Exhibit 10.7
SECOND AMENDMENT TO
CREDIT AGREEMENT
     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of
November 4, 2009 and is by and between FUEL TECH INC., a Delaware corporation
(the “Borrower”), the Loan Parties party hereto, and JPMORGAN CHASE BANK, N.A.,
a national banking association (“Lender”).
     WHEREAS, Lender and the Loan Parties are parties to a Credit Agreement
dated as of June 30, 2009 (as amended from time to time, the “Credit
Agreement”). The Credit Agreement evidences certain credit facilities pursuant
to which the Lender has made certain revolving loans to the Loan Parties on the
terms and conditions set forth therein. The Loan Parties’ obligations under the
Credit Agreement are further evidenced by that certain Promissory Note executed
by Borrower in the original principal amount of $25,000,000.00 dated June 30,
2009; and
     WHEREAS, pursuant to the First Amendment to Credit Agreement dated
October 5, 2009, the parties corrected a scrivener’s error which had occurred in
Section 6.14 (b) (“Leverage Ratio”) of the Credit Agreement; and
     WHEREAS, the Borrower has failed to comply with the Minimum Net Income
covenant set forth at Section 6.14(a) of the Credit Agreement for the quarter
ending September 30, 2009, which failure is an Event of Default pursuant to
Subsection (d) of Article VII of the Credit Agreement (“Covenant Default”); and
     WHEREAS, the Borrower has requested that the Lender waive the Covenant
Default for the period ending September 30, 2009 and establish a Minimum Net
Income Covenant for the period ending December 31, 2009; and
     WHEREAS, the Lender is willing to waive the Covenant Default and establish
a Covenant as requested by Borrower, but only on the terms and subject to the
conditions herein set forth.
     NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
     1. The parties acknowledge the accuracy of the foregoing recitals. All
capitalized terms used herein without specific definitions should be accorded
the meanings set forth for such terms in the Credit Agreement.
     2. Borrower acknowledges the existence of the Covenant Default and agrees
that due to the Covenant Default, the Lender became entitled to exercise all
rights pursuant to the Credit Agreement, at law, in equity, or otherwise, at any
time. In consideration of the agreements the Borrower is making pursuant to this
Amendment and notwithstanding the fact that the Lender is not obligated to do
so, the Lender hereby waives the Covenant Default for the period ending
September 30, 2009. This waiver applies only to the Covenant Default as
described herein, and shall not be deemed to be a waiver of any other breach or
provision of the Credit Agreement. The within waiver does not create an
obligation on the part of the Lender to agree to, or to

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negotiate or consider an agreement to, any waiver of any other breach or
non-compliance by the Borrower with any other terms or provisions of the Credit
Agreement. The within waiver does not create a custom or course of conduct by
the Lender and does not obligate the Lender to waive any other breach or
non-compliance by Borrower of any of its obligations under the Credit Agreement.
     3. From and after the date hereof, Section 6.14(a) of the Credit Agreement
shall be amended to hereafter provide as follows:
“(a) Minimum Net Income. The Borrower shall have, on December 31, 2009, Net
Income for the quarter then-ended of not less than ($2,000,000.00).”
     4. From and after the date hereof, Section 6.14(b) of the Credit Agreement
shall be amended to hereafter provide as follows:
“(b) Leverage Ratio. The Borrower will not permit the Leverage Ratio, determined
for any period of four consecutive fiscal quarters ending on any measurement
date set forth below, to be greater than the ratio set forth below opposite such
period:

      Measurement Date   Ratio 3/31/10   2.75:1.0 6/30/10 and the last day of
each quarter thereafter   1.5:1.0

     5. The definition of “Permitted Acquisitions” in the Credit Agreement is
amended by deleting paragraph (f) thereof in its entirety and replacing that
paragraph with the following:
“(f) The purchase price for all Acquisitions made during any fiscal year of the
Borrower shall not exceed (i) $5,000,000.00 in the aggregate if the Leverage
Ratio is greater than 2:75:1.00 on any measurement date [as provided in
Section 6.14(b)] during such year or (ii) $10,000,000.00 in the aggregate if the
Leverage Ratio is less than or equal to 2.75:1.0 on any such measurement date
during such year;”
     6. From and after the date hereof, the definition of “Applicable Rate” as
set forth in the Credit Agreement shall mean as follows:
“Applicable Rate” means, for any day, with respect to any CBFR Loan or
Eurodollar Revolving Loan, or with respect to the commitment fees or letter of
credit fees payable
Second Amendment to
Credit Agreement

