Document:

Exhibit 10.1

     THIS DISTRIBUTION AGREEMENT is made and entered into as of the 17th day of
March 2003 by Earth Sciences, Inc., a Colorado corporation ("ESI") and ADA-ES,
Inc., a Colorado corporation ("ADA-ES").

                                    RECITALS

          WHEREAS, the Board of Directors of ESI has deemed it appropriate and
     advisable, to:

          (a) separate and divide the existing businesses of ESI so that the
     ADA-ES Business (as defined below) shall be owned directly by ADA-ES, and

          (b) distribute, following such separation and division, as a dividend
     to the holders of shares of common stock, $.01 par value per share, of ESI
     (the "ESI Common Stock") all of the outstanding shares of common stock, no
     par value, of ADA-ES (the "ADA-ES Common Stock") held by ESI;

     WHEREAS, ESI and ADA-ES have determined that it is necessary and desirable
to set forth the principal corporate transactions required to effect such
separation, division and distribution and to set forth other agreements that
will govern certain other matters prior to and following such separation,
division and distribution.

     NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereto hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.01. General. Unless otherwise defined herein or unless the
context otherwise requires, the following terms will have the following meanings
(such meanings to be equally applicable to the singular and plural forms of the
terms defined).

     "Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or any arbitration
tribunal.

     "ADA-ES" means ADA-ES, Inc., a Colorado corporation, the ADA-ES
Subsidiaries and the corporations, partnerships, joint ventures, investments and
other entities that represent equity investments of ADA-ES or any of the ADA-ES
Subsidiaries following the consummation of the Corporate Restructuring
Transactions and the Distribution.

     "ADA-ES Assets" means, collectively, all of the following rights and assets
that are owned by ESI and or any of its Subsidiaries as of the close of business
on the Distribution Date:

          (i) the capital stock of the ADA-ES Subsidiaries;

          (ii) all of the assets included on the ADA-ES Business Pro Forma
     Balance Sheet that are owned by ESI or any of its Subsidiaries as of the
     close of business on the Distribution Date;

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          (iii) all of the assets and rights expressly allocated to ADA-ES or
     any of the ADA-ES Subsidiaries under this Agreement or any of the Ancillary
     Agreements; and

          (iv) any other asset acquired by ESI or any of its Subsidiaries from
     the date of the ADA-ES Business Pro Forma Balance Sheet to the close of
     business on the Distribution Date that is owned by ESI or any of its
     Subsidiaries as of the close of business on the Distribution Date and that
     is of a nature or type that would have resulted in such asset being
     included as an asset on the ADA-ES Business Pro Forma Balance Sheet had it
     been acquired on or prior to the date of the ADA-ES Business Pro Forma
     Balance Sheet, determined on a basis consistent with the determination of
     the assets included on the ADA-ES Business Pro Forma Balance Sheet.

     "ADA-ES Business" means the businesses that, after giving effect to the
Corporate Restructuring Transactions, are conducted by:

          (i) ADA-ES and its Subsidiaries or any of the other members of the
     ADA-ES Group; and

          (ii) any business entity acquired or established by or for ESI or
     ADA-ES or any of their Subsidiaries between the date of this Agreement and
     the close of business on the Distribution Date that is engaged in, or
     intends to engage in, any business that is of a type or nature that would
     have resulted in such business being included either as a Subsidiary or an
     asset of ADA-ES on the ADA-ES Business Pro Forma Balance Sheet had it been
     acquired or established on or prior to the date of the ADA-ES Business Pro
     Forma Balance Sheet, determined on a basis consistent with the
     determination of the Subsidiaries and assets included on the ADA-ES
     Business Pro Forma Balance Sheet.

     "ADA-ES Common Shares" means the shares of ADA-ES Common Stock owned by ESI
after giving effect to the stock dividend provided for in Section 2.02 hereof.

     "ADA-ES Common Stock" has the meaning ascribed to such term in the Recitals
to this Agreement.

     "ADA-ES Group" means ADA-ES, the ADA-ES Subsidiaries and the corporations,
partnerships, joint ventures, investments and other entities that represent
equity investments of ADA-ES or any of the ADA-ES Subsidiaries following the
consummation of the Corporate Restructuring Transactions and the Distribution.

     "ADA-ES Indemnified Parties" means:

          (i) ADA-ES and each Affiliate thereof after giving effect to the
     Corporate Restructuring Transactions and the Distribution; and

          (ii) each of the respective past, present and future directors,
     officers, employees and agents of any of the entities described in the
     immediately preceding clause (i) and each of the heirs, executors,
     successors and assigns of any of such directors, officers, employees and
     agents.

     "ADA-ES Information Statement" means the Information Statement or
Registration Statement relating to ADA-ES and the transactions contemplated
hereby to be distributed to holders of ESI Common Stock pursuant to the terms of
this Agreement.

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     "ADA-ES Liabilities" means, collectively, all of the Liabilities of ADA-ES,
the ADA-ES Subsidiaries and each of the other members of the ADA-ES Group after
giving effect to the Corporate Restructuring Transactions, the Distribution and
the transactions contemplated under the Debt and Cash Allocation Agreement,
including, without limitation:

          (i) all of the Liabilities included on the ADA-ES Business Pro Forma
     Balance Sheet that remain outstanding as of the close of business on the
     Distribution Date;

          (ii) all other Liabilities that are incurred or which accrue or are
     accrued at any time on, prior to or after the date of the ADA-ES Business
     Pro Forma Balance Sheet and that arise or arose out of, or in connection
     with, the ADA-ES Assets, the ADA-ES Business or the Prior ADA-ES
     Businesses, determined on a basis consistent with the determination of
     Liabilities of ADA-ES on the ADA-ES Business Pro Forma Balance Sheet;

          (iii) all of the Liabilities of ADA-ES, the ADA-ES Subsidiaries or any
     of the other members of the ADA-ES Group under, or to be retained or
     assumed by ADA-ES, any ADA-ES Subsidiary or any of the other members of the
     ADA-ES Group pursuant to this Agreement or any of the Ancillary Agreements;

          (iv) all the Liabilities of the parties hereto or their respective
     Subsidiaries (whenever arising whether prior to, on or following the
     Distribution Date) arising out of or in connection with or otherwise
     relating to the management or conduct before or after the Distribution Date
     of the ADA-ES Business;

          (v) ADA-ES Securities Liabilities; and

          (vi) Securities Liabilities arising out of events occurring after the
     Distribution Date and relating to the ADA-ES Business.

     "ADA-ES Pro Forma Balance Sheet" means the Pro Forma Consolidated Balance
Sheet for ADA-ES and the ADA-ES Subsidiaries as of December 31, 2002 attached
hereto as Exhibit G.

     "ADA-ES Records" has the meaning ascribed to such term in Section 6.01(a)
hereof.

     "ADA-ES Registration Statement" or "Registration Statement" means the
Registration Statement on Form 10-SB to be filed with the Commission pursuant to
the requirements of Section 12 of the Exchange Act and the rules and regulations
thereunder in order to register the ADA-ES Common Stock under Section 12(b) of
the Exchange Act.

     "ADA-ES Securities Liabilities" means any and all Securities Liabilities
arising out of, or in connection with, or relating in whole or in part to any of
the following: (i) the ADA-ES Registration Statement; (ii) the ADA-ES
Information Statement; (iii) any of the information, data (financial or
otherwise) or disclosures in (or any alleged failure to set forth certain
information, data or disclosures) in the ADA-ES Registration Statement or ADA-ES
Information Statement irrespective of (A) who authored, prepared or provided
such information, data or disclosures (or, as the case may be, the section or
discussion in which certain information, data or disclosure is alleged to have
been omitted), or (B) the form in which, or medium through which (e.g.,
verbally, in writing, etc.), such information, data, disclosures, discussion or
section were provided.

     "ADA-ES Subsidiaries" means the Subsidiaries listed in Exhibit H hereto.

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<PAGE>

     "Affiliate" means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the Person specified.

     "Agent" means Computershare Trust Company, Inc., or such other trust
company or bank designated by ESI, who shall act as agent for the holders of ESI
Common Stock in connection with the Distribution.

     "Agreement" means this Distribution Agreement by and between ESI and
ADA-ES, including any amendments hereto and each Schedule and Exhibit attached
hereto.

     "Ancillary Agreement" means all of the written agreements, instruments,
understandings, assignments or other arrangements (other than this Agreement)
entered into by the parties hereto or any other member of their respective
Groups in connection with the Corporate Restructuring Transactions, the
Distribution and the other transactions contemplated hereby or thereby,
including, without limitation, the following:

          (i) the Debt and Cash Allocation Agreement;

          (ii) the Insurance Agreement;

          (iii) the Conveyancing and Assumption Instruments;

          (iv) the Benefits and Pension Plan Agreement;

          (v) the Tax Sharing Agreement;

          (vi) the Transition Services Agreement; and

          (vii) the Transition Trademark License.

     "Benefits and Pension Plan Agreement" means the Benefits and Pension Plan
Agreement by and between ESI and ADA-ES, which agreement shall be entered into
on or prior to the Distribution Date in the form attached hereto as Exhibit A.

     "Books and Records" means all books, records, manuals, agreements and other
materials (in any form or medium), including without limitation, all mortgages,
licenses, indentures, contracts, financial data, customer lists, marketing
materials and studies, advertising materials, price lists, correspondence,
distribution lists, supplier lists, production data, sales and promotional
materials and records, purchasing materials and records, personnel records,
manufacturing and quality control records and procedures, blue prints, research
and development files, records, data and laboratory books, accounts records,
sales order files, litigation files, computer files, microfiche, tape recordings
and photographs.

     "CBCA" means the Colorado Business Corporations Act.

     "Code" means the Internal Revenue Code of 1986, as amended, or any
successor law.

     "Commission" means the United States Securities and Exchange Commission.

     "Consents" has the meaning ascribed to such term in Section 2.07 hereof.

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<PAGE>

     "Conveyancing and Assumption Transactions" means, collectively, the various
written agreements, instruments and other documents to be entered into to effect
the Corporate Restructuring Transactions or to otherwise effect the transfer of
assets and the assumption of Liabilities in the manner contemplated by this
Agreement, the Ancillary Agreements and the Corporate Restructuring
Transactions.

     "Corporate Restructuring Transactions" means, collectively, (a) each of the
distribution, transfers, conveyances, contributions, assignments and other
transactions described and set forth in Exhibit B attached hereto, and (b) such
other distribution, transfers, conveyances, contributions, assignments and other
transactions (so long as such other distribution, transfers, conveyances,
contributions, assignments and other transactions do not, individually or in the
aggregate, adversely affect the ESI Business (other than to a de minimis extent)
that may be required to be accomplished, effected or consummated by ESI, ADA-ES
or any of their respective Subsidiaries and Affiliates in order to separate and
divide, in a series of transactions that, to the extent intended to qualify for
tax-free transactions under the Code, shall qualify for tax-free treatment under
the Code, the existing businesses of ESI so that, except as otherwise expressly
set forth in Exhibit B hereto:

          (i) assets, liabilities and business necessary for the continuing
     operation of the ADA-ES Business shall be owned, directly and indirectly,
     by ADA-ES:

          (ii) the businesses, assets and liabilities of ESI that remain after
     the separations and divisions described in clause (i) above, including,
     without limitation, the assets, liabilities and business necessary for the
     continuing operation of the ESI Business, are, after giving effect to the
     Distribution, owned, directly and indirectly, by ESI.

     "Debt and Cash Allocation Agreement" means the Debt and Cash Allocation
Agreement by and between ESI and ADA-ES, which agreement shall be entered into
on or prior to the Distribution Date in the form attached hereto as Exhibit C,
except for such changes or modifications thereto that do not, individually or in
the aggregate, adversely affect the ESI Business (other than to a de minimis
extent).

     "Distribution" means the distribution on the Distribution Date as a
dividend to holders of record of shares of ESI Common Stock as of the
Distribution Record Date of all of the outstanding ADA-ES Common Shares owned by
ESI on the basis provided in Section 3.02 hereof.

     "Distribution Date" means such date as may hereafter be determined by ESI's
Board of Directors as the date on which the Distribution shall be effected.

     "Distribution Record Date" means the close of business on the date
determined by the Board of Directors of ESI for the purpose of determining the
holders of record of ESI Common Stock entitled to participate in the
Distribution.

     "Environmental Laws" means any and all federal, state, local and foreign
statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions (including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.ss. 9601,
et seq.), whether now or hereafter in existence, relating to the environment,
natural resources or human health and safety or endangered or threatened species
of fish, wildlife and plants or to emissions, discharges or releases of
pollutants, contaminants, petroleum a petroleum products, chemicals or toxic or
hazardous substances or waste into the environment, including, without
limitation, ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,

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<PAGE>

disposal, transport or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals or toxic or hazardous substances or waste or the
cleanup or other remediation thereof.

     "ESI" means Earth Sciences, Inc., a Colorado corporation.

     "ESI Assets" means, collectively, all the rights and assets owned by ESI or
any of its Subsidiaries as of the close of business on the Distribution Date
other than the ADA-ES Assets and the capital stock of ADA-ES, including without
limitation:

          (i) the capital stock of the ESI Subsidiaries;

          (ii) all of the assets included on the ESI Business Pro Forma Balance
     Sheet that are owned by ESI and its Subsidiaries as of the close of
     business on the Distribution Date and any other asset acquired by ESI or
     any of its Subsidiaries from the date of the ESI Business Pro Forma Balance
     Sheet to the close of business on the Distribution Date that is owned by
     ESI and its Subsidiaries as of the close of business on the Distribution
     Date and that is of a type or nature that would have resulted in such asset
     being included as an asset on the ESI Business Pro Forma Balance Sheet had
     it been acquired on or prior to the date of the ESI Business Pro Forma
     Balance Sheet, determined on a basis consistent with the determination of
     assets included on the ESI Business Pro Forma Balance Sheet; and

          (iii) all of the assets and rights expressly allocated to ESI or any
     of the Subsidiaries under this Agreement or any of the Ancillary
     Agreements.

     "ESI Business" means the businesses (other than the ADA-ES Business) that,
after giving effect to the Corporate Restructuring Transactions, are or were
conducted by:

          (i) ESI, the ESI Subsidiaries or any of the other members of the ESI
     Group;

          (ii) any other division, Subsidiary or investment of ESI, or any ESI
     Subsidiary or any of the other members of the ESI Group managed or operated
     or in existence as of the date of this Agreement or any prior time, unless
     such other division, Subsidiary or investment is expressly included in the
     ADA-ES Group immediately after giving effect to the Corporate Restructuring
     Transactions; and

          (iii) any business entity acquired or established by or for ESI or any
     of the ESI Subsidiaries between the date of this Agreement and the close of
     business on the Distribution Date that is engaged in, or intends to engage
     in, any business that is of a type or nature that would have resulted in
     such business being included either as a ESI Subsidiary or an asset of ESI
     on the ESI Business Pro Forma Balance Sheet had it been acquired or
     established on or prior to the date of the ESI Business Pro Forma Balance
     Sheet, determined on a basis consistent with the determination of the
     Subsidiaries and assets included on the ESI Business Pro Forma Balance
     Sheet.

