Document:

EXHIBIT 10.6

                SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT

     This SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT dated as of the 7th
day of July 2003, is made between EARTH SCIENCES, INC., a Colorado corporation
with principal executive offices located at 8100 SouthPark Way, B, Littleton,
Colorado 80120 ("ESI"), ADA-ES, INC., a Colorado corporation with the same
address as ESI (the "Company"), and ARCH COAL, INC., a Delaware corporation with
its principal executive offices located at One CityPlace Drive, Suite 300, St.
Louis, MO 63141 (the "Buyer").

                              W I T N E S S E T H:

     WHEREAS, the Company is a wholly-owned subsidiary of the ESI: and

     WHEREAS, Buyer desires to purchase from the Company, and the Company
desires to issue and sell to the Buyer, upon the terms and subject to the
conditions of this Agreement, shares of the Company's common stock, (the "Common
Stock") and an option to purchase shares of such Common Stock; and

     WHEREAS, such investment will be made in reliance upon the provisions of
Section 4(2) and Regulation D of the United States Securities Act of 1933, as
amended and the regulations promulgated thereunder (the "Securities Act"),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
in Common Stock subscribed to hereunder.

     NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1. PURCHASE AND SALE OF COMMON STOCK AND OPTION

     a. Transaction and Purchase Price. Buyer hereby subscribes, upon the
satisfaction of each of the conditions set forth in Section 9 hereto, for
$1,000,000 (payable in United States Dollars) of Common Stock (the "Shares").
The price per share and the number of shares shall be determined as follows:

     (i)  The price per share for the Shares (the "Purchase Price") shall be
          equal to twenty times the price of one share of the common stock of
          ESI (OTCBB: ESCI) ("ESI Stock") or $10.00 per share whichever is less
          as determined by the average closing price per share of ESI Stock for
          the twenty-day trading period immediately preceding the record date of
          the Distribution (as defined below) as reported on the OTCBB (as
          defined below).

     (ii) The number of Shares of Common Stock to be issued to Buyer shall be
          equal to $1,000,000 divided by the Purchase Price.

     b. Form of Payment. Buyer shall pay the Purchase Price on the Closing Date
by wire transfer or check of immediately available funds to the Company.
Simultaneously against receipt by the Company of the Purchase Price, the Company
shall deliver one or more duly authorized, issued and executed certificates
(I/N/O Buyer) evidencing the Shares, to the Buyer or its designated depository.

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     c. Method of Payment. Payment to the Company of the Purchase Price shall be
made by wire transfer of immediately available funds to the account of the
Company as follows:

Wells Fargo Bank Denver
ABA# 102000076
For the Account of:  ADA-ES
Account#  1013093222

Simultaneously with the receipt of the Purchase Price the Company shall arrange
for delivery the Shares as follows:

     (i)  If the number of shares as determined in Section 1(a)(ii) is in less
          than or equal to 100,000 shares of Common Stock, then the Company will
          deliver all the Shares to the Buyer.
     (ii) If the number of shares as determined in Section 1(a)(ii) is greater
          than 100,000 shares of Common Stock, then the shares in excess of
          100,000 shares (the "Excess Shares"), shall be delivered to an escrow
          account as mutually agreed to by Buyer and Company.

     d. Release of Shares from Escrow. During the 365 days following the Closing
Date, the average of the highest twenty consecutive day share price ("HSP") as
provided by the closing price per share as quoted by the OTC Bulletin Board
("OTCBB") or similar quotation will be determined. The HSP will be used to
determine the percentage, if any, of the Excess Shares that will be returned to
the Company from escrow if there are shares in escrow as determined in Section 1
(c). The floor price ("FP") for these escrow calculations will be 125% of the
Purchase Price, and the ceiling price ("CP") will be 200% of the Purchase Price
or $15.00, whichever is greater.

     (i)  If the HSP is less than or equal to the FP, then all of the Excess
          Shares will be released to the Buyer.
     (ii) If the HSP is greater that or equal to the CP, then all of the Excess
          Shares will be released to the Company.
     (iii) If the HSP is greater than the FP but less than the CP, then the
          number of shares to be released from escrow to the Company shall be
          equal to:

                   Escrow Shares times (HSP - FP) / (CP - FP)

     e. Option Shares. The Buyer shall also receive on the Closing Date an
option to purchase additional shares in the form provided for in Exhibit A
attached hereto. The number of shares under option shall be equal to half the
amount of Shares purchased at the Closing Date not to exceed 50,000 shares at a
price of $10.00 per share.

     2. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.

     Buyer represents and warrants to and covenants and agrees with the Company
as follows:

     a. Buyer is purchasing the Shares of Common Stock for its own account, for
investment purposes only and not with a view towards or in connection with the
public sale or distribution thereof in violation of the Securities Act of 1933,
as amended (the "Securities Act").

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     b. Buyer is (i) an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments of
the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.

     c. Buyer understands that the Shares of Common Stock are being offered and
sold by the Company in reliance on an exemption from the registration
requirements of the Securities Act and equivalent state securities and "blue
sky" laws, and that the Company is relying upon the accuracy of, and Buyer's
compliance with, Buyer's representations, warranties and covenants set forth in
this Agreement to determine the availability of such exemption and the
eligibility of Buyer to purchase the Shares;

     d. Buyer acknowledges that it has been furnished with copies of the ESI's
Annual Report on Form 10-KSB for the fiscal years ended December 31, 2002 and
2001, the ESI's Quarterly Report on Form 10-QSB for the fiscal quarters ended
March 31, 2003, and all other reports and documents heretofore filed by the
Company with the Securities and Exchange Commission (the "Commission") pursuant
to the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since December 31, 2002 (collectively the "Commission Filings").

     e. Buyer acknowledges that in making its decision to purchase the Shares it
has (i) relied upon independent investigations made by it and its professional
advisors, (ii) visited the Company's principal executive offices and been given
access and the opportunity to examine all agreements, books and records of the
Company which Buyer requested, (iii) received and examined the Company's draft
Registration Statement on Form 10-SB prepared in connection with the
Distribuiton, and (iv) been given an opportunity to ask questions of and to
receive answers from the Company's and ESI'sexecutive officers, directors and
management personnel concerning the terms and conditions of the private
placement of the Shares by the Company.

     f. Buyer understands that sale of the Shares have not been approved or
disapproved by the Commission or any state securities commission and that the
foregoing authorities have not reviewed any documents or instruments in
connection with the offer and sale to it of the Securities and have not
confirmed or determined the adequacy or accuracy of any such documents or
instruments.

     g This Agreement has been duly and validly authorized, executed and
delivered by the Buyer and is a valid and binding agreement of the Buyer
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally.

     h. Neither Buyer nor its affiliates nor any person acting on its or their
behalf has the intention of entering, or will enter into, prior to the Closing,
any put option, short position or other similar instrument or position with
respect to the Common Stock and neither Buyer nor any of its affiliates nor any
person acting on its or their behalf will use at any time shares of Common Stock
acquired pursuant to this Agreement to settle any put option, short position or
other similar instrument or position that may have been entered into prior to
the execution of this Agreement or any issuance of the Shares.

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     3. ESI'S AND THE COMPANY'S REPRESENTATIONS

     The Company and ESI represent and warrant to Buyer that:

     a. Capitalization.
(i) The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock and 50,000,000 shares of Preferred Stock, of which 10,000 shares of
Common Stock were outstanding as of December 31, 2002. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable. The Common Stock issuable upon purchase
of the Shares has been duly and validly authorized and reserved for issuance by
the Company, and when issued by the Company will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder. There are no preemptive,
subscription, "call" or other similar rights to acquire the Common Stock that
have been issued or granted to any person, except as disclosed in the Commission
Filings or otherwise previously disclosed in writing to Buyer.

(ii) Except as disclosed in the Commission Filings, ESI and/or the Company do
not own or control, directly or indirectly, any interest in any other
corporation, partnership, limited liability company, unincorporated business
organization, association, trust or other business entity. Except as disclosed
in the Commission Filings, the Company owns 100% of the outstanding shares of
capital stock of each of its subsidiaries, free and clear of any and all liens,
pledges, encumbrances, charges, agreements, security interests, mortgages or
claims of any kind whatsoever.

     b. Organization; Reporting Company Status.
(i) The Company and ESI are corporations duly organized, validly existing and in
good standing under the laws of the State of Colorado and are duly qualified as
a foreign corporation in all jurisdictions in which the failure to so qualify
would have a material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of the Company and
its subsidiaries, taken as a whole, or on the consummation of any of the
transactions contemplated by this Agreement (a "Material Adverse Effect"). Each
of the Company's subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation and is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a Material Adverse
Effect.

(ii) The Company has not registered the Common Stock pursuant to Section 12 of
the Exchange Act and has not filed any separate reports or information with
regard to the Company with the Commission. The Company knows of no reports or
information required to be filed with regard to the Company with the Commission
by it pursuant to any reporting obligations under Section 13(a) or 15(d), as
applicable, of the Exchange Act for the 24-month period immediately preceding
the date hereof.

     c. Authority; Validity and Enforceability. The Company and ESI have the
requisite corporate power and authority to enter into this Agreement and to
perform all of their obligations hereunder and thereunder (including the
issuance, sale and delivery to Buyer of the Shares). The execution, delivery and
performance by the Company and ESI of this Agreement, and the consummation by
the Company and ESI of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Company and ESI.
This Agreement has been duly and validly executed and delivered by the Company
and ESI and constitutes a valid and binding agreement of the Company and ESI
enforceable against them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally. The Shares have
been duly and validly authorized for issuance by the Company.

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     d. Non-contravention. The execution and delivery by the Company and ESI of
this Agreement, the issuance of the Shares, and the consummation by the Company
and ESI of the other transactions contemplated hereby, does not and will not
conflict with or result in a breach by the Company and/or ESI of any of the
terms or provisions of, or constitute a default (or an event which, with notice,
lapse of time or both, would constitute a default) under, the articles of
incorporation or by-laws of the Company and/or ESI, or any indenture, mortgage,
deed of trust or other material agreement or instrument to which the Company
and/or ESI or any of their subsidiaries is a party or by which its or any of its
subsidiaries' properties or assets are bound, or any law, rule, regulation,
decree, judgment or order of any court or public or governmental authority
having jurisdiction over the Company and/or ESI or any of their subsidiaries or
any of their or their subsidiaries' properties or assets, except such conflict,
breach or default which would not have a Material Adverse Effect.

     e. Approvals. No authorization, approval or consent of any court or public
or governmental authority is required to be obtained by the Company or ESI for
the issuance and sale of the Shares to Buyer as contemplated by this Agreement,
except such authorizations, approvals and consents that have been obtained by
the Company and ESI prior to the date hereof.

     f. Commission Filings. None of the Commission Filings contained at the time
they were filed any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.

     g. Absence of Certain Changes. Since the Balance Sheet Date (as defined in
Section 3.k.), there has not occurred any change, event or development, and
there has not existed any condition having or reasonably likely to have, a
Material Adverse Effect.

     h. Full Disclosure. There is no fact known to the Company or ESI (other
than general economic or industry conditions known to the public generally) that
has not been fully disclosed to the Buyer that (i) reasonably could be expected
to have a Material Adverse Effect or (ii) reasonably could be expected to
materially and adversely affect the ability of the Company or ESI to perform its
obligations pursuant to this Agreement.

     i. Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the Company's or ESI's knowledge,
threatened, by or before any court or public or governmental authority which, if
determined adversely to the Company or ESI or any of their subsidiaries, would
have a Material Adverse Effect.

     j. Absence of Events of Default. No "Event of Default" (as defined in any
agreement or instrument to which the Company or ESI or any of their subsidiaries
is a party) and no event which, with notice, lapse of time or both, would
constitute an Event of Default (as so defined), has occurred and is continuing,
which could have a Material Adverse Effect.

     k. Financial Statements; No Undisclosed Liabilities. ESI has delivered to
Buyer true and complete copies of its (i) audited consolidated balance sheet as
at December 31, 2002 and the related audited consolidated statements of
operations and cash flows for the fiscal years ended December 31, 2002 and
December 31, 2001, and (ii) an unaudited Pro Forma balance sheet of the Company
as at December 31, 2002, including in all such cases the related notes and
schedules thereto (collectively, the "Financial Statements). Each of the
Financial Statements is complete and correct in all material respects, has been
prepared in accordance with United States General Accepted Accounting Principles
("GAAP") (subject, in the case of the interim Financial Statements, to normal
year-end adjustments and the absence of footnotes, and subject, in case of the
Pro Forma balance sheet to the absence of footnotes) and in conformity with the
practices consistently applied by ESI without modification of the accounting
principles used in the preparation thereof, and fairly presents the financial
position, results of operations and cash flows of ESI and its consolidated

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subsidiaries as at the dates and for the periods indicated. For purposes hereof,
the audited consolidated balance sheet of the ESI and its subsidiaries as at
December 31, 2002 is hereinafter referred to as the "Balance Sheet" and December
31, 2002 is hereinafter referred to as the "Balance Sheet Date". Neither ESI nor
any of its subsidiaries has any indebtedness, obligations or liabilities of any
kind (whether accrued, absolute, contingent or otherwise, and whether due or to
become due) that would have been required to be reflected in, reserved against
or otherwise described in the Balance Sheet or in the notes thereto in
accordance with GAAP, which was not fully reflected in, reserved against or
otherwise described in the Balance Sheet or the notes thereto or was not
incurred in the ordinary course of business consistent with ESI's past practices
since the Balance Sheet Date.

     l. Compliance with Laws; Permits. ESI and each of its subsidiaries is in
compliance with all laws, rules, regulations, codes, ordinances and statutes
(collectively "Laws") applicable to it or to the conduct of its business, except
for such non-compliance which would not have a Material Adverse Effect. ESI and
each of its subsidiaries possesses all permits, approvals, authorizations,
licenses, certificates and consents from all public and governmental authorities
which are necessary to conduct its business, except for those the absence of
which would not have a Material Adverse Effect.

     m. Related Party Transactions. Except as set forth in the Commission
Filings, neither the Company, ESI nor any of their officers, directors or
"Affiliates" (as such term is defined in Rule 12b-2 under the Exchange Act) has
borrowed any moneys from or has outstanding any indebtedness or other similar
obligations to the Company or ESI. Neither the Company, ESI nor any of their
officers, directors or Affiliates (i) owns any direct or indirect interest of
any kind in, or controls or is a director, officer, partner, member or employee
of, or consultant to or lender to or borrower from, or has the right to
participate in the profits of, any person or entity which is (x) a competitor,
supplier, customer, landlord, tenant, creditor or debtor of the Company or any
of its subsidiaries, (y) engaged in a business related to the business of the
Company or any of its subsidiaries, or (z) a participant in any transaction to
which the Company or any of its subsidiaries is a party or (ii) is a party to
any contract, agreement, commitment or other arrangement with the Company or any
of its subsidiaries. Notewithstanding the foregoing, this paragraph does not
require the disclosure by the Company or ESI to the Buyer of any related party
transactions not required to be disclosed in the Commission Filings.

     n. Insurance. Each of the Company and ESI maintains property and casualty,
general liability, workers' compensation, environmental hazard, personal injury
and other similar types of insurance with financially sound and reputable
insurers that is adequate, consistent with industry standards and ESI and the
Company's historical claims experience, to cover all loss contingencies which
forseeably may arise in the conduct of the business of the Company and its
subsidiaries. Neither the Company nor ESI has received notice from, and has no
knowledge of any threat by, any insurer (that has issued any insurance policy to
the Company or any of its subsidiaries) that such insurer intends to deny
coverage under or cancel, discontinue or not renew any insurance policy
presently in force.

     o. Securities Law Matters. Based, in part, upon the representations and
warranties of Buyer set forth in Section 2 hereof, the offer and sale by the
Company of the Shares is exempt from (i) the registration and prospectus
delivery requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state securities and "blue sky" laws. Other than pursuant to
an effective registration statement under the Securities Act, the Company has
not issued, offered or sold the Shares or any shares of Common Stock (including
for this purpose any securities of the same or a similar class as the Common
Stock, or any securities convertible into or exchangeable or exercisable for the
Common Stock or any such other securities) within the six-month period next
preceding the date hereof, except as disclosed in the Commission Filings or

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otherwise previously disclosed in writing to Buyer, and neither the Company nor
ESI shall directly or indirectly take, and shall permit any of its directors,
officers or Affiliates directly or indirectly to take, any action (including,
without limitation, any offering or sale to any person or entity of shares of
Common Stock), so as to make unavailable the exemption from Securities Act
registration being relied upon by the Company for the offer and sale to Buyer of
Shares as contemplated by this Agreement. No form of general solicitation or
advertising has been used or authorized by ESI, the Company or any of their
officers, directors or Affiliates in connection with the offer or sale of Shares
as contemplated by this Agreement or any other agreement to which ESI or the
Company is a party.

     p. Environmental Matters.

(i)      The operations of ESI and each of its subsidiaries are in compliance
         with all applicable Environmental Laws and all permits issued pursuant
         to Environmental Laws or otherwise;
(ii)     to its knowledge, ESI and each of its subsidiaries has obtained all
         permits required under all applicable Environmental Laws necessary to
         operate its business;
(iii)    neither ESI nor any of its subsidiaries is the subject of any
         outstanding written order of or agreement with any governmental
         authority or person respecting (i) Environmental Laws, (ii) Remedial
         Action or (iii) any Release or threatened Release of Hazardous
         Materials;
(iv)     neither ESI nor any of its subsidiaries has received any written
         communication alleging either or both that ESI or any of its
         subsidiaries may be in violation of any Environmental Law or any permit
         issued pursuant to Environmental Law, or may have any liability under
         any Environmental Law;
(v)      except as set forth in the Commission Filings, to ESI's knowledge,
         there are no investigations of the business, operations, or currently
         or previously owned, operated or leased property of the Company or any
         of its subsidiaries pending or threatened which could lead to the
         imposition of any liability pursuant to any Environmental Law; and,
(vi)     the Company has provided to Buyer all environmentally related audits,
         studies, reports, analyses, and results of investigations that have
         been performed with respect to the currently or previously owned,
         leased or operated properties of the Company or any of its
         subsidiaries.

     For purposes of this Section 3.p.:

     "Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance, or rule of common law as now or hereafter in effect in
any way relating to the protection of human health and safety or the environment
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C.ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App.ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss. 6901 et seq.), the Clean Water Act
(33 U.S.C.ss. 1251 et seq.), the Clean Air Act (42 U.S.C.ss. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.ss. 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss. 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C.ss. 651 et seq.), and the
regulations promulgated pursuant thereto.

     "Hazardous Material" means any substance, material or waste which is
regulated by the United States, Canada or any of its provinces, or any state or
local governmental authority including, without limitation, petroleum and its
by-products, asbestos, and any material or substance which is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
"toxic waste" or toxic substance" under any provision of any Environmental Law;

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     "Release" means any release, spill, filtration, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property;

     "Remedial Action" means all actions to (x) clean up, remove, treat or in
any other way address any Hazardous Material; (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.

Notwithstanding the foregoing, neither ESI nor the Company shall be deemed in
breach of any of the representations set forth in this Section 3p unless such
breach shall have a Material Adverse Affect on the Company or the value of the
Shares.

     q. Labor Matters. Neither ESI nor any of its subsidiaries is party to any
labor or collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of the Company or any of its
subsidiaries. No employees of the Company or any of its subsidiaries are
represented by any labor organization and none of such employees has made a
pending demand for recognition, and there are no representation proceedings or
petitions seeking a representation proceeding presently pending or, to the
Company's knowledge, threatened to be brought or filed, with the National Labor
Relations Board or other labor relations tribunal. There is no organizing
activity involving the Company or any of its subsidiaries pending or to the
Company's knowledge, threatened by any labor organization or group of employees
of the Company or any of its subsidiaries. There are no (i) strikes, work
stoppages, slowdowns, lockouts or arbitrations or (ii) material grievances or
other labor disputes pending or, to the knowledge of the Company, threatened
against or involving the company or any of its subsidiaries. There are no unfair
labor practice charges, grievances or complaints pending or, to the knowledge of
the Company, threatened by or on behalf of any employee or group of employees of
the Company.

     r. ERISA Matters. Each of the Company, its subsidiaries and their ERISA
Affiliates is in compliance in all material respects with all provisions of
ERISA applicable to it. No Reportable Event has occurred, been waived or exists
as to which the Company or any of its subsidiaries or any ERISA Affiliate was
required to file a report with the Pension Benefits Guaranty Corporation, and
the present value of all liabilities under all Plans (based on those assumptions
used to fund such Plans) did not, as of the most recent annual valuation date
applicable thereto, exceed the value of the assets of all such Plans in the
aggregate. None of the Company or any of its subsidiaries or ERISA Affiliates
has incurred any Withdrawal Liability that could result in a Material Adverse
Effect. None of the Company or any of its subsidiaries or ERISA Affiliates has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or termination
where such reorganization or termination has resulted or could reasonably be
expected to result in increases to the contributions required to be made to such
Plan or otherwise.

     For purposes of this Section 3.r.:

     "ERISA" means the Employee Retirement Income Security Act of 1974, or any
successor statute, together with the regulations thereunder, as the same may be
amended from time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that was, is or hereafter may become, a member of a group of which the Company
or any of its subsidiaries is a member and which is treated as a single employer
under ss. 414 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code").

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     "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of ss. 414
of the Internal Revenue Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.

     "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

     "Plan" means any pension plan (other than a Multiemployer Plan) subject to
the provision of Title IV of ERISA or ss. 412 of the Internal Revenue Code that
is maintained for employees of the Company or any ERISA Affiliate.

     "Reportable Event" means any reportable event as defined in Section 4043(b)
of ERISA or the regulations issued thereunder with respect to a Plan (other than
a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of ss. 414 of the Internal Revenue Code.

     "Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

     s. Tax Matters.
(i)  ESI and each of its subsidiaries have filed all Tax Returns which they are
     required to file under applicable Laws, except for such Tax Returns in
     respect of which the failure to so file does not and could not have a
     Material Adverse Effect; all such Tax Returns are true and accurate and
     have been prepared in compliance with all applicable Laws; ESI and each of
     its subsidiaries have paid all Taxes due and owing by them (whether or not
     such Taxes are required to be shown on a Tax Return) and have withheld and
     paid over to the appropriate taxing authorities all Taxes which they are
     required to withhold from amounts paid or owing to any employee,
     stockholder, creditor or other third parties; and since the Balance Sheet
     Date, the charges, accruals and reserves for Taxes with respect to the
     Company (including any provisions for deferred income taxes) reflected on
     the books of the Company are adequate to cover any Tax liabilities of the
     Company and its subsidiaries if their current tax year were treated as
     ending on the date hereof.
(ii) No claim has been made by a taxing authority in a jurisdiction where either
     ESI or any of its subsidiaries does not file tax returns that such
     corporation is or may be subject to taxation by that jurisdiction. There
     are no foreign, federal, state or local tax audits or administrative or
     judicial proceedings pending or being conducted with respect to ESI or any
     of its subsidiaries; no information related to Tax matters has been
     requested by any foreign, federal, state or local taxing authority; and no
     written notice indicating an intent to open an audit or other review has
     been received by ESI from any foreign, federal, state or local taxing
     authority. There are no material unresolved questions or claims concerning
     ESI's or any of its subsidiaries' Tax liability. Neither ESI nor any of its
     subsidiaries (A) has executed or entered into a closing agreement pursuant
     toss. 7121 of the Internal Revenue Code or any predecessor provision
     thereof or any similar provision of state, local or foreign law; or (B) has
     agreed to or is required to make any adjustments pursuant toss. 481 (a) of

                                       9

<PAGE>

     the Internal Revenue Code or any similar provision of state, local or
     foreign law by reason of a change in accounting method initiated by ESI or
     any of its subsidiaries or has any knowledge that the IRS has proposed any
     such adjustment or change in accounting method, or has any application
     pending with any taxing authority requesting permission for any changes in
     accounting methods that relate to the business or operations of ESI or any
     of its subsidiaries. Neither ESI nor any of its subsidiaries has been a
     United States real property holding corporation within the meaning ofss.
     897(c)(2) of the Internal Revenue Code during the applicable period
     specified inss. 897(c)(1)(A)(ii) of the Internal Revenue Code.
(iii) Neither the Company nor any of its subsidiaries has made an election under
     ss. 341(f) of the Internal Revenue Code. Neither ESI nor any of its
     subsidiaries is liable for the Taxes of another person that is not a
     subsidiary of ESI under (A) Treas. Reg. ss. 1.1502-6 (or comparable
     provisions of state, local or foreign law), (B) as a transferee or
     successor, (C) by contract or indemnity or (D) otherwise. Neither ESI nor
     any of its subsidiaries is a party to any tax sharing agreement. Neither
     ESI nor any of its subsidiaries has made any payments, is obligated to make
     payments or is a party to an agreement that could obligate it to make any
     payments that would not be deductible under ss. 280G of the Internal
     Revenue Code.

     For purposes of this Section 3.s.:

     "IRS" means the United States Internal Revenue Service.

     "Tax" or "Taxes" means federal, state, county, local, foreign, or other
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.

