Employment Agreement

Employment Agreement

                                                                    EXHIBIT 10.4

            This Document is subject to the terms of a Subordination Agreement
            in favor of PNC Bank, National Association, as agent for certain
            banks. Notwithstanding any contrary statement contained in the
            within instrument, no payment on account of any obligation arising
            from or in connection with the within instrument or any related
            agreement (whether of principal, interest or otherwise) shall be
            made, paid, received or accepted except in accordance with the terms
            of said Subordination Agreement.

                              EMPLOYMENT AGREEMENT

         This agreement ("Agreement") is made as of December 7, 1999 by and
among The Kirk & Blum Manufacturing Company, an Ohio corporation ("K&B"), and
LAWRENCE J. BLUM (the "Employee").


         K&B is a wholly-owned subsidiary of CECO Group, Inc., a Delaware
corporation. CECO is a wholly-owned subsidiary of CECO Environmental Corp., a
New York corporation ("CEC");

         CEC, CECO and the other direct and indirect subsidiaries of CEC,
including without limitation of the foregoing K&B and kbd/Technic, Inc. ("KTI"
and collectively with all of the foregoing, the "Companies") are engaged in the
business of acquiring and operating businesses that engage in engineering,
designing, manufacturing or installation services in the air pollution control
industry including without limitation of the foregoing, (a) fabrication and
installation of industrial ventilation, dust, fume and mist control systems, as
well as automotive spray booth systems, industrial and process piping and other
industrial sheet metal work, (b) fabrication of parts, subassemblies or
customized products for air pollution and non-air pollution applications from
sheet, plate and structural steel, (c) the provision of standard and
non-standard components for contractors and companies that design and/or install
their own air pollution control equipment, or (d) engineering services
concentrated in the industrial ventilation area (the "Business");

         Employee was employed by K&B and KTI, two of the Companies and
wholly-owned subsidiaries of CECO, and will be employed by CECO to assist in the

         Such employment constitutes a confidential relationship wherein
Employee will become familiar with and aware of information as to the specific
manner of doing business and the potential acquisition candidates of the
Companies and their affiliates and future plans with respect thereto, all of
which information is secret and proprietary and constitutes valuable goodwill of
the Companies and their affiliates;

         Employee recognizes that the success of Companies' Business is
dependent upon the maintenance of a number of proprietary trade secrets,
including the identity of customers and potential acquisition candidates, the
confidential information regarding and analysis of such candidates and the
financial data of the Companies or either of them or their affiliates, and that
the protection of these proprietary trade secrets is of critical importance to
the Companies; and

         Employee recognizes that the Companies will sustain great loss and
damage if he should violate the provisions of this Agreement. Further, monetary
damages for such losses would be extremely difficult to measure and would
therefore be likely to be inadequate for any violation of this Agreement by


         For good and valuable consideration the parties hereby agree as

         1. Employment: K&B hereby employs Employee, and Employee hereby accepts
employment with K&B. Employee shall be appointed the Vice President of K&B.
Employee will perform the duties associated with such office and will perform
such others duties as may be assigned to him from time to time by the board of
directors, president or chief executive officer of K&B. During his employment,
Employee shall devote his full time and best efforts to promote and further the
business and services of K&B and the other Companies. Employee shall faithfully
adhere to, execute and fulfill all policies established by K&B's board of
directors. Employee shall not, during his employment hereunder, be engaged in
any business or perform any services in any capacity other than for K&B or the
other Companies, whether or not they interfere with his duties to K&B, without
the prior approval of the Board of Directors of K&B, expect that no such
approval shall be required with respect to volunteer activities for
organizations with charitable purposes; provided that such activities do not
interfere with his duties for K&B and are only occasionally during business
hours. Without limiting the generality of any other provisions hereunder, under
no circumstances shall Employee accept any form of remuneration from any
business owner or broker with respect to any matter related to the Business of
the Companies.