     "ESI Pro Forma Balance Sheet" means the Pro Forma Consolidated Balance
Sheet for ESI and the ESI Subsidiaries as of December 31, 2002 attached hereto
as Exhibit E.

     "ESI Common Stock" has the meaning ascribed to such term in the Recitals to
this Agreement.

     "ESI Corporate Records" has the meaning ascribed to such term in Section
6.01(a) hereof.

                                        6

<PAGE>

     "ESI Group" means ESI, the ESI Subsidiaries and the corporations,
partnerships, joint ventures, investments and other entities that represent
equity investments of ESI or any of the ESI Subsidiaries following consummation
of the Corporate Restructuring Transactions and the Distribution.

     "ESI Holders" means the holders of record of ESI Common Stock as of the
Distribution Record Date.

     "ESI Indemnified Parties" means:

          (i) ESI, the ESI Subsidiaries and each Affiliate thereof after giving
     effect to the Corporate Restructuring Transactions and the Distribution;
     and

          (ii) each of the respective past, present and future directors,
     officers, employees and agents of any of the entities described in the
     immediately preceding clause (i) and each of the heirs, executors,
     successors and assigns of such directors, officers, employees and agents.

     "ESI Liabilities" means, collectively, all of the Liabilities of ESI and
the ESI Subsidiaries and each of the other members of the ESI Group remaining
after giving effect to the Corporate Restructuring Transactions, the
Distribution and the transactions contemplated under the Debt and Cash
Allocation Agreement, including without limitation:

          (i) all of the Liabilities included on the ESI Business Pro Forma
     Balance Sheet that remain outstanding as of the close of business on the
     Distribution Date;

          (ii) all Liabilities that are incurred or that otherwise accrue or are
     accrued at any time on, prior to or after the date of the ESI Business Pro
     Forma Balance Sheet and that arise or arose out of, or in connection with,
     the ESI Assets or the ESI Business, determined on a basis consistent with
     the determination of Liabilities of ESI included on the ESI Business Pro
     Forma Balance Sheet;

          (iii) all of the Liabilities of ESI, the ESI Subsidiaries or any of
     the other members of the ESI Group or to be retained or assumed by ESI, any
     ESI Subsidiary or any of the other members of the ESI Group pursuant to the
     Corporate Restructuring Transactions, this Agreement or any of the
     Ancillary Agreements;

          (iv) all of the Liabilities of the parties hereto or their respective
     Subsidiaries (whenever arising whether prior to, on or following the
     Distribution Date) arising out of or in connection with or otherwise
     relating to the management or conduct before or after the Distribution Date
     of the ESI Business;

          (v) all other Liabilities of ESI, the ESI Subsidiaries or any of the
     other members of the ESI Group (that do not constitute ADA-ES Liabilities),
     which other Liabilities of ESI, the ESI Subsidiaries or any of the other
     members of the ESI Group shall include, without limitation, any and all
     Liabilities arising out of or relating to any Action or Third Party Claim
     by any Governmental Authority or any other Person that is based on any
     alleged breach of fiduciary duty by the Board of Directors of ESI or any
     member thereof, or any ESI stockholder derivative suit or other similar
     Actions;

          (vi) Securities Liabilities arising out of events occurring prior to
     the Distribution Date, and Securities Liabilities arising out of events
     occurring after the Distribution Date and relating to the ESI.

                                        7

<PAGE>

     "ESI Records" has the meaning ascribed to such term in Section 6.01(b)
hereof.

     "ESI Subsidiaries" means the Subsidiaries of ESI set forth in Exhibit F
hereto and all other Subsidiaries of ESI other than ADA-ES or its Subsidiaries.

     "ESI Trademarks and Trade Names" means all trademarks, service marks, and
trade names containing "ESI" or variations thereof, along with their respective
applications and registrations wherever used or registered.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Exchange Act File Material" means the Registration Statement, as amended
at the time it was declared effective under the Exchange Act, the related
Information Statement or any amendment or supplement thereto, the related letter
of transmittal, any related stockholder communication, any other exhibits to any
of the foregoing and any amendment or supplement thereto, in each case including
all information incorporated by reference therein.

     "GAAP" means United States generally accepted accounting principles and
practices, as in effect on the date of this Agreement, as promulgated by the
Financial Accounting Standards Board and its predecessors.

     "Governmental Authority" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.

     "Indemnifiable Losses" means, with respect to any Person, any and all
losses, liabilities, penalties, claims, damages, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees, investigation
expenses and any and all other out-of-pocket expenses, but excluding any
punitive or consequential damages) or other Liabilities whatsoever that are
assessed, imposed, awarded against, incurred or accrued by such Person either
(a) in investigating, preparing for, defending against or otherwise arising out
of or in connection with any Actions, any potential or threatened Actions or any
Third Party Claims for which such Person would be entitled to indemnification
under Article VII hereof, or (b) in respect of any other event, occurrence or
matter for which such Person would be entitled to indemnification under Article
VII hereof, in each case whether accrued or incurred on, before or after the
date of this Agreement.

     "Indemnifying Party" has the meaning ascribed to such term in Section
7.03(a) hereof.

     "Indemnified Party" has the meaning ascribed to such tern in Section
7.03(a) hereof.

     "Information Statement" means the ADA-ES Information Statement.

     "Insurance Agreement" means the Insurance Agreement by and between ESI and
ADA-ES, which agreement shall be entered into on or prior to the Distribution
Date in the form attached hereto as Exhibit D except for such changes or
modifications thereto that do not, individually or in the aggregate, adversely
affect the ESI Business other than to a de minimis extent.

     "Insurance Proceeds" means, with respect to any insured party, those
monies, net of any applicable premium adjustment, retrospectively-rated premium,
deductible, retention, or cost of reserve paid or held by or for the benefit of
such insured, which are either.

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<PAGE>

          (i) received by an insured from an insurance carrier, or

          (ii) paid by an insurance carrier on behalf of an insured.

     "Law" means all laws, statutes and ordinances and all regulations, rules
and other pronouncements of Governmental Authorities having the effect of law of
the United States, any foreign country, or any domestic or foreign state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality, or any Governmental Authority thereof.

     "Liabilities" means any and all debts, liabilities, obligations,
responsibilities, response actions, losses, damages (whether compensatory,
punitive or treble), fines, penalties and sanctions, absolute or contingent,
matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint,
several or individual, asserted or unasserted, accrued or unaccrued, known or
unknown, whenever arising, including, without limitation, those arising under or
in connection with any Law (including any Environmental Law), Action, threatened
Action, order or consent decree of any Governmental Authority or any award of
any arbitration tribunal, and those arising under any contract, guarantee,
commitment or undertaking, whether sought to be imposed by a Governmental
Authority, private party, or party to this Agreement, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
or otherwise, and including any costs, expenses, interest, attorneys' fees,
disbursements and expense of counsel, expert and consulting fees and costs
related thereto or to the investigation or defense thereof.

     "OTCBB" means the OTC Bulletin Board exchange.

     "Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or other
entity, or any government, or any agency or political subdivision thereof.

     "Prior ADA-ES Businesses" means, collectively, all divisions, Subsidiaries,
other business entities or investments of ESI (or one of its Subsidiaries) that,
at any time prior to the date of the ADA-ES Business Pro Forma Balance Sheet,
were included in the ADA-ES segments for purposes of segment reporting in any of
ESI's Annual Reports on Form 10-KSB, and were sold, transferred, otherwise
disposed of or discontinued prior to such date.

     "Privilege" has the meaning ascribed to such term in Section 6.07(a)
hereof.

     "Privileged Information" has the meaning ascribed to such term in Section
6.07(a) hereof.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Securities Liabilities" means any and all losses, liabilities, penalties,
claims, damages, demands, costs or expenses or other Liabilities whatsoever that
are assessed, imposed, awarded against, incurred or accrued by a Person arising
out of or relating in whole or in part to any Action, any potential or
threatened Action or any Third Party Claim (or potential or threatened Third
Party Claim) by any Governmental Authority or any other Person that is based on
any violations or alleged violations of the Securities Act, Exchange Act, any of
the rules or regulations of the Commission promulgated under the Securities Act
or Exchange Act, or any other securities or other similar Law.

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     "Subsidiary" means, with respect to any Person:

          (i) any corporation of which at least a majority in interest of the
     outstanding voting stock (having by the terms thereof voting power under
     ordinary circumstances to elect a majority of the directors of such
     corporation, irrespective of whether or not at the time stock of any other
     class or classes of such corporation shall have or might have voting power
     by reason of the happening of a contingency) is at the time, directly or
     indirectly, owned or controlled by such Person or by such Person and one or
     more of its Subsidiaries; or

          (ii) any noncorporate entity in which such Person or such Person and
     one or more Subsidiaries of such Person either (a) directly or indirectly,
     as of the date of determination thereof, has at least a majority ownership
     interest, or (b) as of the date of determination is a general partner or an
     entity performing similar functions (e.g., manager of a Limited Liability
     Company or a trustee or a trust).

     "Tax" or "Taxes" means any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers
compensation, unemployment, disability, property, ad valorem, stamp, excise,
occupation, services, sales, use, license, lease, transfer, import, export,
value added, alternative minimum, estimated or other similar tax (including any
fee, assessment or other charge in the nature of or in lieu of any tax) imposed
by any governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax, or additional amounts in respect of the foregoing.

     "Tax Sharing Agreement" means the Tax Sharing Agreement by and between ESI
and ADA-ES which agreement shall be entered into on or prior to the Distribution
Date in the form attached hereto as Exhibit I, except for such changes or
modifications thereto that do not, individually or in the aggregate, adversely
affect the ESI Business other than to a de minimis extent.

     "Termination Date" means the date on which this Agreement is terminated
pursuant to and in accordance with the provisions of Section 8.10 of this
Agreement.

     "Third Party Claim" has the meaning as defined in Section 7.04(a) hereof.

     "Transition Services Agreement" means the Transition Services Agreement by
and between ESI and ADA-ES, which agreement shall be entered into on or prior to
the Distribution Date in the form attached hereto as Exhibit J.

     "Transition Trademark License" has the meaning ascribed to such term in
Section 5.02 hereof.

     SECTION 1.02. References. References to an "Exhibit" or to a "Schedule"
are, unless otherwise specified, to one of the Exhibits or Schedules attached to
this Agreement, and references to a "Section" are, unless otherwise specified,
to one of the Sections of this Agreement.

                                   ARTICLE II

                         PRE-DISTRIBUTION TRANSACTIONS;
                                CERTAIN COVENANTS

     SECTION 2.01. Corporate Restructuring Transactions. On or prior to the
Distribution Date and otherwise in accordance with the terms and provisions set
forth in Exhibit B hereto, ESI and ADA-ES shall, and shall cause each of their

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<PAGE>

respective Subsidiaries to, as applicable, take such actions as are necessary to
cause, effect and consummate the Corporate Restructuring Transactions. ESI and
ADA-ES hereby agree that any one or more of the Corporate Restructuring
Transactions may be modified, supplemented or eliminated; provided such
modification, supplement or elimination (a) is necessary or appropriate to
divide the existing businesses of ESI so that the ADA-ES Business shall be
owned, directly and indirectly, by ADA-ES, and (b) does not, individually or in
the aggregate, adversely affect the ESI Business (other than to a de minimis
extent).

     SECTION 2.02. Pre-Distribution Stock Dividends to ESI. On or prior to the
Distribution Date, ADA-ES shall issue to ESI, as a stock dividend, the number of
shares of ADA-ES Common Stock as is required to effect the Distribution, as
certified by the Agent. In connection therewith, ESI shall deliver to ADA-ES for
cancellation the share certificate (or certificates) currently held by it
representing all ADA-ES Common Stock.

     SECTION 2.03. Articles of Incorporation and Bylaws of ADA-ES. On or prior
to the Distribution Date, ESI and ADA-ES shall take all necessary actions so
that, as of the Distribution Date, the Amended and Restated Articles of
Incorporation and Bylaws of ADA-ES will be substantially in the forms set forth
in Exhibits K and L, respectively.

     SECTION 2.04. Election of Directors of ADA-ES. On or prior to the
Distribution Date, ESI, as the sole or majority stockholder of ADA-ES, shall
take all necessary action so that as of the Distribution Date the directors of
ADA-ES will be as set forth in the ADA-ES Information Statement.

     SECTION 2.05. Transfer and Assignment of Certain Licenses and Permits.

          (a) Licenses and Permits Relating to the ADA-ES Business. On or prior
     to the Distribution Date, or as soon as reasonably practicable thereafter,
     ESI shall (and, if applicable, shall cause any other Person over which it
     has legal or effective direct or indirect control to), duly and validly
     transfer or cause to be duly and validly transferred to the appropriate
     member of the ADA-ES Group (as directed by ADA-ES) all transferable
     licenses, permits and authorizations issued by any Governmental Authority
     that relate to the ADA-ES Business but which are held in the name of any
     member of the ESI Group, or any of their respective employees, officers,
     directors, stockholders or agents.

          (b) Licenses and Permits Relating to the ESI Business. On or prior to
     the Distribution Date, or as soon as reasonably practicable thereafter,
     ADA-ES shall (and, if applicable, shall cause any other Person over which
     it has legal or effective direct or indirect control to), duly and validly
     transfer or cause to be duly and validly transferred to the appropriate
     member of the ESI Group (as directed by ESI) all transferable licenses,
     permits and authorizations issued by any Governmental Authority that relate
     to the ESI Business but which are held in the name of any member of the
     ADA-ES Group, or any of their respective employees, officers, directors,
     stockholders or agents.

     SECTION 2.06. Transfer and Assignment of Certain Agreements:

          (a) Transfer and Assignment of ESI Business Agreements. On or prior to
     the Distribution Date, or as soon as reasonably practicable thereafter, and
     subject to the limitations set forth in this Section 2.06, ADA-ES shall
     (and, if applicable, shall cause any of the other members of its Group over
     which it has legal or effective direct or indirect control to), assign,
     transfer and convey to ESI (or such other member of the ESI Group as ESI
     shall direct) all of its (or such other member of its Group's) right, title
     and interest in and to any and all agreements that relate exclusively to
     the ESI Business or any member of the ESI Group.

                                       11

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          (b) Transfer and Assignment of ADA-ES Business Agreements. On or prior
     to the Distribution Date, or as soon as reasonably practicable thereafter,
     and subject to the limitations set forth in this Section 2.06, ESI shall
     (and, if applicable, shall cause any of the other members of its Group over
     which it has legal or effective direct or indirect control to), assign,
     transfer and convey to ADA-ES (or such other member of the ADA-ES Group as
     ADA-ES shall direct) all of its (or such other member of its Group's)
     right, title and interest in and to any and all agreements that relate
     exclusively to the ADA-ES Business or any member of the ADA-ES Group.

          (c) Joint Agreements. Subject to the provisions of Section 2.06(e)
     below, any agreement to which any party hereto (or any other member of such
     party's Group) is a party that inures to the benefit of both the ESI
     Business and the ADA-ES Business shall be assigned in part, at the expense
     and risk of the assignee, on or prior to the Distribution Date or as soon
     as reasonably practicable thereafter, so that each party (or such other
     member of such party's Group) shall be entitled to the rights and benefits
     inuring to its business under such agreement.

