Document:

Exhibit

 JPMORGAN CHASE BANK, N.A.
TENTH AMENDMENT TO CREDIT AGREEMENT
THIS TENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of January 10, 2018 and is by and between FUEL TECH INC., a Delaware corporation (the “Borrower”), the Loan Parties party hereto, and JPMORGAN CHASE BANK, N.A., a national banking association (“Lender”).
WHEREAS, Lender and the Loan Parties are parties to a Credit Agreement dated as of June 30, 2009 (together with the nine amendments as described below, the “Credit Agreement”). The Credit Agreement evidences certain credit facilities pursuant to which the Lender has made certain revolving loans to the Loan Parties on the terms and conditions set forth therein. The Loan Parties’ obligations under the Credit Agreement were originally evidenced by that certain Promissory Note executed by Borrower in the original principal amount of $25,000,000.00 dated June 30, 2009 (the “Note”);
WHEREAS, pursuant to the First Amendment to Credit Agreement dated October 5, 2009, the parties corrected a scrivener's error which had occurred in Section 6.14 (b) (“Leverage Ratio”) of the Credit Agreement;
WHEREAS, pursuant to the Second Amendment to the Credit Agreement dated November 4, 2009, the Lender waived a default of the covenant set forth in Section 6.14(a) of the Agreement, amended the Minimum Net Income covenant, amended the Leverage Ratio, and amended the definitions of “Permitted Acquisitions” and “Applicable Rate”;
WHEREAS, pursuant to the Third Amendment to the Credit Agreement dated June 30, 2011, the Lender renewed and reduced the revolving credit facility evidenced by the Note to $15,000,000.00 and adjusted the Tangible Net Worth Covenant;
WHEREAS, pursuant to the Fourth Amendment to the Credit Agreement dated June 30, 2013, the Lender extended the maturity date of the revolving credit facility evidenced by the Note to June 30, 2015 and also amended the financial covenants set forth at Sections 6.14(b) (“Leverage Ratio”) and 6.14(c) (“Minimum Tangible Net Worth”) of the Credit Agreement;
WHEREAS, pursuant to the Fifth Amendment to the Credit Agreement dated June 20, 2014,, Lender made further adjustments to Section 6.14(c) of the Credit Agreement (“Minimum Tangible Net Worth”);
WHEREAS, pursuant to the Sixth Amendment to the Credit Agreement dated June 30, 2015, Lender, among other things, renewed the Revolving Credit Facility and extended same until June 30, 2016, changed certain pricing on the Revolving Credit Facility, waived certain financial covenant violations, and restated certain financial covenants;
WHEREAS, pursuant to the Seventh Amendment to the Credit Agreement dated December 31, 2015, the parties agreed, among other things, that (i) certain covenants
(Minimum EBITDA and Shareholder Equity) not be tested for the period ending December 31, 2015, with the Shareholder Equity covenant to be deleted in its entirety, (ii) a new Working Capital covenant be established and tested beginning as of December 31, 2015, and (iii) the Minimum EBITDA covenant be revised and tested beginning as of March 31, 2016;
WHEREAS, pursuant to the Eighth Amendment to the Credit Agreement dated May 9, 2016, the parties agreed, among other things, that (i) the Revolving Commitment would be reduced to $5,000,000.00 after August 1, 2016, (ii) a Cash Collateral Account satisfactory to the Lender would be in place until Maturity, and (iii) as a result of the creation of the Cash Collateral Account all financial covenants had been deleted;
WHEREAS, pursuant to the Ninth Amendment the Maturity Date was extended to June 28, 2019;

WHEREAS, the Lender is willing to so modify the terms of the Credit Agreement, but only on the terms and subject to the conditions set forth herein; and
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:
1.The parties acknowledge the accuracy of the foregoing recitals. All capitalized terms used herein without specific definitions should be accorded the meanings set forth for such terms in the Credit Agreement.
2.For the period from January 10, 2018 to and including August 31, 2018 the Commitment shall be increased by $500,000 to $5,500,000. After August 31, 2018 to the Maturity Date, it will be decreased to $5,020,000.
3.The obligation of the Lender to amend the Agreement as herein above set forth and the effectiveness of this Amendment, is subject to satisfaction of the following conditions precedent:
		
	(a)
	Lender, Borrower and Loan Parties shall have executed this Amendment;

(b)Borrower shall be in good standing in the States of Illinois and Delaware;
		
	(c)
	Borrower shall pay all costs and fees incurred by Lender in connection with the preparation and performance of this Amendment;

		
	(d)
	There shall be no less than $5,520,000.00 in the Cash Collateral Account until the later of (i) all commitments and outstanding letter of credit obligations are reduced to $5,000,000 or less, or (ii) August 31, 2018; at which time the Cash Collateral Account shall be no less than $5,020,000; and

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

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

BORROWER:
FUEL TECH, INC., a Delaware corporation
By:    
Name: Title:
LOAN GUARANTOR:
FUEL TECH S.r.l.,
organized under the laws of the Italian Republic
By:    
Name: Title:
LENDER:
JPMORGAN CHASE BANK, N.A., a national association
By:    
Name: Title:Exhibit

FUEL TECH, INC.    