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hereunder, as the case may be, the applicable rate per annum set forth below
under the caption ‘CBFR Spread,’ ‘Eurodollar Spread,’ ‘Commitment Fee Rate,’ or
‘Letter of Credit Rate’ as the case may be, based upon the Borrower’s Leverage
Ratio as of the most recent determination date:

                                              Revolver                  
Revolver     Eurodollar     Letter of Credit         Leverage Ratio   CBFR
Spread     Spread     Rate     Commitment Fee Rate  
Category 1
≤ .75 to 1.0
    0       2.50 %     2.0 %     .25 %
Category 2
> .75 to 1.0 but
≤ 1.25 to 1.0
    .25 %     2.75 %     2.25 %     .25 %
Category 3
> 1.25 to 1.0 but
≤ 2.25 to 1.0
    .50 %     3.00 %     2.5 %     .25 %
Category 4
> 2.25 to 1.0 but
≤ 3.0 to 1.0
    .75 %     3.25 %     2.75 %     .25 %
Category 5
> 3.0 to 1.0
    1.00 %     3.75 %     3.25 %     .25 %

For purposes of the foregoing, (a) the Applicable Rate shall be determined as of
the end of each fiscal quarter of the Borrower based upon the Borrower’s annual
or quarterly consolidated financial statements delivered pursuant to
Section 5.01 and (b) each change in the Applicable Rate resulting from a change
in the Leverage Ratio shall be effective during the period commencing on and
including the date of delivery to the Lender of such consolidated financial
statements indicating such change and ending on the date immediately preceding
the effective date of the next such change, provided that the Leverage Ratio
shall be deemed to be in Category 5 at the option of the Lender if the Borrower
fails to deliver the annual or quarterly consolidated financial statements
required to be delivered by it pursuant to Section 5.01, during the period from
the expiration of the time for delivery thereof until such consolidated
financial statements are delivered.
     7. This Amendment shall be binding upon and inure to the benefit of the
successors and assigns of the Loan Parties and the Lender.
Second Amendment to
Credit Agreement

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     8. Except as expressly amended hereby, the Credit Agreement shall remain in
full force and effect. The Credit Agreement and all rights and powers created
thereby are in all respects ratified and confirmed.
     9. This Amendment has been duly authorized, executed and delivered on
behalf of the Loan Parties pursuant to all requisite corporate authority, and
the Credit Agreement as amended hereby constitutes the legal, valid and binding
obligation of the Loan Parties, enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditor’s rights.
     10. Borrower hereby certifies, represents and warrants to Lender that all
certifications, representations and warranties made by Borrower to Lender in or
in connection with the Credit Agreement were true in all material respects as of
the date of the Credit Agreement and are true in all material respects on and as
of the date hereof as if made on and as of the date hereof.
     11. Borrower hereby acknowledges and agrees that Borrower has no defense,
offset or counterclaim to the payment of principal, interest, fees or other
liabilities owing under the Credit Agreement and hereby waive and relinquishes
any such defense, offset or counterclaim and Borrower hereby releases Lender and
its respective officers, directors, agents, affiliates, successors and assigns
from any claim, demand or cause of action, known or unknown, contingent or
liquidated, which may exist or hereafter be known to exist relating to any
matter prior to the date hereof.
     12. Except as otherwise specified herein, this Amendment embodies the
entire agreement and understanding between Lender and Borrower with respect to
the subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter.
     13. This Amendment may be signed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
     14. This Amendment is governed and controlled by the laws of the state of
Illinois.
[Signature Page to Follow]
Second Amendment to
Credit Agreement

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     IN WITNESS WHEREOF, this Amendment has been duly executed as of the date
and year specified at the beginning hereof.

            BORROWER:

FUEL TECH, INC.,
a Delaware corporation
      By:   /s/ John P. Graham         Name:   John P. Graham        Title:  
Chief Financial Officer        FUEL TECH S.r.l.,
organized under the laws of the Italian Republic
      By:   /s/ John P. Graham         Name:   John P. Graham        Title:  
Director        LENDER:

JPMORGAN CHASE BANK, N.A.
a national association
      By:   /s/ Jennifer Folsom         Name:   Jennifer Folsom        Title:  
AVP     

Second Amendment to
Credit Agreement

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