     "Tax Return" means any return, information report or filing with respect to
Taxes, including any schedules attached thereto and including any amendment
thereof.

     t. No Misrepresentation. No representation or warranty of ESI or the
Company contained in this Agreement, any schedule, annex or exhibit hereto or
any agreement, instrument or certificate furnished by ESI or the Company to
Buyer pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.

     u. Disclosure of Material Information. ESI has provided the Buyer will all
material information with respect to the Company, including a true and complete
copy of the Company's registration statement on Form 10-SB prepared in
connection with the Distribution, which could be reasonably necessary for Buyer
to make a informed decision to invest in the Shares.

     4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

     a. Restrictive Legend. Buyer acknowledges and agrees that, upon issuance
pursuant to this Agreement, any certificate representing the Shares shall have
endorsed thereon a legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the Shares):

     "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
     STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM

                                    10

<PAGE>

     THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
     THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
     EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
     TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
     SECURITIES ACT OR SUCH OTHER LAWS."

     b. Filings. The Company and/or ESI shall make all necessary filings in
connection with the sale of the Shares to the Buyer as required by all
applicable Laws, and shall provide a copy thereof to the Buyer promptly after
such filing.

     c. Use of Proceeds. The Company shall use the proceeds from the sale of the
Shares (excluding amounts paid by the Company for legal fees in connection with
such sale) for general corporate purposes

     5. TRANSFER AGENT INSTRUCTIONS a. The Company undertakes and agrees that no
instruction other than the instructions referred to in this Section 5 and
customary stop transfer instructions prior to the registration and sale of the
Common Stock pursuant to an effective Securities Act registration statement will
be given to its transfer agent for the Shares and that the Shares otherwise
shall be freely transferable on the books and records of the Company as and to
the extent provided in this Agreement and applicable law. Nothing contained in
this Section 5.a. shall affect in any way Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of such Common Stock. If,
at any time, Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of the resale by Buyer of such
Common Stock is not required under the Securities Act and that the removal of
restrictive legends is permitted under applicable law, the Company shall permit
the transfer of such Common Stock and, promptly instruct the Company's transfer
agent to issue one or more certificates for Common Stock without any restrictive
legends endorsed thereon.

     6. DELIVERY INSTRUCTIONS.

     The Shares shall be delivered by the Company to the Buyer pursuant to
Section 1(b) hereof at the Closing.

     7. CLOSING DATE.

     The date and time of the issuance and sale of the Shares (the "Closing
Date") shall be mutually agreed between the parties but shall be no later than
five (5) business days after the Distribution (as defined below) and all other
conditions set forth in Section 9 have been satisfied. The issuance and sale of
the Shares shall occur on the Closing Date at the offices of the Company.
Notwithstanding anything to the contrary contained herein, the Company shall not
be authorized to accept the Purchase Price and to issue the Buyer the
certificate(s) (I/N/O Buyer) evidencing the Shares being purchased by Buyer
unless the conditions set forth in Section 8(c) and 9(e) hereof have been
satisfied.

     8. CONDITIONS TO ESI'S AND THE COMPANY'S OBLIGATIONS.

     The Buyer understands that the Company's obligation to sell the Shares on
the Closing Date to Buyer pursuant to this Agreement is conditioned upon:

     a. Delivery by Buyer to the Company of the Purchase Price;

                                       11

<PAGE>

     b.   The accuracy on the Closing Date of the representations and warranties
          of Buyer contained in this Agreement as if made on the Closing Date
          (except for representations and warranties which, by their express
          terms, speak as of and relate to a specified date, in which case such
          accuracy shall be measured as of such specified date) and the
          performance by Buyer in all material respects on or before the Closing
          Date of all covenants and agreements of Buyer required to be performed
          by it pursuant to this Agreement on or before the Closing Date;

     c.   There shall not be in effect any Law or order, ruling, judgment or
          writ of any court or public or governmental authority restraining,
          enjoining or otherwise prohibiting any of the transactions
          contemplated by this Agreement.

     d.   Each of the Stock Option Agreement attached hereto as Exhibit A (the
          "Option"), the Standstill and Registration Rights Agreement attached
          hereto as Exhibit B (the "Standstill Agreement"), the 6% Convertible
          Debenture attached hereto as Exhibit C (the "Debenture"); and the
          Stockholder Agreement attached hereto as Exhibit D (the "Stockholder
          Agreement") shall have been fully executed by each of the parties.

     9. CONDITIONS TO BUYER'S OBLIGATIONS.

     ESI and the Company understand that Buyer's obligation to purchase the
Shares on the Closing Date pursuant to this Agreement is conditioned upon:

     a.   Delivery by the Company to the Buyer of one or more certificates
          (I/N/O Buyer) evidencing the Shares to be purchased by Buyer pursuant
          to this Agreement less those Shares to be held in an escrow account;

     b.   The accuracy on the Closing Date of the representations and warranties
          of ESI and the Company contained in this Agreement as if made on the
          Closing Date (except for representations and warranties which, by
          their express terms, speak as of and relate to a specified date, in
          which case such accuracy shall be measured as of such specified date)
          and the performance by ESI and the Company in all material respects on
          or before the Closing Date of all covenants and agreements of ESI and
          the Company required to be performed by it pursuant to this Agreement
          on or before the Closing Date;

     c.   There not having occurred (i) any general suspension of trading in, or
          limitation on prices listed for, the common stock of ESI or the
          Company on the OTC:BB, (ii) the declaration of a banking moratorium or
          any suspension of payments in respect of banks in the United States,
          (iii) the commencement of a war, armed hostilities or other
          international or national calamity directly or indirectly involving
          the United States or any of its territories, protectorates or
          possessions, or (iv) in the case of the foregoing existing at the date
          of this Agreement, a material acceleration or worsening thereof.

     d.   There not having occurred any event or development, and there being in
          existence no condition, having or which reasonably and forseeably
          could have a Material Adverse Effect on the Company's business.

     e.   There shall not be in effect any Law or order, ruling, judgment or
          writ of any court or public or governmental authority restraining,
          enjoining or otherwise prohibiting any of the transactions
          contemplated by this Agreement.

                                       12

<PAGE>

     f.   ESI shall have completed the distribution of all of its shares of the
          Company to ESI's shareholders (the "Distribution") as contemplated by
          the Form 10SB filed by the Company with the Securities Exchange
          Commission on March 24, 2003 (the "Form 10SB") and there shall not
          have been any material adverse revisions or other changes in the Form
          10SB between the date of its initial filing with the SEC and the date
          of its effectiveness

     g.   Each of the Option, the Standstill Agreement, the Stockholder
          Agreement and the Debenture shall have been fully executed by each of
          the parties.

     h.   ADA-ES shall have executed final documentation refinancing its
          remaining indebtedness to Tectonic Construction Co., with terms of at
          least a seven-year amortization period with a three-year balloon
          payment.

     10. TERMINATION.

     a. Termination by Mutual Written Consent. This Agreement may be terminated
     and the transactions contemplated hereby may be abandoned, for any reason
     and at any time prior to the Closing Date, by the mutual written consent of
     ESI, the Company and Buyer.

     b. Termination by ESI, the Company or Buyer. This Agreement may be
     terminated and the transactions contemplated hereby may be abandoned by
     action of ESI, the Company or Buyer if (i) the Closing shall not have
     occurred at or prior to 5:00 p.m., Denver time, on September 30, 2003;
     provided, however, that the right to terminate this Agreement pursuant to
     this Section 10.b.(i) shall not be available to any party whose failure to
     fulfill any of its obligations under this Agreement has been the cause of
     or resulted in the failure of the Closing to occur at or before such time
     and date or (ii) any court or public or governmental authority shall have
     issued an order, ruling, judgment or writ, or there shall be in effect any
     Law, restraining, enjoining or otherwise prohibiting the consummation of
     any of the transactions contemplated by this Agreement.

     c. Termination by Buyer. This Agreement may be terminated and the
     transactions contemplated hereby may be abandoned by Buyer at any time
     prior to the Closing Date, if (i) the Company and/or ESI shall have failed
     to comply in any material respect with any of their covenants or agreements
     contained in this Agreement, (ii) there shall have been a breach by the
     Company and/or ESI with respect to any representation or warranty made by
     them in this Agreement, or (iii) there shall have occurred any event or
     development, or there shall be in existence any condition, having or
     reasonably and forseeably likely to have a Material Adverse Effect.

     d. Termination by ESI or the Company. This Agreement may be terminated and
     the transactions contemplated hereby may be abandoned by ESI or the Company
     at any time prior to the Closing Date, if (i) Buyer shall have failed to
     comply in any material respect with any of its covenants or agreements
     contained in this Agreement or (ii) there shall have been a breach by Buyer
     with respect to any representation or warranty made by it in this
     Agreement.

                                       13

<PAGE>

     11. SURVIVAL; INDEMNIFICATION.

     a. Survival. The representations, warranties and covenants made by each of
     the Company, ESI and Buyer in this Agreement, the annexes, schedules and
     exhibits hereto and in each instrument, agreement and certificate entered
     into and delivered by them pursuant to this Agreement, shall survive the
     Closing and the consummation of the transactions contemplated hereby. In
     the event of a breach or violation of any of such representations,
     warranties or covenants, the party to whom such representations, warranties
     or covenants have been made shall have all rights and remedies for such
     breach or violation available to it under the provisions of this Agreement
     or otherwise, whether at law or in equity, irrespective of any
     investigation made by or on behalf of such party on or prior to the Closing
     Date.

     b. Indemnification of Buyer by the Company and ESI. The Company and ESI
     hereby agree to indemnify and hold harmless the Buyer, its Affiliates and
     their respective officers, directors, partners and members (collectively,
     the "Buyer Indemnitees"), from and against any and all losses, claims,
     damages, judgments, penalties, liabilities and deficiencies (collectively,
     "Losses"), and agree to reimburse the Buyer Indemnitees for all
     out-of-pocket expenses (including the fees and expenses of legal counsel),
     in each case promptly as incurred by the Buyer Indemnitees and to the
     extent arising out of or in connection with:

     (i) any misrepresentation, omission of fact or breach of any of the
     Company's and/or ESI's representations or warranties contained in this
     Agreement, the annexes, schedules or exhibits hereto or any instrument,
     agreement or certificate entered into or delivered by the Company pursuant
     to this Agreement; or

     (ii) any failure by the Company and/or ESI to perform in any material
     respect any of its covenants, agreements, undertakings or obligations set
     forth in this Agreement, the annexes, schedules or exhibits hereto or any
     instrument, agreement or certificate entered into or delivered by the
     Company and/or ESI pursuant to this Agreement.

     c. Indemnification of the Company and ESI by Buyer. Buyer hereby agrees to
     indemnify and hold harmless the Company and ESI, their Affiliates and their
     respective officers, directors, partners and members (collectively, the
     "Company Indemnitees"), from and against any and all Losses, and agrees to
     reimburse the Company Indemnitees for all out-of-pocket expenses (including
     the fees and expenses of legal counsel), in each case promptly as incurred
     by the Company Indemnitees and to the extent arising out of or in
     connection with:

          (i) any misrepresentation, omission of fact, or breach of any of
          Buyer's representations or warranties contained in this Agreement, the
          annexes, schedules or exhibits hereto or any instrument, agreement or
          certificate entered into or delivered by Buyer pursuant to this
          Agreement; or
          (ii) any failure by Buyer to perform in any material respect any of
          its covenants, agreements, undertakings or obligations set forth in
          this Agreement or any instrument, certificate or agreement entered
          into or delivered by Buyer pursuant to this Agreement.

     d. Third Party Claims. Promptly after receipt by either party hereto
     seeking indemnification pursuant to this Section 11 (an "Indemnified
     Party") of written notice of any investigation, claim, proceeding or other
     action in respect of which indemnification is being sought (each, a
     "Claim"), the Indemnified Party promptly shall notify the party against
     whom indemnification pursuant to this Section 11 is being sought (the
     "Indemnifying Party") of the commencement thereof; but the omission to so
     notify the Indemnifying Party shall not relieve it from any liability that
     it otherwise may have to the Indemnified Party, except to the extent that
     the Indemnifying Party is materially prejudiced and forfeits substantive

                                       14

<PAGE>

     rights and defenses by reason of such failure. In connection with any Claim
     as to which both the Indemnifying Party and the Indemnified Party are
     parties, the Indemnifying Party shall be entitled to assume the defense
     thereof. Notwithstanding the assumption of the defense of any Claim by the
     Indemnifying Party, the Indemnified Party shall have the right to employ
     separate legal counsel and to participate in the defense of such Claim, and
     the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
     and expenses of such separate legal counsel to the Indemnified Party if
     (and only if): (x) the Indemnifying Party shall have agreed to pay such
     fees, out-of-pocket costs and expenses, (y) the Indemnified Party and the
     Indemnifying Party reasonably shall have concluded that representation of
     the Indemnified Party by the Indemnifying Party by the same legal counsel
     would not be appropriate due to actual or, as reasonably determined by
     legal counsel to the Indemnified Party, potentially differing interests
     between such parties in the conduct of the defense of such Claim, or if
     there may be legal defenses available to the Indemnified Party that are in
     addition to or disparate from those available to the Indemnifying Party, or
     (z) the Indemnifying Party shall have failed to employ legal counsel
     reasonably satisfactory to the Indemnified Party within a reasonable period
     of time after notice of the commencement of such Claim. If the Indemnified
     Party employs separate legal counsel in circumstances other than as
     described in clauses (x), (y) or (z) above, the fees, costs and expenses of
     such legal counsel shall be borne exclusively by the Indemnified Party.
     Except as provided above, the Indemnifying Party shall not, in connection
     with any Claim in the same jurisdiction, be liable for the fees and
     expenses of more than one firm of legal counsel for the Indemnified Party
     (together with appropriate local counsel). The Indemnifying Party shall
     not, without the prior written consent of the Indemnified Party (which
     consent shall not unreasonably be withheld), settle or compromise any Claim
     or consent to the entry of any judgment that does not include an
     unconditional release of the Indemnified Party from all liabilities with
     respect to such Claim or judgment.

     e. Other Claims. In the event one party hereunder should have a claim for
     indemnification that does not involve a claim or demand being asserted by a
     third party, the Indemnified Party promptly shall deliver notice of such
     claim to the Indemnifying Party. If the Indemnified Party disputes the
     claim, such dispute shall be resolved by mutual agreement of the
     Indemnified Party and the Indemnifying Party or by binding arbitration
     conducted in accordance with the procedures and rules of the American
     Arbitration Association. Judgment upon any award rendered by any
     arbitrators may be entered in any court having competent jurisdiction
     thereof.

     12. GOVERNING LAW: MISCELLANEOUS.

     This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Colorado without regard to the conflicts of law principles
of such state. Each of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the City of Denver or the state
courts of the State of Colorado sitting in the City of Denver in connection with
any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. This Agreement may be signed in one or more counterparts,

                                       15

<PAGE>

each of which shall be deemed an original. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

     13. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven business days after deposit in the United
States Postal Service, or by (a) advance copy by fax, and (b) mailing by express
courier or registered or certified mail with postage and fees prepaid, addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by ten days advance written
notice to each of the other parties hereto.

COMPANY and ESI:           EARTH SCIENCES, INC. and ADAES, Inc.
                           8100 SouthPark Way, B
                           Littleton, CO  80120
                           Attention: President
                           Telephone: (303) 734-1727
                           Fax: (303) 734-0330

BUYER:                     Arch Coal, Inc.
                           CityPlace One, Suite 300
                           St. Louis, MO 63141
                           Attention:  Attn:  David B. Peugh
                           Telephone: (314) 994-2700
                           Fax:   (314)994-2940

   With a copy to:         Attention:  General Counsel
                           Telephone:  (314)994-2700
                           Fax: (314)994-2734

     14. CONFIDENTIALITY. Each of the Company, ESI and Buyer agrees to keep
confidential and not to disclose to or use for the benefit of any third party
the terms of this Agreement or any other information which at any time is
communicated by the other party as being confidential without the prior written
approval of the other party; provided, however, that this provision shall not
apply to information which, at the time of disclosure, is already part of the
public domain (except by breach of this Agreement) and information which is
required to be disclosed by law or in Commission Filings.

     15. ASSIGNMENT. This Agreement shall not be assignable by either of the
parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Buyer may assign its rights and
obligations hereunder, in whole or in part, to any affiliate of Buyer who
furnishes to the Company and ESI the representations and warranties set forth in
Section 2 hereof.

                                       16

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date 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

                                                BUYER
                                                Arch Coal, Inc.

                                       By:      /s/ David B. Peugh
                                                -------------------------------
                                                Name:  David B. Peugh
                                                Title:  Vice President

                                       17

<PAGE>

                                    EXHIBIT A
                                       To
                SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT
                               Dated July 7, 2003

                             STOCK OPTION AGREEMENT

     Stock Option Agreement made as of this ____ day of _______, 2003 between
Earth Sciences, Inc., a Colorado corporation, (hereinafter called the "ESI"),
ADA-ES, Inc., a Colorado corporation and wholly-owned subsidiary of ESI,
(hereinafter called the "Company") and Arch Coal, Inc., One CityPlace Drive,
Suite 300, St. Louis, MO 63141, (hereinafter referred to as "Holder").

     WHEREAS, Holder, the Company and ESI have entered into a Securities
Subscription and Investment Agreement dated as of July 7, 2003, and

     WHEREAS, the Company's Board of Directors has specifically authorized the
granting of the stock option hereinafter described as a portion of the
consideration for the investment to be made by Holder in the Common Stock of the
Company.

     NOW THEREFORE, in consideration of the premises, the mutual covenants,
hereinafter set forth, and other good and valuable considerations, the Company,
ESI and Holder agree as follows:

     1. The Company hereby grants to Holder effective this date, as a matter of
separate inducement and agreement, the Option to Purchase (hereinafter the
"Option") an aggregate of ____________ shares of the Company's Common Stock, no
par value, on the terms and conditions hereinafter set forth, at the purchase
price of $10.00 per share.

          (a) The option shall be exercisable one-third after the first
anniversary date of this Option, another one-third after the second anniversary
date of this Option and the final one-third after the third anniversary date of
this Option. The eligible shares under the Option shall be exercisable in whole
or in part, and from time to time, but not as to less than 10,000 shares or a
multiple thereof, or the remaining shares eligible for exercise under the
Option, whichever is smaller.

          (b) To the extent not exercised, the remaining shares shall be
exercisable, in whole or in part, at any time not later than December 31, 2007.

          (c) The purchase price of any shares as to which the Option shall be
exercised shall be paid in full at the time of such exercise. Such shares shall
be issued as fully paid and nonassessable shares. Holder shall not be required
to take any further action to exercise Option other than making payment to the
Company.

     2.   (a) The Option may not be assigned and shall be exercisable only by
Holder. No other person shall acquire any rights herein.

          (b) If Holder shall terminate its existence by law or otherwise and
not have fully exercised the Option, the Option shall immediately expire.

          (c) In the event that another company or individual acquires a 50% or
greater interest in the Company, any remaining shares eligible for exercise
under the Option shall be immediately exercisable, but will otherwise expire
within 30 days from the date of such acquisition.

                                       18

<PAGE>

     3. Holder shall have no rights as a stockholder with respect to any shares
covered by the Option until the date of the issuance of a stock certificate to
it for such shares.

     4. Holder acknowledges that any purchase of stock under the Option shall be
for investment purposes, and not with a view to resale or distribution except
that in the event the stock subject to such Option is registered under the
Securities Act of 1933, as amended or in the event a resale of such stock
without such registration would otherwise be permissible, such condition shall
be inoperative if, in the opinion of counsel for the Company, such condition is
not required under the Securities Act of 1933 or any other applicable law,
regulation or rule of any governmental agency. Holder acknowledges that any
certificates representing the Shares covered by the Option shall, if applicable,
bear the customary Securities Act of 1933 legend restricting resale of the
shares.

     5. This agreement shall be governed by the laws of the State of Colorado.

     6. This agreement shall inure to the benefit of and be binding upon each
successor and assign of the Company. All obligations imposed upon Holder and all
rights granted to the Company, hereunder shall be binding upon Holder's heirs,
legal representatives and successors.

     IN WITNESS WHEREOF, ESI, the Company and Holder have caused this Stock
Option Agreement to be executed as of this ____ day of______, 2003.

                                       EARTH SCIENCES, INC.

                                       By
                                          --------------------------------------
                                            President

                                       ADA-ES, INC.

                                       By
                                          --------------------------------------
                                           President

                                        Holder
                                        Arch Coal, Inc.
                                        One CityPlace Drive, Suite 300
                                        St. Louis, MO 63141

                                       By
                                          --------------------------------------

                                       Its
                                           -------------------------------------

                                       19
<PAGE>

                                       20

<PAGE>

                                    EXHIBIT B
                                       To
                SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT
                               Dated July 7, 2003

                  STANDSTILL AND REGISTRATION RIGHTS AGREEMENT

THIS AGREEMENT, dated as of _______ __, 2003, is between Arch Coal, Inc. a
Delaware corporation ("Arch Coal"), and ADA-ES, Inc., a Delaware corporation
("ADA-ES").

                                   WITNESSETH:

WHEREAS on the date hereof, Arch Coal is acquiring ________shares (the
"Purchased Shares") of common stock of ADA-ES (the "Common Stock") and an option
(the "Option") to purchase up to ______additional shares of Common Stock (the
"Option Shares") pursuant to the terms of a Securities Subscription and
Investment Agreement, dated as of July 7, 2003 (the "Subscription Agreement;"
terms capitalized and not defined herein shall have the meaning ascribed to them
in the Subscription Agreement);

WHEREAS, Arch Coal has the right, under certain circumstances, to acquire an
additional ______ shares of Common Stock pursuant to a 6% Convertible Debenture
due ______ __, 2007 in the face amount of $300,000 (the "Convertible Debenture
Shares"; and together with the Purchased Shares and the Option Shares; the
"Shares")); and

WHEREAS the execution and delivery of this Agreement by the parties is a
condition precedent to the parties' obligations under the Subscription
Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements set forth herein and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties, intending
to be legally bound hereby, agree as follows:

                                    ARTICLE I

                         REPRESENTATIONS AND WARRANTIES

Section 1.01 Arch Coal represents and warrants to ADA-ES as follows:

(a) Arch Coal has full legal right, power and authority to enter into and
perform this Agreement. The execution and delivery of this Agreement by Arch
Coal and the consummation by Arch Coal of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on behalf of Arch
Coal. This Agreement is a valid and binding obligation of Arch Coal enforceable
against Arch Coal in accordance with its terms.

                                       21

<PAGE>

(b) Neither the execution and delivery of this Agreement by Arch Coal nor the
consummation by Arch Coal of the transactions contemplated hereby conflicts with
or constitutes a violation of or default under the charter or by-laws of Arch
Coal, any statute, law, regulation, order or decree applicable to Arch Coal, or
any contract, commitment, agreement, arrangement or restriction of any kind to
which Arch Coal is a party or by which Arch Coal is bound.

Section 1.02. ADA-ES represents and warrants to Arch Coal as follows:

(a) ADA-ES has full legal right, power and authority to enter into and perform
this Agreement. The execution and delivery of this Agreement by ADA-ES and the
consummation by ADA-ES of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on behalf of ADA-ES. This Agreement
is a valid and binding obligation of ADA-ES enforceable against ADA-ES in
accordance with its terms.

(b) Neither the execution and delivery of this Agreement by ADA-ES nor the
consummation by ADA-ES of the transactions contemplated hereby conflicts with or
constitutes a violation of or default under the charter or by-laws of ADA-ES,
any statute, law, regulation, order or decree applicable to ADA-ES, or any
contract, commitment, agreement, arrangement or restriction of any kind to which
ADA-ES is a party or by which ADA-ES is bound.

                                   ARTICLE II

                          LIMITATIONS AND RESTRICTIONS

Section 2.01. Restrictions on Sales by Arch Coal. Arch Coal agrees that until
the first anniversary of this Agreement, it will not, nor will it permit any of
its Affiliates, to sell, solicit an offer to sell, agree to sell, offer or
propose to sell (collectively "Sell"), the Shares; except as follows:

(a) Arch Coal may transfer all or a portion of the Shares to a wholly-owned
subsidiary subject to all of the terms and conditions of this Agreement,
provided that Arch Coal maintains 100% ownership and voting control of such
subsidiary, and the certificates for any securities of such subsidiary are
marked with a legend restricting the transfer of such securities and
specifically referring to this Agreement; and

(b) Arch Coal may sell its shares pursuant to a tender offer for all outstanding
shares of ADA-ES's Common Stock approved by ADA-ES's Board of Directors.

                                   ARTICLE III

                               REGISTRATION RIGHTS

Section 3.01. "Piggy-Back" Registrations. If at any time after the Distribution,
ADA-ES shall determine to register for its own account or the account of others
under the Securities Act (other than a registration demanded by Arch Coal
pursuant to Section 3.02 hereof) any of its equity securities, other than on
Form S-4 or Form S-8 or their then equivalents or otherwise relating to shares
of Common Stock to be issued in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or

                                       22

<PAGE>

other employee benefit plans, it shall send to Arch Coal written notice of such
determination and, if within ten (10) business days after receipt of such
notice, Arch Coal shall so request in writing, ADA-ES shall use its best efforts
to include in such registration statement all or any part of the Shares then
held by Arch Coal ("Registrable Shares") and which Arch Coal requests to be
registered.

