exv10w5






Exhibit 10.5




 

 










CREDIT AGREEMENT




dated as of




June 30, 2009




among




FUEL TECH, INC.




and




JPMORGAN CHASE BANK, N.A.




 

 
















 












TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	ARTICLE I — DEFINITIONS
	 	 	1	 
	SECTION 1.01. Defined Terms
	 	 	1	 
	SECTION 1.02. Classification of Loans and Borrowings
	 	 	14	 
	SECTION 1.03. Terms Generally
	 	 	14	 
	SECTION 1.04. Accounting Terms; GAAP
	 	 	14	 
	ARTICLE II — THE CREDITS
	 	 	15	 
	SECTION 2.01. Commitments
	 	 	15	 
	SECTION 2.02. Loans and Borrowings
	 	 	15	 
	SECTION 2.03. Borrowing Procedures; Requests for Revolving Borrowings
	 	 	15	 
	SECTION 2.04. Intentionally Omitted
	 	 	16	 
	SECTION 2.05. Letters of Credit; Letters of Guaranty
	 	 	16	 
	SECTION 2.06. Funding of Borrowings
	 	 	18	 
	SECTION 2.07. Interest Elections
	 	 	18	 
	SECTION 2.08. Termination of Commitments
	 	 	19	 
	SECTION 2.09. Repayment of Loans; Evidence of Debt
	 	 	19	 
	SECTION 2.10. Prepayment of Loans
	 	 	20	 
	SECTION 2.11. Fees
	 	 	20	 
	SECTION 2.12. Interest
	 	 	21	 
	SECTION 2.13. Alternate Rate of Interest
	 	 	21	 
	SECTION 2.14. Increased Costs
	 	 	22	 
	SECTION 2.15. Break Funding Payments
	 	 	22	 
	SECTION 2.16. Taxes
	 	 	23	 
	SECTION 2.17. Payments Generally; Allocation of Proceeds; Sharing of Set-offs
	 	 	24	 
	SECTION 2.18. Indemnity for Returned Payments
	 	 	24	 
	ARTICLE III — Representations and Warranties
	 	 	24	 
	SECTION 3.01. Organization; Powers
	 	 	24	 
	SECTION 3.02. Authorization; Enforceability
	 	 	24	 
	SECTION 3.03. Governmental Approvals; No Conflicts
	 	 	25	 
	SECTION 3.04. Financial Condition; No Material Adverse Change
	 	 	25	 
	SECTION 3.05. Properties
	 	 	25	 
	SECTION 3.06. Litigation and Environmental Matters
	 	 	25	 
	SECTION 3.07. Compliance with Laws and Agreements
	 	 	26	 
	SECTION 3.08. Investment Company Status
	 	 	26	 
	SECTION 3.09. Taxes
	 	 	26	 
	SECTION 3.10. ERISA
	 	 	26	 
	SECTION 3.11. Disclosure
	 	 	26	 
	SECTION 3.12. Material Agreements
	 	 	26	 
	SECTION 3.13. Solvency
	 	 	27	 
	SECTION 3.14. Insurance
	 	 	27	 
	SECTION 3.15. Capitalization and Subsidiaries
	 	 	27	 
	SECTION 3.16. Intentionally Omitted
	 	 	27	 
	SECTION 3.17. Employment Matters
	 	 	27	 
	ARTICLE IV — CONDITIONS
	 	 	27	 
	SECTION 4.01. Effective Date
	 	 	27	 
	SECTION 4.02. Each Credit Event
	 	 	29	 
	ARTICLE V — AFFIRMATIVE COVENANTS
	 	 	29	 
	SECTION 5.01. Financial Statements; Borrowing Base and Other Information
	 	 	29	 
	SECTION 5.02. Notices of Material Events
	 	 	30	 
	SECTION 5.03. Existence; Conduct of Business
	 	 	31	 






i









 






	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	SECTION 5.04. Payment of Obligations
	 	 	31	 
	SECTION 5.05. Maintenance of Properties
	 	 	31	 
	SECTION 5.06. Books and Records; Inspection Rights
	 	 	31	 
	SECTION 5.07. Compliance with Laws
	 	 	32	 
	SECTION 5.08. Use of Proceeds and Letters of Credit
	 	 	32	 
	SECTION 5.09. Insurance
	 	 	32	 
	SECTION 5.10. Casualty and Condemnation
	 	 	32	 
	SECTION 5.11. Depository Banks
	 	 	32	 
	SECTION 5.12. Further Assurances
	 	 	32	 
	ARTICLE VI — NEGATIVE COVENANTS
	 	 	33	 
	SECTION 6.01. Indebtedness; Certain Equity Securities
	 	 	33	 
	SECTION 6.02. Liens
	 	 	33	 
	SECTION 6.03. Fundamental Changes
	 	 	34	 
	SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions
	 	 	34	 
	SECTION 6.05. Asset Sales
	 	 	35	 
	SECTION 6.06. Sale and Leaseback Transactions
	 	 	35	 
	SECTION 6.07. Swap Agreements
	 	 	35	 
	SECTION 6.08. Restricted Payments
	 	 	35	 
	SECTION 6.09. Transactions with Affiliates
	 	 	35	 
	SECTION 6.10. Restrictive Agreements
	 	 	36	 
	SECTION 6.11. Amendment of Material Documents
	 	 	36	 
	SECTION 6.12. Additional Subsidiaries
	 	 	36	 
	SECTION 6.13. Capital Expenditures
	 	 	36	 
	SECTION 6.14. Financial Covenants
	 	 	36	 
	ARTICLE VII — EVENTS OF DEFAULT
	 	 	37	 
	ARTICLE VIII — MISCELLANEOUS
	 	 	39	 
	SECTION 8.01. Notices
	 	 	39	 
	SECTION 8.02. Waivers; Amendments
	 	 	40	 
	SECTION 8.03. Expenses; Indemnity; Damage Waiver
	 	 	41	 
	SECTION 8.04. Successors and Assigns
	 	 	42	 
	SECTION 8.05. Survival
	 	 	43	 
	SECTION 8.06. Counterparts; Integration; Effectiveness
	 	 	43	 
	SECTION 8.07. Severability
	 	 	43	 
	SECTION 8.08. Right of Setoff
	 	 	44	 
	SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	44	 
	SECTION 8.10. WAIVER OF JURY TRIAL
	 	 	44	 
	SECTION 8.11. Headings
	 	 	45	 
	SECTION 8.12. Confidentiality
	 	 	45	 
	SECTION 8.13. Nonreliance; Violation of Law
	 	 	45	 
	SECTION 8.14. USA PATRIOT Act
	 	 	45	 
	SECTION 8.15. Disclosure
	 	 	45	 
	ARTICLE IX — LOAN GUARANTY
	 	 	45	 
	SECTION 9.01. Guaranty
	 	 	45	 
	SECTION 9.02. Guaranty of Payment
	 	 	46	 
	SECTION 9.03. No Discharge or Diminishment of Loan Guaranty
	 	 	46	 
	SECTION 9.04. Defenses Waived
	 	 	46	 
	SECTION 9.05. Rights of Subrogation
	 	 	47	 
	SECTION 9.06. Reinstatement; Stay of Acceleration
	 	 	47	 
	SECTION 9.07. Information
	 	 	47	 
	SECTION 9.08. Termination
	 	 	47	 
	SECTION 9.09. Taxes
	 	 	47	 
	SECTION 9.10. Maximum Liability
	 	 	47	 
	SECTION 9.11. Contribution
	 	 	48	 






ii









 






	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	SECTION 9.12. Liability Cumulative
	 	 	48	 






SCHEDULES:




Schedule 3.06 — Disclosed Matters

Schedule 3.14 — Insurance

Schedule 3.15 — Capitalization and Subsidiaries

Schedule 6.01 — Existing Indebtedness

Schedule 6.04 — Existing Investments




EXHIBITS:




Exhibit A — Form of Compliance Certificate

Exhibit B — Joinder Agreement

Exhibit C — Fuel Tech Inc. Cash Investment Policy





iii











 





          CREDIT AGREEMENT dated as of June 30, 2009 (as it may be amended or modified from time to
time, this “Agreement”), by and among FUEL TECH, INC., a Delaware corporation, the Loan
Parties party hereto and JPMORGAN CHASE BANK, N.A.




          The parties hereto agree as follows:




ARTICLE I




Definitions




          SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:




          “Acquisition” means the acquisition by the Borrower or any of its Subsidiaries of all
or substantially all of (i) the Equity Interests of any Person, (ii) the assets constituting the
business of a division, branch or other unit of operation of any Person, or (iii) the merger of any
Person with or into the Borrower or any of its Subsidiaries (and, in the case of a merger with the
Borrower, with the Borrower being the surviving corporation. Notwithstanding the foregoing, any
event described in (i), (ii) or (iii) above shall not constitute an Acquisition if the only parties
to such event are the Borrower and any of its Subsidiaries.




          “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.




          “Adjusted One Month LIBOR Rate” means, an interest rate per annum equal to the sum of
(i) 2.50% per annum plus (ii) the Adjusted LIBO Rate for a one month Interest Period on such day
(or if such day is not a Business Day, the immediately preceding Business Day); provided
that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate
appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at
approximately 11:00 a.m. London time on such day (without any rounding).




          “Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.




          “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 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, provided that
until the delivery to the Lender, pursuant to Section 5.01, of the Borrower’s consolidated
financial information for the Borrower’s first fiscal quarter ending after the Effective Date, the
“Applicable Rate” shall be the applicable rate per annum set forth below in Category 3:




 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Revolver	 	 	 	 
	 	 	Revolver	 	Eurodollar	 	Letter of Credit	 	Commitment Fee
	Leverage Ratio	 	CBFR Spread	 	Spread	 	Rate	 	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
	 	 	.50	%	 	 	3.00	%	 	 	2.5	%	 	 	.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 3 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.




          “Approved Fund” has the meaning assigned to such term in Section 8.04(b).




          “Availability Period” means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the Commitment.




          “Available Revolving Commitment” means, at any time, the Revolving Commitment then in
effect minus the Revolving Exposure at such time.




          “Banking Services” means each and any of the following bank services provided to any
Loan Party by the Lender or any of its Affiliates: (a) credit cards for commercial customers
(including, without limitation, “commercial credit cards” and purchasing cards), (b) stored value
cards and (c) treasury management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate depository network
services).




          “Banking Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.




          “Banking Services Reserves” means all Reserves which the Lender from time to time
establishes in its Permitted Discretion for Banking Services then provided or outstanding.




          “Board” means the Board of Governors of the Federal Reserve System of the United
States of America.




          “Borrower” means Fuel Tech, Inc., a Delaware corporation.




2









 








          “Borrowing” means Revolving Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in
effect.




          “Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03.




          “Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Chicago, Illinois are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.




          “Capital Expenditures” means, without duplication, any expenditure or commitment to
expend money for any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries
prepared in accordance with GAAP.




          “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.




          “CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate
shall never be less than the Adjusted One Month LIBOR Rate for a one month Interest Period on such
day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in
the CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall
be effective from and including the effective date of such change in the Prime Rate or the Adjusted
One Month LIBOR Rate, respectively.




          “CBFR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the CB Floating Rate.




          “Change in Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the
date hereof) of Equity Interests representing more than 51% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower; or (b) during any
period of twelve consecutive calendar months, occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated
by the board of directors of the Borrower nor (ii) appointed by directors so nominated.




          “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by the Lender (or, for purposes of Section 2.14(b), by any lending office of the Lender
or by the Lender’s holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after the date of this
Agreement.




          “Class,” when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans.




          “Code” means the Internal Revenue Code of 1986, as amended from time to time.




3









 








          “Commercial LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding commercial Letters of Credit at such time plus (b) the aggregate amount
of all LC Disbursements relating to commercial Letters of Credit that have not yet been reimbursed
by or on behalf of the Borrower at such time.




          “Commitment” means the Revolving Commitment. Such Commitment may be reduced from time
to time pursuant to Section 2.08.




          “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.




          “Controlled Disbursement Account” means any replacement or additional account of the
Borrower maintained with the Lender as a zero balance, cash management account pursuant to and
under any agreement between the Borrower and the Lender, as modified and amended from time to time,
and through which all disbursements of the Borrower are made and settled on a daily basis with no
uninvested balance remaining overnight.




          “Credit Exposure” means the Revolving Exposure.




          “Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.




          “Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.




          “Dollars” or “$” refers to lawful money of the United States of America.




          “EBITDA” means, for any period, Net Income for such period plus (a) without
duplication and to the extent deducted in determining Net Income for such period, the sum of (i)
Interest Expense for such period, (ii) income tax expense for such period, (iii) all amounts
attributable to depreciation and amortization expense for such period, (iv) any extraordinary
charges for such period and (v) any other non-cash charges for such period (but excluding any
non-cash charge in respect of an item that was included in Net Income in a prior period,
minus (b) without duplication and to the extent included in Net Income, any extraordinary
gains and any non-cash items of income for such period, all calculated for the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP.




          “Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 8.02).




          “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any Hazardous Material or to
health and safety matters.




          “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.




4









 








          “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.




          “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is,
or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.




          “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.




          “Event of Default” has the meaning assigned to such term in Article VII.




          “Excluded Taxes” means, with respect to the Lender, or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in which its principal
office is located or, in the case of the Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which the Borrower is located.




          “Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Lender from three Federal funds brokers of recognized standing selected by it.




          “Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower.




          “Funding Account” has the meaning assigned to such term in Section 4.01(h).




          “GAAP” means generally accepted accounting principles in the United States of America.




5









 








          “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government.




          “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.




          “Guaranteed Obligations” has the meaning assigned to such term in Section 9.01.




          “Guaranty Payment” means any payment made by Lender in connection with a Letter of
Credit.




          “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.




          “Inactive Subsidiary” is defined in Section 3.15.




          “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest charges are
customarily paid (excluding current accounts payable, customer deposits, advances and accrued
liabilities), (d) all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding current accounts payable,
customer deposits, advances and accrued liabilities incurred in the ordinary course of business),
(f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired
by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all
Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect
of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such
Person in respect of bankers’ acceptances, (k) obligations under any liquidated earn-out and (l)
obligations of such Person to purchase securities or other property arising out of or in connection
with the sale of the same or substantially similar securities or property or any other Off-Balance
Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the extent such Person is
liable therefor as a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor.




          “Indemnified Taxes” means Taxes other than Excluded Taxes.




