The New Facility consists of a term loan in the amount of $3.1 million and a revolving loan of up to $13.0 million and is available (a) to refinance existing indebtedness of the Company, and (b) for general corporate purposes. The interest rate for the term loan is based upon the prime rate plus 2.0% and the interest rate for the revolving loan is based upon the prime rate plus 2.25%. Under the revolving loan, the Borrowers may request the bank to issue letters of credit, for which a fee is charged in the amount of 3.0% per annum on the amount on each letter of credit issued. The Borrowers must also pay a monthly collateral management fee of $1,000 and a monthly fee on the unused portion of the revolving loan in an amount equal to (i) the amount of the average unused revolving credit line in the previous calendar month multiplied by (ii) .5% multiplied by a fraction, the numerator of which is the number of days in the previous calendar month and the denominator of which is 360.

The New Facility contains customary representations and warranties and affirmative and negative covenants, including, but not limited to, the following financial covenants: (a) the Maximum Total Funded Debt to Adjusted EBITDA Ratio for any consecutive period of four fiscal quarters ending on the last day of a fiscal quarter may not exceed 3.20 to 1.0; and (b) the Fixed Charge Coverage Ratio for any consecutive period of four fiscal quarters ending on the last day of a fiscal quarter may not be less than 1.10 to 1. A violation of these covenants could result in a default under the New Facility, which could permit the bank to restrict the Company's ability to access the New Facility and require the immediate repayment of any outstanding advances under the New Facility. The New Facility has a termination date of January 31, 2007.

The description set forth herein of the terms and conditions of the New Facility is qualified in its entirety by reference to the full text of such agreement, which is filed with this report as Exhibit 10.1 and incorporated by reference into this Item 1.01.   

On January 4, 2006, CECO issued a press release announcing the New Facility. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

This report contains statements about the future, sometimes referred to as "forward--looking" statements. Forward-looking statements are typically identified by the use of the words "believe," "may," "should," "expect," "anticipate," "estimate," "project," "propose,""plan," "intend" and similar words and expressions. Forward-looking statements are subject to risks and uncertainties outside CECO's control. Actual events or results may differ materially from the forward-looking statements. For a discussion of additional contingencies and uncertainties to which information respecting future events is subject, see CECO's other SEC reports.

The Company terminated such Credit Agreement listed above in connection with the entry into the $16.1 million New Facility described in Item 1.01. No early termination penalties were incurred by the Company as a result of the termination of such credit facility.

The 2004 Facility had been available for general corporate purposes, provided for maximum borrowings of $13.1 million and was scheduled to mature on January 1, 2006.