<PAGE>

                                LICENSE AGREEMENT


                                AMENDMENT NO. 1.


Amendment to LICENSE AGREEMENT between GAS RESEARCH INSTITUTE, an Illinois
     not-for-profit corporation ("GRI") and FUEL TECH, INC., ("LICENSEE").

                              W I T N E S S E T H:
                               -------------------

WHEREAS, GRI and LICENSEE have entered into a LICENSE AGREEMENT dated November
     18, 1998, (hereinafter called the "Agreement"); and

WHEREAS, GRI and LICENSEE desire to modify the terms under which LICENSEE must
     pay a Royalty to GRI for use of the licensed technology and patents.

NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
     follows:


1. Add Paragraphs 2.11 and 2.12 as follows:

         "2.11 'Engineered Equipment' means:

                a.)  FLGR(TM)Gas Isolation and Flow Control Modules: manual gas
                     isolation valves, strainers, automatic isolation and vent
                     valves, inlet and outlet pressure transmitters, gas flow
                     control valves, gas injectors, gas flow transmitters,
                     automated header vent valves, and interconnecting piping.

                b.)  Gas Pressure Reducing Station: manual isolation valves,
                     inlet gas strainers, inlet and outlet pressure indicators
                     and transmitters, two redundant pressure control valves,
                     and interconnecting piping.

                c.)  Manual Gas Injector Flow Control: manual gas flow control
                     valves, manual gas isolation valves, pressure indicators,
                     and interconnecting piping.

                d.)  Automated Gas Injector Flow Control: automatic gas flow
                     control valves, automatic gas isolation valves, gas
                     pressure transmitters, and interconnecting piping.

                e.)  Drawings: equipment drawings such as P&IDs for Equipment
                     supplied by Fuel Tech.

                f.)  Controls and Instrumentation: control hardware, including
                     PLC or DCS, programming and software used to run hardware;
                     and sensors used to provide input to control hardware.


<PAGE>



         "2.12  `Engineering Services' means:

                a.)  Baseline Testing: in-furnace temperature and species
                     mapping and emission measurements using a multi-point
                     economizer sampling grid.

                     Moment ("LIM") model to develop predictions for the
                     FLGR(TM) performance and to establish optimum
                     gas/NOxOUT-A(R) injection locations and flow rates.

                c.)  FLGR(TM) System Deployment: Include equipment installation
                     support, control logic integration support, operator
                     process and safety training, equipment startup and
                     checkout, process and boiler optimization tuning and
                     process guarantee testing and support."

2. Delete Paragraph 5.1 of Section 5, Royalties, in its entirety and substitute
   the following in lieu thereof:

         "5.1   In consideration for the license rights granted to LICENSEE by
                GRI pursuant to this Agreement, LICENSEE shall pay GRI a Royalty
                in accordance with Schedule B of this Agreement."

3. Delete Paragraph 14.2 of Section 14, General Provisions, in its entirety and
   substitute the following in lieu thereof:

         "14.2  Assignment. This Agreement may not be assigned in whole or in
                part by either Party without the prior written consent of the
                other Party, except that this Agreement may be assigned to a
                wholly-owned subsidiary of a Party or to any entity with whom
                any Party merges or consolidates or to whom either Party sells
                all or substantially all of such Party's assets. Any assignment
                made without such consent, other than the permitted assignments
                noted above, shall be considered void ab initio. This Agreement
                shall inure to the benefit of and be binding upon the Parties
                hereto and their respective successors and permitted assigns."

4. Delete Paragraph 1 of SCHEDULE B, ROYALTIES, in its entirety and substitute
   the following in lieu thereof:

         "1.    In consideration of the license grant set forth in Section 3 of
                this Agreement, LICENSEE shall pay to GRI a royalty ("Royalty")
                which shall consist of the following: (a) * percent ( * %) of
                the Site License Fee from the Commercial Sale (excluding
                Demonstration Sales) of FLGR(TM) Technology calculated pursuant
                to the Site License Fee Schedule set forth below (LICENSEE shall
                retain the remaining * percent ( * %) of the Site License Fee);
                (b) * percent ( * %) of the revenue received by LICENSEE for
                Engineering Services related to the assessment or implementation
                of FLGR(TM) Technology; and (c) * percent ( * %) of the revenue
                received by LICENSEE for Engineered Equipment related to the
                implementation of FLGR(TM) Technology."


