<SUBMISSION>
<ACCESSION-NUMBER>0001050502-06-000448
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>8
<PERIOD>20060930
<FILING-DATE>20061108
<DATE-OF-FILING-DATE-CHANGE>20061108
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ADA-ES INC
<CIK>0001223112
<ASSIGNED-SIC>2890
<IRS-NUMBER>841457335
<STATE-OF-INCORPORATION>CO
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-50216
<FILM-NUMBER>061198598
</FILING-VALUES>
<MAIL-ADDRESS>
<STREET1>8100 SOUTHPARK WAY B
<CITY>LITTLETON
<STATE>CO
<ZIP>80120
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>adaes906.txt
<DESCRIPTION>10-Q
<TEXT>

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                For the quarterly period ended September 30, 2006

[ ]  TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
               For the transition period from ________ to ________

                        Commission File Number: 000-50216
                        ---------------------------------

                                  ADA-ES, INC.
                                  ------------
             (Exact name of registrant as specified in its charter)

          Colorado                                       84-1457385
          --------                                       ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                8100 SouthPark Way, B, Littleton, Colorado 80120
                ------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (303) 734-1727
                                 --------------
                         (Registrant's telephone number)

                                 Not Applicable
                                 --------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]; No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act. (Check one): Yes [ ]; No [X]

    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ]; No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

            Class                          Outstanding at November 3, 2006
  --------------------------               -------------------------------
  Common Stock, no par value                           5,628,360

<PAGE>
<TABLE>
<CAPTION>

PART I FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS

                                      ADA-ES, Inc. and Subsidiary
                                      Consolidated Balance Sheets
                                          September 30, 2006
                                              (Unaudited)
                             (amounts in thousands, except share amounts)

                                                                             September 30,   December 31,
                                                                                 2006            2005
                                                                               --------        --------

                                                ASSETS
                                                ------
<S>                                                                            <C>             <C>
CURRENT ASSETS:
    Cash and cash equivalents                                                  $ 15,670        $ 14,026
    Trade receivables, net of allowance for doubtful accounts of $4               3,100           3,014
    Investments in securities                                                     1,730           2,515
    Prepaid expenses and other                                                      421             283
                                                                               --------        --------
             Total current assets                                                20,921          19,838
                                                                               --------        --------

PROPERTY AND EQUIPMENT, at cost                                                   1,866           1,663
    Less accumulated depreciation and amortization                               (1,028)         (1,013)
                                                                               --------        --------
             Net property and equipment                                             838             650
                                                                               --------        --------

GOODWILL, net of $1,556 in amortization                                           2,024           2,024
INTANGIBLE ASSETS, net of $54 and $44, respectively, in amortization                190             156
INVESTMENTS IN SECURITIES                                                         5,937           5,663
OTHER ASSETS                                                                        623             385
                                                                               --------        --------
TOTAL ASSETS                                                                   $ 30,533        $ 28,716
                                                                               ========        ========

                                 LIABILITIES AND STOCKHOLDERS' EQUITY
                                 ------------------------------------
CURRENT LIABILITIES:
    Accounts payable                                                           $  2,547        $  1,706
    Accrued payroll and related liabilities                                         485             516
    Accrued expenses                                                                 52             138
    Deferred revenue                                                                749             460
                                                                               --------        --------
             Total current liabilities                                            3,833           2,820
                                                                               --------        --------

LONG-TERM LIABILITIES:
    Deferred warranty and other                                                     116              40
                                                                               --------        --------
             Total liabilities                                                    3,949           2,860
                                                                               --------        --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
    Preferred stock; 50,000,000 shares authorized, none outstanding                --              --
    Common stock; no par value, 50,000,000 shares authorized,
         5,628,360 and 5,610,267 shares issued and outstanding, respectively     26,805          26,318
    Accumulated other comprehensive income                                          120              33
    Accumulated deficit                                                            (341)           (495)
                                                                               --------        --------
             Total stockholders' equity                                          26,584          25,856
                                                                               --------        --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $ 30,533        $ 28,716
                                                                               ========        ========

See accompanying notes.

                                                   2
<PAGE>

                                     ADA-ES, Inc. and Subsidiary
                          Consolidated Statements of Operations (Unaudited)
                       Three and Nine Months Ended September 30, 2006 and 2005
                              (amounts in thousands, except per share)

                                                          Three Months Ended      Nine Months Ended
                                                             September 30,          September 30,
                                                         --------------------    --------------------
                                                           2006        2005        2006        2005
                                                         --------    --------    --------    --------

REVENUE:
    Mercury emission control                             $  4,120    $  2,454    $  9,875    $  6,013
    Flue gas conditioning and other                           328         661       1,528       1,748
                                                         --------    --------    --------    --------
         Total net revenues                                 4,448       3,115      11,403       7,761

COST OF REVENUES
    Mercury emission control                                2,835       1,546       6,588       3,892
    Flue gas conditioning and other                           323         323       1,003         792
                                                         --------    --------    --------    --------
             Total cost of revenues                         3,158       1,869       7,591       4,684
                                                         --------    --------    --------    --------

GROSS MARGIN                                                1,290       1,246       3,812       3,077

OTHER COSTS AND EXPENSES:
    General and administrative                                974         687       2,736       1,873
    Research and development                                  308         224         922         670
    Depreciation and amortization                              71          41         193         123
                                                         --------    --------    --------    --------
         Total other costs and expenses                     1,353         952       3,851       2,666
                                                         --------    --------    --------    --------

OPERATING (LOSS) INCOME                                       (63)        294         (39)        411

OTHER INCOME (EXPENSE):
    Other expense and interest                               (412)         (1)       (412)         (3)
    Interest and other income                                 270          71         658         204
                                                         --------    --------    --------    --------
             Total other income (expense)                    (142)         70         246         201
                                                         --------    --------    --------    --------

INCOME (LOSS) BEFORE TAX                                     (205)        364         207         612

PROVISION FOR TAX BENEFIT (EXPENSE)                            77        (116)        (53)       (162)
                                                         --------    --------    --------    --------

NET INCOME (LOSS)                                            (128)        248         154         450

UNREALIZED GAINS AND (LOSSES) ON CERTAIN INVESTMENTS
  IN DEBT AND EQUITY SECURITIES, net of tax                   101         (35)         87         (26)
                                                         --------    --------    --------    --------
COMPREHENSIVE (LOSS) INCOME                              $    (27)   $    213    $    241    $    424
                                                         ========    ========    ========    ========

NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED   $   (.02)   $    .05    $    .03    $    .09
                                                         ========    ========    ========    ========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                  5,627       4,819       5,622       4,822
                                                         ========    ========    ========    ========
WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING          5,627       4,977       5,795       4,998
                                                         ========    ========    ========    ========

See accompanying notes.

                                                  3
<PAGE>

                                     ADA-ES, Inc. and Subsidiary
                     Consolidated Statements of Changes in Stockholders' Equity
                            Nine Months Ended September 30, 2006 and 2005
                                       (amounts in thousands)
                                             (Unaudited)

                                                                     ACCUMULATED
                                                                       OTHER
                                                  COMMON STOCK      COMPREHENSIVE   ACCUMULATED
                                               SHARES      AMOUNT      INCOME         DEFICIT    TOTAL
                                              --------    --------    --------       --------   --------

BALANCES, January 1, 2005                        4,796    $ 13,134    $     34      $ (1,158)   $ 12,010
   Issuance of stock on exercise of options         41         303        --            --          3034
   Tax benefit of stock transactions              --           256        --            --           256
   Stock and options issued for services             4          69        --            --            69
   Return of shares from escrow                    (20)       --          --            --          --
   Unrealized gains on investments                --          --           (26)         --           (26)
   Net income                                     --          --          --             450         450
                                              --------    --------    --------      --------    --------
BALANCES, September 30, 2005                     4,821    $ 13,762    $      8      $   (708)   $ 13,062
                                              ========    ========    ========      ========    ========

BALANCES, January 1, 2006                        5,610    $ 26,318    $     33      $   (495)   $ 25,856
   Stock and stock options issued to
      consultant and directors for services          7         157        --            --           157
   Issuance of stock on exercise of options         11          93        --            --            93
   Sale of stock - registration costs              (12)        (12)
   Stock-based compensation                       --           249        --            --           249
   Unrealized losses on investments               --          --            87          --            87
   Net income                                     --          --          --             154         154
                                              --------    --------    --------      --------    --------
BALANCES, September 30, 2006                     5,627    $ 26,805    $    120      $   (341)   $ 26,584
                                              ========    ========    ========      ========    ========

See accompanying notes.







                                                  4
<PAGE>

                                 ADA-ES, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows (Unaudited)
                        Nine Months Ended September 30, 2006 and 2005
                                   (amounts in thousands)

                                                                         NINE MONTHS ENDED
                                                                            SEPTEMBER 30,
                                                                        --------------------
                                                                          2006        2005
                                                                        --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                           $    154    $    450
   Adjustments to reconcile net income to net cash provided by
      operating activities:
         Depreciation and amortization                                       193         123
         Loss on asset dispositions and securities                            34          63
         Deferred tax expense                                                 78         162
         Expenses paid with stock and stock options                          406          69
         Changes in operating assets and liabilities:
                  Receivables                                                (86)     (1,033)
                  Prepaid expenses and other                                (376)        (66)
                  Accounts payable                                           841         504
                  Accrued expenses                                          (242)        142
                  Deferred revenue and other                                 365         301
                                                                        --------    --------
             Net cash provided by operating activities                     1,367         715
                                                                        --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for equipment and patents                           (419)        (54)
   Investment in securities                                               (5,485)     (7,722)
   Proceeds from sale of securities                                        6,104       7,216
                                                                        --------    --------
             Net cash provided by (used in) investing activities             200        (560)
                                                                        --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on debt and notes payable                                         (4)         (3)
   Registration of stock sold                                                (12)       --
   Exercise of stock options                                                  93         303
                                                                        --------    --------
             Net cash provided by financing activities                        77         300
                                                                        --------    --------
INCREASE IN CASH AND CASH EQUIVALENTS                                      1,644         455
CASH AND CASH EQUIVALENTS, beginning of period                            14,026       2,108
                                                                        --------    --------
CASH AND CASH EQUIVALENTS, end of period                                $ 15,670    $  2,563
                                                                        ========    ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
   Cash payments for interest                                           $      1    $      3
                                                                        ========    ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Tax effect of stock option exercises                                 $   --      $     26
                                                                        ========    ========


See accompanying notes.




                                              5
<PAGE>

                           ADA-ES, Inc. and Subsidiary
             Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2006

(1) General
-----------
The accompanying consolidated financial statements were prepared in accordance
with U.S. generally accepted accounting principles and reflect all adjustments
which are, in the opinion of management, necessary for fair representation of
the financial results of ADA-ES, Inc. and subsidiary (the "Company") for the
interim periods shown. Such statements should be considered in conjunction with
Registrant's Form 10-KSB, filed for the year ended December 31, 2005.

(2) Investments
---------------
Investments in available-for-sale securities consisting of certificates of
deposit, equities and corporate, government and municipal bonds maturing in the
next year are reported as current assets at their fair values in investments in
securities. Investments in available-for-sale securities not included in current
assets are reported at their fair values in non-current investments in
securities. Cumulative unrealized gains and losses on such securities are shown,
net of their tax effect, as a component of shareholders' equity and such gains
or losses related to the current period are shown in the determination of
comprehensive income as reported on the statement of operations.

(3) Stock Based Compensation
----------------------------
Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standards No. 123R (SFAS 123R), Share-Based Payment, which requires the Company
to record equity compensation to employees at fair value. Prior to January 1,
2006, the Company elected to use APB 25, which required expense to be recognized
only to the extent the exercise price of the stock-based compensation was below
the market price on the date of grant. The modified prospective approach was
used in adopting SFAS 123R; therefore, results prior to January 1, 2006 have not
been restated. For the three and nine months ended September 30, 2006, $95,000
and $249,000, respectively, were charged to expense for equity compensation,
which amounted to $71,000 and $185,000, respectively, after tax and ($0.01) and
($0.03), respectively, of basic and diluted earnings per share.

If compensation cost for the Company's stock-based compensation plans had been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of SFAS 123R during 2005, then the Company's
net income per share for the three and nine months ended September 30, 2005
would have been adjusted to the pro forma amounts indicated below:

                                                          Three Months     Nine Months
                                                              Ended           Ended
                                                          September 30,   September 30,
                                                               2005           2005
                                                           -----------    -----------
Net income as reported                                     $   248,000    $   450,000
  Deduct:  Stock-based compensation cost under SFAS 123R       (63,000)       (96,000)
                                                           -----------    -----------
      Pro forma net income                                 $   185,000    $   354,000
                                                           ===========    ===========

Pro forma basic and diluted net income per share:

Pro forma shares used in the calculation of pro forma
   net income per common share -
      Basic                                                  4,819,000      4,822,000
                                                           ===========    ===========
      Diluted                                                4,977,000      4,998,000
                                                           ===========    ===========

Reported net income per common share -
  Basic and Diluted                                        $      0.05    $      0.09
                                                           ===========    ===========

Pro forma net income per common share -
   Basic and Diluted                                       $      0.04    $      0.07
                                                           ===========    ===========
</TABLE>

(4) Stock Options
-----------------
During 2003 the Company adopted the 2003 ADA-ES, Inc. Stock Option Plan and
reserved 400,000 shares of common stock for issuance under the plan. In general,
all options granted under the plan expire ten years from the date of grant
unless otherwise specified by the Company's board of directors. The exercise
price of an option will be determined by the compensation committee of the board

                                       6
<PAGE>

of directors at the time the option is granted and will not be less than 100% of
the fair market value of a share of our common stock on the date the option is
granted. The compensation committee may provide in the option agreement that an
option may be exercised in whole immediately or is exercisable in increments
through a vesting schedule. During the first nine months of 2006, 19,900 options
were granted under this plan.

During 2004, the Company adopted the 2004 Executive Stock Option Plan. This plan
authorized the grant of up to 200,000 options to purchase shares of the
Company's Common Stock to executive officers of the Company, all of which were
granted in 2004. The option exercise price of $8.60 per share was the market
price on the date of the grant. The options are exercisable over a 10-year
period based on a vesting schedule that may be accelerated based on performance
of the individual recipients as determined by the Board of Directors. In January
2006, the Board of Directors authorized the vesting of 38,428 options under this
plan with a fair value of $77,000. Thus far in 2006 1,000 of such option had
been exercised. The remaining 37,428 options were exercisable at September 30,
2006.

During 2004, the Company adopted a plan (the "2004 Plan") for the issuance of
shares and the grant of options to purchase shares of the Company's Common Stock
to the Company's non-management directors. The 2004 Plan provided for the award
of stock of 603 shares per individual non-management director or 4,221 shares in
total, and the grant of options of 5,000 per individual non-management director
or 35,000 in total, all of which were formally granted and issued in 2005 after
approval of the 2004 Plan by the stockholders. The option exercise price of
$13.80 per share for the stock options granted on November 4, 2004 was the
market price on the date of the grant. The options are exercisable over a period
of five years and will vest over a three-year period, one-third each year for
continued service on the Board. If such service is terminated, the non-vested
portion of the option will be forfeited. During the first half of 2006, 15,000
of such options were forfeited after the resignation of three directors. As of
September 30, 2006, one-third of the remaining outstanding options, or a total
of 6,668 options had vested and were exercisable.

During 2005 the Company adopted the 2005 Directors' Compensation Plan (the "2005
Plan"), which authorized the issuance of shares of Common Stock and the grant of
options to purchase shares of the Company's Common Stock to non-management
directors. The 2005 Plan provides a portion of the annual compensation to
non-management directors of the Company in the form of awards of shares of
Common Stock and vesting of options to purchase Common Stock of the Company for
services performed for the Company. Under the 2005 Plan, the award of stock is
limited to not more than 1,000 shares per individual per year, and the grant of
options is limited to 5,000 per individual in total. The aggregate number of
shares of Common Stock reserved for issuance under the 2005 Plan totals 90,000
shares (50,000 in the form of stock awards and 40,000 in the form of options).
The exercise price will be the market price on the date of grant, the shares of
Stock underlying the option will vest for exercise at a rate of no more than
1,667 shares per annual period per individual, and any unvested shares of Stock
that are outstanding at the date the individual is no longer a director will be
forfeited. The 2005 Plan, if not terminated earlier by the Board, will terminate
ten years after the date of its adoption. In January 2006, the Board of
Directors authorized the issuance of 1,000 shares of Common Stock each, or a
total of 7,000 shares, and in August the Board authorized the grant of 15,000
options to the non-management directors of the Company.

Following is a table of options activity for the nine months ended September 30,
2006:

                                                                        Weighted
                                            Director &                  Average
                                             Employee    Non-Employee   Exercise
                                             Options       Options        Price
                                            ------------------------------------
 OPTIONS OUTSTANDING, January 1, 2006         351,483       80,000       $10.99
 Options granted                               34,900            -       $18.05
 Options expired                              (16,466)           -       $13.80
 Options exercised                            (11,093)           -       $ 8.39
                                            ---------     --------       ------
 OPTIONS OUTSTANDING, September 30, 2006      358,757       80,000       $11.51
                                            =========     ========       ======


The weighted average remaining contractual life for all options as of September
30, 2006 was approximately 7.8 years. At September 30, 2006, 188,755 options
with a weighted average exercise price of $10.95 were fully vested and
exercisable. Of the remaining 250,002 options, 17,302 options with a weighted
average exercise price of $14.57 vest in the remaining months of 2006, 70,750
options with a weighted average exercise price of $15.25 vest in 2007, 21,425

                                       7
<PAGE>

options with a weighted average exercise price of $13.24 vest in 2008, 16,600
options with a weighted average exercise price of $11.17 vest in 2009, and the
remaining 123,992 options with a weighted average exercise price of $9.54 vest
at the discretion of the board of directors based on specific performance
objectives of executive officers and a consultant, with minimum annual vesting
of 11,500 and maximum annual vesting of 23,000.

The average fair value of each employee and director option granted in 2006 was
approximately $4.72 and was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions.

           Expected volatility                               55%
           Risk-free interest rate                           4.0%
           Expected life of options (in years)               4.0
           Expected dividends                                 0



Following is information related to options outstanding/exercisable at September
30, 2006:

                  Options Outstanding      Options Exercisable
                  -------------------      -------------------
                                                                    Weighted
                              Weighted                 Weighted      Average
                              Average                  Average     Contractual
     Range       Number of    Exercise   Number of     Exercise       Life
     -----        Options      Price      Options       Price         ----
                  -------      -----      -------       -----      (in years)
     $2.80         11,665      $ 2.80      11,665        $2.80         7.1
$8.60 - $10.00    247,150      $ 8.88     112,658        $9.22         7.7
$13.80 - $15.20   136,709      $14.52      47,757       $14.18         7.5
$18.61 - $20.20    43,300      $19.34      16,675       $19.08         9.1
                  -------      ------     -------       ------         ---

                  438,824      $11.51     188,755       $10.95         7.8
                  =======      ======     =======       ======         ===

The aggregate intrinsic value of options exercised in the nine months ended
September 30, 2006 and 2005, based on a market price of $13.00 and $19.70,
respectively, was $51,000 and $504,000, respectively. The aggregate intrinsic
value of options exercisable at September 30, 2006 was $387,000 based on a
market price of $13.00.

