<DOCUMENT>
<TYPE>EX-8.1
<SEQUENCE>4
<FILENAME>b413582_ex8-1.txt
<DESCRIPTION>EXHIBIT 8.1
<TEXT>
<PAGE>


                                                                    Exhibit 8.1

June 5, 2006

Board of Directors
Fuel-Tech, N.V.
Castroweg 22-24
Curacao, Netherlands, Antilles

Ladies and Gentlemen:

          You have requested our opinion (the "Opinion") regarding the U.S.
federal income tax consequences of the steps whereby Fuel-Tech N.V. ("FTNV")
will domesticate under Delaware state law (the "Domestication") and FTNV's
wholly owned domestic subsidiaries, Fuel Tech, Inc. ("FTI") and Platinum Plus,
Inc. ("PPI"), each will merge with and into the newly domesticated Fuel-Tech
N.V. ("Fuel Tech Delaware"), (separately, the "FTI Liquidation" and the "PPI
Liquidation" and collectively, the "Liquidations"). The Domestication and the
Liquidations, together, are referred to hereafter as the "Restructuring."

          Our analysis is based on the Internal Revenue Code of 1986, as amended
(the "Code"), U.S. Treasury Department Regulations promulgated thereunder,
judicial decisions, and the positions of the U.S. Internal Revenue Service (the
"IRS") as reflected in published rulings, all as of the date of this letter, and
all of which are subject to change. Unless otherwise specified, all section
references are to the Code and all "Treas. Reg. section" references to the
regulations promulgated thereunder, both as amended through the date of this
letter. We have not considered any non-income tax, or any state, local, or
foreign income tax consequences of the Restructuring, and therefore, we do not
express any opinion regarding the treatment that would be given by the
applicable authorities on any non-income tax or any state, local, or foreign tax
issue. We also express no opinion on


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June 5, 2006

non-tax issues, such as corporate law or securities law matters. We express no
opinion other than that as stated below, and neither this opinion, nor any prior
statements are intended to imply or to be an opinion on any other matters.

          OUR OPINION IS LIMITED TO THE ONE OR MORE U.S. FEDERAL TAX ISSUES
ADDRESSED IN THE OPINION. ADDITIONAL ISSUES MAY EXIST THAT COULD AFFECT THE U.S.
FEDERAL TAX TREATMENT OF THE TRANSACTION THAT IS THE SUBJECT OF THE OPINION;
HOWEVER, THE OPINION DOES NOT CONSIDER OR PROVIDE CONCLUSIONS WITH RESPECT TO
ANY ADDITIONAL ISSUES. SPECIFICALLY, THIS OPINION ADDRESSES ONLY THE U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE RESTRUCTURING TO FTNV AND ITS AFFILIATES
AND DOES NOT ADDRESS ANY U.S. FEDERAL INCOME TAX ISSUES ASSOCIATED WITH THE
CONTINUING OPERATION OF OR TRANSACTIONS BETWEEN THE ENTITIES THAT ARE A PARTY TO
THE RESTRUCTURING. MOREOVER, ALTHOUGH A GENERAL SUMMARY OF THE EXPECTED TAX
CONSEQUENCES OF THE DOMESTICATION TO THE SHAREHOLDERS OF FTNV IS INCLUDED
HEREIN, WE EXPRESS NO OPINION REGARDING ANY SHAREHOLDER TAX CONSEQUENCES. EACH
SHAREHOLDER SHOULD CONTACT ITS INDIVIDUAL TAX ADVISOR REGARDING THE U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE DOMESTICATION.

          THE OPINION WAS NOT WRITTEN, AND CANNOT BE USED BY FUEL-TECH, N.V.,
ITS AFFILIATES, OR ANY OTHER PERSON FOR THE PURPOSE OF AVOIDING PENALTIES THAT
MAY BE IMPOSED BY ANY GOVERNMENTAL TAXING AUTHORITY OR AGENCY.

          Our Opinion is based solely on the facts, assumptions, and
representations outlined herein, and the documents specifically referred to
herein. We assume, for purposes of this Opinion, that all of the facts,
assumptions, representations, documents,



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and information contained herein provided to us by or on behalf of FTNV and its
affiliates are accurate and correct, that all documents have been properly
executed and are legally valid and enforceable in accordance with their terms,
and that all agreements have been and will be carried out or performed in
accordance with their terms.

          Further, except for such due diligence as is necessary to determine
the reasonableness of the factual representations, we have not and will not
independently investigate the existence or accuracy of any such facts,
assumptions, or representations as reflected herein. A misstatement or omission
of any fact or a change or amendment in any of the facts, assumptions, or
representations we have relied upon may require a modification of all or a part
of the Opinion. The Opinion has been prepared solely for the benefit of FTNV and
its affiliates, and it may not be relied upon by any other person for any
purpose without the written consent of Deloitte Tax LLP.

          THE U.S. FEDERAL INCOME TAX ADVICE INCLUDED HEREIN IS NOT INTENDED OR
WRITTEN TO BE USED, AND IT CANNOT BE USED BY FTNV, ITS AFFILIATES, OR ANY OTHER
PARTY TO PROMOTE, MARKET, OR RECOMMEND TO ANOTHER PARTY ANY TRANSACTION OR
MATTER ADDRESSED OR OTHERWISE DISCUSSED HEREIN.

                                    I. FACTS

A. OVERVIEW

         1. BACKGROUND

         FTNV is a holding company incorporated in 1987 under the laws of the
Netherlands Antilles. The stock of FTNV is traded on the NASDAQ Stock Market
under the symbol "FTEK." As of March 31, 2006, approximately 33 percent of the
stock of

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FTNV was beneficially owned by its officers and directors, including three
officers and directors who own greater than one percent of the stock of FTNV and
approximately six percent was beneficially owned by Ergates Capital Management,
LLC. The remainder of FTNV's stock was widely held.

         FTNV is engaged in the air pollution control and specialty chemical
businesses through its wholly owned subsidiary FTI. FTI's business includes the
worldwide marketing of the nitrogen oxide reduction and "FUEL CHEM(R)"
processes. The nitrogen oxide reduction process reduces nitrogen oxide emissions
in flue gas from boilers, incinerators, furnaces, and other stationary
combustion sources. The FUEL CHEM product line uses chemical processes for the
control of slagging, fouling, and corrosion and for plume abatement in furnaces
and boilers through the addition of chemicals into the fuel or through "Targeted
In-Furnace Injection (TM)" programs. FTI also has a number of other
technologies, both commercial and in the development stage, that are related to
the nitrogen oxide reduction process.

         2. CURRENT STRUCTURE OF THE FTNV AFFILIATED GROUP

         FTNV owns all of the stock of FTI, a Massachusetts corporation, all of
the stock of PPI, a Delaware corporation, and 700,000 shares of Clean Diesel
Technologies, Inc. ("CDT"), which represents less than three percent of the
outstanding CDT stock. PPI is a holding company whose only asset is 1,100,000
shares of CDT stock, which represents approximately four percent of the
outstanding CDT stock. FTI, formed in 1981, is an operating company that is
actively involved in the air pollution control and specialty

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chemical businesses. In addition, FTI owns all of the stock of the following
entities, each of which is treated as an association taxed as a corporation for
U.S. federal tax purposes: (i) Fuel Tech Jamaica Limited, a dormant entity
formed under the laws of Jamaica; (ii) Fuel Tech Targeted Injection Chemicals,
Ltd., a Canadian company that currently serves as a sales company; (iii) Fuel
Tech Holdings N.V., a holding company formed under the laws of the Netherlands
Antilles; and (iv) Fuel Tech Srl, an Italian company that conducts most of Fuel
Tech's European operations.

         Fuel Tech Holdings N.V. owns all of the stock of Fuel Tech BV, a
holding company formed under the laws of the Netherlands that is treated as an
association taxed as a corporation for U.S. federal income tax purposes. Fuel
Tech BV owns all of the stock of Fuel Tech GmbH, a dormant entity that was
formed under the laws of Germany and which is also treated as an association
taxed as a corporation for U.S. federal income tax purposes.

         FTNV maintains an open account on its books through which it records
intercompany transactions with FTI.