          (d) Obligations of Assignees. The assignee of any agreement assigned,
     in whole or in part, hereunder (an "Assigned") shall, as a condition to
     such assignment, assume and agree to pay, perform, and fully discharge all
     obligations of the assignor under such agreement (whether such obligations
     arose or were incurred prior to, on or subsequent to the Distribution Date
     and irrespective of whether such obligations have been asserted as of the
     Distribution Date) or, in the case of a partial assignment under Section
     2.06(c) above, such Assignee's related portion of such obligations as
     determined in accordance with the terms of the relevant agreement, where
     determinable on the face thereof, and otherwise as determined in accordance
     with the practice of the parties prior to the Distribution. Furthermore,
     the Assignee shall use its commercially reasonable efforts to cause the
     assignor of such agreement to be released from its obligations under the
     assigned agreements.

          (e) No Assignment of Certain Agreements. Notwithstanding anything in
     this Agreement to the contrary, this Agreement shall not constitute an
     agreement to assign any agreement, in whole or in part, or any rights
     thereunder if the agreement to assign or attempt to assign, without the
     consent of a third party, would constitute a breach thereof or in any way
     adversely affect the rights of the Assignee thereof until such consent is
     obtained. If an attempted assignment thereof would be ineffective or would
     adversely affect the rights of any party hereto so that the Assignee would
     not, in fact, receive all such rights, the parties hereto will cooperate
     with each other to effect any arrangement designed reasonably to provide
     for the Assignee the benefits of, and to permit the Assignee to assume
     liabilities under, any such agreement, subject to the remaining sentences
     of this Section 2.06(e). There are certain software license agreements held
     in the name of a member of the ADA-ES Group that presently inure to the
     benefit of the ESI Business and the ADA-ES Business. Notwithstanding any
     other provision of this Agreement, each such license agreement shall
     continue to be held by that member of the ADA-ES Group without any
     obligation of any party to cause the assignment of such license agreement,
     or to effect any arrangement to provide such benefit, to the ESI Business
     or the ADA-ES Business, except where the license agreement expressly
     permits the benefits and obligations to be divided among the Businesses or
     as may be negotiated with the licensor by that member of the ADA-ES Group
     and such other parties and the ADA-ES Business shall use commercially
     reasonable efforts to do so.

     SECTION 2.07. Consents. The parties hereto shall use their reasonable
efforts to obtain any third-party consents or approvals that are required to
consummate the Corporate Restructuring Transactions, the Distribution and the
other transactions contemplated herein (the "Consents").

                                       12

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     SECTION 2.08. Other Transactions. On or prior to the Distribution Date (but
in all events prior to the Distribution, ESI and ADA-ES shall have consummated
those other transactions in connection with the Corporate Restructuring
Transactions and the Distribution that are contemplated by the ADA-ES
Information Statement, and not specifically referred to in Sections 2.01 through
2.07 above, subject, however, to the limitations set forth in subparagraph (b)
of Section 2.01 above.

     SECTION 2.09. Election of Officers. On or prior to the Distribution Date,
ESI and ADA-ES shall, as applicable, take all actions necessary and desirable so
that as of the Distribution Date the officers of ADA-ES will be as set forth in
the ADA-ES Information Statement.

     SECTION 2.10. Preparation and Filing of ADA-ES Registration Statement. ESI
and ADA-ES shall prepare or cause to be prepared, and ADA-ES shall file or cause
to be filed with the Commission, the ADA-ES Registration Statement. The ADA-ES
Registration Statement shall include or incorporate by reference the ADA-ES
Information Statement setting forth appropriate disclosure concerning ESI,
ADA-ES, the Distribution and such other matter: as may be required to be
disclosed therein by the provisions of the Exchange Act and the rules and
regulations promulgated thereunder. ESI and ADA-ES shall take all such actions
as may be reasonably necessary or appropriate in order to cause the ADA-ES
Registration Statement to become effective by order of the Commission pursuant
to the Exchange Act.

     SECTION 2.11. State Securities Laws. Prior to the Distribution Date, ESI
and ADA-ES shall take all such action as may be necessary or appropriate under
the securities or Blue Sky laws of states or other political subdivisions of the
United States in order to effect the Distribution.

     SECTION 2.12. Listing Application. Prior to the Distribution Date, ESI and
ADA-ES shall prepare and file with the OTCBB listing applications and related
documents and shall take all such other actions with respect thereto as shall be
necessary or desirable in order to cause the OTCBB to list on or prior to the
Distribution Date, subject to official notice of issuance, the ADA-ES Common
Shares.

     SECTION 2.13. Certain Financial and Other Arrangements.

          (a) Settlement of Intercompany Accounts Between ADA-ES Group and ESI
     Group. All intercompany receivables, payables and loans (other than
     receivables, payables and loans otherwise specifically provided for in any
     of the Ancillary Agreements or hereunder), including, without limitation,
     in respect of any cash balances, any cash balances representing deposited
     checks or drafts for which only a provisional credit has been allowed or
     any cash held in any centralized cash management system, between any member
     of the ADA-ES Group and any member of the ESI Group shall, as of the close
     of business on the Distribution Date, be settled, capitalized or converted
     into ordinary trade accounts, in each case as may be agreed in writing
     prior to the Distribution Date by duly authorized representatives of ESI
     and ADA-ES.

          (b) Operations in Ordinary Course. Except as otherwise provided in
     this Agreement or any Ancillary Agreement, during the period from the date
     of this Agreement through the Distribution Date, ESI and ADA-ES shall, and
     shall cause any entity that is a Subsidiary of such party at any time
     during such period to, conduct its business in a manner substantially
     consistent with current and past operating practices and in the ordinary
     course, including, without limitation, with respect to the payment and
     administration of accounts payable and the collection and administration of
     accounts receivable, the purchase of capital assets and equipment and the
     management of inventories.

                                       13

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     SECTION 2.14. Director, Officer and Employee Resignations. Subject to the
provisions of Section 2.04 and Section 2.09 above:

          (a) Resignations by Directors and Employees of the ESI Group. ESI
     shall cause all of its directors and all employees of the ESI Group to
     resign, effective as of the close of business on the Distribution Date,
     from all boards of directors or similar governing bodies of each member of
     the ADA-ES Group on which they serve, and from all positions as officers or
     employees of any member of the ADA-ES Group, except as otherwise set forth
     in the ADA-ES Information Statement or mutually agreed to in writing on or
     prior to the Distribution Date by ESI and ADA-ES.

          (b) Resignations by Directors and Employees of the ADA-ES Group.
     ADA-ES shall cause all of its directors and all employees of the ADA-ES
     Group to resign, effective as of the close of business on the Distribution
     Date, from all boards of directors or similar governing bodies of each
     member of the ESI Group on which they serve, and from all positions as
     officers or employees of any member of the ESI Group, except as otherwise
     set forth in the ADA-ES Information Statement or mutually agreed to in
     writing on or prior to the Distribution Date by ADA-ES and ESI.

     SECTION 2.15. Transfers Not Effected Prior to the Distribution; Transfers
Deemed Effective as of the Distribution Date. To the extent that any transfers
contemplated by this Article II shall not have been consummated on or prior to
the Distribution Date, the parties hereto shall cooperate (and shall cause each
of their respective Affiliates and each member of their respective Groups over
which they have legal or effective direct or indirect control to cooperate) to
effect such transfers as promptly following the Distribution Date as shall be
practicable. Nothing herein shall be deemed to require the transfer of any
assets or the assumption of any Liabilities, which by their terms or operation
of Law cannot be transferred or assumed; provided, however, that the parties
hereto shall cooperate (and shall cause each of their respective Affiliates and
each member of their respective Groups over which they have legal or effective
direct or indirect control to cooperate) to seek to obtain any necessary
consents or approvals for the transfer of all assets and Liabilities
contemplated to be transferred pursuant to this Article II. In the event that
any such transfer of assets or Liabilities has not been consummated, from and
after the Distribution Date the party retaining such asset or Liability (or, as
applicable, such other member or members of such party's Group) shall hold such
asset in trust for the use and benefit of the party entitled thereto (at the
expense of the party entitled thereto) or retain such Liability for the account
of the party by whom such Liability is to be assumed pursuant hereto, as the
case may be, and take such other action as may be reasonably requested by the
party to whom such asset is to be transferred, or by whom such Liability is to
be assumed, as the case may be, in order to place such party, insofar as is
reasonably possible, in the same position as would have existed had such asset
or Liability been transferred or assumed as contemplated hereby. As and when any
such asset or Liability becomes transferable or assumable, such transfer shall
be effected forthwith. As of the Distribution Date, each party hereto (or, if
applicable, such other members of such party's Group) shall be deemed to have
acquired (or, as applicable, retained) complete and sole beneficial ownership
over all of the assets, together with all rights, powers and privileges incident
thereto, and shall be deemed to have assumed in accordance with the terms of
this Agreement all of the Liabilities, and all duties, obligations and
responsibilities incident thereto, which such party (or any other member of such
party's Group) is entitled to acquire or required to assume pursuant to the
terms of this Agreement.

     SECTION 2.16. Ancillary Agreements. Prior to the Distribution Date, ESI and
ADA-ES shall enter into, and/or where applicable shall cause such other members
of their restive Groups to enter into, (a) the Ancillary Agreements and (b) any
other agreements in respect of the Corporate Restructuring Transactions and the
Distribution as are reasonably necessary or appropriate in connection with the
transactions contemplated hereby and thereby so long as such agreements do not
adversely affect the ESI Business other than to a de minimis extent.

                                       14

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                                   ARTICLE III

                                THE DISTRIBUTION

     SECTION 3.01. ESI Action Prior to the Distribution. Subject to the terms
and conditions set forth herein, ESI shall take, or cause to be taken, the
following acts or actions in connection with, and to otherwise effect in
accordance with the terms of this Agreement, the Distribution.

          (a) Declaration of Distribution and Establishment of Distribution
     Date. The Board of Directors of ESI shall, in its sole discretion and
     subject to and in accordance with the applicable rules of the OTCBB and
     provisions of the CBCA, declare the Distribution and establish the
     Distribution Record Date, the Distribution Date, the date on which ADA-ES
     Common Shares and any cash in lieu of fractional shares shall be mailed to
     the ESI Holders and all appropriate procedures in connection with the
     Distribution to the extent not provided for herein; provided, however, that
     no such action shall create any obligation on the part of ESI to effect the
     Distribution or in any way limit ESI's power of termination as set forth in
     Section 8.10 hereof or alter the consequences of any such termination from
     those specified in such Section.

          (b) Notice to OTCBB. ESI shall, to the extent possible, give the OTCBB
     or other appropriate authority not less than ten days advance notice of the
     Distribution Record Date in compliance with Rule 10b-17 under the Exchange
     Act, as required.

          (c) Mailing of ADA-ES Information Statement. ESI shall, as soon as
     practicable after the ADA-ES Registration Statement shall have been
     declared effective under the Exchange Act, cause the ADA-ES Information
     Statement to be mailed to the ESI Holders.

     SECTION 3.02. The Distribution.

          (a) Duties and Obligations of ESI. Subject to the conditions contained
     herein, on the Distribution Date, but effective immediately following the
     close of business on the Distribution Date, ESI shall:

               (i) deliver to the Agent the share certificates representing the
          ADA-ES Common Shares issued to ESI by ADA-ES pursuant to Section 2.02
          hereof, endorsed by ESI in blank, for the benefit of the ESI Holders;
          and

               (ii) instruct the Agent to distribute, as soon as practicable
          following consummation of the Distribution, to the ESI Holders the
          following:

             (A) one share of ADA-ES Common Stock for every ten shares of ESI
          Common Stock; and

             (B) cash, if applicable, in lieu of fractional shares obtained in
          the manner provided in Section 3.03 hereof.

          (b) Duties and Responsibilities of ADA-ES. ADA-ES shall provide, or
     cause to be provided, to the Agent sufficient certificates representing
     ADA-ES Common Stock in such denominations as the Agent may request in order
     to effect the Distribution. All shares of ADA-ES Common Stock issued
     pursuant to the Distribution will be validly issued, fully paid and
     nonassessable and free of any preemptive (or similar) rights.

                                       15

<PAGE>

     SECTION 3.03. Fractional Shares

          (a) No Fractional Shares. Notwithstanding anything herein to the
     contrary, no certificate or scrip evidencing a fractional share of ADA-ES
     Common Stock shall be issued in connection with the Distribution, and any
     such fractional share interests to which a ESI Holder would otherwise be
     entitled will not entitle such ESI Holder to vote or to any rights of a
     stockholder of ADA-ES. In lieu of any such fractional shares, each ESI
     Holder who, but for the provisions of this Section 3.03, would be entitled
     to receive a fractional share interest of ADA-ES Common Stock pursuant to
     the Distribution shall be paid cash, without any interest thereon, as
     hereinafter provided. ESI shall instruct the Agent to determine the number
     of whole shares and fractional shares of ADA-ES Common Stock allocable to
     each ESI Holder, to aggregate all such fractional shares into whole shares,
     to sell the whole shares obtained thereby in the open market at the then
     prevailing prices on behalf of ESI Holders who otherwise would be entitled
     to receive fractional share interests and to distribute to each such ESI
     Holder his, her or its ratable share of the total proceeds of such sale,
     after making appropriate deductions of the amount required for federal
     income tax withholding purposes and after deducting any applicable transfer
     taxes. All brokers' fees and commissions incurred in connection with such
     sales shall be paid by ADA-ES.

          (b) Unclaimed Stock or Cash. Any ADA-ES Common Stock or cash in lieu
     of fractional shares and dividends or distribution with respect to ADA-ES
     Common Stock that remain unclaimed by any ESI Holder 180 days after the
     Distribution Date shall be returned to ESI and any such ESI Holders shall
     look only to ESI for the ADA-ES Common Stock, cash, if any, in lieu of
     fractional share interests and any such dividends or distribution to which
     they are entitled, subject in each case to applicable escheat or other
     abandoned property laws.

          (c) Beneficial Owners. Solely for purposes of computing fractional
     share interests pursuant to Section 3.03(a), the beneficial owner of shares
     of ESI Common Stock held of record in the name of a nominee will be treated
     as the holder of record of such shares.

                                   ARTICLE IV

                         CONDITIONS TO THE DISTRIBUTION

     SECTION 4.01. Conditions Precedent to the Distribution. The obligation of
ESI to cause the Distribution to be consummated shall be subject, at the option
of ESI, to the fulfillment or waiver, on or prior to the Termination Date, of
each of the following conditions:

          (a) Tax Sharing Agreement. ESI and ADA-ES shall have executed and
     delivered the Tax Sharing Agreement and such agreement shall be in full
     force and effect.

          (b) Benefits and Pension Plan Agreement. ESI and ADA-ES shall have
     executed and delivered the Benefits and Pension Plan Agreement and such
     agreement shall be in full force and effect.

          (c) Insurance Agreement. ESI and ADA-ES shall have executed and
     delivered the Insurance Agreement and such agreement shall be in full force
     and effect.