As of September 30, 2006, total compensation costs related to non-vested
options, which had not yet been recognized was $496,000. The weighted average
period over which such expense is expected to be recognized is 2.0 years.

(5) Business Segment Information
--------------------------------
The Company has two reportable segments: mercury emission control (MEC) and flue
gas conditioning and other (FGC). All assets are located in the US and are not
evaluated by management on a segment basis. All significant customers are US
companies.

                  Three Months Ended September 30, 2006 (amounts in thousands)
                            MEC                 FGC                Total
                            ---                 ---                -----
Total revenue             $4,120               $328               $4,548
Segment profit (loss)       $889              $(93)                 $796


                  Three Months Ended September, 2005 (amounts in thousands)
                             MEC                FGC                Total
                             ---                ---                -----
Total revenue             $2,454               $661               $3,115
Segment profit              $556               $318                 $874

                  Nine Months Ended September 30, 2006 (amounts in thousands)
                             MEC                FGC                Total
                             ---                ---                -----
Total revenue             $9,875             $1,628              $11,503
Segment profit            $2,094               $387               $2,481

                  Nine Months Ended September 30, 2005 (amounts in thousands)
                             MEC                FGC                Total
                             ---                ---                -----
Total revenue             $6,013             $1,748               $7,761
Segment profit            $1,163               $709               $1,872


                                       8
<PAGE>

A reconciliation of reported total segment profit to Net Income for the periods
shown above is as follows (amounts in thousands). Non-allocated general and
administrative expenses include costs that benefit the business as a whole and
are not directly related to one of our segments. Such costs include but are not
limited to accounting and human resources staff, information systems costs,
facility costs, audit fees and corporate governance expenses.

                                       Three Months Ended    Nine Months Ended
                                            Sept. 30,             Sept. 30,
                                       ------------------    ------------------
                                          2006       2005       2006       2005
                                       -------    -------    -------    -------
Total segment profit                   $   796    $   874    $ 2,381    $ 1,972
Non-allocated general & admin
   expenses                               (788)      (539)    (2,227)    (1,438)
Depreciation and amortization              (71)       (41)      (193)      (123)
Interest, other (expenses),
   income and taxes                        (65)       (46)       193         39
                                       -------    -------    -------    -------
   Net Income (Loss)                   $  (128)   $   248    $   154    $   450
                                       =======    =======    =======    =======


Item 2. Management's Discussion and Analysis or Plan of Operation.
------------------------------------------------------------------
This Quarterly Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risks and uncertainties. The following
discussion and analysis of our financial condition and results of operations
should be read in conjunction with the audited consolidated financial statements
and related notes thereto included in our Annual Report on Form 10-KSB for the
year ended December 31, 2005. Words or phrases such as "will," "hope," "expect,"
"anticipate," "intend," "plan" or similar expressions are generally intended to
identify forward-looking statements. Forward-looking statements in this report
include statements regarding our expectations for market growth and continued
positive cash flow; the impact of governmental regulations and the outcome of
pending litigation contesting them; timing of performance of services under
existing contracts and associated revenue recognition; expected increase in
merger and acquisition activities; payments expected from NexGen; expected
growth in MEC revenues, operating cash flow and research and development
expenses; sources of MEC revenue growth; anticipated declines in the market for
FGC chemicals and services and revenues from such market, and gross margins;
expenses under our defined contribution and 401(k) plan; our ability to satisfy
performance guaranties; sufficiency of working capital; future capital
expenditures; realization of net deferred tax assets; outcome of any
governmental audits of our contracts; availability of skilled labor; and no
material effect on our internal controls. Forward-looking statements involve
risks and uncertainties that could cause actual results to differ materially
from the results discussed herein.

The principal risks and uncertainties that may affect our actual performance and
results of operations include the following: general economic conditions;
adverse weather; changes in federal income tax laws and federal funding for
environmental technology/specialty chemicals programs; changes in federal and
state governmental regulations; clarification of "market value" requirements by
Congress or the Internal Revenue Service impacting our joint venture with
NexGen; changes in governmental and public policy; the outcome of pending
litigation regarding EPA regulations; permitting requirements; changes in market
demand and cost/benefit analysis of our products and services; results of
demonstrations of our technologies; construction of new coal-fueled power plants
and significant retrofitting of existing plants; availability and pricing of
coal compared to other energy sources; changes in relationships with key
business partners; intellectual property protection of our technologies and
availability of additional intellectual property necessary for our business;
dependence on key employees; availability of skilled personnel; changes in
economic conditions specific to one or more of our markets and businesses;
competition; availability of raw materials; and unexpected operations
difficulties. Other risks and uncertainties may also affect the outcome of our
actual performance and results of operations. You are cautioned not to place
undue reliance on the forward-looking statements made in this Management's
Discussion and Analysis of Financial Condition and Results of Operations.

                                       9
<PAGE>

Overview
--------
We provide environmental technologies and specialty chemicals to the
coal-burning electric utility industry. Revenues are generated through (1) time
and materials and fixed-price contracts for the emerging mercury emission
control (MEC) market, several of which are co-funded by government (Department
of Energy - DOE) and industry and (2) the sale of specialty chemicals and
services for flue gas conditioning (FGC) and other applications.

Mercury has been identified as a toxic substance and, pursuant to a court order,
the EPA issued regulations for its control in March 2005. The long-term growth
of the MEC market for the electric utility industry will most likely depend on
how industry chooses to respond to federal and state regulations, which are in
various stages of enactment and challenge in the courts. As many as 1,100
existing coal-fired boilers may be affected by such regulations, if and when
they are fully implemented. We have recently seen a significant increase in new
plant projects. DOE's latest report issued in 2006 includes 153 new projects
totaling 93GW of capacity. Permitting of new coal-fired plants generally
requires them to meet more stringent requirements that likely include MEC. For
the near-term, our revenues from this market will be dependent on (i) DOE- and
industry-funded contracts mentioned above, (ii) mercury testing services and
(iii) equipment sales and commissions on sorbents sold to new plants and
existing plants affected by the implementation of enacted regulations. State
regulations and increasing numbers of consent decrees are becoming the largest
market driver for this part of our business. Although we expect this market to
show steady growth over the next several years, more significant revenue growth
is anticipated when federal regulations impact a significant portion of existing
boilers.

The market for our FGC chemicals and services is relatively flat and is expected
to continue to decline in the near-term but we are testing certain synergies
with our mercury control technology that may provide opportunities for future
growth. Margins on these products are typically higher than what we recognize
for our present MEC sales and represent an important contribution to the overall
profitability of the Company.

Thus far in 2006, we have signed contracts for eleven ACI systems to be
delivered in 2006 and 2007, bringing the total number of ACI systems installed
or currently in process to ten. In addition, one system was installed in
partnership with a third party for whom we provided design services through a
DOE contract. Revenue from ACI system contracts totaled $4.2 million for the
nine months ended September 30, 2006 and $4.4 million is remaining to be
recognized. We have historically bid on single unit contracts for ACI systems,
but are now seeing a number of multi-unit contracts out for proposal.

Thus far in 2006, we have also signed two development and testing contracts with
DOE with revenues totaling approximately $7.5 million, including industry cost
share amounts, the services for which are expected to be performed over the
period from contract signing through the fall of 2008. We were also awarded a
$100,000 research grant from DOE in 2006 to develop an improved activated carbon
manufacturing process, which activities are expected to be conducted over the
next six months. Assuming no changes in government funding, we expect to
recognize over the next several years the remaining revenue on the in-progress
and new awards totaling $16.2 million as of September 30, 2006. We recognized
$4.6 million related to DOE and industry co-funded contracts in the first nine
months of 2006. We expect to recognize revenue from these contracts of
approximately $6.8 million in total for 2006, including the revenue recognized
in the first nine months. If further funding were not approved, the Company
would decrease or cease activities on those contracts and would expect to
maintain a positive cash flow but at a reduced level. We expect DOE programs to
represent a decreasing percentage of revenues over the next few years as we
focus more on market growth for ACI systems and commercial testing and
demonstrations in 2007, which tend to offer higher margins and faster
implementation schedules.

On November 3, 2006, we closed the sale of a 50% interest in a joint venture
with NexGen Refined Coal, LLC, an affiliate of NexGen Resources Corporation, to
market our refined coal technology as further described in Part II. Item 5.
Other Information below. We received a $100,000 non-refundable down payment from
NexGen upon signing a Joint Venture Proposal on June 26, 2006, which has been
included as deferred revenue at September 30, 2006. At closing, NexGen paid us
$900,000 for its 50% interest. This payment is non-refundable. NexGen and ADA-ES
are each obligated to pay 50% of the costs of operating the JV, which we
estimate will amount to around $50,000 per month for the next several months.

As part of our strategy to address the growing MEC market, we are not only
pursuing internal, organic growth, but we have also been and expect to be
engaged in merger and acquisition (M&A) activities, particularly with respect to
the vertical integration of our business to establish an invested role in the
production and supply of activated carbon. The major revenue sources from the
growing MEC market are expected to include engineering services, equipment sales
and activated carbon supply. Our M&A activities have been and will likely be
focused on candidates engaged in those businesses. The costs we incur in our M&A
activities may be significant. Such costs are generally deferred and either (a)
expensed when it has been determined they are no longer of future value, or (b)
capitalized as part of an acquisition and then subject to future impairment
evaluations. During the quarter ended September 30, 2006 we determined that
deferred charges amounting to approximately $412,000 related to our M&A
activities incurred earlier in the year were no longer of future value and were
therefore expensed. Such charges are included in Other expense and interest for
the quarter ended September 30, 2006 in the accompanying financial statements.

                                       10
<PAGE>

Thus far in 2006 we have incurred $344,000 for project development costs, which
costs have been deferred and are classified on the balance sheet as Other
Assets. Such development costs are generally deferred and either (a) expensed
when it has been determined they are no longer of future value, or (b)
capitalized as part of a long-term assets and then subject to future impairment
evaluations.

Liquidity and Capital Resources
-------------------------------
We had a positive working capital of $17.1 million at September 30, 2006,
compared to working capital of $17.0 million at December 31, 2005. The increase
resulted from an increase in cash, offset by a decrease in short-term
investments due to liquidation of certificate of deposits and fluctuations in
operating assets and liabilities in the normal course of business. In addition
to working capital, we had long-term investments in securities, accounted for as
"available-for-sale" investments, of approximately $5.9 million and $5.7 million
at September 30, 2006 and December 31, 2005, respectively. We intend to retain a
portion of these investments to demonstrate strength in our financial position
to support performance guarantees we have been and may continue to provide on
sales of ACI systems. We may also use a portion of such investments and cash on
hand to fund growth of the Company, which may include expansion of product
offerings and strategic acquisitions. We believe that existing and expected
future working capital, which we expect to come from positive cash flow, will be
sufficient to meet the anticipated operating needs of the Company for the next
twelve months. However, we cannot be certain that positive cash flow that we
have achieved historically will continue, and it is possible that we could be
required to expend some of our current working capital to fund operations,
although we consider this unlikely. In addition, we may need to raise additional
capital to fund strategic acquisitions.

Our principal source of liquidity is our existing working capital and positive
operating cash flow. The continuation of positive cash flow is somewhat
dependent upon the continuation of chemical sales and operations of the three
flue gas conditioning (FGC) units currently in-place. Each of these units
provided an average monthly cash flow of approximately $30,000 in 2005. One of
these customers is performing a process upgrade expected to be completed in 2006
that may reduce or eliminate the requirement for FGC. Since the beginning of
2006, we performed a successful demonstration project at one plant that has
resulted in continued chemical sales, although at a lower level and with a lower
gross margin than existing customers. Unsatisfactory results for any of our FGC
customers, which could be caused by a single factor (or some combination of
factors) such as changes in coal, mechanical difficulties (whether in the FGC
unit or otherwise), changes in regulations, and/or overall cost/benefit
analysis, at any of those units, are likely to result in a decrease or
termination of the sale of chemicals for such units and a reduction in the cash
flow we have historically received, thereby reducing that portion of our
liquidity that has been provided by positive cash flow.

We have planned capital expenditures to sustain and improve ongoing operations
for 2006 estimated at $460,000, which include planned expenditures for build out
of space and office equipment to accommodate new employees, replacement of
obsolete computers and office equipment and field equipment. We expect to fund
these requirements out of existing working capital and cash flow from
operations. Of this estimated total we have spent $419,000 through the nine
months ended September 30, 2006.

Under our defined contribution and 401(k) pension plan, we match up to 5% of
salary amounts deferred by employees in the Plan and contribute certain amounts
based on the profits of the Company, which amounts are determined annually by
our Board of Directors. During the nine months ended September 30, 2006 and
2005, we recognized $81,000 and $69,000, respectively, of matching expense; this
expense is expected to amount to approximately $123,000 total in 2006. In the
past, the Company has also made discretionary contributions to the Plan and
employees. Based on results for 2005, the amount paid to the plan totaled
$108,000 and was paid in the form of cash to the accounts of all eligible
employees in February 2006. During the first nine months of 2006 and 2005, the
Company accrued approximately $102,000 and $150,000, respectively, for such
payments based on results for the respective periods.

We recorded net deferred tax assets of $241,000 and $340,000 as of September 30,
2006 and December 31, 2005, respectively. Based on existing R&D contracts
supported by the DOE, the current industry and regulatory environment and other
expectations of continuing work, the Company has determined that it is more
probable than not that deferred tax assets will be realized in the future.

Cash flow from operations totaled $1,367,000 for the first nine months of 2006
compared to $715,000 for the same period of 2005. Cash flow from operations in
2006 increased from 2005 primarily as a result of increases in expenses paid
with stock and stock options, and depreciation and amortization, offset by
variations in operating asset and liability accounts due to fluctuations in the
normal course of business. The 2006 operating cash flow was reduced by
additional prepaid expenses and other assets totaling ($376,000) as a result of
increases in prepaid insurance, deferred project development costs and interest
receivable and a decrease in accrued expenses in the net amount of ($242,000).
The 2006 operating cash flow was also increased as a result of a decrease in
accounts payable totaling $841,000 and an increase in other liabilities totaling
$265,000.

                                       11
<PAGE>

Net cash provided by investing activities was $200,000 for the first nine months
of 2006 compared to cash used in investing activities of ($560,000) in the first
nine months of 2005. In 2006, certificates of deposit were liquidated and held
as cash, whereby proceeds from sales of securities exceeded purchases of
securities. Such excess was offset somewhat by trading activity on investments
to maintain a targeted portfolio balance and maximize earnings, as well as
re-investment of gains that occurred during the period. The net increase in cash
from investment activity was offset by a use of cash for purchases of property
and equipment for the build-out of additional space in our current headquarters
location to accommodate new employees and field equipment.

Cash provided by financing activities was $77,000 and $300,000 in the first nine
months of 2006 and 2005, respectively. The decrease was due to the exercise of
fewer stock options in 2006 and registration costs incurred in 2006 but related
to stock sold in 2005. We may require additional debt or equity financing to
support future growth, including potential acquisitions.

Results of Operations
---------------------
Revenues totaled $4,448,000 and $11,403,000 for the quarter and nine months
ended September 30, 2006, respectively, versus $3,115,000 and $7,761,000 for the
same periods in 2005, representing increases of 43% for the quarter and 47% for
the first nine months of 2006. Revenues in the MEC segment for 2006 increased
from the second quarter by $1,666,000 (68%), and FGC and other activities
decreased by ($333,000) (51%). For the nine-month period, revenues in the MEC
segment for 2006 increased by $3,862,000 (64%), and FGC and other activities
decreased by $220,000 (13%). Based on contracts in hand and other anticipated
projects, we anticipate that total revenues for 2006 will grow by approximately
35% from the 2005 level. We have been hiring personnel in response to the growth
we have realized in the past and expect to achieve in 2006, and adequate
resources of skilled labor have been and are expected to be available to meet
anticipated needs.

Revenues in the first nine months of 2006 from the MEC segment were comprised of
government and industry-supported contracts (47%), sales and installation of
activated carbon injection (ACI) systems (42%) and consulting services (11%),
compared to 60%, 14% and 26%, respectively, in the first nine months of 2005.
While revenues from both the government and industry-supported contracts and the
ACI systems sales increased from the first nine months of 2005 to the first nine
months of 2006, the most significant growth occurred in the sales and
installations of ACI systems, which increased $3.4 million. We expect growth in
2006 in the MEC segment to result primarily from sales of ACI systems in
response to mercury emission control legislation and from existing and recently
awarded government and industry-supported contracts. Activities in two of our
DOE contracts are behind the original planned schedule due to the unavailability
of one of the host sites and test results that did not meet project goals.
Discussions with DOE have resulted in reallocating a portion of the remaining
contract amounts to our other activities. Our contracts with the government are
subject to audit by the federal government, which could result in adjustment(s)
to previously recognized revenue. We believe, however, that we have complied
with all requirements of the contracts and future adjustments, if any, will not
be material. In addition, the federal government must appropriate funds on an
annual basis to support these DOE contracts, and funding is always subject to
unknown and uncontrollable contingencies.

FGC and other revenues decreased due to fewer shipments of chemical and revenues
related to continuing customers. We expect FGC and other revenues in 2006 to be
somewhat lower than 2005, as we believe that planned customer purchases for 2006
will be less than such purchases made in 2005.

Cost of revenues increased by $1,289,000 and $2,907,000, respectively, in the
third quarter and first nine months of 2006 as compared to the same periods in
2005 as a result of increased revenues for the same periods. Gross margins were
29% and 34% for the quarter and nine months ended September 30, 2006,
respectively, as compared to 40% and 40%, respectively, for the same periods in
2005. The decrease is a result of decreased margins in both the MEC and FGC and
other segments as discussed below.

Cost of revenues for the MEC segment increased by $1,289,000 and $2,696,000,
respectively, in the third quarter and first nine months of 2006, as compared to
the same periods in 2005 as a result of the increased revenue generating
activities noted above. Gross margins for this segment were 31% and 33% for the
quarter and nine months ended September 30, 2006, respectively, as compared to
37% and 35%, respectively, for the same periods in 2005. The decrease in gross
margins from the prior periods resulted from lower margins on ACI system sales
where we have found that in order to maintain market share, we have had to
decrease prices. The changes in MEC segment profits for periods under review are
a result of the same factor.