         B. BUSINESS REASONS FOR THE RESTRUCTURING

         FTNV has proposed the Restructuring described herein in order to: (i)
simplify its legal structure; (ii) allow certain investors, including
institutional investors who may not be permitted to invest in foreign
corporations, to invest in its common stock; and (iii) eliminate what FTNV
understands to be uncertainties related to investment in a






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corporation that is incorporated in a jurisdiction with which the United States
does not have an income tax treaty, such as the Netherlands Antilles.(1)

         C. RESTRUCTURING STEPS

         The Restructuring includes the following series of steps, which were
approved on May 4, 2006 by FTNV's board of directors through a series of
resolutions:

         1.   FTNV will change its place of incorporation from the Netherlands
              Antilles to the State of Delaware, effective June 30, 2006, by
              filing a new certificate of incorporation and a certificate of
              domestication with the State of Delaware.(2) FTNV will file
              corresponding documents in the Netherlands Antilles and will no
              longer be registered in the Netherlands Antilles following the
              Domestication. The Domestication will result in the conversion of
              FTNV from a Netherlands Antilles corporation into a Delaware
              corporation (Fuel Tech Delaware) for both Delaware and Netherlands
              Antilles corporate law purposes. Immediately prior to the
              Domestication, all employee stock options to acquire FTNV stock
              will be converted into corresponding rights to acquire Fuel Tech
              Delaware stock. Immediately following the Domestication, Fuel Tech
              Delaware, FTI, and PPI, will not elect to join in the filing of a
              consolidated U.S. federal income tax return.


----------
(1) Deloitte Tax LLP has not expressed, nor does it express herein, any opinion
or conclusion regarding any consequences of or uncertainties surrounding the
investment in a corporation that is incorporated in a jurisdiction with which
the United States does not have an income tax treaty, such as the Netherlands
Antilles.

(2) Upon filing the certificate of domestication and certification of
incorporation in Delaware, FTNV will be considered to be incorporated in
Delaware and will become subject to Delaware law.


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         2.   After the Domestication but prior to December 31, 2006, FTI will
              merge, pursuant to Massachusetts and Delaware merger statutes,
              with and into Fuel Tech Delaware, with Fuel Tech Delaware
              surviving.(3)

         3.   After the Domestication and the FTI merger but prior to December
              31, 2006, PPI will merge, pursuant to Delaware merger statute,
              with and into Fuel Tech Delaware, with Fuel Tech Delaware
              surviving.(4)

                              II. REPRESENTATIONS

A. GENERAL REPRESENTATIONS

         1.   All of the steps described herein will be consummated as described
              and will be undertaken pursuant to effective actions in Delaware,
              Massachusetts, and the Netherlands Antilles, with each party
              acting as, and being held out as, a principal on its own behalf,
              and there are no other written or oral agreements regarding the
              transactions described above.

         2.   All of the steps described herein will be reported pursuant to the
              relevant U.S. federal income tax reporting rules consistent with
              the treatment described in this Opinion.



----------
(3) The timing of the FTI Liquidation will be at the discretion of the
management of Fuel Tech Delaware and FTI.


(4) The timing of the PPI Liquidation will be at the discretion of the
management of Fuel Tech Delaware and PPI.

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         3.   None of FTNV, FTI, Fuel Tech Delaware, or PPI has taken, nor will
              take, any position on any U.S. federal, state or local income or
              franchise tax return, or take any other U.S. tax reporting
              position that is inconsistent with these representations or the
              treatment of the Restructuring described in this Opinion.

         4.   The Restructuring is being undertaken in order to: (i) allow FTNV
              to simplify its legal structure; (ii) allow certain investors,
              including institutional investors who may not otherwise be
              permitted to invest in foreign corporations, to invest in Fuel
              Tech Delaware stock; and (iii) eliminate what FTNV understands to
              be uncertainties accompanying an investment in a corporation
              organized in a non-treaty jurisdiction. Each of the steps in the
              Restructuring is intended to facilitate the completion of these
              objectives.

         5.   All steps and transactions related to the Restructuring have been
              disclosed to us.

B. DOMESTICATION

         For purposes of these representations, FTNV should be viewed as
transferring its assets to Fuel Tech Delaware in exchange for Fuel Tech Delaware
stock. FTNV should then be viewed as distributing the Fuel Tech Delaware stock
to its shareholders in exchange for their FTNV stock.

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         6.   The fair market value of the stock of Fuel Tech Delaware received
              by each FTNV shareholder will be approximately equal to the fair
              market value of the FTNV stock surrendered by such shareholder in
              the Domestication.

         7.   Immediately following the Domestication, the shareholders of FTNV
              will own all of the outstanding stock of Fuel Tech Delaware and
              will own such stock by reason of their ownership of FTNV stock
              immediately prior to the Domestication.

         8.   Except upon exercise of employee stock options which were rights
              to acquire FTNV stock that will be converted into rights to
              acquire Fuel Tech Delaware stock, Fuel Tech Delaware has no plan
              or intention to issue additional shares of its stock following the
              Domestication.

         9.   Immediately following the Domestication, Fuel Tech Delaware will
              possess the same assets and liabilities as those possessed by FTNV
              immediately before the Domestication, except for assets used to
              pay expenses incurred in connection with the Domestication. For
              purposes of this representation, the assets of FTI to be
              distributed to Fuel Tech Delaware in the FTI Liquidation will not
              be treated as assets held by Fuel Tech Delaware immediately
              following the Domestication. No assets of FTNV will be distributed
              in the Domestication, and there will be no dissenting shareholders
              to the Domestication. Any expenses paid with


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              FTNV's assets will be customary and necessary for this type of
              transaction.

         10.  Shareholders of FTNV will receive no consideration other than Fuel
              Tech Delaware stock in exchange for their FTNV stock.

         11.  All warrants, options, convertible securities, or any other type
              of right pursuant to which any person could acquire stock in FTNV
              that are outstanding immediately prior to the Domestication will
              be converted into a right to acquire stock in Fuel Tech Delaware.

         12.  There is no plan or intention for Fuel Tech Delaware to reacquire
              any of its stock issued in the Domestication.

         13.  There is no plan or intention for Fuel Tech Delaware to sell or
              otherwise dispose of any of the assets of FTNV acquired in the
              Domestication, except for the exchange of FTI and PPI stock that
              will occur pursuant to the Liquidations.

         14.  The liabilities of FTNV that will be assumed by Fuel Tech Delaware
              plus the liabilities, if any, to which the transferred assets are
              subject have been incurred by FTNV in the ordinary course of its
              business and are associated with the assets to be transferred.

         15.  Except for the exchange of FTI and PPI stock that will occur
              pursuant to the Liquidations, following the Domestication, Fuel
              Tech Delaware will


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              continue the historic business of FTNV or use a significant part
              of FTNV's assets in a business.

         16.  FTNV's shareholders will pay their respective expenses, if any,
              incurred in connection with the Domestication.

         17.  At the time of the Domestication, FTNV will not be under the
              jurisdiction of a court in a Title 11 or similar case within the
              meaning of section 368(a)(3)(A).

         18.  None of the parties to the Domestication are investment companies
              as defined in section 368(a)(2)(F)(iii) and (iv).

         19.  FTNV has never conducted business in the United States or been
              subject to U.S. federal income tax.

         20.  On the date of the Domestication, FTNV will not own any U.S. real
              property interests as defined in section 897(c)(1) and Treas. Reg.
              section 1.897-1(c)(1).

         21.  FTNV is not a passive foreign investment company (within the
              meaning of section 1297(a)).

         22.  FTNV is a widely held corporation and does not qualify as a
              controlled foreign corporation as defined in section 957 because
              FTNV is not owned more than 50 percent (by vote or value) by U.S.
              shareholders that own


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              (under the ownership attribution rules of section 958) at least 10
              percent of the voting stock of FTNV.

         23.  Following the Domestication, Fuel Tech Delaware will not elect to
              file a consolidated return with either FTI or PPI.

         24.  FTNV has not generated positive earnings and profits during any of
              its previous tax years and does not expect to generate positive
              earnings and profits during its tax year beginning on January 1,
              2006 and which should end at the close of the date of the
              Domestication. Furthermore, FTNV does not expect to generate an
              amount of current earnings and profits in the period beginning
              July 1, 2006 and ending December 31, 2006 that would exceed the
              deficit in its earnings and profits accumulated as of the close of
              the date of the Domestication.

C. FTI LIQUIDATION

For purposes of these representations, FTI should be treated as liquidating and
distributing its assets to Fuel Tech Delaware in complete redemption of its
stock.

         25.  Prior to the FTI Liquidation, FTI will adopt a formal plan of
              merger that will be approved by its board of directors (the "FTI
              Plan of Merger").

         26.  All of FTI's assets will be transferred to Fuel Tech Delaware on a
              single day pursuant to the operation of Delaware and Massachusetts
              merger
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              statutes. Upon completion of the merger, FTI will cease to exist
              for legal purposes.

         27.  On the date of adoption of the FTI Plan of Merger and on the date
              of the merger, Fuel Tech Delaware will be the owner of all of the
              single outstanding class of FTI stock.