          “Interest Election Request” means a request by the Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.07.




6









 








          “Interest Expense” means, with reference to any period, the interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries for
such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of interest
rates to the extent such net costs are allocable to such period in accordance with
GAAP), calculated on a consolidated basis for the Borrower and its Subsidiaries for such
period in accordance with GAAP.




          “Interest Payment Date” means (a) with respect to any CBFR Loan, the first Business
Day of each calendar month and the Maturity Date, (b) with respect to any Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the
case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each
day prior to the last day of such Interest Period that occurs at intervals of three months’
duration after the first day of such Interest Period, and (c) the Maturity Date.




          “Interest Period” means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the Borrower may elect;
provided, that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the
date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be
the effective date of the most recent conversion or continuation of such Borrowing.




          “Joinder Agreement” has the meaning assigned to such term in Section 5.12.




          “LC Collateral Account” has the meaning assigned to such term in Section 2.05(h).




          “LC Disbursement” means any payment made by Lender pursuant to a Letter of Credit.




          “LC Exposure” means, at any time, the sum of Commercial LC Exposure and Standby LC
Exposure.




          “Lender” means JPMorgan Chase Bank, N.A.




          “Letter of Credit” means any letter of credit issued pursuant to this Agreement.




          “Letter of Guaranty” means any written undertaking by Lender or any Affiliate of
Lender, issued upon the application of the Borrower, to make payments to third parties, other than
Letters of Credit.




          “Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness on such date
to (b) EBITDA for the period of four consecutive fiscal quarters ended on such date (or, if such
date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter most
recently ended prior to such date).




          “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the Lender from time to
time for purposes of providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time for any reason,
then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period
shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal




7









 







London office of the Lender in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.




          “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, and (b)
the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the foregoing) relating to
such asset.




          “Loan Documents” means this Agreement, any promissory notes issued pursuant to the
Agreement, any Letter of Credit applications and all other agreements, instruments, documents and
certificates identified in Section 4.01 executed and delivered to, or in favor of, the Lender and
including all other negative pledge agreements, powers of attorney, consents, assignments,
contracts, notices, letter of credit agreements and all other written matter whether heretofore,
now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and
delivered to the Lender in connection with the Agreement or the transactions contemplated thereby.
Any reference in the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative.




          “Loan Guarantor” means each Loan Party (other than the Borrower).




          “Loan Guaranty” means Article IX of this Agreement as it may be amended or
modified and in effect from time to time.




          “Loan Parties” means the Borrower, the Borrower’s Subsidiaries who are parties hereto,
and any other Person who becomes a party to this Agreement pursuant to a Joinder Agreement and
their successors and assigns.




          “Loans” means the loans and advances made by the Lender pursuant to this Agreement.




          “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrower, (b) the ability of the
Borrower to perform any of its obligations under the Loan Documents to which it is a party, or (c)
the ability of the Lender to enforce its rights of or benefits available to the Lender under the
Loan Documents (other than the Loan Guaranty) in any material respect.




          “Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower in an aggregate principal amount exceeding $500,000.00. For purposes of determining
Material Indebtedness, the “obligations” of the Borrower in respect of any Swap Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting agreements) that the
Borrower would be required to pay if such Swap Agreement were terminated at such time.




          “Maturity Date” means June 30, 2011 or any earlier date on which the Commitment is
reduced to zero or otherwise terminated pursuant to the terms hereof.




          “Maximum Liability” has the meaning assigned to such term in Section 9.10.




          “Moody’s” means Moody’s Investors Service, Inc.




          “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.





8









 








          “Net Income” means, for any period, the consolidated net income (or loss) of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or
any of its Subsidiaries, and (b) the income (or deficit) of any Person (other than a Subsidiary) in
which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that
any such income is actually received by the Borrower or such Subsidiary in the form of dividends or
similar distributions.




          “Net Proceeds” means, with respect to any event, (a) the cash proceeds received in
respect of such event including (i) any cash received in respect of any non-cash proceeds
(including any cash payments received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but excluding any
interest payments), but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third
parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback transaction or a
casualty or a condemnation or similar proceeding), the amount of all payments required to be made
as a result of such event to repay Indebtedness (other than Loans) secured by such asset or
otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to
fund contingent liabilities reasonably estimated to be payable, in each case during the year that
such event occurred or the next succeeding year and that are directly attributable to such event
(as determined reasonably and in good faith by a Financial Officer).




          “Non-Paying Guarantor” has the meaning assigned to such term in Section 9.11.




          “Obligated Party” has the meaning assigned to such term in Section 9.02.




          “Obligations” means all unpaid principal of and accrued and unpaid interest on the
Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities
and other obligations of the Loan Parties to the Lender or any indemnified party arising under the
Loan Documents. Obligations shall also include (i) all Banking Services Obligations and (ii) all
Swap Obligations owing to the Lender or its Affiliates.




          “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability or obligation under any sale and leaseback transaction which is not a
Capital Lease Obligation, or (c) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person or (d) any indebtedness, liability or
obligation arising with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the balance sheets of
such Person (other than operating leases).




          “Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.




          “Participant” has the meaning set forth in Section 8.04.




          “Paying Guarantor” has the meaning assigned to such term in Section 9.11.




          “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.




          “Permitted Acquisition” means any Acquisition by any Loan Party in a transaction that
satisfies each of the following requirements:





9









 









     (a) such Acquisition is not a hostile or contested acquisition;




     (b) the business acquired in connection with such Acquisition is not principally
engaged, directly or indirectly, in any line of business other than the businesses in which
the Loan Parties are engaged on the Closing Date and any business activities that are
substantially similar, related, or incidental thereto;




     (c) both before and after giving effect to such Acquisition and the Loans (if any)
requested to be made in connection therewith, each of the representations and warranties in
the Loan Documents is true and correct (except (i) any such representation or warranty which
relates to a specified prior date and (ii) to the extent the Lender have been notified in
writing by the Loan Parties that any representation or warranty is not correct and the
Lender has explicitly waived in writing compliance with such representation or warranty) and
no Default exists, will exist, or would result therefrom;




     (d) as soon as available, but not more than sixty days after publicly announcing such
Acquisition, the Borrower have provided the Lender (i) notice of such Acquisition and (ii) a
copy of all business and financial information reasonably requested by the Lender including
projected pro forma financial statements, and statements of cash flow, and projected
Financial Covenant compliance calculations;




     (e) if the Acquisition is being financed in whole or in part with the proceeds of a
Borrowing, Lender shall have given its prior written consent (such consent not to be
unreasonably withheld or delayed);




     (f) the purchase price for all Acquisitions made during any fiscal year of the Borrower
without the prior consent of the Lender shall not exceed $10,000,000.00 in the aggregate;




     (g) if such Acquisition is an acquisition of the Equity Interests of a Person, the
Acquisition is structured so that the acquired Person shall become a Wholly-Owned Subsidiary
of the Borrower and, a Loan Party pursuant to the terms of this Agreement;




     (h) if such Acquisition is an acquisition of assets, the Acquisition is structured so
that the Borrower or another Loan Party shall acquire such assets;




     (i) if such Acquisition is an acquisition of Equity Interests, such Acquisition will
not result in any violation of Regulation U;




     (j) no Loan Party shall, as a result of or in connection with any such Acquisition,
assume or incur any direct or contingent liabilities (whether relating to environmental,
tax, litigation, or other matters) that could reasonably be expected to have a Material
Adverse Effect; and




     (k) in connection with an Acquisition of the Equity Interests of any Person by the
Borrower, all Liens on property of such Person shall be terminated unless the Lender in its
sole discretion consents otherwise, and in connection with an Acquisition of the assets of
any Person by the Borrower, all Liens on such assets shall be terminated.



          “Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from the perspective of a lender) business judgment.




          “Permitted Encumbrances” means:





10









 









     (a) Liens imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.04;




     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
Liens imposed by law, arising in the ordinary course of business and securing obligations
that are not overdue by more than 30 days or are being contested in compliance with Section
5.04;




     (c) pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or regulations;



     (d) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;




     (e) judgment liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;




     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected property or interfere with
the ordinary conduct of business of the Borrower or any Subsidiary;




     (g) pledges or deposits made in the ordinary course of business to secure payment of worker’s
compensation or to participate in any fund in connection with worker’s compensation, unemployment
insurance or other social security obligations;




     (h) Liens, if any otherwise expressly permitted by this Agreement (including, without
limitation, subsection (k) of the definition of “Permitted Acquisitions;”




     (i) Liens in favor of the Lender (including, without limitation, Liens granted under Section
2.05); and




     (j) the Satisfaction of Letters of Credit Deposit, as defined in the letter dated June 30,
2009 by the Borrower to Wachovia Bank, N.A. (“Wachovia”) in respect of the deposit of cash
with Wachovia in satisfaction of potential obligations of the Borrower under letters of credit
issued by Wachovia (the “Wachovia Letters of Credit”).




provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness
(a) other than Indebtedness to Lender or (b) Indebtedness to which Lender has consented in its sole
discretion.



          “Permitted Investments” means:





     (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition thereof;




     (b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s;




     (c) investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under



11









 







the laws of the United States of America or any state
thereof which has a combined capital and surplus and undivided profits of not less than
$500,000,000;




     (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above;




     (e) money market funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA
by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000;




     (f) deposits of cash with banks or other depository institutions in the ordinary course
of business in a manner consistent with the terms of this Agreement; and




     (g) any other investments set forth in the Fuel Tech Inc. Cash Investment Policy
attached hereto as Exhibit C.



          “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.




          “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.




          “Prime Rate” means the rate of interest per annum publicly announced from time to time
by the Lender as its prime rate; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.




          “Projections” has the meaning assigned to such term in Section 5.01(f).




          “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.




          “Report” means reports prepared by the Lender or another Person showing the results of
appraisals, field examinations or audits pertaining to the Borrower’s assets from information
furnished by or on behalf of the Borrower, after the Lender has exercised its rights of inspection
pursuant to this Agreement.




          “Requirement of Law” means, as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.




          “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or
other right to acquire any such Equity Interests in the Borrower.




          “Revolving Commitment” means the commitment of the Lender to make Revolving Loans and
Letters of Credit hereunder, as such commitment may be reduced from time to time pursuant to
Section 2.08. The initial amount of the Lender’s Revolving Commitment is $25,000,000.00.




12









 








          “Revolving Exposure” means, at any time, the sum of the outstanding principal amount
of Revolving Loans and LC Exposure at such time.




          “Revolving Loan” means a Loan made pursuant to Section 2.01(a).




          “S&P” means Standard & Poor’s Rating Services, a division of The McGraw Hill
Companies, Inc.




          “Standby LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
of all outstanding standby Letters of Credit at such time plus (b) the aggregate amount of all LC
Disbursements relating to standby Letters of Credit that have not yet been reimbursed by or on
behalf of the Borrower at such time.




          “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Lender is subject with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities”
in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.




          “Subordinated Indebtedness” of a Person means any Indebtedness of such Person the
payment of which is subordinated to payment of the Obligations to the written satisfaction of the
Lender.




          “subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of the equity or more
than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held.




          “Subsidiary” means any direct or indirect subsidiary of the Borrower or a Loan Party,
as applicable.




          “Swap Agreement” means any agreement with respect to any swap, forward, futures or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no transactions
under any retirement plan or stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or consultants of the
Borrower or the Subsidiaries shall be a Swap Agreement.




          “Swap Obligations” of a Person means any and all net obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions therefor), under
(a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.




          “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.




13









 








          “Total Indebtedness” means, at any date, the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP.




          “Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and
the issuance of Letters of Credit hereunder.




          “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate or the CB Floating Rate.




          “UCC” means the Uniform Commercial Code as in effect from time to time in the State of
Illinois or any other state the laws of which are required to be applied in connection with the
issue of perfection of security interests.




          “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Subtitle
E of Title IV of ERISA.




          SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or
by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a
“Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type
(e.g., a “Eurodollar Revolving Borrowing”).




          SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.




          SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP,
as in effect from time to time; provided that, if the Borrower notifies the Lender that the
Borrower requests an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Lender notifies the Borrower that the Lender request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is given before or after
such change in GAAP or in the application thereof, then such provision shall be interpreted on the
basis of GAAP as in effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in accordance herewith.




ARTICLE II




The Credits 




14









 





          SECTION 2.01. Commitment. Subject to the terms and conditions set forth herein, the
Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability
Period in an aggregate principal amount that will not result in the Revolving Exposure exceeding
the Revolving Commitment. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.




          SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be made as part
of a Borrowing consisting of Loans of the same Class and Type.




          (b) Subject to Section 2.13, each Revolving Borrowing shall be comprised entirely of CBFR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith, provided that all
Borrowings made on the Effective Date must be made as CBFR Borrowings. The Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of the Lender
to make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.




          (c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of $100,000.00 and not less
than $200,000.00. CBFR Revolving Borrowings may be in any amount. Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) Eurodollar Revolving Borrowings outstanding.




          (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.




          SECTION 2.03. Borrowing Procedures; Requests for Revolving Borrowings.




          (a) Controlled Disbursement Account. Not later than 1:00 p.m., Chicago time, on each
Business Day, the Lender shall, subject to the conditions of this Agreement (but without any
further written notice required), make available to the Borrower, by a credit to the Funding
Account, the proceeds of a CBFR Borrowing to the extent necessary to pay items to be drawn on the
Controlled Disbursement Accounts that day. All other Revolving Loans shall be made upon notice
given in accordance with §2.03(b).




          (b) Notices by the Borrower to the Lender of requests for Revolving Loans other than
pursuant to §2.03(a). To request a Revolving Borrowing, the Borrower shall notify the Lender
of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m.,
Chicago time, three Business Days before the date of the proposed Borrowing or (b) in the case of a
CBFR Borrowing, not later than noon, Chicago time, on the date of the proposed Borrowing;
provided that any such notice of a CBFR Revolving Borrowing to finance the reimbursement of
an LC Disbursement as contemplated by Section 2.05(d) may be given not later than 9:00 a.m.,
Chicago time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Lender of a
written Borrowing Request in a form approved by the Lender and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information in compliance with
Section 2.01:





	 	(i)	 	the aggregate amount of the requested Borrowing;
	 
	 	(ii)	 	the date of such Borrowing, which shall be a Business Day;
	 
	 	(iii)	 	whether such Borrowing is to be a CBFR Borrowing or a Eurodollar
Borrowing; and
	 
	 	(iv)	 	in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term “Interest Period.”