                                       12
<PAGE>

Cost of revenues for the FGC and other segment remained flat and increased by
$211,000, respectively, in the third quarter and first nine months of 2006, as
compared to the same periods in 2005 also as a result of increased costs for
development projects included in this segment. Gross margins for this segment
were 2% and 34% for the quarter and nine months ended September 30, 2006,
respectively, as compared to 51% and 55%, respectively, for the same periods in
2005. The decrease in gross margins from 2005 to 2006 is a result of increased
FGC sales of a product we license from ARKAY Technologies, which carry a lower
margin than historical FGC sales, lower margins typically recognized on the
demonstration projects we carried out in 2006, and the increased costs in
development projects noted above. FGC revenues primarily include chemical sales,
which carry a higher margin than the fixed price and time and materials MEC
revenues. FGC and other revenues comprised 13% of total revenues thus far in
2006, compared to 23% in 2005. The changes in the FGC segment profits for the
periods under review are a result of the same factors.

We expect the amount of fixed price and time and materials work in the MEC
segment for the near term to represent an increasing source of revenue. Overall
gross margins for 2006 are therefore expected to decline further from the levels
achieved in 2005, as a result of an increasing proportion of fixed price and
time and materials work, our assumption of an increasing share of costs in the
field demonstration projects in which we have elected to participate and pricing
pressure caused by increased competition.

General and administrative expenses increased by $287,000 or 42%, from $687,000
to $974,000, and by $863,000 or 46% to $2,736,000 in the third quarter and the
first nine months of 2006, respectively. The dollar increase in 2006 resulted
primarily from compensation expenses related to the implementation of SFAS 123R
($95,000 for the quarter and $249,000 for the nine months ended September 30,
2006); legal and increased director fees and expenses incurred to maintain
compliance with public company regulations (approximately $50,000 for the
quarter and $150,000 for the nine months); and facilities, benefits and other
overhead expenses resulting from increases in number of employees (approximately
$80,000 for the quarter and $150,000 for the nine months).

Research and development expenses increased by $84,000 or 38% in the third
quarter of 2006, and $252,000 or 38% in the first nine months of 2006 as
compared to the same periods in 2005. We incur R&D expenses not only on direct
activities we conduct but also by sharing a portion of the costs in the
government and industry programs in which we participate. Future consolidated
research and development expenses, except for those anticipated to be funded by
the DOE contracts and others that may be awarded, are expected to continue to
grow at a rate of about 10% annually for the next several years, with an
expected increase of about 40% in total for 2006 compared to 2005.

Included in other expenses for the third quarter we recognized $411,000 of
deferred costs related to our M&A activities as noted above. The Company had net
interest and other income of $270,000 for the third quarter and $658,000 in the
first nine months of 2006, as compared to $71,000 and $204,000 for the same
periods in 2005. Interest and other income increased in 2006 due to an increase
in invested balances and increasing interest rates.

Unrealized gains, net of tax, on investments in debt and equity securities
amounted to $101,000 and $87,000, respectively, for the third quarter and first
nine months of 2006 as compared to losses of ($35,000) and ($26,000) for the
same periods in 2005. The gains recorded in 2006 are the result of increases in
the market value of our equity investments. The losses incurred in 2005 were
primarily the result of increasing interest rates, which correspondingly tend to
decrease the market value of our investments in longer-term fixed-rate debt
securities.

The deferred income tax provision for the first nine months of 2006 represents
an effective tax rate of approximately 26%, which approximates the rate for the
same period in 2005. During the preparation of its effective tax rate, the
Company uses an annualized estimate of pre-tax earnings or loss. Throughout the
year, this annualized estimate may change based on actual results and annual
earnings or loss estimate revisions. Because the Company's permanent tax
benefits expected for 2006 are relatively constant, changes in the annualized
estimate may have a significant impact on the effective tax rate in future
periods.

Critical Accounting Policies and Estimates
------------------------------------------
Significant estimates are used in preparation of our financial statements and
include (1) our allowance for doubtful accounts, which is based on historical
experience; (2) our valuation and classification of investments as
"available-for-sale" securities, which is based on estimated fair market value;
(3) our percentage of completion method of accounting for significant long-term
contracts, which is based on estimates of gross margins and of the costs to
complete such contracts; and (4) warranty reserves related to sales of ACI
systems to cover performance guarantees that we provided on certain contracts.
In addition, amounts invoiced for government contracts are subject to change
based on the results of future audits by the federal government. We have not
experienced significant adjustments in the past from such audits, and we do not
expect significant adjustments will be required in the future. We also use our
judgment to support the current fair value of goodwill and other intangible
assets of $2.2 million on the consolidated balance sheet. Although we have

                                       13
<PAGE>

performed an evaluation of the goodwill and intangible asset values which
supports the recorded value, market demand for our products and services could
change in the future, which would require a write-down in recorded values. As
with all estimates, the amounts described above are subject to change as
additional information becomes available, although we are not aware of anything
that would cause us to believe that any material changes will be required in the
near term.

Recently Issued Accounting Policies
-----------------------------------
Effective January 1, 2006, we adopted SFAS 123R using the modified prospective
approach. See Note 3 to the consolidated financial statements for further
details.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to
define fair value, establish a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expand disclosures about fair value
measurements. Having a single definition of fair value, together with a
framework for measuring fair value, is designed to result in increased
consistency and comparability in fair value measurements. This FASB is effective
for reporting period beginning after November 15, 2007. We are continuing to
evaluate the impact and do not expect that adoption of this FASB will have a
material impact on our financial statements.

In July 2006, The FASB Issued FIN No. 48, Accounting for Uncertainty in Income
Taxes, which provides guidance for (1) recognizing and measuring tax positions
taken or expected to be taken that affect amounts reported in the financial
statements, and (2) for the income tax effects of tax positions that do not meet
the threshold condition for recognition. This FIN will apply to fiscal years
beginning after December 15, 2006. We are continuing to evaluate the impact and
do not expect that adoption of this FIN will have a material impact on our
financial statements.


Item 4. CONTROLS AND PROCEDURES
-------------------------------

Disclosure Controls and Procedures
----------------------------------
We maintain disclosure controls and procedures designed to ensure that the
information required to be disclosed by us in the reports we file with the
Securities and Exchange Commission (SEC), is recorded, processed, summarized and
disclosed within the time periods specified in the rules of the SEC. Based on
their evaluation of our disclosure controls and procedures which took place as
of September 30, 2006, the end of the period covered by this report, the Chief
Executive and Financial Officers believe that these controls and procedures are
effective to ensure that (i) we are able to record, process, summarize and
disclose the information we are required to disclose in the reports we file with
the SEC within the required time periods and (ii) information required to be
disclosed by us in such reports is accumulated and communicated to our
management, including our principal executive and financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosures.

Internal Control Over Financial Reporting
-----------------------------------------
The Company also maintains a system of internal controls designed to provide
reasonable assurance that: transactions are executed in accordance with
management's general or specific authorization; transactions are recorded as
necessary (1) to permit preparation of financial statements in conformity with
generally accepted accounting principles, and (2) to maintain accountability for
assets; access to assets is permitted only in accordance with management's
general or specific authorization; and the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
During the Company's last fiscal quarter, we evaluated our disclosure controls
and procedures and our internal controls over financial reporting and concluded
that (i) our disclosure controls and procedures were effective as of September
30, 2006, and (ii) there have been no changes in such controls or in other
factors that have materially affected, or are reasonably likely to materially
affect, those controls.

PART II.  OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities.

In January 2006, the Board of Directors authorized the issuance of 1,000 shares
of common stock to each of the seven non-management directors of the Company (a
total of 7,000 shares of common stock) representing a portion of their
compensation for the period from October 2005 through September 2006. The shares
were issued on February 2, 2006. The fair value of the shares issued totaled
$154,000. The Company relied on the registration exemption contained in Section
4(2) of the Securities Act of 1933 for offerings not involving a public

                                       14
<PAGE>

offering. The shares were issued to directors, each of whom were fully
knowledgeable about the Company and its financial condition, and who were
therefore capable of evaluating the merits and risks of owning the shares.

On January 27, 2006, the Company authorized the issuance of 19,900 common stock
options to three employees of the Company solely in consideration for services
rendered to the Company. The options are exercisable at $20.20 per share, the
market price of the underlying shares on the date of grant. The Company relied
on the registration exemption contained in Section 4(2) of the Securities Act of
1933 for offerings not involving a public offering. The options were issued to
employees, each of whom were fully knowledgeable about the Company and its
financial condition, and who the Company believes to be capable of evaluating
the merits and risks of owning the options. The options are not transferable and
can be exercised only by the employee or, under certain circumstances, their
heirs or devisees. The options cannot be exercised until the underlying shares
are registered with the SEC.

On August 3, 2006, the Company authorized the issuance of 15,000 common stock
options to three non-management directors of the Company solely in consideration
for services rendered to the Company. The options are exercisable at $15.20 per
share, the market price of the underlying shares on the date of grant. The
Company relied on the registration exemption contained in Section 4(2) of the
Securities Act of 1933 for offerings not involving a public offering. The
options were issued to directors, each of whom were fully knowledgeable about
the Company and its financial condition, and who the Company believes to be
capable of evaluating the merits and risks of owning the options. The options
are not transferable and can be exercised only by the director while he or she
remains a director of the Company. The options cannot be exercised until the
underlying shares are registered with the SEC.

Item 5. Other Information.

On November 3, 2006, we closed the sale of a 50% interest in a joint venture
(the "JV") with NexGen Refined Coal, LLC ("NexGen"), an affiliate of NexGen
Resources Corporation, to market our refined coal technology ("Refined Coal
Technology"), which reduces emissions of nitrogen oxides and mercury from
certain, treated coals ("Refined Coal"). The JV's primary opportunity is based
on tax credits available under Section 45 of the Internal Revenue Code ("Section
45 Tax Credits"), as it was amended by the American Jobs Creation Act of 2004
(the "2004 Act") for qualifying Refined Coal. Under the 2004 Act, a tax credit
with a current value of approximately $5.60 per ton of Refined Coal can be
earned for a period of ten years ending in or before 2019. Our Refined Coal
Technology incorporates ADA-ES' patented chemical, which we developed for
slagging boilers, and our expertise with sorbent-based mercury control
technology. NexGen's affiliates have extensive experience and expertise with
Section 29 tax credits (which apply to the development of coal-bed methane gas),
and we anticipate that NexGen's experience and expertise in this area will serve
as a template for monetization of Section 45 Tax Credits in the Refined Coal
area. We believe that our Refined Coal Technology is applicable to a target
market of approximately 60 million tons of Refined Coal per year.

The JV will be carried out through a Colorado limited liability company called
ADA-NexCoal, LLC ("ADA-NexCoal") which we formed on October 31, 2006. Under a
Purchase and Sale Agreement, we sold a 50% interest in ADA-NexCoal to NexGen,
which paid us $900,000 for its 50% interest. This $900,000 payment was in
addition to a $100,000 non-refundable down payment NexGen paid us upon signing a
Joint Venture Proposal on June 26, 2006, which has been included as deferred
revenue at September 30, 2006. The detailed report of a demonstration of the
related Refined Coal technology, which was a prerequisite to the final
documentation, was also completed in that quarter. The $900,000 payment received
on November 3, 2006 is non-refundable.

The JV will initially operate a business supplying chemicals, additives,
equipment and technical services to cyclone fired boiler users (a "Chemicals
Business"), but the JV's primary purpose is to seek and obtain approval from the
United States Internal Revenue Service to qualify ADA Refined Coal for the
Section 45 Tax Credits (a "Section 45 Business"). If the JV succeeds in
obtaining that approval and becomes a Section 45 Business, NexGen has the right
to maintain its 50% interest by paying us an additional $4 million, in 8
quarterly payments of $500,000 each, beginning in the 4th quarter of 2007.
NexGen can determine not to make those payments, but it if does so, it will
forfeit a part of its interest in ADA-NexCoal in direct proportion to the amount
of the $4 million that it elects not to pay. Once it fails to make any one
payment, it cannot come back and reclaim its interest by making later payments.

Simultaneously with the execution of the Purchase and Sale Agreement, the
parties entered into an Amended and Restated Operating Agreement governing the
operation of ADA-NexCoal, which calls for NexGen and ADA-ES to each pay 50% of
the costs of operating the JV, and specifies certain duties that ADA-ES and
NexGen are obligated to perform as members of ADA-NexCoal to further the
business purposes of the JV. We estimate those costs will amount to around
$50,000 per month for the next several months. We also entered into a License
Agreement with ADA-NexCoal pursuant to which we licensed certain patents and

                                       15
<PAGE>

know-how (the "Licensed Property") to ADA-NexCoal on a fully paid-up,
royalty-free, non-transferable and exclusive basis, to allow it to exploit our
Refined Coal Technology for the cyclone-fired boiler market. Pursuant to the
License Agreement, we are required to provide technical assistance without
charge to the JV relating to the development, marketing and deployment of the
Licensed Property and, with certain limitations, to prosecute, maintain and
defend the patents that are a part of the Licensed Property, take appropriate
steps to protect the know-how and trade secrets comprising a part of the
Licensed Property, and indemnify and hold ADA-NexCoal harmless in the event the
Licensed Property infringes the intellectual property of any third party.

Finally, we entered into a Chemicals, Equipment and Technical Services Supply
Agreement with ADA-NexCoal pursuant to which we will supply the JV with certain
chemicals, additives, equipment and technical services to facilitate the
purposes of the JV. ADA-NexCoal will pay us standard charges for the chemicals,
additives, equipment and technical services it will supply to the JV, on a
"most-favored" nation basis.

Item 6. Exhibits

Exhibits filed as part of this Quarterly Report on Form 10-Q are as follows:

10.1    License Agreement dated as of November 3, 2006 by and between ADA-ES,
        Inc. and ADA-NexCoal, LLC.
10.2    Chemicals, Equipment, and Technical Engineering Services Supply
        Agreement dated as of November 3, 2006 by and between ADA-ES, Inc. and
        ADA-NexCoal, LLC.
10.3    Purchase and Sale Agreement dated as of November 3, 2006 by and among
        ADA-ES, Inc., NexGen Refined Coal, LLC and ADA-NexCoal, LLC.
10.4    Amended and Restated Operating Agreement of ADA-NexCoal, LLC dated as of
        November 3, 2006 by and among ADA-ES, Inc., NexGen Refined Coal, LLC and
        ADA-NexCoal, LLC.
31.1*   Certification of Chief Executive Officer of ADA-ES, Inc. Pursuant to 17
        CFR 240.13a-14(a)or 17 CFR 240.15d-14(a)
31.2*   Certification of Chief Financial Officer of ADA-ES, Inc. Pursuant to 17
        CFR 240.13a-14(a)or 17 CFR 240.15d-14(a)
32*     Certification Pursuant to 18 U.S.C. Section 1350

* These certifications are "furnished" and shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.


SIGNATURES

     In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

                                          ADA-ES, Inc.
                                          ------------
                                          Registrant

Date: November 7, 2006                    /s/ Michael D. Durham
                                          ---------------------
                                          Michael D. Durham
                                          President and Chief Executive Officer


Date: November 7, 2006                    /s/ Mark H. McKinnies
                                          ---------------------
                                          Mark H. McKinnies
                                          Chief Financial Officer

                                       16
<PAGE>


                                  EXHIBIT INDEX

10.1    License Agreement dated as of November 3, 2006 by and between ADA-ES,
        Inc. and ADA-NexCoal, LLC.
10.2    Chemicals, Equipment, and Technical Engineering Services Supply
        Agreement dated as of November 3, 2006 by and between ADA-ES, Inc. and
        ADA-NexCoal, LLC.
10.3    Purchase and Sale Agreement dated as of November 3, 2006 by and among
        ADA-ES, Inc., NexGen Refined Coal, LLC and ADA-NexCoal, LLC.
10.4    Amended and Restated Operating Agreement of ADA-NexCoal, LLC dated as of
        November 3, 2006 by and among ADA-ES, Inc., NexGen Refined Coal, LLC and
        ADA-NexCoal, LLC.
31.1*   Certification of Chief Executive Officer of ADA-ES, Inc. Pursuant to 17
        CFR 240.13a-14(a)or 17 CFR 240.15d-14(a)
31.2*   Certification of Chief Financial Officer of ADA-ES, Inc. Pursuant to 17
        CFR 240.13a-14(a)or 17 CFR 240.15d-14(a)
32*     Certification Pursuant to 18 U.S.C. Section 1350

*These certifications are "furnished" and shall not be deemed filed for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>adaex10-1.txt
<DESCRIPTION>AGREEMENT
<TEXT>

                                                                    Exhibit 10.1

                                LICENSE AGREEMENT


     THIS LICENSE AGREEMENT (the "Agreement") is entered into by and between,
ADA-ES Inc., a Colorado corporation having its principal place of business at
8100 South Park Way, Unit B, Littleton, CO 80120-4525 ("Licensor") and
ADA-NexCoal, LLC, a Delaware limited liability company having its principal
place of business at 8100 South Park Way, Unit B, Littleton, CO 80120-4525
("Licensee") to be effective as of November 3, 2006 (the "Effective Date").
Licensor and Licensee are sometimes hereinafter individually referred to as a
"party" and collectively as the "parties."

                                    RECITALS

     WHEREAS, Licensor is the sole owner of all right, title and interest in and
to the inventions and subject matter disclosed in the Patents (as defined
below); and

     WHEREAS, Licensor has agreed to license the Patents to Licensee in return
for 100% of the ownership interest in Licensee, which consists of 100 units of
interest therein (the "Units"), the rights and obligation as to which are as
described in that certain Operating Agreement of Licensee dated as of November
3, 2006, as the same may be amended from time to time (the "Operating
Agreement").

     NOW, THEREFORE, in consideration of the mutual covenants and promises made
in this Agreement, the parties hereto, intending to be legally bound hereby,
agree to the terms and conditions as follows:

1.   DEFINITIONS

     Unless otherwise elsewhere defined herein, the following capitalized terms
shall have the following meanings:

     1.1. "Affiliate" has the meaning ascribed to such term in the Purchase
Agreement.

     1.2. "Board" has the meaning ascribed to such term in the Amended and
Restated Operating Agreement.

     1.3. "Chemicals Business" means the business of marketing and selling
Chemicals, Additives and Technical Engineering Services (as defined in the
Chemicals, Equipment and Technical Engineering Services Supply Agreement entered
into by and between Licensee and Licensor and attached hereto as Exhibit 1),
specifically pertaining to NOx and mercury emissions controls from cyclone
coal-fired boilers.