         28.  FTI will not have redeemed any shares of its stock during the
              three years preceding the adoption of the FTI Plan of Merger.

         29.  FTI will not have acquired assets in any nontaxable transaction at
              any time, except for acquisitions occurring more than three years
              prior to the adoption of the FTI Plan of Merger.

         30.  No assets of FTI have been, or will be, disposed of by either FTI
              or Fuel Tech Delaware except for dispositions in the ordinary
              course of business and dispositions occurring more than three
              years prior to the adoption of the FTI Plan of Merger.

         31.  There is no present plan or intention to: (i) reincorporate FTI,
              or (ii) transfer or sell its business assets to a corporation in
              which Fuel Tech Delaware (either directly or indirectly) owns more
              than 20 percent in value. For purposes of this representation,
              ownership is determined by application of the constructive
              ownership rules of section 318, as modified by section 304(c)(3).

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         32.  Prior to adoption of the FTI Plan of Merger, no assets of FTI will
              have been distributed in kind, transferred, or sold to Fuel Tech
              Delaware (or its predecessor FTNV) except for (i) transactions
              occurring in the normal course of business and (ii) transactions
              occurring more than three years prior to adoption of the FTI Plan
              of Merger.

         33.  FTI will report all earned income that is represented by assets
              that will be distributed to Fuel Tech Delaware such as receivables
              being reported on a cash basis, unfinished construction contracts,
              commissions due, etc.

         34.  The total fair market value of the assets of FTI will exceed the
              aggregate amount of its liabilities, plus any liabilities to which
              those assets are subject, both at the date of adoption of the FTI
              Plan of Merger and immediately before the FTI Liquidation.

         35.  At the time of the FTI Liquidation, the fair market value of any
              obligation owed by FTI to Fuel Tech Delaware, if such an amount
              exists at that time, will not exceed the adjusted basis of such
              obligation.

         36.  Fuel Tech Delaware is not an organization that is exempt from
              federal income tax under section 501 or any other provision of the
              Code.

         37.  FTI had a deficit in its accumulated earnings and profits as of
              December 31, 2005, and FTI does not expect to generate an amount
              of earnings and profits during its tax year that began on January
              1, 2006 and which will end as of the close of the date of the FTI
              Liquidation that would exceed

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              the deficit in its accumulated earnings and profits as of December
              31, 2005.

D. PPI LIQUIDATION

For purposes of these representations, PPI should be treated as liquidating and
distributing its assets to Fuel Tech Delaware in complete redemption of its
stock.

         38.  Prior to the PPI Liquidation, PPI will adopt a formal plan of
              merger that will be approved by its board of directors (the "PPI
              Plan of Merger").

         39.  All of PPI's assets will be transferred to Fuel Tech Delaware on a
              single day pursuant to the operation of Delaware merger statute.
              Upon completion of the merger, PPI will cease to exist for legal
              purposes.

         40.  On the date of adoption of the PPI Plan of Merger and on the date
              of the merger, Fuel Tech Delaware will be the owner of all of the
              single outstanding class of PPI stock.

         41.  PPI will not have redeemed any shares of its stock during the
              three years preceding the adoption of the PPI Plan of Merger.

         42.  PPI will not have acquired assets in any nontaxable transaction at
              any time, except for acquisitions occurring more than three years
              prior to the adoption of the PPI Plan of Merger.

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         43.  No assets of PPI have been, or will be, disposed of by either PPI
              or Fuel Tech Delaware except for dispositions in the ordinary
              course of business and dispositions occurring more than three
              years prior to the adoption of the PPI Plan of Merger.

         44.  There is no present plan or intention to: (i) reincorporate PPI,
              or (ii) transfer or sell its business assets to a corporation in
              which Fuel Tech Delaware (either directly or indirectly) owns more
              than 20 percent in value. For purposes of this representation,
              ownership is determined by application of the constructive
              ownership rules of section 318, as modified by section 304(c)(3).

         45.  Prior to adoption of the PPI Plan of Merger, no assets of PPI will
              have been distributed in kind, transferred, or sold to Fuel Tech
              Delaware (or its predecessor FTNV) except for (i) transactions
              occurring in the normal course of business and (ii) transactions
              occurring more than three years prior to adoption of the PPI Plan
              of Merger.

         46.  PPI will report all earned income that is represented by assets
              that will be distributed to Fuel Tech Delaware such as receivables
              being reported on a cash basis, unfinished construction contracts,
              commissions due, etc.

         47.  The total fair market value of the assets of PPI will exceed the
              aggregate amount of its liabilities, plus any liabilities to which
              those assets were

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              subject both at the date of adoption of the PPI Plan of Merger and
              immediately before the PPI Liquidation.

                                 III. OPINIONS

         1.   With regard to the Domestication, we express the following
              opinions:

              o    For U.S. federal income tax purposes, the Domestication
                   should be treated as a transfer by FTNV of its assets to Fuel
                   Tech Delaware in exchange for Fuel Tech Delaware stock and
                   the assumption by Fuel Tech Delaware of the liabilities of
                   FTNV, followed by the distribution by FTNV to its
                   shareholders of the Fuel Tech Delaware stock in exchange for
                   their FTNV stock. Rev. Rul. 88-25, 1988-1 C.B. 116 and Treas.
                   Reg. section 1.367(b)-2(f). The Domestication should be a
                   reorganization within the meaning of section 368(a)(1)(F) and
                   subject to Treas. Reg. ss. 1.367(b)-2(f). FTNV and Fuel Tech
                   Delaware should each be a party to the reorganization within
                   the meaning of section 368(b).

              o    No gain or loss should be recognized by FTNV on the transfer
                   of its assets to Fuel Tech Delaware in exchange for Fuel Tech
                   Delaware stock and the assumption by Fuel Tech Delaware of
                   the liabilities of FTNV. Sections 361(a) and 357(a).

              o    No gain or loss should be recognized by Fuel Tech Delaware
                   upon its receipt of the assets of FTNV in exchange for Fuel
                   Tech Delaware

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                   stock and the assumption by Fuel Tech Delaware of the
                   liabilities of FTNV. Section 1032(a).

              o    Fuel Tech Delaware's basis in each of FTNV's assets received
                   by Fuel Tech Delaware in the Domestication should equal the
                   basis of such asset in the hands of FTNV immediately before
                   the Domestication. Section 362(b).

              o    Fuel Tech Delaware's holding period for each of FTNV's assets
                   received by Fuel Tech Delaware in the Domestication should
                   include the period during which such asset was held by FTNV.
                   Section 1223(2).

              o    Fuel Tech Delaware should succeed to and take into account
                   the earnings and profits, or deficit in earnings and profits,
                   of FTNV as of the date of the Domestication. Section
                   381(c)(2) and Treas. Reg. section 1.381(c)(2)-1).

              o    The taxable year of FTNV should end upon the close of the
                   date of the Domestication. Treas. Reg. section 1.367(b)-2(f)
                   (4).

2. With regard to the FTI Liquidation, we express the following opinions:

              o    No gain or loss should be recognized by FTI or Fuel Tech
                   Delaware as a result of the FTI Liquidation. Sections 332(a),
                   336(d)(3), 337(a), and 337(b).

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              o    Fuel Tech Delaware's basis in each asset received from FTI
                   should be the same as the basis of that asset in the hands of
                   FTI immediately before FTI Liquidation. Section 334(b)(1).

              o    Fuel Tech Delaware's holding period in each asset received
                   from FTI should include the holding period that such asset
                   was held by FTI. Section 1223(2).

              o    Fuel Tech Delaware should succeed to and take into account
                   the items of FTI described in section 381(c), including any
                   net operating loss and its earnings and profits. Section
                   381(a) and Treas. Reg. section 1.381(a)-1.

3. With regard to the PPI Liquidation, we express the following opinions:

              o    No gain or loss should be recognized by PPI or Fuel Tech
                   Delaware as a result of the PPI Liquidation. Sections 332(a),
                   336(d)(3), 337(a), and 337(b).

              o    Fuel Tech Delaware's basis in each asset received from PPI
                   should be the same as the basis of that asset in the hands of
                   PPI immediately before PPI Liquidation. Section 334(b)(1).

              o    Fuel Tech Delaware's holding period in each asset received
                   from PPI should include the holding period that such asset
                   was held by PPI. Section 1223(2).

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              o    Fuel Tech Delaware should succeed to and take into account
                   the items of PPI described in section 381(c), including any
                   net operating loss and its earnings and profits. Section
                   381(a) and Treas. Reg. section 1.381(a)-1.