15











 




If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving
Borrowing shall be a CBFR Borrowing. If no Interest Period is specified with respect to any
requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Lender shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.




          SECTION 2.04. [Intentionally omitted]




          SECTION 2.05. Letters of Credit; Letters of Guaranty. (a) General. Subject
to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of
Credit or Letters of Guaranty for its own account, in a form reasonably acceptable to the Lender at
any time and from time to time during the Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions of any form of
letter of credit application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Lender relating to any Letter of Credit or Letter of Guaranty, the terms and
conditions of this Agreement shall control.




          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit or a Letter of Guaranty (or the amendment, renewal or extension
of an outstanding Letter of Credit), the Borrower shall hand deliver or facsimile (or transmit by
electronic communication, if arrangements for doing so have been approved by the Lender) to the
Lender prior to 9:00 am, Chicago time, at least three Business Days prior to the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit
or a Letter of Guaranty, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which shall be a Business
Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit or Letter of Guaranty, the name and address
of the beneficiary thereof and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit or Letter of Guaranty. If requested by the Lender, the
Borrower also shall submit a letter of credit application on the Lender’s standard form in
connection with any request for a Letter of Credit.




          (c) Expiration Date. Each Letter of Credit or Letter of Guaranty shall expire at or
prior to the close of business on the date that is five Business Days prior to the Maturity Date.
Extended maturity terms may be allowed by Lender in its Permitted Discretion.




          (d) Reimbursement. If the Lender shall make any LC Disbursement in respect of a
Letter of Credit or Letter of Guaranty, the Borrower shall reimburse such LC Disbursement or
Guaranty Payment by paying to the Lender an amount equal to such LC Disbursement or Guaranty
Payment not later than 11:00 a.m., Chicago time, on the date that such LC Disbursement or Guaranty
Payment is made, if the Borrower shall have received notice of such LC Disbursement or Guaranty
Payment prior to 9:00 a.m., Chicago time, on such date, or, if such notice has not been received by
the Borrower prior to such time on such date, then not later than 11:00 a.m., Chicago time, on (i)
the Business Day that the Borrower receives such notice, if such notice is received prior to 9:00
a.m., Chicago time, on the day of receipt, or (ii) the Business Day immediately following the day
that the Borrower receives such notice, if such notice is not received prior to such time on the
day of receipt; provided that the Borrower may, subject to the conditions to borrowing set
forth herein, request that such payment be financed with a CBFR Revolving Borrowing in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment
shall be discharged and replaced by the resulting CBFR Revolving Borrowing.




          (e) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements or
Guaranty Payments as provided in paragraph (d) of this Section shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under
any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit, Letter of Guaranty or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of



16









 






Credit or Letter of Guaranty proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by the Lender under a
Letter of Credit or Letter of Guaranty against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit or Letter of Guaranty, or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrower’s obligations hereunder. Neither the Lender nor any of its Related
Parties, shall have any liability or responsibility by reason of or in connection with the issuance
or transfer of any Letter of Credit or Letter of Guaranty or any payment or failure to make any
payment thereunder (irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit or Letter of
Guaranty (including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond the control of the
Lender; provided that the foregoing shall not be construed to excuse the Lender from
liability to the Borrower to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by the Lender’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of Credit or Letter of
Guaranty comply with the terms thereof. The parties hereto expressly agree that, in the absence of
gross negligence or wilful misconduct on the part of the Lender (as finally determined by a court
of competent jurisdiction), the Lender shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit or Letter of Guaranty, the Lender may,
in its sole discretion, either accept and make payment upon such documents without responsibility
for further investigation, regardless of any notice or information to the contrary, or refuse to
accept and make payment upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit or Letter of Guaranty.




          (f) Disbursement Procedures. The Lender shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Lender shall promptly notify a Financial Officer of the Borrower by telephone
(confirmed by facsimile) of such demand for payment and whether the Lender has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving such
notice shall not relieve the Borrower of its obligation to reimburse the Lender with respect to any
such LC Disbursement.




          (g) Interim Interest. If the Lender shall make any LC Disbursement, then, unless the
Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement,
at the rate per annum then applicable to CBFR Revolving Loans; provided that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.12(d) shall apply. Interest accrued pursuant to this paragraph shall be
for the account of the Lender. Interest shall not accrue at a default rate during any period in
which the Lender has failed or delayed giving notice to the Borrower of any demand for payment
under a Letter of Credit.




          (h) Cash Collateralization. If any Default shall occur and be continuing, on the
Business Day that the Borrower receives notice from the Lender demanding the deposit of cash
collateral pursuant to this paragraph, or on the Maturity Date if there shall then be exposure on a
Letter of Credit or a Letter of Guaranty, the Borrower shall deposit in an account with the Lender,
in the name and for the benefit of the Lender (the “LC Collateral Account”), an amount in
cash equal to 110% of the aggregate LC Exposure and exposure on any Letter of Guaranty as of such
date plus accrued and unpaid interest thereon; provided that the obligation to deposit such
cash collateral shall become effective immediately, and such deposit shall become immediately due
and payable, without demand or other notice of any kind, upon the occurrence of any Event of
Default with respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit
shall be held by the Lender as collateral for the payment and performance of the Obligations. The
Lender shall have exclusive dominion and control, including the exclusive right of withdrawal, over
such account and the Borrower hereby grants the Lender a security interest in the LC Collateral
Account. Other than any interest earned on the investment of such deposits, which investments



17









 






shall be made in Permitted Investments at the option and sole discretion of the Lender and at the
Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate
in such account. Moneys in such account shall be applied by the Lender for LC Disbursements or
Guaranty Payments for which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at
such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other
Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after all such Defaults
have been cured or waived.




          SECTION 2.06. Funding of Borrowings. The Lender shall make each Loan to be made by
it hereunder on the proposed date thereof available to the Borrower by promptly crediting the
amounts in immediately available funds, to the Funding Account; provided that CBFR
Revolving Loans made to finance the reimbursement of an LC Disbursement or a Guaranty Payment as
provided in Section 2.05(e) shall be retained by the Lender.




          SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar
Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different options with respect
to different portions of the affected Borrowing, and the Loans comprising each such portion shall
be considered a separate Borrowing.




          (b) To make an election pursuant to this Section, the Borrower shall notify the Lender of such
election by telephone by the time that a Borrowing Request would be required under Section 2.03 if
the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest Election Request shall
be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Lender of a
written Interest Election Request in a form approved by the Lender and signed by the Borrower.




          (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:





          (i) the Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);




          (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;




          (iii) whether the resulting Borrowing is to be a CBFR Borrowing or a Eurodollar
Borrowing; and




          (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.


If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.




          (d) If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such



18









 







Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to a CBFR Borrowing. Notwithstanding any contrary provision hereof,
if a Default has occurred and is continuing and the Lender so notifies the Borrower, then, so long
as a Default is continuing (i) no outstanding Revolving
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Revolving Borrowing shall be converted to a CBFR Borrowing at the end of the Interest
Period applicable thereto.




          SECTION 2.08. Termination of Commitment. (a) Unless previously terminated, the
Revolving Commitment shall terminate on the Maturity Date.




          (b) The Borrower may at any time terminate the Commitment upon (i) the payment in full of all
outstanding Loans, together with accrued and unpaid interest thereon and on any Letters of Credit
or Letters of Guaranty, (ii) the cancellation and return of all outstanding Letters of Credit or
Letters of Guaranty (or alternatively, with respect to each such Letter of Credit or Letters of
Guaranty, the furnishing to the Lender of a cash deposit equal to 110% of the LC Exposure or the
Letter of Guaranty exposure as of such date), (iii) the payment in full of the accrued and unpaid
fees, and (iv) the payment in full of all reimbursable expenses and other Obligations together with
accrued and unpaid interest thereon.




          (c) The Borrower may from time to time reduce, the Revolving Commitment; provided that
(i) each reduction of the Revolving Commitment shall be in an amount that is an integral multiple
of $100,000.00 and not less than $1,000,000.00 and (ii) the Borrower shall not reduce the Revolving
Commitment if, after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.09, the sum of the Revolving Exposures would exceed the Revolving
Commitment.




          (d) The Borrower shall notify the Lender of any election to terminate or reduce the Commitment
under paragraph (b) or (c) of this Section at least five Business Days prior to the effective date
of such termination or reduction, specifying such election and the effective date thereof. Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitment delivered by the Borrower may state that such notice
is conditioned upon the effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Lender on or prior to the specified effective date) if
such condition is not satisfied. Any termination or reduction of the Commitment shall be
permanent.




          SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Lender for its account the then unpaid principal amount of
each Revolving Loan on the Maturity Date.




          (b) [Intentionally omitted.]




          (c) The Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to the Lender resulting from each Loan made by the
Lender, including the amounts of principal and interest payable and paid to the Lender from time to
time hereunder.




          (d) The Lender shall maintain accounts in which it shall record (i) the date and amount of
each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due and payable from the
Borrower to the Lender hereunder and (iii) the amount of any sum received by the Lender hereunder.




          (e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this
Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of the Lender to maintain such
accounts or any error therein shall not in any manner affect the obligation of the Borrower to
repay the Loans in accordance with the terms of this Agreement.



19









 







          (f) The Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to the Lender a promissory note payable to
the order of the Lender (or, if requested by the Lender, to the Lender and its registered assigns)
and in a form approved by the Lender. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to Section 8.04) be
represented by one or more promissory notes in such form payable to
the order of the payee named therein (or, if such promissory note is a registered note, to such
payee and its registered assigns).




          SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty,
subject to prior notice in accordance with paragraph (f) of this Section.




          (b) [Intentionally omitted.]




          (c) [Intentionally omitted.]




          (d) [Intentionally omitted.]




          (e) [Intentionally omitted.]




          (f) The Borrower shall notify the Lender by telephone (confirmed by facsimile) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later
than 10:00 a.m., Chicago time, three Business Days before the date of prepayment, or (ii) in the
case of prepayment of a CBFR Revolving Borrowing, not later than 10:00 a.m., Chicago time, on the
date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date
and the principal amount of each Borrowing or portion thereof to be prepaid; provided that,
if a notice of prepayment is given in connection with a conditional notice of termination of the
Commitment as contemplated by Section 2.08, then such notice of prepayment may be revoked if such
notice of termination is revoked in accordance with Section 2.08. Each partial prepayment of any
Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a
Revolving Borrowing of the same Type as provided in Section 2.02. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.12.




          SECTION 2.11. Fees. (a) The Borrower agrees to pay to the Lender a commitment fee,
which shall accrue at the Applicable Rate on the average daily amount of the Available Revolving
Commitment of the Lender during the period from and including the Effective Date to but excluding
the date on which the Lender’s Revolving Commitment terminates. Accrued commitment fees shall be
payable in arrears on the first Business Day of each January, April, July and October and on the
date on which the Revolving Commitment terminates, commencing on the first such date to occur after
the date hereof. All commitment fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed.




          (b) The Borrower agrees to pay (i) to the Lender a letter of credit fee with respect to
Letters of Credit which shall accrue at the same Applicable Rate for Letters of Credit on the
average daily amount of the Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which the Lender’s Revolving Commitment terminates and the date
on which the Revolving Lender ceases to have any LC Exposure, and (ii) the Lender’s standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of Credit or Letter of
Guaranty or processing of drawings thereunder. Letter of Credit or Letter of Guaranty fees accrued
through and including the last day of each calendar quarter shall be payable on the first Business
Day of each January, April, July and October following such last day, commencing on the first such
date to occur after the Effective Date; provided that all such fees shall be payable on the
date on which the Revolving Commitment terminates and any such fees accruing after the date on
which the Commitment terminates shall be payable on demand. Any other fees payable to the Lender
pursuant to this paragraph shall be payable within 10 days after demand. All fronting fees shall
be computed on the basis of a year of 360 days and shall be payable for the actual



20









 






number of days
elapsed. Fees to be incurred for Letters of Guaranty shall accrue at the same rate and shall be
payable on the same terms as for Letters of Credit.




          (c) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Lender. Fees paid shall not be refundable under any circumstances. Notwithstanding
anything to the contrary in this Agreement or the Loan Documents, no fees shall accrue following
the occurrence of any event
described in Section 7(h) or (i) with respect to the Lender during any period during which Lender
is precluded from making Loans or advances to or for the account of the Borrower.




          SECTION 2.12. Interest. (a) The Loans comprising each CBFR Borrowing shall bear
interest at the CB Floating Rate plus the Applicable Rate.




          (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.




          (c) [Intentionally omitted.]




          (d) Notwithstanding the foregoing, during the occurrence and continuance of an Event of
Default, the Lender may, at its option, by notice to the Borrower, declare that (i) all Loans shall
bear interest at 3% plus the rate otherwise applicable to such Loans as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount outstanding hereunder, such
amount shall accrue at 3% plus the rate applicable to such fee or other obligation as provided
hereunder.




          (e) Accrued interest on each Loan (for CBFR Loans, accrued through the last day of the prior
calendar month) shall be payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitment; provided that (i) interest accrued pursuant to paragraph (d)
of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any
Loan (other than a prepayment of a CBFR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of
such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.




          (f) All interest hereunder shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed. The applicable CB Floating Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Lender, and such determination shall be conclusive absent
manifest error.




          SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:




          (a) the Lender determines (which determination shall be conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or




          (b) the Lender determines the Adjusted LIBO Rate or the LIBO Rate, as applicable, for
such Interest Period will not adequately and fairly reflect the cost to the Lender of making
or maintaining their Loans (or its Loan) included in such Borrowing for such Interest
Period;



then the Lender shall give notice thereof to the Borrower by telephone or facsimile as promptly as
practicable thereafter and, until the Lender notifies the Borrower that the circumstances giving
rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion
of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar
Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as a CBFR Borrowing.



21









 







          SECTION 2.14. Increased Costs. (a) If any Change in Law shall:




          (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by,
the Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or




          (ii) impose on the Lender or the London interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;



and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
increase the cost to the Lender of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by the Lender hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to the Lender such additional amount
or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.




