for the applicable Test Period by Fixed Charges
for that same Test Period to be less than 1.25 to 1 for any Test Period ending as of the end of any Fiscal Quarter or Fiscal Year ending on or after December 31, 2006.

     1.12 Section 5.11 of the Credit Agreement is hereby amended in its entirety by substituting the following in its place:

     5.11 Maximum Total Funded Debt to Adjusted EBITDA Ratio. Borrowers will not permit the ratio (“Maximum
Total Funded Debt to Adjusted EBITDA Ratio”) resulting from dividing (a) Borrowers’ total Funded Debt as of the end of the applicable Test Period
by (b) Borrowers’ Adjusted EBITDA for the applicable Test Period to exceed the following ratios set opposite the following Test Periods occurring during each of the following
periods:

-13-

	
 
		
 		
Period 
		
 		
Maximum 
	
	
 
		
 		
 
		
 		
Total Funded Debt to 
	
	
 
		
 		
 
		
 		
Adjusted EBITDA Ratio 
	
	
 
	
	
(a) 
		
 		
The Test Period ending on 
		
 		
 
		
 		
 
		
 		
 
	
	
 
		
 		
December 31, 2006 
		
 		
                    3.20 
		
 		
to 
		
 		
1 
	
	
 
	
	
(b) 
		
 		
The Test Period ending on 
		
 		
 
		
 		
 
		
 		
 
	
	
 
		
 		
March 31, 2007 
		
 		
                    4.25 
		
 		
to 
		
 		
1 
	
	
 
	
	
(c) 
		
 		
The Test Period ending on 
		
 		
 
		
 		
 
		
 		
 
	
	
 
		
 		
June 30, 2007 
		
 		
                    4.00 
		
 		
to 
		
 		
1 
	
	
 
	
	
(d) 
		
 		
The Test Period ending on 
		
 		
 
		
 		
 
		
 		
 
	
	
 
		
 		
September 30, 2007 
		
 		
                    3.50 
		
 		
to 
		
 		
1 
	
	
 
	
	
(e) 
		
 		
Each Test Period ending on and after 
		
 		
 
		
 		
 
		
 		
 
	
	
 
		
 		
December 31, 2007 
		
 		
                    3.20 
		
 		
to 
		
 		
1 
	

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

     5.12 Effox Acquisition; Effox Acquisition Documents.  The Loan Parties will not seek, agree to or permit, directly or indirectly, the
amendment, waiver or other change to any material term of or applicable to any of the Effox Acquisition Documents. For purposes of this Section 5.12, “material” means any
modification, waiver, or amendment of any of the Effox Acquisition Documents, which, in the judgment of Lender exercised in good faith, could: (i) materially increase the purchase price for the assets to be acquired under the Effox Acquisition
Documents or the Indebtedness to be incurred by any Loan Party under the Effox Acquisition Documents, (ii) materially and adversely affect any of Lender’s rights or remedies under the Loan Documents, the value of the Loan Collateral, or
Lender’s security interest in or other Lien on the Loan Collateral (including the priority of Lender’s interests), (iii) have a Material Adverse Effect, or (iv) create or result in an Event of Default.

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

(t) (i) the Subordination Agreement is terminated or ceases,

for any reason, to be in full and effect; (ii) the Subordinated Creditor denies its obligations under the Subordination Agreement or attempts to

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limit or terminate or revoke its obligations under the Subordination Agreement; or (iii) there is a default or an event of default under any of the Effox Acquisition Documents by any Person which has a Material Adverse
Effect.

1.15 The Credit Agreement is hereby amended by the addition of a new Exhibit

	
2.12      		
to provide in its entirety the document attached hereto as Exhibit 2.12.	
	 