                                IV. TAX ANALYSIS

A. THE DOMESTICATION

         1. U.S. FEDERAL INCOME TAX CHARACTERIZATION OF THE DOMESTICATION

         In Rev. Rul. 88-25,(5) the IRS ruled that the conversion of a foreign
corporation to a domestic corporation pursuant to a state domestication statute
would be treated as a reorganization under section 368(a)(1)(F). In the ruling,
corporation F was incorporated in Country Y. For valid business reasons, F filed
a certificate of domestication and a certificate of incorporation in State A.
Upon filing the certificate of domestication and certificate of incorporation, F
was considered by State A to be incorporated in State A and became subject to
State A law. Following the domestication, F had the same assets and liabilities
that it had before the domestication, and there was no change in the
shareholders of F.

         The ruling holds that the conversion of F from a Country Y to a State A
corporation is treated as: (i) a transfer by a F of all of its assets and
liabilities to a new domestic corporation in exchange for stock of the new
domestic corporation; and (ii) a



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(5) 1988-1 C.B. 116.



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liquidating distribution by F to its shareholders of the new domestic
corporation's stock received in exchange for F's assets and liabilities. Because
there was no change in the assets or shareholders of F as a result of the
domestication, the ruling concludes that the domestication qualified as a
reorganization under section 368(a)(1)(F). F and the new domestic corporation
were each a party to the reorganization within the meaning of section 368(b).(6)

          In several private letter rulings, the IRS has applied Rev. Rul. 88-25
to conclude that a domestication effected pursuant to state law should be
treated as transfer of the foreign corporation's assets to a newly formed
domestic corporation, followed by the foreign corporation's distribution of the
newly formed domestic corporation's stock to its shareholders in exchange for
their foreign corporation stock.(7) This characterization is consistent with the
characterization that Treas. Reg. section 1.367(b)-2(f) (discussed below)
applies to a reorganization under section 368(a)(1)(F) in which the transferor
is a foreign corporation.

2. SECTION 368(A)(1)(F)

          Under section 368(a)(1)(F), a reorganization (an "F Reorganization")
includes a "mere change in identity, form, or place of organization of one
corporation, however effected." To qualify as a reorganization under section
368(a)(1)(F), a transaction must




----------
(6) See also Rev. Rul. 87-27, 1987-1 C.B. 134 (concluding that the
reincorporation in a foreign country of a dual resident U.S. corporation was a
reorganization under section 368(a)(1)(F)).

(7) See PLRs 200613011 (Dec. 13, 2005); PLR 9213025 (Dec. 30, 1991); PLR 8943081
(Aug. 3, 1989); and PLR 8848040 (Sep. 2, 1988). These private pronouncements are
not cited as authority upon which FTNV may rely but rather as evidence of the
IRS's treatment of similar transactions.



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satisfy three requirements: (i) it must involve only one operating corporation
(the "One Corporation Requirement"); (ii) there must be no change in the
shareholders of the corporation ("Shareholder Identity Requirement"); and (iii)
there must be no change in the assets of the corporation ("Asset Identity
Requirement"). These requirements have been identified in the legislative
history to section 368(a)(1)(F) and in several revenue rulings.(8) Under the
regulations, an F Reorganization must also be undertaken for a valid business
purpose (the "Business Purpose Requirement") and must be undertaken pursuant to
a plan of reorganization.(9)

                         a. ONE CORPORATION REQUIREMENT

         As noted above, section 368(a)(1)(F) applies to a mere change in
identify, form, or place of organization of "one corporation." However, this
does not prevent the use of multiple corporations provided only a single
operating company is involved.(10) Therefore, the One Corporation Requirement
should be satisfied, notwithstanding that the Domestication is treated a
transfer of assets from the foreign corporation to a newly



----------
(8) Regulations proposed by the IRS in August 2004 would provide four
requirements for an F reorganization: (i) all of the stock of the resulting
corporation, including stock issued before the transfer, must be issued in
respect of stock of the transferring corporation; (ii) there must be no change
in the ownership of the corporation in the transaction, except a change that has
no effect other than that of a redemption of less than all of the shares of the
corporation; (iii) the transferring corporation must completely liquidate in the
transaction; and (iv) the resulting corporation must not hold any property or
have any tax attributes (including those specified in section 381(c))
immediately before the transfer. These regulations will be effective when they
are published as final.

(9) In TD 9182, the IRS and Treasury issued final regulations, effective for
transactions occurring on or after February 25, 2005, providing that the
continuity of interest and continuity of business enterprise requirements, which
apply to other types of reorganizations, are not applicable to reorganizations
under section 368(a)(1)(F).

(10) H.R. Conf. Rep. No. 760-248, at 541 ("this limitation does not preclude the
use of more than one entity to consummate the transaction provided only one
operating company is involved").



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formed domestic corporation because the Domestication involves a single
operating company.

         The Liquidations should not cause the One Corporation Requirement to be
violated, even if the Liquidations are treated as occurring pursuant to the same
plan as the Domestication. Reorganizations under section 368(a)(1)(F) have
historically been respected as separate steps, notwithstanding that they occur
as a step in a larger transaction (and thus might be characterized differently
if combined with other steps in the larger transaction).(11) For example, in
Rev. Rul. 58-422 one corporation transferred its assets to another corporation
in a transaction that was found to qualify as a reorganization under section
368(a)(1)(F).(12) The IRS concluded that the transaction qualified as an F
Reorganization, notwithstanding that two subsidiaries of the reorganized
corporation liquidated into the reorganized corporation as part of the same plan
in what were found to be separate section 332 liquidations.(13)

         Therefore, because the One Corporation Requirement should be tested
immediately after the Domestication and without regard to any other
transactions, the One Corporation Requirement should be satisfied with respect
to the Domestication.




------------
(11) Rev. Rul. 96-29, 1996-1 C.B. 50. In addition, proposed regulations issued
in August 2004 provide that related events preceding or following the mere
change do not cause the steps effecting the mere change to fail to qualify as an
F Reorganization, and moreover, the qualification of the mere change as an F
Reorganization does not alter the treatment of the larger transaction. Prop.
Treas. Reg. section 1.368-2(m)(3). These regulations would be effective when
they are published as final.

(12) 1958-2 C.B. 145.

(13) Note that the One Corporation Requirement had not been added to the
statutory language of section 368(a)(1)(F) at the time of this ruling; however,
in TAM 9743001 (Jun. 4, 1997), the IRS stated that Rev. Rul. 58-422 was not
inconsistent with the One Corporation Requirement noting that the revenue ruling
had not been revoked at the time the One Corporation Requirement was
implemented.



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June 5, 2006



                      b. SHAREHOLDER IDENTITY REQUIREMENT

          In general, a transaction will not qualify as reorganization under
section 368(a)(1)(F) unless the shareholders of the old entity are virtually
identical to the shareholders of the new entity.(14) Based on Rev. Rul. 96-29,
the proper time for testing whether there has been more than a de minimis change
in Shareholder Identity is immediately before and immediately after the
purported F Reorganization, without regard to other aspects of a larger
transaction that may precede or follow that step. In Rev. Rul. 96-29, the IRS
addressed two different situations where a corporation changed its place of
organization by merging into a newly formed corporation.(15) In Situation 1,
immediately after the merger, the newly formed corporation redeemed a class of
nonvoting preferred stock and sold new shares to the public. In Situation 2, a
corporation acquired an unrelated corporation with its stock immediately before
the acquiring corporation merged into a newly formed corporation. In each
situation, the IRS concluded that the reincorporation qualified as a
reorganization under section 368(a)(1)(F), notwithstanding that it was a step in
a larger transaction that resulted in a substantial change in stock
ownership.(16)






----------
(14) See Rev. Rul. 96-29, 1996-1 C.B. 693 (a transaction does not qualify under
section 368(a)(1)(F) unless there is not change in the existing shareholders,
except that a de minimis change, i.e., less than one percent is permissible).


(15) 1996-1 C.B. 693.


(16) See also PLR 200129024 (April 20, 2001) (IRS ruled that various prior
redemptions do not prevent a merger from qualifying under section 368(a)(1)(F);
Rev. Rul. 96-29 cited).



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          As a result of the Domestication (and as represented by FTNV), the
shareholders of FTNV will own all of the outstanding stock of Fuel Tech Delaware
and will own such stock by reason of their ownership of FTNV stock immediately
prior to the Domestication. All employee stock options to acquire FTNV stock
will be converted into options to acquire Fuel Tech Delaware stock, and except
with regard to the future exercise of those stock options, FTNV has represented
that Fuel Tech Delaware has no plan or intention to issue additional shares of
its stock following the Domestication.