          (d) Debt and Cash Allocation Agreement. ESI and ADA-ES shall have
     executed and delivered the Debt and Cash Allocation Agreement and such
     agreement shall be in full force and effect.

                                       16

<PAGE>

          (e) Effective Date of Registration Statement. The Registration
     Statement shall have been declared effective by order of the Commission and
     no stop order shall have been entered, and no proceeding for that purpose
     shall have been initiated or threatened by the Commission with respect
     thereto.

          (f) OTCBB Listing. The ADA-ES Common Shares shall have been approved
     for listing on the OTCBB, subject to official notice of issuance.

          (g) Pre-Distribution Transactions. Each of the transactions and other
     matters contemplated by Article II and Section 3.01 hereof (including,
     without limitation, each of the distribution, transfers, conveyances,
     contributions, assignments or other transactions included in, or otherwise
     necessary to consummate, the Corporate Restructuring Transactions) shall
     have been fully effected, consummated and accomplished.

          (h) Covenants. The covenants contained in Article V of this Agreement
     that are required to be performed on or before the Distribution Date shall
     have been fully performed.

          (i) No Prohibitions. Consummation of the transactions contemplated
     hereby shall not be prohibited by Law and no Governmental Authority of
     competent jurisdiction shall have enacted, issued, promulgated, enforced or
     entered any statute, rule, regulation, executive order, decree, injunction
     or other order (whether temporary, preliminary or permanent) which is in
     effect and which materially restricts, prevents or prohibits consummation
     of the Distribution or any transaction contemplated by this Agreement, it
     being understood that the parties hereto hereby agree to use their
     reasonable best efforts to cause any such decree, judgment, injunction or
     other order to be vacated or lifted as promptly as possible.

          (j) Consents. ESI, ADA-ES and the other members of their respective
     Groups shall have obtained all Consents the failure of which to obtain
     would, in the determination of the Board of Directors of ESI, have a
     material adverse effect on the ESI Group or the ADA-ES Group, each taken as
     a whole, and such Consents shall be in full force and effect.

     SECTION 4.02. No Constraint. Notwithstanding the provisions of Section 4.01
above, the fulfillment or waiver of any or all of the conditions precedent to
the Distribution set forth therein shall not:

          (a) create any obligation on the part of ESI or any other party hereto
     to effect the Distribution;

          (b) in any way limit ESI's right and power under Section 8.10 hereof
     to terminate this Agreement and the process leading to the Distribution and
     to abandon the Distribution; or

          (c) alter the consequences of any such termination under Section 8.10
     hereof from those specified in such Section.

     SECTION 4.03. Deferral of Distribution Date. If the Distribution Date shall
have been established by the Board of Directors of ESI but all the conditions
precedent to the Distribution set forth in this Agreement have not theretofore
been fulfilled or waived, or ESI does not reasonably anticipate that they will
be fulfilled or waived, on or prior to the date established as the Distribution
Date, ESI may, by resolution of its Board of Directors (or a committee thereof,
so authorized), defer the Distribution Date to a later date.

                                       17

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     SECTION 4.04. Public Notice of Deferred Distribution Date. If the Board of
Directors (or a committee thereof, so authorized) of ESI shall defer the
Distribution Date in accordance with Section 4.03 above and public announcement
of the prior Distribution Date has theretofore been made, ESI shall promptly
thereafter issue, in accordance with the advice of legal counsel, a public
announcement with respect to such deferment and shall, with the advice of legal
counsel, take such other actions as may be deemed necessary or desirable with
respect to the dissemination of such information.

                                    ARTICLE V

                                    COVENANTS

     SECTION 5.01. Further Assurances. ESI and ADA-ES shall use all reasonable
efforts to:

          (a) take or cause to be taken all actions, and do or cause to be done
     all things reasonably necessary, proper or advisable under applicable Law
     and agreements or otherwise to consummate and make effective the
     transactions contemplated hereby, including without limitation using
     commercially reasonable efforts to obtain any consents and approvals from,
     enter into any amendatory agreements with and make any applications,
     registrations or filings with, any third Person or any Governmental
     Authority necessary or desirable in order to consummate the transactions
     contemplated hereby or to carry out the purposes of this Agreement; and

          (b) execute and deliver such further instruments and documents and
     take such other actions as the other party may reasonably request in order
     to consummate the transactions contemplated hereby and effectuate the
     purposes of this Agreement.

     SECTION 5.02. ESI Name. ESI shall grant ADA-ES transition licenses, in the
forms of Exhibit M (the "Transition Trademark License"), to use the ESI
Trademarks and Trade Names for the limited use as more fully described below in
this Section 5.02 and in Section 5.03. ADA-ES shall, and shall cause each of the
other members of its Group over which it has legal or effective direct or
indirect control to, at its own expense:

          (a) Within thirty (30) days following the Distribution Date, change,
     if necessary, its corporate name to delete therefrom the word "ESI" or any
     other word that is confusingly similar to the word "ESI;" and

          (b) Within one year following the Distribution Date, remove any and
     all references to the ESI Trademark and Trade Names from any and all signs,
     displays or other identification or advertising material (excluding any
     such material that is the subject of Section 5.03 below). After the
     conclusion of such period, ADA-ES and each other member of its respective
     Group or over which it has legal or effective direct or indirect control
     shall not use or display any of the ESI Trademarks and Trade Names without
     the prior written consent of ESI, which consent may be withheld for any
     reason or no reason whatsoever. After the Distribution date, no party
     hereto shall represent or permit to be represented to any third Person that
     it or any member of its Group has a business affiliation with any other
     party hereto or any member of such other party's Group, except as expressly
     permitted by any of the Ancillary Agreements.

     SECTION 5.03. Supplies and Documents. Notwithstanding the provisions of
Section 5.02 above, for a period of six (6) months following the Distribution
Date, the Transition Trademark License shall license (on a nonexclusive basis)
to the ADA-ES Group the right to use existing supplies and documents which have
imprinted thereon any of the ESI Trademarks and Trade Names to the extent that
such supplies and documents were existing in the inventory of such member of the
ADA-ES Group as of the Distribution Date.

                                       18

<PAGE>

     SECTION 5.04. Assumption and Satisfaction of Liabilities. Except as
otherwise specifically set forth in any Ancillary Agreement, from and after the
Distribution Date:

          (a) ESI shall, and shall cause each of the other members of the ESI
     Group over which it has legal or effective direct or indirect control to,
     assume, pay, perform and discharge all ESI Liabilities in accordance with
     their terms, when determinable, and otherwise as determined in accordance
     with the practice of the parties prior to the Distribution; and

          (b) ADA-ES shall, and shall cause each of the other members of the
     ADA-ES Group over which it has legal or effective direct or indirect
     control to, assume, pay, perform and discharge all ADA-ES Liabilities in
     accordance with their terms, when determinable, and otherwise as determined
     in accordance with the practice of the parties prior to the Distribution.

     SECTION 5.05. No Representations or Warranties; Consents.

          (a) General. Each of the parties hereto understands and agrees that no
     party hereto is, in this Agreement or in any other agreement or document
     contemplated by this Agreement (including the Ancillary Agreements) or
     otherwise, making any representation or warranty whatsoever, including
     without limitation, any representation or warranty:

               (i) as to the value or freedom from encumbrance of, or any other
          matter concerning, any assets of such party; or

               (ii) as to the legal sufficiency to convey title to any asset as
          of the execution, delivery and filing of this Agreement or any
          Ancillary Agreement, including, without limitation, any Conveyancing
          and Assumption Instrument.

          (b) Disclaimer of Merchantability or Fitness of Assets. Each party
     hereto further understands and agrees that there are no warranties, express
     or implied, as to the merchantability or fitness of any of the assets
     either transferred to or retained by the ESI Group or the ADA-ES Group,
     pursuant to Corporate Restructuring Transactions and the other terms and
     provisions of this Agreement, any Conveyancing and Assumption Agreement or
     any Ancillary Agreement, and all such assets that are so transferred will
     be transferred on an "AS IS, WHERE IS" basis, and the party to which any
     such assets are transferred hereunder, or which retains assets hereunder,
     shall bear the economic and legal risk that any conveyances of such assets
     shall prove to be insufficient or that the title of such party or any other
     member of its respective Group to any such assets shall be other than good
     and marketable and free from encumbrances.

          (c) Acknowledgement of Disclosure and Waiver. ADA-ES acknowledges, for
     itself and on behalf of each other member of its Group, that:

               (i) ESI and the other members of the ESI Group have disclosed,
          and ADA-ES have knowledge of, all matters pertaining to the assets and
          properties to be conveyed to ADA-ES or any member of its Group

                                       19

<PAGE>

          pursuant to the Corporate Restructuring Transactions or otherwise
          pursuant to the other term of this Agreement to the same extent that
          ESI and the other members of the ESI Group have knowledge of such
          matters; and

               (ii) such knowledge constitutes notice and disclosure of such
          matters. ADA-ES waives, to the fullest extent permitted by Law, for
          itself and for each other member of its Group, any and all claims or
          causes of action which any of them may have arising out of such
          matters or the failure of any Conveyancing and Assumption Instrument
          to describe or refer to, or provide notice of, any such matters.

          (d) No Representations or Warranties Regarding Consents. Each of the
     parties hereto understands and agrees that no party hereto is, in this
     Agreement or any Ancillary Agreement or in any other agreement or document
     contemplated by this Agreement or any Ancillary Agreement or otherwise,
     representing or warranting in any way that the obtaining of any consents or
     approvals, the execution and delivery of any amendatory agreements and the
     making of any filings or applications contemplated by this Agreement will
     satisfy the provisions of any or all applicable agreements or the
     requirements of any or all applicable Law. Each of the parties hereto
     further agrees and understands that the party to which any assets are
     transferred as contemplated by the Corporate Restructuring Transactions or
     the other provisions of this Agreement shall bear the economic and legal
     risk that any necessary consents or approvals are not obtained, that any
     necessary amendatory agreements are not executed and delivered or that any
     requirements of Law are not complied with.

          (e) Covenant to Use Reasonable Efforts to Obtain Consents.
     Notwithstanding the provisions of Section 5.05(d) above, each of the
     parties hereto shall (and shall cause each other member of its respective
     Group over which it has direct or indirect legal or effective control to)
     use reasonable efforts to obtain all consents and approvals, to enter into
     all amendatory agreements and to make all filings and applications that may
     be reasonably required for the consummation of the transactions
     contemplated by this Agreement and shall take all such further reasonable
     actions as shall be reasonably necessary to preserve for each of the ESI
     Group and the ADA-ES Group, to the greatest extent feasible, the economic
     and operational benefits of the allocation of assets and Liabilities
     contemplated by this Agreement. In case at any time after the Distribution
     Date any further action is necessary or desirable to carry out the purposes
     of this Agreement, the proper officers and directors of each party to this
     Agreement shall take all such necessary or desirable action.

     SECTION 5.06. Removal of Certain Guarantees.

          (a) Removal of ESI Group as Guarantor of ADA-ES and ADA-ES
     Liabilities. Except as otherwise contemplated in the Corporate
     Restructuring Transactions or otherwise specified in any Ancillary
     Agreement ESI, and ADA-ES shall use commercially reasonable efforts to
     have, on or prior to the Distribution Date, or as soon as practicable
     thereafter, ESI and any other member of the ESI Group removed as a
     guarantor of, or obligor under or for, any ADA-ES Liability.

          (b) Removal of ADA-ES Group as Guarantor of ESI Liabilities. Except as
     otherwise contemplated in the Corporate Restructuring Transactions or
     otherwise specified in any Ancillary Agreement, ESI and ADA-ES shall use
     commercially reasonable efforts to have, on or prior to the Distribution
     Date, or as soon as practicable thereafter, ADA-ES and any other member of
     the ADA-ES Group removed as a guarantor of, or obligor under or for, any
     ESI Liability.

     SECTION 5.07. Public Announcements. Each party hereto shall consult with
each other before issuing any press release or otherwise issuing any other
similar written public statement with respect to this Agreement or the
Distribution and shall not issue any such press release or make any such public
statement without the prior consent of each other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior

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consent of any other party, issue such press release or other similar written
public statement as may be required by Law or any listing agreement with a
national securities exchange to which any party hereto (or any member of such
party's Group) is a party if it has used all reasonable efforts to consult with
such other party and to obtain such party's consent but has been unable to do so
in a timely manner.

     SECTION 5.08. Intercompany Agreements. Effective as of the consummation of
the Distribution, ADA-ES and ESI shall (and shall cause each other member of its
respective Group over which it has legal or effective direct or indirect
control) to terminate each and every agreement between it and any member of the
other Group other than this Agreement, any of the Ancillary Agreements and any
of the license agreements referred to in Section 2.06(e) above; provided,
however, that such termination shall not have any effect whatsoever on any of
its rights and/or obligations that accrued or were incurred prior to the
Distribution Date (subject to the terms of Section 2.13 above).

     SECTION 5.09. Tax Matters. ESI and the ADA-ES intend the Distribution to be
treated as tax-free distribution under Code Section 355 and each such party
shall use its reasonable efforts to cause the Distribution to so qualify.
Neither ESI nor ADA-ES shall take any action that might cause:

               (i) the Distribution to fail to qualify as tax-free distribution
          under Code Section 355;

               (ii) any other transfer described in the Corporate Restructuring
          Transaction that is intended to qualify as a tax-free transfer under
          Code Section 332, 351, 355 or 368 to fail to so qualify; or

               (iii) ESI or any ESI Subsidiary to recognize any gains relating
          to deferred intercompany transactions or excess loss accounts between
          or among any members of affiliated groups of corporations of which ESI
          is the common parent.

                                   ARTICLE VI

                              ACCESS TO INFORMATION

     SECTION 6.01. Provision, Transfer and Delivery of Applicable Corporate
                                    Records.

          (a) Provision, Transfer and Delivery of ADA-ES Records. Each of ESI
     and ADA-ES shall (and shall cause each other member of its respective Group
     over which it has legal or effective direct or indirect control to) arrange
     as soon as practicable following the Distribution Date for the
     transportation (at ADA-ES' cost) to ADA-ES of the Books and Records in its
     possession (i) that relate primarily to the ADA-ES Business or are
     necessary to operate the ADA-ES Business (collectively, the "ADA-ES
     Records") and (ii) that consist of the corporate minutes of the Board of
     Directors (or committees thereof) of ESI or that otherwise relate to the
     business, administrative and management operations of ESI as the parent
     holding company of the ESI Business and ADA-ES Business (collectively, the
     "ESI Corporate Records") except to the extent such items are already in the
     possession of any member of the ADA-ES Group. The ADA-ES Records and the
     ESI Corporate Records shall be the property of ADA-ES, but shall be
     available to ESI for review and duplication, at its cost, pursuant to the
     terms of this Agreement.