         2. Term. This Agreement shall expire five years from the date hereof,
unless terminated as herein provided (the "Term").

         3. Compensation. During the Term, K&B shall compensate Employee as

                  a. Salary. For his services during the Term, K&B shall pay to
Employee a base salary of $100,000 per year, payable in accordance with K&B's
standard payroll practices, but no less frequently than in monthly installments,
and which may be increased from time to time in the discretion of the board of
directors of K&B. The payment of salary and any bonuses paid hereunder shall be
subject to all federal, state and local withholding taxes, social security tax
deductions and other general obligations. Employee may be entitled to receive
additional compensation from K&B in such form and only to the extent explicitly
set forth below.


                  b. Other Compensation. Employee shall be entitled to
participate, on the same terms as other non-union, executive employees of K&B,
in any medical, dental or other health plan, 401(k) plan, stock option plan,
profit-sharing plan and life insurance plan that K&B may adopt or maintain for
such employees, any of which plans may be changed, terminated or eliminated by
K&B at any time in their sole discretion.

                  c. Reimbursement of Expenses. K&B shall reimburse Employee for
properly documented expenses that are incurred by Employee on behalf of K&B in
accordance with corporate policies in effect from time to time.

                  d. Stock Purchase Warrants. Employee shall be granted on the
date hereof a stock purchase warrant (the "Stock Purchase Warrant") in the form
of Exhibit A hereto exercisable for 217,000 shares of CEC's common stock. The
such stock purchase warrant shall become exercisable over a period of four (4)
years at the rate of one-quarter of the stock that can be purchased under such
stock purchase warrant on each of the first four (4) anniversaries of the date
immediately prior to the date of this Agreement. Such Stock Purchase Warrant
shall have a term of ten (10) years.

                  e. Bonus. In addition to the foregoing, K&B shall pay a bonus
(the "Bonus") to Employee with respect to each the fiscal years ended as of
December 31, 2000, 2001, 2002, 2003 and 2004 equal to (i) 21.7% of 25% of the
net income before interest and taxes in excess of $4,000,000 of CEC as reported
on its audited financial statements filed with the Securities and Exchange
Commission ("SEC") with respect to such year, less (ii) the contribution made on
behalf of Employee to any profit sharing or 401(k) plan by CEC, CECO, K&B or any
affiliate (other than Employee) with respect to such fiscal year. Net income
shall be calculated in accordance with generally accepted accounting principles,
consistently applied, as such may be modified or mandated by rules and
regulations promulgated by the SEC or any other body that may have been
delegated such responsibility.

         If this Agreement shall be terminated prior to the expiration of its
term for any reason (other than a termination of this Agreement by K&B without
Cause, as defined below, or Breach by K&B, as defined below), Employee shall
only be paid Bonuses for the period through the date of termination. If Employee
is terminated without Cause and not as a result of disability, as defined below,
or terminates this Agreement as a result of a Breach by K&B, Employee shall
continue to receive Bonuses as if he had been employed for the entire term of
this Agreement. The Bonus with respect to the year of termination (other than
termination without Cause and not as a result of a disability) shall be equal to
a fraction of the amount of the Bonus otherwise payable with respect to such
year as a whole, where the numerator of such fraction shall be the number of
days in the year of termination between January 1 and the date of termination,
inclusive, and the denominator shall be 365 or 366 (the number of days in such
year) as applicable. The Bonus with respect to each year shall be paid on or
prior to May 15, of the year following the year with respect to which such Bonus


                  Notwithstanding the foregoing, no Bonus shall be paid if K&B,
CECO or CEC is in default under any financing agreement with any bank or other
financial institution or any other material agreement to which K&B, CECO or CEC
is a party, or the payment of such Bonus would cause K&B,CEC or CECO to be in
default under any such agreement. If no Bonus is paid as a result of the
operation of the foregoing sentence, such Bonus shall accrue interest at the
rate of 8% per annum, calculated on the basis of a 365/366 day year from June 30
of the year such Bonus was payable. Any such interest and accrued and unpaid
Bonus shall be paid as soon as CEC, K&B or CECO ceases to be in default under
such agreements and such payment would not cause a default under any such

         4. Vacation. Employee shall be entitled to four (4) weeks of paid
vacation in each full calendar year of employment at times mutually acceptable
to Employee and K&B. Vacation shall be earned ratably over the course of a
calendar year, and unused vacation time cannot be carried forward past December
31 of any year without the prior written consent of K&B.