          Therefore, the Shareholder Identity Requirement should be satisfied
with respect to the Domestication.

                         C. ASSET IDENTITY REQUIREMENT

          Rev. Rul. 96-29 states that a transaction does not qualify as an F
Reorganization unless the assets of the old entity are substantially identical
to the assets of the new entity. For this purpose, a difference of less than one
percent will be disregarded as de minimis. Similar to its holding with respect
to the Shareholder Identity Requirement, Rev. Rul. 96-29 provides that the
proper time for testing the Asset Identity Requirement is immediately before and
immediately after the step constituting the change in identity, form, or place
of organization. Any other steps in a larger transaction should be considered
separate from the change in identity, form, or place of organization. Therefore,
the assets that New Fuel Tech will acquire in the Liquidations should not be
considered in determining whether the Asset Identity Requirement is satisfied.


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          In connection with the issuance of a private letter ruling that a
transaction constitutes a reorganization under section 368(a)(1)(F), the IRS
requests a representation that the expenses paid from the target's assets will
constitute less than one percent of the target's assets prior to the purported
reorganization.(17) This representation ensures that expenses paid in connection
with the reorganization should not cause there to be more than a de minimis
change in the assets. In this case, it is possible that the assets of FTNV that
are used to pay expenses incurred in connection with the Domestication may
exceed (by a small amount) one percent of the assets held by FTNV's immediately
before the Domestication. However, FTNV has represented that these expenses will
be customary and necessary for this type of transaction. We do not believe that
the mere fact that the amount of the expenses related to the transaction exceed
one percent of the assets that FTNV held immediately before the reorganization
should cause the Asset Identify Requirement to be violated.

          Moreover, under proposed regulations issued by the IRS in August 2004,
the Asset Identity Requirement is stated somewhat differently.(18) The proposed
regulations require that the corporation resulting from an F Reorganization not
hold any property or have any tax attributes immediately before the transfer,
except for a nominal amount of assets used to facilitate the organization of the
resulting corporation or to preserve is existence.(19) Therefore, it appears
that the proposed regulations are more concerned with





----------
(17) See Rev. Proc. 86-42, 1986-2 C.B. 722, SECTION 7.07.

(18) REG-106889-04. These regulations will be effective when published as final.

(19) Proposed Treas. Reg. section 1.368-2(m)(1)(i)(D).



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the addition of assets as a result of the F Reorganization rather than a
reduction in assets to pay expenses.

                        D. BUSINESS PURPOSE REQUIREMENT

          Treas. Reg. section 1.368-1(c) provides that a transaction may qualify
as a reorganization only if it has a business or corporate purpose other than
mere avoidance of tax. Further, Treas. Reg. section 1.368-2(g) requires that in
addition to coming within the scope of the specific language of section 368, a
reorganization must also be "undertaken for reasons germane to the continuance
of the business of a corporation a party to the reorganization."

          As discussed above, the Domestication is part of a series of steps
undertaken by FTNV, the purpose of which is to: (i) simplify its legal
structure; (ii) allow certain investors, including institutional investors who
may not be permitted to invest in foreign corporations to invest in its common
stock; and (iii) eliminate what FTNV understands to be uncertainties related to
investment in a corporation that is incorporated in a jurisdiction with which
the United States does not have an income tax treaty, such as the Netherlands
Antilles. Accordingly, the Business Purpose Requirement should be satisfied.

             E. THE REORGANIZATION MUST BE MADE PURSUANT TO A PLAN

          Treas. Reg. section 1.368-1(c) states "a plan of reorganization must
contemplate the bona fide execution of one of the transactions specifically
described as a reorganization in section 368(a) and for the bona fide
consummation of each of the requisite acts under



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which nonrecognition of gain is claimed." Treas. Reg. section 1.368-3(a)
provides that the plan of reorganization must be adopted by each of the
corporations that are a party to the reorganization, the adoption must be shown
by the acts of each corporation's duly responsible officers, and must appear
upon the official records of the corporation.

         The Domestication is being undertaken pursuant to effective actions in
Delaware and the Netherlands Antilles. These effective actions were approved by
FTNV's board of directors through a series of resolutions adopted on May 4, 2006
and appear on the official records of the corporation. Consequently,
Domestication should be considered to have been undertaken pursuant to a Plan of
Reorganization.

3. CORPORATE TAX CONSEQUENCES OF THE DOMESTICATION

         Treas. Reg. section 1.367(b)-2(f)(2) provides that in a reorganization
described in section 368(a)(1)(F) in which the transferor corporation is
foreign, there is considered to exist:

         o    A transfer of assets by the foreign corporation to the acquiring
              corporation in exchange for stock of the acquiring corporation and
              the assumption by the acquiring corporation of the foreign
              transferor corporation's liabilities;

         o    A distribution of such stock by the foreign transferor corporation
              to its shareholders; and



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         o    An exchange by the foreign transferor corporation's shareholders
              of their stock for stock of the acquiring corporation.(20)

            In light of this regulation, each of the provisions described below
should apply to determine the tax consequences to FTNV of this series of
transfers.

                               A. NO GAIN OR LOSS

          Section 361(a) provides that, in general, no gain or loss is
recognized on a transfer of assets by a corporation in exchange for stock or
securities in a corporation that is also a party to a reorganization. In
addition, section 357(a) provides that the assumption of liabilities as
consideration in an exchange is not treated as money or other property and will
not prevent the exchange from qualifying under section 361. Thus, FTNV should
recognize no gain or loss on its deemed transfer of assets to Fuel Tech
Delaware.

           Section 361(c) provides that a corporation that has received stock or
securities in exchange for its assets pursuant to a plan of reorganization
recognizes no gain or loss when it distributes the stock or securities received
to its shareholders. Consequently, FTNV should recognize no gain or loss on its
distribution of the Fuel Tech Delaware stock received in the exchange to each of
its shareholders.








----------
(20) Treas. Reg. section 1.367(b)-2(f)(3) provides that these transfers are
treated as occurring without regard to whether the applicable foreign or
domestic law treats the acquiring corporation as a continuation of the foreign
transferor corporation.




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         Section 1032 provides that a corporation will not recognize gain or
loss on the receipt of money or other property in exchange for stock of that
corporation. Therefore, Fuel Tech Delaware should recognize no gain or loss upon
the receipt of the assets of FTNV in exchange for the issuance of its stock.

                          B. BASIS AND HOLDING PERIOD

         Section 362(b) provides that property acquired by a corporation in
connection with a reorganization will have the same basis to the acquirer as its
basis in the hands of the transferor, increased by any gain recognized by the
transferor on the transfer. Because no gain or loss is recognized in connection
with the Domestication, Fuel Tech Delaware should have a tax basis in the assets
it should be deemed to acquire from FTNV equal to the FTNV's basis in those
assets immediately before the Domestication.

         Section 1223(1) provides that where property received in an exchange
has the same basis as the property exchanged, the holding period of the property
received will include the holding period of the property exchanged. Therefore,
Fuel Tech Delaware's holding period for the assets it is deemed to acquire from
FTNV should include FTNV's holding period for such assets prior to the
Domestication.

                         C. CARRYOVER OF TAX ATTRIBUTES

         Section 381(a) provides that, generally, if one corporation acquires
the assets of another corporation in a transaction that qualifies as a
reorganization under section 368(a)(1) (A), (C), (D), (F), or (G), then the
acquirer succeeds to and takes into account certain tax attributes of the
transferor, including net operating loss carryovers and





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earnings and profits of the transferor.(21) However, in the case of a domestic
corporation that acquires the assets of a foreign corporation, the general rule
of section 381(a) is subject to certain limitations.

         First, net operating losses of a foreign corporation that are incurred
prior to a reorganization of the foreign corporation into a domestic corporation
may be deductible by the domestic corporation only to the extent that the losses
were incurred by the foreign corporation in the conduct of a U.S. trade or
business.(22) Therefore, although FTNV's net operating losses should carry over
to Fuel Tech Delaware, these losses could be utilized by Fuel Tech Delaware only
to the extent that these losses were incurred in connection with a U.S. trade or
business. Because FTNV has represented that it has never been engaged in the
conduct of a U.S. trade or business, any net operating losses of FTNV would not
be deductible by Fuel Tech Delaware for U.S. federal income tax purposes.

         Under section 381(c)(2)(A), the earnings and profits of the transferor
corporation are deemed to have been received or incurred by the acquiring
corporation as of the close of the date of the distribution or transfer. Treas.
Reg. section 1.381(c)(2)-1(a)(2) provides that the distributor or transferor
corporation's earnings and profits (or deficit therein) as of the close of the
date of distribution or transfer, are deemed to be received by, and to become a
part of the accumulated earnings and profits of, the acquiring corporation at
the close of the date of distribution or transfer. The amount of earnings and
profits succeeded to



----------
(21) Section 381(c)(1) and (c)(2).