If, in connection with any offering involving an underwriting, the managing
underwriter shall impose a limitation on the number of shares of Common Stock
which may be included in the registration statement because, in its judgment,
such limitation is necessary to effect an orderly public distribution, then
ADA-ES shall be obligated to include in such registration statement only such
limited portion (which may be none) of the Registrable Shares with respect to
which Arch Coal has requested inclusion pursuant hereto as may reasonably be
determined by the managing underwriters; provided, that inclusion of any of Arch
Coal's Registrable Shares shall be subordinate to the currently existing
"piggyback" registration rights granted by ADA-ES. Any inclusion of Registrable
Shares in an offering, when the managing underwriter has so limited the number
of shares that may be included in such offering, shall be allocated as follows:
first, pro rata among the holders of registration rights granted by ADA-ES prior
to the date hereof seeking to include their shares, in proportion to the number
of shares of Common Stock (whether or not such shares are sought to be included
in such offering) held by such persons; and thereafter, to Arch Coal. ADA-ES
shall have the right to withdraw any registration initiated by it pursuant to
this Section 3.01.

Section 3.02. Registrations on Form S-1 or Form S-2. In addition to the rights
provided Arch Coal in Section 3.01 above, if the registration of Registrable
Shares under the Securities Act can be effected on Form S-3 (or any similar form
promulgated by the Commission), then, at any time after the first anniversary of
this Agreement, upon the written request of Arch Coal, ADA-ES will use its best
efforts to effect qualification and registration under the Securities Act on
Form S-1 or Form S-2 of such portion of the Registrable Shares as Arch Coal
shall specify, up to the lesser of (i) twenty-five percent (25%) of the
Registrable Shares then held by Arch Coal, and (ii) the amount of Registrable
Shares then held by Arch Coal and permitted to be sold under Section 2.02 of
this Agreement; provided, however, ADA-ES shall not be required to effect a
registration pursuant to this Section 3.02 unless the market value of the
Registrable Shares to be sold in any such registration shall be estimated to be
at least $1,000,000 at the time of filing such registration statement, and
further provided that ADA-ES shall not be required to effect more than one (1)
registration during any twelve (12) month period pursuant to this Section 3.02
and four (4) registrations in the aggregate under this Section 3.02. No request
for registration under this Section 3.02 may be made within the one hundred and
eighty day period after the effective date of a registration statement filed by
ADA-ES or while ADA-ES is in the process of preparing a registration statement.

Section 3.03 Effectiveness. ADA-ES will use its best efforts to maintain the
effectiveness for up to 90 days (or such shorter period of time as the
underwriters need to complete the distribution of a registered offering or until
the securities are actually sold) of any registration statement pursuant to
which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. ADA-ES will also provide

                                       23

<PAGE>

Arch Coal with as many copies of the prospectus contained in any such
registration statement as it may reasonably request. For a period not to exceed
ninety (90) days, ADA-ES shall not be obligated to prepare and file, or be
prevented from delaying or abandoning, a registration statement pursuant to this
Agreement at any time when ADA-ES, in its good faith judgment with advice of
counsel, reasonably believes:

(a) that the filing thereof at the time requested, or the offering of
Registrable Shares pursuant thereto, would materially and adversely affect (a) a
pending or scheduled public offering of ADA-ES's securities, (b) an acquisition,
merger, recapitalization, consolidation, reorganization or similar transaction
by or of ADA-ES, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or (d) the
financial condition of ADA-ES in view of the disclosure of any pending or
threatened litigation, claim, assessment or governmental investigation which may
be required thereby; and

(b) that the failure to disclose any material information with respect to the
foregoing would cause a violation of the Securities Act or the Exchange Act.

Section 3.04. Indemnification of Arch Coal. In the event that ADA-ES registers
any of the Registrable Shares under the Securities Act, ADA-ES will indemnify
and hold harmless Arch Coal and each underwriter of Registrable Shares
(including their officers, directors, affiliates and partners and including any
broker or dealer through whom Registrable Shares may be sold in such
registration) and each person, if any, who controls Arch Coal or any such
underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them become subject under the Securities Act,
applicable state securities laws or under any other statute or at common law or
otherwise, as incurred, and, except as hereinafter provided, will reimburse Arch
Coal, each such underwriter and each such controlling person, if any, for any
legal or other expenses reasonably incurred by them or any of them in connection
with investigating or defending any actions whether or not resulting in any
liability, as incurred, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in the final
prospectus (or the registration statement or prospectus as from time to time
amended or supplemented by ADA-ES) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or any violation by ADA-ES of any rule or regulation promulgated
under the Securities Act or any state securities laws applicable to ADA-ES and
relating to action or inaction required of ADA-ES in connection with such
registration, unless (i) such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or amended preliminary prospectus or final prospectus in reliance
upon and in conformity with information furnished in writing to ADA-ES in
connection therewith by Arch Coal (in the case of indemnification of Arch Coal),
any such underwriter (in the case of indemnification of such underwriter) or any
such controlling person (in the case of indemnification of such controlling
person) expressly for use therein, or unless (ii) in the case of a sale directly
by Arch Coal (including a sale of Registrable Shares through any underwriter

                                       24

<PAGE>

retained by Arch Coal to engage in a distribution solely on behalf of Arch
Coal), such untrue statement or alleged untrue statement or omission or alleged
omission was contained in a preliminary prospectus and corrected in a final or
amended prospectus copies of which were delivered to Arch Coal or such
underwriter on a timely basis, and Arch Coal failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of the
Registrable Shares to the person asserting any such loss, claim, damage or
liability in any case where such delivery is required by the Securities Act.

Promptly after receipt by Arch Coal, any underwriter or any controlling person
of notice of the commencement of any action in respect of which indemnity may be
sought against ADA-ES, Arch Coal, or such underwriter or such controlling
person, as the case may be, shall notify ADA-ES in writing of the commencement
thereof (provided, that failure to so notify ADA-ES shall not relieve ADA-ES
from any liability it may have hereunder, except to the extent prejudiced by
such failure) and, subject to the provisions hereinafter stated, ADA-ES shall be
entitled to assume the defense of such action (including the employment of
counsel, who shall be counsel reasonably satisfactory to Arch Coal, such
underwriter or such controlling person, as the case may be) and the payment of
expenses insofar as such action shall relate to any alleged liability in respect
of which indemnity may be sought against ADA-ES.

Arch Coal, any such underwriter or any such controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel subsequent to any
assumption of the defense by ADA-ES shall not be at the expense of ADA-ES unless
the employment of such counsel has been specifically authorized in writing by
ADA-ES; provided, however, that, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be reasonable defenses available
to it which are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred. At any time, Arch Coal may select separate counsel and assume its own
legal defense with the expenses and fees of such separate counsel and other
expenses related to such separate counsel to be borne by Arch Coal. ADA-ES shall
not be liable to indemnify Arch Coal, any underwriter or any controlling person
for any settlement of any such action effected without ADA-ES's written consent
(which consent shall not be unreasonably withheld or delayed). ADA-ES shall not,
except with the approval of each party being indemnified under this Section
3.04, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to the parties being so indemnified of a release from all liability in
respect to such claim or litigation.

In order to provide for just and equitable contribution to joint liability under
the Securities Act in any case in which Arch Coal, or any controlling person of
Arch Coal, makes a claim for indemnification pursuant to this Section 3.04 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the

                                       25

<PAGE>

denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 3.04 provides
for indemnification in such case, then, ADA-ES and Arch Coal will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of ADA-ES on the one hand and of Arch Coal on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of ADA-ES on the one hand and of Arch Coal on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by ADA-ES on
the one hand or by Arch Coal on the other, and each party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case, (A) Arch Coal
will not be required to contribute any amount in excess of the public offering
price of all Registrable Shares offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

The indemnities provided in this Section 3.04 shall survive the transfer of any
Registrable Shares by Arch Coal.

Section 3.05 Indemnification of Company. In the event that ADA-ES registers any
of the Registrable Shares under the Securities Act, Arch Coal will indemnify and
hold harmless ADA-ES, each of its directors, each of its officers who have
signed or otherwise participated in the preparation of the registration
statement, each underwriter of the Registrable Shares so registered (including
any broker or dealer through whom such of the shares may be sold) and each
person, if any, who controls ADA-ES within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, applicable state securities laws or under any other
statute or at common law or otherwise, and, except as hereinafter provided, will
reimburse ADA-ES and each such director, officer, underwriter or controlling
person for any legal or other expenses reasonably incurred by them or any of
them in connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in the final
prospectus (or in the registration statement or prospectus as from time to time
amended or supplemented) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to ADA-ES in connection
therewith by Arch Coal expressly for use therein; provided, however, that Arch
Coal's obligations hereunder shall be limited to an amount equal to the proceeds
received by Arch Coal for the Registrable Shares sold in such registration.

                                       26

<PAGE>

Promptly after receipt of notice of the commencement of any action in respect of
which indemnity may be sought against Arch Coal, ADA-ES shall notify Arch Coal
in writing of the commencement thereof (provided, that failure to so notify Arch
Coal shall not relieve Arch Coal from any liability it may have hereunder,
except to the extent prejudiced by such failure), and Arch Coal shall, subject
to the provisions hereinafter stated, be entitled to assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably
satisfactory to ADA-ES) and the payment of expenses insofar as such action shall
relate to the alleged liability in respect of which indemnity may be sought
against Arch Coal. ADA-ES and each such director, officer, underwriter or
controlling person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel subsequent to any assumption of the defense by Arch Coal shall not
be at the expense of Arch Coal unless employment of such counsel has been
specifically authorized in writing by Arch Coal. Arch Coal shall not be liable
to indemnify any person for any settlement of any such action effected without
Arch Coal's written consent (which consent shall not be unreasonably withheld or
delayed).

In order to provide for just and equitable contribution to joint liability under
the Securities Act in any case in which ADA-ES, its officers, directors or
controlling persons ("ADA-ES Indemnitees") exercising its rights under this
Article III, makes a claim for indemnification pursuant to this Section 3.05,
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding that this Section 3.05 provides for
indemnification, in such case, then, ADA-ES Indemnitee and Arch Coal will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of ADA-ES Indemnitee on the one hand
and of the Arch Coal on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of ADA-ES Indemnitee
on the one hand and of Arch Coal on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by ADA-ES Indemnitee on the one hand or by Arch Coal on
the other, and each party's relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission; provided,
however, that, in any such case, (A) Arch Coal will not be required to
contribute any amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.

Section 3.06. Further Obligations of ADA-ES. Whenever under the preceding
Sections of this Article III, ADA-ES is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:

                                       27

<PAGE>

(a) Furnish to Arch Coal such copies of each preliminary and final prospectus
and such other documents as Arch Coal may reasonably request to facilitate the
public offering of the Registrable Shares;

(b) Use its best efforts to register or qualify the Registrable Shares covered
by said registration statement under the applicable securities or "blue sky"
laws of such jurisdictions as Arch Coal may reasonably request; provided,
however, that ADA-ES shall not be obligated to qualify to do business in any
jurisdictions where it is not then so qualified or to take any action which
would subject it to the service of process in suits other than those arising out
of the offer or sale of the securities covered by the registration statement in
any jurisdiction where it is not then so subject;

(c) Permit Arch Coal or its counsel or other representatives to inspect and copy
such corporate documents and records as may reasonably be requested by them,
after reasonable advance notice and without undue interference with the
operation of ADA-ES's business;

(d) Furnish to Arch Coal a copy of all documents filed with and all
correspondence from or to the Commission in connection with any such offering of
securities;

(e) Use its best efforts to insure the obtaining of all necessary approvals from
the National Association of Securities Dealers, Inc.; and

(f) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earning statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the registration statement covering a Public
Offering, which earning statement shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder.

Whenever under the preceding Sections of this Article III Arch Coal is
registering Registrable Shares pursuant to any registration statement, (i) Arch
Coal agrees to timely provide to ADA-ES, at its request, such information and
materials as it may reasonably request in order to effect the registration of
such Registrable Shares and (ii) if the offering is underwritten, ADA-ES and
Arch Coal agree to execute an underwriting agreement containing customary
conditions..

Section 3.07. Expenses. Subject to Section 3.02(b) in the case of each
registration effected under Section 3.01 or 3.02, ADA-ES shall bear its own
reasonable costs and expenses of each such registration on behalf of Arch Coal,
including, but not limited to, ADA-ES's printing, legal and accounting fees and
expenses, Commission and NASD filing fees and "blue sky" fees and expenses;
provided, however, that ADA-ES shall have no obligation to pay or otherwise bear
any portion of the underwriters' commissions or discounts or transfer taxes
attributable to the Registrable Shares being offered and sold by Arch Coal, or
the fees and expenses of counsel for Arch Coal in connection with the
registration of the Registrable Shares.

ADA-ES shall pay all expenses in connection with any registration initiated
pursuant to this Article III which is withdrawn, delayed or abandoned at the
request of ADA-ES, unless such registration is withdrawn, delayed or abandoned
solely because of any action of Arch Coal.

                                       28

<PAGE>

Section 3.08. Non-Transferability. Arch Coal's rights and obligations contained
in this Article III shall not be transferable to any other party under any
circumstances, whether by operation of law or otherwise.

Section 3.09 Lock-Up Agreement. Arch Coal agrees, if so requested by ADA-ES in
connection with any public offering of ADA-ES's securities, not to sell, grant
any option or right to buy or sell, or otherwise transfer or dispose of in any
manner, whether in privately-negotiated or open-market transactions, any Common
Stock or other securities of ADA-ES held by it during the 180-day period
following the effective date of a registration statement filed pursuant to
apublic offering, nor will it permit any of its affiliates or associates to do
any of the foregoing. Arch Coal, its affiliates or associates shall enter into
"lock-up" agreements to such effect. Such "lock-up" agreements shall be in
writing and in form and substance satisfactory to ADA-ES. ADA-ES may impose
stop-transfer instructions with respect to the Shares (or securities) subject to
the foregoing restrictions until the end of said 180-day period.

Section 3.10. Termination of Registration Rights. Notwithstanding any other term
or provision of this Article III, at such time as Arch Coal is free to sell the
Registrable Shares without registration pursuant to Rule 144(k) promulgated
under the Securities Act, all rights of Arch Coal as to such Registrable Shares
under Sections 3.01 and 3.02 of this Article III shall terminate.

                                   ARTICLE IV

                                  MISCELLANEOUS

Section 4.01. Interpretation. For all purposes of this Agreement, the term
ADA-ES Common Stock shall include any securities of any issuer entitled to vote
generally for the election of directors of such issuer which securities the
holders of ADA-ES Common Stock shall have received or as a matter of right be
entitled to receive as a result of (i) any capital reorganization or
reclassification of the capital stock of ADA-ES, (ii) any consolidation, merger
or share exchange of ADA-ES with or into another corporation or (iii) any sale
or substantially all the assets of ADA-ES.

Section 4.02. Enforcement. (a) Arch Coal acknowledges and agrees that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, ADA-ES will be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically its provisions
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which ADA-ES may be entitled at law or in
equity.

(b) No failure or delay on the part of ADA-ES in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.

                                       29

<PAGE>

Section 4.03. Entire Agreement. This Agreement, together with the applicable
provisions of the Subscription Agreement, constitutes the entire understanding
of the parties with respect to the transactions contemplated hereby and thereby.
This Agreement may be amended only by an agreement in writing executed by ADA-ES
and Arch Coal.

Section 4.04. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable, the remaining provisions
shall remain in full force and effect. It is declared to be the intention of the
parties that they would have executed the remaining provisions without including
any that may be declared unenforceable.

Section 4.05. Headings. Descriptive headings are for convenience only and will
not control or affect the meaning or construction of any provision of this
Agreement.

Section 4.06. Counterparts. This Agreement may be executed in two or more
counterparts, and each such executed counterpart will be an original instrument.

Section 4.07. Notices. All notices, consents, requests, instructions, approvals
and other communications provided for in this Agreement and all legal process in
regard to this Agreement will be validly given, made or served, if in writing
and delivered personally, by telecopy (except for legal process) or sent by
certified mail postage paid.

if to ADA-ES:              ADA-ES, Inc.
                           8100 SouthPark Way, B
                           Littleton, CO  80120
                           Attn:  President
                           Fax:  (303) 734-0330

if to Arch Coal:           Arch Coal, Inc.
                           One CityPlace Drive
                           Suite 300
                           St. Louis, MO  63141
                           Attn:  David Peugh
                           Fax:  (314) 994-2940

with a copy to:            General Counsel
                           Fax:  (314) 994-2734

or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice by telecopy shall
be deemed delivered on the day telephone confirmation of receipt is given.

Section 4.08. Successors and Assigns. This Agreement shall bind the successors
and assigns of the parties, and inure to the benefit of any successor or assign
of any of the parties; provided, however, that no party may assign this
Agreement without the other party's prior written consent; provided further,
however, that the rights contained in Article III of this Agreement may not be
transferred or assigned under any circumstances.

                                       30

<PAGE>

Section 4.09. Legend. Each certificate representing shares of capital stock of
ADA-ES beneficially owned by Arch Coal or its affiliates or associates shall
bear a legend in substantially the following form, until such time as the shares
of capital stock represented thereby are no longer subject to the provisions
hereof:

"The sale, transfer or assignment of the securities represented by this
certificate are subject to the terms and conditions of a certain Standstill and
Registration Rights Agreement dated __________ __, 2003, as amended from time to
time, between ADA-ES and Arch Coal, Inc. Copies of such Agreement may be
obtained at no cost by written request made by the holder of record of this
certificate to the Secretary of ADA-ES."

Section 4.10. Governing Law. This Agreement will be governed by and construed
and enforced in accordance with the laws of the State of Colorado, without
giving effect to the conflict of laws principles thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first referred to above.

ADA-ES, INC.

By:
    -----------------------------------
     Name:
     Title:

Arch Coal, Inc.

By:
    -----------------------------------
     Name:
     Title:

                                       31
<PAGE>

                                    EXHIBIT C
                                       To
                SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT
                               Dated July 7, 2003

         THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.
THE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), PURSUANT TO REGISTRATION OR AN
EXEMPTION THEREFROM.

No.     1                                                            US$ 300,000
     --------

                                  ADA-ES, INC.

                 6% CONVERTIBLE DEBENTURE DUE ________ ___, 2008

     THIS DEBENTURE is one of a duly authorized issue of Debentures of ADA-ES,
Inc., a corporation duly organized and existing under the laws of the State of
Colorado (the "Company"), designated as its Variable Interest Convertible
Debenture Due _______ __, 2008, in an aggregate principal amount not exceeding
US$ 300,000 (herein, the "Debentures").

     FOR VALUE RECEIVED, the Company promises to pay to Arch Coal, Inc., the
registered holder hereof (the "Holder"), the principal sum of US$ 300,000.00, on
_____ __, 2008 (the "Maturity Date") together with interest on the principal sum
outstanding from time to time at the annual rate equal to the greater of (i) the
rate reported by the Wall Street Journal as the "prime rate" then in effect
("Prime Rate") plus one percent (1%), or (ii) six percent (6%), adjusted
quarterly and computed on the basis of the actual number of days elapsed in a
365-day year. All accrued interest shall be payable in arrears, and shall be due
and payable at the Maturity Date or, if earlier, on the Conversion Date (as
hereinafter defined). Accrual of interest shall commence on the date hereof and
shall continue until payment in full of the principal sum has been made or duly
provided for. All accrued and unpaid interest so payable, together with any and
all other amounts payable hereunder, less any amounts required by law to be
deducted or withheld, will be paid on the Maturity Date or, if earlier, on the
Conversion Date, and shall be paid to the person in whose name this Debenture
(or one or more predecessor Debentures) is registered on the records of the
Company regarding registration and transfers of the Debentures (the "Debenture
Register") on the Conversion Date or tenth day prior to the Maturity Date, as
the case may be; provided, however, that the Company's obligation to a
transferee of this Debenture arises only if such transferee executes a
subscription agreement and investment agreement as the Company may reasonably
require. The principal of, and interest on, this Debenture are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, at the address last
appearing on the Debenture Register of the Company as designated in writing by
the Holder from time to time. The Company may prepay a portion or all of the
Debentures at any time. The Company shall provide the Holder with no less than
30 days written notice of any prepayment. The forwarding of the Company's check
shall, subject to collection, constitute a payment of interest and principal
hereunder and shall satisfy and discharge the liability for principal and
interest on this Debenture to the extent of the sum represented by such check.

                                       32
<PAGE>

Any payments received by Holder will be applied in the following order: (i) any
collection and other costs, including, without limitation, attorneys' fees,
which the Holder may have incurred in procuring the Company's performance
hereunder, (ii) any charges assessed by the Holder, (iii) payment of the
interest then accrued and due on the unpaid interest and unpaid principal
balance of this Debenture, and (iv) principal.

     This Debenture is subject to the following additional provisions:

     1. This Debenture is exchangeable for an equal aggregate principal amount
of Debentures of different authorized denominations, as requested by the Holders
surrendering the same. No service charge will be made for such registration or
transfer or exchange.

     2. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act") and the terms
of the Subscription Agreement. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Debenture be overdue, and neither the
Company nor any such agent shall be affected by notice to the contrary.

     3. The Holder of this Debenture shall be entitled, at any time during the
period commencing on and after March 31, 2005 and expiring on the Maturity Date,
to convert up to the entire outstanding principal amount on this Debentures into
shares of common stock(the "Common Stock") of the Company at a conversion price
for each share of the Common Stock of the lesser of $20.00 during the period
from March 31, 2005 through March 30, 2006, $30.00 during the period from March
31, 2006 through March 30, 2007 and, $40.00 during the period from March 31,
2007 through the Maturity Date or 150% of the average trading price per share of
Common Stock on the Conversion Date. Such conversion shall be effectuated by
surrendering the Debenture to the Company with the form of conversion notice
attached hereto as Exhibit A, executed by the Holder evidencing its intent to
convert the Debenture. The amount of accrued but unpaid interest as of the
Conversion Date shall also be subject to conversion, and if not so requested
shall be paid in cash as of the Conversion Date. No fraction of shares of the
Common Stock or scrip representing fractions of shares will be issued on
conversion, but the number of shares of the Common Stock issuable shall be
rounded to the nearest whole share. The date on which notice of conversion is
given shall be deemed to be the date on which the Holder has delivered this
Debenture, with the conversion notice duly executed, to the Company, or if
earlier, the date set forth in such notice of conversion if the Debenture is
received by the Company within three business days thereafter. Such date is
referred to herein as the "Conversion Date." Facsimile delivery of the
conversion notice shall be accepted by the Company. Certificates representing
Common Stock upon conversion will be delivered to the Holder within five (5)
business days from the date the notice of conversion is delivered to the
Company. The Common Stock issuable upon conversion will not have been registered
under the Securities Act of 1933, and will be issued in reliance upon exemptions
from the registration requirements of the Securities Acts of 1933, and the
transfer of such Common Stock will be subject to restrictions imposed by
applicable securities laws. A legend restricting the transfer of the Commons
Stock may be placed on any Certificate representing the Common Stock. If the
Holder converts less than then entire outstanding principal amount of this
Debenture, the Company shall execute and issue to the Holder a substitute
debenture for the remaining unpaid and unconverted principal amount, and shall
deliver same to the Holder together with the stock certificate(s).

                                       33

<PAGE>

     4. Any of the following shall constitute an "Event of Default":

          a. The Company defaults in the payment of principal or interest on
          this Debenture as and when the same is due and payable and such
          default continues for five (5) business days after the receipt of
          written notice that the Company is in default hereunder; or

          b. Any of the representations or warranties made by the Company
          herein, in the Subscription Agreement, or in any certificate or
          financial or other written statements heretofore or hereafter
          furnished by or on behalf of the Company in connection with the
          execution and delivery of this Debenture or the Subscription Agreement
          is false or misleading in any material respect at the time made; or

          c. The Company fails to perform or observe, in any material respect,
          any other covenant, term, provision, condition, agreement or
          obligation of the Company under this Debenture, or under the
          Subscription Agreement, or under any related agreement, or under any
          document or instrument granting security for amounts owing under this
          Debenture including, without limitation, any of the following
          documents: Subscription Agreement and Investment Agreement of Earth
          Sciences, Inc. dated December 31, 2002 in favor of Arch Coal, Inc.
          (collectively referred to herein as the "Loan Documents"), and such
          failure continues uncured for a period of five (5) business days after
          the receipt of written notice that the Company is in default hereunder
          (it being understood that in the case of defaults which can not
          reasonably be cured within a 5-day period no grace period shall be
          necessary as a precondition to the failure to perform such covenant
          constituting an Event of Default); or

          d. The Company (1) makes an assignment for the benefit of creditors or
          commence proceedings for its dissolution; or (2) applies for or
          consents to the appointment of a trustee, liquidator or receiver for
          its or for a substantial part of its property or business; or

          e. A trustee, liquidator or receiver is appointed for the Company or
          for a substantial part of its property or business without its
          consent, and is not discharged within sixty (60) days after such
          appointment; or

          f. Bankruptcy, reorganization, insolvency or liquidation proceedings
          or other proceedings for relief under any bankruptcy law or any law
          for the relief of debtors is instituted by or against the Company and,
          if instituted against the Company, is not dismissed within sixty (60)
          days after such institution or the Company by any action or answer
          approves of, consents to, or acquiesces in any such proceeding or
          admits the material allegations of, or defaults in answering a
          petition filed in any such proceeding; or

          g. The Company fails to make any required material payments, fees,
          taxes, costs, insurance premiums when due beyond any applicable grace
          period; or

          h. The Company defaults on the payment of any material indebtedness
          for borrowed money beyond any applicable grace period; or

          i. Any judgment, levy or attachment is rendered against the Company or
          any of its assets or properties in an amount in excess of $100,000 and
          such judgment, levy or attachment is not dismissed, stayed, bonded or
          discharge within thirty (30) days of the date of entry thereof, or

                                       34

<PAGE>

          j. The control of the Company or ADA -Environmental Solutions, LLC
          ("ADA ES"), is changed by reason of merger or acquisition of shares of
          either company, or sale of substantially all assets of either company.