          (b) Provision, Transfer and Delivery of ESI Records. ADA-ES shall (and
     shall cause each other member of its respective Group over which it has
     legal or effective direct or indirect control to) arrange as soon as
     practicable following the Distribution Date for the transportation (at

                                       21

<PAGE>

     ESI's cost) to ESI of the Books and Records in its possession that relate
     primarily to the ESI Business or are necessary to operate the ESI Business
     (collectively, the "ESI Records"), except to the extent such items are
     already in the possession of any member of the ESI Group. The ESI Records
     shall be the property of ESI, but shall be available to ADA-ES for review
     and duplication, at its cost, pursuant to the terms of this Agreement.

     SECTION 6.02. Access to Information.

          (a) Access to Books and Records. Unless otherwise contemplated by
     Section 6.06 hereof, from and after the Distribution Date, ESI and ADA-ES
     shall (and shall cause each of the other members of its respective Group
     over which it has legal or effective direct or indirect control to) afford
     to each other party and its authorized accountants, counsel and other
     designated representatives reasonable access and duplicating rights (all
     such duplicating costs to be borne by the requesting party) during normal
     business hours, subject to appropriate restrictions for classified,
     privileged or confidential information, to the personnel, properties, Books
     and Records and other data and information of such party and each other
     member of such party's Group relating to operations prior to the
     Distribution insofar as such access is reasonably required by the other
     requesting party for the conduct of the requesting party's business (but
     not for competitive purposes).

          (b) Provision of Post-Distribution Commission Fillings. For a period
     of five years following the Distribution Date, ESI and ADA-ES shall (and
     shall cause each of the other members of its respective Group over which it
     has legal or effective direct or indirect control to) provide to the other,
     promptly following such time at which such documents are filed with the
     Commission, all documents (other than documents or portions thereof for
     which confidential treatment has been granted or a request for confidential
     treatment is pending) filed by it and by each other member of such party's
     Group with the Commission pursuant to the Securities Act or the periodic
     and interim reporting requirements of the Exchange Act and the rules and
     regulations of the Commission promulgated thereunder.

     SECTION 6.03. Reimbursement: Other Matters. Except to the extent otherwise
contemplated hereby or by any Ancillary Agreement, a party providing Books and
Records or access to information to any other party (or such party's
representatives) under this Article VI shall be entitled to receive from such
other party, upon the presentation of invoices therefore, payments for such
amounts, relating to supplies, disbursements and other out-of pocket expenses,
as may be reasonably incurred in providing such Books and Records or access to
information.

     SECTION 6.04. Confidentiality.

          (a) General Restriction on Disclosure. ESI and ADA-ES shall not (and
     shall not permit any other member of its respective Group over which it has
     legal or effective direct or indirect control to) use or permit the use of
     (without the prior written consent of the other) and shall hold, and shall
     cause its consultants, advisors and otter representatives and any other
     member of its respective Group (over which it has legal or effective direct
     or indirect control) to hold, in strict confidence, all information
     concerning each other party hereto and the other members of such other
     party's Group in its possession, custody or control to the extent such
     information either

               (i) relates to the period up to the Distribution Date,

               (ii) relates to any Ancillary Agreement, or

                                       22

<PAGE>

               (iii) is obtained in the course of performing services for the
          other party pursuant to any Ancillary Agreement, and each party hereto
          shall not (and shall cause each other member of its respective Group
          over which it has legal or effective direct or indirect control not
          to) otherwise release or disclose such information to any other
          Person, except its auditors, attorneys, financial advisors, bankers
          and other consultants and advisors, without the prior written consent
          of the other affected party or parties, unless compelled to disclose
          such information by judicial or administrative process or unless such
          disclosure is required by Law and such party has used reasonable
          efforts to consult with the other affected party or parties prior to
          such disclosure.

          (b) Compelled Disclosure. To the extent that a party hereto is
     compelled by judicial or administrative process to disclose such
     information under circumstances in which any evidentiary privilege would be
     available, such party agrees to assert such privilege in good faith prior
     to making such disclosure. Each of the parties shall consult with the other
     party in connection with any such judicial or administrative process,
     including, without limitation, in determining whether any privilege is
     available, and shall not object to each such relevant party and its counsel
     participating in any hearing or other proceeding (including, without
     limitation, any appeal of an initial order to disclose) in respect of such
     disclosure and assertion of privilege.

          (c) Exceptions to Confidential Treatment. Anything herein to the
     contrary notwithstanding, no party hereto shall be prohibited from using or
     permitting the use of, or required to hold in confidence, any information
     to the extent that (i) such information has been or is in the public domain
     through no fault of such party, (ii) such information is, after the
     Distribution Date, lawfully acquired from other sources by such party, or
     (iii) this Agreement, any Ancillary Agreement or any other agreement
     entered into pursuant hereto permits the use or disclosure of such
     information by such party.

     SECTION 6.05. Witness Services. At all times from and after the
Distribution Date, ESI and ADA-ES shall use its reasonable efforts to make
available to each other party hereto, upon reasonable written request, the
officers, directors, employees and agents of each member of its respective Group
for fact finding, consultation or interviews and as witnesses to the extent
that:

          (a) such persons may reasonably be required in connection with the
     prosecution or defense of any Action in which the requesting party or any
     member of its respective Group may from time to time be involved; and

          (b) there is no conflict in the Action between the requesting party or
     any member of its respective Group and the party to which a request is made
     pursuant to this Section 6.05 or any member of such party's Group. Except
     as otherwise agreed by the parties, a party providing witness services to
     any other party under this Section shall be entitled to receive from the
     recipient of such services, upon the presentation of invoices therefore,
     payments for such amounts, relating to supplies, disbursements and other
     out-of-pocket expenses (but not salary expenses) and direct and indirect
     costs of employees who participate in fact finding, consultation or
     interviews or are witnesses, as are actually and reasonably incurred in
     providing such fact finding, consulting, interviews or witness services by
     the party providing such services.

     SECTION 6.06. Retention of Records. Except when a longer period is required
by Law or is specifically provided for herein or in any Ancillary Agreement,
each party hereto shall cause the members of its Group over which it has legal
or effective direct or indirect control, to retain, for a period of at least
seven years following the Distribution Date, all material information (including
without limitation all material Books and Records) relating to such Group and

                                       23

<PAGE>

its operations prior to the Distribution Date. Notwithstanding the foregoing,
any party hereto may offer in writing to deliver to the other party all or a
portion of such information as it relates to members of the offering party's
Group and, if such offer is accepted in writing within ninety (90) days after
receipt thereof, the offering party shall promptly arrange for the delivery of
such information (or copies thereof) to the accepting party (at the expense of
such accepting party). If such offer is not so accepted, the offered information
may be destroyed or otherwise disposed of by the offering party at any time
thereafter.

     SECTION 6.07. Privileged Matters.

          (a) Privileged Information. The parties hereto shall, and shall cause
     the members of its Group over which it has legal or effective direct or
     indirect control to, use its reasonable efforts to maintain, preserve,
     protect and assert all privileges including, without limitation, all
     privileges arising under or relating to the attorney-client relationship
     (including without limitation the attorney-client and attorney work product
     privileges) that relate directly or indirectly to any member of any other
     Group for any period prior to the Distribution Date ("Privilege" or
     "Privileges"). The parties hereto shall use reasonable efforts not to
     waive, or permit any member of its Group over which it has legal or
     effective direct or indirect control to waive, any such Privilege that
     could be asserted under applicable Law without the prior written consent of
     the other parties. With respect to each party, the rights and obligations
     created by this Section 6.07 shall apply to all information as to which a
     member of any Group did assert or, but for the Distribution, would have
     been entitled to assert the protection of a Privilege ("Privileged
     Information") including, but not limited to, any and all information that
     either:

               (i) was generated or received prior to the Distribution Date but
          which, after the Distribution, is in the possession of a member of
          another Group; or

               (ii) is generated or received after the Distribution Date but
          refers to or relates to Privileged Information that was generated or
          received prior to the Distribution Date.

          (b) Production of Privileged Information. Upon receipt by a party or
     any member of its Group of any subpoena, discovery or other request that
     arguably calls for the production or disclosure of Privileged Information,
     or if a party or any member of its Group obtains knowledge that any current
     or former employee of such party or any member of its Group has received
     any subpoena, discovery or other request that arguably calls for the
     production or disclosure of Privileged Information, such party shall
     promptly notify the other party of the existence of the request and shall
     provide the other party a reasonable opportunity to review the information
     and to assert any rights it may have under this Section 6.07 or otherwise
     to prevent the production or disclosure of Privileged Information. No party
     will, or will permit any member of its Group over which it has direct or
     indirect legal or effective control to. produce or disclose any information
     arguably covered by a Privilege under this Section 6.07 unless:

               (i) the party has provided its express written consent to such
          production a disclosure; or

               (ii) a court of competent jurisdiction has entered an order,
          which is not then appealable or a final, nonappealable order finding
          that the information is not entitled to protection under any
          applicable privilege.

          (c) No Waiver. The parties hereto understand and agree that the
     transfer of any Books and Records or other information between any members
     of the ESI Group or the ADA-ES Group shall be made in reliance on the

                                       24

<PAGE>

     agreements of ESI and ADA-ES, as set forth in Section 6.04 and Section 6.07
     hereof, to maintain the confidentiality of Privileged Information and to
     assert and maintain all applicable Privileges. The Books and Records being
     transferred pursuant to Section 6.01 hereof, the access to information
     being granted pursuant to Section 6.01 hereof, the agreement to provide
     witnesses and individuals pursuant to Section 6.05 hereof and the transfer
     of Privileged Information to either party pursuant to this Agreement shall
     not be deemed a waiver of any Privilege that has been or may be asserted
     under this Section or otherwise.

                                   ARTICLE VII

                                 INDEMNIFICATION

     SECTION 7.01. Indemnification by ESI. Except as otherwise specifically set
forth in any provision of this Agreement or of any Ancillary Agreement, ESI
shall, to the fullest extent permitted by Law, indemnify, defend and hold
harmless the ADA-ES Indemnified Parties from and against any and all
Indemnifiable Losses of the ADA-ES Indemnified Parties arising out of, by reason
of or otherwise in connection with either (i) the ESI Liabilities, or (ii) the
breach by ESI of any provision of this Agreement or any Ancillary Agreement.

     SECTION 7.02. Indemnification by ADA-ES. Except as otherwise specifically
set forth in any provision of this Agreement or of any Ancillary Agreement,
ADA-ES shall. to the fullest extent permitted by Law, indemnify, defend and hold
harmless the ESI Indemnified Parties from and against any and all Indemnifable
Losses of the ESI Indemnified Parties arising out of, by reason of or otherwise
in connection with either (i) the ADA-ES Liabilities, or (ii) the breach by
ADA-ES of any provision of this Agreement or any Ancillary Agreement.

     SECTION 7.03. Limitation on Indemnification Obligations.

          (a) Reductions for Insurance Proceeds and Other Recoveries. The amount
     that any party (an "Indemnifying Party") is or may be required to pay to
     any other Person (an "Indemnified Party") pursuant-to Section 7.01 or
     Section 7.02, as applicable, shall be reduced (retroactively or
     prospectively) by any Insurance Proceeds or other amounts actually
     recovered from third parties by or on behalf of such Indemnified Party in
     respect of the related Indemnifiable Losses (except that nothing herein
     shall be construed as requiring any Indemnified Party in respect of any
     ADA-ES Securities Liability to file any claim for insurance). The existence
     of a claim by an Indemnified Party for insurance or against a third party
     in respect of any Indemnifiable Loss shall not, however, delay any payment
     pursuant to the indemnification provisions contained herein and otherwise
     determined to be due and owing by an Indemnifying Party. Rather the
     Indemnifying Party shall make payment in full of such amount so determined
     to be due and owing by it against an assignment by the Indemnified Party to
     the Indemnifying Party of the entire claim of the Indemnified Party for
     such insurance or against such third party. Notwithstanding any other
     provisions of this Agreement, it is the intention of the parties hereto
     that no insurer or any other third party shall be (i) entitled to a benefit
     it would not be entitled to receive in the absence of the foregoing
     indemnification provisions or (ii) relieved of the responsibility to pay
     any claims for which it is obligated. If an Indemnified Party shall have
     received the payment required by this Agreement from an Indemnifying Party
     in respect of any Indemnifiable Losses and shall subsequently actually
     receive Insurance Proceeds or other amounts in respect of such
     indemnifiable Losses, then such Indemnified Party shall hold such Insurance
     Proceeds in trust for the benefit of such Indemnifying Party and shall pay
     to such Indemnifying Party a sum equal to the amount of such Insurance
     Proceeds or other amounts actually received, up to the aggregate amount of
     any payments received from such Indemnifying Party pursuant to this
     Agreement in respect of such lndemnifiable Losses.

                                       25

<PAGE>

          (b) Foreign Currency Adjustments. In the event that any
     indemnification payment required to be made hereunder or under any
     Ancillary Agreement shall be denominated in a currency other than U.S.
     Dollars, the amount of such payment shall be translated into U.S. Dollars
     using the foreign exchange rate for such currency determined in accordance
     with the following rules:

               (i) with respect to any Indemnifiable Losses arising from the
          payment by a financial institution under a guarantee, comfort letter,
          letter of credit, foreign exchange contract or similar instrument, the
          foreign exchange rate for such currency shall be determined as of the
          date on which such financial institution shall have been reimbursed;

               (ii) with respect to any Indemnifiable Losses covered by
          insurance, the foreign exchange rate for such currency shall be the
          foreign exchange rate employed by the insurance company providing such
          insurance in settling such Indemnifiable Losses with the Indemnifying
          Party; and

               (iii) with respect to any Indemnifiable Losses not covered by
          either clause (i) or (ii) above, the foreign exchange rate for such
          currency shall be determined as of the date that notice of the claim
          with respect to such Indemnifiable Losses shall be given to the
          Indemnified Party.

     SECTION 7.04. Procedures for Indemnification. Except as otherwise
specifically provided in any Ancillary Agreement, including, without limitation,
the Tax Sharing Agreement and the Benefits Agreement:

          (a) Notice of Third Party Claims. If a claim or demand is made against
     an Indemnified Party by any Person who is not a member of the ESI Group or
     ADA-ES Group (a "Third Party Claim") as to which such Indemnified Party is
     entitled to indemnification pursuant to this Agreement, such Indemnified
     Party shall notify the Indemnifying Party in writing, and in reasonable
     detail, of the Third Party Claim promptly (and in any event within fifteen
     (15) business days) after receipt by such Indemnified Party of written
     notice of the Third Party Claim; provided, however, that failure to give
     such notification shall not affect the Indemnified Party's right to
     indemnification hereunder except to the extent the Indemnifying Party shall
     have been actually prejudiced as a result of such failure (except that the
     Indemnifying Party shall not be liable for any expenses incurred during the
     period in which the Indemnified Party failed to give such notice).
     Thereafter, the Indemnified Party shall deliver to the Indemnifying Party,
     promptly (and in any event within fifteen (15) business days) after the
     Indemnified Party's receipt thereof, copies of all notices and documents
     (including court papers) received by the Indemnified Party relating to the
     Third Party Claim.