2017 Executive Officer Incentive Plan

1.THE PLAN

1.1    Objectives.  The Executive Officer Incentive Plan (“EOIP”) of Fuel Tech, Inc., a Delaware corporation, (the “Company”), is designed to provide each Participant with financial incentives based upon Company financial results, measured in terms of Adjusted EBITDA, Revenues and APC Bookings.  The EOIP is an annual bonus plan based on the Company’s fiscal performance in 2017.  Capitalized terms not otherwise defined shall have the meanings set forth in Section 4 below.

1.2    Plan Supersedes All Prior Short-Term Incentive Compensation Programs for Participants.   This EOIP supersedes and replaces all prior cash incentive compensation programs for all Participants.

2.    ELIGIBILITY

2.1    Participants.  The Company’s Executive Chairman; Chief Executive Officer; Chief Financial Officer; and Senior Vice President and General Counsel and shall each be a Participant in the EOIP.  The Committee, in its business discretion, may subjectively decide to designate additional full-time senior management employees of the Company to be Participants in the EOIP after consideration of the recommendations of the Company’s Chief Executive Officer.  The addition of new full-time senior management employees to the EOIP would require modification to the EOIP’s formulaic funding or payout mechanics, subject to approval by the Committee.

Participants must be employed on the last day of a fiscal year (December 31) in order to be eligible for a payout under the EOIP based on that fiscal year’s performance.  No amounts will be deemed earned or payable under the EOIP by any Participant whose employment with the Company ends on or before the last day of the fiscal year.  A Participant deemed to be eligible for a payout in accordance with the provisions of the EOIP for a given fiscal year, need not be employed on the day of a bonus payout under this EOIP for such fiscal year in order to be eligible for the payout.

2.2    Involuntary Termination of Employment.  Notwithstanding the preceding paragraph, if, during a fiscal year in which the EOIP is in effect, a Participant’s employment with the Company is involuntarily terminated: (a) not for cause by the Company, or (b) on account of the Participant’s death, or (c) on account of the Participant’s disability (as that term is defined below), then to the extent and at the time the Company determines there shall be a payout for that fiscal year under the EOIP, the affected Participant shall be eligible for a pro rata EOIP payment (or, in the case of death, to that employee’s estate) in accordance with the applicable calculations of Section 3, “EOIP Payouts” and subject to all the other provisions of the EOIP; provided, however, that only the normal employee wages paid to the affected employee (as determined by the Company in its sole discretion and excluding bonuses, allowances, paid leave, vacation or severance payments) through that Participant’s separation date from the Company shall be used in such pro rata allocations. 

Any funds not paid out to a Participant under the EOIP, whether due to voluntary termination of employment, termination of employment for cause or otherwise, will automatically revert back to the Company.

		
	3.
	EOIP Payouts

3.1    Incentive Pool.  EOIP payouts are based on the Company’s performance for three financial metrics – Adjusted EBITDA, Revenues and APC Bookings.  An “Incentive Pool” may or may not be created dependent on the Company’s financial performance pertaining to all or some of those metrics during the fiscal year. If the Incentive Pool is created, each Participant is then awarded that Participant’s designated portion of the Incentive Pool on or before March 31, 2017.  The methodology for calculating EOIP payouts to Participants is more fully described below. 

3.2    Minimum Adjusted EBITDA Threshold.  No amounts shall be payable under this EOIP for any fiscal year unless the Company has achieved the established minimum threshold of Adjusted EBITDA for such fiscal year.  Accordingly, if the Company’s financial performance for the fiscal year falls below the established minimum threshold of Adjusted EBITDA, there is no payout under the EOIP of any kind, regardless of the annual Revenue or annual APC Bookings amounts achieved.  

3.3    Funding and Payout.  

3.3.1    A percentage of Adjusted EBITDA is set aside in an Incentive Pool with respect to each fiscal year to provide for bonus payments under this EOIP based on performance in the following three categories:  (i) Adjusted EBITDA, (ii) Revenue and (iii) APC Bookings.  The percentage of Adjusted EBITDA that is set aside based on the Company’s actual level attained in each of these three categories shall be determined by the Committee after consideration of the recommendations of the Company’s Chief Executive Officer.