Upon the occurrence of any Event of Default or at any time thereafter, and in
each and every such case, unless such Event of Default has been waived in
writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent Event of Default) at the option of the Holder and in the Holder's
sole discretion, then or at any time thereafter, the whole of said principal sum
then remaining unpaid hereunder, together with all interest accrued thereon, and
all other sums owing hereunder or under the Loan Documents, shall immediately
become due and payable upon the Company's receipt of the Holder's written notice
of acceleration ("Acceleration") and the liens given to secure the payment of
this Debenture may be foreclosed and the Holder may pursue all rights and
remedies available under this Debenture, or under the Loan Documents, or
otherwise available at law or in equity.

     6. Following the occurrence of an Event of Default due to non-payment of
this Debenture or the Note, and so long as any such Event of Default remains
outstanding and uncured, if the Holder does not declare this Debenture in
default and provide the Company with a written notice of Acceleration, without
notice to the Company all unpaid principal and all other interest and charges
payable hereunder shall accrue interest at the annual rate equal to the greater
of (i) Prime Rate plus three percent (3%), or (ii) ten percent (10%). Following
the occurrence of an Event of Default, and for so long as any such Event of
Default shall remain outstanding and uncured, and upon the Holder's written
notice of such Event of Default and Acceleration, the Company promises to pay
interest on the outstanding principal balance of this Debenture, and on any and
all other amounts then outstanding, at an annual rate of interest equal to the
greater of (i) Prime Rate plus three percent (3%), or (ii) ten percent (10%) per
annum, provided that any interest which has accrued at the default rate shall be
paid at the time of, and as a condition precedent to the curing of any default
under any statutory right to cure. The fluctuating default rates at which
interest accrues shall be adjusted simultaneously, at each announced change of
the Prime Rate. Failure to exercise such option or charge of such increased
interest shall not be a waiver of the right to do so at any future time or with
respect to any other default.

     7. No provision of this Debenture shall alter or impair the obligation of
the Company which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company. The
Company shall pay all costs and expenses, including reasonable attorneys' fees,
which the Holder may incur in connection with any effort or action to collect
amounts due under this Debenture.

     8. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

     9. The rights or remedies of the Holder as provided in this Debenture and
the Loan Documents shall be cumulative and concurrent and may be pursued singly,
successively, or together against the Company, the property described in the
Loan Documents, and any other funds, property or security held by the Holder for
the payment hereof or otherwise at the sole discretion of the Holder. The
failure to exercise any such right or remedy shall in no event be considered as
a waiver or release of such rights or remedies or the right to exercise them at
any later time.

                                       35

<PAGE>

     10. In the event the interest provisions hereof or any exactions provided
for herein, or in the Loan Documents or any other instrument securing this
Debenture shall result, because of any reduction of principal, or for any reason
at any time during the life of this loan, in any effective rate of interest
which, for any month, transcends the limit of the usury or any other law
applicable to the obligation evidenced hereby, all sums in excess of those
lawfully collectible as interest for the period in question shall, without
further agreement or notice between or by any party hereto, be applied upon
principal immediately upon receipt of such moneys by Holder, with the same force
and effect as though the payor had specifically designated such extra sums to be
so applied to principal and Holder had agreed to accept such extra payment as a
premium-free prepayment. In no event shall any agreed to or actual exaction as
consideration for this obligation transcend the limits imposed or provided by
the laws applicable to this transaction or the Company hereof in the
jurisdiction in which any of the security herefor is located for the use or
detention of money or for forbearance in seeking its collection.

     11. The Company and all endorsers, guarantors and all persons liable or to
become liable on this Debenture waive presentment, protest and demand, notice of
protest, demand and dishonor and nonpayment of this Debenture, and consent to
any and all renewals and extensions in the time of payment hereof, and agree,
further, that at any time and from time to time without notice, the terms of
payment herein may be modified or the security described in the Loan Documents
released in whole or in part or increased, changed or exchanged by agreement
between the Holder hereof and any owner of the property affected by said Loan
Documents without in anywise affecting the liability of any party to this
instrument or any person liable or to become liable with respect to any
indebtedness evidenced hereby. The right to plead any and all statues of
limitation as a defense to any demand on this Debenture, or any guaranty hereof,
or any agreement to pay the same, or any demand secured by the Loan Documents,
or any and all obligations or liabilities arising out of or in connection with
this Debenture or in the Loan Documents, is expressly waived by each and every
of the Company, endorsers, or guarantors to the fullest extent permitted by law.

     12. Any forbearance of Holder in exercising any right or remedy hereunder
or under the Loan Documents, or otherwise, afforded by applicable law, shall not
be a waiver of or preclude the exercise of any right or remedy. The acceptance
by Holder of payment of any sum payable, hereunder after the due date of such
payment shall not be a waiver of Holder's right to either require prompt payment
when due of all other sums payable hereunder or to declare a default for failure
to make prompt payment. Holder shall at all times have the right to proceed
against any portion of the security held herefor in such order and in such
manner as Holder may deem fit, without waiving any rights with respect to any
other security. No delay or omission on the part of Holder in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Debenture.

     13. This Debenture shall be governed by and construed in accordance with
the laws of the State of Colorado without regard to the choice of law provisions
thereof, and in the event this Debenture is placed in the hands of any attorney
for collection or is collected through any legal proceedings, the undersigned
promises to pay (in addition to costs and disbursements otherwise allowed), to
the extent permitted by law, reasonable attorneys' fee and legal costs (whether
or not suit is commenced and whether or not incurred in connection with appeal
of a lower court judgment or order or in collecting any judgment entered
therein),and if foreclosure is made by any public official, reasonable
attorneys' fees and legal costs shall be added by such public official to the
cost of foreclosure. The undersigned hereby represents that the proceeds of the
loan evidenced by this Debenture will be used for a commercial or business
purpose.

                                       36

<PAGE>

     14. Time is of the essence with regard to the performance of the
obligations of the Company in this Debenture and each and every term, covenant
and condition herein by or applicable to the Company.

     15. The Company hereby irrevocably waives, to the fullest extent permitted
by law, any and all right to trial by jury in any legal proceeding arising out
of or relating to this Debenture and the other Loan Documents or the
transactions contemplated thereby. In any action which may be brought under this
Debenture, Holder hereby irrevocably consents to the personal jurisdiction of
any State District Court or Federal Court located in the State of Colorado, and
further stipulates and agrees that venue shall be proper in the State of
Colorado for any such actions and further agrees not to seek a change of venue
to any court outside the State of Colorado without the consent of Holder.

     16. All notices required or permitted to be given pursuant to the terms
hereof shall be in writing and shall be delivered either by (a) certified mail,
return receipt requested, in which case notice shall be deemed received three
(3) business days after deposit, postage prepaid in the U.S. mail, (b) a
reputable messenger service or a nationally-recognized overnight courier, in
which case notice shall be deemed received one (1) business day after deposit
with such messenger or courier, (c) facsimile or other telecopy transmission
(followed with "hard copy" sent by a nationally-recognized overnight courier or
mail as aforesaid), in which case notice shall be deemed received when the
facsimile or other telecopy transmission is received, provided such receipt
occurs before 5:00 p.m. recipient's local time on a business day, otherwise at
8:30 a.m. recipient's local time on the next business day or (d) personal
delivery with receipt acknowledged in writing, in which case notice shall be
deemed received upon delivery. Notices shall be deemed given or sent upon
deposit in the U.S. mail in the case of clause (a) above, or upon deposit with a
reputable messenger or courier in the case of clause (b) above. Notices shall be
deemed given or sent upon receipt of electronic confirmation in the case of
clause (c) above or upon receipt in the case of clause (d). All such notices
shall be addressed as follows:

                           To Maker:

                           ADA-ES, Inc.
                           Attn:  Mark McKinnies
                           8100 SouthPark Way, B
                           Littleton, CO  80120
                           Fax:  303-734-0330

                           To Holder:

                           Arch Coal, Inc.
                           Attn:  David B. Peugh
                           CityPlace One, Suite 300
                           St. Louis, MO 63141
                           Fax:  314-994-2940

                                       37

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

                                                ADA-ES, INC.

                                                By:
                                                    ----------------------------
                                                    Name:  Mark H. McKinnies
                                                    Title:   CFO

                                       38

<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                       in order to Convert the Debenture)

     The undersigned hereby irrevocably elects to convert the above Debenture
No. ______ into shares of Common Stock of ADA-ES, INC. (the "Company") according
to the conditions hereof, as of the date written below.

                                                --------------------------------
                                                Date of Conversion

                                                --------------------------------
                                                Applicable Conversion Price

                                                [SUBSCRIBER]

                                                --------------------------------
                                                          Signature

                                                Address:

                                                --------------------------------

                                                --------------------------------

* The original Debenture and Notice of Conversion must be received by the
Company by the third business day following the Date of Conversion.

                                       39

<PAGE>

                                    EXHIBIT D
                                       To
                SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT
                               Dated July 7, 2003

                              STOCKHOLDER AGREEMENT

     This Stockholder Agreement, dated as of July 7, 2003, is by and among Arch
Coal, Inc., a Delaware corporation ("Arch Coal"), ADA-ES, INC., a Colorado
corporation ("ADA-ES"), and Earth Sciences, Inc., a Colorado corporation
("ESI").

     WHEREAS, on the Closing Date, as defined in that certain Securities
Subscription and Investment Agreement dated July 7, 2003, by and among the
parties hereto (the "Subscription Agreement"), Arch Coal will acquire shares of
the common stock of ADA-ES (the "Common Stock"); and

     WHEREAS, Arch Coal has relied upon this Agreement in entering into the
Subscription Agreement; and

     WHEREAS, the parties desire to enter into an agreement with respect to the
nomination of one member for election to the Board of Directors of ADA-ES; and

     NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:

     SECTION 1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms (whether used in the singular
or plural) have the meanings indicated:

     "Affiliate" means, with respect to any Person, any Person that controls, is
controlled by or is under common control with such Person in question. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.

     "Exchange Act" means the Securities Exchange Act of 1934 as amended from
time to time and the rules and regulations of the SEC thereunder.

     "Person" means an individual, corporation, limited liability company,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political subdivision thereof)
or other entity of any kind.

     "Voting Stock" means capital stock of any class or classes of ADA-ES, the
holders of which are entitled, in the absence of contingencies, to participate
generally in the election of the members of ADA-ES's Board of Directors, and any
securities of ADA-ES convertible into, or exercisable or exchangeable for, any
such capital stock of ADA-ES, including, without limitation, the Common Stock;
provided, however, that any capital stock held in the treasury of ADA-ES or held
by any subsidiary of ADA-ES shall not be Voting Stock.

                                       40

<PAGE>

     SECTION 2. Director Nomination and Election. (a) The parties hereto agree
with the principle that Arch Coal, at all times during the effectiveness of this
Agreement and subject to the terms and conditions of this Agreement, shall be
entitled to be represented by one member of the Board of Directors of ADA-ES.
ADA-ES and ESI agree they shall take the following steps to cause one
representative of Arch Coal to be elected to the Board of Directors of ADA-ES:

          (i) ADA-ES shall give at least 10 days' notice to Arch Coal of any
     meeting of its Board of Directors (or any committee thereof) at which the
     Board's nominees for election are to be selected. Upon receipt of such
     notice from ADA-ES, Arch Coal shall within 10 days thereafter furnish
     ADA-ES with a written designation of one nominee for election to the Board
     of Directors of ADA-ES, with a copy thereof to ESI. Such notice shall be
     given in the manner set forth in Section 5 of this Agreement. If no written
     designation of a nominee is received by ADA-ES within the time frame
     specified herein, the current director of ADA-ES designated by Arch Coal
     shall be a nominee for the ensuing election.

          (ii) So long as this Agreement is in effect, ADA-ES hereby agrees to
     take all actions necessary to nominate or cause to be nominated and to
     solicit proxies (and if properly executed or otherwise valid, to vote all
     such proxies and other shares which ADA-ES management is otherwise entitled
     to vote in accordance with the terms and requirements of this provision)
     for election as a director at each annual meeting of stockholders (or, if
     applicable, at any special meeting of stockholders) of ADA-ES, the
     representative of Arch Coal designated by Arch Coal or in favor of the
     current director designated by Arch Coal, as the case may be, pursuant to
     Section 2(a)(i) above.

          (iii) So long as this Agreement is in effect, if ESI or its Affiliates
     shall be the beneficial owner (as defined in Rule 13d-3(a) under the
     Exchange Act) of outstanding Voting Stock, then ESI will vote the shares of
     Voting Stock so held or owned directly or indirectly by ESI in favor of the
     election of the Arch Coal representative.

          Except as specifically set forth in this Section 2(a)(iii), ESI shall
     be free to vote its shares of Voting Stock in such manner as it may, in its
     sole discretion, deem advisable.

          (iv) So long as this Agreement is in effect, Arch Coal may designate a
     successor to fill any vacancy created by the death, resignation, or
     incapacity of its designated nominee to the ADA-ES Board of Directors by
     giving notice to ADA-ES in the manner set forth in Section 5 of this
     Agreement setting forth the name of the new designee. ADA-ES will recommend
     to the Board such new designee and ESI will vote its shares, if any, in the
     election of directors, if required, to cause the Board to appoint Arch
     Coal's designee and each of ADA-ES and ESI will cause to be taken all steps
     to assure the continued representation of Arch Coal on the ADA-ES Board of
     Directors contemplated by this Section 2.

     (b) Notwithstanding the foregoing Sections 2(a) (i) - (iv) , if at any time
during the term of this Agreement ADA-ES adopts a staggered Board of Directors,
ADA-ES and ESI shall take all steps regarding nomination and election of
directors to ensure Arch Coal continues to be represented by one member of the
Board of Directors.

     SECTION 3. Enforceability. ADA-ES and ESI each hereby represent that this
Agreement is its valid and binding obligation enforceable against it in
accordance with its terms and that its obligations hereunder comply in all
respects with the provisions Colorado law applicable to corporations.

                                       41

<PAGE>

     SECTION 4. Termination. This Agreement shall terminate if at any time Arch
Coal shall be the beneficial owner (as defined in Rule 13d-3(a) under the
Exchange Act) of less than 100,000 shares of Common Stock; provided that Arch
Coal shall be deemed to hold for this purpose any shares of ADA-ES Common Stock
which Arch Coal has transferred to ADA-ES or any subsidiary of ADA-ES in
exchange for voting equity securities of approximately equivalent voting power
of ADA-ES or such subsidiary.

     SECTION 5. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon personal delivery or seven business days after deposit in
the United States Postal Service, or by (a) advance copy by fax, and (b) mailing
by express courier or registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days advance written notice to each of the other parties hereto.

ADA-ES and ESI:            EARTH SCIENCES, INC. and ADA-ES, Inc.
                           8100 SouthPark Way, B
                           Littleton, CO  80120
                           Attention: President
                           Telephone: (303) 734-1727
                           Fax: (303) 734-0330

Arch Coal:                 Arch Coal, Inc.
                           CityPlace One, Suite 300
                           St. Louis, MO 63141
                           Attention:  Attn:  David B. Peugh
                           Telephone: (314) 994-2700
                           Fax:   (314)994-2940

With a copy to:            Attention:  General Counsel
                           Telephone:  (314)994-2700
                           Fax (314)994-2734

     SECTION 6. Governing Law; Miscellaneous. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of Colorado without
regard to the conflicts of law principles of such state. Each of the parties
consents to the jurisdiction of the federal courts whose districts encompass any
part of the City of Denver or the state courts of the State of Colorado sitting
in the City of Denver in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

                                       42

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.

                                           EARTH SCIENCES, INC.

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

                                           ADA-ES, Inc.

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

                                           BUYER
                                           Arch Coal, Inc.

                                      By:
                                           -------------------------------------
                                           Name:  David B. Peugh
                                           Title:  Vice President -
                                                   Business Development

                                       43EXHIBIT 10.7

DOE F 4600.1 (7-81)
                           U.S. DEPARTMENT OF ENERGY
                      NOTICE OF FINANCIAL ASSISTANCE AWARE
Under the authority of Public Law  95-91- and 95-224, as amended by 97-258
and subject to legislation, regulations and policies applicable to (city
legislative Program Title):
================================================================================

1.  PROJECT TITLE
Field test Program to Develop Comprehensive Design, Operating, and Cost Date for
Mercury Control Systems
--------------------------------------------------------------------------------
2.  INSTRUMENT TYPE
        [ ] GRANT                               [X]  COOPERATIVE AGREEMENT
--------------------------------------------------------------------------------
3.  RECIPIENT (Name, address, zip code, area code, telephone no.)
        ADA Environmental Solutions, LLC
        8100 SouthPark Way, B-2
        Littleton, CO 80120
--------------------------------------------------------------------------------
4.  INSTRUMENT NO.
        DE-FC26-00NT41004
--------------------------------------------------------------------------------
5.  AMENDMENT NO.
        A000
--------------------------------------------------------------------------------
6.  BUDGET PERIOD
        From:  10/01/00 To: 09/30/03
--------------------------------------------------------------------------------
7.  PROJECT PERIOD
        From 10/01/00  To:  09/30/03
--------------------------------------------------------------------------------
8.  RECIPIENT PROJECT DIRECTOR (Name and Telephone No.)
        e-mail:  miked@adaes.com
        Michael D. Durham (303) 734-1727
--------------------------------------------------------------------------------
9.  RECIPIENT BUSINESS OFFICER (Name and Telephone No.)
        e-mail:  richards@adaes.com
        Richard Schlager (303) 734-1727
--------------------------------------------------------------------------------
10.  TYPE OF AWARD
        [X]  NEW                 [ ] CONTINUATION           [ ]  RENEWAL
        [ ]  REVISION            [ ] SUPPLEMENT
--------------------------------------------------------------------------------
11.  DOE PROJECT OFFICER (Name, Address, Zip Code, Phone No.)
        Scott Renninger (304-285-4790
        U.S. Department of Energy
        National Energy Technology Laboratory
        P.O. Box 880
        Morgantown, WV 26507-0880
--------------------------------------------------------------------------------
12.  ADMINISTERED BY (Name, Address, Zip Code, Phone No.)
        Martin J. Byrnes (412) 386-4486
        U.S. Department of Energy
        National Energy Technology Laboratory
        P.O. Box 10940, MS 921-112
        Phittsburgh, PA 15235-0940
--------------------------------------------------------------------------------
13.  RECIPIENT TYPE
        [ ] STATE GOV'T              [ ] INDIAN TRIBAL GOV'T     [ ] HOSPITAL
        [X] FOR PROFIT ORGANIZATION  [ ] INDIVIDUAL              [ ] LOCAL GOV'T
        [ ] INSTITUTION OF HIGHER    [ ] OTHER NONPROFIT         [ ] OTHER
             EDUCATION                   ORGANIZATION                (Specify)
                                [ ]  C         [ ]  P       [ ]  SP
--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------
14.  ACCOUNTING AND APPROPRIATIONS DATA                     26-00NT41005.000
--------------------------------------------------------------------------------
  a. Appropriation Symbol   b.  B&R No.    c.  FT/AFP/OC       d.  DFA Number
  -----------------------   -----------    -------------       --------------
    89x0213.91              AA2025200      FT0391/JF/255           05276029
--------------------------------------------------------------------------------
15.  EMPLOYER I.D. NO./SSN                                  84-134-1182
--------------------------------------------------------------------------------
16.  BUDGET AND FUNDING INFORMATION
          a.  CURRENT BUDGET PERIOD (BP) INFORMATION
        (1)  DOE Funds Obligated this Action:                   $   300,000.00
        (2)  DOE Funds Authorized for Carryover:                $       -0-
        (3)  DOE Funds Previously Obligated this BP:            $       -0-
        (4)  DOE Share of Total Approved Budget:                $ 4,542,563.00
        (5)  Recipient Share of Total Approved Budget:          $ 2,237,383.00
        (6)  Total Approved Budget:                             $ 6,779,946.00
          b   CUMULATIVE DOE OBLIGATIONS
        (1)  This Budget Period                                 $    300,000.00
                (Total Lines a.(1) and a.(3))
        (2)  Prior Budget Periods                               $       -0-
        (3)  Project Period to Date                             $    300,000.00
                (Total Lines b.(1) and b(2))
--------------------------------------------------------------------------------
17.  TOTAL ESTIMATED COST OF PROJECT:  $6,779,946 (DOE share is $4,542,563)
(This is the current estimated cost of the project, it is not a promise to award
nor authorization to expend funds in this amount)
--------------------------------------------------------------------------------
18.  AWARD/AGREEMENT TERMS AND CONDITIONS:  This award/agreement consists of
this form plus the following:
        a.   Special Terms and Conditions
        b.   Applicable program regulations (Specify)____________(Date)_________
        c.   DOE Assistance Regulations, 10 DFR Part-600, as amended
        d.   Application/Proposal dated April 26, 2000,
                [ ] as submitted  [X] with changes as negotiated
--------------------------------------------------------------------------------
19.  REMARKS  This award consists of Section I (face page), Section II (Special
Terms and Conditions), Section III (Intellectual Property, and Section IV (List
of Attachments). CFDA:  81.089
--------------------------------------------------------------------------------
20.  EVIDENCE OF ACCEPTANCE
        /s/  Richard J. Schlager                10/5/00
        -----------------------------------------------
        (Signature of Authorized Official)
     Name:  Richard J. Schlager
     Title:  Vice President, Contract R & D
--------------------------------------------------------------------------------
21.  AWARDED BY
        /s/  William R. Mundorf                 9/28/00
        -----------------------------------------------
     Name:  William R. Mundorf
     Title:  Contracting Officer
================================================================================

<PAGE>

                   SECTION II -- SPECIAL TERMS AND CONDITIONS
                   ------------------------------------------

2.1 PREVAILING REGULATIONS (NOV 1998)
-------------------------------------

As 'indicated on the face page, Block 18c, this Award is subject to the DOE
Assistance Regulations of Title 1O, Code of Federal Regulations, Part 600. This
set of regulations may be found in most major libraries or on the World Wide Web
at:

                       http://www.pr.doe.gov/fahome.htmi

2.2 ORDER OF PRECEDENCE (DEC 1999)
----------------------------------

In the event of any inconsistency among the provisions of this agreement, the
inconsistency shall be resolved by giving precedence as follows: (a) Applicable
Public Laws; (b) the special terms and conditions or schedule of articles; (c)
10 CFR Part 600; and (d) other documents, exhibits and attachments.

2.3 SUBSTANTIAL INVOLVEMENT BETWEEN DOE AND THE RECIPIENT (JAN 1999)
--------------------------------------------------------------------

There will be substantial involvement between the DOE and the Recipient during
performance of this Cooperative Agreement. The DOE will participate in review
and approval during the project period of one stage before work can begin on a
subsequent stage, thereby sharing the responsibility for the direction of the
project. In addition, the DOE will share responsibility for the management of
the project as further described in this section. The substantial involvement
anticipated between DOE and the Participant consists of (1) involvement in the
technical and business management aspects of the project, (2) substantial
involvement and contribution to the technical aspects of the work necessary for
its accomplishment, and (3) review and approval during the project period of one
stage before work can begin on a subsequent stage(ie, DOE will participate in
establishing and approving a work plan, which will be used to identify essential
and significant milestones necessary of completion of the project. This plan
will be used to determine whether or not to proceed with subsequent tasks in the
statement of project objectives).

a. Recipient Role
   --------------

          The Recipient shall be responsible for all aspects of project
          performance as set forth in the Application dated 4-26-00 as revised.
          All services, personnel, facilities, equipment, materials, and
          supplies shall be furnished by the Recipient, unless otherwise
          specified under this Cooperative Agreement.

          The Recipient shall designate a Project Manager who shall serve as its
          authorized representative for the technical and administrative
          elements of all work to be performed under this Cooperative Agreement.
          The Project Manager shall be the single authorized point of contact
          for all communications between the Recipient and the DOE.

b. DOE Role
   --------

          DOE shall monitor the Recipient's progress in performing the project
          and shall have a substantial role in project decision making.

          The DOE Contracting Officer is the only Government Representative
          authorized to accept the reports and other deliverables the Recipient
          is required to provide under this Cooperative Agreement. The review
          and comment of such reports and other deliverables may be delegated to
          the Contracting Officer's authorized representative (COR).