     1.4. "Insolvency" has the meaning ascribed to such term in the Purchase
Agreement.

     1.5. "Improvements" means those modifications, revisions, derivations,
updates, enhancements and improvements of the Technology related to the
reduction of NOx and mercury emissions from cyclone boilers that are conceived,
discovered, created or developed by or on behalf of Licensor, which Improvements
will automatically and without any further action on the part of Licensor or
Licensee, become part of the Technology (and part of the Technology License).

<PAGE>

     1.6. "Know-How" means technical information, ideas, concepts, confidential
information, trade secrets, know-how, discoveries, inventions, processes,
methods, formulas, source and object codes, data, programs, other works of
authorship, improvements, developments, designs and techniques related to the
reduction of NOx and mercury emissions from cyclone coal-fired boilers other
than as embodied in the Patents, that are owned or controlled by Licensor during
the term of this Agreement and that are necessary or desirable to use the
Patents for the purpose of the license granted in Section 2 hereof.

     1.7. "Licensed Property" means any products or methods related to the
reduction of NOx and mercury emissions from cyclone coal-fired boilers, whether
owned by Licensor or licensed by Licensor now or hereafter, that are (i) covered
by any Valid Claim(s) contained in any of the Patents, and/or (ii) based on the
products, processes or methods developed using the Technology.

     1.8. "Loss" has the meaning ascribed to such term in the Purchase
Agreement.

     1.9. "Patents" means: (i) U.S. Patent No. 6,773,471 B2 entitled "Low Sulfur
Coal Additive for Improved Furnace Operation" issued on August 10, 2004; (ii)
U.S. Patent No. 6,729,248 B2 entitled "Low Sulfur Coal Additive for Improved
Furnace Operation" issued on May 4, 2004; (iii) Patent Application No.
10/209,083 entitled "Low Sulfur Coal Additive for Improved Furnace Operation"
filed July 30, 2002; (iv) U.S. Provisional Patent Application Serial No.
60/730,971 entitled "Additives for Catalysis of Mercury Oxidation in Coal-Fired
Power Plants" filed October 27, 2005; and (v) any foreign counterpart
applications or patents, reissues or extensions, continuations,
continuations-in-part or divisions relating to any of the preceding patents and
patent applications, together with any other patents (U.S. or foreign and even
if not listed herein) that share a common claim of priority with said patents or
that, as mutually agreed upon in good faith by the parties, cover inventions
substantially similar to said patents.

     1.10. "Purchase Agreement" means the Purchase and Sale and Contribution
Agreement as proposed to be entered into among Licensor, Licensee and NexGen
Refined Coal, LLC.

     1.11. "Section 45 Business" means that Licensee shall have received, prior
to January 1, 2009, or such later date as may become applicable based on
extensions thereto as approved by the Internal Revenue Service (the "IRS"), a
written private letter ruling ("PLR") or other indication from the IRS pursuant
to which the Licensee may sell, and Licensee has entered into agreements to
sell, a qualified facility to a third party, and such third party would be
thereafter entitled to Section 45 Tax Credits as a result of operating such
facility, specifically pertaining to NOx and mercury emissions controls from
cyclone coal-fired boilers.

     1.12. "Section 45 Tax Credits" means the tax credits provided for under
Section 45 of the Internal Revenue Code.

                                       2
<PAGE>

     1.13. "Technology" means the Patents and the Know-How specifically
pertaining to NOx and mercury emissions control for cyclone coal-fired boilers,
as well as any Know-How developed or acquired after the Effective Date which is
based on the knowledge contained in the Patents, whether or not such Know-How
becomes the subject of a patent application during the term of this Agreement;
provided, however, that such Know-How shall be a trade secret of Licensor until
such time as it is the subject of a published patent application. As used
herein, Patents shall include any and all continuations, continuations-in-part,
and divisionals, and all patents issuing which are based on such applications,
and all reissues, reexaminations, or extensions thereof, as well as any foreign
counterparts, continuations, continuations in part or divisions thereof and
patents and patent applications on any improvements, advancements,
modifications, revisions or developments that are developed by or for Licensor.

     1.14. "Territory" means the United States and each foreign country in which
the Patents exist or in which Licensor intends or has been requested by Licensee
to file patent applications related to the Technology.

     1.15. "Valid Claim(s)" means any claim contained in an issued and unexpired
patent included within the Patents that has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency of
competent jurisdiction, or unappealable or unappealed within the time allowed
for appeal, and that has not been admitted to be invalid or unenforceable
through reissue or disclaimer.

2.   GRANT OF LICENSE.

     2.1. In consideration of the issuance by Licensee of the Units, and in
accordance with the terms and conditions of this Agreement, Licensor hereby
grants to Licensee a fully paid-up, royalty-free, non-transferable license under
the Technology to make or have made the Licensed Property and to use, sell,
lease, offer to sell, import or otherwise dispose of the Licensed Property in
the Territory (the "Technology License").

     2.2. In addition, as Licensor shall at all times during the term of this
Agreement promptly and fully discloses in writing to Licensee all Improvements,
and each of such Improvements shall automatically become part of the Technology
and subject to the Technology License.

     2.3. Licensee may, from time to time, sub-license to any third party or
parties any or all rights under the Technology License (each a "Sublicensee")
whereupon each Sublicensee will become a third party beneficiary to this
Agreement.

     2.4. The Technology License shall be exclusive even as to Licensor for
purposes of engaging in the Chemicals Business or a Section 45 Business for the
purpose of monetization of Internal Revenue Code Section 45 tax credits
available through the American Jobs Creation Act of 2004, or its equivalent in a
jurisdiction other than the United States, and to do any and all things
necessary or incidental thereto.

                                       3
<PAGE>

3.   PATENT MARKING

     Licensee agrees that all Licensed Property shall be marked (e.g., with U.S.
Patent Nos. 6,773,471 B2, or 6,729,248 B2 or "Patents Pending," as appropriate)
in a manner sufficient to give proper legal notice under the applicable patent
laws. In the event that it is not practicable to affix the patent marking onto
the Licensed Property directly, Licensee will affix the patent numbers or the
term "Patents Pending" to literature that accompanies the Licensed Property in a
manner sufficient to give proper legal notice under the applicable patent laws.
With respect to any Licensed Property for which a patent issues, as soon as
reasonably practicable after the issuance of the patent, Licensee shall mark the
Licensed Property or the literature relating thereto with the patent number of
any patent that is licensed to Licensee pursuant to this Agreement.

4.   TECHNICAL ASSISTANCE AND IMPROVEMENTS.

     4.1. Licensor shall be available to provide any technical assistance
relating to the development, marketing and deployment of the Licensed Property
without charge to Licensee provided, however, that Licensee shall pay all of
Licensor's reasonable, related travel and lodging expenses that have been
pre-approved in writing by Licensee.

     4.2. Licensor shall promptly and fully advise Licensee of any Improvements,
it being understood that any Improvements made by Licensor during the term of
this Agreement shall be the property of Licensor, and shall be included within
the Licensed Property and the Technology and thereby made a part of the
Technology License granted to Licensee for the remaining duration of this
Agreement. The expenses of filing and prosecuting any patent application
relating to such Improvements shall be borne by Licensor, if deemed reasonable
by unanimous consent of the Board governing the Licensee.

     4.3. Any inventions or improvements that may be developed during the term
of this Agreement by Licensee or by Licensee and Licensor jointly with respect
to the subject matter of the Technology shall be assigned to Licensor and shall
be included within the Licensed Property and the Technology and thereby made a
part of the Technology License granted to Licensee hereunder for the remaining
duration of this Agreement. The expenses of filing and prosecuting any patent
application relating to any such improvements shall be borne by Licensor, if
deemed reasonable by unanimous consent of the Board governing the Licensee;
provided, however that Licensee shall reasonably assist Licensor, at Licensor's
sole expense, to obtain full ownership rights, including, but not limited to,
patent rights in and to the subject improvements or inventions.

5.   TERM AND TERMINATION UPON DEFAULT.

     5.1. Term. This Agreement shall remain in full force and effect for as long
as any patent application related to the Technology is pending in any domestic
or foreign patent office or until the expiration of the last to expire of any
patent included in the Technology, unless sooner terminated pursuant to Sections
5.2 or 5.3.

                                       4
<PAGE>

     5.2. Termination Upon the Occurrence of Certain Events. Licensor shall have
the right to terminate this Agreement immediately in the event of the Insolvency
of Licensee or the dissolution or liquidation of Licensee in accordance with the
terms of the Operating Agreement.

     5.3. Other Termination. Either party may terminate this Agreement upon
providing written notice to the other party if the other party shall commit any
material default or breach of any covenant or agreement contained herein, and
shall fail to remedy any such default or breach within thirty (30) days after
receiving written notice describing in reasonable detail the material default of
breach from the non-defaulting or non-breaching party.

     5.4. Effect of Termination. Upon expiration of this Agreement, or upon
termination of this Agreement by Licensor under Section 5.2 (Termination Upon
the Occurrence of Certain Events) or under Section 5.3 (Other Termination), all
license rights granted to Licensee hereunder shall immediately terminate. Upon
termination of this Agreement by Licensee under Section 5.3 (Other Termination),
all license rights granted to Licensee hereunder shall extend for the later of
(i) five (5) years from the date of termination, or (ii) the term of any
agreement with a third party as a sublicense hereunder or which otherwise
requires the effectiveness of the license of the Licensed Property hereunder.
Upon expiration of this Agreement, or upon termination of this Agreement by
Licensor under Section 5.2 (Termination Upon the Occurrence of Certain Events)
or under Section 5.3 (Other Termination), all sublicenses that may have been
granted by Licensee shall terminate, provided that any sublicensee may elect to
continue its sublicense by advising Licensor in writing within twenty (20)
business days of the sublicensee's receipt of written notice from Licensor of
such termination or expiration and of the sublicensee's agreement to accept a
license from Licensor that contains such terms and conditions as the sublicensee
and Licensor mutually agree upon in writing. Upon termination of this Agreement
by Licensee under Section 5.3 (Other Termination), all sublicenses that may have
been granted by Licensee shall continue in full force in accordance with their
terms with Licensee for the later of (i) five (5) years from the date of
termination, or (ii) the term of any agreement with a third party as a
sublicensee hereunder or which otherwise requires the effectiveness of the
license of the Licensed Property hereunder.

6.   REPRESENTATIONS AND WARRANTIES

     6.1. By Licensee. Licensee represents and warrants to Licensor that it has
the right and authority to enter into this Agreement and perform its obligations
hereunder and this Agreement constitutes the legal, valid and binding obligation
of Licensee enforceable in accordance with its terms, subject, however, to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws
from time to time in effect, as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

     6.2. By Licensor. Licensor represents, warrants and covenants to Licensee
that (a) it has the right and authority to enter into this Agreement and perform
its obligations hereunder and this Agreement constitutes the legal, valid and
binding obligation of Licensor enforceable in accordance with its terms,
subject, however, to the effects of bankruptcy, insolvency, reorganization,
moratorium and similar Laws from time to time in effect, as well as to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), (b) it owns all right, title and interest in

                                       5
<PAGE>

and to the Patents and Know-How and has the full right and authority to grant
the licenses set forth in Section 2 (Grant of License), (d) there are no
outstanding agreements, assignments or encumbrances inconsistent with the
provisions of said licenses and Licensor has the right to grant the licenses set
forth in Section 2 without seeking the approval or consent of any third party,
(e) none of the Patents have been invalidated either wholly or partly by a court
of law within the United States or abroad or by the United States Patent and
Trademark Office or any of its foreign equivalents and there are no proceedings
to do so as of the Effective Date, (f) to Licensor's best knowledge, the Patents
are valid and enforceable as of the Effective Date, (g) to Licensor's best
knowledge, neither the Patents nor the Know-How infringe or misappropriate any
patent, trade secret or other intellectual property right of any third party and
(h) Licensor has not threatened or initiated any claim, suit or proceeding
against any third party alleging that such third party has infringed or
misappropriated any rights under the Patents and/or Know-How and, to the
knowledge of Licensor, no third party is infringing or misappropriating any such
rights.

7.   DISCLAIMER

     Unless expressly set forth in this Agreement, nothing herein shall be
construed as: (a) a representation, warranty, or admission by either party as to
the validity, scope or enforceability of the Patents; (b) a representation or
warranty that the manufacture, sale, lease, deployment, use or other transfer of
Licensed Property will be free from infringement of patents other than the
Patents; or (c) a representation or warranty as to the accuracy or suitability
of any information disclosed or claimed in the Patents to produce a successful
process or product. Determination of the commercial efficacy and suitability of
the subject matter of the Patents' intended uses, as disclosed in the Patents,
is to be made solely by Licensee, subject to any obligations of Licensor
specifically set forth in the Operating Agreement.

8.   LIMITATION OF LIABILITY

     WITH THE EXCEPTION OF LICENSOR'S OBLIGATIONS UNDER SECTION 10.2
(INFRINGEMENT INDEMNITY) OR ANY WILLFUL MISCONDUCT OR GROSS NEGLIGENCE BY A
PARTY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD
PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, HOWEVER
CAUSED, ON ANY THEORY OF LIABILITY WHETHER OR NOT A PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT.

9.   MAINTENANCE OF PATENT RIGHTS

     Subject to the limitations set forth in Section 9.3 hereof, at all times
hereunder, Licensor shall be solely responsible for and shall pay all fees,
costs or expenses of any nature required to prosecute, defend or maintain the
Patents, so long as commercially reasonable for Licensee as follows:

                                       6
<PAGE>

     9.1. Prosecution and Maintenance. Licensor will, at its sole expense,
continue to diligently prosecute any and all patent applications in the Patents
and, with respect to all issued patents within the Patents, maintain the Patents
during the term of this Agreement. In connection with the prosecution of said
patent applications and maintenance of the Patents, Licensor will provide to
Licensee copies of all filings and correspondence sent and correspondence
received by Licensor related thereto. In addition, Licensor will throughout the
term of this Agreement use best efforts to maintain and enhance the scope of the
Valid Claim(s) and, if any claim contained in an issued and unexpired patent
included within the Patents is held unenforceable, unpatentable or invalid by a
decision of a court or other governmental agency of competent jurisdiction, then
Licensor will, at its sole expense, use reasonable commercial efforts to create,
develop and/or secure functionally equivalent workarounds and, where
appropriate, prosecute patent applications and or patents for the same, which
patent applications and/or patents will automatically be included within the
Patents.

     9.2. Failure to Prosecute or Maintain. If Licensor determines, for any
reason, not to diligently prosecute or maintain the Patents, then Licensor will
promptly notify Licensee in writing of the same. If it comes to the attention of
Licensee that Licensor, for any reason, is not diligently prosecuting or
maintaining the Licensed Patent(s), then in the event of Licensor's
discontinuance of prosecution or maintenance of the Patents, Licensor will
assign the Licensed Patent(s) to Licensee.

     9.3. Limitation on Obligations of Licensee to Prosecute, Defend or Maintain
the Patents. Notwithstanding Licensor's obligation as set forth in this Section
9 or under any other section of this Agreement, in no event shall Licensor be
obligated to expend in excess of Five Hundred Thousand Dollars ($500,000) (on a
cumulative basis beginning on the Effective Date) to prosecute, defend or
maintain the Patents, which amount shall include all costs, fees and expenses
incurred by Licensor to do so. Once Licensor has expended such amount, any
costs, fees or expenses necessary to prosecute, maintain or defend the Patents
shall become the sole obligation of Licensee. Licensor shall maintain complete
and accurate records of all costs, fees and expenses it incurs to prosecute,
defend or maintain the Patents for the term of this Agreement and for three
years after the termination of this Agreement, and shall provide copies of such
records to Licensee upon request.

10.  PROTECTION OF LICENSED PROPERTY

     10.1. Enforcement of Patents.

          10.1.1. It shall be the obligation of Licensor, at its sole cost and
expense, in Licensor's name, to protect and enforce the Patents and to prosecute
or settle any third party infringement of the Patents during the term of this
Agreement. Licensor shall not enter into any settlement, consent judgment or
other voluntary final disposition of the matter without the prior written
consent of Licensee, which shall not be unreasonably withheld or delayed. Any
recovery obtained in an action brought by Licensor shall be distributed as
follows: (i) Licensor shall be reimbursed for any and all expenses and
attorneys' fees incurred in the action; and (ii) the parties shall share equally
in the remaining damages award, whether it be for ordinary, special or punitive
damages.

                                       7
<PAGE>

          10.1.2. If Licensor determines, for any reason, not to diligently
enforce the Patents (in which case Licensor will promptly notify Licensee in
writing of the same) or if it comes to the attention of Licensee that Licensor,
for any reason, is not diligently enforcing the Patents then (i) Licensee will
have the right to enforce the Patents at Licensee's sole expense, (ii) if
requested by Licensee, Licensor will cooperate in Licensee's prosecution or
defense of any litigation or settlement activities hereunder, provided that
Licensee will reimburse Licensor for all reasonable costs incurred by Licensor
as a result of such cooperation and (iii) any recoveries will be awarded solely
and exclusively to Licensee.

     10.2. Infringement Indemnity. Licensor will defend, indemnify and hold
harmless Licensee and its Affiliates and their respective members, managers,
stockholders, officers, employees, agents, representatives and attorneys against
any Loss arising from or in connection with any claim that (i) any portion of
the Licensed Property covered under a Patent and/or the Know-How infringes or
misappropriates a third party patent, trade secret, trademark or other
intellectual property right or (ii) challenges the validity of any of the
Patents or the rights granted to Licensee hereunder. Licensee shall: notify
Licensor in writing no later than 30 days after receiving written notice of the
claim, or sooner if required by applicable law; grant Licensor sole control of
the defense and all related settlement negotiations; and provide Licensor, at
Licensor's expense, with the reasonable assistance, information and authority
necessary to perform Licensor's obligations hereunder. If said portion of the
Licensed Property is, or in the opinion of Licensor may reasonably become, the
subject of any claim, suit or proceeding for infringement of a United States
Patent, or if it is adjudicatively determined that said portion of the Licensed
Property, infringes any United States Patent, or if the development, manufacture
or deployment of the Licensed Property is, as a result, enjoined, then (i)
Licensor shall procure for Licensee and Licensor the right under such United
States Patent to manufacture, develop and deploy or sublicense, as appropriate,
the Licensed Property or such part thereof; or (ii) Licensor shall suitably
modify the Licensed Property or part thereof to be non-infringing. Except as
otherwise set forth in this Agreement, this Section 10.2 states Licensor's
entire liability and Licensee's exclusive remedy for infringement or invalidity.