          (b) Legal Defense of Third Party Claims. If a Third Party Claim is
     made against an Indemnified Party, the Indemnifying Party shall be entitled
     to participate in the defense thereof and, if it so chooses, to assume the
     defense thereof with counsel selected by the Indemnifying Party, which
     counsel shall be reasonably satisfactory to the Indemnified Party. Should
     the Indemnifying Party so elect to assume the defense of a Third Party
     Claim, the Indemnifying Party shall not be liable to the Indemnified Party
     for legal or other expenses subsequently incurred by the Indemnified Party
     in connection with the defense thereof. If the Indemnifying Party assumes

                                       26

<PAGE>

     such defense, the Indemnified Party shall have the right to participate in
     the defense thereof and to employ counsel, at its own expense, separate
     from the counsel employed by the Indemnifying Party, it being understood
     that the Indemnifying Party shall control such defense. The Indemnifying
     Party shall be liable for the reasonable fees and expenses of counsel
     employed by the Indemnified Party for any period during which the
     Indemnifying Party has failed to assume the defense of the Third Party
     Claim (other than during the period prior to the time the Indemnified Party
     shall have given notice of the Third Party Claim as provided above). If the
     Indemnifying Party so elects to assume the defense of any Third Party
     Claim, all of the Indemnified Parties shall cooperate with the Indemnifying
     Party in the defense or prosecution thereof. Notwithstanding the foregoing:

               (i) the Indemnifying Party shall not be entitled to assume the
          defense of any Third Party Claim (and shall be liable to the
          Indemnified Party for the reasonable fees and expenses of counsel
          incurred by the Indemnified Party in defending such Third Party Claim)
          if the Third Party Claim seeks an order, injunction or other equitable
          relief or relief for other than money damages against the Indemnified
          Party which the Indemnified Party reasonably determines, after
          conferring with its counsel, cannot be separated from any related
          claim for money damages; provided, however, that if such equitable
          relief or other relief portion of the Third Party Claim can be so
          separated from that for money damages, the Indemnifying Party shall be
          entitled to assume the defense of the portion relating to money
          damages;

               (ii) an Indemnifying Party shall not be entitled to assume the
          defense of any Third Party Claim (and shall be liable for reasonable
          fees and expenses of counsel incurred by Indemnified Party in
          defending such Third Party Claim) if, in the Indemnified Party's
          reasonable judgment, a conflict of interest between such Indemnified
          Party and such Indemnifying Party exists in respect of such Third
          Party Claim; and

               (iii) if at any time after assuming the defense of a Third Party
          Claim an Indemnifying Party shall fail to prosecute or shall withdraw
          from the defense of such Third Party Claim, the Indemnified Party
          shall be entitled to resume the defense thereof and the indemnifying
          Party shall be liable for the reasonable fees and expenses of counsel
          incurred by the Indemnified Party in such defense.

          (c) Settlement of Third Party Claims. Except as otherwise provided
     below in this Section 7.04(c), or as otherwise specifically provided in any
     Ancillary Agreement, including without limitation, the Tax Sharing
     Agreement and the Benefits and Pension Plan Agreement, if the Indemnifying
     Party has assumed the defense of any Third Party Claim, then

               (i) in no event will the Indemnified Party admit any liability
          with respect to, or settle, compromise or discharge, any Third Party
          Claim without the Indemnifying Party's prior written consent;
          provided, however, that the Indemnified Party shall have the right to
          settle, compromise or discharge such Third Party Claim without the
          consent of the Indemnifying Patty if the Indemnified Party releases
          the Indemnifying Party from its indemnification obligation hereunder
          with respect to such Third Party Claim and such settlement, compromise
          or discharge would not otherwise adversely affect the Indemnifying
          Party, and

               (ii) the Indemnified Party will agree to any settlement,
          compromise or discharge of a Third Party Claim that the Indemnifying
          Party may recommend and that by its terms obligates the Indemnifying
          Party to pay the full amount of the liability in connection with such
          Third Party Claim and releases the Indemnified Party completely in
          connection with such Third Party Claim and would not otherwise
          adversely affect the Indemnified Party

                                       27

<PAGE>

          provided, however, that the Indemnified Party may refuse to agree to
          any such settlement, compromise or discharge if the Indemnified Party
          agrees that the Indemnifying Party's indemnification obligation with
          respect to such Third Party Claim shall not exceed the amount that
          would be required to be paid by or on behalf of the Indemnifying Party
          in connection with such settlement, compromise or discharge. If the
          Indemnifying Party has not assumed the defense of a Third Party Claim
          then in no event shall the Indemnified Party settle, compromise or
          discharge such Third Party Claim without providing prior written
          notice to the Indemnifying Party, which shall have the option within
          fifteen (15) business days following the receipt of such notice to:

               (i) approve and agree to pay the settlement,

               (ii) approve the amount of the settlement, reserving the right to
          contest the Indemnified Party's right to indemnity pursuant to this
          Agreement,

               (iii) disapprove the settlement and assume in writing all past
          and future responsibility for such Third Party Claim (including all of
          Indemnified Patty's prior expenditures in connection therewith), or

               (iv) disapprove the settlement and continue to refrain from
          participation in the defense of such Third Party Claim, in which event
          the Indemnifying Party shall have no further right to contest the
          amount or reasonableness of the settlement if the Indemnified Party
          elects to proceed therewith.

               In the event the Indemnifying Party does not respond to such
          written notice from the Indemnified Party within such fifteen (15)
          business-day period, the Indemnifying Party shall be deemed to have
          elected option (i).

          (d) Other Claims. Any claim on account of an Indemnifiable Loss that
     does not result from a Third Party Claim shall be asserted by written
     notice given by the Indemnified Party to the applicable Indemnifying Party.
     Such Indemnifying Party shall have a period of fifteen (15) business days
     after the receipt of such notice within which to respond thereto. If such
     Indemnifying Party does not respond within such fifteen (15) business-day
     period, such Indemnifying Party shall be deemed to have refused to accept
     responsibility to make payment. If such Indemnifying Party does not respond
     within such fifteen (15) business-day period or rejects such claim in whole
     or in part, such Indemnified Party shall be free to pursue such remedies as
     may be available to such party under applicable Law or under this
     Agreement.

     SECTION 7.05. Indemnification Payments. Indemnification required by this
Article VII shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.

     SECTION 7.06. Other Adjustments. In addition to any adjustments required
pursuant to Section 7.04 hereof, if the amount of any Indemnifiable Losses
shall, at any time subsequent to any indemnification payment made by the
Indemnifying Patty pursuant to this Article VII, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less any expenses
incurred in connection therewith, shall promptly be repaid by the Indemnified
Party to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Losses.

                                       28

<PAGE>

     SECTION 7.07. Obligations Absolute. The foregoing contractual obligations
of indemnification set forth in this Article VII shall:

          (a) also apply to any and all Third Party Claims that allege that any
     Indemnified Patty is independently, directly, vicariously or jointly and
     severally liable to such third party;

          (b) to the extent permitted by applicable law, apply even if the
     Indemnified Party is partially negligent or otherwise partially culpable or
     at fault, whether or not such liability arises under any doctrine of strict
     liability; and

          (c) be in addition to any liability or obligation that an Indemnifying
     Party may have other than pursuant to this Agreement.

     SECTION 7.08. Survival of Indemnities. The obligations of ESI and ADA-ES
under this Article VII shall survive the sale or other transfer by any of them
of any assets or businesses or the assignment by any of them of any Liabilities,
with respect to any Indemnifiable Loss of any Indemnified Party related to such
assets, businesses or Liabilities.

     SECTION 7.9. Remedies Cumulative. The remedies provided in this Article VII
shall be cumulative and shall not preclude assertion by any Indemnified Party of
any other rights or the seeking of any and all other remedies against any
Indemnifying Party.

     SECTION 7.10. Cooperation of the Parties with Respect to Actions and Third
Party Claims.

          (a) Identification of Party In Interest. Any party to this Agreement
     that has responsibility for an Action or Third Party Claim shall identify
     itself as the true party in interest with respect to such Action or Third
     Party Claim and shall use its reasonable efforts to obtain the dismissal of
     any other party to this Agreement from such Action or Third Party Claim.

          (b) Disputes Regarding Responsibility for Actions and Third Party
     Claims. If there is uncertainty or disagreement concerning which party to
     this Agreement has responsibility for any Action or Third Party Claim, the
     following procedure shall be followed in an effort to reach agreement
     concerning responsibility for such Action or Third Party Claim:

               (i) The parties in disagreement over the responsibility for an
          Action or Third Party Claim shall exchange brief written statements
          setting forth their position concerning which party has responsibility
          for the Action or Third Party Claim in accordance with the provisions
          of this Article VII. These statements shall be exchanged within five
          (5) days of a party putting another party on written notice that the
          other party is or may be responsible for the Action or Third Party
          Claim.

               (ii) If within five (5) days of the exchange of the written
          statement of each party's position agreement is not reached on
          responsibility for the Action or Third Party Claim, the General
          Counsel for each of the parties in disagreement over responsibility
          for the Action or Third Party Claim shall speak either by telephone or
          in person to attempt to reach agreement on responsibility for the
          Action or Third Party Claim.

                                       29

<PAGE>

               (c) Effect of Failure to Follow Procedure. Failure to follow the
          procedure set forth in clause (b) above shall not affect the rights
          and responsibilities of the parties as established by the other
          provisions of this Article VII.

               (d) Exchange of Information. In connection with the handling of
          current or future Actions or Third Party Claims, the parties may
          determine that it is in their mutual interest to exchange privileged
          or confidential information. If so, the parties agree to discuss
          whether it is in their mutual interest to enter into a joint defense
          agreement or information exchange agreement to maintain the
          confidentiality of their communications and to permit them to maintain
          the confidentiality of proprietary information or information that is
          otherwise confidential or subject to an applicable privilege,
          including but not limited to the attorney-client, work product,
          executive, deliberative process, or self-evaluation privileges.

     SECTION 7.11. Contribution. To the extent that any indemnification provided
for under Section 7.01 or Section 7.02 is unavailable to an Indemnified Party,
then the Indemnifying Party under such Section, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Indemnifiable Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other hand
from the transaction or other matter that resulted in the Indemnifiable Losses
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
hand in connection with the action, inaction, statements or omissions that
resulted in such Indemnifiable Losses as well as any other relevant equitable
considerations.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     SECTION 8.01. Complete Agreement; Construction. This Agreement, including
the Exhibits and Schedules hereto, and the Ancillary Agreements shall constitute
the entire agreement between the parties with respect to the subject matter
hereof and shall supersede all previous negotiations, commitments and writings
with respect to such subject matter. In the event of any inconsistency between
this Agreement and any Schedule or Exhibit hereto, the Schedule or Exhibit, as
the case may be, shall prevail. Notwithstanding any other provisions in this
Agreement to the contrary, in the event and to the extent that there shall be a
conflict between the provisions of this Agreement and the provisions of any
Ancillary Agreement, such Ancillary Agreement shall control.

     SECTION 8.02. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.

     SECTION 8.03. Survival of Agreements. Except as otherwise expressly
provided herein, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.

     SECTION 8.04. Responsibility for Expenses.

          (a) Expenses Incurred on or Prior to Distribution Date. Subject to the
     provisions of Section 8.05(c) below and except as otherwise set forth in
     this Agreement or any Ancillary Agreement, all costs and expenses incurred
     on or prior to the Distribution Date (whether or not paid on or prior to
     the Distribution Date) in connection with the preparation, execution,

                                       30

<PAGE>

     delivery and implementation of this Agreement and any Ancillary Agreement,
     the Information Statements and the Distribution, and the consummation of
     the transactions contemplated hereby and thereby shall be charged to and
     paid by ADA-ES; and, ADA-ES shall be solely responsible and liable for any
     expenses, fees, or other costs that it separately and directly incurs in
     connection with any of the transactions contemplated under this Agreement
     or any of the Ancillary Agreements.

          (b) Expenses Incurred or Accrued After Distribution Date. Subject to
     the provisions of Section 8.05(c) below and except as otherwise set forth
     in this Agreement or any Ancillary Agreement, each party shall bear its own
     costs and expenses first incurred or accrued after the Distribution Date.

          (c) Environmental Expenses. Notwithstanding the provisions of Section
     8.05(a) and Section 8.05(b) above, expenses and other costs incurred in
     connection with compliance with any Environmental Laws applicable to the
     transactions contemplated hereby shall be paid by the party that after the
     Distribution Date will, or that this Agreement contemplates will, own the
     assets or operate the business subject to such Environmental Laws.

     SECTION 8.05. Notices. All notices and other communications to a party
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to such
party (and will be deemed given on the date on which the notice is received by
such party) at the address for such party set forth below (or at such other
address for the party as the party shall, from time to time, specify by like
notice to the other parties):

     If to ESI, at:       8100 SouthPark Way, B-2
                          Littleton, CO 80120
                          Fax - 303-734-1727
                          Attention: President

     If to ADA-ES, at:    8100 SouthPark Way, B-2
                          Littleton, CO 80120
                          Fax - 303-734-1727
                          Attention: President

     SECTION 8.06. Waivers. The failure of any party hereto to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.

     SECTION 8.07. Amendments. Subject to the terms of Section 8.10 hereof, this
Agreement may not be modified or amended except by an agreement in writing
signed by the parties hereto.

     SECTION 8.08. Assignment. This Agreement shall be assignable in whole in
connection with a merger or consolidation or the sale of all or substantially
all the assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other parties to this Agreement. Otherwise this Agreement
shall not be assignable, in whole or in part, directly or indirectly, by any
party hereto without the prior written consent of the others, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.

                                       31

<PAGE>

     SECTION 8.09. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective permitted successors and permitted assigns.

     SECTION 8.10. Termination. This Agreement may be terminated and the
Distribution may be amended, modified or abandoned at any time prior to the
Distribution by and in the sole discretion of ESI without the approval of ADA-ES
or the stockholders of ESI. In the event of such termination, no party shall
have any liability of any kind to any other party. After the Distribution, this
Agreement may not be terminated except by an agreement in writing signed by the
parties hereto; provided, however, that Article VIII shall not be terminated or
amended after the Distribution in respect of the third party beneficiaries
thereto without the consent of such persons.

     SECTION 8.11. Third Party Beneficiaries. Except as provided in Article VII
hereof (relating to Indemnified Parties), this Agreement is solely for the
benefit of the parties hereto, and the members of their respective Groups and
Affiliates and should not be deemed to confer upon third parties any remedy,
claim, liability, right of reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.

     SECTION 8.12. Attorney Fees. A party in breach of this Agreement shall, on
demand, indemnify and hold harmless the other parties hereto for and against all
out-of-pocket expenses, including, without limitation, reasonable legal fees,
incurred by such other party by reason of the enforcement and protection of its
rights under this Agreement. The payment of such expenses is in addition to any
other relief to which such other party may be entitled hereunder or otherwise.

     SECTION 8.13. Title and Headings. Titles and headings to Sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.

     SECTION 8.14. Exhibits and Schedules. The Exhibits and Schedules attached
hereto shall be construed with and as an integral part of this Agreement to the
same extent as if the same had been set forth verbatim herein.