          The DOE Contracting Officer shall designate a COR who shall have the
          authority to issue written technical advice which suggests redirecting
          the project work (e.g., by changing the emphasis among different
          tasks), or pursuing specific lines of inquiry likely to assist in
          accomplishing the Statement of Work. The COR shall have the authority
<PAGE>

          to comment on those technical reports, plans, and other technical
          information the Recipient is required to submit to DOE for review and
          comment. The COR is not authorized to issue, and the Recipient is not
          required to follow, any technical advice which constitutes work which
          is not within the scope of the Statement of Work; which in any manner
          causes an increase or decrease in the total estimated cost or in the
          time required for performance of the project; which has the effect of
          changing any of the terms or conditions of the Cooperative Agreement;
          or which interferes with the Recipient's right to perform the project
          in accordance with the terms and conditions of this Cooperative
          Agreement.

c. No Government Obligation to Third Paties
   ----------------------------------------

          In connection with the performance of the project, the Government
          shall have no obligation or responsibility to any contractor,
          subcontractor or other person who is not a party to this Cooperative
          Agreement. The foregoing limitation shall apply notwithstanding the
          Contracting Officer's prior approval or consent of any contract
          awarded by the Recipient. The Recipient shall be responsible, without
          recourse to DOE, except for amounts DOE is otherwise obligated to pay
          pursuant to the provisions of this Cooperative Agreement for the
          resolution and satisfaction of all pre-award protests, contract
          administration issues, and contract disputes arising out of
          acquisitions related to the Project.

2.4 COST SHARING (May 2000)
---------------------------

The total estimated cost of the project for the work to be accomplished under
this award is $6,779,946.00. The Recipient and the Government agree to share the
allowable project costs under this award as follows:

DOE:                      $4,542,563           66.6%
Recipient:                $2,237,383           33.3%
Total:                    $6,779,946          100.0%

In the event allowable project costs exceed $6,779,946.00, such costs shall be
borne solely by the recipient.

2.5 METHOD OF PAYMENT (APR. 2000)
---------------------------------

The method of payment to the Recipient shall be accomplished by the method
checked below:

[X]    Advance in accordance with 10 CFR 600. 122(b)
[ ]    Reimbursement in accordance with 10 CFR 600. 122(e)
[ ]    Other in accordance with 10 CFR 600.122

The Recipient shall request advances or reimbursements using the Standard Form
SF 270, Request for Advance or Reimbursement, and shall complete Blocks 1-11 and
13. Electronic versions of the SF 270 can be found on the NETL website at:
http://www.netl.doe.gov/business/forms/forms.html

Note 1: If the block designating payment by Advance is used, the Recipient is
allowed advances not to exceed the funding required to cover expenditures for
any succeeding one month time period. Such requests for monthly advances shall
be prepared using the Standard Form SF 270 in an original and two (2) copies.

The original is to be submitted to:

      U. S. Department of Energy Oak
      Ridge Financial Services
      P. O. Box 4787
      Oak Ridge, TN 37831

<PAGE>

The two copies are to be submitted to:

      U. S. Department of Energy
      National Energy Technology Laboratory
      Commercial Payments Center
      P. O. Box 10940, MS 921-143 Pittsburgh, PA
      15236-0940

Note 2: If the block designating payment by Reimbursement is used, the Recipient
shall submit the request for payment for costs incurred using the Standard Form
SF 270 in an original and two (2) copies as indicated in Note 1 above. This
request shall not be submitted more frequently than monthly.

Status of Payments
------------------

The Oak Ridge Financial Service Center (ORFSC) has a system via Internet, in
which Recipients can request information about payments by invoice, by award
number, and/or by paid date. The system is called Vendor Inquiry Payment
Electronic Reporting System (VIPERS) and is available to Recipients at the
following website: http://finweb.oro.doe/vioers.htm. Recipients must have a
federal tax identification number (TIN) and then obtain a personal
identification number (PIN) to access the system.

2.6 NOTICE OF INVOICE PROCESSING BY SUPPORT CONTRACTOR (DEC 1999}
-----------------------------------------------------------------

A support service contractor performs the function of processing of all invoices
submitted to the National Energy Technology Laboratory, against its awards.
Therefore, this contractor has access to your business confidential cost/rate
information. A special provision in this contractor's award requires the
confidential treatment by all contractor employees of any and all business
confidential information of other contractors and financial assistance
recipients to which they have access.

2.7 ACKNOWLEDGMENT OF FEDERAL FUNDING (NOV 1998)
------------------------------------------------

When issuing statements, press releases, requests for proposals, bid
solicitations, and other documents describing this project, the Recipient shall
clearly state (1) the percentage of the total cost of the project which will be
financed with Federal money, and (2) the dollar amount of Federal funds for the
project.

2.8 REAL PROPERTY - NONE (JAN 1999)
-----------------------------------

No real property may be acquired under this award.

2.9 RECIPIENT ACQUIRED PRQPERTY (MAY 1999)
------------------------------------------

Reference Attachment 0 for a listing of property authorized for acquisition
under this award. Property acquired by the Recipient under this award shall be
managed in accordance with 10 CFR 600.130 to 10 CFR 600.137. and reported as
prescribed in Attachment 8, Federal Assistance Reporting Checklist.

2.10 KEY PERSONNEL (NOV 1998)
-----------------------------

Recipient personnel considered to be essential and key to the work being
performed hereunder are specified below.

<PAGE>

      NAME                          TITLE                     TELEPHONE
      ----                          -----                     ---------
   Michael Durham           Principal Investigator           303-734-1727

The personnel specified in this clause are considered to be essential to the
project. Before diverting any key personnel to work outside the scope of this
award, the Recipient shall notify the Contracting Officer reasonably in advance
and shall submit justification (including proposed substitutions) in sufficient
detail to permit evaluation of the impact on the project. No key personnel may
be substituted without the Contracting Officer's approval. Such approval shall
be obtained in advance of the substitution, except that the Contracting Officer
may ratify a substitution which, because of exigent circumstances, was made
before the Recipient could request and/or obtain the Contracting Officer's
approval.

2.11 PAPERWORK REDUCTION (NOV 1998)
-----------------------------------

The award is subject to the requirements of the Paperwork Reduction Act of 1980
as implemented by the Office of Management and Budget rules, "Controlling
Paperwork Burdens on the Public," published at 5 CFR 1320. These requirements
apply if the Recipient will collect information from ten (10) or more
respondents at the specific request of DOE, or if the award requires specific
DOE approval of the information collection or the collection procedures.

The Recipient shall submit any proposed sponsored information collection to the
person identified on the DOE F 4600.1 (Award Face Page, Block 12). The proposal
shall be submitted at least 120 days prior to the intended date of information
collection. DOE will seek the requisite approval from the Office of Management
and Budget (OMB) and will promptly notify the Recipient of the disposition of
the request.

2.12 PUBLIC ACCESS TO INFORMATION (APR 2000)
--------------------------------------------

The Freedom of Information Act, as amended, and the DOE implementing regulations
(10 CFR 1004) requ ire DOE to release certain documents and records regarding
awards to any person who provides a written request. The intended use of the
information will not be a criterion for release.

2.13 NATIONAL SECURITY (NOV. 1998)
----------------------------------

It is not expected that activities under the award will generate or otherwise
involve classified information (i.e. Restricted Data, Formerly Restricted Data,
National Security Information). However, if in the opinion of the Recipient or
DOE such involvement becomes expected prior to the closeout of the award, the
Recipient or DOE shall notify the other in writing immediately. If the Recipient
believes any information developed or acquired may be classifiable, the
Recipient shall not provide the potentially classifiable information to anyone,
including the DOE officials with whom the Recipient normally communicates,
except the Director of Classification, and shall protect such information as if
it were classified until notified by DOE that a determination has been made that
it does not require such handling. Correspondence which includes the specific
information in question shall be sent by registered mail to U. S. Department of
Energy, Attn.: Executive Assistant for Defense Programs, DP-4, 4A-019/FORS, 1000
Independence Avenue, Washington, D.C. 20585. If the information is determined to
be classified, the Recipient may wish to discontinue the project, in which case
the Recipient and DOE shall terminate the award by mutual agreement. If the
award is to be terminated, all materials deemed by DOE to be classified shall be
forwarded to DOE, In a manner specified by DOE, for proper disposition. If the
Recipient and DOE wish to continue the award, even though classified information
is involved, the Recipient shall be required to obtain both personnel and
facility security clearances through the Office of Safeguards and Security for
Headquarters awarded awards obtained through DOE field organizations. Costs
associated with handling and protecting any such classified information shall be
negotiated at the time the determination to proceed is made.

<PAGE>

2.14 NOTICE REGARDING THE PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS--
----------------------------------------------------------------------------

SENSE OF CONGRESS (DEC 1999)
----------------------------

It is the sense of the Congress, that to the greatest extent practicable, all
equipment and products purchased with funds made available under this award
should be American-made.

2.15 LOBBYING RESTRICTION (DEPARTMENT OF INTERIOR AND RELATED AGENCIES
APPROPRIATIONS ACT. 2000) (DEC 1999)
--------------------------------------------------------------------------------

The awardee agrees that none of the funds obligated on this award shall be made
available for any activity or the publication or distribution of literature that
in any way tends to promote public support or opposition to any legislative
proposal on which Congressional action is not complete. This restriction is in
addition to those prescribed elsewhere in statute and regulation.

A copy of the DOE "Lobbying Brochure" which provides a summary of the statutory
and regulatory restrictions regarding lobbying activities for Federal
contractors can be found at (http://www.pr.doe.gov/lobbying.html).

2.16 NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITES (NOV 1998)
-------------------------------------------------------------------------

Recipients of financial assistance are cautioned to carefully review the
allowable cost and other provisions applicable to expenditures under their
particular award instruments. If financial assistance funds are spent for
purposes or in amounts inconsistent with the allowable cost or any other
provisions governing expenditures in an award instrument, the government may
pursue a number of remedies against the Recipient, including in appropriate
circumstances, recovery of such funds, termination of the award, suspension or
debarment of the Recipient from future awards, and criminal prosecution for
false statements.

Particular care should be taken by the Recipient to comply with the provisions
prohibiting the expenditure of funds for lobbying and related activities.
Financial assistance awards may be used to describe and promote the
understanding of scientific and technical aspects of specific energy
technologies, but not to encourage or support political activities such as the
collection and dissemination of information related to potential, planned or
pending legislation.

2.17 YEAR 2000 COMPLIANCE (NOV 1998)
------------------------------------

Year 2000 compliant means, with respect to information technology, the
information technology accurately processes date/time data (including, but not
limited to, calculating, comparing, arid sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations, to the extent that other information technology, used in
combination with the information technology being acquired, properly exchanges
date/time data with it.

The Recipient assures, by acceptance of this award, that items delivered under
this contract are year 2000 compliant.

2.18 REPORTING (NOV 1998)
-------------------------

Failure to comply with the reporting requirements contained in this award will
be considered a material noncompliance with the terms of the award.
Noncompliance may result in a withholding of future payments, suspension or
termination of the current award, and withholding of future awards. A willful
failure to perform, or of unsatisfactory performance of this and/or other
financial assistance awards, may also result in a debarment action to preclude
future awards by Federal agencies.

2.19 RESEARCH INVOLVING RECOMBINANT DNA MOLECULES (NOV 1998)
------------------------------------------------------------

Any Recipient performing research involving recombinant DNA molecules and/or
organisms and viruses containing recombinant DNA molecules agrees by acceptance
of this award to comply with the National Institute of Health "Guidelines for

<PAGE>

Research Involving Recombinant DNA Molecules," (59 FR 34496, July 5, 1994 as
amended by 59 FR 40170, 60 FR 20726, 61 FR 1482, 61 FR 10004, 62 FR 53335, 62 FR
56196, 62 FR 59032 and 63 FR 8052, "subject to change - call 301-496-9838 to
obtain reference to a current version.")

2.20 SAFETY & HEALTH AND ENVIRONMENTAL PROTECTION (JAN 1999)
------------------------------------------------------------

The Recipient shall implement the DOE work in accordance with all applicable
Federal, State, and local laws, including codes, ordinances, and regulations,
covering safety, health, and environmental protection. The Recipient agrees to
include this clause in first-tier subcontracts and agrees to enforce the terms
of this clause.

2.21 PERMITS AND LICENSES (AUG 1999)
------------------------------------

Within sixty (60) days of award, the Recipient shall submit to the DOE
Contracting Officer Representative (COR) a list of ES&H approvals that, in the
Recipient's opinion, shall be required to complete the work under this award.
The list shall include the topic of the approval being sought, the approving
authority, and the expected submittal/approval schedule. The COR shall be
notified as specific items are added or removed from the list and processed
through their approval cycles. The Recipient agrees to include this clause in
first-tier subcontracts and agrees to enforce the terms of this clause.

2.22 FUNDING (AUG 2000)
-----------------------

This award is to be incrementally funded. The DOE has currently obligated
$300,000 and anticipates, subject to the availability of funds, obligating the
balance of DOE funds. The recipient shall not be obligated to continue
performance of this project beyond the amount set forth in Block 16(b)(3) of the
DOE form 4600.1.

<PAGE>

                 SECTION III -- INTELLECTUAL PROPERTY PROVISIONS
                 -----------------------------------------------

3.1 INTELLECTUAL PROPERTY PROVISIONS (JAN 1999)
-----------------------------------------------

The patent and technical data clauses included in this section apply to this
award. As used in these applicable clauses, the term "Patent Counsel" refers to
the following point of contact: Intellectual Property Law Division U.S.
Department of Energy Chicago Operations Office 9800 South Cass Avenue Argonne,
IL 60439 In any of the FAR and DEAR clauses contained in this section, use of
the term "Contracf' means "Award" and "Contractor" means "Recipient." The
Recipient shall include intellectual property clauses in any contract awarded in
accordance with requirements of the clauses in this section and of 10 CFR Part
600.27.

3.2 PUBLICATION OF RESULTS/ACKNOWLEDGMENT STATEMENT (JAN 1999)
--------------------------------------------------------------

Publication of the results of the award is encouraged subject to any applicable
restrictions in 10 CFR 600.27 (Patent and Data Provisions). Publications, as
well as reports prepared under this award shar.r contain the following
acknowledgment statement:

          "This (describe material) was prepared with the support of
          the U.S. Department of Energy, under Award No. DE-
          FG26-00NT41 005. However, any opinions, findings,
          conclusions, or recommendations expressed herein are those
          of the author(s) and do not necessarily reflect the views of
          the DOE".

3.3 RECIPIENT PRESS RELEASES (APR 1998)
---------------------------------------

The DOE policy and procedure on planned press releases requires that all
Recipient press releases be reviewed and approved by DOE prior to issuance.
Therefore, the Recipient shall, at least ten (10) days prior to the planned
issue date, submit a draft copy to the Contracting Officer of any planned press
releases related to work performed under this award. The Contracting Officer
will then obtain necessary reviews and clearances and provide the Recipient with
the results of such reviews prior to the planned issue date.

3.4 CONFIDENTIAL BUSINESS INFORMATION (DEC 1999)
------------------------------------------------

Data represented to the Department as being confidential business information,
and which does not include 'Technical Data" as that term is defined in 52.227-14
Rights in Data General clause of this agreement, shall be submitted as an
attachment to the required reports and will be withheld from disclosure outside
NETL to the extent permitted by law, provided such attachment and each page
therein is stamped with the following legend and no other:

          CONFIDENTIAL BUSINESS INFORMATION

          The Recipient considers the data furnished herein to contain
          confidential business information which is to be withheld
          from disclosure outside NETL to the extent permitted by law.

<PAGE>

3.552.227-1 AUTHORIZATION AND CONSENT. (JUL 1995) --ALTERNATE I (APR1984)
-------------------------------------------------------------------------

     (a) The Government authorizes and consents to all use and
     manufacture of any invention described in and covered by a United
     States patent in the performance of this contract or any
     subcontract at any tier.

     (b) The Contractor agrees to include, and require inclusion of,
     this clause, suitably modified to identify the parties, in all
     subcontracts at any tier for supplies or services (including
     construction, architect-engineer services, and materials,
     supplies, models, samples, and design or testing services
     expected to exceed the simplified acquisition threshold);
     however, omission of this clause from any subcontract, including
     those at or below the simplified acquisition threshold, does not
     affect this authorization and consent.

3.6952.227-11 PATENT RIGHTS-RETENTION BY THE CONTRACTOR (SHORT FORM). (FEB 1995)
--------------------------------------------------------------------------------

     (a) Definitions.

          (1) "Invention" means any invention or discovery which is or may be
          patentable or otherwise protectable under title 35 of the United
          States Code, or any novel variety of plant which is or may be
          protected under the Plant Variety Protection Act (7 U.S.C. 2321, et
          seq.).

          (2) "Made" when used in relation to any invention means the conception
          of first actual reduction to practice of such invention.

          (3) "Nonprofit organization" means a university or other institution
          of higher education or an organization of the type described in
          section 501 (c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501
          (c>> and exempt from taxation under section 501 (a) of the Internal
          Revenue Code (26 U.S.C. 501 (a>> or any nonprofit scientific or
          educational organization qualified under a state nonprofit
          organization statute.

          (4) "Practical application" means to manufacture, in the case of a
          composition or product; to practice, in the case of a process or
          method; or to operate, in the case of a machine or system; and, in
          each case, under such conditions as to establish that the invention is
          being utilized and that is benefits are, to the extent permitted by
          law or Government regulations, available to the public on reasonable
          terms.

          (5) "Small business firm" means a small business concern as defined at
          section 2 of Pub. L. 85-536 (15 U.S.C. 632) and implementing
          regulations of the Administrator of the Small Business Administration.
          For the purpose of this clause. the size standards for small business
          concerns involved in Government procurement and subcontracting at 13
          CFR 121.3-8 and 13 CFR 121.3-:12. respectively, will be used.

          (6) "Subject invention" means any invention of the contractor
          conceived or first actually reduced to practice in the performance of
          work under this contract, provided that in the case of a variety of
          plant, the date of determination (as defined in section 41 (d) of the
          Plant Variety Protection Act, 7 U.S.C. 2401 (d) must also occur during
          the period of contract performance.

          (7) "Agency licensing regulations" and "agency regulations concerning
          the licensing of Government-owned inventions" mean the Department of
          Energy patent licensing regulations at 10 CFR Part 781.

<PAGE>

     (b) Allocation of principal rights. The Contractor may retain the entire
     right, title, and interest throughout the world to each subject invention
     subject to the provisions of this clause and 35 U.S.C. 203. With respect to
     any subject invention in which the Contractor retains title, the Federal
     Government shall have a nonexclusive, nontransferable, irrevocable, paid-up
     license to practice or have practiced for or on behalf of the United States
     the subject invention throughout the world.

     (c) Invention disclosure, election of title, and filing of patent
     application by Contractor.

          (1) The Contractor will disclose each subject invention to the
          Department of Energy (DOE) within 2 months after the inventor
          discloses it in writing to Contractor personnel responsible for patent
          matters. The disclosure to DOE shall be in the form of a written
          report and shall identify the contract under which the invention was
          made and the inventor(s). It shall be sufficiently complete in
          technical detail to convey a clear understanding to the extent known
          at the time of the disclosure, of the nature, purpose, operation, and
          the physical, chemical, biological or electrical characteristics of
          the invention. The disclosure shall also identify any publication, on
          sale or public use of the invention and whether a manuscript
          describing the invention has been submitted for publication and, if
          so, whether it has been accepted for publication at the time of
          disclosure. In addition, after disclosure to the DOE, the Contractor
          will promptly notify that agency of the acceptance of any manuscript
          describing the invention for publication or of any on sale or public
          use planned by the Contractor.

          (2) The Contractor will elect in writing whether or not to retain
          title to any such invention by notifying DOE within 2 years of
          disclosure to DOE. However, in any case where publication, on sale or
          public use has initiated the I-year statutory period wherein valid
          patent protection can still be obtained in the United States, the
          period for election of title may be shortened by DOE to a date that is
          no more than 60 days prior to the end of the statutory period.

          (3) The Contractor will file its initial patent application on a
          subject invention to which it elects to retain title within 1 year
          after election of title or, if earlier, prior to the end of any
          statutory period wherein valid patent protection can be obtained in
          the United States after a publication, on sale, or public use. The
          Contractor will file patent applications in additional countries or
          international patent offices within either 10 months of the
          corresponding initial patent application or 6 months from the date
          permission is granted by the Commissioner of Patents and Trademarks to
          file foreign patent applications where such filing has been prohibited
          by a Secrecy Order.

          (4) Requests for extension of the time for disclosure, election, and
          filing under subparagraphs (c)(I), (2), and (3) of this clause may, at
          the discretion of the agency, be granted.

(d) Conditions when the Government may obtain title. The Contractor will convey
to the Federal agency, upon written request, title to any subject invention--

          (1) If the Contractor fails to disclose or elect title to the subject
          invention within the times specified in paragraph (c) of this clause,
          or elects not to retain title; provided, that DOE may only request
          title within 60 days after learning of the failure of the Contractor
          to disclose or elect within the specified times.

          (2) In those countries in which the Contractor fails to file patent
          applications within the times specified in paragraph (c) of this
          clause; provided, however, that if the Contractor has filed a patent
          application in a country after the times specified in paragraph (c) of
          this clause, but prior to its receipt of the written request of the
          Federal agency, the Contractor shall continue to retain title in that
          country.

<PAGE>

          (3) In any country in which the Contractor decides not to continue the
          prosecution of any application for, to pay the maintenance fees on, or
          defend in reexamination or opposition proceeding on, a patent on a
          subject invention.

     (e) Minimum rights to Contractor and protection of the Contractor right to
     file.

          (1) The Contractor will retain a nonexclusive royalty-free license
          throughout the world in each subject invention to which the Government
          obtains title, except if the Contractor fails to disclose the
          invention within the times specified in paragraph (c) of this clause.
          The Contractor's license extends to its domestic subsidiary and
          affiliates, if any, within the corporate structure of which the
          Contractor is a party and includes the right to grant sublicenses of
          the same scope to the extent the Contractor was legally obligated to
          do so at the time the contract was awarded. The license is
          transferable only with the approval of the Federal agency, except when
          transferred to the successor of that part of the Contractor's business
          to which the invention pertains.

          (2) The Contractor's domestic license may be revoked or modified by
          DOE to the extent necessary to achieve expeditious practical
          application of subject invention pursuant to an application for an
          exclusive license submitted in accordance with applicable provisions
          at 37 CFR Part 404 and agency licensing regulations. This license will
          not be revoked in that field of use or the geographical areas in which
          the Contractor has achieved practical application and continues to
          make the benefits of the invention reasonably accessible to the
          public. The license in any foreign country may be revoked or modified
          at the discretion of DOE to the extent the Contractor, its licensees,
          or the domestic subsidiaries or affiliates have failed to achieve
          practical application in that foreign country.

          (3) Before revocation or modification of the license, DOE will furnish
          the Contractor a written notice of its intention to revoke or modify
          the license, and the Contractor will be allowed 30 days (or such other
          time as may be authorized by DOE for good cause shown by the
          Contractor) after the notice to show cause why the license should not
          be revoked or modified. The Contractor has the right to appeal, in
          accordance with applicable regulations in 37 CFR Part 404 and agency
          regulations concerning the licensing of Government owned inventions,
          any decision concerning the revocation or modification of the license.

     (f) Contractor action to protect the Government's interest.

          (1) The Contractor agrees to execute or to have executed and promptly
          deliver to DOE all instruments necessary to (i) establish or confirm
          the rights the Government has throughout the world in those subject
          inventions to which the Contractor elects to retain title, and (ii)
          convey title to DOE when requested under paragraph (d) of this clause
          and to enable the government to obtain patent protection throughout
          the world in that subject invention.

          (2) The Contractor agrees to require, by written agreement, its
          employees, other than clerical and nontechnical employees, to disclose
          promptly in writing to personnel identified as responsible for the
          administration of patent matters and in a format suggested by the
          Contractor each subject invention made under contract in order that
          the Contractor can comply with the disclosure provisions of paragraph
          (c) of this clause, and to execute all papers necessary to file patent
          applications on subject inventions and to establish the Government's
          rights in the subject inventions. This disclosure format should
          require, as a minimum, the information required by subparagraph (c)(1)
          of this clause. The Contractor

<PAGE>

          shall instruct such employees, through employee agreements or other
          suitable educational programs, on the importance of reporting
          inventions in sufficient time to permit the filing of patent
          applications prior to U.S. or foreign statutory bars. (3) The
          Contractor will notify DOE of any decision not to continue the
          prosecution of a patent application, pay maintenance fees, or defend
          in a reexamination or opposition proceeding on a patent, in any
          country, not less than 30 days before the expiration of the response
          period required by the relevant patent office.

          (4) The Contractor agrees to include, within the specification of any
          United States patent application and any patent issuing thereon
          covering a subject invention, the following statement, "This invention
          was made with Government support under (identify the contract) awarded
          by the United States Department of Energy. The Government has certain
          rights in the invention."

     (g) Subcontracts.