	 	
1.16 Exhibit 2.1 to the Credit Agreement is hereby amended in its entirety by	
	 

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

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

     3. Other Documents.  As a condition of this Amendment, Borrowers, with the signing of this Amendment, will deliver or, as
applicable, shall cause to be delivered to Lender: (a) the Second Amended and Restated Revolving Credit Promissory Note (“Amended and Restated Revolving Note”) in the form of
Exhibit 2.1 attached hereto; (b) the Second Amended and Restated Term Promissory Note (“Amended and Restated Term Loan Note A”) in the form of Exhibit 2.2 attached hereto; (c) the Term Promissory Note (“Term Loan Note B”) in the
form of Exhibit 2.12 attached hereto; (d) the Joinder Agreement, the Security Agreement, and the Guaranty, each executed by CECO Acquisition and each in the form of Exhibit 3 attached hereto; (e) amendments to each Mortgage in form and substance satisfactory to Lender; (f) the

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Third Amendment to Pledge Agreement executed by Group in form and substance satisfactory to Lender; (g) copies, certified by the directors of each Borrower, of resolutions of such directors authorizing the execution of this
Amendment and all other documents executed in connection herewith, which certificates and resolutions will be in form and substance satisfactory to Lender; (h) the First Amendment to Subordination Agreement executed by Green Diamond, in form and
substance satisfactory to Lender; (i) a Trademark Security Agreement executed by CECO Acquisition and Lender in the form of Exhibit 3 attached hereto; and (j) such other documents,
instruments, and agreements deemed necessary or desirable by Lender to effect the amendments to Borrowers’ credit facilities with Lender contemplated by this Amendment.

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

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

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

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

	
4.4      		
No Event of Default has occurred and is continuing.	
	 
	
4.5      		
As of the closing of the Effox Acquisition:	
	 
	 	
4.5.1 Each Loan Party has adequate power and authority and has full	
	 

legal right to enter into each of the Effox Acquisition Documents to which it is a party, and to perform, observe and comply with all of its agreements and obligations under each of the Effox Acquisition Documents.

     4.5.2 The execution and delivery by each Loan Party of the Effox Acquisition Documents to which it is a party, the performance by each Loan Party of all of
its

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

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

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

     5. Costs and Expenses; Amendment Fee. As a condition of this Amendment, (i) Borrowers will pay to Lender an amendment fee of
$30,000, payable in full on the Effective Date; such amendment fee, when paid, will be fully earned and non-refundable under all circumstances, and (ii) Borrowers will promptly on demand pay or reimburse Lender for the costs and expenses
incurred by Lender in connection with this Amendment, including, without limitation, reasonable attorneys’ fees.

     6. Entire Agreement. This Amendment, together with the other Loan Documents, sets forth the entire agreement of the parties
with respect to the subject matter of this

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Amendment and supersedes all previous understandings, written or oral, in respect of this Amendment and the other Loan Documents.

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

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

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

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

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

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

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

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

[Signature Page Follows]

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

CECO ENVIRONMENTAL CORP. CECO GROUP, INC.

By: /s/Dennis W. Blazer By: /s/Dennis W. Blazer

Dennis W. Blazer, Chief Financial Officer Dennis W. Blazer, Chief Financial Officer, and Vice President Secretary and Treasurer

CECO FILTERS, INC. NEW BUSCH CO., INC.

By: /s/Dennis W. Blazer By: /s/Dennis W. Blazer

Dennis W. Blazer, Secretary and Treasurer Dennis W. Blazer, Secretary and Treasurer

THE KIRK & BLUM KBD/TECHNIC, INC.  MANUFACTURING COMPANY

By: /s/Dennis W. Blazer By: /s/Dennis W. Blazer

Dennis W. Blazer, Secretary and Treasurer Dennis W. Blazer, Secretary and Treasurer

CECOAIRE, INC. CECO ABATEMENT SYSTEMS, INC.

By: /s/Dennis W. Blazer By: /s/Dennis W. Blazer

Dennis W. Blazer, Secretary and Treasurer Dennis W. Blazer, Secretary and Treasurer

H.M. WHITE, INC. CECO ACQUISITION CORP.

By: /s/Dennis W. Blazer By: /s/Dennis W. Blazer

Dennis W. Blazer, Treasurer Dennis W. Blazer, Secretary and Treasurer

	
FIFTH THIRD BANK

	
By: /s/Donald K. Mitchell

Donald K. Mitchell, Vice President

	
SIGNATURE PAGE TO

SECOND AMENDMENT TO CREDIT AGREEMENT

(CECO Environmental Corp. et al.)

111601v1

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