     10.3. Protection and Enforcement of Know-How and Trade Secrets. Licensor
will at all times during this Agreement use reasonable efforts to preserve and
protect the confidentiality of all portions of the Know-How that constitutes
"trade secrets" as that term is defined in the Uniform Trade Sercets Act (the
"Trade Secrets"). Furthernore, if it comes to the attention of Licensor that any
Trade Secret has been misappropriated by any third party, then Licensor will use
all reasonable efforts, including without limitation legal actions, to preserve
and protect the confidentiality of the Trade Secret and to prevent such third
party from any and all uses of the Trade Secret, so long as it is commercially
reasonable for Licensee.

                                       8
<PAGE>

11.  INVALIDITY

     Unless otherwise agreed upon by the parties, this Agreement shall not
terminate in the event of (i) a lawsuit involving the issue of the validity of
any claims of any of the Patents in which such claims are held to be invalid by
a final judgment from which no appeal is taken; or (ii) the unsuccessful
prosecution of Patent Application No. 10/209,083 and U.S. Provisional Patent
Application Serial No. 60/730,971.

12.  CONFIDENTIALITY.

     Licensee and Licensor acknowledge and agree that the Technology, Licensed
Property and Know How embodied therein, are "Confidential Information" as
defined in the Operating Agreement, and that they shall be bound by Section 11.8
of the Operating Agreement, entitled "Confidentiality" with respect to such
Confidential Information.

13.  GENERAL

     13.1. Notices. All notices provided for in this Agreements shall be
effective when received either by (i) personal delivery or (ii) three days after
deposit, postage prepaid, in the United States Mail, sent registered or
certified, addressed to the parties respectively at the following addresses:

         If to Licensor:     ADA-ES, Inc.
                             8100 SouthPark Drive, Unit B
                             Littleton, CO 80120
                             Attn:  Dr. Michael Durham
                             Fax:  (303) 734-0330
                             Email address: miked@adaes.com

         If to Licensee:     ADA-NexCoal, LLC
                             Attn:  Charles S. McNeil
                             c/o NexGen Refined Coal, LLC
                             3300 South Parker Road, Suite 520
                             Aurora, CO 80014
                             Fax:  (303) 751-9210

     13.2. Governing Law. This Agreement will be governed by the laws of the
State of Colorado without regard to the conflicts of law provisions thereof.

     13.3. Integration. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
representations, assurances, courses of dealing, agreements, and undertakings,
whether written or oral, between the parties concerning such subject matter.
This Agreement will mutually benefit and be binding upon the parties, their
successors and assigns.

                                       9
<PAGE>

     13.4. Amendment. This Agreement may not be amended or modified except by
written agreement signed by authorized representatives of the parties.

     13.5. Independent Contractors. The relationship between the parties hereto
is that of independent contractors, and nothing herein will be construed to
create a partnership, joint venture, employment, or agency relationship between
the parties. Neither party will have any authority to enter into agreements or
make any statements, representations or commitments or take any action of any
kind on behalf of the other, and neither party will have any other power or
authority to bind or obligate the other in any manner to any third party.

     13.6. No Third Party Beneficiaries. Except as expressly set forth in this
Agreement, nothing in this Agreement is intended to, or shall, create any third
party beneficiaries.

     13.7. Severability. If any provision of this Agreement is construed to be
invalid or unenforceable, such provision will be deemed to be limited or
modified to the minimum extent necessary so that this Agreement shall remain in
full force and effect and, as so limited or modified, remain enforceable.

     13.8. Waiver. The provisions of this Agreement may be waived only with the
consent of the parties. The failure of a party to enforce its rights under this
Agreement for any period will not be construed as a waiver of such rights.

     13.9. Headings. Headings contained in this Agreement are for ease of
reference only and will have no legal effect.

     13.10. Counterparts and Facsimiles. This Agreement may be executed on
facsimile copies in two or more counterparts, each of which will be deemed an
original and all of which together will constitute one and the same Agreement.

     13.11. Survivability on Termination. The provisions of Sections 5.4
(Effects of Termination), 7 (Disclaimer), 8 (Limitation of Liability), 10.2
(Infringement Indemnity), 12 (Confidentiality) and 13 (General), and any other
provision hereof which, by its terms, expressly provides that it survive
termination of this Agreement, shall survive the termination of this Agreement
for any reason. All other rights and obligations of the parties shall cease upon
termination of this Agreement.

                  [Remainder of Page Intentionally Left Blank]






                                       10
<PAGE>


     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the Effective Date.


ADA-ES, INC. (Licensor)                   ADA-NEXCOAL, LLC (Licensee)


By: /s/ Michael D. Durham                 By: /s/ Mark H. McKinnies
-------------------------                 -------------------------

Name: Michael D. Durham                   Name: Mark H. McKinnies
-----------------------                   -----------------------

Title: President                          Title: Manager
----------------                          --------------





                                       11
<PAGE>


                                    Exhibit 1
                                    ---------

[Insert copy of Chemicals, Equipment and Technical Engineering Services Supply
Agreement]

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>adaes10-2.txt
<DESCRIPTION>AGREEMENT
<TEXT>

                                                                    Exhibit 10.2

                            CHEMICALS, EQUIPMENT, AND
                         TECHNICAL ENGINEERING SERVICES
                                SUPPLY AGREEMENT

     This Chemicals, Equipment and Technical Engineering Services Supply
Agreement (this "Agreement") is entered into by and between, ADA-ES Inc., a
Colorado corporation having its principal place of business at 8100 South Park
Way, Unit B, Littleton, CO 80120-4525 ("ADA") and ADA-NexCoal, LLC, a Colorado
limited liability company having its principal place of business at 8100
SouthPark Way, Unit B, Littleton, CO 80120 ("NexCoal") to be effective as of
November 3, 2006 (the "Effective Date") as follows:

                                    RECITALS
                                    --------

     WHEREAS, ADA and NexCoal have entered into a license agreement dated
effective as of November 3, 2006 (the "License Agreement"),

     WHEREAS, in order to realize the purposes of the License Agreement, NexCoal
will require Chemicals and Additives, Equipment and Technical Engineering
Services (as hereafter defined), and seeks to purchase such items from ADA for
the purpose of developing, marketing and deploying the Technology (as such term
is defined in the License Agreement), and (ii) organizing, owning, operating,
managing, selling, and otherwise dealing, either directly or through one or more
Subsidiaries (as such term is defined in the Operating Agreement) of the
Company, in one or more businesses based on the Technology; and

     WHEREAS, ADA has agreed to supply to NexCoal, and NexCoal is willing to
purchase from ADA, Chemicals and Additives, Equipment and Technical Engineering
Services in accordance with the terms set forth in this Agreement;;

     NOW, THEREFORE, in consideration of the mutual promises and premises
contained herein, the Parties hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS


     Capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth below:

     1.1 "Chemicals and Additives" means the chemicals listed on Schedule A
hereto to be supplied by ADA to NexCoal in accordance with the terms and
conditions of this Agreement.

     1.2 "Customer Contract" means a contract between NexCoal and an
unaffiliated party pursuant to which ADA is to hereunder provide NexCoal with
Chemicals and Additives, Equipment and/or Technical Engineering Services for the
benefit of either NexCoal or such unaffiliated party.

     1.3 "Equipment" means the equipment described on an Order Document to be
supplied by ADA in accordance with Schedule A hereto.

<PAGE>

     1.4 "Force Majeure" means an act of God, war, terrorism, hostilities, riot,
fire, explosion, accident, flood or sabotage; lack of adequate fuel, power, raw
materials, containers or transportation for reasons beyond such party's
reasonable control; labor trouble, strike, lockout or injunction (provided that
neither party shall be required to settle a labor dispute against its own best
judgment); compliance with governmental laws, regulations, or orders requiring
unreasonable effort or expense; breakage or failure of machinery or apparatus;
or any other cause whether or not of the class or kind enumerated above,
including, but not limited to, a severe economic decline or recession, which
prevents or materially delays the performance of this Agreement in any material
respect arising from or attributable to acts, events, non-happenings, omissions,
or accidents beyond the reasonable control of the party affected, provided,
however, that Force Majeure shall not relieve any party of the obligation to
make any payments required hereunder unless such event affects normal banking
transactions.

     1.5 "License Agreement" means the License Agreement entered into between
ADA and NexCoal effective as of November 3, 2006.

     1.6 "Loss" or "Losses" has the meaning set forth in Section 7.1 hereof.

     1.7 "Operating Agreement" means the Amended and Restated Operating
Agreement of NexCoal, dated as of the date hereof.

     1.8 "Order Document" has the meaning set forth in Section 3.3 hereof.

     1.9 "Prudent Industry Practice" means those practices, methods, equipment
specifications and standards of safety and performance as the same may change
from time to time, as are commonly used by firms providing services similar to
the Technical Engineering Services and which are considered good, safe and
prudent with commensurate standards of safety, performance, dependability,
efficiency and economy. Prudent Industry Practice is not intended to be limited
to the optimum practice or method to the exclusion of all others, but rather to
be a spectrum of reasonable and prudent practices and methods.

     1.10 "Scope of Work" means the description of the work that ADA shall
perform under this Agreement, as set forth on Schedule B hereto.

     1.11 "Tax" has the meaning set forth in Section 4.3 hereof.

     1.12 "Technical Engineering Services" means the technical engineering
services to be provided by ADA to NexCoal and NexCoal's customers hereunder, as
described in Schedule B hereto.

                                   ARTICLE II
                               SCOPE OF AGREEMENT

     2.1 Scope of Agreement. Pursuant to the Scope of Work and subject to the
terms and conditions of this Agreement, ADA agrees to supply to NexCoal and
NexCoal agrees to purchase from ADA, the Chemicals and Additives, Equipment and
Technical Engineering Services. In order to insure the confidentiality and
quality of the Technology, NexCoal agrees to buy Chemicals and Additives
exclusively from ADA, and where practical, obtain Technical Engineering Services
from ADA. In addition, ADA shall consider in good faith any request to supply
any other Chemicals and Additives, Equipment and/or Technical Engineering
Services in accordance with the terms and conditions of this Agreement, and at
prices to be mutually agreed upon at such time.

                                       2
<PAGE>

     2.2 ADA's Subcontractors. ADA may subcontract the provision of Technical
Engineering Services as it deems appropriate, provided that (i) subcontractors
have a demonstrated track record of (i) performing high quality work, (ii)
reliability and (iii) experience in performing the relevant tasks for which such
subcontractors are contracted.

     2.3 Specifications. The Chemicals and Additives, Equipment and Technical
Engineering Services supplied or furnished by ADA under this Agreement shall be
of high quality, shall conform to the specifications called for in Schedules A
and B, and shall comply with all applicable laws and Prudent Industry Practice.

     2.4 Permits, License and Registrations. Unless the parties otherwise agree,
ADA shall obtain and maintain at ADA's sole cost and expense all permits,
licenses, and registrations required by law for the sale of the Chemicals and
Additives.

                                   ARTICLE III
                                ORDER & DELIVERY

     3.1 Order Procedures. Schedule C sets forth the procedure agreed to by the
parties for the purchases to be made under this Agreement.

     3.2 Other Order Documents. In the event of any inconsistency between the
terms and conditions contained in this Agreement and the terms and conditions of
any Order Document or other written agreement executed by the parties, the terms
of this Agreement shall prevail unless such Order Document or other written
agreement expressly modifies such terms.

     3.3 Acceptance of Orders. Except as otherwise provided for herein, only an
Order Document duly executed by NexCoal and accepted by ADA as provided in this
Article III shall constitute a firm commitment to purchase on the part of
NexCoal and a firm commitment to supply or provide the subject Chemicals and
Additives, Equipment and/or Technical Engineering Services on the part of ADA.
As used in this Agreement, an "Order Document" shall mean a document consisting
of a purchase order (or similar document) in form acceptable to ADA, which has
been completed to specify with particularity at least the following (i) the
Chemicals and Additives, Equipment and/or Technical Engineering Services
requested, (ii) the quantities required, (iii) the time and place for delivery,
(iv) the prices to be paid therefor; and (v) any insurance and/or delivery
arrangements requested to be provided by ADA.

     3.4 Delivery. All Chemicals and Additives and Equipment will be shipped FOB
ADA or its designee. The term FOB shall have the meaning provided in Incoterms
2000, the ICC's international rules for interpretation of trade rules. NexCoal
shall be responsible for all shipping charges, including freight and insurance.
Under no circumstances shall the carrier be deemed an agent, employee, or
representative of ADA.

                                       3
<PAGE>

     3.5 Inspection and Acceptance. NexCoal shall inspect all orders immediately
upon receipt and shall notify ADA within ten (10) business days after receiving
an order if there is a discrepancy between the Order Documents and the shipment.
Failure to notify ADA within this period shall be deemed acceptance of the
order.

     3.6 Force Majeure. If either party is prevented or delayed in the
performance of any of its obligations hereunder by Force Majeure and such party
gives written notice thereof to the other party within twenty (20) days of the
first day of such event specifying the matters constituting Force Majeure,
together with such evidence as it reasonably can give, then ADA will be excused
from the performance or punctual performance, as the case may be, as from the
date of such notice for so long as such Force Majeure continues.

                                   ARTICLE IV
                            PRICES AND PAYMENT TERMS

     4.1 Prices. The price to NexCoal for the Chemicals and Additives, Equipment
and Technical Engineering Services shall be as set forth on Schedules A and B,
respectively. The prices charged by ADA to NexCoal shall be no less favorable to
NexCoal than the prices charged by ADA to customers who, during the term of this
Agreement as set forth in Article 8, purchase similar volumes of substantially
similar Chemicals and Additives, Equipment and Technical Engineering Services.
ADA may change the prices of any Chemicals and Additives, Equipment and
Technical Engineering Services supplied hereunder upon thirty (30) days advance
notice to NexCoal.

     4.2 Payment Terms. Payment hereunder shall be made by NexCoal either by
check payable to ADA or wire transfer to the ADA bank account specified by ADA,
and shall be due thirty (30) days after the date of ADA's invoice. In the event
that NexCoal does not pay an invoice in full when due, NexCoal shall pay
interest on the outstanding balance at a rate of 12% per annum from the date on
which the invoice was due, until the date on which payment is received by ADA.

     4.3 Taxes and Other Charges. NexCoal shall bear all taxes, duties, levies
and similar charges (and any related interest and penalties) (each, a "Tax"),
however designated, imposed upon or arising from the provision of Chemicals and
Additives, Equipment and/or Technical Engineering Services (as the case may be)
by ADA pursuant to this Agreement, except Tax imposed upon ADA's net income.

                                    ARTICLE V
                                    COVENANTS

     5.1 Insurance. ADA shall at all times maintain insurance, standard in the
industry, against the risk of loss or damages arising as a result of the
activities to be performed by ADA on behalf of NexCoal hereunder, including risk
of loss or damages as a result of the transportation, use or storage of the
Chemicals and Additives, and shall, to the extent possible, include NexCoal as

                                       4
<PAGE>

an additional insured on such insurance policies. ADA shall be entitled to
reimbursement from NexCoal for all out-of-pocket cost of any insurance
specifically required to be purchased by it (in addition to its standard
coverages) under any Customer Contract. Any such additional endorsement shall be
indicated on the certificate(s) of insurance and a copy of such certificate(s)
shall be provided to NexCoal, or written notice shall be given by ADA to NexCoal
that it has been unable to add it as an additional insured, in order to allow
NexCoal to obtain appropriate coverage in its own name.

     5.2 Promoting Safe Use Practices. ADA shall use commercially reasonable
methods to inform and familiarize its employees, NexGen, customers, contractors
(including transporters) and others who may handle or use the Chemicals and
Additives of any potential hazards pertaining thereto. The foregoing shall not
limit, or be construed to limit, the obligations of ADA under Section 4.5
hereof.

     5.3 No Unauthorized Representation. Notwithstanding anything to the
contrary contained herein, neither NexCoal nor any manager, officer, member or
agent of NexCoal shall hold itself out as authorized to make on behalf of ADA or
otherwise, any oral or written warranty or representation regarding the
Technology, Chemicals and Additives, Equipment, or Technical Engineering
Services other than what is stated in written material furnished to NexCoal by
ADA.

                                   ARTICLE VI
                                   WARRANTIES

     6.1 Each Party warrants that it has the right and authority to enter into
this Agreement and perform its obligations hereunder.

     6.2 ADA warrants that the Chemicals and Additives comply with all
applicable laws, as well as all applicable governmental registrations,
registration applications, temporary registrations, experimental use permits,
and emergency use exemptions.

     6.3 ADA warrants that the Technical Engineering Services will be performed
in a good and workmanlike manner by qualified individuals with suitable skill,
training, education and experience. This warranty shall be valid for thirty (30)
days from performance of the service. NexCoal's exclusive remedy for breach of
this warranty, and ADA's sole liability, shall be the reperformance of the
Technical Engineering Services.

     6.4 ADA shall pass on any manufacturer's warranty on any Equipment to the
maximum extent that it is able to do so. OTHERWISE, EQUIPMENT IS SOLD WITHOUT
ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING .ANY WARRANTY OF MERCHANTABILITY OR
SUITABILITY FOR A PARTICULAR PURPOSE.

                                       5
<PAGE>

                                   ARTICLE VII
                                 INDEMNIFICATION

     Subject to the limitations set forth in Article VIII or in any other
provisions of this Agreement, each party shall defend, indemnify and hold
harmless the other party and its affiliates, customers, licensees, distributors,
directors, officers, employees and agents from and against any losses, damages,
liabilities, expenses, costs, claims, suits, demands, actions, causes of action,
proceedings, judgments, assessments, deficiencies and charges (including,
without limitation, reasonable attorney's fees and expenses (singly a "Loss" and
collectively, "Losses"), including third party claims, arising out of, on
account of or resulting from (a) the operation or conduct of such party's
business, (b) the willful misconduct or gross negligence of such party or its
directors, officers, employees or agents (other than the other party), and (c)
the breach of any representation, warranty or covenant of such party in this
Agreement.

     In addition to the indemnity provided elsewhere herein, or in the Operating
Agreement, ADA shall be solely responsible for, and shall indemnify, defend and
hold harmless NexCoal and any of its Affiliates (as such term is defined in the
Operating Agreement) from and against, any and all Loss based upon, arising out
of or in any manner related to (i) the manufacture, storage, use, handling, sale
or otherwise of the Chemicals and Additives or the Equipment, and (ii) the acts
or omissions of any of ADA's employees, agents or contractors performing or
involved with Technical Engineering Services.

                                  ARTICLE VIII
                             LIMITATION OF LIABILITY

IN NO EVENT SHALL ADA BE LIABLE TO NEXCOAL OR ANY THIRD PARTY FOR ANY SPECIAL,
CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY, WHETHER OR NOT ADA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT. IN NO EVENT SHALL THE
CUMULATIVE LIABILITY OF ADA EXCEED THE TOTAL AMOUNT ADA RECEIVED HEREUNDER.