(22) Rev. Rul. 72-421, 1972-2 C.B. 166 and Proposed Treas. Reg. section
1.367(b)-3(e).



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should be determined after any shareholder inclusions required by Treas. Reg.
section 1.367(b)-3(b) (summarized below).(23)

         Pursuant to Treas. Reg. section 1.381(c)(2)-1(a)(2), if the transferor
and acquiring corporations both have positive accumulated earnings and profits
as of the close of the date of the distribution or transfer (or if each
corporation has a deficit in accumulated earnings and profits as of such time),
then the transferor corporation's earnings and profits (or deficit therein) and
the acquiring corporation's earnings and profits (or deficit therein) are
consolidated to become accumulated earnings and profits of the acquiring
corporation as of the close of the date of the distribution or transfer.
However, if one corporation has positive accumulated earnings and profits as of
the close of the date of distribution or transfer and the other corporation has
a deficit in accumulated earnings and profits as of such time, then the deficit
can be used only to offset earnings and profits accumulated by the acquiring
corporation after the date of distribution or transfer.(24)

         FTNV has represented that it had a deficit in its accumulated earnings
and profits on December 31, 2005, and that it does not expect to generate an
amount of positive earnings and profits during its tax year ending on the date
of the Domestication that would exceed the accumulated earnings and profits
deficit as of December 31, 2005. Because Fuel Tech Delaware is deemed to be a
new corporation, it should have no earnings and profits prior to the
Domestication. Consequently, as of the close of the date of the Domestication,
FTNV's deficit in earnings and profits should become the




----------
(23) Treas. Reg. section 1.367(b)-2(d)(3).

(24) Treas. Reg. section 1.381(c)(2)-1(a)(2).



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accumulated deficit in earnings and profits of Fuel Tech Delaware as of the
close of the date of the Domestication. FTNV's deficit in its earnings and
profits should be available to offset earnings and profits accumulated by Fuel
Tech Delaware after the date of distribution or transfer.(25)

                            D. CLOSE OF TAXABLE YEAR

          Section 381(b) provides that except in the case of an acquisition in
connection with an F reorganization, the taxable year of the distributor or
transferor corporation shall end on the date of distribution or transfer.
However, Treas. Reg. section 1.367(b)-2(f)(4) provides that in an F
Reorganization in which the transferor corporation is a foreign corporation, the
taxable year of the foreign transferor corporation ends with the close of the
date of the transfer. The regulation further provides that, except as otherwise
required under other provisions of the Code such as section 1502 and the
consolidated return regulations thereunder, the taxable year of the acquiring
corporation ends with the close of the date on which the transferor's taxable
year would have ended but for the occurrence of the reorganization, provided
that the acquiring corporation is either (i) a






----------
(25) We note that under proposed Treas. Reg. section 1.367(b)-3(f), the earnings
and profits (or deficit in earnings and profits) of a domestic corporation
acquired by a foreign corporation, which are not included as a deemed dividend
under section 367(b), would be eligible to carry over only to the extent such
earnings and profits (or deficit in earnings and profits) are effectively
connected with the conduct of a trade or business within the United States. All
other earnings and profits (or deficit in earnings and profits) of the foreign
acquired corporation do not carry over to the domestic acquiring corporation
and, as a result, are eliminated. Therefore, because FTNV's earnings and profits
are not effectively connected to the conduct of a trade or business in the
United States, under these proposed regulations, its earnings and profits (or
deficit in earnings and profits) would not carry over to Fuel Tech Delaware.
However, this regulation is proposed to be effective 30 days after it is
published as a final regulation, and therefore, the regulation, as now drafted,
would not apply to the Domestication unless the regulation is published as final
more than 30 days prior to the Domestication.


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domestic corporation or (ii) has earnings and profits effectively connected with
the conduct of a U.S. trade or business.

          Pursuant to Treas. Reg. section 1.367(b)-2(f)(4), FTNV's taxable year
should close as of the end of the date of the Domestication, and Fuel Tech
Delaware's first taxable year should end on December 31, 2006 (the date that
FTNV's year would have ended absent the Domestication). Because Fuel Tech
Delaware will not file a consolidated return with either FTI or PPI following
the Domestication, its taxable year should not be affected by section 1502 or
the regulations thereunder.

         4.   GENERAL DISCUSSION OF SHAREHOLDER TAX CONSEQUENCES

         The following discussion is a brief summary of the potential tax
consequences of the Domestication to FTNV's shareholders. This discussion does
not represent the opinion of or conclusion by Deloitte Tax LLP regarding the tax
consequences of the Domestication to any particular FTNV shareholder because
each shareholder's tax consequences may vary, depending upon the shareholder's
specific facts and circumstances. Each shareholder should contact its own tax
advisor regarding the specific tax consequences resulting from the
Domestication.

         o    Under Treas. Reg. section 1.367(b)-3(b)(3),(26) a United States
              person who on the date of the Domestication owns 10 percent or
              more of the voting power of FTNV (including stock owned through
              stock options and through


---------
(26) Treas. Reg. section 1.367(b)-3 applies to the acquisition by a domestic
corporation of the assets of a foreign corporation in a liquidation described in
section 332 liquidation or an asset acquisition described in section 368(a)(1)
(thus including a reorganization described in section 368(a)(1)(F)).




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              attribution from related parties),(27) should be required to
              include in income as a deemed dividend, the all earnings and
              profits amount (as defined in Treas. Reg. section 1.367(b)-2(d))
              with respect to its FTNV stock.(28) However, as FTNV has
              represented that it has never had positive earnings and profits
              during any tax year preceding or including the Domestication,
              those shareholders who own greater than 10 percent of the stock of
              FTNV should not have an income inclusion.

         o    Under Treas. Reg. section 1.367(b)-3(c), a United States person
              who owns less than 10 percent of the voting power of FTNV but who
              owns stock with a fair market value of more than $50,000 (as of
              the date of the Domestication), should recognize gain, but not
              loss, on the exchange of the stock of FTNV for the stock of Fuel
              Tech Delaware. This gain or loss is recognized without regard to
              the amount of FTNV's earnings and profits. Alternatively, under
              Treas. Reg. section 1.367(b)-3(c)(3), such a shareholder could
              elect to include in its income as a deemed dividend, the all
              earnings and profits amount (as defined in Treas. Reg. section
              1.367(b)-2(d)) with respect to its FTNV stock. In order to make
              such an election, FTNV must provide the shareholder information
              necessary to substantiate the all earnings and profits amount with
              respect to its FTNV stock, and the




----------
(27) For this purpose, a United States person includes an individual citizen or
resident of the United States; a domestic partnership; a domestic corporation;
any estate, other than a foreign estate; and any trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have the authority to control
all substantial decisions of the trust.

(28) See Treas. Reg. section 1.367(b)-3(d)(3), which provides that the all
earnings and profits amount with respect to stock of a foreign corporation is
determined according to the attribution principles under section 1248 and the
regulations thereunder.




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              shareholder must comply with the notice requirement in Treas. Reg.
              section 1.367(b)-1(c). Because FTNV has represented that it has
              never had positive earnings and profits in any tax year preceding
              or including the Domestication, shareholders who make this
              election should not have an income inclusion provided the
              shareholder properly executes the election, receives from FTNV and
              retains the proper documentation to substantiate its portion of
              FTNV's earnings and profits, and complies with the applicable
              notice requirements.

         o    Finally, under Treas. Reg. section 1.367(b)-3(c)(4), a shareholder
              who holds stock of FTNV with a fair market value less than $50,000
              on the date of the Domestication should not be required to
              recognize any gain or loss in connection with the Domestication
              pursuant to the general rule of section 354(a) applicable to a
              reorganization.

         o    If a shareholder is required to include in income as a deemed
              dividend, the all earnings and profits amount (as defined in
              Treas. Reg. section 1.367(b)-2(d)) (either because it owns 10
              percent or more of FTNV or because it made the election in Treas.
              Reg. section 1.367(b)-3(c)), the shareholder's basis in its Fuel
              Tech Delaware stock received should equal its basis in the FTNV
              stock immediately before the Domestication plus its portion of
              FTNV's earnings and profits included in income as a dividend.
              Section 358(a), Treas. Reg. section 1.367(b)-3(b)(3), Example 4,
              and Treas. Reg. section 1.367(b)-3(c)(5), Example 1.