          (b) If the Lender determines that any Change in Law regarding capital requirements has or
would have the effect of reducing the rate of return on the Lender’s capital or on the capital of
the Lender’s holding company, as a consequence of this Agreement or the Loans made by, Letters of
Credit issued by the Lender to a level below that which the Lender or the Lender’s holding company
could have achieved but for such Change in Law (taking into consideration the Lender’s policies and
the policies of the Lender’s holding company with respect to capital adequacy), then from time to
time the Borrower will pay to the Lender such additional amount or amounts as will compensate the
Lender or the Lender’s holding company for any such reduction suffered.




          (c) A certificate of the Lender setting forth the amount or amounts necessary to compensate
the Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay the Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.




          (d) Failure or delay on the part of the Lender to demand compensation pursuant to this Section
shall not constitute a waiver of the Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than 270 days prior to the date that the Lender
notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of
the Lender’s intention to claim compensation therefor; provided further that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the
270-day period referred to above shall be extended to include the period of retroactive effect
thereof.




          SECTION 2.15. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.08 and is revoked
in accordance therewith), then, in any such event, the Borrower shall compensate the Lender for the
loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss,
cost or expense to the Lender shall be deemed to include an amount determined by the Lender to be
the excess, if any, of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate which the Lender
would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of the Lender setting
forth any amount or amounts that the Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and shall be conclusive absent manifest error.



22









 






The Borrower shall
pay the Lender the amount shown as due on any such certificate within 10 days after receipt
thereof.




          SECTION 2.16. Taxes. (a) Any and all payments by the Borrower hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section) the Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance with applicable law.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.




          (c) The Borrower shall indemnify the Lender within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the Lender on or with respect to
any payment by or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by the Lender shall be conclusive absent manifest error.




          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a
certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Lender.




          (e) If the Lender determines, in its sole discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which
the Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay over such
refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section 2.16 with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Lender and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such refund); provided,
that the Borrower, upon the request of the Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Lender in the event the Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the Lender to make available
its tax returns (or any other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.




          (f) Notwithstanding anything in this Section 2.16 to the contrary, the Borrower shall
not have any obligation to the Lender with respect to any Tax, Other Tax or other indemnity
payment to the extent arising from the willful misconduct or gross negligence of the Lender.




          SECTION 2.17. Payments Generally; Allocation of Proceeds. (a) The Borrower shall
make each payment required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or
otherwise) prior to 2:00 p.m., Chicago time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the Lender at its
offices at 10 South Dearborn Street, 22nd Floor, Chicago, Illinois. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments hereunder shall be made in
dollars.



23









 







          (b) At the election of the Borrower or, if a Default has occurred and is continuing, at the
election of the Lender, all payments of principal, interest, LC Disbursements, fees, premiums,
reimbursable expenses (including, without limitation, all reimbursement for fees and expenses
pursuant to Section 8.03), and other sums payable under the Loan Documents, may be paid from the
proceeds of Borrowings made hereunder whether made following a request by the Borrower pursuant to
Section 2.03 or a deemed request as provided in this Section or may be deducted from any deposit
account of the Borrower maintained with the Lender. If a Default has occurred and is continuing,
the Borrower hereby irrevocably authorizes (i) the Lender to make a Borrowing for the purpose of
paying each payment of principal, interest and fees as it becomes due hereunder or any other amount
due under the Loan Documents and agrees that all such amounts charged shall constitute Loans and
that all such Borrowings shall be deemed to have been requested pursuant to Sections 2.03 or 2.04,
as applicable and (ii) the
Lender to charge any deposit account of the Borrower maintained with the Lender for each payment of
principal, interest and fees as it becomes due hereunder or any other amount due under the Loan
Documents.




          SECTION 2.18. Indemnity for Returned Payments. If after receipt of any payment which
is applied to the payment of all or any part of the Obligations, the Lender is for any reason
compelled to surrender such payment or proceeds to any Person because such payment or application
of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not been received by the
Lender and the Borrower shall be liable to pay to the Lender. The provisions of this Section 2.18
shall be and remain effective notwithstanding any contrary action which may have been taken by the
Lender in reliance upon such payment or application of proceeds. The provisions of this Section
2.18 shall survive the termination of this Agreement.




ARTICLE III




Representations and Warranties




          Each Loan Party represents and warrants to the Lender that:




          SECTION 3.01. Organization; Powers. Each of the domestic Loan Parties and each of
its domestic Subsidiaries is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, has all requisite power and authority to carry on its
business as now conducted and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required and where failure to qualify would have a
Material Adverse Effect. Borrower will use its best efforts to ensure its foreign subsidiaries
comply with the terms of this Section 3.01, and will cause such compliance where failure of
compliance would have a Material Adverse Effect.




          SECTION 3.02. Authorization; Enforceability. The Transactions are within each Loan
Party’s organizational powers and have been duly authorized by all necessary organizational actions
and, if required, actions by equity holders. The Loan Documents to which it is a party have been
duly executed and delivered by it and constitute a legal, valid and binding obligation of it,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.
This Section shall not be effective as to Borrower’s Italian subsidiary until August 31, 2009.




          SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full force and effect
and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will
not violate any Requirement of Law applicable to any domestic Loan Party or any of its domestic
Subsidiaries, (c) will not violate or result in a default under any indenture,




24









 







agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or its assets, or give rise to a
right thereunder to require any payment to be made by any Loan Party or any of its Subsidiaries,
and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or
any of its Subsidiaries, except Liens created pursuant to the Loan Documents. Borrower will use
its best efforts to ensure its foreign Subsidiaries comply with this Section 3.03, but failure of a
foreign Subsidiary to comply with this section shall not constitute a breach of this Agreement
unless such failure to comply would cause a Material Adverse Effect.




          SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has
heretofore furnished to the Lender its consolidated balance sheet and statements of income,
stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2008 and
(ii) as of and for the fiscal quarter and the portion of the fiscal year ended March 31, 2009,
certified by its chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash flows of the Borrower
and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject
to year-end audit adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above.




          (b) No event, change or condition has occurred that has had, or could reasonably be expected
to have, a Material Adverse Effect, since March 31, 2009.




          SECTION 3.05. Properties. (a) The Borrower and each other domestic Loan Party has
good title to, or valid leasehold interests in, all of its real and personal property material to
its business, except for minor defects in title that do not interfere with its ability to conduct
its business as currently conducted or to utilize such properties for their intended purposes.




          (b) The Borrower and each domestic Loan Party owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its business, and the
use thereof by the Borrower and each other Loan Party does not infringe upon the rights of any
other Person, except for any such infringements that could not reasonably be expected to result in
a Material Adverse Effect. Borrower will use its best efforts to ensure that its foreign
Subsidiaries comply with this Section 3.05(b), but failure of a foreign Subsidiary to comply with
this subsection shall not constitute a breach of this Agreement unless such failure to comply would
cause a Material Adverse Effect.




          SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending against or, to the
knowledge of any Loan Party, threatened against or affecting the Loan Parties or any of their
Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this
Agreement or the Transactions.




          (b) Except for the Disclosed Matters (i) no Loan Party nor any of its Subsidiaries has
received notice of any claim with respect to any Environmental Liability and (ii) and except with
respect to any other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, no Loan Party nor any of its domestic Subsidiaries
(1) has failed to comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law or (2) has become subject to
any Environmental Liability. Borrower will use its best efforts to ensure to ensure its foreign
Subsidiaries comply with Environmental Laws applicable to such Subsidiaries and will cause such
compliance where failure of compliance would have a Material Adverse Effect.




          (c) Since the date of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.



25









 







          SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party and its
Subsidiaries is in compliance with all Requirements of Law applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. No Default has occurred and is continuing.




          SECTION 3.08. Investment Company Status. No Loan Party is an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940.




          SECTION 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed or caused
to be filed all Tax returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good
faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable,
has set aside on its books adequate reserves or (b) to the extent that the failure to do so could
not be expected to result in a Material Adverse Effect. No tax liens have been filed and no claims
are being asserted with respect to any such taxes.




          SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse Effect. The
present value of all accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the
most recent financial statements reflecting such amounts, exceed the fair market value of the
assets of such Plan, except where such excess could not reasonably be expected to result in a
Material Adverse Effect.




          SECTION 3.11. Disclosure. The Borrower has disclosed to the Lender all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all
other matters known to it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to the Lender or any Lender in
connection with the negotiation of this Agreement or any other Loan Document (as modified or
supplemented by other information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time delivered and, if such
projected financial information was delivered prior to the Effective Date, as of the Effective
Date.




          SECTION 3.12. Material Agreements. Neither the Borrower nor any Loan Party is in
default in the performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any material agreement to which it is a party or (ii) any agreement or
instrument evidencing or governing Indebtedness.




          SECTION 3.13. Solvency. (a) Immediately after the consummation of the Transactions
to occur on the Effective Date, (i) the fair value of the assets of each Loan Party, at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (ii) the
present fair saleable value of the property of each Loan Party will be greater than the amount that
will be required to pay the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii)
each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, and (iv) each Loan Party will
not have unreasonably small capital with which to conduct the business in which it is engaged as
such business is now conducted and is proposed to be conducted after the Effective Date.




          (b) No Loan Party intends to, or will permit any of its Subsidiaries to, and believes that it
or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature,
taking into account the timing of and amounts of cash to be received by it or any such Subsidiary
and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the
Indebtedness of any such Subsidiary.



26









 







          SECTION 3.14. Insurance. Schedule 3.14 sets forth a description of all
insurance maintained by or on behalf of the Borrower as of the Effective Date. As of the Effective
Date, all premiums in respect of such insurance have been paid. The Borrower believes that the
insurance maintained by or on behalf of the Borrower and the Subsidiaries is adequate.




          SECTION 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth a
correct and complete list of the name and relationship to the Borrower of each and all of the
Borrower’s Subsidiaries, including the type of entity of the Borrower and each of its
Subsidiaries. Each Subsidiary which is an Inactive Subsidiary is identified on Schedule 3.15.
“Inactive Subsidiary” for the purposes of this Agreement means a Subsidiary which has
generated less than $1,000,000.00 in gross revenue in its most recent fiscal year, as determined
from time to time. All of the issued and outstanding Equity Interests owned by any Loan Party has
been (to the extent such concepts are relevant with respect to such ownership interests) duly
authorized and issued and is fully paid and non-assessable.




          SECTION 3.16. [Intentionally omitted.].




          SECTION 3.17. Employment Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to the knowledge of the
Borrower, threatened. The hours worked by and payments made to employees of the Loan Parties and
the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters, except where such violation would
not have a Material Adverse Effect. All payments due from any Loan Party or any Subsidiary, or for
which any claim may be made against any Loan Party or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Loan Party or such Subsidiary, except where failure to make such payment or
accrual would not have a Material Adverse Effect.



ARTICLE IV




Conditions




          SECTION 4.01. Effective Date. The obligations of the Lender to make Loans and to
issue Letters of Credit hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 8.02):





     (a) Credit Agreement and Loan Documents. The Lender (or its counsel) shall
have received (i) from each party hereto either (A) a counterpart of this Agreement signed
on behalf of such party or (B) written evidence satisfactory to the Lender (which may
include facsimile transmission of a signed signature page of this Agreement) that such party
has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan
Documents and such other certificates, documents, instruments and agreements as the Lender
shall reasonably request in connection with the transactions contemplated by this Agreement
and the other Loan Documents, including a written opinion of the Borrower’s counsel,
addressed to the Lender in form and substance reasonably satisfactory to the Lender.




     (b) Financial Statements and Projections. The Lender shall have received (i)
audited consolidated financial statements of Borrower for the 2006, 2007 and 2008 fiscal
years, (ii) unaudited interim consolidated financial statements of Borrower for each fiscal
quarter ended after the date of the latest applicable financial statements delivered
pursuant to clause (i) of this paragraph as to which such financial statements are
available, and such financial statements shall not, in the reasonable judgment of the
Lender, reflect any material adverse change in the consolidated financial condition of
Borrower, as reflected in the most recent financial statements or projections delivered to
Lender.



27









 






     (c) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Lender shall have received (i) a certificate of each Loan Party,
dated the Effective Date and executed by its Secretary or Assistant Secretary, which shall
(A) certify the resolutions of its Board of Directors, members or other body authorizing the
execution, delivery and performance of the Loan Documents to which it is a party, (B)
identify by name and title and bear the signatures of the Financial Officers and any other
officers of such Loan Party authorized to sign the Loan Documents to which it is a party,
and (C) contain appropriate attachments, including the certificate or articles of
incorporation or organization of each Loan Party certified by the relevant authority of the
jurisdiction of organization of such Loan Party and a true and correct copy of its by-laws
or operating, management or partnership agreement, and (ii) a long form good standing
certificate for each Loan Party from its jurisdiction of organization.




     (d) No Default Certificate. The Lender shall have received a certificate,
signed by the chief financial officer of the Borrower, on the initial Borrowing date (i)
stating that no Default has occurred and is continuing, (ii) stating that the
representations and warranties contained in Article III are true and correct as of such
date, and (iii) certifying any other factual matters as may be reasonably requested by the
Lender.




     (e) Fees. The Lender shall have received all fees required to be paid, and all
expenses for which invoices have been presented (including the reasonable fees and expenses
of legal counsel), on or before the Effective Date. All such amounts will be paid with
proceeds of Loans made on the Effective
Date and will be reflected in the funding instructions given by the Borrower to the
Lender on or before the Effective Date.




     (f) Lien Searches. The Lender shall have received the results of a recent lien
search in each of the jurisdictions where a material portion of the assets of the Borrower
are located, and such search shall reveal no liens on any of the assets of the Borrower
except for liens permitted by Section 6.02 or discharged on or prior to the Effective Date
pursuant to a pay-off letter or other documentation satisfactory to the Lender.




     (g) Pay-Off Letter. The Lender shall have received satisfactory pay-off
letters for all existing Indebtedness to be repaid from the proceeds the initial Borrowing,
confirming that all letters of credit issued or guaranteed as part of such Indebtedness
shall have been cash collateralized or supported by a Letter of Credit.




     (h) Funding Account. The Lender shall have received a notice setting forth the
deposit account of the Borrower (the “Funding Account”) to which the Lender is
authorized by the Borrower to transfer the proceeds of any Borrowings requested or
authorized pursuant to this Agreement.




     (i) Other Documents. The Lender shall have received such other documents as
the Lender or its counsel may have reasonably requested.


The Lender shall notify the Borrower of the Effective Date, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligations of the Lender to make Loans and to issue
Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02).




