Corporate Governance - Audit Committee Charter

CORPORATE GOVERNANCE Audit Committee Charter

August 30, 2004

The Board of Managing Directors (the “Board”) of Fuel Tech, Inc. (the “Company”) has established from among its members an Audit Committee (the “Committee”) with the composition, responsibilities, and duties described below:

COMPOSITION
The Committee shall be comprised of not less than that number of independent directors and financial experts who shall, in the opinion of the Board, meet the requirements of applicable stock exchange rules and law and regulations from time to time in effect. Appointment to the Committee shall not signify that the appointee has a higher degree of liability than other directors.

RESPONSIBILITY
The Committee’s responsibility is to assist the Board in fulfilling its fiduciary responsibilities as to accounting policies and reporting practices of the Company. The Committee is authorized to retain persons having a special competence as necessary to assist the Committee in fulfilling such responsibility. Notwithstanding the terms of this Charter, it shall not be the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles, that being the responsibility of Management and the Independent Accountant. The Independent Accountant shall report directly to the Committee in connection with issuing an audit report or related work. The designation of any member of the Committee as a “financial expert” is not intended and shall not be construed as imposing a higher degree of individual responsibility, obligation or liability on such member or that the duties, obligations or liabilities of the other members of the Committee are decreased because of such designation.

ATTENDANCE
At all meetings of the Committee two independent members shall constitute a quorum. As necessary, the Chairman of the Committee may request members of Management and representatives of the Independent Accountant to be present at meetings.

MINUTES
Minutes of the meetings of the Committee shall be prepared by the Corporate Secretary, shall be sent to Committee members and to directors who are not Committee members and, after approval by the Committee, shall be kept with the minutes of the meetings of the Board.

DUTIES
1.	For purposes of issuing an audit report or related work, the Committee shall have sole authority to appoint the Independent Accountant; oversee and evaluate the work of the Independent Accountant; approve the compensation of the Independent Accountant; review and approve in advance all matters concerning audit and non-audit services proposed to be performed by the Independent Accountant; and review and approve any discharge of the Independent Accountant.
2.	Receive periodic written statements from the Independent Accountant regarding its independence and delineating all relationships between it and the Company, including fees for audit and non-audit services, and to discuss such statements with the Independent Accountant, in accordance with applicable statements of independence standards, law and regulations.
3.	Review with Management and the Independent Accountant the scope and general extent of the Independent Accountant’s proposed audit examinations and, where applicable, annual independent evaluation of the Company’s disclosure controls and internal controls.
4.	Upon completion of the annual audit, the Committee shall review with Management and the Independent Accountant the Company’s financial results for the year; where applicable, the results of the Independent Accountant’s evaluation of the Company’s disclosure controls and internal controls; and discuss with the Independent Accountant the matters relating to the annual audit required to be discussed by applicable statements on auditing standards, law and regulations.
5.	Discuss with the Independent Accountant matters relating to reviews by the Independent Accountant of the Company’s unaudited interim financial statements and periodic reports.
6.	Discuss with the Independent Accountant the quality of the Company’s financial accounting personnel and any relevant recommendations of the Independent Accountant.
7.	Review and approve all related party transactions and matters apparently involving conflicts of interest regardless of amount.
8.	Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting or disclosure controls or auditing matters; and the confidential anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
9.	The members of the Committee shall act as a Qualified Legal Compliance Committee to receive reports of material violations of the securities laws, breaches of fiduciary duty or similar material violations from legal counsel representing the Company and practicing before the Securities and Exchange Commission.
10.	Review this Charter from time to time with a view toward recommending revisions to the Board.
11.	Perform such other duties as may be required by law, the Company’s governing documents or the resolutions of the Board.

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