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         o    If a shareholder of FTNV recognizes gain or loss as a result of
              the Domestication (because such shareholder is a U.S. person which
              owned less than 10 percent of FTNV but did not make the election
              in Treas. Reg. section 1.367(b)-3(c)), the shareholder should have
              a tax basis in its Fuel Tech Delaware stock received equal the
              shareholder's basis for the FTNV stock surrendered plus the amount
              of gain recognized by the shareholder as a result of the
              Domestication. Section 358(a)(1) and Treas. Reg. section
              1.367(b)-3(c)(5), Example 1.

         o    If a shareholder qualifies for the de minimis exception of Treas.
              Reg. section 1.367(b)-3(c)(4), the shareholder should have a tax
              basis in its Fuel Tech Delaware stock equal to the basis of its
              FTNV stock surrendered in exchange therefor. Section 358(a)(1).

         o    Any shareholder that has previously filed a gain recognition
              agreement under Treas. Reg. section 1.367(a)-8 with respect to a
              prior exchange in which such person received FTNV stock in a
              tax-free transaction should consult its tax advisor regarding the
              impact of the Domestication on any previously executed gain
              recognition agreement.

B. THE LIQUIDATIONS

         The following discussion addresses the FTI Liquidation and the PPI
Liquidation together; however, each of the requirements and conclusions
discussed herein should be applied to the FTI Liquidation and the PPI
Liquidation separately.


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         1.   CHARACTERIZATION OF THE UPSTREAM MERGERS

         FTI and PPI should each be treated as liquidating into Fuel Tech
Delaware, notwithstanding that the transaction is effected as a merger of each
with and into Fuel Tech Delaware under the applicable state law merger statute.
The flush language of section 332(b) provides that a distribution otherwise
constituting a distribution in complete liquidation within the meaning of
section 332(b) shall not be considered as not constituting such a distribution
merely because it does not constitute a distribution or liquidation within the
meaning of the corporate law under which the distribution is made. Similarly,
Treas. Reg. section 1.332-2(d) provides that if a transaction constitutes a
distribution in complete liquidation and satisfies all of the requirements of
section 332, it is not material that it is otherwise described under the local
law. Therefore, provided each of the Liquidations satisfies the requirements of
section 332, set forth below, each of the Liquidations should constitute a
distribution in complete liquidation, even though the distribution occurs as a
result of the operation of state law merger statute.

         Moreover, under Rev. Rul. 58-422, discussed above, the Liquidations
should be respected as separate section 332 liquidations and should not be
recast as an asset reorganization.

         2.   SECTION 332

         Section 332 provides that a corporation does not recognize gain or loss
upon the receipt of property distributed in complete liquidation of another
corporation provided: (i) the corporation receiving the property owns a
specified amount of the distributing

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corporation's stock (the "Ownership Requirement"); (ii) there is a complete
cancellation or redemption of all of the stock of the distributing corporation
(the "Complete Liquidation Requirement"); and (iii) the transfer of property
occurs within certain time limits (the "Timing Requirement"). Section 337(a)
provides that a corporation does not recognize gain or loss upon the
distribution of property in complete liquidation if (i) section 332 applies to
the liquidation and (ii) the distributee corporation meets the Ownership
Requirement of section 332.

                            A. OWNERSHIP REQUIREMENT

         Section 332(b)(1) provides that section 332 applies only if, on the
date of the adoption of the plan of liquidation and at all times until the
receipt of property, the distributee corporation owns enough stock of the
liquidating corporation to satisfy the control requirements of section
1504(a)(2). Section 1504(a)(2) requires the distributee corporation to own (1)
stock possessing at least 80 percent of the total combined voting power of all
classes of stock entitled to vote and (2) at least 80 percent of the value of
all of the stock.(29) The Ownership Requirement must be satisfied on the date of
adoption of the plan of liquidation and at all times until the property is
distributed to the distributee corporation.

         Fuel Tech Delaware will own all of the outstanding stock of each of FTI
and PPI on the date of adoption of the FTI Plan of Merger and the PPI Plan of
Merger,




----------
(29) Pursuant to section 1504(a)(4), certain nonconvertible, nonvoting stock
that is limited and preferred as to dividends is excluded from the 80 percent
vote and value test.



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respectively, and will continue to own all of the stock of each on the date of
the Liquidations. Therefore, the Ownership Requirement should be satisfied with
respect to each of the Liquidations.(30)

         3.   COMPLETE LIQUIDATION REQUIREMENT

          Section 332 applies only if a subsidiary distributes property "in
complete cancellation or redemption of all of its stock."(31) Treas. Reg.
section 1.332-6 requires that the plan of liquidation be adopted by each of the
corporations that are a party to the liquidation, and the adoption must be shown
by the acts of its duly constituted responsible officers and appear upon the
official records of each such corporation.

          Section 332 applies only to those cases in which the recipient
corporation receives at least partial payment for the stock which it owns in the
liquidating corporation.(32) In general, this requirement means that the
liquidating corporation must be solvent. In Commissioner v. Spaulding
Bakeries(33) and H.K. Porter Company v. Commissioner,(34) the courts held that
each of the relevant transactions did not qualify as a




----------
(30) In Rev. Rul. 70-106, the IRS found that a corporation's redemption of its
stock in order to cause its majority shareholder to satisfy the Ownership
Requirement, constituted the adoption of a plan of liquidation, and as a result,
held that the Ownership Requirement was not satisfied on that date. FTNV has
represented that neither FTI nor PPI has redeemed any of its stock within the
three years preceding its liquidation, and therefore, Rev. Rul. 70-106 should
not apply to affect satisfaction of the Ownership Requirement.

(31) Section 332(b)(2) and (3).

(32) Treas. Reg. section 1.332-2(b).

(33) 252 F.2d 693 (2nd Cir. 1958).

(34) 87 T.C. 689.



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Board of Directors
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section 332 liquidation because the distributee corporation received payment
only with respect to its preferred stock interest in the distributing
corporation and received no payment in exchange for its common stock.(35)

          Historically, when a parent corporation has caused a wholly owned
subsidiary to liquidate, and, as part of the same plan, the parent corporation
reincorporates all or a portion of the liquidated subsidiary's assets in a newly
formed subsidiary, the IRS has asserted that the liquidation and subsequent
incorporation should be recharacterized as an asset transfer by the liquidated
subsidiary to the newly formed subsidiary. In Rev. Rul. 76-429,(36) the IRS
ruled that there was no complete liquidation where, following the liquidation of
a corporation, 52 percent of the assets were reincorporated in a new
corporation. The IRS instead determined that the transaction should be taxed as
if the corporation that purported to liquidate had merely distributed 48 percent
of its assets to its shareholders and continued its existence in the form of a
new corporation. The courts have also taken a similar view. In Telephone
Answering Service Co. v. Commissioner,(37) a corporation sold an investment. The
corporation then contributed its remaining operating assets to a new corporation
and liquidated, distributing the sale proceeds and the stock of the new
corporation to its shareholders. The Tax Court determined that no




-----------
(35) See also Treas. Reg. section 1.332-2(b). In Rev. Rul. 68-602, 1968-2 C.B.
135, the IRS held that a parent corporation's cancellation of debt owed to it
from its subsidiary immediately prior to the liquidation of the subsidiary was
transitory and therefore, disregarded. FTNV has represented that FTI and PPI are
solvent without regard to the cancellation of any intercompany debt owed from
FTI or PPI to FTNV.

(36) 1976-2 C.B. 97.

(37) 63 T.C. 423 (1974).


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Board of Directors
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complete liquidation had occurred because the operating assets were
reincorporated in the new corporation.

          FTI and PPI should each meet the elements necessary to satisfy the
Complete Liquidation Requirement. FTI and PPI each adopted a plan of merger by
action of its board of directors and such plans should constitute the adoption
of a plan of liquidation. FTNV has represented that FTI and PPI will be solvent
immediately before each liquidates and therefore, FTI and PPI should each be
deemed to distribute its property to Fuel Tech Delaware in at least partial
payment for its common stock. Finally, FTNV has represented that none of the
assets of either FTI nor PPI will be reincorporated, and thus, the
liquidation-reincorporation authorities should not prevent either of the
Liquidations from qualifying as a complete liquidation. Therefore, each of the
Liquidations should satisfy the Complete Liquidation Requirement.

         4.   TIMING REQUIREMENT

         Pursuant to section 332(b)(2), a liquidation will qualify as a tax-free
liquidation under section 332 if the transfer of property in complete
liquidation occurs within the taxable year. Alternatively, section 332(b)(3)
provides rules for a series of liquidating distributions extending beyond one
year. In this case, all of the assets of FTI and PPI will be transferred to Fuel
Tech Delaware on the date that the merger of each corporation with and into Fuel
Tech Delaware is effected under the relevant state merger statute, and as a
result, each of the Liquidations should satisfy the Timing Requirement.