         5. Termination by K&B.

                  a. Termination for Cause. K&B may terminate this Agreement at
any time for Cause, in which case Employee shall be entitled to receive base
salary and Bonus accrued through the date of such termination. Any of the
following shall constitute "Cause":

                           (i) any material breach by Employee of any of the
                  terms of this Agreement or his non-competition agreement with
                  K&B or the Employee Innovations and Proprietary Rights
                  Assignment Agreement between Employee and K&B where such
                  breach is not cured within thirty (30) days after written
                  notice of such breach is delivered to Employee;

                           (ii) intoxication with alcohol or drugs while on the
                  premises of K&B or any of the Companies or any customer or
                  potential customer to the extent that in the reasonable
                  judgment of management, Employee is abusive or his ability to
                  perform his duties and responsibilities under this Agreement
                  is impaired;

                           (iii) conviction of a felony or any misdemeanor
                  involving dishonesty, theft, the failure to tell the truth,
                  other unethical behavior, racial prejudice, drugs, alcohol,
                  sexual misconduct or any other crime likely to result in
                  public disparagement with respect to any of the Companies;

                            (iv) intentional misappropriation of property
                  belonging to K&B or any of the Companies;

                           (v) illegal business practices in connection with any
                  of K&B or the Companies' businesses which could have a
                  material adverse effect on CEC's, CECO's, K&B's or any of the
                  Companies' or their business or financial position or


                           (vi) excessive absence of Employee from his
                  employment during usual business hours for reasons other than
                  vacation, disability or sickness after written notice thereof
                  is delivered to Employee describing the nature of such excess
                  absences and affording Employee one more opportunity to avoid
                  excess absences; or

                           (vi) failure of Employee to obey directions of the
                  Board of Directors of K&B, the president or chief executive
                  officer of K&B.

                  (b) Termination Without Cause. K&B may terminate the
employment of Employee, and this Agreement, without Cause at any time, in which
event K&B shall pay to Employee, in full satisfaction of K&B's obligations to
Employee under this Agreement, the compensation accrued but unpaid through the
date of the termination of his employment, and shall continue to pay base salary
and Bonuses for the balance of the Term of this Agreement as if he had remained
employed by K&B for such term. Such amounts shall be earned and paid rateably
over the applicable period in accordance with K&B's regular payroll practices.

                  (c) Breach by K&B. Employee may terminate his employment with
K&B if K&B shall (i) materially breach any of its obligations and
responsibilities under this Agreement and such breach shall be continuing, (ii)
relocate the location of Employee's regular work place to a location more than
35 miles from its current location in Cincinnati, Ohio (excluding travel in the
course of performing Employee's duties), and (iii) demote the Employee to a less
prestigious position without the mutual agreement of K&B and the Employee
(collectively, "Breach by K&B"); provided, that, Employee shall not terminate
his employment under this paragraph (c) unless he shall first have delivered to
CEC a written notice setting forth with particularity the basis for such
termination and shall have given the Board of Directors of CEC an opportunity to
meet with Employee and, if curable, to cure such breach within thirty (30) days
following delivery of such written notice. If Employee's employment is
terminated by reason of Breach by K&B, K&B shall pay the Employee his full
accrued and unpaid compensation through the date of such termination, and shall
continue to pay base salary and Bonuses for the balance of the term of this
Agreement as if he had remained employed by K&B for such term. Such amounts
shall be earned and paid rateably over the applicable period in accordance with
K&B's regular payroll practices.

         6. Termination on Account of Death or Disability. If Employee dies
during the Term, this Agreement shall terminate, and K&B shall pay to the estate
of Employee the base salary accrued but unpaid through the date of his death
plus any Bonus accrued through the date of death (which shall be payable as
provided above). The Board of Directors of K&B may elect to terminate the
engagement of Employee for "disability," if Employee is no longer able to
perform the duties of his position due to illness, accident or other physical or
mental condition and such disability is expected to continue, with or without
interruption, for a period of six months, or such greater period as may be
required by any applicable law. If the Board of Directors of K&B determines that
Employee is so disabled, it shall deliver notice to Employee and K&B shall pay
to Employee the base salary accrued but unpaid through the date of the
termination of his employment hereunder plus any Bonuses accrued to the date of
such termination (which shall be payable as provided above) in full satisfaction
of K&B's obligations to Employee under this Agreement.


         7. Termination by Employee. Employee may terminate his employment at
any time. If he does so other than as a result of a Breach by K&B, K&B shall pay
to him the base salary accrued but unpaid through the date of such termination
of his employment in full satisfaction of K&B's obligations to Employee under
this Agreement and K&B shall only be obligated to pay Employee his Bonus for the
period through and ending on the date of termination.