<PAGE>
                            Site License Fee Schedule

--------------------------------------------------------------------------------
                        Utility Boiler Site License Fees
--------------------------------------------------------------------------------
                 Boiler Size                             FLGR
--------------------------------------------------------------------------------
                  <= 100 MW                            $ * /KW
--------------------------------------------------------------------------------
                  101-200 MW                           $ * /KW
--------------------------------------------------------------------------------
                  201-300 MW                           $ * /KW
--------------------------------------------------------------------------------
                 301- 400 MW                           $ * /KW
--------------------------------------------------------------------------------
                  401-500 MW                           $ * /KW
--------------------------------------------------------------------------------
                  => 501 MW                            $ * /KW
--------------------------------------------------------------------------------

*   INFORMATION OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT: SUCH
    INFORMATION HAS BEEN FILED SEPARATELY.

--------------------------------------------------------------------------------
                       Industrial Boiler Site License Fees
--------------------------------------------------------------------------------
                 Boiler Size                           FLGR
--------------------------------------------------------------------------------
                 Minimum Fee                           $ *
--------------------------------------------------------------------------------
               <= 250 MMBTU/HR                    $ * /MMBTU/hr
--------------------------------------------------------------------------------
              251 - 500 MMBTU/hr                  $ * /MMBTU/hr
--------------------------------------------------------------------------------
             501 - 1000 MMBTU/hr                  $ * /MMBTU/hr
--------------------------------------------------------------------------------
             1001 - 2000 MMBTU/hr                 $ * /MMBTU/hr
--------------------------------------------------------------------------------
             2001 - 3000 MMBTU/hr                 $ * /MMBTU/hr
--------------------------------------------------------------------------------
             3001 - 4000 MMBTU/hr                 $ * /MMBTU/hr
--------------------------------------------------------------------------------
             4001 - 5000 MMBTU/hr                 $ * /MMBTU/hr
--------------------------------------------------------------------------------
            5001 - 10000 MMBTU/hr                 $ * /MMBTU/hr
--------------------------------------------------------------------------------

*   INFORMATION OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT: SUCH
    INFORMATION HAS BEEN FILED SEPARATELY.

5. Delete Paragraphs 4 and 5 of SCHEDULE B, ROYALTIES, in their entirety and
   substitute the following in lieu thereof:

         "4.    Notwithstanding the Site License Fee Schedule set out above,
                LICENSEE may, from time to time, recommend to GRI that a
                Customer/Sublicensee be offered the option of paying for
                FLGR(TM)Technology pursuant to an alternate calculation and not
                pursuant to the Site License Fee Schedule, and GRI agrees to
                consider such alternate calculations. LICENSEE will recommend an
                alternative calculation only when, in LICENSEE's reasonable
                commercial judgment, the Customer/Sublicensee is unlikely to
                consider buying FLGR(TM)Technology unless offered such an
                alternative. Notwithstanding the above, any discount offered to
                a customer shall come solely out of the portion of the Site
                License Fee received by LICENSEE and/or the revenue received by
                LICENSEE from the Engineering Services and Engineered Equipment,
                and GRI shall at all times receive its full Royalty calculated
                under Paragraph 1 of this Schedule B.


<PAGE>



         5.     GRI agrees that when a Customer/Sublicensee has already
                purchased and installed as of the date of this Agreement Fuel
                Tech Inc.'s NOxOUT(R) technology, GRI will receive a Royalty
                from a sale of FLGR(TM) Technology to that Customer/Sublicensee
                pursuant to the provisions of Paragraph 1 of this Schedule B and
                the Customer/Sublicensee will receive a Site License to operate
                its system as either a FLGRTM Technology system or an AEFLGR
                Technology system. After the effective date of this Agreement,
                if a Customer/Sublicensee installs a NOxOUT(R) system from
                LICENSEE and installs a FLGRTM Technology system within eighteen
                (18) months thereafter of installing that NOxOUT(R) system, and
                if the Customer/Sublicensee intends to operate the system as
                taught by GRI's AEFLGR patent(s), then GRI shall receive a
                roylaty for the sale of the FLGRTM Technology system to that
                Customer/Sublicensee that is calculated on the basis of the Site
                License Fee Schedule contained in the AEFLGR License Agreement,
                and the Customer/Sublicensee will receive a Site License to
                operate its system as either a FLGRTM Technology system or an
                AEFLGR Technology system. If a Customer/Sublicensee installs a
                NOxOUT system from LICENSEE and installs a FLGRTM Technology
                system more than eighteen (18) months after installing that
                NOxOUT(R) system, then GRI shall receive a Royalty for the sale
                of the FLGRTM Technology system to that Customer/Sublicensee
                that is calculated on the basis of the provisions of Paragraph 1
                of this Schedule B, and the Customer/Sublicensee will receive a
                Site License to operate its system as either a FLGRTM Technology
                system or an AEFLGR Technology system."