          SECTION 4.02. Each Credit Event. The obligation of the Lender to make a Loan on the
occasion of any Borrowing, and to issue, amend, renew or extend any Letter of Credit, is subject to
the satisfaction of the following conditions:





     (a) The representations and warranties of the Borrower set forth in this Agreement
shall be true and correct on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable.



28









 






     (b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no
Default shall have occurred and be continuing.



          (c) After giving effect to any Borrowing or the issuance of any Letter of Credit or
Letter of Guaranty, Availability is not less than zero.


Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a), (b) and (c) of this Section.




ARTICLE V




Affirmative Covenants




          Until the Commitment has expired or been terminated and the principal of and interest on each
Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit or
Letters of Guaranty shall have expired or terminated and all LC Disbursements or Guaranty Payments
shall have been reimbursed, the Borrower agrees with the Lender that:




          SECTION 5.01. Financial Statements; Borrowing Base and Other Information. The
Borrower will furnish to the Lender:





     (a) within 90 days after the end of each fiscal year of the Borrower, its audited
consolidated and consolidating balance sheet and related income statement, and its
consolidated (but not consolidating) statements of stockholders’ equity and cash flows as of
the end of and for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by nationally recognized independent public
accountants (without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, accompanied by any
management letter prepared by said accountants;




     (b) within 50 days after the end of each of the first three fiscal quarters of the
Borrower, its consolidated and consolidating balance sheet and related income statement and
its consolidated (but not consolidating) statements of stockholders’ equity and cash flows
as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of footnotes;




     (c) [Intentionally omitted.]




     (d) concurrently with any delivery of financial statements under clause (a) or (b) or
(c) above, a certificate of a Financial Officer of the Borrower in substantially the form of
Exhibit A (i) certifying, in the case of the financial statements delivered under
clause (b) or (c), as presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, (ii) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed
calculations demonstrating compliance with the



29









 







Financial Covenants contained herein and (iv)
stating whether any change in GAAP or in the application thereof has occurred since the date
of the audited financial statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements accompanying such
certificate;




     (e) [Intentionally omitted.]




     (f) as soon as available, but in any event prior to the end of each fiscal year of the
Borrower, a copy of the plan and forecast (including a projected consolidated and
consolidating balance sheet and income statement and consolidated (but not consolidating)
statement of cash flows) of the Borrower for each quarter of the coming fiscal year (the
“Projections”) in form reasonably satisfactory to the Lender;




     (g) [Intentionally omitted.]




     (h) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any Subsidiary with
the Securities and Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be; and




     (i) promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of any Loan Party, or compliance with
the terms of this Agreement, as the Lender may reasonably request.



          SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Lender
prompt written notice of the following:





     (a) the occurrence of any Default;




     (b) receipt of any notice of any governmental investigation or any litigation commenced
or threatened against any Loan Party that (i) seeks damages in excess of $2,000,000.00, (ii)
seeks injunctive relief, (iii) is asserted or instituted against any Plan, its fiduciaries
or its assets, (iv) alleges criminal misconduct by any Loan Party, (v) alleges the violation
of any law regarding, or seeks remedies in connection with, any Environmental Laws; (vi)
contests any tax, fee, assessment, or other governmental charge in excess of $1,000,000.00,
(vii) involves any product recall or (vii) could reasonably be expected to have a Material
Adverse Effect;




     (c) any material Lien (other than Permitted Encumbrances) or claim made or asserted
against any of the Borrower’s assets which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect;




     (d) the occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000.00; and




     (e) any other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect.


Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer
or other executive officer of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect thereto.





30












 





          SECTION 5.03. Existence; Conduct of Business. Each Loan Party will, and will cause
each Subsidiary to, (a) do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, qualifications, licenses, permits,
franchises, governmental authorizations, intellectual property rights, licenses and permits
material to the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, except where failure to do so
could not reasonably be expected to have a Material Adverse Effect; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03 and (b) carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted.




          SECTION 5.04. Payment of Obligations. Each Loan Party will and will cause each
Subsidiary to, pay or discharge all Material Indebtedness and all other material liabilities and
obligations, including Taxes, before the same shall become delinquent or in default, but subject to
any applicable grace periods, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make
payment pending such contest could not reasonably be expected to result in a Material Adverse
Effect.




          SECTION 5.05. Maintenance of Properties. Each Loan Party will, and will cause each
Subsidiary to keep and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, except where failure to do so could
not reasonably be expected to result in a Material Adverse Effect




          SECTION 5.06. Books and Records; Inspection Rights. Each Loan Party will, and will
cause each Subsidiary to, (i) keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities and (ii) permit any representatives designated by the Lender (including employees of the
Lender, or any consultants, accountants, lawyers and appraisers retained by the Lender, upon
reasonable prior notice, to visit and inspect the Borrower’s properties, to examine and make
extracts from its books and records, including environmental assessment reports and Phase I or
Phase II studies, and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably requested;
provided, that unless a Default is continuing, such visits and inspections shall not occur more
than once every 365 days. Such visits shall be made in such a manner as to interfere as little as
possible with the conduct of the Borrower’s business. The Borrower acknowledges that the Lender,
after exercising its rights of inspection, may prepare certain Reports pertaining to the Borrower’s
assets for internal use by the Lender. The Borrower will permit the Lender to conduct field audit
examinations of the Borrower’s assets, liabilities, books and records at a frequency not less than
once every 365 days; provided further that the Borrower will permit the Lender to conduct such
examinations at any time and with any reasonable frequency while a Default is continuing.




          SECTION 5.07. Compliance with Laws. Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.




          SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans will
be used only for repayment of existing Indebtedness and for general operating purposes. No part of
the proceeds of any Loan and no Letter of Credit or Letter of Guaranty will be used, whether
directly or indirectly, (i) for any purpose that entails a violation of any of the Regulations of
the Board, including Regulations T, U and X or (ii) to make any Acquisition other than a Permitted
Acquisition.




          SECTION
5.09. Insurance. Each Loan Party will, and will cause each Subsidiary to,
maintain (in all jurisdictions where such insurance is reasonably available and customary for
companies in similar businesses and of similar size) with financially sound and reputable carriers
insurance in such amounts (with no greater risk retention) and against such risks including
(i) loss or damage by fire and loss in transit; (ii) theft, burglary,


31









 







pilferage, larceny,
embezzlement, and other criminal activities; (iii) business interruption; (iv) general liability
and (v) and such other hazards, as is customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar locations. The Borrower
will, upon request, furnish to the Lender, information in reasonable detail as to the insurance so
maintained.




          SECTION 5.10. Casualty and Condemnation. The Borrower (a) will furnish to the Lender
prompt written notice of any casualty or other insured damage to any material asset, if the amount
of such damage is reasonably expected to exceed $1,000,000.00 and (b) will use commercially
reasonable efforts to ensure that the Net Proceeds of any such event (whether in the form of
insurance proceeds, condemnation awards or otherwise) are collected.




          SECTION 5.11. Depository Banks. The Borrower will maintain the Lender as its sole
depository and remittance bank, including for the maintenance of operating, administrative, cash
management, collection activity, and other deposit accounts for the conduct of its business to the
extent the Lender is willing and able to undertake these activities.




          SECTION 5.12. Further Assurances. (a) Subject to applicable law, the Borrower and each
Subsidiary that is a Loan Party shall, unless the Lender otherwise consents, cause each Subsidiary
of the Borrower formed or acquired after the date of this Agreement in accordance with the terms of
this Agreement and each Inactive Subsidiary to become a Loan Party by executing the Joinder
Agreement set forth as Exhibit B hereto (the “Joinder Agreement”), provided,
however, that neither the existing Inactive Subsidiaries nor any foreign Subsidiaries shall be
required to execute a Joinder Agreement if (i) such Subsidiary does not generate gross revenue of
more than $1,000,000.00 in fiscal year 2009 or any subsequent fiscal year, (ii) there is a
substantial likelihood that joinder to this Agreement would violate applicable laws, rules or
regulations of the such Subsidiary’s jurisdiction of formation or result in any liability for any
officer or director of the Borrower or such Subsidiary or (iii) such joinder could reasonably be
expected to result in increased costs to the Borrower or such Subsidiary in any given year of more
than $25,000.00. Any Subsidiary which executes a Joinder Agreement shall continue to be a Loan
Party until the expiration of this Agreement. Upon execution and delivery of a Joinder Agreement,
each such Person shall automatically become a Loan Guarantor hereunder and thereupon shall have all
of the rights, benefits, duties, and obligations in such capacity under the Loan Documents.
Notwithstanding anything to the contrary provided in this Agreement, no foreign Subsidiary which
executes a Joinder Agreement shall be required to provide a legal opinion regarding enforceability
nor shall any foreign Subsidiary be required to execute a guaranty governed by the laws of any
jurisdiction other than the United States or the state of Illinois.




ARTICLE VI




Negative Covenants




          Until the Commitment has expired or terminated and the principal of and interest on each Loan
and all fees payable hereunder have been paid in full and all Letters of Credit or Letters of
Guaranty have expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lender that:




          SECTION 6.01. Indebtedness; Certain Equity Securities.




          The Borrower will not create, incur, assume or permit to exist any Indebtedness,
except:





     (i) Indebtedness created under the Loan Documents and other Indebtedness to the
Bank;




     (ii) Indebtedness existing on the date hereof and set forth in Schedule 6.01;



32









 






     (iii) Indebtedness of Borrower to any of its Subsidiaries;




     (iv) [Intentionally omitted];




     (v) Guarantees of Indebtedness permitted under this Section 6.01;




     (vi) Capital Lease Obligations or purchase money Indebtedness in an aggregate
amount not exceeding, at any one time outstanding, $1,500,000.00;




     (vii) Indebtedness created pursuant to Section 5.14 and “mark to market”
exposure resulting from any Swap Agreement entered into for protection against
interest rate, foreign currency or commodity price risks incurred in the ordinary
course of the Borrower’s business, and not for speculative purposes;




     (viii) other Indebtedness in an aggregate principal amount not exceeding
$500,000.00 at any one time outstanding;




     (ix) extensions, renewals and replacements of any of the foregoing that do not
increase the outstanding principal amount thereof; and




     (x) Indebtedness under the Wachovia Letters of Credit.



          SECTION 6.02. Liens. The Borrower will not, and will not permit any other Loan Party
to, create, incur, assume or permit to exist any Lien (including, without limitation, any mortgage
on real estate or any security interest in accounts, equipment, inventory, general intangibles or
intellectual property) on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect of any thereof,
except:





     (i) Liens securing obligations owed to Lender under a Swap Agreement or under an
agreement governing Banking Services;




     (ii) Liens created pursuant to Capital Lease Obligations or purchase money
Indebtedness permitted pursuant to this Agreement; provided that such Liens are only
in respect of the property or assets subject to, and secure only, the respective
Capital Lease Obligations or purchase money Indebtedness not to exceed $1,500,000.00
in the aggregate; and




     (iii) Permitted Encumbrances.



          SECTION 6.03. Fundamental Changes.





     (a) The Borrower will not, nor will it permit any other Loan Party to, merge into or
consolidate with any other Person, or permit any other Person to merge into or consolidate
with it, or liquidate or dissolve, except that (i) any Subsidiary may merge into any other
Subsidiary or into Borrower and (ii) Borrower may effect a Permitted Acquisition.




     (b) The Borrower will not and will not permit any other Loan Party to, engage to any
material extent in any business other than businesses of the type conducted by the Borrower
and the other Loan Parties on the date of execution of this Agreement and businesses
reasonably related thereto.



          SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. Absent the
written consent of the
Lender, which will not be unreasonably withheld or delayed, the Borrower will not purchase, hold or
acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary of
Borrower


33









 







prior to such merger) any Equity Interests in or evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the foregoing) of, in
each case other than financing extended to customers in the ordinary course of business, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person constituting a business
unit, except:





     (a) investments existing on the date hereof and set forth on Schedule 6.04;




     (b) Permitted Investments;




     (c) loans or advances permitted under Section 6.01(a);




     (d) loans or advances by the Borrower or any of its Subsidiaries to their respective
employees in the ordinary course of business, not to exceed $500,000.00 in the aggregate for
Borrower and its Subsidiaries at any one time outstanding;




     (e) Accounts receivable owned by the Borrower or any of its Subsidiaries, if created in
the ordinary course of business and payable or dischargeable in accordance with customary
trade terms;




     (f) Guarantees constituting Indebtedness permitted by Section 6.01;




     (g) investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent Accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;




     (h) investments or other interests acquired in compliance with Section 6.03;
and




     (i) investments or loans by Borrower in or to any Subsidiary (or all Subsidiaries in
the aggregate) in an aggregate principal amount not to exceed $1,000,000 at any time
outstanding.



          SECTION 6.05. Asset Sales. The Borrower will not, and will not permit any other Loan
Party to, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest
owned by it, except:





     (a) sales, transfers, leases and other dispositions of inventory in the ordinary course
of business, licenses of intellectual property in the ordinary course of business, used or
surplus equipment or intellectual property which is no longer useful in such party’s
business and Permitted Investments in the ordinary course of business;




     (b) sales, transfers and dispositions to the Borrower or to any of its Subsidiaries;
provided that any such sales, transfers or dispositions involving a Subsidiary of Borrower
that is not a Loan Party shall be made in compliance with Section 6.09; and




     (c) sales of Equity Interests in Subsidiaries which, in the aggregate, do not result in
a Material Adverse Effect;




     (d) other sales, transfers, leases or other dispositions by the Borrower or any of its
Subsidiaries which do not exceed, in the aggregate, $1,000,000.00 in any fiscal year;




provided that all sales, transfers, leases and other dispositions permitted hereby (other
than those permitted by clauses (a) and (b) above) shall be made for fair value.



          SECTION 6.06. Sale and Leaseback Transactions. The Borrower will not, and will not
permit any other Loan Party to, enter into any arrangement, directly or indirectly, whereby it
shall sell or transfer any property, real or personal, used or useful in its business, whether now
owned or hereinafter acquired, and thereafter rent or


34









 







lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property sold or transferred,
other than sale-leaseback transactions with Subsidiaries of not more than $1,000,000 in the
aggregate at any time, if at arm’s length and for fair market value.




          SECTION 6.07. Swap Agreements. The Borrower will not, and will not permit any other
Loan Party to, enter into any Swap Agreement, other than Swap Agreements entered into in the
ordinary course of business to hedge or mitigate risks to which the Borrower or any other Loan
Party is exposed in the conduct of its business or the management of its liabilities.