         8. a. Confidentiality. Except in the furtherance of the business of the
Companies, during and at all times after Employee's employment:

                  (i) Employee shall not disclose to any person or entity,
         without K&B's prior written consent, any confidential or secret
         proprietary information, whether prepared by him or others.

                  (ii) Employee shall not directly or indirectly use any such
         proprietary information other than as directed by K&B in writing.

                  (iii) Employee shall not remove confidential or secret
         proprietary information from the premises of K&B without the prior
         written consent of K&B.

Upon termination of his employment for whatever reason, with or without Cause,
Employee will promptly deliver to K&B all originals and copies (whether in note,
memo or other document form or on video, audio or computer tapes or discs or
otherwise) of confidential or secret proprietary information in his possession,
custody or control, whether prepared by him or others.

Confidential or secret proprietary information includes, but is not limited to:

                  (i) the name of any company or business, all or any
         substantial part of which is or at any time was a candidate for
         potential acquisition by any of the Companies, together with all
         analyses and other information which any of the Companies has
         generated, compiled or otherwise obtained with respect to such
         candidate, business or potential acquisition, or with respect to the
         potential effect of such acquisition on the business, assets, financial
         results or prospects of any of the Companies;

                  (ii) business, pricing and management methods;

                  (iii) finances, strategies, systems, research, surveys, plans,
         reports, recommendations and conclusions;

                  (iv) names of, arrangements with, or other information
         relating to, the Companies' customers, equipment suppliers,
         manufacturers, financiers, owners or operators, representatives and
         other persons who have business relationships with the Companies or who
         are prospects for business relationships with any of the Companies;


                  (v) technical information, work products and know-how; and

                  (vi) cost, operating, and other management information
         systems, and other software and programming.

         b. Employee Inventions. Employee shall enter into an Employee
Innovations and Proprietary Rights Assignment Agreement in the form of Exhibit B
attached hereto.

         9. Damages, etc. The parties acknowledge that monetary damages will be
inadequate and the Companies will be irreparably damaged if the provisions of
this Agreement are not specifically enforced. K&B shall be entitled, among other
remedies, (a) without any bond or other security being required, to an
injunction restraining any violation of this Agreement by Employee and by any
person or entity to whom Employee provides or proposes to provide any services
in violation of this Agreement, and (b) to require Employee to hold in a
constructive trust, account for and pay over to K&B all compensation and other
benefits which Employee shall derive as a result of any action or omission which
is a violation of any provision of this Agreement.

         10. Enforceability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had not
been contained herein. The courts or other parties enforcing this Agreement
shall be entitled to modify the duration and scope of any restriction contained
herein to the extent necessary to render such restriction enforceable, and such
restriction as so modified shall be enforced.

         11. Return of Property. All products, records, designs, plans, manuals,
"field guides", memoranda, lists and other property delivered to Employee by or
on behalf of any of the Companies or by their customers, including, but not
limited to, customers obtained for any of them by Employee, and all records
compiled by Employee which pertain to the business of any of the Companies, or
any of their customers, whether or not confidential, shall be and remain the
property of the Companies, and be subject at all times to the discretion and
control of the Companies. Likewise, all correspondence with customers or
representatives, reports, records, charts, advertising materials, and any data
collected by Employee, or by or on behalf of any of the Companies or their
representatives, whether or not confidential, shall be delivered promptly to K&B
without request by it upon termination of Employee's employment.


         12. Suits Against the Companies. Both during and after the term of his
employment hereunder, Employee covenants that he will not bring suit or file
counterclaims against the Companies or any of them for corporate misconduct,
unless both of the following shall have occurred: (a) Employee shall have first
made written demand to the Board of Director of CEC to investigate and deal with
such misconduct, and (b) such Board of Directors shall have failed within 45
days after the date of receipt of such demand to establish a Special Litigation
Committee, consisting exclusively of outside directors, to investigate and deal
with such misconduct. Without limiting the generality of and to further
implement the foregoing, Employee irrevocably and unconditionally consents at
the option of either of the Companies to the entry of temporary restraining
orders and temporary and permanent injunctions, without posting bond or other
security, against the filing of any action or counterclaim which is prohibited
hereunder. The opinion of such Board of Directors shall be binding and
conclusive on the determination of which directors constitute "outside
directors", and the determination of the Special Litigation Committee shall be
binding and conclusive on all matters relating to the actual or alleged
misconduct which is referred to it as aforesaid.