6. Delete Paragraphs 7 and 8 of SCHEDULE B, ROYALTIES, in their entirety and
   substitute the following in lieu thereof:

         "7.    At the end of each calendar year during the term of this
                Agreement, LICENSEE shall pay to GRI a minimum Site License Fee
                equivalent to the difference between the Minimum Cumulative
                Megawatts indicated above and the actual cumulative megawatts
                sold through the current year of the Agreement. If LICENSEE
                fails to pay the minimum Site License Fee as required, then,
                upon written notice to LICENSEE, the license granted in Section
                3 of this Agreement shall terminate.

         8.     It is in the best interest of the Parties to maximize the
                commercial exploitation of the GRI Patents and the GRI Technical
                Information. To achieve the most effective commercial
                exploitation of the FLGR(TM) Technology, LICENSEE shall propose
                appropriate Demonstration Sales of the FLGR(TM)Technology. GRI
                shall not unreasonably withhold its approval of the proposed
                Demonstration Sales. No Site License Fee payments shall be due
                on such Demonstration Sales. LICENSEE and GRI agree that such
                Demonstration Sales shall include new and different applications
                of the FLGR(TM) Technology, including but not limited to the
                application of the FLGR(TM) Technology to the following types of
                boilers: a cyclone boiler with over-fire air, a wet-bottom
                boiler, a wall-fired boiler, a tangentially-fired boiler, an
                opposed-wall-fired boiler, and a boiler with a total megawatt
                capacity of 500 MW or above."

7. Delete Paragraphs 10 and 11 of SCHEDULE B, ROYALTIES, in their entirety and
   substitute the following in lieu thereof:


<PAGE>

         "10.   Within forty-five (45) days of the close of each fiscal quarter
                of LICENSEE, beginning with the first close of a fiscal quarter
                following the Effective Date, LICENSEE shall make the Royalty
                payments due under this Agreement to GRI, including all Site
                License Fees received by LICENSEE during that quarter on
                Commercial Sales of the FLGR(TM) Technology, or LICENSEE shall
                certify to GRI that it has made no Commercial Sales of the
                FLGR(TM) Technology. All Royalty payments shall be made in U.S.
                dollars. LICENSEE shall attach a statement to its payment
                indicating the size and location of the boiler to which each
                Customer/Sublicense applies, the applicable Site License Fee per
                boiler, the total megawatts for the number of FLGR(TM)
                Technology systems sold, leased, or otherwise transferred to
                date by year, the amount of revenue received from the sale of
                Engineering Services and Engineered Equipment, and such other
                information as GRI may reasonably request from time to time.

         11.    Interest on Late Payments. Royalty payments provided for in this
                Agreement, when overdue, shall bear interest at a rate per annum
                equal to two percent (2%) in excess of the "Prime Rate"
                published by "The Wall Street Journal" on the due date for such
                Royalty payment. This interest charge shall commence on the day
                after the due date and shall continue until payment is received
                by GRI. The foregoing notwithstanding, if a Royalty payment is
                more than sixty (60) days past due, GRI may, at its sole option,
                deem such late payment to be a material breach of this
                Agreement."

Except as expressly revised and amended by this Amendment No. 1, the Agreement
         is in all other respects ratified, confirmed, and continued in full
         force and effect in accordance with the original Agreement and its
         attachments.

IN  WITNESS WHEREOF, the parties hereto have caused this Agreement to be
         executed by their duly authorized representatives as of the last date
         and year written below.

 FUEL TECH, INC.                          GAS RESEARCH INSTITUTE


By: /s/ Vincent M. Albanese               By: /s/ Janice E. Pastryk
    -------------------------------           ------------------------------

    V.P., Sales & Marketing                   Assoc. Gen. Counsel
    -------------------------------           ------------------------------
    Name and Title of Signer                  Name and Title of Signer

      2-28-00                                   2-23-00
    -------------------------------           ------------------------------
           Date Signed                               Date Signed

(76760/pgc)