          (1) The Contractor will include this clause, suitably modified to
          identify the parties, in all subcontracts, regardless of tier, for
          experimental, developmental, or research work to be performed by a
          small business firm or domestic nonprofit organization. The
          subcontractor will retain all rights provided for the Contractor in
          this clause, and the Contractor will not, as part of the consideration
          for awarding the subcontract, obtain rights in the subcontractor's
          subject inventions.

          (2) The contractor shall include in all other subcontracts, regardless
          of tier, for experimental, developmental, demonstration, or research
          work the patent rights clause at952.227-13.

          (3) In the case of subcontracts, at any tier, DOE, subcontractor, and
          the Contractor agree that the mutual obligations of the parties
          created by this clause constitute a contract between the subcontractor
          and DOE with respect to the matters covered by the clause; provided,
          however, that nothing in this paragraph is intended to confer any
          jurisdiction under the Contract Disputes Act in connection with
          proceedings under paragraph 0) of this clause.

          (h) Reporting on utilization of subject inventions. The Contractor
          agrees to submit, on request, periodic reports no more frequently than
          annually on the utilization of a subject invention or on efforts at
          obtaining such utilization that are being made by the Contractor or
          its licensees or assignees. Such reports shall include information
          regarding the status of development, date of first commercial sale or
          use, gross royalties received, by the Contractor, and such other data
          and information as DOE may reasonably specify. The Contractor also
          agrees to provide additional reports as may be requested by DOE in
          connection with any march-in proceeding undertaken by that agency in
          accordance with paragraph (j) of this clause. As required by 35 U.S.C.
          2O2(c)(5), DOE agrees it will not disclose such information to persons
          outside the Government without permission of the Contractor.

          (i) Preference for United States industry. Notwithstanding any other
          provision of this clause, the Contractor agrees that neither it nor
          any assignee will grant to any person the exclusive right to use or
          sell any subject invention in the United States unless such person
          agrees that any product embodying the subject invention or produced
          through the use of the subject invention will be manufactured
          substantially in the United States. However, in individual cases, the
          requirement for such an agreement may be waived by DOE upon a showing
          by the Contractor or its assignee that reasonable but unsuccessful
          efforts have been made to grant licenses on similar terms to potential
          licensees that would be likely to manufacture substantially in the
          United States or that under the circumstances domestic manufacture is
          not commercially feasible.

<PAGE>

     0) March-in rights. The Contractor agrees that, with respect to any subject
     invention in which it has acquired title, DOE has the right in accordance
     with the procedures in 37 CFR 401.6 and any supplemental regulations of the
     agency to require the Contractor, an assignee or exclusive licensee of a
     subject invention to grant a nonexclusive, partially exclusive, or
     exclusive license in any field of use to a responsible applicant or
     applicants, upon terms that are reasonable under the circumstances, and, if
     the Contractor, assignee, or exclusive licensee refuses such a request, DOE
     has the right to grant such a license itself if DOE determines that--

          (1) Such action is necessary because the Contractor or assignee has
          not taken, or is not expected to take within a reasonable time,
          effective steps to achieve practical application of the subject
          invention in such field of use;

          (2) Such action is necessary to alleviate health or safety needs which
          are not reasonably satisfied by the Contractor, assignee, or their
          licensees;

          (3) Such action is necessary to meet requirements for public use
          specified by Federal regulations and such requirements are not
          reasonably satisfied by the Contractor, assignee, or licensees; or (4)
          Such action is necessary because the agreement required by paragraph
          (i) of this clause has not been obtained or waived or because a
          licensee of the exclusive right to use or sell any subject invention
          in the United States is in breach of such agreement.

     (k) Special provisions for contracts with nonprofit organizations. If the
     Contractor is a nonprofit organization, it agrees that--

          (1) Rights to a subject invention in the United States may not be
          assigned without the approval of the Federal agency, except where such
          assignment is made to an organization which has as one of its primary
          functions the management of inventions; provided, that such assignee
          will be subject to the same provisions as the Contractor;

          (2) The Contractor will share royalties collected on a subject
          invention with the inventor. including Federal employee co-inventors
          (when DOE deems it appropriate) when the subject invention is assigned
          in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10;

          (3) The balance of any royalties or income earned by the Contractor
          with respect to subject inventions, after payment of expenses
          (including payments to inventors) incidental to the administration of
          subject inventions will be utilized for the support of scientific
          research or education; and

          (4) It will make efforts that are reasonable under the circumstances
          to ~ttract licensees of subject inventions that are small business
          firms, and that it will give a preference to a small business firm
          when licensing a subject invention if the Contractor determines that.
          the small business firm has a plan or proposal for marketing the
          invention which, if executed, is equally as likely to brrng the
          invention to practical application as any plans or proposals from
          applicants that are not small business firms; provided, that the
          Contractor is also satisfied that the small business firm has the
          capability and resources to carry out its plan or proposal. The
          decision whether to give a preference in any specific case will be at
          the discretion of the contractor. However, the Contractor agrees that
          the Secretary of Commerce may review the Contractor's licensing
          program and decisions regarding small business applicants, and the
          Contractor will negotiate changes to its licensing policies,
          procedures, or practices with the Secretary of Commerce when that
          Secretary's review discloses that the Contractor could take reasonable
          steps to more effectively implement the requirements of this
          subparagraph (k)(4).

<PAGE>

     (I) Communications.

          (1) The contractor shall direct any notification, disclosure, or
          request to DOE provided for in this clause to the DOE patent counsel
          assisting the DOE contracting activity, with a copy of the
          communication to the Contracting Officer.

          (2) Each exercise of discretion or decision provided for in this
          clause, except subparagraph (k)(4), is reserved for the DOE Patent
          Counsel and is not a claim or dispute and is not subject to the
          Contract Disputes Act of 1978.

          (3) Upon request of the DOE Patent Counselor the contracting officer,
          the contractor shall provide any or all of the following: (i) a copy
          of the patent application, filing date, serial number and title,
          patent number, and issue date for any subject invention in any country
          in which the contractor has applied for a patent; (ii) a report, not
          more often than annually, summarizing an subject inventions which were
          disclosed to DOE individually during the reporting period specified;
          or (iii) a report, prior to closeout of the contract, listing all
          subject inventions or stating that there were none.

3.7 FAR 52.227-14 RIGHTS IN DATA -GENERAL. (JUN 1987) WITH ALTERNATE V {JUN
1987} AS AMENDED BY DEAR 927.409 (JAN 1999)
----------------------------------------------------------------------------

     (a) Definitions.

          (1) "Computer databases," as used in this clause, means a collection
          of data in a form capable of, and for the purpose of, being stored in,
          processed, and operated on by a computer. The term does not include
          computer software.

          (2) "Computer software," as used in this clause, means (i) computer
          programs which are data comprising a series of instructions, rules,
          routines, or statements, regardless of the media in which recorded,
          that allow or cause a computer to perform a specific operation or
          series of operations and (ii) data comprising source code listings,
          design details, algorithms, processes, flow charts, formulae, and
          related material that would enable the computer program to be
          produced, created, or compiled. The term does not include computer
          data bases.

          (3) "Data," as used in this clause, means recorded information,
          regardless of form or the media on which it may be recorded. The term
          includes technical data and computer software. For the purposes of
          this clause, the term does not include data incidental to the
          administration of this contract, such as financial, administrative,
          cost and pricing, or management information.

          (4) "Form, fit, and function data," as used in this clause, means data
          relating to items, components, or processes that are sufficient to
          enable physical and functional interchangeability, as well as data
          identifying source, size, configuration, mating, and attachment
          characteristics, functional characteristics, and performance
          requirements; except that for computer software it means data
          identifying source, functional characteristics, and performance
          requirements but specifically excludes the source code, algorithm,
          process, formulae, and flow charts of the software.

          (5) "Limited rights data," as used in this clause, means data, other
          than computer software, developed at private expense that embody trade
          secrets or are commercial or financial and

<PAGE>

          confidential or privileged. The Government's rights to use, duplicate,
          or disclose limited rights data are as set forth in the Limited Rights
          Notice of subparagraph (g)(2) of this section if included in this
          clause.

          (6) "Restricted computer software," as used in this clause, means
          computer software developed at private expense and that is a trade
          secret; is commercial or financial and is confidential or privileged;
          or is published copyrighted computer software, including minor
          modifications of any such computer software. The Government's rights
          to use, duplicate, or disclose restricted computer software are as set
          forth in the Restricted Rights Notice of subparagraph (g)(3) of this
          section if included in this clause.

          (7) "Technical data," as used in this clause, means recorded data,
          regardless of form or characteristic, that are of a scientific or
          technical nature. Technical data does not include computer software,
          but does include manuals and instructional materials and technical
          data formatted as a computer data base.

          (8) "Unlimited rights," as used in this clause, means the rights of
          the Government to use, disclose, reproduce, prepare derivative works,
          distribute copies to the public, including by electronic means, and
          perform publicly and display publicly, in any manner, including by
          electronic means, and for any purpose whatsoever, and to have or
          permit others to do so.

     (b) Allocation of rights.

          (1) Except as provided in paragraph (c) of this clause regarding
          copyright, the Government shall have unlimited rights in -

               (i) Data first produced in the performance of this contract;

               (ii) Form, fit, and function data delivered under this contract;

               (iii) Data delivered under this contract (except for restricted
               computer software) that constitute manuals or instructional and
               training material for installation, operation, or routine
               maintenance and repair of items, components, or processes
               delivered or furnished for use under this contract; and

               (iv) All other data delivered under this contract unless provided
               otherwise for limited rights data or restricted computer software
               in accordance with paragraph (g) of this clause.

(2) The Contractor shall have the right to-

               (i) Use, release to others, reproduce, distribute, or publish any
               data first produced or specifically used by the Contractor in the
               performance of this contract, unless provided otherwise in
               paragraph (d) of this clause;

               (ii) Protect from unauthorized disclosure and use those data
               which are limited rights data or restricted computer software to
               the extent provided in paragraph (g) of this clause;

               (iii) Substantiate use of, add or correct limited rights,
               restricted rights, or copyright notices and to take other
               appropriate action, in accordance with paragraphs (e) and (f) of
               this clause; and

               (iv) Establish claim to copyright subsisting in data first
               produced in the performance of this contract to the extent
               provided in subparagraph {c)(1) of this clause.

<PAGE>

     (c) Copyright-

          (1) Data first produced in the performance of this contract. Unless
          provided otherwise in paragraph (d) of this clause, the Contractor may
          establish, without prior approval of the Contracting Officer, claim to
          copyright subsisting in scientific and technical articles based on or
          .containing data first produced in the performance of this contract
          and published in academic, technical or professional journals,
          symposia proceedings or similar works. The prior, express written
          permission of the Contracting Officer is required to establish claim
          to copyright subsisting in all other data first produced in the
          performance of this contract. When claim to copyright is made, the
          Contractor shall affix the applicable copyright notices of 17 U.S.C.
          401 or 402 and acknowledgment of Government sponsorship (including
          contract number) to the data when such data are delivered to the
          Government, as well as when the data are published or deposited for
          registration as a published work in the U.S. Copyright Office. For
          data other than computer software the Contractor grants to the
          Government, and others acting on its behalf, a paidnonexclusive,
          irrevocable worldwide license in such copyrighted data to reproduce,
          prepare derivative works, distribute copies to the public, and perform
          publicly and display publicly, by or on behalf of the Government. For
          computer software, the Contractor grants to the Government and others
          acting in its behalf, a paidnonexclusive, irrevocable worldwide
          license in such copyrighted computer software to reproduce, prepare
          derivative works, and perform publicly and display publicly by or on
          behalf of the Government.

          (2) Data not first produced in the performance of this contract. The
          Contractor shall not, without prior written permission of the
          Contracting Officer, incorporate in data delivered under this contract
          any data not first produced in the performance of this contract and
          which contains the copyright notice of 17 U.S.C. 401 or 402, unless
          the Contractor identifies such data and grants to the Government, or
          acquires on its behalf, a license of the same scope as set forth in
          subparagraph (c)(1) of this clause; provided, however, that if such
          data are computer software the Government shall acquire a copyright
          license as set forth in subparagraph (g)(3) of this clause if included
          in this contract or as otherwise may be provided in a collateral
          agreement incorporated in or made part of this contract.

          (3) Removal of copyright notices. The Government agrees not to remove
          any copyright notices placed on data pursuant to this paragraph (c),
          and to include such notices on all reproductions of the data.

     (d) Release, publication and use of data.

          (1) The Contractor shall have the right to use, release to others,
          reproduce, distribute, or publish any data first produced or
          specifically used by the Contractor in the performance of this
          contract, except to the extent such data may be subject to the Federal
          export control or national security laws or regulations, or unless
          otherwise provided in this paragraph of this clause or expressly set
          forth in this contract.

          (2) The Contractor agrees that to the extent it receives or is given
          access to data necessary for the performance of this contract which
          contain restrictive markings, the Contractor shall treat the data in
          accordance with such markings unless otherwise specifically authorized
          in writing by the Contracting Officer.

          (3) The Contractor agrees not to assert copyright in computer software
          first produced in the performance of this contract without prior
          written permission of the DOE Patent Counsel assisting the contracting
          activity. When such permission is granted, the Patent Counsel shall
          specify appropriate terms, conditions, and submission requirements to
          assure utilization, dissemination, and commercialization of the data.
          The Contractor, when requested, shall promptly deliver to Patent
          Counsel a duly executed and approved instrument fully confirmatory of
          all rights to which the Government is entitled.

<PAGE>

     (e) Unauthorized marking of data.

          (1) Notwithstanding any other provisions of this contract concerning
          inspection or acceptance, if any data delivered under thIs contract
          are marked with the notices specified in subparagraph (g)(2) or (g)(3)
          of this clause and use of such is not authorized by this clause, or if
          such data bears any other restrictive or limiting markings not
          authorized by this contract, the Contracting Officer may at any time
          either return the data to the Contractor, or cancel or ignore the
          markings. However, the following procedures shall apply prior to
          canceling or ignoring the markings.

               (i) The Contracting Officer shall make written inquiry to the
               Contractor affording the Contractor 30 days from receipt of the
               inquiry to provide written justification to substantiate the
               propriety of the markings;

               (ii) If the Contractor fails to respond or fails to provide
               written justification to substantiate the propriety of the
               markings within the 30-day period (or a longer time not exceeding
               90 days approved in writing by the Contracting Officer for good
               cause shown), the Government shall have the right to cancel or
               ignore the markings at any time after said period and the data
               will no longer be made subject to any disclosure prohibitions.

               (iii) If the Contractor provides written justification to
               substantiate the propriety of the markings within the period set
               in subdivision (e)(1)(i) of this clause, the Contracting Officer
               shall consider such written justification and determine whether
               or not the markings are to be canceled or ignored. If the
               Contracting Officer determines that the markings are authorized,
               the Contractor shall be so notified in writing. If the
               Contracting Officer determines, with concurrence of the head of
               the contracting activity, that the markings are not authorized,
               the Contracting Officer shall furnish the Contractor a written
               determination, which determination shall become the final agency
               decision regarding the appropriateness of the markings unless the
               Contractor files suit in a court of competent jurisdiction within
               90 days of receipt of the Contracting Officer's decision. The
               Government shall continue to abide by the markings under this
               subdivision (e)(1 )(iii) until final resolution of the matter
               either by the Contracting Officer's determination becoming final
               (in which instance the Government shall thereafter have the right
               to cancel or ignore the markings at any time and the data will no
               longer be made subject to any disclosure prohibitions), or by
               final disposition of the matter by court decision if suit is
               filed.

          (2) The time limits in the procedures set forth in subparagraph (e)(1)
          of this clause may be modified in accordance with agency regulations
          implementing the Freedom of Information Act (5 U.S.C. 552) if
          necessary to respond to a request thereunder.

          (3) This paragraph (e) does not apply if this contract is for a major
          system or for support of a major system by a civilian agency other
          than NASA and the U.S. Coast Guard agency subject to the provisions of
          Title III of the Federal Property and Administrative Services Act of
          1949.

          (4) Except to the extent the Government's action occurs as the result
          of final disposition of the matter by a court of competent
          jurisdiction, the Contractor is not precluded by this paragraph (e)
          from bringing a claim under the Contract Disputes Act, including
          pursuant to the Disputes clause of this contract, as applicable, that
          may arise as the result of the Government removing or ignoring
          authorized markings on data delivered under this contract.

     (f) Omitted or incorrect markings.

          (1) Data delivered to the Government without either the limited rights
          or restricted rights notice as authorized by paragraph (g) of this
          clause, or the copyright notice required by paragraph (c) of this
          clause, shall be deemed to have been furnished with unlimited rights,
          and the Government assumes no liability for the disclosure, use, or
          reproduction of such data. However, to the extent the data has not
          been disclosed without restriction outside the Government, the
          Contractor may request, within 6

<PAGE>

          months (or a longer time approved by the Contracting Officer for good
          cause shown) after delivery of such data, permission to have notices
          placed on qualifying data at the Contractor's expense, and the
          Contracting Officer may agree to do so if the Contractor

               (i) Identifies the data to which the omitted notice is to be
               applied;

               (ii) Demonstrates that the omission of the notice was
               inadvertent;

               (iii) Establishes that the use of the proposed notice is
               authorized; and

               (iv) Acknowledges that the Government has no liability with
               respect to the disclosure, use, or reproduction of any such data
               made prior to the addition of the notice or resulting from the
               omission of the notice.

          (2) The Contracting Officer may also (i) permit correction at the
          Contractor's expense of incorrect notices if the Contractor identifies
          the data on which correction of the notice is to be made, and
          demonstrates that the correct notice is authorized, or (ii) correct
          any incorrect notices.

     (g) Protection of limited rights data and restricted computer software.

          (1) When data other than that listed in subdivisions (b)(1)(i), (ii),
          and (iii) of this clause are specified to be delivered under this
          contract and qualify as either limited rights data or restricted
          computer software, if the Contractor desires to continue protection of
          such data, the Contractor shall withhold such data and not furnish
          them to the Government under this contract. As a condition to this
          withholding, the Contractor shall identify the data being withheld and
          furnish form, fit, and function data in lieu thereof. Limited rights
          data that are formatted as a computer data base for delivery to the
          Government are to be treated as limited rights data and not restricted
          computer software.

          (2) (Reserved)

          (3) (Reserved)

     (h) Subcontracting. The Contractor has the responsibility to obtain from
     its subcontractors all data and rights therein necessary to fulfill the
     Contractor's obligations to the Government under this contract. If a
     subcontractor refuses to accept terms affording the Government such rights,
     the Contractor shall promptly bring such refusal to the attention of the
     Contracting Officer and not proceed with subcontract award without further
     authorization.

     (i) Relationship to patents. Nothing contained in this clause shall imply a
     license to the Government under any patent or be construed as affecting the
     scope of any license or other right otherwise granted to the Government.

     (j) The Contractor agrees, except as may be otherwise specified in this
     contract for specific data items listed as not subject to this paragraph,
     that the Contracting Officer or an authorized representative may, up to
     three years after acceptance of all items to be delivered under this
     contract, inspect at the Contractor's facility any data withheld pursuant
     to paragraph (g)(1) of this clause, for purposes of verifying the
     Contractor's assertion pertaining to the limited rights or restricted
     rights status of the data or for evaluating work performance. Where the
     Contractor whose data are to be inspected demonstrates to the Contracting
     Officer that there would be a possible conflict of interest if the
     inspection were made by a particular representative, the Contracting
     Officer shall designate an alternate inspector.

<PAGE>

3.952.227-23 RIGHTS TO PROPOSAL DATA (TECHNICAL). (JUN 1987)
------------------------------------------------------------

Except for data contained on pages [NONE], it is agreed that as a condition of
award of this contract, and notwithstanding the conditions of any notice
appearing thereon, the Government shall have unlimited rights (as defined in the
"Rights in Data - General" clause contained in this contract) in and to the
technical data contained in the proposal dated 4-26-00 upon which this contract
is based.

<PAGE>

                       SECTION IV -- LIST OF ATTACHMENTS
                       ---------------------------------

4.1 LIST OF ATTACHMENTS (JAN 1999)
----------------------------------

Attachment A -- Statement of Project Objectives

Attachment B -- Federal Assistance Reporting Checklist

Attachment C -- Budget Page(s)

Attachment D -- Recipient Acquired Property

<PAGE>

4.2 ATTACHMENT A -- STATEMENT OF PROJECT OBJECTIVES (JAN 1999)
--------------------------------------------------------------

The Statement of Project Objectives is attached.

                                       20

<PAGE>

                 Statement of Cooperative Agreement Objectives

A. Objectives
   ----------

The overall objective of this project is to determine the cost and impacts of
sorbent injection into particulate control devices for various mercury removal
levels at field-scale, coal-fired power plants.

B. Scope of Work
   -------------

The scope of work is for one, three-year long budget period and intended to
provide the necessary information to assess the costs of controlling mercury
from coal-fired utilities by examining the economics of various levels of
mercury control (at different temperatures) at four different host sites.
Testing will be conducted on a minimum of three different configurations that
represent a significant percentage of existing units. These configurations will
include the following: an electrostatic precipitator collecting ash from a
powder river basin subbituminous coal; electrostatic precipitators collecting
ash from a low-sulfur eastern bituminous coal burned in low-NOx burners with
selective non-catalytic reduction (SNCR); and a baghouse configuration filtering
ash from powder river basin subbituminous coal. The subsequent cost analyses
will include capital costs, byproduct utilization issues, sorbent usage, any
necessary enhancements, such as S03 control or flue gas conditioning, balance of
plant, manpower requirements and waste issues.

C. Statement of Work
   -----------------

The program is divided into 13 tasks. Each task addresses one or more of the
program objectives. A description of these tasks is presented below.

Task 1 - Design and Fabrication of Transportable Mercury Control System
-----------------------------------------------------------------------

The participant shall design a transportable mercury control system with the
ability to provide both humidification and carbon/sorbent injection to a minimum
of two flue gas ducts simultaneously. Components shall be skid or panel mounted
for relatively quick and easy set-

<PAGE>

up/tear-down at each site. This system shall be sized and designed to cover the
range of plant TThis system shall have the ability to be operated with both
baghouses and electrostatic precipitators. The participant shall design and size
humidification injection lances for each plant application separately based on
duct dimensions and water flow requirements. The sorbent injection system shall
provide high flow (100-1500 lbs./hr) and low flow (10-200 lbs./hr) capability
depending on the amount of required sorbent injection. The participant shall
hold a design review meeting including the DOE COR, equipment suppliers, and
site-specific engineers before finalizing the transportable mercury control
system design and fabrication. The participant shall submit the final design
specifications to the DOE COR. After design specifications are finalized, the
participant shall fabricate the transportable mercury control system. Any
host-site components that are necessary to interface with the transportable
mercury control system shall be identified at least forty-five days prior to the
start of the scheduled host site field test to allow adequate design time to
accommodate the specific plant arrangements and ductwork configurations.

Tasks 2-9 will be common to each field test site and will be repeated for each
site that comes under a host site agreement.

Task 2 - Kick off Meeting Test Plan and Program Management Plan
---------------------------------------------------------------

The participant shall schedule and attend a kickoff meeting at each host site
with the appropriate plant, project, and environmental personnel. The
participant shall discuss the overall scope of the program, the potential impact
on plant equipment and operation and obtain information necessary to develop a
detailed test plan and program management plan. These documents shall be
available for host site personnel to use when addressing permitting, scheduling
and operating issues. The final test plan shall be completed 30 days prior to
testing and require concurrence from both the host site and DOE COR. The
participant shall also prepare a program management plan that includes
coordination, accounting, and project tracking activities for each host-site
field test.

<PAGE>

Task 3 - Sorbent Selection
--------------------------

The participant shall select at least two sorbents for evaluation during the
full-scale tests. These sorbents shall include at least one standard activated
carbon sorbent and one site-specific sorbent that demonstrates the best capacity
for mercury uptake based on mercury concentration, gas composition, temperature,
and mixing.

     Subtask 3.1 - Activated Carbon Screening:
     -----------------------------------------

     The participant shall characterize the physical and chemical properties of
     a given activated carbon followed by bench-scale, fixed-bed tests to
     determine the equilibrium absorption capacity and breakthrough
     characteristics. The sorbent shall be commercially available at a cost less
     than $.50/pound.

     Subtask 3.2- Site-Specific Sorbent Screening
     --------------------------------------------

     The participant shall evaluate the potential of alternate sorbents,
     including fly ash based products, to remove' mercury considering key
     factors such as carbon content, pore volume, surface area, and particle
     size distribution. The participant shall characterize the performance
     potential of candidate sorbents using equilibrium adsorption capacity data
     generated from fixed-bed, laboratory experiments with simulated flue gas.

All selected sorbents will be tested at the host site using a slipstream of gas
from full-scale systems. Additional site-specific sorbents shall also be tested
if the results from screening tests are promising and availability and cost are
reasonable. Samples of the candidate and selected sorbents shall be supplied to
DOE if requested by the COR.