         13. Cooperation in Proceedings. During and after the termination of
Employee's employment, Employee shall for reasonable compensation consistent
with his compensation from K&B cooperate fully and at reasonable times with any
of the Companies in all litigation and regulatory proceedings with respect to
which any of the Companies seeks Employee's assistance and as to which Employee
has any knowledge or involvement. Without limiting the generality of the
foregoing, Employee shall be available to testify at such litigations and other
proceedings, and will cooperate with counsel to the Companies in preparing
materials and offering advice in such litigation and other proceedings. Except
as required by law, and then only upon reasonable prior written notice to K&B,
Employee shall not in any way cooperate or assist any person or entity in any
matter which is adverse to any of the Companies or to any person who was at any
time an officer or director of any of the Companies.

         14. Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and will be deemed duly given when
personally delivered, the next business day when deposited with Federal Express
or other nationally recognized overnight courier service delivery prepaid or
five (5) business days after being sent by registered mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth

If to Employee:                             Copy to:

________________________                    ______________________________
________________________                    ______________________________


If to K&B:                          Copy to:

c/o CECO Environmental Corp.        Leslie J.  Weiss, Esq.
505 University Avenue               Sugar, Friedberg & Felsenthal
Suite 1400                          30 North LaSalle Street
Toronto, Ontario  M5G 1X3           Suite 2600
Canada                              Chicago, Illinois 60602-2506

Either party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.

         15. Survival. The provisions of Sections 8 through 18 and 21 shall
survive the termination of this Agreement.

         16. Other Agreements. Employee represents that he has furnished to K&B
copies of all agreements which restrict or limit or could restrict or limit his
services for K&B at any time during the term. However, nothing in this Agreement
shall be construed to render an opinion as to the interpretation or validity of
any agreements with prior employers purporting to restrict or limit Employee's
services for K&B.

         17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio without giving effect to any
choice or conflict of law provision or rule, whether of the State of Ohio or any
other jurisdiction, that would cause the application of the laws of any
jurisdiction other than the State of Ohio. In the event of any dispute or claim
relating to arising out of Employee's employment relationship with K&B,
Employee's stock options, the Stock Purchase Warrant or the termination of
Employee's employment relationship with K&B (including, without limitation of
the foregoing, any claim of wrongful termination or age, sex disability, race or
other discrimination), Employee and K&B agree that (i) all such disputes shall
be fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in Cook County, Illinois, and (ii) each waives his or
its rights to have such dispute tried by a court or a jury. RIGHT TO TRIAL BY
JURY IS WAIVED. However, Employee and K&B agree that this arbitration provision
shall not apply to any disputes or claims relating to or arising out of the
misuse or misappropriation of K&B's or any Companies' trade secrets, proprietary
information, other proprietary rights or property. With respect to each such
dispute, each of the parties submits to the jurisdiction of any state court
sitting in Cincinnati, Ohio or the United States District Court for the Southern
District of Ohio.

         18. Advice of Counsel. Employee has been advised by his own counsel
concerning this Agreement prior to executing this Agreement.


         19. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective heirs,
legal representatives, successors and permitted assigns. Employee may not assign
either this Agreement or any of Employee's rights, interests or obligations
hereunder. K&B may assign any or all of its rights and interests hereunder to
any person or entity that acquires the business of K&B or any Company, or to any
entity with which such company merges or consolidates.

         20 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same agreement.

         21 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

         22 Waiver. The waiver of a breach of any provision of this Agreement
shall not operate or be construed to be a waiver of any other provision or of a
subsequent or prior breach of this Agreement.

         23 Entire Agreement. This Agreement contains the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
or contemporaneous negotiations, correspondence, understandings and agreements
between the parties regarding the subject matter of this Agreement. This
Agreement may not be amended or modified or any provision waived except in a
writing signed by both parties and supported by new consideration.

Executed as of the date first above set forth.


By: /s/  Richard J. Blum
    Its: President

    Lawrence J. Blum
- -----------------------------------
Lawrence J. Blum, Employee



         The undersigned corporations hereby guaranty the foregoing obligations
of The Kirk & Blum Manufacturing Company.

                                 CECO ENVIRONMENTAL CORP.

                                  By: /s/  Phillip DeZwirek
                                      Its: President

                                  CECO GROUP, INC.

                                  By: /s/  Phillip DeZwirek
                                      Its: President