          SECTION 6.08. Restricted Payments. The Borrower will not make, or agree to pay or
make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i) the Borrower may declare and pay dividends with respect to its
Equity Interests payable solely in additional shares of its Equity Interests and (ii) the Borrower
may make any cash payment or other distribution of cash or property to redeem, purchase, repurchase
or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to
acquire any of its Equity Interests in an amount not to exceed $1,000,000 in any fiscal year
provided no such payment or distribution may be made during the continuation of a Default or if
such payment or distribution will cause a Default.




          SECTION 6.09. Transactions with Affiliates. The Borrower will not, nor will it
permit any other Loan Party to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except transactions in the ordinary course of business
that are at prices and on terms and conditions not less favorable to the Borrower than could be
obtained on an arm’s-length basis from unrelated third parties.




          SECTION 6.10. Restrictive Agreements. The Borrower will not, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Borrower to create, incur or permit to exist
any Lien upon any of its property or assets, or (b) the ability of any domestic Subsidiary of
Borrower to pay dividends or other distributions with respect to any of its Equity Interests or to
make or repay loans or advances to the Borrower or any other Subsidiary of Borrower or to Guarantee
Indebtedness of the Borrower or any of its Subsidiaries; provided that the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document.




          SECTION 6.11. Amendment of Material Documents. The Borrower will not amend, modify or
waive any of its rights under (a) any Agreement relating to any Subordinated Indebtedness or (b)
its organizational documents (in any manner materially adverse to the Lender).




          SECTION 6.12. Additional Subsidiaries.. The Borrower will not, and will not permit
any other Loan Party to, form or acquire any Subsidiary after the Effective Date except that
Borrower or any of its Subsidiaries may form, create or acquire a wholly-owned Subsidiary so long
as (a) immediately thereafter and giving effect thereto, no event will occur and be continuing
which constitutes a Default; (b) such Subsidiary (and, where applicable, Borrower) shall (to the
extent required by Section 5.12 hereof) execute and deliver a Guarantee (or, at the option of
Lender, a joinder to the Guarantee executed concurrently herewith) and (c) Lender is given prior
notice of such formation, creation or acquisition. Borrower shall not permit any foreign
Subsidiary to form, create or acquire a domestic Subsidiary.




          SECTION 6.13. Capital Expenditures. The Borrower will not, and will not permit any
Subsidiary to, incur or make aggregate Capital Expenditures during any period set forth below in an
amount exceeding the amount set forth opposite such period:




	 	 	 	 	 
	Period	 	Maximum Capital Expenditures
	Borrower’s Fiscal Year
	 	$	10,000,000.00	 






35









 





The unused portion of permitted Capital Expenditures in any fiscal year cannot be carried over to a
subsequent fiscal year.




          SECTION 6.14. Financial Covenants.





     (a) Minimum Net Income. The Borrower shall have, at the end of each period set
forth below, Net Income for the quarter then-ended of not less than the following:



	 	 	 	 	 
	Period	 	Net Income
	6/30/09
	 	 	($2,000,000.00	)
	9/30/09
	 	$	750,000.00	 







     (b) Leverage Ratio. The Borrower will not permit the Leverage Ratio,
determined for any period of four consecutive fiscal quarters ending on any date during any
period set forth below, to be less than the ratio set forth below opposite such period:



	 	 	 	 	 
	Period	 	Ratio
	12/31/09
	 	 	2.0:1.0	 
	3/31/10 and each quarter-end thereafter
	 	 	1.5:1.0	 







     (c) Minimum Tangible Net Worth. Borrower’s Tangible Net Worth shall not at any
time be less than the Minimum Tangible Net Worth; “Minimum Tangible Net Worth” is defined
for purposes of this Subsection as $42,000,000.00 at all times from the date hereof through
December 31, 2009 and adjusted on the last day of each Fiscal Year of Borrower (starting
with December 31, 2009) by adding an amount equal to fifty percent (50%) of Borrower’s Net
Income (but without reduction for any net loss) for the Fiscal Year then ended as reflected
on Borrower’s audited year-end financial statement plus 100% of all capital contributed
through the issuance of Equity Interests in the Borrower during such period; and
“Tangible Net Worth” being defined for purposes of this Subsection as Borrower’s
consolidated shareholders’ equity (including retained earnings) less the net book value of
all Intangible Assets plus the amount of any LIFO reserve plus the amount of any debt
subordinated to Lender, all as determined under GAAP applied on a basis consistent with the
financial statement dated December 31, 2008. “Intangible Assets” shall mean goodwill,
patents, trademarks, customer lists and other items that are categorized as intangible
assets in accordance with GAAP.



ARTICLE VII




Events of Default




          If any of the following events (“Events of Default”) shall occur:





     (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment thereof or
otherwise;




     (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Article) payable under this
Agreement, within three Business Days after the same shall become due and payable;



36









 






     (c) any representation or warranty made or deemed made by or on behalf of any Loan
Party or any Subsidiary in or in connection with this Agreement or any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection with this
Agreement or any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect when made or deemed
made;




     (d) the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02(a), 5.03 (with respect to the Borrower’s existence) or 5.08 or in
Article VI;




     (e) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those which constitute a default under
another Section of this Article), and such failure shall continue unremedied for a period of
(i) 5 days after the earlier of knowledge of such breach or written notice thereof from the
Lender if such breach relates to terms or provisions of Section 5.01, or 5.03 through 5.07
and 5.09 of this Agreement or (ii) 30 days after the earlier of knowledge of such breach or
notice thereof from the Lender if such breach relates to terms or provisions of any other
Section of this Agreement;




     (f) any Loan Party or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable after lapse of any applicable grace period
set forth in the agreement governing such Material Indebtedness;




     (g) any event or condition occurs that results in any Material Indebtedness becoming
due prior to its scheduled maturity or that enables or permits (with or without the giving
of notice or the lapse of any applicable grace period set forth in the agreement governing
such Material Indebtedness, or both) the holder or holders of any Material Indebtedness or
any trustee or agent on its or their behalf to cause any Material Indebtedness to become
due, prior to its scheduled maturity; provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;




     (h) an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of a Loan Party or
Beijing Fuel Tech Environmental Technologies Co., Ltd. or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Loan Party or Beijing Fuel
Tech Environmental Technologies Co., Ltd. or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered;




     (i) any Loan Party or Beijing Fuel Tech Environmental Technologies Co., Ltd. shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described in clause
(h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such Loan Party or Beijing Fuel
Tech Environmental Technologies Co., Ltd. or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;




     (j) any Loan Party or Beijing Fuel Tech Environmental Technologies Co., Ltd. shall
become unable, admit in writing its inability or fail generally to pay its debts as they
become due;



37









 






     (k) one or more judgments for the payment of money in an aggregate amount in excess of
$250,000 shall be rendered against any Loan Party, any Subsidiary of any Loan Party or any
combination thereof and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of any Loan Party or any Subsidiary of any Loan
Party to enforce any such judgment or any Loan Party or any Subsidiary of any Loan Party shall fail
within 30 days to discharge one or more non-monetary judgments or orders which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or
orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in
good faith by proper proceedings diligently pursued;




     (l) an ERISA Event shall have occurred that, in the opinion of the Lender, when taken
together with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;




     (m) a Change in Control shall occur;




     (n) the occurrence of any “default”, as defined in any Loan Document (other than this
Agreement) or the breach of any of the terms or provisions of any Loan Document (other than
this Agreement), which default or breach continues beyond any period of grace therein
provided;




     (o) [Intentionally omitted];




     (p) any material provision of any Loan Document (other than the Loan Guaranty) for any
reason ceases to be valid, binding and enforceable in accordance with its terms (or any Loan
Party shall challenge the enforceability of any Loan Document (other than the Loan Guaranty)
or shall assert in writing, or engage in any action or inaction based on any such assertion,
that any provision of any of the Loan Documents has ceased to be or otherwise is not valid,
binding and enforceable in accordance with its terms);




     (q) any Loan Party is criminally indicted or convicted under any law that may
reasonably be expected to lead to a forfeiture of any property of such Loan Party having a
fair market value in excess of $250,000.00; or




     (r) any event or condition occurs that causes an Event of Default under the Credit
Facility Agreement between Beijing Fuel Tech Environmental Technologies Co., Ltd., and
JPMorgan Chase Bank (China) Company Limited, Shanghai Branch dated as of September 14, 2007,
as amended, supplemented, modified or restated from time to time but only for so long as
said agreement remains in effect;


then, and in every such event (other than an event with respect to the Borrower described in clause
(h) or (i) of this Article), and at any time thereafter during the continuance of such event, the
Lender may, by notice to the Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitment, and thereupon the Commitment shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the Commitment shall
automatically terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower. Upon the occurrence and the continuance of
an Event of Default, the Lender may increase the rate of interest applicable to the Loans and other


38









 






Obligations as set forth in this Agreement and exercise any rights and remedies provided to the
Lender under the Loan Documents or at law or equity, including all remedies provided under the UCC.




ARTICLE VIII




Miscellaneous




          SECTION 8.01. Notices. (a) Except in the case of notices and other communications
expressly permitted to be given by telephone (which shall be given to the telephone numbers set
forth below) (and subject to paragraph (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by facsimile, as follows:





	 	(i)	 	if to any Loan Party, to the Borrower at:
	 
	 	 	 	Fuel Tech, Inc.

27601 Bella Vista Parkway

Warrenville, IL 60555

Attention: John Graham, CFO

Telephone No.: (630) 845-4493

Facsimile No: (630) 845-4501
	 
	 	(ii)	 	if to the Lender, to JPMorgan Chase Bank, N.A. at:
	 
	 	 	 	JPMorgan Chase Bank, N.A.

111 East Busse Avenue

Mount Prospect, IL 60056

Attention: Lewis E. Rieck

Telephone No.: 847-506-8406

Facsimile No: 847-590-3745
	 
	 	 	 	with a copy to:
	 
	 	 	 	Locke Lord Bissell & Liddell LLP

111 West Wacker Drive

Chicago, IL 60606

Attention: Kenneth M. Lodge

Facsimile: 312-896-6478




All such notices and other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received or (ii) sent by
facsimile shall be deemed to have been given when sent, provided that if not given during
normal business hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient.




          (b) Notices and other communications to the Lender hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Lender; provided that the foregoing shall not apply to notices
pursuant to Article II or to compliance and no Event of Default certificates delivered pursuant to
Section 5.01(d) unless otherwise agreed by the Lender. The Lender or the Borrower (on behalf of
the Loan Parties) may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications. All such
notices and other communications (i) sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available,


39









 







return e-mail or other written acknowledgement),
provided that if not given during the normal business hours of the recipient, such notice
or communication shall be deemed to have been given at the opening of business on the next
Business Day for the recipient, and (ii) posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (b)(i) of notification that such notice or communication is
available and identifying the website address therefor.




          (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.




          SECTION 8.02. Waivers; Amendments. (a) No failure or delay by the Lender in
exercising any right or power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the Lender
hereunder and under any other Loan Document are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Event of Default, regardless of whether the Lender may have had notice
or knowledge of such Event of Default at the time.




          (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except (i) in the case of this Agreement, pursuant to an agreement
or agreements in writing entered into by the Borrower and the Lender, or (ii) in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered into by the Lender
and the Loan Party or Loan Parties that are parties thereto.




          SECTION 8.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses incurred by the Lender and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Lender in connection with the credit
facilities provided for herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions of the Loan Documents (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Lender in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Lender, including the fees, charges and disbursements of
any counsel for the Lender in connection with the enforcement, collection or protection of its
rights in connection with the Loan Documents, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of
such Loans or Letters of Credit. Expenses being reimbursed by the Borrower under this Section
include, without limiting the generality of the foregoing, costs and expenses incurred in
connection with:





     (i) appraisals and insurance reviews;




     (ii) field examinations and the preparation of Reports based on the fees charged by a
third party retained by the Lender or the internally allocated fees for each Person employed
by the Lender with respect to each field examination;




     (iii) background checks regarding senior management and/or key investors, as deemed
necessary or appropriate in the sole discretion of the Lender;




     (iv) taxes, fees and other charges for (A) lien and title searches and title insurance
and (B) recording the Mortgages, filing financing statements and continuations, and other
actions to perfect, protect, and continue the Lender’s Liens;




40












 






     (v) sums paid or incurred to take any action required of any Loan Party under the Loan
Documents that such Loan Party fails to pay or take; and




     (vi) forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the accounts and lock boxes.


All of the foregoing costs and expenses may be charged to the Borrower as Revolving Loans or to
another deposit account, all as described in Section 2.17(c).




          (b) The Borrower shall indemnify the Lender, and each Related Party of the Lender(each such
Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any
and all losses, claims, damages, penalties, incremental taxes, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Loan Documents or any agreement or instrument contemplated thereby,
the performance by the parties hereto of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or
Letter of Credit or the use of the proceeds therefrom (including any refusal by the Lender to honor
a demand for payment under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) the failure of the Borrower to deliver to the Lender
the required receipts or other required documentary evidence with respect to a payment made by the
Borrower for Taxes pursuant to Section 2.17, or (v) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, penalties, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or
wilful misconduct of such Indemnitee.




          (c) The relationship between any Loan Party on the one hand and the Lender on the other hand
shall be solely that of debtor and creditor. The Lender (i) shall not have any fiduciary
responsibilities to any Loan Party or (ii) does not undertake any responsibility to any Loan Party
to review or inform such Loan Party of any matter in connection with any phase of any Loan Party’s
business or operations. To the extent permitted by applicable law, no Loan Party shall assert, and
each hereby waives, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out
of, in connection with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.




          (d) All amounts due under this Section shall be payable not later than seven (7) days after
written demand therefor.




          SECTION 8.04. Successors and Assigns. (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby and, to the extent
expressly contemplated hereby, the Related Parties of each of the Lender) any legal or equitable
right, remedy or claim under or by reason of this Agreement.