     SECTION 8.15. Governing Law. All questions and/or disputes concerning the
construction, validity and interpretation of this agreement and the schedules
and exhibits hereto shall be governed by the internal laws, and not the law of
conflicts, of the state of Colorado. Each of the parties to this agreement
hereby irrevocably and unconditionally agrees to be subject to, and hereby
consents and submits to, the jurisdiction of the courts of the state of Colorado
and of the federal courts sitting in the state of Colorado.

     SECTION 8.16. Severability. In the event any one or more of the provisions
or part thereof contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

     SECTION 8.17. Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantee the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party
which is contemplated to be a Subsidiary of such party on and after the
Distribution Date.

                                       32

<PAGE>

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

                                            EARTH SCIENCES, INC.

                                            By:  /s/  Mark H. McKinnies
                                                  -------------------------
                                            Name:     Mark H. McKinnies
                                            Title:    President

                                            ADA-ES, INC.

                                            By:  /s/  Michael D. Durham
                                               ----------------------------
                                            Name:     Michael D. Durham
                                            Title:    President

                                       33Exhibit 10.2

                                  ADA-ES, INC.
                             2003 STOCK OPTION PLAN

                                TABLE OF CONTENTS

1.     PURPOSE............................................................... 2
2.     DEFINITIONS........................................................... 2
3.     ADMINISTRATION........................................................ 4
3.1.   COMMITTEE............................................................. 4
3.2.   NO LIABILITY.......................................................... 4
4.     STOCK................................................................. 4
5.     ELIGIBILITY........................................................... 4
6.     EFFECTIVE DATE AND TERM............................................... 4
6.1.   EFFECTIVE DATE........................................................ 4
6.2.   TERM.................................................................. 5
7.     GRANT OF OPTIONS...................................................... 5
8.     LIMITATION ON INCENTIVE STOCK OPTIONS................................. 5
9.     OPTION AGREEMENTS..................................................... 5
10.    OPTION PRICE.......................................................... 6
11.    TERM AND EXERCISE OF OPTIONS.......................................... 6
11.1.  TERM.................................................................. 6
11.2.  EXERCISE BY OPTIONEE.................................................. 6
11.3.  OPTION PERIOD AND LIMITATIONS ON EXERCISE............................. 6
11.4.  METHOD OF EXERCISE.................................................... 7
11.5.  PARACHUTE LIMITATIONS................................................. 7
12.    TRANSFERABILITY OF OPTIONS............................................ 8
12.1.  TRANSFERABILITY OF OPTIONS.............................................8

                                        i

<PAGE>

12.2.  FAMILY TRANSFERS.......................................................8
13.    TERMINATION OF SERVICE RELATIONSHIP................................... 9
14.    RIGHTS IN THE EVENT OF DEATH OR DISABILITY............................ 9
14.1.  DEATH................................................................. 9
14.2.  DISABILITY............................................................ 10
15.    USE OF PROCEEDS....................................................... 10
16.    SECURITIES LAWS....................................................... 10
17.    EXCHANGE ACT: RULE 16B-3...............................................11
17.1.  GENERAL............................................................... 11
17.2.  COMPENSATION COMMITTEE................................................ 11
17.3.  RESTRICTION ON TRANSFER OF STOCK...................................... 11
18.    AMENDMENT AND TERMINATION............................................. 11
19.    EFFECT OF CHANGES IN CAPITALIZATION................................... 11
19.1.  CHANGES IN STOCK...................................................... 12
19.2.  REORGANIZATION WITH CORPORATION SURVIVING............................. 12
19.3.  OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK.......................  12
19.4.  ADJUSTMENTS........................................................... 13
19.5.  NO LIMITATIONS ON CORPORATION......................................... 13
20.    WITHHOLDING............................................................13
21.    DISCLAIMER OF RIGHTS.................................................. 13
22.    NONEXCLUSIVITY........................................................ 13
23.    GOVERNING LAW......................................................... 14

                                       ii

<PAGE>

                                  ADA-ES, INC.
                             2003 Stock Option Plan

     ADA-ES, INC., a Colorado corporation (the "Corporation"), sets forth herein
the terms of the 2003 Stock Option Plan (the "Plan") as follows:

1. PURPOSE

     The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 5 hereof) an
opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries and will encourage
such eligible individuals to continue to service the Corporation.

2. DEFINITIONS

     For purposes of interpreting the Plan and related documents (including
Option Agreements), the following definitions shall apply:

          2.1 "Affiliate" means any company or other trade or business that is
controlled by or under common control with the Corporation, (determined in
accordance with the principles of Section 414(b) and 414(c) of the Code and the
regulations thereunder) or is an affiliate of the Corporation within the meaning
of Rule 405 of Regulation C under the 1933 Act.

          2.2 "Board" means the Board of Directors of the Corporation.

          2.3 "Cause" means, unless otherwise defined in an Option Agreement,
(i) gross negligence or willful misconduct in connection with the performance of
duties; (ii) conviction of a criminal offense (other than minor traffic
offenses); or (iii) material breach of any term of any employment, consulting or
other services, confidentiality, intellectual property or non-competition
agreements, if any, between Optionee and the Corporation or any of its
Subsidiaries or Affiliates.

          2.4 "Code" means the Internal Revenue Code of 1986, as now in effect
or as hereafter amended.

          2.5 "Committee" means the Compensation Committee of the Board which
must consist of no fewer than two members of the Board and shall be appointed by
the Board.

          2.6 "Corporation" means ADA-ES, INC.

          2.7 "Effective Date" means the date of adoption of the Plan by the
Board.

          2.8 "Employer" means ADA-ES, INC. or a Subsidiary or Affiliate of the
Corporation, which employs the designated recipient of an Option.

          2.9 "Exchange Act" means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended.

                                        1

<PAGE>

          2.10 "Fair Market Value" means the value of each share of Stock
subject to the Plan determined as follows: if on the Grant Date or other
determination date the shares of Stock are listed on an established national or
regional stock exchange, are admitted to quotation on the National Association
of Securities Dealers Automated Quotation System, or are publicly traded on an
established securities market, the Fair Market Value of the shares of Stock
shall be the closing bid price of the shares of Stock on such exchange or in
such market (the highest such closing price if there is more than one such
exchange or market) on the trading day immediately preceding the Grant Date (or
on the Grant Date, if so specified by the Committee or the Board) or such other
determination date or, if no sale of the shares of Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the shares of Stock are not listed on such an exchange, quoted on
such System or traded on such a market, Fair Market Value shall be determined by
the Board in good faith.

          2.11 "Grant Date" means the later of (i) January 20, 2003 and (ii) the
date as of which the Optionee and the Corporation, Subsidiary or Affiliate enter
the relationship resulting in the Optionee being eligible for grants.

          2.12 "Family Member" means a person who is a spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, of the Optionee, any person
sharing the Optionee's household (other than a tenant or employee), a trust in
which these persons (or the Optionee) have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the Optionee)
control the management of assets, and any other entity in which these persons
(or the Optionee) own more than fifty percent of the voting interests.

          2.13 "Incentive Stock Option" means an "incentive stock option" within
the meaning of section 422 of the Code.

          2.14 "Option" means an option to purchase one or more shares of Stock
pursuant to the Plan.

          2.15 "Option Agreement" means the written agreement evidencing the
grant of an Option hereunder.

          2.16 "Optionee" means a person who holds an Option under the Plan.

          2.17 "Option Period" means the period during which Options may be
exercised as defined in Section 11.

          2.18 "Option Price" means the purchase price for each share of Stock
subject to an Option.

          2.19 "Plan" means the ADA-ES, INC. 2003 Stock Option Plan.

          2.20 "1933 Act" means the Securities Act of 1933, as now in effect or
as hereafter amended.

                                        2

<PAGE>

          2.21 "Service Relationship" means the provision of bona fide services
to the Corporation, a Subsidiary, or an Affiliate as an employee or consultant.

          2.22 "Stock" mean the shares of Common Stock, no par value, of the
Corporation.

          2.23 "Subsidiary" means any "subsidiary corporation" of the
Corporation within the meaning of Section 425(f) of the Code.

3. ADMINISTRATION

          3.1. Committee

          The Plan shall be administered by the Committee appointed by the
Board, which shall have the full power and authority to take all actions and to
make all determinations required or provided for under the Plan or any Option
granted or Option Agreement entered into hereunder and all such other actions
and determinations not inconsistent with the specific terms and provisions of
the Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan or any Option granted or Option Agreement entered
into hereunder. The interpretation and construction by the Committee of any
provision of the Plan or of any Option granted or Option Agreement entered into
hereunder shall be final and conclusive.

          3.2. No Liability

          No member of the Board or of the Committee shall be liable for any
action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.

4.  STOCK

     The stock that may be issued pursuant to Options granted under the Plan
shall be Stock, which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant to Options
granted under the Plan shall not exceed in the aggregate 400,000 shares of
Stock, which number of shares is subject to adjustment as provided in Section 19
hereof. If any Option or portion thereof is unearned, expires, terminates or is
terminated for any reason prior to exercise in full, the shares of Stock that
were subject to the unexercised portion of such Option shall be available for
future Options granted under the Plan.

5. ELIGIBILITY

     Options may be granted under the Plan to (i) any officer or full-time
employee of the Corporation, any Subsidiary, any Affiliate (including any such
officer or employee who is also a director of the Corporation, any Subsidiary,
any Affiliate) or (ii) any other individual whose participation in the Plan is
determined to be in the best interests of the Corporation by the Committee. An
individual may hold more than one Option, subject to such restrictions as are
provided herein.

                                        3

<PAGE>

6. EFFECTIVE DATE AND TERM

          6.1. Effective Date

          The Plan shall become effective as of January 20, 2003, the date of
adoption by the Board, subject to stockholders' approval of the Plan within one
year of such effective date by a majority of the votes cast at a duly held
meeting of the stockholders of the Corporation at which a quorum representing a
majority of all outstanding stock is present, either in person or by proxy, and
voting on the matter, or by written consent in accordance with applicable state
law and the Certificate of Incorporation and By-Laws of the Corporation;
provided, however, that upon approval of the Plan by the stockholders of the
Corporation, all Options granted under the Plan on or after the effective date
shall be fully effective as if the stockholders of the Corporation had approved
the Plan on the effective date. If the stockholders fail to approve the Plan
within one year of such effective date, any Options granted hereunder shall be
null, void and of no effect.

          6.2. Term

          If not sooner terminated by the Board, the Plan shall terminate on the
date 10 years after the effective date.

7. GRANT OF OPTIONS

     Subject to the terms and conditions of the Plan, the Committee may, at any
time and from time to time prior to the date of termination of the Plan, grant
to such eligible individuals as the Committee may determine Options to purchase
such number of shares of Stock on such terms and conditions as the Committee may
determine, including any terms or conditions which may be necessary to qualify
such Options as Incentive Stock Options. Without limiting the foregoing, the
Committee may at any time, with the consent of the Optionee, amend the terms of
outstanding Options or issue new Options in exchange for the surrender and
cancellation of outstanding Options. The date on which the Committee approves
the grant of an Option (or such later date as is specified by the Committee)
shall be considered the date on which such Option is granted. The maximum number
of shares of Stock subject to Options that can be awarded under the Plan to any
person is 20,000 shares, which number of shares is subject to adjustment as
provided in Section 19 hereof.

8. LIMITATION ON INCENTIVE STOCK OPTIONS

     An Option shall constitute an Incentive Stock Option only to the extent
that (i) it is designated an Incentive Stock Option and (ii) the aggregate fair
market value (determined at the time the Option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionee during any calendar year (under the Plan and all other plans of the
Optionee's employer corporation and its parent and subsidiary corporations
within the meaning of Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which
such Options were granted.

                                        4

<PAGE>

9. OPTION AGREEMENTS

     All Options granted pursuant to the Plan shall be evidenced by written
agreements to be executed by the Corporation and the Optionee, in such form or
forms as the Committee shall from time to time determine. Option Agreements
covering Options granted from time to time or at the same time need not contain
similar provisions; provided, however, that all such Option Agreements shall
comply with all terms of the Plan.

10. OPTION PRICE

     The purchase price of each share of Stock subject to an Option shall be
fixed by the Committee and stated in each Option Agreement. In the case of an
Option that is intended to constitute an Incentive Stock Option, the Option
Price shall be not less than the greater of par value or 100 percent of the fair
market value of a share of the Stock covered by the Option on the date the
Option is granted (as determined in good faith by the Committee); provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), the
Option Price of an Option which is intended to be an Incentive Stock Option
shall be not less than the greater of par value or 110 percent of the fair
market value of a share of the Stock covered by the Option at the time such
Option is granted. In the case of an Option not intended to constitute an
Incentive Stock Option, the Option Price shall be not less than the par value of
a share of the Stock covered by the Option on the date the Option is granted.

11. TERM AND EXERCISE OF OPTIONS

          11.1.  Term

          Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of 5 years from the
date such Option is granted, or on such date prior thereto as may be fixed by
the Committee and stated in the Option Agreement relating to such Option;
provided, however, that in the event the Optionee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10
percent), an Option granted to such Optionee which is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.

          11.2. Exercise by Optionee

          Only the Optionee receiving an Option or a transferee of an Option
pursuant to Section 12 (or, in the event of the Optionee's legal incapacity or
incompetency, the Optionee's guardian or legal representative, and in the case
of the Optionee's death, the Optionee's estate) may exercise the Option.

                                        5

<PAGE>

          11.3. Option Period and Limitations on Exercise

          Each Option granted under the Plan shall be exercisable in whole or in
part at any time and from time to time over a period commencing on or after the
date of grant of the Option and ending upon the expiration or termination of the
Option, as the Committee shall determine and set forth in the Option Agreement
relating to such Option. Without limitation of the foregoing, the Committee,
subject to the terms and conditions of the Plan, may in its sole discretion
provide that an Option may not be exercised in whole or in part for any period
or periods of time during which such Option is outstanding as the Committee
shall determine and set forth in the Option Agreement relating to such Option.
Any such limitation on the exercise of an Option contained in any Option
Agreement may be rescinded, modified or waived by the Committee, in its sole
discretion, at any time and from time to time after the date of grant of such
Option. Notwithstanding any other provisions of the Plan, no Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the
stockholders of the Corporation as provided in Section 6.1 hereof.