The limitations of this Article VIII will apply even if ADA has been advised of
such possible damages. Some jurisdictions, states, or provinces do not allow the
exclusion or limitation of incidental or consequential damages, so the
limitation or exclusion included in this Agreement may not apply. All other
limitations under applicable law, including any statutes of limitations, shall
continue to apply. NexCoal acknowledges that ADA's pricing reflects this
allocation of risk, and the limitation of liability specified in this section
will apply regardless of whether any limited or exclusive remedy specified in
this Agreement fails of its essential purpose.


                                       6
<PAGE>

                                   ARTICLE IX
                               TERM & TERMINATION

     9.1 Term. This Agreement shall remain in full force and effect for the term
of the License Agreement, unless sooner terminated for cause by either party
pursuant to Sections 9.2 or 9.3.

     9.2 Automatic Termination. This Agreement shall terminate immediately and
automatically without any notice or further action by either party in the event
of (1) the appointment of a trustee or receiver for or on behalf of either
party, its assets, property or operations (2) assignment of assets for the
benefit of the creditors of either party, (3) an adjudication of either party as
bankrupt or insolvent, or (4) the dissolution or liquidation of either party.

     9.3 Other Termination. Either party may terminate this Agreement if the
other party shall commit any material default of any covenant or agreement
contained herein, and shall fail to remedy any such default or breach within
thirty (30) days after written notice by the non-defaulting or non-breaching
party.

                                    ARTICLE X
                                     GENERAL

     10.1 Notices. All notices provided for in this Agreements shall be
effective when received either by (i) personal delivery or (ii) three days after
deposit, postage prepaid, in the United States Mail, sent registered or
certified, addressed to the parties respectively at the following addresses:

If to ADA:       ADA-ES, Inc.

                 Attn:  Dr. Michael Durham
                 8100 South Park Way, Unit B
                 Littleton, CO  80120-4525
                 Fax:  (303) 734-0330
                 Email address: miked@adaes.com

If to NexCoal:   ADA-NexCoal, LLC

                 Attn:  Mr. Charles McNeil
                 3300 South Parker Rd., Suite 520
                 Aurora, CO 80014
                 Fax:  (303) 751-9210
                 Email address:  cmcneil@nexgen-group.com


                                       7
<PAGE>

                 With a copy to:

                 Republic Financial Corporation
                 3300 South Parker Road, Suite 500
                 Aurora, CO  80014
                 Attn:  Senior Vice President
                 Fax:  (303) 751-4777
                 Email address:  jstirbis@republic-financial.com

                 and

                 Attn:  Dr. Michael Durham
                 8100 South Park Way, Unit B
                 Littleton, CO  80120-4525
                 Fax:  (303) 734-0330
                 Email address: miked@adaes.com

     10.2 Governing Law. This Agreement will be governed by the laws of the
State of Colorado, without regard to the conflicts of law provisions thereof,
and the District Courts located in Arapahoe County, Colorado shall have
exclusive jurisdiction and venue over all suits and proceedings brought to
enforce or interpret this Agreement, and the parties hereby submit to the
jurisdiction and venue of said court.

     10.3 Integration. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersede all prior
representations, assurances, courses of dealing, agreements, and undertakings,
whether written or oral, between the parties concerning such subject matter.
This Agreement will mutually benefit and be binding upon the parties, their
successors and assigns.

     10.4 Amendment. This Agreement may not be amended or modified except by
written agreement signed by authorized representatives of the parties.

     10.5 Independent Contractors. The parties hereto are independent
contractors, and nothing herein will be construed to create a partnership, joint
venture, employment, or agency relationship between the parties. Neither party
will have any authority to enter into agreements or make any statements,
representations or commitments or take any action of any kind on behalf of the
other, and neither party will have any other power or authority to bind or
obligate the other in any manner to any third party.

     10.6 Assignment. Neither party may assign any of their rights, duties or
obligations under this Agreement without the prior written consent of the other
party hereto, which consent shall not be unreasonably withheld; provided,
however, that such consent may be withheld if the non-assigning party (in its
sole discretion) has a reasonable basis to doubt the ability of a proposed
assignee to perform the obligations of the assignor under this Agreement.

     10.7 No Third Party Beneficiaries. Nothing in this Agreement is intended
to, or shall, create any third party beneficiaries, whether intended or
incidental, and no party shall make any representations to the contrary.

                                       8
<PAGE>

     10.8 Severability. If any provision of this Agreement is construed to be
invalid or unenforceable, such provision will be deemed to be limited or
modified to the minimum extent necessary so that this Agreement shall remain in
full force and effect and, as so limited or modified, remain enforceable.

     10.9 Waiver. The provisions of this Agreement may be waived only with the
written consent of the party waiving any such provision. The failure of a party
to enforce its rights under this Agreement for any period will not be construed
as a waiver of such rights.

     10.10 Headings. Headings contained in this Agreement are for ease of
reference only and have no legal effect.

     10.11 Counterparts and Facsimiles. This Agreement may be executed on
facsimile copies in two or more counterparts, each of which will be deemed an
original and all of which together will constitute one and the same Agreement.

     10.12 Survival of Provisions on Termination. The provisions of Articles VI,
VII, VIII and Section 10.2, and any other provision hereof which, by its terms,
should survive termination of this Agreement, shall survive the termination of
this Agreement for any reason. All other rights and obligations of the parties
shall cease upon termination of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of
the Effective Date.


ADA-ES, INC.                                ADA-NEXCOAL, LLC


By: /s/ Michael D. Durham                   By: /s/ Mark H. McKinnies
-------------------------                   -------------------------

Name: Michael D. Durham                     Name: Mark H. McKinnies
-----------------------                     -----------------------

Title: President                            Title: Manager
----------------                            --------------





                                        9
<PAGE>

                                  Schedule A to
                            Chemicals, Equipment and
                 Technical Engineering Services Supply Agreement


                Chemicals and Additives and Equipment Terms List
                ------------------------------------------------

     o    Mercury control halogen additive - ADA will purchase this chemical at
          prevailing market rate (i.e., the best rate ADA can purchase it for
          commercially) and will sell it to NexCoal at 50% margin (ADA's
          standard margin). As an example, the current commercial market rate
          (as of September 30, 2006) for this chemical is approximately
          $2000/ton, so NexCoal's price would be $3000/ton, undelivered.

     o    Iron mineralizer additive - ADA's current published commercial rate
          for this chemical is $55/ton, undelivered. ADA will sell this additive
          to NexCoal at its current published commercial rate of $55/ton, plus
          delivery cost.

     o    Other chemicals or additives that may be required for coal treatment
          will be sold by ADA to NexCoal at ADA's cost, plus its standard
          commercial mark-up of 50%. In no event will ADA charge NexCoal a
          greater price than it charges unaffiliated third party purchasers.

     o    Equipment will be sold to NexCoal by ADA at ADA's cost, plus delivery,
          without mark-up.

Price changes will be provided to NexCoal in writing by ADA from time to time,
based on raw material prices charged to ADA by its suppliers. However, in no
event shall ADA impose cumulative annual price increases in any calendar year
that exceed the increase in the Consumer Price Index for All Urban Consumers,
U.S. City Average for all items (CPI-U), published by the United States Bureau
of Labor Statistics of the Department of Labor for the prior calendar year. At
NexCoal's request, ADA will supply NexCoal with copies of any invoices or
similar or related documents evidencing the raw material prices charged to ADA
by its suppliers.

     o    All Chemicals and Additives and Equipment will be sold FOB ADA or its
          designee. ADA will arrange for purchase and delivery to the location
          specified in an Order Document.

     o    Delivery and risk of loss will pass to NexCoal at ADA facility
          location (or that of its supplier). NexCoal will be responsible for
          transportation and insurance costs, which will be reimbursed to ADA,
          if not paid directly by NexCoal

     o    Delivery charges and insurance arranged for by ADA will be added to
          each order at ADA's cost, with no mark-up.


<PAGE>

                                  Schedule B to
                            Chemicals, Equipment and
                 Technical Engineering Services Supply Agreement


           Scope of Work and Prices for Technical Engineering Services
           -----------------------------------------------------------


Scope of Work:
--------------

ADA will provide the Technical Engineering Services specified by NexCoal from
time to time on a properly tendered and accepted Order Document.


Prices for Technical Engineering Services:
------------------------------------------

Technical Engineering Services will be charged to NexCoal at ADA's published
commercial rates, which as of September 30, 2006, are as follows:

ADA-ES Commercial Rates

(Effective as of November 3, 2006, subject to change on prior notice)

               Category                            Rate ($/hour)
               --------                            -------------

               Executive Management                $250

               Principal                           $170

               Project Manager                     $145

               Senior Engineer                     $135

               Engineer                            $110

               Technician                          $ 85

               Administrative Support              $ 70

Materials Fee: 10% mark-up on all direct materials aside from Chemicals and
Additives specified above, subcontracts, consultants, leases, and other direct
costs


<PAGE>

                                  Schedule C to
                            Chemicals, Equipment and
                 Technical Engineering Services Supply Agreement


                                Orders Procedure
                                ----------------


The following procedures will apply to the submission and acceptance of Order
Documents:

1. NexCoal must submit a written Purchase Order (or similar document), signed by
an authorized NexCoal representative, specifying in detail the Chemicals and
Additives, Equipment and Technical Engineering Services requested to be supplied
by ADA. Each Purchase Order must provide specific information which shall
include at least the following, plus such other information as ADA may
reasonably request to allow it to fulfill the order:

     (i)  the Chemicals and Additives, Equipment and/or Technical Engineering
          Services requested,

     (ii) the quantities required,

     (iii) the time and place for delivery,

     (iv) the prices to be paid therefor; and

     (v)  any insurance and/or delivery arrangements requested to be provided by
          ADA.

2. Upon receipt of a Purchase Order, ADA shall review it and either (i) accept
it by signing it, returning a signed copy to NexCoal, or (ii) contact NexCoal
with suggested changes and/or issues to be resolved to satisfy ADA's concerns.

3. NexCoal and ADA shall discuss any required changes and resolve any issues
raised by ADA and/or NexCoal. NexCoal shall then resubmit the Purchase Order,
with revisions as necessary to address ADA's concerns. ADA shall then review it
and either (i) accept it by signing it, returning a signed copy to NexCoal, or
(ii) contact NexCoal with any further suggested changes and/or issues to be
resolved to satisfy ADA's concerns.

4. This process shall continue until ADA returns a signed Purchase Order to
NexCoal. Only upon ADA's written acceptance of a Purchase Order shall it become
a binding agreement upon ADA.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>adaes10-3.txt
<DESCRIPTION>AGREEMENT
<TEXT>

                                                                    Exhibit 10.3

                           PURCHASE AND SALE AGREEMENT


     THIS PURCHASE AND SALE AGREEMENT (this "Agreement") dated as of November 3,
2006 (the "Effective Date"), is by and among ADA-ES, Inc., a Colorado
corporation ("ADA"), NexGen Refined Coal, LLC, a Wyoming limited liability
company ("NexGen") and ADA-NexCoal, LLC, a Colorado limited liability company
(the "Company"). ADA, NexGen and the Company are sometimes herein collectively
referred to as the "parties" and each individually as a "party."

                                    RECITALS
                                    --------

     WHEREAS, ADA owns one hundred (100) Units in the Company, consisting of one
hundred percent (100%) of the membership interests, including, without
limitation, all rights to profits and losses of the Company, all capital of the
Company, all rights to receive distributions of the Company's assets, and all
rights to participate in the management of the Company; and

     WHEREAS, ADA desires to sell, transfer and convey to NexGen, and NexGen
desires to purchase from ADA, fifty (50) Units in the Company, representing
fifty percent (50%) of the outstanding Units in the Company (the "Purchased
Units"), on the terms and conditions contained herein; and

     WHEREAS, simultaneously with the purchase and sale of the Purchased Units
provided for by this Agreement, ADA and NexGen will enter into that certain
Amended and Restated Operating Agreement of the Company of even date herewith
(as the same may be further amended or restated from time to time, the
"Operating Agreement") which will govern the business and affairs of the Company
from and after the Effective Date; and

     WHEREAS, simultaneously with the execution and delivery of this Agreement
and the Operating Agreement, ADA and the Company will enter into the Supply
Agreement pursuant to which ADA will provide Chemicals and Additives, Equipment,
and Technical Engineering Services to the Company and its customers on the terms
and conditions contained therein (the "Supply Agreement"); and

     WHEREAS, ADA and the Company have previously entered into that certain
License Agreement dated as of November 3, 2006 (the "License Agreement"),
pursuant to which ADA has licensed certain technology and know-how to the
Company on the terms set forth therein;

     WHEREAS, the Purchased Units are being sold in reliance upon an exemption
from the registration requirements provided under the Securities Act of 1933, as
amended (the "Act"), as promulgated by the Securities and Exchange Commission.

<PAGE>

                                    AGREEMENT
                                    ---------

     NOW THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound, the parties agree as follows:

                                    ARTICLE I
                                    ---------

                                   DEFINITIONS

     Except as otherwise set forth elsewhere in this Agreement, the following
capitalized terms shall have the meanings set forth below. Any other capitalized
terms in this Agreement that are not specifically defined herein shall have the
meanings ascribed to such terms in the Operating Agreement.

          (a) "Additional Cash Consideration" shall have the meaning ascribed to
such term in Section 2.1(c) of this Agreement.

          (b) "Business" shall have the meaning ascribed to such term in the
Operating Agreement.

          (c) "Chemicals Business" shall have the meaning ascribed to such term
in the License Agreement, a copy of which is attached hereto as Exhibit A.


          (d) "Closing" shall have the meaning ascribed to such term in Section
4.1 of this Agreement.

          (e) "Closing Date" shall have the meaning ascribed to such term in
Section4.1 of this Agreement.

          (f) "Code" means the Internal Revenue Code of 1986, as amended. All
references to particular sections of the Code shall be deemed to include
reference to corresponding provisions of subsequent federal tax law, as set
forth in the Code, the Regulations, and the published interpretations thereof.

          (g) "Down Payment" shall have the meaning ascribed to such term in
Section 2.1(b) of this Agreement.

          (h) "Initial Cash Consideration" shall have the meaning ascribed to
such term in Section 2.1(b) of this Agreement.

          (i) "Installment Payment" or "Installment Payments" shall have the
meanings ascribed to such terms in Section 2.2 of this Agreement.

                                       2
<PAGE>

          (j) "IRS" means the United States Internal Revenue Service.

          (k) "Law" means such United States or State statutes, regulations,
rules, ordinances, or other Laws (as the same have been interpreted by the
courts) that are applicable to this Agreement, the other Transaction Agreements,
the parties hereto or the Business.

          (l) "License Agreement" shall have the meaning ascribed to such term
in the Recitals of this Agreement. A copy of the License Agreement is attached
hereto as Exhibit A.

          (m) "Lien" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest, option, right of first refusal or other transfer
restriction or encumbrance of any kind (including preferential purchase rights,
conditional sales agreements or other title retention agreements, and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction to evidence any of the foregoing).

          (n) "LOI" shall have the meaning ascribed to such term in the
Operating Agreement.

          (o) "Non-Breaching Party" shall have the meaning ascribed to such term
in Article V of this Agreement.

          (p) "Non-payment Election" shall have the meaning ascribed to such
term in Section 2.3 of this Agreement.

          (q) "Operating Agreement" shall have the meaning ascribed to such term
in the Recitals to this Agreement.

          (r) "Purchase Price" shall have the meaning ascribed to such term in
Section 2.1(c) of this Agreement.

          (s) "Section 45 Business" shall have the meaning ascribed to such term
in the License Agreement, a copy of which is attached hereto as Exhibit A.

          (t) "Section 45 Tax Credits" means the tax credits provided for under
Section 45 of the Code.

          (u) "Supply Agreement" shall have the meaning ascribed to such term in
the Recitals of this Agreement. A copy of the Supply Agreement is attached as
Exhibit 1 to the License Agreement, a copy of which is attached hereto as
Exhibit A.

          (v) "Transaction Agreements" means this Agreement, the Operating
Agreement, the License Agreement and the Supply Agreement, as in effect on the
date hereof.

                                       3
<PAGE>

                                   ARTICLE II
                                   ----------

                                PURCHASE AND SALE

     2.1 Purchase and Sale; Purchase Price.

          (a) Effective as of the Closing Date, ADA hereby sells, transfers and
conveys to NexGen, and NexGen hereby purchases from ADA, the Purchased Units,
subject to the terms and conditions of this Agreement.

          (b) In consideration of the purchase and sale of the Purchased Units,
NexGen agrees to pay to ADA $900,000 in cash (the "Initial Cash Consideration")
at the Closing in immediately available funds via certified check or wire
transfer, it being agreed and acknowledged by the parties that NexGen previously
made a down payment on the Purchased Units in the amount of $100,000 to ADA (the
"Down Payment") on or about June 26, 2006 pursuant to the LOI and that the Down
Payment is and shall be deemed to be a part of the Purchase Price for the
Purchased Units.

          (c) The purchase price ("Purchase Price") for the Purchased Units
shall be the sum of (i) the Initial Cash Consideration, (ii) the Down Payment,
and (iii) the Additional Cash Consideration. For so long as the Business of the
Company remains only a Chemicals Business, the "Additional Cash Consideration"
shall be $-0-; provided, that, in the event the Business of the Company becomes
a Section 45 Business, upon such occurrence, NexGen shall make payments to ADA
of Additional Cash Consideration in the amount of up to $4,000,000 or such
lesser amount as NexGen may determine in its sole and absolute discretion,
payable in accordance with Section 2.2 below; provided, further that, in the
event the Company's Business becomes a Section 45 Business and NexGen does not
make aggregate payments to ADA of Additional Cash Consideration of $4,000,000 in
accordance with Section 2.2, the provisions of Section 2.3 shall apply.

     2.2 Installment Payments of Additional Cash Consideration. In the event the
Company's Business becomes a Section 45 Business, the Additional Cash
Consideration to be paid to ADA by NexGen in its sole and absolute discretion in
accordance with Section 2.1(c) above shall be made in installments (each an
"Installment Payment" and collectively, the "Installment Payments") as follows:

     $500,000 payable on 9/30/07;
     $500,000 payable on 12/31/07;
     $500,000 payable on 3/31/08;
     $500,000 payable on 6/30/08;
     $500,000 payable on 9/30/08;
     $500,000 payable on 12/31/08;
     $500,000 payable on 3/31/09; and
     $500,000 payable on 6/30/09.