Task 4 - Design and Fabrication of Site-Specific Equipment Needs
----------------------------------------------------------------

The participant shall insure the host utility obtains all permitting and
variance requirements. In test unit during sorbent injection. These components
shall be sized and designed for the specific plant arrangements and ductwork
configurations. Site specific equipment includes but is not limited to the
following:

<PAGE>

                                              Activated Carbon (AC) /
Humidification System                         SorbentIniectionSystem
---------------------                         ----------------------

Injection Ports                               Injection Ports
Platforms/Scaffolding                         Sorbent Distribution Manifold
Lance Hoist                                   Sorbent Injectors (if possible
Injection Lances (if possible these           these components will be re-used)
 components will be re-used)                  Cherry Picker for Supersacks
TC Array (if possible these                   Compressed Air
 components will be re-used),                 480V Power, 110V Power
Compressed Air                                Boiler Load, Signal
480V Power, l10 V Power                       Signal Wiring
Freeze Protection                             Balance of Plant Engineering
Signal Wiring
Water Supply
Balance of Plant Engineering

The participant shall insure the host utility obtains all permitting and
variance requirements. In addition, the participant shall make arrangements with
the host utility to isolate fly ash from the test unit during sorbent injection.

Task 5 - Field Testing.
-----------------------

The field tests shall be accomplished through a series of nine (9) subtasks. The
subtasks shall be independent from each other in that each shall have specific
goals and tests associated with them. However, they shall also be interdependent
with the results from each task influencing the test parameters of subsequent
tasks.

     Subtask 5.1 - Pre-Baseline Measurements:
     ----------------------------------------

     The participant shall make preliminary system operation, performance and
     mercury level measurements prior to the start of equipment installation.
     The mercury shall be measured at both the inlet and outlet of the air
     pollution control device using a semi-continuous emissions (S-CEM) monitor
     for both total and speciated mercury concentrations. measurements shall be
     used to expedite the parametric evaluation, provide insight as to how
     mercury levels and removal efficiencies change in a transient and
     steady-state manner with varying boiler operation and to allow for the
     timely completion of the test plan. The participant shall verify the S-CEM
     by comparing its results to those obtained by Ontario-Hydro testing. During
     this period, the S-CEM shall be run continuously for a

<PAGE>

     minimum of 3 days. These data shall be used to understand the relationship
     between boiler operation (load and combustion conditions), control device
     inlet temperature, and fly ash properties (fly ash concentration and carbon
     content at the inlet and outlet of particulate matter control device and
     collection efficiency). The participant shall use these results in the
     design of parametric tests to reduce the number of uncontrolled variables.

     Subtask 5.2- Sorbent Screening:
     -------------------------------

     The participant. shall screen selected sorbents on actual flue gas prior to
     the start of equipment installation. The participant shall select the most
     promising sorbent/s based on these results and in coordination with Task 3.

     Subtask 5.3 - Site Modifications, Equipment Installation and System
     Checkout
     -------------------------------------------------------------------

     The participant shall oversee installation and checkout of the mercury
     control equipment. Procedures developed shall be similar to those used in
     the commercial installation of other flue gas conditioning systems. The
     participant shall work with the host utility to assure that the equipment
     is installed in an efficient manner, within the resources available at the
     site. In addition, the participant shall make arrangements with the host
     utility to isolate fly ash from the test unit during sorbent injection. The
     participant shall be responsible for final checkout of all systems and for
     the general maintenance of the systems during testing.

     Subtask 5.4 - Quality Assurance and Quality Control (QA/QC) Plan
     ----------------------------------------------------------------

     The participant shall prepare a QA/QC plan to control, evaluate, and
     document data quality to ensure that data generated are of the highest
     quality possible. The participant shall submit the QA/QC plan for DOE (and
     EPA if an agreement is negotiated between DOE and EPA) approval 30 days
     prior to each host-site field test. The plan shall be EPA ORD Level 2
     compliant and document that specific procedures that shall be adhered to
     and include data quality objectives and data quality indicator metrics to
     achieve them.

<PAGE>

The plan shall address:

     o QA/QC procedures associated with in sample collection, analytical and
     data analysis

          o    Integral performance evaluation and verification of Hg removal

          o    Data validation

          o    Data Treatment

          o    Procedural remedies for identified data deficiencies

     Other key questions the plan shall address include what will be done with
     the data, how will it be analyzed, will any duplicate (co-located) sampling
     take place, and what is the measurement precision. Table 1 summarizes
     several of the QA/QC activities DOE would like to consider. DOE reserves
     the right to coordinate with EPA to further refine required QA/QC
     activities.

<TABLE>
<CAPTION>

                                                 Table 1. QA/QC Activities
------------------------------------------------------------------------------------------------------------------
Property/Test                   QC Check                Frequency               Acceptance      Corrective Action
------------------------------------------------------------------------------------------------------------------
Hg in Flue gas, Ontario
   Hydro (draft)
------------------------------------------------------------------------------------------------------------------
<S>                      <C>                          <C>                       <C>            <C>
Sampling                Equipment Calibration           Pre/Post Test           Refer to        Repeat calibration
                                                                                method
------------------------------------------------------------------------------------------------------------------
                        Field Blank                     One per sampling        Within          Flag data
                                                                                minus 20%
                                                                                of measured Hg
------------------------------------------------------------------------------------------------------------------
Analytical              Analyze in Duplicate            All samples             Agreement       Repeat analysis
                                                                                within 10%
------------------------------------------------------------------------------------------------------------------
QDPP DQI                Analyze spike                   Once per 10 samples     Refer to        Repeat analysis
                                                                                methos
------------------------------------------------------------------------------------------------------------------
articulate, EPA
   Method 5
------------------------------------------------------------------------------------------------------------------
Sampling                Equipment Calibration,          Pre/Post Test           Refer to        Repeat test or
                               Leak Test                                        method          correct data
------------------------------------------------------------------------------------------------------------------
Analytical              Control                         One per triplicate      Refer to        Repeat analysis
                                                               test             method
------------------------------------------------------------------------------------------------------------------

<PAGE>

------------------------------------------------------------------------------------------------------------------
Duct Opacity, CEM       Integral Calibration and        Continuous              Per             Recalibrate
                                correction                                      Performance
                                                                                Spec. 1,
                                                                                40CFR60,
                                                                                App. B
------------------------------------------------------------------------------------------------------------------
Mercury Analyzer,       Calibration with                Per participant         To be           Flag data,
Au-CVAAS                pre/post test zero/span            procedures           developed       recalibrate
                        drift checks                                                            instrument
------------------------------------------------------------------------------------------------------------------
TCLP, EPA SW 846        Per Method for RCRA             Refer to method         Refer to        Flag data
   Method 1311          metals                                                  method
------------------------------------------------------------------------------------------------------------------
Fly ash Analysis,       Test Procedures                 Refer to method(s)
Concrete ASTM C-618     according to ASTM
                        C311
------------------------------------------------------------------------------------------------------------------
                        Duplicate samples               One per test series     To be           Flag data
                                                                                developed
------------------------------------------------------------------------------------------------------------------
Coal Analysis, total    NIST Standard                   One per laboratory      Per method      Repeat analysis
Hg ASTM D6414-99        Reference Material fly ash
------------------------------------------------------------------------------------------------------------------
ly ash Analysis, total  NIST Standard                   One per laboratory      Per method      Repeat analysis
ASTM D6414-99           Reference Material fly ash
------------------------------------------------------------------------------------------------------------------

     Subtask 6.6 - Baseline Testing:
     -------------------------------

     After equipment installation, the participant shall conduct a second,
     shorter set of baseline tests at conditions expected during the parametric
     tests. The participant shall ensure constant boiler load, standard soot
     blowing, and normal ESP rapping sequences or baghouse cleaning logic. The
     participant shall collect data during baseline operation that include the
     parameters identified in Table 2.

<PAGE>

                                          Table 2. Baseline Parameters

Parameter               Sample/signal/test                              Baseline        Parametric/
                                                                                        Long-Term
---------------------------------------------------------------------------------------------------

Coal                    Batch sample                                    Yes             Yes
---------------------------------------------------------------------------------------------------
Coal                    Plant signals:                                  Yes             Yes
                         burn rate (lb/hr)
                         quality (lb/MMBTU,%ash)
---------------------------------------------------------------------------------------------------
Fly ash                 Batch sample                                    Yes             Yes
---------------------------------------------------------------------------------------------------
Unit operation          Plant Signals:                                  Yes             Yes
                         Boiler load
                         Measure of low for partial
                         unit test (i.e. fan amps)
---------------------------------------------------------------------------------------------------
Temperature             Plant signal at particulate                     Yes             Yes
                        collector inlet and outlet
---------------------------------------------------------------------------------------------------
Temperature             Full traverse, inlet & outlet                   Yes             No
---------------------------------------------------------------------------------------------------
Average                 Before spray cooling                            No              Yes
Temperature             After spray cooling
---------------------------------------------------------------------------------------------------
Duct Gas Velocity       Full traverse, inlet & outlet w/Draft           Yes             No
                        Ontario-Hydro method
---------------------------------------------------------------------------------------------------
Mercury (total and      Full traverse, inlet & outlet                   Yes             No
speciated)              APCD
---------------------------------------------------------------------------------------------------
Mercury (total and      Single point, inlet & outlet of APCD            Yes             Yes
speciated)              (Au-CVAAS) S-CEM verified by
                        draft Ontario Hydro
---------------------------------------------------------------------------------------------------
Mercury (total and      Ontario Hydro, inlet and outlet of              Yes(2 sets)     Yes(2 sets)
speciated               APCD                                            Every 12 hours
---------------------------------------------------------------------------------------------------
Spray Cooling Rate      PLC, gal/min                                    No              Yes
---------------------------------------------------------------------------------------------------
Sorbent Injuection      PLC, lbs/min                                    No              Yes
Rate
---------------------------------------------------------------------------------------------------
CEM data (NOx3          Plant data                                      Yes             Yes
O2, SO2)
---------------------------------------------------------------------------------------------------
HCl, Cl2 (optional)     FTIR and                                        Yes             Yes
and So3 (optional)      controlled condensation
---------------------------------------------------------------------------------------------------
Stack Opacity           Plant data                                      Yes             Yes
---------------------------------------------------------------------------------------------------
Pollution control       Plant data (ESP power)                          Yes             Yes
equipment operation     baghouse cleaning, etc.)
---------------------------------------------------------------------------------------------------
</TABLE>

     Subtask 5.6 - Parametric Test Series 1: Mercury Removal as a Function
     Temperature:
     ---------------------------------------------------------------------

     The participant shall conduct a series of tsts to determine the impace of
     inlet temperature on mercury removal efficiency across the particulate
     collection device. The participant shall define an operating window for
     temperature where maximum mercury removal can be obtained with a very low
     risk of duct deposition from spray cooling with water. The parametric tests

<PAGE>

     shall show the effects of boiler operating conditions and sorbent injection
     parameters .for temperatures less than 300(degree)F. Temperature shall be
     incrementally lowered to determine the effect of temperature and sorbent
     injection parameters on mercury removal and operational feasibility with
     the goal of obtaining maximum mercury removals. The participant shall pull
     the lances at least once per day during the tests to inspect for deposits
     forming around the nozzles and utilize an in-duct camera to monitor duct
     deposition.

     Subtask 5.7 - Parametric Test Series 2: Mercury Removal as a Function of
     Sorbent Injection:
     -------------------------------------------------------------------------

     The participant shall evaluate mercury removal as a function of sorbent
     injection rate at both the "normal" and optimized temperatures. The goal of
     this task shall be to define the quantity of sorbent required to obtain
     three different levels of mercury removal between 40% and 90% of the
     remaining mercury. The participant shall determine the optimum combination
     of cooling and sorbent injection required from subtask 5.6 data and input
     from available models. The optimum combination shall be based on a
     lowest-cost approach to a desired removal rate. The participant shall
     determine the operational time at each setting based on the time necessary
     to collect adequate operating/performance data. The participant shall
     utilize these results to determine the settings for the long-term test.
     These tests shall also be used to optimize performance and operation of the
     particulate control device. The participant shall provide additional
     flue-gas conditioning additives for particle resistivity and/or
     reentraimnent if required. DOE may provide (or coordinate with the prime
     participant) for additional sampling during the parametric testing.

DOE would primarily be concerned with co-pollutant control measurements of SO3,
HF, NOx, HCI, and fine particulate matter.

<PAGE>

     Subtask 5.8 - Parametric Test Series 3: Mercury Removal as a Function of
     Alternate
     ---------------------------------------------------------------------------

     Sorbent Injection:
     ------------------

     The participant shall perform a set of parametric tests for evaluation of
     site-specific sorbent/s. These tests shall be conducted in a similar manner
     as those in subtask5. 7.

     Subtask 5.9 - Long-Term Testing:
     --------------------------------

     The participant shall perform mercury removal validation testing for a
     maximum of fourteen days at the "optimum" plant operating conditions
     (lowest cost/highest mercury removal) as determined from the parametric
     tests. The participant shall obtain DOE and host utility concurrence on the
     exact length of testing. The participant shall use commercially available
     semi-continuous mercury analyzers capable of measuring 0.1 microgram per
     normal cubic meter of mercury at the inlet of the particulate collector and
     at the outlet of the particulate collector during this test program to
     provide near real-time feedback. The participant shall calibrate the S-CEM
     every three days. The participant shall also make Ontario-Hydro
     measurements at the inlet and outlet of the particulate control device
     during testing. The participant shall strive for a leak-free sampling
     system. The participant shall place an oxygen analyzer downstream of the
     S-CEM to monitor and store the oxygen levels in the gas stream. The
     participant shall configure the gas sampling system in a manner to minimize
     any mercury removal or conversion due to the presence of particulate. The
     participant shall prepare a preliminary report on the removal efficiency
     over time, the effects on the particulate control device and balance of
     plant equipment, and on operation of the injection equipment to determine
     the viability and economics of the process.

     Task 6 - Data Analysis
     ----------------------

     The participant shall optimize data collection for the four host-sites
     measured and prepare a summary report on the effect of the combination of
     temperature and sorbent injection on mercury control and their impact on
     the existing pollution control equipment. The participant shall
     characterize mercury levels and plant operation for baseline conditions (no
     modification of

<PAGE>

     temperature or sorbent injection), various temperatures and injection rates
     as defined by the final test plan, and a long term evaluation to identify
     effects that may not be immediate. The participant shall collect samples of
     coal and fly ash during baseline testing for analysis. The participant
     shall conduct a full analysis of the coal including the mercury, chlorine
     and levels. The fly ash shall be analyzed for mercury and carbon content.
     Fly ash samples shall be collected from multiple locations when appropriate
     to determine if there is mercury segregation throughout the system or
     across the particulate collector. The participant shall conduct a full
     temperature, velocity and mercury (total and speciated) traverse at the
     inlet and outlet of the particulate collector during full-load conditions
     to determine profiles for appropriate sampling, humidification, and sorbent
     distribution. Following a complete mercury traverse using a S-CEM, the
     S-CEM shall be placed at the inlet to the particulate collector at a
     location identified from the traverse to represent the average duct
     concentration. While the first S-CEM is operating, a Second S~CEM shall be
     connected to the same probe to verify that both are measuring the same
     mercury concentration. The second S-CEM shall then be moved to the outlet
     of the particulate collector at a location identified from the traverse to
     indicate the duct average concentration. The participant shall obtain a
     triplicate manual mercury sample using the draft Ontario Hydro Method at
     the inlet location through a probe common to the inlet analyzer to verify
     operation of the analyzers. The participant shall monitor different plant
     signals to determine if any correlation exists between changes in mercury
     concentration and measured plant operating conditions.

     Task.7 - Waste Characterization
     -------------------------------

     The participant shall evaluate the stability and form of mercury in the ash
     for disposal and reuse (e.g. increased carbon content, elevated mercury
     concentrations). The participant shall utilize three series of standard
     procedures to assess the environmental stability of the ash and suitability
     for use in concrete. These tests consist of the Toxicity Characteristic
     Leaching Procedure (TCLP, SW846-1311 ), Specification C618 with air
     entrainment shaker tests, synthetic groundwater leaching procedure (SGLP),
     and thermal desorption (see Table 3). The participant

<PAGE>

     may perform additional tests on selected byproduct samples as needed to
     assess special. site- specific conditions that impact disposal or reuse
     options. The participant shall analyze selected samples of the fly ash for
     size, composition, and abundance of the ash particle types (for any host
     site that incorporates carbon separation). The participant shall obtain
     these grab samples of ash from control device hoppers during each day of
     testing. Samples shall be segregated by the test condition (baseline, each
     parametric test, and1ong-term test) and composited in 55-gallon drums with
     appropriate quantities placed into sample containers for shipping to the
     analytical laboratories. The participant! shall collect samples of the
     carbon-rich fraction in a similar manner as the ash samples for any host
     site that has a carbon separation process. Sampling and

     Table 3. Summary of Waste Characterization Testing
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
Series          Test Purpose            Test Method             Comments
---------------------------------------------------------------------------------------------------
<S>             <C>                       <C>                   <C>
1               Ash Disposal            TCLP(SW846-1311)        Measures leachable Hg, As, Ba,
                                                                Cd, Cr, Pb, Se, Ag
---------------------------------------------------------------------------------------------------
2               Cement Additive          AST C618               Measures LOI, total oxides,
                Suitability             Air Entrainment         sulfur trioxide, moisture,
                                        Shaker Test             available alkalines, fineness,
                                                                pozzolanic activity, autoclave
                                                                soundness, specific gravity, air
                                                                entrainment
---------------------------------------------------------------------------------------------------
                Environmental           EERC SGLP               Measures leachable Hg at 18 hrs,
                Stability -                                     2 weeks, and 4 weeks
3               Leaching

                Environmental           EERC Thermal            Measures Hg release as a function
                Stability - Air         Desorption              of temperature up to 500 degrees C
                Release
---------------------------------------------------------------------------------------------------
4               Special Testing         Various                 As needed for troubleshooting or
                                                                site specific information needs
---------------------------------------------------------------------------------------------------
</TABLE>

Notes:    1.Two samples from each test condition shall be analyzed for TCLP and
          ASTM C618/Air Entrainment parameters. One sample from each test
          condition shall be tested for SGLP,

1. Two samples from each test condition shall be analyzed for TCLP and ASTM
C618/Air entrainment parameters. One sample from each test condition shall be
tested for SGLP,

<PAGE>

          and Thermal Stability. Additional samples may be analyzed after the
          initial results are available and have been reviewed.

          2. For those situations where it maybe important to look at front and
          back hoppers separately, samples may be segregated and analyzed as a
          function of ESP field.

The participant shall collect ask samples from each host site per the sampling
frequency and volume identified in Table 4.

Table 4.  Ash Sampling Schedule and volumes - Each Host Site

--------------------------------------------------------------------------------
Test Condition             Frequency                       Comments
--------------------------------------------------------------------------------
Baseline                   Once Before Parametric          110-gal. sample
                           Testing
--------------------------------------------------------------------------------
Parametric Test #1         Grab Samples Daily for 1-       110-gal. total sample
                           week
--------------------------------------------------------------------------------
Parametric Test #2         Grab Samples Daily for 1-       110-gal. total sample
                           week
--------------------------------------------------------------------------------
Parametric Test #3         Grab Samples Daily for 1-       110-gal. total sample
                           week
--------------------------------------------------------------------------------
Long-term Test             Grab Samples Daily for 1-       220-gal. total sample
                           week
--------------------------------------------------------------------------------

     Task 8 - Design and Economics of Site-specific Control System

     After completion of testing and analysis of the data at each plant, the
     participant shall determine the requirements and costs for full-scale,
     permanent commercial implementation of the necessary equipment for mercury
     control using sorbent injection with humidification technology. The
     participant shall meet with the host utility plant and engineering
     personnel to develop plant specific design criteria. Process equipment
     shall be sized and designed based on test results and the plant specific
     requirements (reagent storage capacity, plant arrangement, retrofit issues,
     winterization, controls interface, etc.). A conceptual design document
     shall be developed with drawings and equipment lists. Modifications to
     existing plant equipment shall be determined and a work scope document
     developed based on input from the plant which may include modifications to
     the particulate collector, ash handling system, compressed air supply,
     electric power capacity, other plant auxiliary equipment, utilities and
     other balance of plant engineering

<PAGE>

     removal, and a comparison of fly ash (with varying levels of unburned
     carbon) to activated carbon for mercury removal effectiveness. The
     participant shall also compare the database to EPRI's sorbent injection
     model which utilizes sorbent characteristics, mass transfer theory, and
     sorbent residence time in duct.

     Subtask 10.2 - Integrated Economic Analysis
     -------------------------------------------

     The participant shall determine the costs of controlling mercury emissions
     from coal- fired power plants I by conducting economic analyses on various
     mercury control technologies. After completion of all host-site testing,
     the participant shall submit a detailed economic analysis plan for DOE COR
     approval. This plan shall discuss the recommended economic methodology for
     evaluating electric utility industry costs as well as specific cost
     considerations and assumptions (including the requirements listed below).

     These economic/cost evaluations shall update and expand upon previous DOE
     cost assessments. The participant shall use the results from the host site
     tests in conjunction with detailed engineering cost estimates, reagent cost
     and transportation projections, impacts on downstream equipment, and O&M to
     determine full scale commercial costs for each fuel/plant/control
     configuration identified in Table 5.

Table 5.  Fuel/Plant/Control Configuration

--------------------------------------------------------------------------------
Coal Type               Existing Particulate          Mercury Control System
                        Control
--------------------------------------------------------------------------------
PRB                     ESP                           AC w/cooling
--------------------------------------------------------------------------------
PRB                     ESP                           AC, cooling, polishing FF
--------------------------------------------------------------------------------
PRB                     FF                            AC
--------------------------------------------------------------------------------
PRB                     FF                            AC w/cooling
--------------------------------------------------------------------------------
Eastern Low S           ESP                           AC w/cooling
--------------------------------------------------------------------------------
Eastern Low S           ESP                           AC, cooling, polishing FF
--------------------------------------------------------------------------------
Eastern Low S           FF                            AC
--------------------------------------------------------------------------------
Eastern Low S           FF                            AC w/ cooling
--------------------------------------------------------------------------------

The participant shall determine costs for two reference plants, one of l50MW
size and one of 500MW size. The economic analyses shall include the following:

<PAGE>

requirements. Reagent type and sources shall be evaluated to determine the most
cost -effective reagent(s) for the site. Cost credits/penalties for fly ash
salability shall be estimated. The participant shall prepare a cost estimate to
implement the control technology. This shall include
capital cost estimates for mercury control process equipment as well as
projected annual operating costs. Where possible, order-of-magnitude estimates
will be included for plant modifications and balance of plant items.

Task 9 - Site Report
--------------------

The participant shall prepare a site report documenting all measurements, test
procedures, analyses, and results obtained in Tasks 2 through 8. This report
shall be a stand-alone document providing a comprehensive review of the testing
and data analyses completed at each host site.

Task 10 - Informaion Collection Request (ICR) Data Integration and Economic
Analysis
--------------------------------------------------------------------------------

This task consists of two sub tasks.

     Subtask 10.1 - ICR Data Integration
     -----------------------------------

     The participant shall prepare a database to catalog the level of mercury
     currently removed using ESP's and FF's without additional mercury controls.
     The participant shall populate this database with ICR Phase I, II, and III
     information showing plant configuration (boiler type, size, and emission
     control equipment, ESP or FF), fuel data (Btu, ash, sulfur, chlorine, and
     mercury), and mercury emission data (total and speciated) for the given
     load and temperature. The participant shall use the database to
     characterize the baseline ICR mercury removal as a function of fuel (type,
     chlorine content, etc.), configuration (ESP or FF), temperature and ash
     carbon content. The participant shall compare host sites' fly ash analyses
     (including mercury concentration and carbon content in fly ash) with any
     available plants' fly ash samples that were collected during ICR testing.
     The participant shall then integrate the host site field data with the
     database to identify any general trends. The participant shall specifically
     address mercury removal as a function of flue gas temperature, the effect
     of carbon content (native and re-injected) on mercury

<PAGE>
<TABLE>
<CAPTION>

Capital Costs                                           Present Worth of Revenue Required
-------------                                           ---------------------------------
<S>                                                    <C>
Mercury control process equipment
Modifications/upgrades to existing plant equipment      Cost Sensitivity Studies
                                                        ------------------------
                                                        Plant size
Variable and Fixed Operating and Maintenance Costs      Mercury control level
--------------------------------------------------      Uncontrolled Mercury
Reagents                                                Reagent costs
Power                                                   Cooling level Remaining
Maintenance Labor and materials                         plant life
Fly ash utilization penalties

Levelized Control Costs
-----------------------
First Year Fixed and operating costs

15 year levelized costs ($/ton of carbon removed)
</TABLE>

Task 11 - Technology Transfer
-----------------------------

The participant shall attend and present project results at a minimum of three
mercury-control technology symposiums identified by collaboration with the DOE
COR.

Task 12 - Equipment Disposition Plan
------------------------------------

The participant shall also prepare a detailed plan for maintaining/disposing of
all project related equipment following the project including the transportable
mercury treatment system consisting of carbon injection equipment, reagent
injection for S03 control, flue gas humidifier, and controllers. The participant
shall maintain custody until final disposition with the DOE Contracting Office.
Site specific equipment, as described elsewhere, shall remain at the test site
unless otherwise specified by DOE. This shall exclude items that can be reworked
for uses at different sites.