3.3.2    Once the Company’s minimum threshold of Adjusted EBITDA is met, the percentage of Adjusted EBITDA set aside in the Incentive Pool rises pro rata incrementally based on actual Company performance in each of the Adjusted EBITDA, Revenues, and APC Bookings financial metrics subject to an overall Incentive Pool funding percentage upper limit cap, all as shown in the chart below.  The payout formula for a Participant is shown in the chart below.

(Amounts shown in thousands)

	
											
	Executive Officer Incentive Plan Mechanics

	 
	

Minimums
	

	

Funding 
Percentage
	

	

Incremental
Value
	

Incremental
Percentage
	

	

Percentage Cap
	

	Adjusted EBITDA, as defined
	

	$4,000
	

	1.25
	%
	200
	0.100
	%
	2.25
	%

	Revenue
	

	$57,500
	

	0.625
	%
	450
	0.050
	%
	1.125
	%

	APC Bookings
	

	$38,000
	

	0.625
	%
	900
	0.050
	%
	1.125
	%

	 
	 
	3.00
	%
	 
	 
	7.00
	%

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	
			
	Executive Officer Plan Incentive Participation % Summary

	

Title
	

Percentage of Pool

	Executive Chairman
	20.0
	%

	Chief Executive Officer
	40.0
	%

	Chief Financial Officer
	20.0
	%

	SVP, General Counsel & Secretary
	20.0
	%

	 
	100.0
	%

	 
	 

 

		
	4.
	DEFINITIONS

“Adjusted EBITDA” – means generally earnings before interest expense, taxes, depreciation and amortization, profit sharing plan contributions, stock compensation, incentive pay (excluding sales commissions) and other unusual or non-cash charges, but shall be as determined by the Company, in its sole discretion, with the assistance of its accountants.  In calculating Adjusted EBITDA, the Company shall exclude the effects of any acquisition or divestiture undertaken by the Company for the fiscal year in which such event occurs.

“APC Bookings” – means generally to revenue (a) to which the Company has a legally binding, contractual right pursuant to a Sales Contract signed after December 31, 2015, and (b) which involves the sale of equipment or services associated with the Company’s APC product line, all as determined by the Company, in its sole discretion.  For purposes of clarity, it is understood that APC Bookings shall not include revenue (i) for equipment or services included in the scope of work of contracts executed and entered into prior to January 1, 2017 and restated in newly executed contracts; (ii) revenues relating to work for which authorization to proceed from the customer is required but has not been obtained in writing; or (iii) revenues relating to any equipment or services the delivery of which has been cancelled by the customer.

“Committee” – means the Compensation Committee of the Company’s Board of Directors or such other committee as may from time to time succeed or perform the functions of that Committee.

"Disability” – means that a Participant, after exhausting any applicable leave available under the Company's policies, is unable because of physical or mental condition to perform the essential functions of such Participant's position, with or without a reasonable accommodation. 

“Revenue” – means the Company’s net sales, as determined by the Company in its sole discretion.

“Sales Contract” – means a comprehensive set of executed, legally binding documents between the Company and a customer, in form and substance acceptable to the Company.

		
	5.
	OTHER CONDITIONS

5.1    No Alienation of Awards.  Payouts under this EOIP may not be assigned or alienated, except that payouts earned and payable may be assigned under the laws of descent and distribution of the Participant’s domicile.

5.2    No Right of Employment.  Neither the EOIP nor any action taken under the EOIP shall be construed, expressly or by implication, as either giving to any Participant the right to be retained in the employ of the Company or any affiliate, or altering or limiting the employment-at-will relationship between the Company and any Participant.

5.3    Taxes, Withholding.  The Company or any affiliate shall have the right to deduct from any payout under the EOIP any applicable federal, state or local taxes or other amounts required by applicable law, rule, or regulation to be withheld with respect to such payment.

5.4    Code Section 409A.  The EOIP is intended to be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

5.5    Plan Administration; Effectiveness for any Fiscal Year.  The EOIP shall be administered by or under the authority of the Committee which shall have the full discretionary power to administer and interpret this EOIP and to establish rules for its administration.  

5.6    Reservation of Rights; Governing Law; Contract Disclaimer.  The Company reserves the right to amend or cancel the EOIP in whole or in part at any time without notice.  There can be no guaranty that the EOIP will be in effect in any subsequent fiscal year. The Company also reserves the right to decide all questions and issues arising under the EOIP and its decisions are final.  The EOIP shall be construed in accordance with and governed by the laws of the State of Illinois.  The EOIP is a statement of the Company’s intentions and does not constitute a guarantee that any particular EOIP payment amount will be paid.  It does not create a contractual relationship or any contractually enforceable rights between the Company or its wholly owned subsidiaries and the Participant.

 
2017 Executive Officer Incentive Plan

Effective January 1, 2017    1

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