          (b) The Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment and the Loans at the
time owing to



41









 






it); provided that, except in the case of an assignment to an Affiliate of the Lender or an
Approved Fund, the Borrower must give its prior written consent to such assignment (which consent
shall not be unreasonably withheld); and provided further that any consent of the
Borrower otherwise required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article VII has occurred and is continuing. Subject to notification of an
assignment, the assignee shall be a party hereto and, to the extent of the interest assigned, have
the rights and obligations of the Lender under this Agreement, and the Lender shall, to the extent
of the interest assigned, be released from its obligations under this Agreement (and, in the case
of an assignment covering all of the Lender’s rights and obligations under this Agreement, the
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.14, 2.15, 2.16 and 8.03). The Borrower hereby agrees to execute any amendment and/or
any other document that may be necessary to effectuate such an assignment, including an amendment
to this Agreement to provide for multiple lenders and an administrative agent to act on behalf of
such lenders. Any assignment or transfer by the Lender of rights or obligations under this
Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by the Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.




     For the purposes of this Section 8.04(b), the term “Approved Fund” has the following
meaning:



          “Approved Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) the Lender, (b) an
Affiliate of the Lender or (c) an entity or an Affiliate of an entity that administers or manages
the Lender.




          (c) The Lender may, without the consent of the Borrower, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of the Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (i) the Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower shall continue to deal solely and directly
with the Lender in connection with the Lender’s rights and obligations under this Agreement.
Subject to paragraph (d) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were the
Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.




          (d) A Participant shall not be entitled to receive any greater payment under Section 2.14 or
2.15 than the Lender would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent.




          (e) The Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of the Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Lender, and this Section shall not apply to
any such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party hereto.




          SECTION 8.05. Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Lender, the Lender or any Lender may have had notice or knowledge of any Event of Default
or incorrect representation or warranty at the time any credit is extended hereunder, and shall
continue in full force and effect as long as the principal of or any accrued interest on any Loan
or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter
of Credit is outstanding and so long as the Commitment has not expired or terminated. The
provisions of Sections 2.14, 2.15, 2.16 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,



42









 






the repayment of the Loans, the expiration or termination of the Letters of Credit and the
Commitment or the termination of this Agreement or any provision hereof.




          SECTION 8.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different counterparts), each of which
shall constitute an original, but all of which when taken together shall constitute a single
contract. This Agreement, the other Loan Documents and any separate letter agreements with respect
to fees payable to the Lender constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Lender and when the Lender shall
have received counterparts hereof which, when taken together, bear the signatures of each of the
other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.




          SECTION 8.07. Severability. Any provision of any Loan Document held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions thereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.




          SECTION 8.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Lender and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any
of and all the Obligations held by such Lender, irrespective of whether or not such Lender shall
have made any demand under the Loan Documents and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and remedies (including
other rights of setoff) which such Lender may have.




          SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) The
Loan Documents (other than those containing a contrary express choice of law provision) shall be
governed by and construed in accordance with the internal laws (including, without limitation, 735
ILCS Section 105/5-1 et seq, but otherwise without regard to the conflict of laws provisions) of
the State of Illinois, but giving effect to federal laws applicable to national banks.




          (b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any U.S. Federal or Illinois State court sitting in
Chicago, Illinois in any action or proceeding arising out of or relating to any Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or proceeding may be heard
and determined in such Illinois State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any
right that the Lender, the Lender or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against any Loan Party or its
properties in the courts of any jurisdiction.




          (c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.




43









 








          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 8.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.




          SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.




          SECTION 8.11. Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.




          SECTION 8.12. Confidentiality. The Lender agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating
to the Loan Parties and their obligations, (g) with the prior written consent of the Borrower or
(h) to the extent such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Lender on a non-confidential basis from a
source other than the Borrower. For the purposes of this Section, “Information” means all
information received from the Borrower relating to the Borrower or its business, other than any
such information that is available to the Lender, the Lender or any Lender on a non-confidential
basis prior to disclosure by the Borrower; provided that, in the case of information
received from the Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.




          SECTION 8.13. Nonreliance; Violation of Law. The Lender hereby represents that it is
not relying on or looking to any margin stock for the repayment of the Borrowings provided for
herein. Anything contained in this Agreement to the contrary notwithstanding, the Lender shall not
be obligated to extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.




          SECTION 8.14. USA PATRIOT Act. The Lender is subject to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) and hereby
notifies the Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.




44









 








          SECTION 8.15. Disclosure. Each Loan Party hereby acknowledges and agrees that the
Lender and/or its Affiliates from time to time may hold investments in, make other loans to or have
other relationships with any of the Loan Parties and their respective Affiliates.




ARTICLE IX




Loan Guaranty




          SECTION 9.01. Guaranty. Each Loan Guarantor (other than those that have delivered a
separate Guaranty) hereby agrees that it is jointly and severally liable for, and, as primary
obligor and not merely as surety, absolutely and unconditionally guarantees to the Lender the
prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Obligations and all costs and expenses including, without limitation, all
court costs and attorneys’ and paralegals’ fees and expenses paid or incurred by the Lender in
endeavoring to collect all or any part of the Obligations from, or in prosecuting any action
against, the Borrower, any Loan Guarantor or any other guarantor of all or any part of the
Obligations (such costs and expenses, together with the Obligations, collectively the
“Guaranteed Obligations”). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or further assent from
it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal. All
terms of this Loan Guaranty apply to and may be enforced by or on behalf of any domestic or foreign
branch or Affiliate of any Lender that extended any portion of the Guaranteed Obligations.




          SECTION 9.02. Guaranty of Payment. This Loan Guaranty is a guaranty of payment and
not of collection. Each Loan Guarantor waives any right to require the Lender to sue the Borrower,
any Loan Guarantor, any other guarantor, or any other person obligated for all or any part of the
Guaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce its payment
against any collateral securing all or any part of the Guaranteed Obligations.




          SECTION 9.03. No Discharge or Diminishment of Loan Guaranty. (a) Except as otherwise
provided for herein, the obligations of each Loan Guarantor hereunder are unconditional and
absolute and not subject to any reduction, limitation, impairment or termination for any reason
(other than the indefeasible payment in full in cash of the Guaranteed Obligations), including:
(i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or
compromise of any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any change
in the corporate existence, structure or ownership of the Borrower or any other guarantor of or
other person liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Obligated Party, or their assets or any
resulting release or discharge of any obligation of any Obligated Party; or (iv) the existence of
any claim, setoff or other rights which any Loan Guarantor may have at any time against any
Obligated Party, Lender, or any other person, whether in connection herewith or in any unrelated
transactions.




          (b) The obligations of each Loan Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable
law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.




          (c) Further, the obligations of any Loan Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of the Lender to assert any claim or demand or to enforce
any remedy with respect to all or any part of the Guaranteed Obligations; (ii) any waiver or
modification of or supplement to any provision of any agreement relating to the Guaranteed
Obligations; (iii) any release, non-perfection, or invalidity of any indirect or direct security
for the obligations of the Borrower for all or any part of the Guaranteed Obligations
or any obligations of any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iv) any action or failure to act by the Lender with respect to any collateral
securing any part of the Guaranteed Obligations;



45









 






or (v) any default, failure or delay, willful or
otherwise, in the payment or performance of any of the Guaranteed Obligations, or any other
circumstance, act, omission or delay that might in any manner or to any extent vary the risk of
such Loan Guarantor or that would otherwise operate as a discharge of any Loan Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed
Obligations).




          SECTION 9.04. Defenses Waived. To the fullest extent permitted by applicable law,
each Loan Guarantor hereby waives any defense based on or arising out of any defense of the
Borrower or any Loan Guarantor or the unenforceability of all or any part of the Guaranteed
Obligations from any cause, or the cessation from any cause of the liability of the Borrower or any
Loan Guarantor, other than the indefeasible payment in full in cash of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Loan Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not
provided for herein, as well as any requirement that at any time any action be taken by any person
against any Obligated Party, or any other person. The Lender may, at its election, foreclose on
any collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any
such collateral in lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, compromise or adjust any part of
the Guaranteed Obligations, make any other accommodation with any Obligated Party or exercise any
other right or remedy available to it against any Obligated Party, without affecting or impairing
in any way the liability of such Loan Guarantor under this Loan Guaranty except to the extent the
Guaranteed Obligations have been fully and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, each Loan Guarantor waives any defense arising out of any such
election even though that election may operate, pursuant to applicable law, to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of any Loan Guarantor against
any Obligated Party or any security.




          SECTION 9.05. Rights of Subrogation. No Loan Guarantor will assert any right, claim
or cause of action, including, without limitation, a claim of subrogation, contribution or
indemnification that it has against any Obligated Party, or any collateral, until the Loan Parties
and the Loan Guarantors have fully performed all their obligations to the Lender.




          SECTION 9.06. Reinstatement; Stay of Acceleration. If at any time any payment of any
portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon
the insolvency, bankruptcy, or reorganization of the Borrower or otherwise, each Loan Guarantor’s
obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time
as though the payment had not been made and whether or not the Lender is in possession of this Loan
Guaranty. If acceleration of the time for payment of any of the Guaranteed Obligations is stayed
upon the insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise
subject to acceleration under the terms of any agreement relating to the Guaranteed Obligations
shall nonetheless be payable by the Loan Guarantors forthwith on demand by the Lender.




          SECTION 9.07. Information. Each Loan Guarantor assumes all responsibility for being
and keeping itself informed of the Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks that each Loan Guarantor assumes and incurs under this Loan Guaranty,
and agrees that the Lender shall not have any duty to advise any Loan Guarantor of information
known to it regarding those circumstances or risks.




          SECTION 9.08. Termination. The Lender may continue to make loans or extend credit to
the Borrower based on this Loan Guaranty until five days after it receives written notice of
termination from any Loan Guarantor. Notwithstanding receipt of any such notice, each Loan
Guarantor will continue to be liable to the Lender for any Guaranteed Obligations created, assumed
or committed to prior to the fifth day after receipt of the notice, and all subsequent renewals,
extensions, modifications and amendments with respect to, or substitutions for, all or any part of
that Guaranteed Obligations.




          SECTION 9.09. Taxes. All payments of the Guaranteed Obligations will be made by each
Loan Guarantor free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if any Loan Guarantor shall be required to deduct any Indemnified Taxes or
Other Taxes from such payments, then (i) the



46









 






sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section) the Lender receives
an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan
Guarantor shall make such deductions and (iii) such Loan Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law.




          SECTION 9.10. Maximum Liability. The provisions of this Loan Guaranty are severable,
and in any action or proceeding involving any state corporate law, or any state, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if
the obligations of any Loan Guarantor under this Loan Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this
Loan Guaranty to the contrary, the amount of such liability shall, without any further action by
the Loan Guarantors or the Lender, be automatically limited and reduced to the highest amount that
is valid and enforceable as determined in such action or proceeding (such highest amount determined
hereunder being the relevant Loan Guarantor’s “Maximum Liability”. This Section with
respect to the Maximum Liability of each Loan Guarantor is intended solely to preserve the rights
of the Lender to the maximum extent not subject to avoidance under applicable law, and no Loan
Guarantor nor any other person or entity shall have any right or claim under this Section with
respect to such Maximum Liability, except to the extent necessary so that the obligations of any
Loan Guarantor hereunder shall not be rendered voidable under applicable law. Each Loan Guarantor
agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum
Liability of each Loan Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lender hereunder, provided that, nothing in this sentence shall be
construed to increase any Loan Guarantor’s obligations hereunder beyond its Maximum Liability. In
addition to the above, it is agreed that the liability of the Fuel Tech S.r.l. under this Section 9
may never exceed, and shall automatically be reduced to the maximum amount that, if paid, would
allow Fuel Tech S.r.l. to remain operating as a going concern in good standing and not become
insolvent.




          SECTION 9.11. Contribution. In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or shall suffer any
loss as a result of any realization upon any collateral granted by it to secure its obligations
under this Loan Guaranty, each other Loan Guarantor (each a “Non-Paying Guarantor”) shall
contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable
Percentage” of such payment or payments made, or losses suffered, by such Paying Guarantor. For
purposes of this Article IX, each Non-Paying Guarantor’s “Applicable Percentage” with
respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on
which such payment or loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s
Maximum Liability as of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been
determined, the aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrower after the date hereof (whether by loan, capital infusion or by other means) to (ii) the
aggregate Maximum Liability of all Loan Guarantors hereunder (including such Paying Guarantor) as
of such date (without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been determined for any
Loan Guarantor, the aggregate amount of all monies received by such Loan Guarantors from the
Borrower after the date hereof (whether by loan, capital infusion or by other means). Nothing in
this provision shall affect any Loan Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor’s Maximum Liability). Each of the Loan
Guarantors covenants and agrees that its right to receive any contribution under this Loan Guaranty
from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in
full in cash of the Guaranteed Obligations. This provision is for the benefit of the Lender and
the Loan Guarantors and may be enforced by any one, or more, or all of them in accordance with the
terms hereof.




     SECTION 9.12. Liability Cumulative. The liability of each Loan Party as a Loan
Guarantor under this Article IX is in addition to and shall be cumulative with all liabilities of
each Loan Party to the Lender under this Agreement and the other Loan Documents to which such Loan
Party is a party or in respect of any obligations or liabilities of the other Loan Parties, without
any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.



[signature pages to follow]



47









 








          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.




	 	 	 	 	 
	 	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 	 
	 
	 	JPMORGAN CHASE BANK, N.A.

 	 
	 	By:  	                                              /s/ Eric Devereaux
 	 
	 	 	Name:  	Eric Devereaux 	 
	 	 	Title:  	Vice President 	 
	 




 












 





EXHIBIT A




COMPLIANCE CERTIFICATE




To: JPMorgan Chase Bank, N.A.



          This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of
June 30, 2009 (as amended, modified, renewed or extended from time to time, the “Agreement”) among
Fuel Tech, Inc. (the “Borrower”) and JPMorgan Chase Bank, N.A., as Lender. Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in
the Agreement.




          THE UNDERSIGNED HEREBY CERTIFIES THAT:




          1. I am the duly elected Chief Financial Officer of the Borrower;





	1.	 	I have reviewed the terms of the Agreement and I have made, or have caused to be made under
my supervision, a detailed review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached financial statements and
such financial statements present fairly in all material respects the fmancial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
	 
	2.	 	The examinations described in paragraph 2 did not disclose, except as set forth below, and I
have no knowledge of (i) the existence of any condition or event which constitutes a Default
during or at the end of the accounting period covered by the attached financial statements or
as of the date of this Certificate or (ii) any change in GAAP or in the application thereof
that has occurred since the date of the audited financial statements referred to in Section
3.04 of the Agreement;
	 
	3.	 	I hereby certify that the Borrower has not changed (i) its name, (ii) its chief executive
office, (iii) principal place of business, (iv) the type of entity it is or (v) its state of
incorporation or organization since the date ofthe last certificate;
	 
	4.	 	Schedule I attached hereto sets forth financial data and computations evidencing the
Borrower’s compliance with certain covenants of the Agreement, all of which data and
computations are true, complete and correct; and
	 
	5.	 	Schedule II hereto sets forth the computations necessary to determine the Applicable Rate
commencing on the Business Day this certificate is delivered.





          Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i)
nature of the condition or event, the period during which it has existed and the action which the
Borrower has taken, is taking, or proposes to take with respect to each such condition or event or
(i) the change in GAAP or the application thereof and the effect of such change on the attached
financial statements:




 









 








          The foregoing certifications, together with the computations set forth in
Schedule I and Schedule II hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this day of                     




	 	 	 	 	 	 	 
	 	 	FUEL TECH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





 









 





EXHIBIT B JOINDER AGREEMENT



THIS JOINDER AGREEMENT (this “Agreement”), dated as of , ___, 200_, is entered into between , a
(the “New Subsidiary”) and JPMORGAN CHASE BANK, N.A. (the “Lender”) under that certain Credit
Agreement, dated as of June 30, 2009 among Fuel Tech, Inc. (the “Borrower”), the Loan Parties party
thereto, and the Lender (as the same may be amended, modified, extended or restated from time to
time, the “Credit Agreement”). All capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Credit Agreement.



The New Subsidiary and the Lender, hereby agree as follows:



1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution ofI this
Agreement, the New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and a
“Loan Guarantor” for all purposes ofthe Credit Agreement and shall have all ofthe obligations of a
Loan Party and a Loan Guarantor thereunder as if it had executed the Credit Agreement. The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Credit Agreement, including without limitation (a) all
of the representations and warranties of the Loan Parties set forth in Article III of the Credit
Agreement, and (b) all of the covenants set forth in Articles V and VI of the Credit Agreement and
(c) all ofthe guaranty obligations set forth in Article IX ofthe Credit Agreement. Without limiting
the generality ofthe foregoing terms of this paragraph 1, the New Subsidiary, subject to the
limitations set forth in Section 9.10 ofthe Credit Agreement, hereby guarantees, jointly and
severally with any other Loan Guarantors, to the Lender and the Lender, as provided in Article IX
of the Credit Agreement, the prompt payment and performance of the Guaranteed Obligations in full
when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise)
strictly in accordance with the terms thereof and agrees that if any of the Guaranteed Obligations
are not paid or performed in full when due (whether at stated maturity, as a mandatory prepayment,
by acceleration or otherwise), the New Subsidiary will,jointly and severally together with any
other Loan Guarantors, promptly pay and perform the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension
or renewal.



2. The address of the New Subsidiary for purposes of Section 8.01 of the Credit Agreement is as
follows:


I




 









 









3. The New Subsidiary hereby waives acceptance by the Lender of the guaranty by the New
Subsidiary upon the execution of this Agreement by the New Subsidiary.



4. This Agreement may be executed in any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall constitute one and the same instrument.



5. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its
authorized officer, and the Lender, has caused the same to be accepted by its authorized officer,
as of the day and year first above written.




	 	 	 	 	 	 	 
	 	 	[NEW SUBSIDIARY]	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 
	Acknowledged and accepted:	 	 
	 
	 	 	 	 
	JPMORGAN CHASE BANK, N.A.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 






 












 





EXHIBIT C

FUEL TECH INC. CASH INVESTMENT POLICY




Fuel Tech, Inc.

CASH INVESTMENT POLICY









 









 






Table of Contents




	 	 	 	 	 
	CASH INVESTMENT POLICY
	 	 	2	 
	 
	 	 	 	 
	OVERVIEW
	 	 	2	 
	 
	 	 	 	 
	ADOPTION
	 	 	2	 
	 
	 	 	 	 
	SCOPE
	 	 	2	 
	 
	 	 	 	 
	INVESTMENT OBJECTIVES
	 	 	2	 
	Preservation of Capital
	 	 	2	 
	Maintain Liquidity
	 	 	2	 
	Maximize Return
	 	 	3	 
	Specific Obligations and Future Needs
	 	 	3	 
	 
	 	 	 	 
	AUTHORIZED INVESTMENTS AND ALLOWABLE CREDIT RATING
	 	 	3	 
	 
	 	 	 	 
	INVESTMENT ALLOCATION
	 	 	5	 
	 
	 	 	 	 
	AUTHORIZED BROKER DEALERS and QUALIFICATIONS
	 	 	5	 
	 
	 	 	 	 
	MONITORING OF OBJECTIVES AND RESULTS
	 	 	5	 
	 
	 	 	 	 
	ADDENDUM A – AUTHORIZED INVESTMENT PERSONNEL
	 	 	6	 
	 
	 	 	 	 
	ADDENDUM B – AUTHORIZED INVESTMENT BROKERS and DEALERS
	 	 	7	 






 









 






CASH INVESTMENT POLICY




OVERVIEW




Fuel Tech, Inc. (FTI) recognizes that due to the nature of its operating Business Segments, excess
cash reserves will arise from time to time. Cash reserves are defined as the balance of funds
available after having given consideration to 1) the amount of funds necessary to meet the
operating liquidity needs of the business, and 2) those funds required for specific legal,
contractual or long-term investment requirements.



The remainder of this document defines the details of the Cash Investment Policy (the Policy) as
follows: Adoption, Scope, Investment Objectives, Authorized Investments and Allowable Credit
Rating, Investment Allocation, Authorized Broker/Dealers, Monitoring of Objectives and Reporting.
Again, this Policy will exclude all specifically identified Cash requirements for any specific
legal, contractual or long-term investment requirements.



ADOPTION




It is the responsibility of the Board of Directors to adopt the Policy as written and to approve
all subsequent changes to the Policy. This Policy will be reviewed on a recurring basis as defined
further below based on input from FTI’s Chief Financial Officer, its investment advisors and or by
other qualified, approved, and authorized FTI Finance personnel.



SCOPE




This Policy applies to FTI and its consolidated subsidiaries, and to all personnel authorized to
engage in cash investment transaction as defined in this Policy (Addendum A).



INVESTMENT OBJECTIVES




The primary objectives of the Policy are to provide safety and liquidity for excess cash balances,
and only after these requirements are clearly met, to seek optimum yields. Below, the key
financial objectives of the FTI cash investment portfolio are defined:



Preservation of Capital 




Preserve the principal value of the investment. FTI shall consider the safety of its capital as
the primary objective in investment activities. Each investment transaction shall seek to first
ensure that capital losses are avoided, whether they are from security default or the erosion of
market value.



Maintain Liquidity




Maintain an investment portfolio that provides access to the cash or cash equivalents necessary to
meet the immediate short-term operating needs of FTI. Liquidity needs shall be anticipated by
matching investment maturities with forecasted cash flow requirements and by investing in
securities with active secondary markets.



2









 





Maximize Return




Attain the maximum return on the investment portfolio (net of investment management fees if
applicable) consistent with the investment objectives set forth in this Investment Policy. The
financial return objective will be reviewed by FTI’s Chief Financial Officer on a recurring basis.



Specific Obligations and Future Needs




Address and provide for any specific legal, contractual or long-term investment requirements of FTI
and its subsidiaries.



AUTHORIZED INVESTMENTS AND ALLOWABLE CREDIT RATING




To achieve FTI investment objective, all excess cash balances shall be invested in the following
securities:



	 	 	 	 	 
	 	 	Minimum Allowable Credit	 	 
	Security	 	Rating	 	Maximum Duration/Maturity
	Direct obligations of the U.S. Treasury, including Bills, Notes and Bonds

	 	N/A
	 	1 Year
	 
	 	 	 	 
	Federal Agency and Government Sponsored Entity Securities e.g. FNMA, GNMA, FHLB, Freddie Mac

	 	N/A
	 	1 Year
	 
	 	 	 	 
	Corporate Obligations, including Commercial Paper, Bonds and Notes as issued by either domestic or foreign entities

	 	Rated A1 by Standard and Poors,
Rated P1 by Moody’s or
Rated AAA by Standard & Poors,
Rated Aaa Moody’s
	 	1 Year
	 
	 	 	 	 
	Municipal Notes and Bonds

	 	Rated SP1 by Standard and Poors,
Rated MIG1 by Moody’s
	 	1 Year
	 
	 	 	 	 
	Money Market Mutual Funds

	 	Rated AAA by Standard & Poors,

Rated Aaa Moody’s
	 	1 Year
	 
	 	 	 	 
	Money Market Instruments, including Certificates of Deposits, Banker’s Acceptances, Bank Time Deposits, Repurchase Agreements

	 	Rated A1 by Standard & Poors,

Rated P1 by Moody’s or Rated AAA by Standard & Poors,

Rated Aaa Moody’s
	 	1 Year






3









 






	 	 	 	 	 
	 	 	Minimum Allowable Credit	 	 
	Security	 	Rating	 	Maximum Duration/Maturity
	Asset-Backed Securities

	 	Rated AAA by Standard & Poors,

Rated Aaa Moody’s
	 	1 Year






All investments will be denominated in United States dollars or in the functional currency of FTI
subsidiaries.



4









 





INVESTMENT ALLOCATION




To achieve FTI’s investment objective, all excess cash balances shall be divided into two separate
pools. The pools shall be identified as the Current Investment Pool and the Intermediate-Term
Investment Pool. The investment time frame for the Current Investment Pool is zero to three months
while the time frame for the Intermediate-Term Investment Pool is four to twelve months.



The purpose of the Current Pool is to provide immediate cash flow to support the FTI’s
operations in the near-term. The percentage of total cash assets in the Current Pool will be
determined by the forecasted cash requirements of FTI’s operating business segments and an analysis
of available investments and their respective returns.



The purpose of the Intermediate Pool is to invest available cash that is not required in
the near term, but rather, will need to be made available on a longer term basis. The percentage
of total cash assets in the Current Pool will be determined by the forecasted cash requirements of
FTI’s operating business segments and an analysis of available investments and their respective
returns.



AUTHORIZED BROKER DEALERS and QUALIFICATIONS




Listed in Addendum B below are the firms in which FTI’s authorized investment personnel can invest
the available cash reserves. All authorized investment firms must maintain a net worth of not less
than $I billion and they must be members in good standing of the Securities Investor Protection
Corporation (SPIC).



MONITORING OF OBJECTIVES AND RESULTS




All objectives in this Policy are in effect until modifications are recommended by the Chief
Financial Officer and approved by the FTI Board of Directors. The objectives should be reviewed on
an annual basis for their continued appropriateness, or more often if the need arises.



It is the responsibility of FTI’s authorized investment personnel or authorized broker dealers to
advise the Chief Financial Officer if, at any time, any specific guideline in this Policy inhibits
the achievement of any of the stated objectives.



All investment decisions are to be made with the approval of the Chief Financial Officer and two
signatures from FTI’s list of authorized investment personnel must evidence the investment
transaction. Further, subsequent to submission of the investment request to the authorized
broker-dealer, the authorized broker dealer must confirm the transaction with Chief Financial
Officer, or another member of FTI’s authorized investment personnel via e-mail or phone call.
There will be no exceptions to the investment Policy without prior approval from the Board of
Directors.



On a monthly basis, a report summarizing the assets held in the investment portfolio, and all prior
month investment activity, will be provided to the Chief Financial Officer by the authorized
investment personnel listed in Addendum A.



5









 





ADDENDUM A – AUTHORIZED INVESTMENT PERSONNEL




The following named officers and finance personnel of FTI, are authorized, for and on behalf of
the FTI, to establish and maintain one or more accounts with the approved investment brokers and
dealers set forth in Addendum B for the purpose of buying and selling approved securities
described in the investment Policy. All investment decisions and all new accounts are to be
authorized by the Chief Financial Officer:



	 	 	 
	Name	 	Title
	John P. Graham

	 	Chief Financial Officer, Sr. Vice President, Treasurer
	Sandra K. Brunk

	 	Manager Treasury Operations, Assistant Treasurer
	Ellen T. Albrecht

	 	Vice President, Controller






6









 






ADDENDUM B – AUTHORIZED INVESTMENT BROKERS and DEALERS




The following companies have been approved by the Board of Directors as companies with whom
approved officers and finance personnel may establish and maintain accounts for the purposes of
buying and selling the approved securities described in the investment policy. Additions to the
list will be approved at quarterly Board meetings. Preference will be given to those firms which
are approved depositories for FTI. Deletions from the list do not need Board approval.



	 	 	 
	Broker Dealer Name	 	 
	Bank of America
	 	 
	JPMorgan Chase
	 	 







7












 





SCHEDULE 3.06




Disclosed Matters




None




 









 





SCHEDULE 3.15




Capitalization and Subsidiaries



1. See the attached ownership chart of the Borrower and its Subsidiaries. The Borrower owns all of
the outstanding Equity Interests of each of the following Subsidiaries:




	 	 	 
	Legal Name	 	Jurisdiction of Formation
	Fuel Tech Jamaica Limited

	 	Jamaica
	Fuel Tech Targeted Injection
	 	 
	Chemicals, Ltd.

	 	Canada
	Fuel Tech Holdings N.V.

	 	Netherlands
	Fuel Tech S.r.L.

	 	Italy
	Fuel Tech (HK) Holding Limited

	 	Hong Kong






     In addition (a) Fuel Tech (HK) Holding Limited owns all the outstanding Equity Interests of
Beijing Fuel Tech Environmental Technologies Co., Ltd., a corporation organized under the laws of
the Peoples Republic of China, and (b) Fuel Tech Holdings, N.V.owns all the outstanding Equity
Interests of Fuel Tech B.V., a Netherlands corporation, which in turn owns all the outstanding
Equity Interests of Fuel Tech GmbH, a German corporation.


2. The following Subsidiaries are “Inactive Subsidiaries”:




Fuel Tech Jamaica Limited

Fuel Tech Targeted Injection Chemicals, Ltd.

Fuel Tech Holdings N.V.

Fuel Tech B.V.

Fuel Tech GmbH




 









 





SCHEDULE 6.02




Existing Liens




None.




 









 





SCHEDULE 6.04




Existing Investments



1. See list of Subsidiaries contained in Schedule 3.15.



2. The Borrower owns 4.5% of the outstanding Equity Interests of Clean Diesel Technologies, Inc., a
Delaware corporation.