Task 13 - Final Report
----------------------

The participant shall prepare a final report sixty days after completion of
tasks report shall summarize the results of all field sites and include the
results from Tasks 8-10. The DOE COR will either provide comments and
recommended changes or approve as is within 45 days of receiving the draft
report. The participant shall have 30 days to submit the final version of the
final report after receiving the DOE COR comments or approval.

<PAGE>

D. Deliverables
---------------

The periodic and final reports shall be submitted as indicated in the Financial
Assistance Reporting Requirements Checklist and prepared in accordance with the
instructions for preparation and submission of said reports. In addition to
these reports, the participant shall prepare the following deliverables:

a. Final Design Specification~ for transportable mercury control system as
described in Task 1

b. Final Host Site Test Plan and Program Management Plan as described in Task 2.

c Candidate Sorbents (if requested) as described in Task 3.

d. QA/QC Plan as described in Subtask 5.4

e. Preliminary report as described in Subtask 5.9

f. Host Site Field Test Topical Reports as described in Task 9.

g. Integrated Database as described in Task 10.1

h. Draft Economic Analysis Flan as described in Task 10.2

i. Symposium Technical Papers as described in Task 11

j. Equipment Disposition Plan as described in Task 12

k. Final Report as described in Task 13,

E. Technical Briefings/Presentations
------------------------------------

The participant may be asked to prepare and present at least one annual briefing
on the project at the DOE National Energy Technology Laboratory, located in
Morgantown, West Virginia, or other COR-approved location.

<PAGE>

4.3 ATTACHMENT B -- FEDERAL ASSISTANCE REPORTING CHECKLIST (JAN 1999)
---------------------------------------------------------------------

<PAGE>

NETL F 540.3-1#
(12/1999) OPI=PS10
(Previous Editions
Obsolete)

1.   AWARDEE: ADA Environmental Solutions, LLC

2.   IDENTIFICATION NUMBER: DE-FC26-00NT41005

3.   REPORT SUBMISSION ADDRESS: The requested quantity of all required report
     deliverables shall be submitted to the following address:

                      NETL AAD DOCUMENT CONTROL BLDG. 921
                           U.S. DEPARTMENT OF ENERGY
                     NATIONAL ENERGY TECHNOLOGY LABORATORY
                                 P.O. BOX 10940
                            PITTSBURGH, PA 15236-0940
<TABLE>
<CAPTION>

4.   PLANNING AND REPORTING REQUIREMENTS:                                FORM NO.             FREQ.   NUMBER OF COPIES

A.   PROGRAM/PROJECT MANAGEMENT
<S>                                                                        <C>                 <C>          <C>
[ ]  Federal Assistance Milestone Plan                                 DOE F 4600.3
[ ]  Milestone Log                                                     DOE F 4600.3A
[ ]  Federal Assistance Management Summary Report                      DOE F 4600.5
[X]  Federal Assistance Program/Project Status Report                  DOE F 4600.6             M            3
[X]  Financial Status Report                                        SF-269 or SF-269A           Q            3
[ ]  Federal Cash Transaction Report                                      SF-272

B.   TECHNICAL (One paper copy and one PDF electronic file copy)
[X]  Technical Progress Report                                             None                 Q            2
[X]  Topical Report                                                        None                 A            2
[X]  Final Report                                                          None                 F            2

C.   ENVIRONMENTAL
[X]  Hazardous Substance Plan                                              None                 O            3
[X]  Hazardous Waste Report                                                None                 F            3
[ ]  Environmental Compliance Plan                                         None
[ ]  Environmental Monitoring Plan                                         None
[ ]  Environmental Status Report                                           None

D.   PROPERTY
[ ]  Annual Report of Property in the Custody of Contractors            F 580.1-8
[ ]  High Risk Property Report                                          F 4440.5
[X]  Report of Termination or Completion Inventory                   SF-1428 or SF-120          FC           1

E.   EXCEPTION
[ ]  Conference Record                                                     None
[X]  Hot Line Report                                                       None                 A            2
[X]  Journal Articles/Conference Papers and Proceedings                    None                 A            2
[ ]  Software
[ ]  Other______________________________

</TABLE>

5.   FREQUENCY CODES AND DUE DATES:

A-  As required; for due date of Hot Line Report, Property Reports, and all
    other reports, see attached text.
C-  Federal Assistance change/revision, within 15 calendar days after event.
F-  Final; within ninety (90) calendar days after the project period ends.
FC- Final (End of Effort - No Draft); end of effort.
M-  Monthly; within twenty-five (25) calendar days after end of the report
    period.
O-  Once after award; within thirty (30) calendar days after award.
Q-  Quarterly; within thirty (30) calendar days after end of the calendar
    quarter or portion thereof.
S-  Semiannually; within thirty (30) calendar days after end of program half-
    year.
Y-  Yearly; 90 calendar days after the end of calendar year.

6.   SPECIAL INSTRUCTIONS:

     The forms identified in the checklist are available at
     http://www.netl.doe.gov/business/forms/forms.html. Alternate formats are
     acceptable provided the contents remain consistent with the form. All
     technical reports submitted to the DOE must be accompanied by a completed
     and signed NETL F 2959.4 addressing patent information.

<PAGE>

4.4 GENERAL INSTRUCTIONS FOR THE PREPARATION AND SUBMISSION OF REPORTS (MAY
1999)
--------------------------------------------------------------------------------

The Recipient shall prepare and submit (postage prepaid) the plans and reports
indicated on the "Federal Assistance Reporting Checklisf" to the addressee
identified on the checklist. The level of detail the Recipient provides in the
plans and reports shall be commensurate with the scope and complexity of the
effort and shall be as delineated in the guidelines and instructions contained
herein. The prime Recipient shall be responsible for acquiring data from any
contractors or sub recipients to ensure that data submitted are compatible with
the data elements which prime Recipients are required to submit to DOE.

4.5 FINANCIAL STATUS REPORT (STANDARD FORM 269 OR 269A) (MAY 1999)
------------------------------------------------------------------

This report is used for the Recipient to provide regular periodic accounting of
project funds expended. The accounting may be on either a cash or accrual basis.
Actual total expenditures and obligations incurred, but not paid, are reported
for each reporting period for each major activity. They should correlate with
those identified on the "Federal Assistance Milestone Plan" when the "Federal
Assistance Milestone Plan" is required. Provision is made to identify the
Federal and non-Federal share of project outlays for each identified activity.

4.6 TECHNICAL REPORTS (DEC 1999)
--------------------------------

CAUTION: Technical reports SHALL NOT include limited rights data (such as
restricted, proprietary or patentable information). Limited Rights Data shall be
submitted in a separate proprietary appendix to the technical report. This
appendix SHALL NOT be submitted in an electronic format but rather submitted in
ONE ORIGINAL AND THREE (3) PAPER COPIES along with the paper version of the
sanitized technical report deliverable. The appendix shall be referenced in, but
not included in, the sanitized technical report deliverable under the contract.
In accordance with FAR 52.227-14, Rights in Data-General, the appendix must be
appropriately marked and identified.

All TECHNICAL REPORTS submitted to the DOE MUST be accompanied by a completed
and signed NETL F 2050.4, addressing patent information.

4.7 FINAL TECHNICAL REPORT (MAY 1999)
-------------------------------------

The Final Report shall document and summarize all work performed during the
award period in a comprehensive manner. It shall also present findings and/or
conclusions produced as a consequence of this work. This report shall not merely
be a compilation of information contained in subsequent quarterly, or other
technical reports, but shall present that information in an integrated fashion,
and shall be augmented with findings and conclusions drawn from the research as
a whole.

The Recipient shall deliver a draft copy of the final report thirty (30) days
after completion of the project period. The Government shall be allowed thirty
(30) days to review the draft copy and to notify the Recipient, in writing, of
approval or recommended changes. If the Government does not approve or recommend
changes within thirty (30) days of receipt of the draft copy, the report shall
be deemed approved. The approved final report is due ninety (90) days after
completion of the project period.

4.8 TOPICAL REPORT (MAY 1999)
-----------------------------

These reports usually provide a comprehensive statement of the technical results
of the work performed for a specific task or subtask of the Statement of Project
Objectives, or detail significant new scientific or technical advances. If
required, DOE shall review and approve the report outline prior to submission of
the report.

<PAGE>

4.9 GUIDELINES FOR ORGANIZATION OF TECHNICAL REPORTS (DEC 1999)
---------------------------------------------------------------

The following sections should be included (as appropriate) in technical reports
in the sequence shown. Any section denoted by an
asterisk is required in all technical reports.

     TITLE PAGE* - The Title Page of the report itself must contain the
     following information in the following sequence:

     Report Title
     Type of Report (Quarterly, Semi-Annual, Annual, Topical, Final)
     Reporting Period Start Date
     Reporting Period End Date
     Principal Author{s)
     Date Report was Issued (Month [spelled out] and Year [4 digits])

     DOE Award Number (e.g., DE-FG26-99NT12345) and if appropriate, task number
     Name and Address of Submitting Organization (This section should also
     contain the name and address of significant subcontractors or subrecipients
     who participated in the production of the report.)

     DISCLAIMER* -- The Disclaimer must follow the title page, and must contain
     the following paragraph:

     "This report was prepared as an account of work sponsored by an agency of
     the United States Government. Neither the United States Government nor any
     agency thereof, nor any of their employees, makes any warranty, express or
     implied, or assumes any legal liability or responsibility for the accuracy,
     completeness, or usefulness of any information, apparatus, product, or
     process disclosed, or represents that its use would not infringe privately
     owned rights. Reference herein to any specific commercial product, process,
     or service by trade name, trademark, manufacturer, or otherwise does not
     necessarily constitute or imply its endorsement, recommendation, or
     favoring by the United States Government or any agency thereof. The views
     and opinions of authors expressed herein do not necessarily state or
     reflect those of the United States Government or any agency thereof."

     ABSTRACT* - should be a brief, concise summary of the report.

     TABLE OF CONTENTS*

     LlST(S) OF GRAPHICAL MATERIALS

     INTRODUCTION

     EXECUTIVE SUMMARY - this should be a well organized summary that highlights
     the important accomplishments of the research during the reporting period.
     It should be no less than one page and no more than two pages in length,
     and should be single spaced. This summary must be more comprehensive than
     the traditional "abstract."

     EXPERIMENTAL * - this should describe, or reference all experimental
     methods being used for the research. It should also provide detail about
     materials and equipment being used. Standard methods can be referenced to
     the appropriate literature, where details can be obtained. Equipment should
     be described only if it is not standard, or if information is not available
     thru the literature or other reference publications.

     RESULTS AND DISCUSSION* - It is extremely important that this section
     includes enough relevant data, especially statistical data, to allow the
     project manager to justify the conclusions. With the relevant data, explain
     how the data was interpreted and how it relates to the original purpose of
     the research. Be concise in the discussion on how this research effort
     solved or contributed to solving the original problem.

<PAGE>

     CONCLUSION* - The conclusion should not simply reiterate what was already
     included in the "Results and Discussion" section. It should, however,
     summarize what has already been presented, and include any logical
     implications of how the successes are relevant to technology development in
     the future. This is extremely important, since "relevancy" continues to be
     a criteria of the program.

     REFERENCES*
     BIBLIOGRAPHY
     LIST OF ACRONYMS AND ABBREVIATIONS
     APPENDICES (IF NECESSARY)

Company Names and Logos -- Except as indicated above, company names, logos, or
similar material should not be incorporated into reports.

Copyrighted Material -- Copyrighted material should not be submitted as part of
a report unless written authorization to use such material is received from the
copyright owner and is submitted to DOE with the report.

Measurement Units -- All reports to be delivered under this instrument shall use
the SI Metric System of Units as the primary units of measure. When reporting
units in all reports, primary SI units shall be followed by their U.S. Customary
Equivalents in parentheses ().

The Recipient shall insert the text of this clause, including this paragraph, in
all subcontracts under this award. Note: SI is an abbreviation for "Le Systeme
International d'Unites."

4.10 ELECTRONIC MEDIA STANDARD FOR PREPARATION OF TECHNICAL REPORTS (DEC 1999)
--------------------------------------------------------------------------------

FILE FORMAT

     Production of high-quality, electronic documents is dependent on the
     quality of the input that is provided. Thus, the Recipient shall submit one
     good quality paper copy using either permanent or alkaline paper plus an
     electronic version of each technical report.

     ELECTRONIC REPORTS SHALL BE SUBMITTED IN THE ADOBE ACROBAT PORTABLE
     DOCUMENT FORMAT (PDF). ELECTRONIC REPORTS SUBMITTED IN A FORMAT OTHER THAN
     ADOBE WILL BE RETURNED AND THE REPORT CONSIDERED DELINQUENT.

     Each report shall be an integrated file that contains all text, tables,
     diagrams, photographs, schematics, graphs, and charts.

SUBMISSION FORMAT

     The electronic file(s} shall be submitted via diskette or CD-ROM. Diskettes
     or CD-ROMs must be labeled as follows:

        DOE Award Number
        Type/Frequency of Report(s)
        Reporting Period (if applicable)
        Name of submitting organization
        Name, phone number and fax number of preparer

     Diskettes -- Diskettes must be 3.5" double-sided, high-density (1.4 M Byte
     capacity). If file compression software is used to transmit a PDF file
     spanning more than one diskette, PKZIP from PKWare, Inc., is the required
     compression software. State the number of diskettes in the set (e.g.,

<PAGE>

     1/3)

     CD-ROM -- The electronic file(s) may be submitted on an ISO9660-format
     CD-ROM.

FILE NAMING

     In naming the electronic file, the Recipient shall use the standard
     eight-character naming convention for the main file name, and the three
     character extension applicable to the software use, e.g., .pdf for Adobe.

     For the main file name, .the first five characters are the last five digits
     from the award number; e.g., for Award Number DE-FG26-97NT12345, the first
     five characters are 12345.

     The next character represents the technical report and will always be
     designated as "R",

     The remaining two characters indicate the chronological number of the
     particular type of report; e.g., Quarterly Technical Progress Reports for a
     5-year award are numbered R01 through R20. Thus, the main file name for the
     sixth Quarterly Technical Progress Report under Award No. DE-FG26-
     99NT12345 would be 12345R06.PDF. If monthly, quarterly, annual, and a final
     technical report are required, the numbers would run from R01 through R86
     (60 monthly reports, 20 quarterly reports, 5 annual reports, and 1 final
     report).

4.11 ENVIRONMENTAL (DEC 1999)
-----------------------------

In response to the requirements of the National Environmental Policy Act of 1969
(NEPA) and other related environmental statutes, the National Energy Technology
Laboratory (NETL) requires the submission of various documents that assess the
environmental aspects and projected impacts of all of its proposed actions.
These documents may include the following: (1) Hazardous Substance Plan, (2)
Hazardous Waste Report, (3) Environmental Compliance Plan, (4) Environmental
Monitoring Plan, and (5) Environmental Status Reports.

The environmental information provided in these documents will enable NETL to
fulfill its responsibilities under NEPA (additional information about the
requirements of the National Environmental Policy Act can be found in the DOE
NEPA Compliance Guide and 10 CFR 1021) and to monitor the Recipient's compliance
with other environmental regulations. The implementation of any task associated
with a proposed action will be dependent upon DOE completing necessary NEPA
documentation. Therefore, to minimize the risk of project delays, it is
imperative that these reports be submitted in a timely manner.

The information contained herein specifies the basic environmental requirements
for this award, but it is not to be interpreted as containing all necessary
information for any given project. Likewise, certain aspects of the requirements
may not be applicable. Accordingly, the level of information provided should be
sufficient for DOE to assess the environmental implications of the proposed
action.

4.12 HAZARDOUS SUBSTANCE PLAN (MAY 1999)
----------------------------------------

The Recipient shall submit a Hazardous Substance Plan not later than thirty (30)
days after initial award. The Plan shall specifically identify each Hazardous
Substance (as defined under 40 CFR 261, Subpart D, entitled Lists of Hazardous
Wastes) anticipated to be purchased, utilized or generated in the performance of
this award. For each such Hazardous Substance identified, the Plan shall
specifically provide the following information:

     Description of Substance/Chemical
     EPA Hazardous Waste Number
     EPA Hazard Code
     Anticipated Quantity to be purchased, utilized or generated

<PAGE>

     Anticipated Hazardous Waste Transporter
     Anticipated Hazardous Waste Disposal Facility Contractor and Location
     (City/Municipality,State)
     Anticipated Treatment Method

4.13 HAZARDOOUS WASTE REPORT (MAY 1999)
---------------------------------------

The Recipient shall submit a Hazardous Waste Report at the completion of award
performance. The Report shall specifically identify each Hazardous Waste (as
defined under 40 CFR 261, subpart d, entitled Lists of Hazardous Wastes)
actually utilized, or generated in the performance of this award. For each such
Hazardous Waste identified, the Report shall specifically provide the following
information:

     Description of substance/Chemical
     EPA Hazardous Waste Number
     EPA Hazard Code
     Actual Quantity Disposed
     Actual Hazardous Waste Transporter
     Actual Hazardous Waste Disposal Facility Contractor and Location
     (City/Municipality, State)
     Actual Disposal Date
     Actual Treatment Method

The Hazardous Waste Report is intended as a final reconciliation of anticipated
versus actual Hazardous Substances purchased, utilized, or generated in the
performance of this award.

4.14 PROPERTY REPORTS (DEC 1999)
--------------------------------

The NETL Property Handbook entitled "Management of Government Property in the
Possession of Contractors," contains forms, instructions, and suggested formats
for submission of property reports. This handbook can be found at
http://www.netl.doe.gov/business/index.html

4.15 REPORT OF TERMINATION OR COMPLETION INVENTORY (SF-1428 AND SF-120) (MAY
1999)
--------------------------------------------------------------------------------

This report submitted on the SF-1428 and SF-120 is due immediately upon
completion or termination of the award. The Recipient is required to perform and
cause each subcontractor to perform a physical inventory, adequate for disposal
purposes, of all Government property applicable to the award.

4.16 REPORT OF TERMINATION OR COMPLETION INVENTORY (SF-1428 AND SF-120) (MAY
1999)
--------------------------------------------------------------------------------

The "Hot Line Report" may be used to report a major breakthrough in research,
development, or design; an event causing a significant schedule slippage or cost
growth; an environmental, safety and health violation; achievement of or failure
to achieve an important technical objective; or any requirement for quickly
documented direction or redirection. The report shall be submitted by the most
rapid means available, usually electronic, and should confirm telephone
conversations with DOE representatives. Identification as a "Hot Line Report"
serves notice at each link in the delivery chain that expedition in handling is
required. Unless otherwise agreed by the parties involved, DOE is expected to
take action and respond in a similarly timely manner. The report should include:

        1.  Recipient's name and address;
        2.  Award title and number;
        3.  Date;
        4.  Brief statement of problem or event;
        5.  Anticipated impacts; and
        6.  Corrective action taken or recommended.

Hot line reports shall document the incidents listed below:

<PAGE>

     1. Any single fatality or injuries requiring hospitalization of five or
     more individuals is to be immediately reported.

     2. Any significant environmental permit violation is to be reported as soon
     as possible, but within 24 hours of the discovery of the incident.

     3. Other incidents that have the potential for high visibility in the media
     are to be reported as quickly as possible, but within 24 hours following
     discovery.

     4. Any failure resulting in damage to Government-owned equipment in excess
     of $50,000 is to be reported as quickly as possible, but within 24 hours of
     the discovery of the failure.

     5. Any unplanned event which is anticipated to cause a schedule slippage or
     cost increase significant to the project is to be reported within 24 hours.

     6. Any verbal or written Notice of Violation of any Environmental, Safety,
     and Health statutes arising from the performance of this award is to be
     immediately reported.

     7. Any accidental spill or release which is in violation of any
     Environmental, Safety, and Health statutes arising from the performance of
     this award is to be immediately reported, but within 24 hours of the
     discovery of the accident.

     8. Any incident which causes a significant process or hazard control system
     failure, or is indicative of one which may lead to any of the above defined
     incidents, is to be reported as soon as possible, but within 5 days of
     discovery.

The requirement to submit Hot Line Reports for the incidents identified in 1, 2,
3, 6, or 7 is for the sole purpose of enabling DOE officials to respond to
questions relating to such events from the media and other public.

When an incident is reported in accordance with 4, 5, 6, 7, or 8, the Recipient
shall conduct an investigation of its cause and make an assessment of the
adequacy of resultant action. A written report is required no later than ten
(10) calendar days following the incident and shall include an analysis of the
pertinent facts regarding the cause, and a schedule of the remedial events and
time periods necessary to correct the action.

When an event results in the need to issue a written or verbal statement to the
local media, the statement is to be cleared first; if possible, and coordinated
with NETL Management and Communications Division, the Contracting Officer
Representative (COR) and the Contracting Officer.

<PAGE>

4.17 ATTACHMENT C -- BUDGET PAGES (APR 1999)
--------------------------------------------

<PAGE>
<TABLE>
<CAPTION>

                                                    U.S. DEPARTMENT OF ENERGY
DOE F 4600.4#                                                                                                            OMB Control
(09-92)                                                                                                                       1910-0
Replaces EIA-459CF                             Federal Assistance Budget Information
All Other Editions
Obsolete

                                                  OMB Burden Disclosure Statement
                                                  -------------------------------

Public reporting burden for this collection of information is estimated to average 1.87 hours per response, including time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing
the collection of information.  Send comments regarding this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Office of Information Resources Management, AD-241.1- GTN, Paperwork Reduction
Project (1910-0400), U.S. Department of Energy, 1000 Independence Avenue, S.W., Washington, DC 20585; and to the Office of
Management and budget (OMB), Paperwork Reduction Project (1910-0400), Washington, DC 20503.

------------------------------------------------------------------------------------------------------------------------------------

1.  Program/Project Identification No.                       1.  Program/Project Title   Field Test Program to Develop Comprehensive
                                                                     Design, Operating and Cost Data for Mercury Control Systems on
                                                                     Non-scrubbed Coal-Fired Boilers
------------------------------------------------------------------------------------------------------------------------------------
3.  Name and Address    U.S. Department of Energy, National Energy Technology Laboratory         4.  Program/Project Start Date
                        P.O. Box 10940                                                                  10/1/2000
                        Pittsburgh, PA 15236-0940                                                -----------------------------------
                                                                                                 5.  Completion Date
                                                                                                       9/30/2003
------------------------------------------------------------------------------------------------------------------------------------

                                                    SECTION A - BUDGET SUMMARY
------------------------------------------------------------------------------------------------------------------------------------
Grant Program                                  Estimated Unobligated Funds                          New or Revised Budget
 Function or            Federal                ----------------------------          ----------------------------------------------
  Activity            Catalog No.              Federal          Non-Federal          Federal            Non-Federal          Total
    (a)                  (b)                     (c)                (d)                (e)                 (f)                (g)
------------------------------------------------------------------------------------------------------------------------------------
<C>                    <C>                    <C>                                                       <C>               <C>
1. Fossil Energy       81.089                 $                 $                  $4,542,563           $2,237,383        $6,779,946
    R&D
------------------------------------------------------------------------------------------------------------------------------------
2.
------------------------------------------------------------------------------------------------------------------------------------
3.
------------------------------------------------------------------------------------------------------------------------------------
4.
------------------------------------------------------------------------------------------------------------------------------------
5.  TOTALS                                    $                  $                 $4,542,563           $2,237,383        $6,779,946
------------------------------------------------------------------------------------------------------------------------------------
                                                   SECTION B - BUDGET CATEGORIES
------------------------------------------------------------------------------------------------------------------------------------
                                                       Grant Program, Function or Activity
                                                       -----------------------------------
                                        (1) Fossil                                                                       Total
6.  Object Class Categories             Energy R&D     (2)           (3)             (4)                                 (5)
------------------------------------------------------------------------------------------------------------------------------------
  a.  Personnel                       $   799,527       $          $             $                                  $    779,527
------------------------------------------------------------------------------------------------------------------------------------
  b.  Fringe Benefits
------------------------------------------------------------------------------------------------------------------------------------
  c.  Travel                              235,445                                                                        235,445
------------------------------------------------------------------------------------------------------------------------------------
  d.  Equipment                           399,100                                                                        399,100
------------------------------------------------------------------------------------------------------------------------------------
  e.  Supplies                            447,700                                                                        447,700
------------------------------------------------------------------------------------------------------------------------------------
  f.  Contractual                       1,488,132                                                                      1,488,132
------------------------------------------------------------------------------------------------------------------------------------
  g.  Construction
------------------------------------------------------------------------------------------------------------------------------------
  h.  Other                                                                                                               20,200
------------------------------------------------------------------------------------------------------------------------------------
  i.  Total Direct Charges              3,499,504                                                                      3,499,504
------------------------------------------------------------------------------------------------------------------------------------
  j.  Indirect Charges                  3,280,442                                                                      3,280,442
------------------------------------------------------------------------------------------------------------------------------------
  k.  TOTALS                          $ 6,779,946       $          $             $                                  $  6,779,946
------------------------------------------------------------------------------------------------------------------------------------
7.  Program Income                    $                 $          $             $                                  $
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

ATTACHMENT D-- RECIPIENT ACQUIRED PROPERTY
------------------------------------------

Humidification System               $215,100
Sorbent Injection System            $112,700
Lances (4 sets at $46,000)          184,000

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