          11.4. Method of Exercise

          An Option that is exercisable hereunder may be exercised by delivery
to the Corporation on any business day, at its principal office addressed to the
attention of the Committee, of written notice of exercise, which notice shall
specify the number of shares for which the Option is being exercised, and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised. Payment of the Option Price for the shares of
Stock purchased pursuant to the exercise of an Option shall be made, as
determined by the Committee and set forth in the Option Agreement pertaining to
an Option, (a) in cash or by certified check payable to the order of the
Corporation; (b) through the tender to the Corporation of shares of Stock which,
if acquired from the Company, have been owned by the Optionee no less than six
(6) months and which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; (c) to the extent permitted by applicable law and
under the terms of the Option Agreement with respect to such Option, by causing
the Corporation to withhold shares of Stock otherwise issuable pursuant to the
exercise of an Option equal in value to the Option Price or portion thereof to
be satisfied pursuant to this clause (c); or (d) by a combination of the methods
described in Sections 11.4(a), 11.4(b) and 11.4(c) hereof; provided, however,
that the Committee may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions on the use of
shares of Stock to exercise Options as it deems appropriate. Payment in full of
the Option Price need not accompany the written notice of exercise provided the
notice directs that the Stock certificate or certificates for the shares for
which the Option is exercised be delivered to a licensed broker acceptable to
the Corporation as the agent for the individual exercising the Option and, at
the time such Stock certificate or certificates are delivered, the broker
tenders to the Corporation cash (or cash equivalents acceptable to the
Corporation) equal to the Option Price plus the amount (if any) of federal
and/or other taxes which the Corporation may, in its judgment, be required to
withhold with respect to the exercise of the Option. An attempt to exercise any
Option granted hereunder other than as set forth above shall be invalid and of
no force and effect. Promptly after the exercise of an Option and the payment in
full of the Option Price of the shares of Stock covered thereby, the individual
exercising the Option shall be entitled to the issuance of a Stock certificate
or certificates evidencing such individual's ownership of such shares. A
separate Stock certificate or certificates shall be issued for any shares

                                        6

<PAGE>

purchased pursuant to the exercise of an Option which is an Incentive Stock
Option, which certificate or certificates shall not include any shares which
were purchased pursuant to the exercise of an Option which is not an Incentive
Stock Option. An individual holding or exercising an Option shall have none of
the rights of a stockholder until the shares of Stock covered thereby are fully
paid and issued to such individual and, except as provided in Section 19 hereof,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date of such issuance.

          11.5. Parachute Limitations

          Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Optionee with the Corporation or any Subsidiary, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an "Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Corporation (or any such Subsidiary) for the direct or
indirect provision of compensation to the Optionee (including groups or classes
of participants or beneficiaries of which the Optionee is a member), whether or
not such compensation is deferred, is in cash, or is in the form of a benefit to
or for the Optionee (a "Benefit Arrangement"), if the Optionee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any Option
held by that Optionee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested (i) to the extent that
such right to exercise, vesting, payment, or benefit, taking into account all
other rights, payments, or benefits to or for the Optionee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any payment or
benefit to the Optionee under this Plan to be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code as then in effect (a
"Parachute Payment") and (ii) if, as a result of receiving a Parachute Payment,
the aggregate after-tax amounts received by the Optionee from the Corporation
under this Plan, all Other Agreements, and all Benefit Arrangements would be
less than the maximum after-tax amount that could be received by Optionee
without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Optionee under any Other Agreement or any
Benefit Arrangement would cause the Optionee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Optionee as described in clause (ii) of the
preceding sentence, then the Optionee shall have the right, in the Optionee's
sole discretion, to designate those rights, payments, or benefits under this
Plan, any Other Agreements, and any Benefit Arrangements that should be reduced
or eliminated so as to avoid having the payment or benefit to the Optionee under
this Plan be deemed to be a Parachute Payment.

12. TRANSFERABILITY OF OPTIONS

          12.1. Transferability of Options

          Except as provided in Section 12.2, during the lifetime of an
Optionee, only the Optionee (or, in the event of legal incapacity or
incompetency, the Optionee's guardian or legal representative) may exercise an

                                        7

<PAGE>

Option. Except as provided in Section 12.2, no Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.

          12.2. Family Transfers.

          Subject to the terms of the applicable Option Agreement, an Optionee
may transfer all or part of an Option which is not an Incentive Stock Option to
any Family Member; provided that subsequent transfers of transferred Options are
prohibited except those in accordance with this Section 12.2 or by will or the
laws of descent and distribution; and, provided further, that, except with the
consent of the Board or the Committee, there may be no consideration for any
transfer made pursuant to this section. Following transfer, any such Option
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Section 12.2 hereof
the term "Optionee" shall be deemed to refer to the transferee. The events of
termination of the Service Relationship of Sections 13 and 14 hereof shall
continue to be applied with respect to the original Optionee, following which
the Option shall be exercisable by the transferee only to the extent, and for
the periods, specified in Section 11.3.

13. TERMINATION OF SERVICE RELATIONSHIP

     Upon the termination of the Service Relationship of an Optionee with the
Corporation, a Subsidiary or an Affiliate, other than by reason of the death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee or for Cause, any Option granted to an Optionee pursuant
to the Plan shall continue to be exercisable only to the extent that it was
exercisable immediately before such termination; provided, however, such Option
shall terminate thirty (30) days after the date of such termination of Service
Relationship, unless earlier terminated pursuant to Section 11.1 hereof, and
such Optionee shall have no further right to purchase shares of Stock pursuant
to such Option; and provided further, that the Committee may provide, by
inclusion of appropriate language in any Option Agreement, that an Optionee may
(subject to the general limitations on exercise set forth in Section 11.3
hereof), in the event of termination of the Service Relationship of the Optionee
with the Corporation, a Subsidiary or an Affiliate, exercise an Option, in whole
or in part, at any time subsequent to such termination of Service Relationship
and prior to termination of the Option pursuant to Section 11.1 hereof, either
subject to or without regard to any installment limitation on exercise imposed
pursuant to Section 11.3 hereof, as the Committee, in its sole and absolute
discretion, shall determine and set forth in the Option Agreement. Upon the
termination of the Service Relationship of an Optionee with the Corporation, a
Subsidiary or an Affiliate for Cause, any Option granted to an Optionee pursuant
to the Plan shall terminate and such Optionee shall have no further right to
purchase shares of Stock pursuant to such Option; and provided however, that the
Committee may provide, by inclusion of appropriate language in any Option
Agreement, that an Optionee may (subject to the general limitations on exercise
set forth in Section 11.3 hereof), in the event of termination of the Service
Relationship of the Optionee with the Corporation, a Subsidiary or an Affiliate
for Cause, exercise an Option, in whole or in part, at any time subsequent to
such termination of Service Relationship and prior to termination of the Option
pursuant to Section 11.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 11.3 hereof, as

                                        8

<PAGE>

the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement. Whether a leave of absence or leave on military
or government service shall constitute a termination of Service Relationship for
purposes of the Plan shall be determined by the Committee, which determination
shall be final and conclusive. For purposes of the Plan, including without
limitation this Section 13 and Section 14, unless otherwise provided in an
Option Agreement, a termination of Service Relationship with the Corporation, a
Subsidiary or an Affiliate shall not be deemed to occur if the Optionee
immediately thereafter has a Service Relationship with the Corporation, any
other Subsidiary or any other Affiliate.

14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

          14.1. Death

          If an Optionee dies while in a Service Relationship with the
Corporation, a Subsidiary or an Affiliate or within the period following the
termination of such Service Relationship during which the Option is exercisable
under Section 13 or 14.2 hereof, the executors, administrators, legatees or
distributees of such Optionee's estate shall have the right (subject to the
general limitations on exercise set forth in Section 11.3 hereof), at any time
within one year after the date of such Optionee's death and prior to termination
of the Option pursuant to Section 11.1 hereof, to exercise, in whole or in part,
any Option held by such Optionee at the date of such Optionee's death, whether
or not such Option was exercisable immediately prior to such Optionee's death;
provided, however, that the Committee may provide by inclusion of appropriate
language in any Option Agreement that, in the event of the death of an Optionee,
the executors, administrators, legatees or distributees of such Optionee's
estate may exercise an Option (subject to the general limitations on exercise
set forth in Section 11.3 hereof), in whole or in part, at any time subsequent
to such Optionee's death and prior to termination of the Option pursuant to
Section 11.1 hereof, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 11.3 hereof, as the
Committee, in its sole and absolute discretion, shall determine and set forth in
the Option Agreement.

          14.2. Disability

          If an Optionee terminates a Service Relationship with the Corporation,
a Subsidiary or an Affiliate by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such
Optionee shall have the right (subject to the general limitations on exercise
set forth in Section 11.3 hereof), at any time within one year after such
termination of Service Relationship and prior to termination of the Option
pursuant to Section 11.1 hereof, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of Service Relationship,
whether or not such Option was exercisable immediately prior to such termination
of Service Relationship; provided, however, that the Committee may provide, by
inclusion of appropriate language in any Option Agreement, that an Optionee may
(subject to the general limitations on exercise set forth in Section 11.3
hereof), in the event of the termination of the Service Relationship of the
Optionee with the Corporation or a Subsidiary by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option, in whole or in part, at any time subsequent to

                                        9

<PAGE>

such termination of Service Relationship and prior to termination of the Option
pursuant to Section 11.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 11.3 hereof, as
the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement. Whether a termination of a Service Relationship
is to be considered by reason of "permanent and total disability" for purposes
of the Plan shall be determined by the Committee, which determination shall be
final and conclusive.

15. USE OF PROCEEDS

     The proceeds received by the Corporation from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the
Corporation.

16. SECURITIES LAWS

     The Corporation shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or by the Corporation of any
provisions of any law or regulation of any governmental authority, including,
without limitation, any federal or state securities laws or regulations. If at
any time the Corporation shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to the Option upon any
securities exchange or under any state or federal law, or the consent of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares, the Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Corporation, and any delay caused thereby shall in no way
affect the date of termination of the Option. Specifically in connection with
the Securities Act, upon exercise of any Option, unless a registration statement
under the Securities Act is in effect with respect to the shares of Stock
covered by such Option, the Corporation shall not be required to sell or issue
such shares unless the Corporation has received evidence satisfactory to the
Corporation that the Optionee may acquire such shares pursuant to an exemption
from registration under the Securities Act. Any determination in this connection
by the Corporation shall be final and conclusive. The Corporation may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the Securities Act. The Corporation shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.

17. EXCHANGE ACT: RULE 16b-3

          17.1. General

          The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3") (and any
successor thereto) under the Exchange Act. Any provision inconsistent with Rule
16b-3 shall, to the extent permitted by law and determined to be advisable by
the Committee (constituted in accordance with Section 17.2 hereof), be
inoperative and void.

                                       10

<PAGE>

          17.2. Compensation Committee

          The Committee appointed in accordance with Section 3.1 hereof shall
consist of not fewer than two members of the Board each of whom shall qualify
(at the time of appointment to the Committee and during all periods of service
on the Committee) in all respects as a "non-employee director" as defined in
Rule 16b-3.

          17.3. Restriction on Transfer of Stock

          No director, officer or other "insider" of the Corporation subject to
Section 16 of the Exchange Act shall be permitted to sell Stock (which such
"insider" had received upon exercise of an Option) during the six months
immediately following the grant of such Option.

18. AMENDMENT AND TERMINATION

     The Board may, at any time and from time to time, suspend or terminate the
Plan and make such changes in or additions to the Plan as it may deem proper,
provided that, if and to the extent provided by applicable law or regulation, no
such suspension or termination of, change in or addition to the Plan shall be
made unless such suspension or termination of, or change in or addition to the
Plan is authorized by the Company's stockholders. Except as permitted under
Section 19 hereof, no suspension or termination of the Plan or any change in or
addition to the Plan shall, without the consent of any Optionee who is adversely
affected thereby, alter any Options previously granted to the Optionee pursuant
to the Plan.

19. EFFECT OF CHANGES IN CAPITALIZATION

          19.1. Changes in Stock

          If the number of outstanding shares of Stock is increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, a proportionate and
appropriate adjustment shall be made by the Corporation in the number and kind
of shares issuable under the Plan and for which Options are outstanding, so that
the proportionate interest of the Optionee immediately following such event
shall, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares subject to the unexercised portion
of the Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share. Notwithstanding the foregoing, in the
event of a spin-off that results in no change in the number of outstanding
shares of Stock of the Corporation, the Corporation may, in such manner as the
Corporation deems appropriate, adjust (i) the number and kind of shares of Stock
subject to outstanding Options and/or (ii) the exercise price of outstanding
Options.

                                       11

<PAGE>

          19.2. Reorganization With Corporation Surviving

          Subject to Section 19.3 hereof, if the Corporation shall be the
surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.

          19.3. Other Reorganizations; Sale of Assets or Stock

          Upon the dissolution or liquidation of the Corporation, or upon a
merger, consolidation or reorganization of the Corporation with one or more
other entities in which the Corporation is not the surviving entity, or upon a
sale of substantially all of the assets of the Corporation to another person or
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving entity) approved by the
Board that results in any person or entity (other than persons who are holders
of stock of the Corporation at the time the Plan is approved by the Stockholders
and other than an Affiliate) owning 80 percent or more of the combined voting
power of all classes of stock of the Corporation, the Plan and all Options
outstanding hereunder shall terminate, except to the extent provision is made in
connection with such transaction for the continuation of the Plan and/or the
assumption of the Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and exercise prices, in which event the Plan and Options theretofore
granted shall continue in the manner and under the terms so provided. In the
event of any such termination of the Plan, each Optionee shall have the right
(subject to the general limitations on exercise set forth in Section 11.3 hereof
and except as otherwise specifically provided in the Option Agreement relating
to such Option), immediately prior to the occurrence of such termination and
during such period occurring prior to such termination as the Committee in its
sole discretion shall designate, to exercise such Option in whole or in part,
whether or not such Option was otherwise exercisable at the time such
termination occurs, but subject to any additional provisions that the Committee
may, in its sole discretion, include in any Option Agreement. The Committee
shall send written notice of an event that will result in such a termination to
all Optionees not later than the time at which the Corporation gives notice
thereof to its stockholders.

          19.4. Adjustments

          Adjustments under this Section 19 relating to stock or securities of
the Corporation shall be made by the Committee, whose determination in that
respect shall be final and conclusive. No fractional shares of Stock or units of
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.

                                       12

<PAGE>

          19.5. No Limitations on Corporation

          The grant of an Option pursuant to the Plan shall not affect or limit
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

20. WITHHOLDING

     The Corporation or a Subsidiary may be obligated to withhold federal and
local income taxes and Social Security taxes to the extent that an Optionee
realizes ordinary income in connection with the exercise of an Option. The
Corporation or a Subsidiary may withhold amounts needed to cover such taxes from
payments otherwise due and owing to an Optionee, and upon demand the Optionee
will promptly pay to the Corporation or a Subsidiary having such obligation any
additional amounts as may be necessary to satisfy such withholding tax
obligation. Such payment shall be made in cash or cash equivalents.

21. DISCLAIMER OF RIGHTS

     No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Corporation, any Subsidiary
or any Affiliate, or to interfere in any way with the right and authority of the
Corporation, any Subsidiary or any Affiliate either to increase or decrease the
compensation of any individual at any time, or to terminate any employment or
other relationship between any individual and the Corporation, any Subsidiary or
any Affiliate. The obligation of the Corporation to pay any benefits pursuant to
the Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the Corporation to
transfer any amounts to a third party trustee or otherwise hold any amounts in
trust or escrow for payment to any participant or beneficiary under the terms of
the Plan.

22. NONEXCLUSIVITY

     Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.

                                       13

<PAGE>

23. Governing Law.

     This Plan and all Options to be granted hereunder shall be governed by the
laws of the State of Colorado (but not including the choice of law rules
thereof).

     IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer
to execute this Plan as of the 20th day of January, 2003 to evidence its
adoption of this Plan.

                                            ADA-ES, INC.

                                            By:  /s/  Mark H. McKinnies
                                               -----------------------------
                                                      Mark H. McKinnies
                                                      Chief Financial Officer

                                       14

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