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Board of Directors
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5.       OPERATION OF SECTION 332

         Because each of the Liquidations meets the Ownership, Complete
Liquidation, and Timing Requirements of section 332, the following provisions
should apply to determine the tax consequences of each of the Liquidations.

                          A. TREATMENT OF FTI AND PPI

         Section 337(a) provides that no gain or loss is recognized by the
liquidating corporation on the distribution to an "80-percent distributee" of
any property in a complete liquidation to which section 332 applies. Section
337(c) provides that for purposes of section 337, the term "80-percent
distributee" means only a corporation that meets the Ownership Requirement
specified in section 332(b) (without regard to any consolidated return
regulation). In addition, section 337(b) provides that if a corporation is
liquidated in a liquidation to which section 332 applies, and on the date of
adoption of the plan of liquidation, the liquidating corporation was indebted to
its 80-percent distributee, any transfer of property in satisfaction of such
indebtedness is treated as a distribution to such distributee in the liquidation
and thus is tax-free to the liquidating corporation.(38)

         Fuel Tech Delaware will own all of the stock of FTI and PPI on the date
each liquidates into Fuel Tech Delaware (thus satisfying the Ownership
Requirement), and consequently neither FTI nor PPI should recognize any gain or
loss on the property distributed to Fuel Tech Delaware with respect to both Fuel
Tech Delaware's stock as




----------
(38) See also Treas. Reg. section 1.332-7.


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Board of Directors
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well as any obligation owed from FTI to FTNV, if such an obligation exists at
the time of the FTI Liquidation.

                       B. TREATMENT OF FUEL TECH DELAWARE

                              (I) NO GAIN OR LOSS

         Section 332 provides that a corporation that holds stock meeting the
Ownership Requirement does not recognize gain or loss upon the receipt of
property distributed in complete liquidation of another corporation. However,
Treas. Reg. section 1.332-7 provides that if any of the liquidating subsidiary's
assets are transferred in satisfaction of an obligation owed to the 80-percent
distributee, any gain or loss realized by the parent corporation is recognized
at the time of the liquidation.

         Because Fuel Tech Delaware will own all of the stock of each of FTI and
PPI at the time of the liquidation of each and because FTNV has represented that
the fair market value of any obligations owed by FTI to Fuel Tech Delaware (if
such an obligation exists at the time of the FTI Liquidation) will not exceed
the basis of such obligations (and thus there will be no gain inherent in such
obligations), Fuel Tech Delaware should recognize no gain or loss upon the
receipt of property in each of the Liquidations.

                         (II) BASIS AND HOLDING PERIOD

         Section 334(b) provides that in the case of property received by a
corporate distributee in a section 332 liquidation, the basis of the property in
the hands of the


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Board of Directors
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distributee is the same as it would be in the hands of the transferor. Fuel Tech
Delaware should, therefore, take a carryover basis in the property it receives
from FTI and PPI.

         Section 1223(2) provides that in determining the period for which the
taxpayer has held property, however acquired, there shall be included the period
for which such property was held by any other person, if under this chapter such
property has, for the purpose of determining gain or loss from a sale or
exchange, the same basis in whole or in part in such taxpayer's hands as it
would have in the hands of such other person. Consequently, because Fuel Tech
Delaware should have a carryover basis in the property it acquires from FTI and
PPI, its holding period for each asset acquired should include the period during
which such asset was held by FTI or PPI.

                       (III) CARRYOVER OF TAX ATTRIBUTES

         Section 381(a) provides that in the case of the acquisition of assets
of a corporation by another corporation in a distribution to which section 332
applies, the acquiring corporation shall succeed to and take into account, as of
the close of the day of distribution or transfer, the items enumerated in
section 381(c).(39) As discussed above, section 381(c) includes, among other
items, net operating loss carryforwards, earnings and profits, and capital loss
carryovers.

         Under section 381(c)(2)(A), the earnings and profits of the transferor
corporation are deemed to have been received or incurred by the acquiring
corporation as of the close



----------
(39) See also Treas. Reg. section 1.381(a)-1(b)(i).



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of the date of the distribution or transfer. Pursuant to Treas. Reg. section
1.381(c)(2)-1(a)(2), if each of the transferor and acquiring corporations has
positive accumulated earnings and profits as of the close of the date of the
distribution or transfer (or if each has a deficit in accumulated earnings and
profits as of such date), then the transferor corporation's earnings and profits
become part of the acquiring corporation's earnings and profits as of the close
of the date of the distribution or transfer. On the other hand, if one
corporation has positive accumulated earnings and profits as of the close of the
date of distribution or transfer and the other corporation has a deficit in
accumulated earnings and profits as of such time, then the deficits can be used
only to offset earnings and profits accumulated by the other corporation after
the date of distribution or transfer.(40)

         FTI has represented that it expects to have a deficit in its current
and accumulated earnings and profits as of the date of the FTI Liquidation. This
deficit should carry over to Fuel Tech Delaware as of the close of the date of
the FTI Liquidation and should be combined with Fuel Tech Delaware's existing
accumulated earnings and profits deficit as of that time.

         Likewise, PPI's earnings and profits (or deficit therein) should also
carry over to Fuel Tech Delaware as of the close of the date of the PPI
Liquidation. If PPI has positive earnings and profits as of the date of the PPI
Liquidation, such positive earnings and profits may not be used to offset any
deficits of Fuel Tech Delaware (including deficits generated by FTI) prior to
the date of the PPI Liquidation. On the other hand, if PPI has negative earnings
and profits as of the date of the PPI Liquidation, PPI's deficit in




----------
(40) Treas. Reg. section 1.381(c)(2)-1(a)(2).



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earnings and profits should be combined with Fuel Tech Delaware's accumulated
deficit in earnings and profits as of the close of the date of the PPI
Liquidation.

         Section 381(b) provides that except in the case of an acquisition in
connection with an F reorganization, the taxable year of the distributor or
transferor corporation shall end on the date of distribution or transfer.
Therefore, the tax years of FTI and PPI should close as of the date of the
respective liquidation of each.

                                    * * * * *

          The opinion levels expressed in this letter assume that the issues
addressed herein are litigated and ultimately decided by a court on their
merits. Subsequent developments in these areas (for which we have no
responsibility to advise you) could have a material effect on this opinion, and
may render this opinion invalid or necessitate (upon your request) a
reconsideration of the opinion. The opinion expressed herein is not binding on
the IRS or the courts and should not be considered a representation, warranty,
or guarantee that the IRS or the courts will concur with our opinion.
Furthermore, any issues which may arise as a result of the series of events
described herein but which are not addressed herein, including tax return
reporting and tax shelter disclosure issues, are outside the scope of our
opinion.

          Deloitte Tax LLP hereby acknowledges and agrees that there are no
conditions of confidentiality associated with the transactions described herein.
Thus, FTNV and its employees, representatives or agents are authorized to
disclose to any and all persons, without limitation of any kind, the structure
and tax aspects of the transaction described


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Board of Directors
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herein and all materials of any kind (including opinions or other tax analyses)
that Deloitte Tax LLP may provide with respect to the structure and tax aspects
of the transaction.

          This Opinion is based solely upon:

                 a. the representations, information, documents, and facts that
                    we have included or referenced in the Opinion;

                 b. our assumption that all of FTNV's representations used in
                    our analysis and all of the originals, copies, and
                    signatures of documents reviewed by use are accurate, true,
                    and authentic;

                 c. our assumption that there will be timely execution and
                    delivery of and performance as required by the
                    representations and documents;

                 d. the understanding that only the specific Federal income tax
                    issues and tax consequences opined upon herein are covered
                    by this opinion, and no other federal, state, or local taxes
                    of any kind were considered;

                 e. the law, regulations, cases, rulings, and other tax
                    authority in effect as of the date of this letter. If there
                    are changes in or to the foregoing tax authorities (for
                    which we shall have no responsibility to advise you), such
                    changes may result in our opinion being rendered invalid or
                    necessitate (upon your request) a reconsideration of the
                    Opinion;

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Board of Directors
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                 f. your understanding that this Opinion is not binding on the
                    IRS or the courts and should not be considered a
                    representation, warranty, or guarantee that the IRS or the
                    courts will concur with our Opinion.

          Please do not hesitate to contact us if you need any clarification or
if you have any additional questions regarding this matter.

Very truly yours,

/s/ Deloitte Tax LLP
Deloitte Tax LLP







</TEXT>
</DOCUMENT>