                                       4
<PAGE>

provided, however, in the event the Company's Business becomes a Section 45
Business (i) before September 30, 2007, NexGen shall only be obligated to make
the first Installment Payment above on September 30, 2007 and thereafter in
accordance with the payment schedule above, and (ii) after September 30, 2007,
NexGen shall, within ten (10) days after the date the Company's Business becomes
a Section 45 Business, make the Installment Payments to ADA which accrued
according to the above payment schedule between September 30, 2007 and the date
the Company's Business becomes a Section 45 Business and thereafter, any
remaining Installment Payments shall be made by NexGen to ADA in accordance with
the payment schedule above. In no event shall any interest accrue on any of the
Installment Payments.

     2.3 Non-payment Election. In the event the Company's Business becomes a
Section 45 Business and, simultaneously or subsequently thereto NexGen fails to
make any or all of the Installment Payments to ADA as required by Section 2.2 of
this Agreement (a "Non-payment Election") then NexGen shall, without request or
any further action on the part of ADA, transfer, convey and deliver unto ADA,
free and clear of all Liens, and without payment of any additional consideration
therefor by ADA, that number of Units (including any fractional number of Units)
equal to: (i) the total unpaid amount owing under Section 2.2 of this Agreement
from the date of the Non-payment Election through June 30, 2009, divided by (ii)
One Hundred Thousand Dollars ($100,000). NexGen shall deliver any certificate
representing such Units to ADA, endorsed as appropriate to effect such transfer,
and shall deliver any other documents reasonably requested by ADA to vest title
to such Units in ADA. Except for the obligations of NexGen under this Section
2.3 of this Agreement or any other Section of this Agreement which by its terms
continues to be applicable following a Non-payment Election, NexGen and its
Affiliates, shall have no further rights or obligations with respect to the
Company or ADA hereunder, and all rights of NexGen with respect to its remaining
Units shall be as set forth in the Operating Agreement.

     2.4 Apportionment Upon Closing. The income, gain, loss, deduction, credit
and other items of the Company and the Purchased Units shall be apportioned
between the pre-Closing period and the post-Closing period by closing the books
of the Company as of the Closing Date.

                                   ARTICLE III
                                   -----------

                                    COVENANTS

     3.1 Confidentiality. The parties acknowledge that in connection with the
purchase and sale of the Purchased Units to be completed hereunder, each has
been given access to, and provided with, Trade Secrets and Confidential
Information of another party, as such terms are defined in the Operating
Agreement. Each party agrees that the provisions of Section 11.8 of the
Operating Agreement shall apply to any Trade Secrets or Confidential Information
obtained by a party or to which any party has access in connection with the
activities described in this Agreement, and that the remedies set forth in the
Operating Agreement shall apply and be available with respect to any breach or
threatened breach of the confidentiality obligations of a party hereto.

                                       5
<PAGE>

     3.2 Records Retention. NexGen and ADA shall each maintain true and complete
records in connection with this Agreement and their activities hereunder, and
shall retain all such records for at least forty-eight (48) months following the
termination or expiration of this Agreement. This obligation shall survive the
termination or expiration of this Agreement.

                                   ARTICLE IV
                                   ----------

                         CLOSING; CONDITIONS TO CLOSING

     4.1 Closing. The closing of the purchase and sale of the Purchased Units
(the "Closing") shall take place at the offices of ADA on the first business day
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take at the
Closing itself) or such other date as ADA and NexGen may mutually determine (the
"Closing Date").

     4.2 Actions To Be Taken At Closing; Conditions to Closing. At the Closing,
each of the following events shall occur and each of the conditions shall be
satisfied, as the case may be, each being a condition precedent to the
obligation of the parties to consummate the transactions contemplated by this
Agreement:

          (a) ADA and NexGen shall execute and deliver an Assignment of the
Purchased Units in the form of Exhibit B hereto endorsed in blank or accompanied
by duly executed assignment documents.

          (b) NexGen shall deliver the Initial Cash Consideration to ADA in
immediately available U.S. funds by wire transfer to an account designated by
ADA or by certified check.

          (c) ADA and NexGen shall execute and deliver this Agreement.

          (d) ADA, NexGen and the Company shall each execute and deliver the
Operating Agreement.

          (e) ADA and the Company shall each execute and deliver the Supply
Agreement.

          (f) ADA shall cause the records of the Company to be updated to
reflect the sale of the Purchased Units provided hereby with NexGen as the
record owner and holder of such Purchased Units as of the Closing Date.

          (g) ADA shall execute and deliver to NexGen a receipt for the Down
Payment and the Initial Cash Consideration.

          (h) The requisite written approval of the Members to the admission of
NexGen as an additional Member of the Company under the terms of Section 7.2 of
the Existing LLC Agreement, shall have been obtained and in full force and
effect.

                                       6
<PAGE>

          (i) The consummation of the transactions contemplated by this
Agreement shall not violate, or cause the violation of (i) any federal or state
Law, regulation, statute or rule, (ii) the Existing LLC Agreement or other
document, instrument or agreement by which the Company, its Members or the
parties are bound, or (iii) any order, decision, ruling or decree of any person,
governmental authority or other entity of any kind, having jurisdiction over one
or both of the parties or the subject matter of this Agreement.

          (j) The License Agreement shall be in full force and effect.

          (k) ADA and NexGen shall each have delivered to the other appropriate
evidence of all necessary corporate action in connection with the transactions
contemplated hereby, including, without limitation (i) certified copies of
resolutions duly adopted by the board of directors or other governing body of
such party approving the transactions contemplated herein and authorizing the
execution, delivery and performance by such party of this Agreement and the
other Transaction Agreements and all other documents or instruments required to
be executed and delivered in connection herewith, and (ii) a certificate as to
the incumbency of officers of such party executing this Agreement and each of
the aforementioned agreements, documents and instruments delivered in connection
with the transactions contemplated herein.

                                    ARTICLE V
                                    ---------

                       TERMINATION AND REMEDIES FOR BREACH

     This Agreement shall terminate at such time as the Parties have performed
all of their respective obligations hereunder; provided, however, that any
breach of any representation, warranty, covenant or agreement of a Party shall
entitle the other Party (the "Non-Breaching Party") to all remedies available at
law or in equity resulting from such breach, including, at the option of the
Non-Breaching Party, the right to specific performance. All remedies available
to a Party hereunder shall be cumulative, and the election of one remedy shall
not prevent the Party from seeking and obtaining additional relief under another
remedy to the extent permitted under applicable law.


                                   ARTICLE VI
                                   ----------

                         REPRESENTATIONS AND WARRANTIES

     6.1 Representations and Warranties of NexGen. As of the Closing Date,
NexGen hereby represents and warrants to ADA and the Company as follows:

          (a) NexGen is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Wyoming.

                                       7
<PAGE>

          (b) NexGen has all requisite limited liability company power and
authority to carry on its business as presently conducted, to enter into this
Agreement and to perform its obligations under this Agreement. The consummation
of the transactions contemplated by this Agreement will not violate, nor be in
conflict with, any provision of NexGen's organizational documents, limited
liability company agreement, other governing documents, or any agreement or
instrument to which NexGen is a party or is bound, or any judgment, decree,
order, statute, rule or regulation applicable to NexGen.

          (c) This Agreement has been duly executed and delivered on behalf of
NexGen. At the Closing, this Agreement and all other documents and instruments
required hereunder to be executed and delivered by NexGen shall have been duly
executed and delivered. This Agreement constitutes the legal, valid and binding
obligation of NexGen enforceable in accordance with its terms, subject, however,
to the effects of bankruptcy, insolvency, reorganization, moratorium and similar
Laws from time to time in effect, as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

          (d) NexGen is an "accredited investor," as defined in Rule 501 of
Regulation D under the Act, and has such knowledge and sophistication in
business and financial matters that it is capable of evaluating the merits and
risks inherent in the purchase of the Purchased Units.

          (e) NexGen is the sole party in interest to this Agreement, is
acquiring the Purchased Units for investment for NexGen's own account, and not
on behalf of any other person. NexGen is acquiring the Purchased Units for
investment purposes only and not for subsequent resale or distribution. NexGen
has no present agreement, understanding, arrangement, or intent to subdivide,
sell, assign, transfer or otherwise dispose of all or any part of the Purchased
Units to any other person.

          (f) NexGen has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which ADA or the Company shall have any responsibility whatsoever.

     6.2 Representations and Warranties of ADA. As of the Closing Date, ADA
hereby represents and warrants to NexGen and the Company as follows:

          (a) ADA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado.

          (b) ADA has all requisite corporate power and authority to carry on
its business as presently conducted, to enter into this Agreement and to perform
its obligations under this Agreement. The consummation of the transactions
contemplated by this Agreement will not violate, nor be in conflict with, any
provision of ADA's articles of incorporation, bylaws, other governing documents,
or any agreement or instrument to which ADA is a party or is bound, or any
judgment, decree, order, statute, rule or regulation applicable to ADA and no
consent, approval or notice is required to be given or received by ADA to or by
any third party in order to consummate the transactions contemplated hereby.

                                       8
<PAGE>

          (c) This Agreement has been duly executed and delivered on behalf of
ADA. At the Closing, this Agreement and all other documents and instruments
required hereunder to be executed and delivered by ADA shall have been duly
executed and delivered. This Agreement constitutes the legal, valid and binding
obligation of ADA enforceable in accordance with its terms, subject, however, to
the effects of bankruptcy, insolvency, reorganization, moratorium and similar
Laws from time to time in effect, as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

          (d) Prior to giving effect to the transactions contemplated by this
Agreement, ADA owns of record and beneficially the Purchased Units free and
clear of any Lien. Except as provided in this Agreement, ADA has not granted any
person any right or has entered into any agreement or understanding with respect
to the acquisition, purchase, sale, transfer or assignment of the Purchased
Units.

          (e) The License Agreement has been duly executed and delivered by ADA,
has not been amended or modified, and is in full force and effect and
enforceable in accordance with its terms, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar Laws from time to
time in effect, as well as to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
and the obligations of ADA thereunder are not subject to any condition precedent
which has not been fully satisfied as of the Closing.

          (f) ADA has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which NexGen or the Company shall have any responsibility
whatsoever.

     6.3 Representations and Warranties of the Company. As of the Closing Date,
the Company hereby represents and warrants to NexGen and ADA as follows:

          (a) The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Colorado.

          (b) The Company has all requisite limited liability company power and
authority to carry on its business as presently conducted, to enter into this
Agreement and to perform its obligations under this Agreement. The consummation
of the transactions contemplated by this Agreement will not violate, nor be in
conflict with, any provision of the Company's Articles of Organization,
operating agreement, other governing documents, or any agreement or instrument
to which the Company is a party or is bound, or any judgment, decree, order,
statute, rule or regulation applicable to the Company and no consent, approval
or notice is required to be given or received by the Company to or by any third
party in order to consummate the transactions contemplated hereby.

                                       9
<PAGE>

          (c) This Agreement has been duly executed and delivered on behalf of
the Company. At the Closing, this Agreement and all other documents and
instruments required hereunder to be executed and delivered by the Company shall
have been duly executed and delivered. This Agreement constitutes the legal,
valid and binding obligation of the Company enforceable in accordance with its
terms, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect, as well
as to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

          (d) The License Agreement has been duly executed and delivered by the
Company, has not been amended or modified, and is in full force and effect and
enforceable in accordance with its terms, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar Laws from time to
time in effect, as well as to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
and the obligations of the Company thereunder are not subject to any condition
precedent which has not been fully satisfied as of the Closing.

                                   ARTICLE VII
                                   -----------

                               GENERAL PROVISIONS

     7.1 Expenses. Except as otherwise specifically provided in this Agreement,
all fees, costs and expenses incurred by NexGen and ADA in negotiating this
Agreement or in consummating the transactions contemplated by this Agreement
shall be paid by the party incurring the same, including without limitation,
legal and accounting fees, costs and expenses.

     7.2 Notices. All notices and other required communications hereunder shall
be in writing, addressed as follows:

     If to NexGen:

     NexGen Refined Coal, LLC
     3300 South Parker Road, Suite 520
     Aurora, CO  80014
     Attn:  Charles S. McNeil, President
     Fax:  (303) 751-9210
     Email address:  cmcneil@nexgen-group.com


                                       10
<PAGE>

     With a copy to:

     Republic Financial Corporation
     3300 South Parker Road, Suite 500
     Aurora, CO  80014
     Attn:  Senior Vice President
     Fax:  (303) 751-4777
     Email address:  jstirbis@republic-financial.com

     If to ADA:

     ADA-ES, Inc.
     8100 SouthPark Drive, Unit B
     Littleton, CO 80120
     Attn:  Dr. Michael Durham
     Fax:  (303) 734-0330
     Email address: miked@adaes.com

Notices shall be given (a) by personal delivery to the other party, (b) by
facsimile or email, with confirmation sent by registered or certified mail,
return receipt requested, or (c) by registered or certified mail, return receipt
requested. All notices shall be effective and deemed delivered (i) if by
personal delivery, on the date of delivery if during business hours, otherwise
the next business day, (ii) if by facsimile, on the date the facsimile is
received if received during business hours, otherwise the next business day and
(iii) if solely by mail, upon receipt by the addressee, which receipt shall be
deemed to have occurred at such time as the party is provided with notice from
the postal authorities that a registered or certified letter is awaiting
delivery to the party . A party may change its address by notice to the other
party.

     7.3 Amendment. This Agreement may not be altered or amended, nor any rights
hereunder be waived, except by an instrument in writing executed by the party or
parties to be charged with such amendment or waiver. No waiver of any term,
provision or condition of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
provision or condition or as a waiver of any other term, provision or condition
of this Agreement.

     7.4 Assignment. This Agreement is personal to the parties and neither party
shall assign any right or delegate any duty that it has or may have under this
Agreement, either voluntarily, involuntarily by operation of Law or otherwise by
sale, assignment, transfer, delegation or other arrangement having similar
effect, without the other party's prior written consent except as specifically
provided herein. Notwithstanding the foregoing, either party may assign their
rights and obligations under this Agreement to their Affiliates.

                                       11
<PAGE>

     7.5 Headings. The headings of the articles and sections of this Agreement
are for guidance and convenience of reference only and shall not limit or
otherwise affect, or be used to construe, any of the terms or provisions of this
Agreement.

     7.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same instrument. This Agreement
shall become operative when each party has executed at least one counterpart of
this Agreement. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally effective as delivery of a manually executed
counterpart of this Agreement, and the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability or binding effect of
this Agreement.

     7.7 References. References made in this Agreement, including use of a
pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships, limited liability partnerships,
corporations, limited liability companies or any other entity.

     7.8 Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Colorado without application of such
state's conflict of laws rules. In an proceeding brought to enforce or interpret
this Agreement or any matter related hereto, the parties agree that exclusive
jurisdiction and venue shall exist in the District Courts of the State of
Colorado, located in Arapahoe County, and neither party shall be entitled to
move for a change of venue based on the grounds of inconvenience or for any
other reason.

     7.9 Entire Agreement. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof and supersedes all
negotiations, prior discussions and prior agreements and understandings relating
to such subject matter, including, without limitation, the LOI. No
representation, warranty, covenant, agreement, promise, inducement or statement,
whether oral or written, has been made by any party that is not set forth in
this Agreement, including, such representations, warranties, covenants,
agreements, promises, inducements or statements as are referenced herein but are
included in any of the other Transaction Agreements or in the documents or
instruments referred to herein or therein), and no party shall be bound by or be
liable for any alleged representation, warranty, covenant, agreement, promise,
inducement or statement not so set forth.

     7.10 Mutually Drafted. The parties stipulate and agree that this Agreement
is the product of both parties' efforts in consultation with their attorneys and
other consultants and each party hereby irrevocably waives the benefit of any
rule of contract construction which disfavors the drafter of an agreement.

     7.11 Parties in Interest. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns. Nothing contained in this Agreement, express or implied, is intended to
confer upon any other person, any benefits, rights or remedies.

                                       12
<PAGE>

     7.12 Further Assurances. ADA and NexGen shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered such instruments and
take such other action as may be reasonably necessary or advisable to carry out
their obligations under this Agreement and under any document, certificate or
other instrument delivered pursuant hereto.

     7.13 Survival. The representations, warranties, covenants, agreements and
indemnities included or provided in this Agreement, or in any document,
certificate or other instrument delivered pursuant hereto, shall survive the
Closing, except that the representations and warranties of the parties contained
in Article VI shall be made only as of the Closing Date.

     7.14 Limitation on Remedies. The parties acknowledge that under no
circumstances is NexGen obligated by the terms hereof or otherwise, to make any
Installment Payment and that the decision whether or not to make or withhold any
Installment Payment shall be in the sole and absolute discretion of NexGen. In
the event NexGen does not elect to make one or any of the Installment Payments,
the parties agree and acknowledge that the sole remedy available to ADA for such
failure shall be as set forth in Section 2.3 hereof.

     7.15 Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, in whole or in part, under a judgment, Law or statute
now or hereafter in effect, the remainder of this Agreement shall not thereby be
impaired or affected and shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

     7.16 Public Announcements. No public announcement may be made by any Person
with regard to the transactions contemplated by this Agreement without the prior
consent of NexGen and ADA, provided that either party may make such disclosure
if advised by counsel that it is required to do so by applicable Law or
regulation of any governmental agency or stock exchange upon which securities of
such party are registered. NexGen and ADA will discuss any public announcements
or disclosures concerning the transactions contemplated by this Agreement with
the other party prior to making such announcements or disclosures.

     7.17 Attorneys' Fees. In the event that any suit or action is instituted
under or in relation to this Agreement, including, without limitation, to
enforce any provision in this Agreement or any right hereunder, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including, without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.

     7.18 Conflict. In the event of a conflict between any term(s) or
provision(s) of this Agreement, the License Agreement or the Supply Agreement
and anything contained in the Operating Agreement, the Operating Agreement shall
be overriding and controlling.

                  [Remainder of Page Intentionally Left Blank]




                                       13
<PAGE>


     IN WITNESS WHEREOF the parties have executed this Purchase and Sale
Agreement as of the date first written above.

                                           ADA-NEXCOAL, LLC

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


                                           ADA-ES, INC.

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


                                           NEXGEN REFINED COAL, LLC

                                           By: /s/ Charles S. McNeil
                                           -------------------------
                                           Name:  Charles S. McNeil
                                           Title:  President






                                       14
<PAGE>

                                    Exhibit A
                                    ---------


[Copy of Executed License Agreement, to which shall be attached as Exhibit 1, a
copy of the Supply Agreement.]



<PAGE>

                                    Exhibit B
                                    ---------


[Assignment of Purchased Units]



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>adaes10-4.txt
<DESCRIPTION>AGREEMENT
<TEXT>

                                                                    Exhibit 10.4


          AMENDED AND RESTATED OPERATING AGREEMENT OF ADA-NEXCOAL, LLC

     This Amended and Restated Operating Agreement of ADA-NexCoal, LLC
("Agreement") is made and entered into to be effective as of November 3, 2006
(the "Effective Date"), by and among ADA-ES, Inc., a Colorado corporation
("ADA"), NexGen Refined Coal, LLC, a Wyoming limited liability company
("NexGen") as members (each individually a "Member" and collectively the
"Members") and ADA-NexCoal, LLC, a Colorado limited liability company (the
"Company"). ADA, NexGen and the Company are hereinafter sometimes referred to
each individually herein as a "party" and collectively as the "parties."

                                    RECITALS:
                                    ---------

     A. ADA has formed the Company under the laws of the State of Colorado for
the purpose of engaging in the Business described herein.

     B. ADA and the Company are parties to that certain Operating Agreement
dated as of November 3, 2006 (the "Existing LLC Agreement").

     C. ADA owns One Hundred (100) Units of membership interests in the Company,
representing, without limitation, one hundred percent (100%) of the rights to
profits and losses of the Company, all capital of the Company, all rights to
receive distributions of the Company's assets, and all rights to participate in
the management of the Company, for which it paid $1000.00 in cash and entered
into a License Agreement dated as of November 3, 2006 (the "License Agreement"),
a copy of which is attached hereto as Exhibit D.

     D. NexGen and ADA are entering into that certain Purchase and Sale
Agreement (the "Purchase Agreement"), pursuant to which ADA will sell, and
NexGen will purchase, fifty (50) of ADA's Units in the Company, which will
amount to fifty percent (50%) of the total membership interests to be
outstanding, all in accordance with and subject to the conditions set forth in,
the Purchase Agreement.

     E. NexGen and ADA have agreed to amend and restate the Existing LLC
Agreement to set forth their mutual understanding and agreement regarding the
matters set forth herein.

                                   ARTICLE I
                            FORMATION OF THE COMPANY
                            ------------------------

     1.1 Name and Formation. The name of the Company is ADA-NexCoal, LLC. The
Company was formed by the filing of Articles of Organization of the Company (the
"Articles") with the Secretary of State of the State of Colorado on, October 31,
2006, pursuant to the Colorado Limited Liability Company Act (the "Act"). The
Company's Business (as hereafter defined) may be conducted under such other
names as the Members may from time to time agree to be necessary or advisable.
The rights and liabilities of the parties hereto shall be as provided in the Act
except as herein otherwise expressly provided.

<PAGE>

     1.2 Principal Place of Business; Qualification. The principal place of
business of the Company shall be located at 8100 SouthPark Way, Unit B,
Littleton, CO 80120. The Company may locate its place(s) of business and
registered office at any other place or places as the Board may from time to
time deem necessary or advisable. The Company shall qualify to do business in
such states in which such qualification is necessary.

     1.3 Registered Office and Registered Agent. The Company's registered office
and registered agent in Colorado shall be Mark H. McKinnies, with an address of
8100 SouthPark Way, Unit B, Littleton, CO 80120.

     1.4 Term. The term of existence of the Company shall be unlimited, subject
to being dissolved in accordance with the provisions of this Agreement.

     1.5 Purposes and Powers.

          (a) Purposes. The purposes and character of the business of the
Company shall be to (i) enter into the Transaction Agreements (as hereafter
defined), (ii) accept contributions by the Members in accordance with the
provisions of this Agreement, (iii) engage in the Business (as hereafter
defined), and (v) engage in other business consistent with or in furtherance of
the foregoing, as may be necessary or appropriate to accomplish the purposes set
forth herein or as may be approved by the Board from time to time. The Company
will not engage in any other business or activity not within the scope of the
preceding sentence or otherwise permitted or contemplated by this Agreement
(whether or not permitted by the Articles) unless approved by the Board or if
required, the Members in accordance with Section 6.2 hereof.

          (b) Powers. The Company shall have all powers which are necessary or
desirable to carry out the purposes and Business of the Company, to the maximum
extent the same are available and may be legally exercised by limited liability
companies under the Act.

     1.6 Limits of Company Activities; Independent Activities.

     Except as set forth in Sections 11.8 and 11.9, the Members hereby agree
that no other provision in this Agreement shall be deemed to restrict in any way
the rights of any of the Members or any Manager, officer, shareholder or
Affiliate of any of the Members from conducting, engaging or participating in
any other activity, trade or business, independently or with others, whether or
not any such activity, trade or business is adverse to, competes with or is
complementary with, the Business or the business of any Subsidiary of the
Company or of any other Member or any of a Member's Affiliates, and neither the
Company nor the other Members shall have any rights in or to any such trade,
business or activity or the income or profits derived therefrom.

     1.7 Default Rules Under the Act. Regardless of whether this Agreement
specifically refers to a particular Default Rule: (i) if any provision of this
Agreement conflicts with a Default Rule, the provision of this Agreement
controls and such Default Rule is hereby modified or negated accordingly, and
(ii) if it is necessary to construe a Default Rule as modified or negated in
order to effectuate any provision of this Agreement, such Default Rule is hereby
modified or negated accordingly.

                                       2
<PAGE>

     1.8 Existing LLC Agreement. This Agreement completely amends, restates and
supersedes the Existing LLC Agreement.

     1.9 Title to Property. All real and personal property, whether tangible or
intangible, owned by the Company shall be owned by the Company as an entity and
no Member shall have any ownership interest in such property in its individual
name, and each Member's interest in the Company shall be personal property for
all purposes. Except as otherwise provided in this Agreement, the Company shall
hold all of its real and personal property in the name of the Company and not in
the name of any Member.

     1.10 Intent. It is the intent of the Members that the Company be operated
in a manner consistent with its treatment as a partnership for federal and state
income tax purposes. The Company shall take all appropriate actions to ensure
that the Company will be treated as a partnership for federal and state income
tax purposes, including the making of available tax elections. No election may
be made to treat the Company as an association taxable as a corporation for
federal or state income tax purposes without obtaining the unanimous written
consent of all of the Members pursuant to Section 6.2. Neither the Company nor
any Member shall take any action inconsistent with the express intent of the
parties hereto as set forth in this Section 1.10.

                                   ARTICLE II
                      DEFINITIONS AND RULES OF CONSTRUCTION
                      -------------------------------------

     2.1 Definitions.

     The terms defined in this Article II, wherever used and capitalized in this
Agreement, have the meanings set forth below. Certain other capitalized terms
are defined in the text of this Agreement in the Section where such terms are
first used, and such definitions shall apply throughout this Agreement wherever
such terms are used.

     "AAA" shall have the meaning ascribed to such term in Section 5.1(d).

     "Act" shall mean the statutes governing limited liability companies in the
State of Colorado, which, as of the Effective Date, is Chapter 80 of Title 7 of
the Colorado Revised Statutes.

     "ADA" has the meaning in the preamble hereof.

     "ADA Managers" has the meaning ascribed to such term in Section 5.1(c).

     "Affiliate" of a Person means (i) any Person directly or indirectly owning,
controlling or holding with power to vote fifty percent (50%) or more of the
outstanding voting securities of such Person; (ii) any Person fifty percent
(50%) or more of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote, by such Person; (iii) any Person
directly or indirectly controlling, controlled by, or under common control with
such Person; or (iv) any officer, Manager or partner of any company which is an
Affiliate of such Person under (i), (ii) or (iii) above.

                                       3
<PAGE>

     "Agreement" means this Amended and Restated Operating Agreement of the
Company as adopted on the Effective Date and as the same may be further amended
or restated from time to time.

     "Annual Business Plan" shall mean the annual business plan developed and
adopted by the Board of Managers, as approved by the Members which shall set
forth the projected revenues, expenses and capital needs of the Company for the
succeeding twelve (12) month period (or such other period as stated therein).
The first Annual Business Plan shall be approved by the Members and thereafter
adopted by the Board as soon as reasonably practicable following the Effective
Date, and shall cover the period described therein. Thereafter, an Annual
Business Plan shall be adopted to become effective as of December 31 of each
calendar year, and shall cover the succeeding twelve (12) month period
thereafter.

     "Appraiser" has the meaning given that term in Section 9.2(c).

     "Appraised Value" has the meaning given that term in Section 9.2(c).

     "Articles" shall have the meaning ascribed to such term in Section 1.1
hereof.

     "Bankruptcy" means the filing by a Person of a petition commencing a
voluntary case under the Bankruptcy Code; a general assignment by a Person for
the benefit of creditors; an admission in writing by a Person of its inability
to pay debts as they become due; the seeking or acquiescence by a Person in the
appointment of any trustee, receiver, or liquidator for the Person or for any
part of the Person's property; or the commencement against a Person of an
involuntary case under the Bankruptcy Code, or a proceeding under any
receivership, composition, readjustment, liquidation, insolvency, dissolution or
similar law or statute, if not dismissed or vacated within 60 days.

     "Bankruptcy Code" shall mean Title 11 of the United States Code.

     "Board Decision Threshold" means $25,000.

     "Board of Managers" or "Board" shall mean the Managers appointed pursuant
to Section 5.1(c) hereof.

     "Bona Fide Offer" means an offer in writing, from a third party that is
financially capable of closing the proposed acquisition either itself or through
reasonably available and confirmed financing (as shown by said third party),
which third party is not an Affiliate of a Member and which offer is capable of
being accepted and, when accepted, will result in an enforceable agreement, for
the purchase of all of the Transferor's Units.

     "Business" means either the Chemicals Business or the Section 45 Business,
as such terms are defined in the License Agreement. As of the Effective Date,
the Company shall be deemed a Chemicals Business, but as part of such Business,
it shall use commercially reasonable efforts to become a Section 45 Business as
soon as practicable. Upon receipt of the PLR (as defined in the definition of

                                       4
<PAGE>

Section 45 Business), the Company shall, without any further action from the
Board or any Party, be deemed a Section 45 Business. As a Section 45 Business,
the Company may continue to engage in the Chemicals Business, but for all
purposes, it shall be considered a Section 45 Business. Notwithstanding the
definitions of Chemicals Business and Section 45 Business, the Business of the
Company shall be limited to (i) developing, marketing and deploying the
Technology, and (ii) organizing, owning, operating, managing, selling, and
otherwise dealing, either directly or through one or more Subsidiaries of the
Company, in one or more businesses based on the Technology.

     "Capital Account" shall have the meaning set forth in Section 3.5(a).

     "Capital Call" shall have the meaning set forth in Section 3.2.

     "Capital Contribution" means any contribution by a Member to the capital of
the Company in cash or property whenever made.

     "Chairman" means the Member elected as Chairman of a Members' meeting in
accordance with Section 6.5.

     "Change of Control" shall mean in the case of a Person, (i) any
consolidation or merger of such Person with or into any other Person, or any
other corporate reorganization, in which its equity holders immediately prior to
such consolidation, merger or reorganization, own less than 50% of the voting
power immediately after such consolidation, merger or reorganization, or (ii) a
sale, lease or other disposition of all or substantially all of its assets,
other than (A) the sale of inventory in the ordinary course of business, or (B)
the sale, lease or other disposition of such Person's assets other than
inventory in any calendar year having an aggregate fair market value not in
excess of 75% of the fair market value of such Person's total assets unless
otherwise determined by the Board, which shall apply the rebuttable presumption
that a sale of assets comprised of less than 75% of the fair market value of a
Person is not a Change of Control. It is specifically understood that the
Company may form subsidiary entities to carry on the Business, and the sale of
any such subsidiary, in whole or in part, shall not be deemed a Change of
Control, even if the specifics of the transaction fall within the definition of
Change of Control set forth above.

     "Chemicals Business" shall have the meaning set forth in Section 1.3 of the
License Agreement, a copy of which is attached hereto as Exhibit D.

     "Code" means the Internal Revenue Code of 1986, as amended. All references
to particular sections of the Code shall be deemed to include reference to
corresponding provisions of subsequent federal tax law, as set forth in the
Code, the Regulations, and the published interpretations thereof.

     "Company" means ADA-NexCoal, LLC, a Colorado limited liability company.

     "Company Option Period" has the meaning set forth in Section 9.2(a).

     "Confidential Information" has the meaning set forth in Section 11.8(a).

                                       5
<PAGE>

     "Damages" shall have the meaning ascribed to such term in Section 5.7(b).

     "Default Amount" shall have the meaning ascribed to such term in Section
3.3 hereto.

     "Default Interest Rate" means the lesser of (a) the Prime Rate, plus 600
basis points, and (b) the maximum non-usurious rate of interest under applicable
Law.

     "Default Rule" means a provision of the Act that would apply to the Company
unless otherwise provided in, or modified by, the Agreement.

     "Defaulting Member" shall have the meaning ascribed to such term in Section
3.3 hereto.

     "Disability" shall mean the physical or mental impairment to the extent
that the person in question becomes unable, despite any reasonable accommodation
required by law, to perform the essential functions of his position with the
Company including, without limitation, his or her role as a Manager.

     "Effective Date" shall have the meaning ascribed to such term in the
preamble hereto.

     "Existing LLC Agreement" shall have the meaning set forth in the recitals
hereto.

     "Fiscal Year" means the Company's fiscal year, which shall end on December
31 of each year.

     "Force Majeure" means an act of God, war, terrorism, hostilities, riot,
fire, explosion, accident, flood or sabotage; lack of adequate fuel, power, raw
materials, containers or transportation for reasons beyond such party's
reasonable control; labor trouble, strike, lockout or injunction (provided that
neither party shall be required to settle a labor dispute against its own best
judgment); compliance with governmental laws, regulations, or orders requiring
unreasonable effort or expense; breakage or failure of machinery or apparatus;
or any other cause whether or not of the class or kind enumerated above,
including, but not limited to, a severe economic decline or recession, which
prevents or materially delays the performance of this Agreement in any material
respect arising from or attributable to acts, events, non-happenings, omissions,
or accidents beyond the reasonable control of the party affected, provided,
however, that Force Majeure shall not relieve any party of the obligation to
make any payments required hereunder unless such event affects normal banking
transactions.

     "Indemnitee" shall have the meaning set forth in Section 10.1(a).

     "Law" means such United States or State statutes, regulations, rules,
ordinances, or other Laws (as the same have been interpreted by the courts) that
are applicable to this Agreement, the other Transaction Agreements, the parties
hereto or the Business.

     "License Agreement" means that certain License Agreement, dated as of
November 3, 2006, by and between ADA and the Company pursuant to which ADA
granted the Company an exclusive royalty-free license to use the Licensed
Property, all in accordance with the terms thereof, a copy of which is attached
hereto as Exhibit D.

                                       6
<PAGE>

     "Licensed Property" shall have the meaning ascribed to such term in the
License Agreement.

     "Lien" means any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, charge, deposit arrangement, preference, priority,
security interest, option, right of first refusal or other transfer restriction
or encumbrance of any kind (including preferential purchase rights, conditional
sales agreements or other title retention agreements, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction to evidence any of the foregoing).

     "LOI" means that certain letter agreement re: "Joint Venture Proposal for
ADA-ES, Inc. and NexGen Resources Corporation" dated as of June 26, 2006, as the
same was executed by the parties thereto.

     "Manager" has the meaning ascribed to such term in Section 5.1.

     "Member" means each of the Persons named in the introductory paragraph and
shall include Persons acquiring new Units as authorized herein, and those
Persons acquiring Units in the Company after the Effective Date who have
succeeded to all or part of the Units as a Permitted Transferee pursuant to this
Agreement. The Members and their respective Unit ownership and Sharing Ratios
are as set forth in Exhibit B, as the same may be updated or amended from time
to time.

     "Member Loans" has the meaning set forth in Section 3.9.

     "Member Option Period" has the meaning set forth in Section 9.2(b).

     "NexGen" has the meaning in the preamble hereof.

     "NexGen Managers" has the meaning ascribed to such term in Section 5.1(c).

     "Non-Defaulting Members" shall have the meaning ascribed to such term in
Section 3.3 hereto.

     "Non-payment Election" shall have the meaning ascribed to such term in the
Purchase Agreement.

     "Non-transferring Member" has the meaning set forth in Section 9.2(b).

     "Non-voting Units" means Units that have no associated voting, consent or
approval rights and only represent an economic interest in the Company.

     "Non-voting Member" means a Person owning only Non-voting Units and who has
been admitted as a Member of the Company in accordance with all requirements of
this Agreement.

                                       7
<PAGE>

     "Notice to Sell" has the meaning set forth in Section 9.3.

     "Offered Units" has the meaning set forth in Section 9.3.

     "Officer" means a Person appointed as an officer of the Company by the
Managers pursuant to Section 5.4.

     "Option Notice" has the meaning set forth in Section 9.2(b).

     "Option Seller" has the meaning set forth in Section 9.2(c).

     "Option Units" has the meaning set forth in Section 9.2.

     "Participating Member" shall have the meaning ascribed to such term in
Section 3.3(a) hereto.

     "Permitted Transfer" shall have the meaning ascribed to such term in
Section 9.1.

     "Permitted Transferee" shall have the meaning ascribed to such term in
Section 9.1.

     "Person" means an individual, business entity (including, without
limitation, a corporation, limited partnership, general partnership, registered
limited partnership, registered limited liability partnership or limited
liability company), business trust, estate, trust, association, joint venture,
government, governmental subdivision or agency, or any other legal or commercial
entity organized or existing in any jurisdiction.

     "Profit" or "Loss" means the income or loss of the Company as determined
under the capital accounting rules of Section 704 of the Code, and those
Treasury Regulations relating to the computation of items of income, gain,
deduction and loss promulgated thereunder.

     "Proceeding" shall have the meaning ascribed to such term in Section
5.7(b).

     "Purchase Agreement" has the meaning set forth in the recitals hereto.

     "Purchase Price" has the meaning set forth in Section 9.2(c).

     "Purchasing Members" shall have the meaning ascribed to such term in
Section 9.2(b).

     "Regulations" means the Income Tax Regulations promulgated by the
Department of the Treasury in connection with the interpretation and enforcement
of the Code, as such regulations may be amended from time to time.

     "Representatives" shall have the meaning ascribed to such term in Section
11.8.

     "Section 45 Business" shall have the meaning set forth in Section 1.11 of
the License Agreement, a copy of which is attached hereto as Exhibit D.

                                       8
<PAGE>

     "Securities Act" shall mean The Securities Act of 1933, as amended.

     "Sharing Ratio" means the sharing ratio of a Member, expressed as a
percentage of the total, in allocations of Profits, Losses and other items of
income, gain, loss or deduction and distributions of cash and property.. The
initial Sharing Ratio shall be equal to the ownership by each Member of Units,
expressed as a ratio equal to the number of such Member's Units over the total
number of outstanding Units, as set forth on Exhibit B. Thereafter, the Sharing
Ratio shall be adjusted and Exhibit B shall be amended or updated from time to
time to reflect the Sharing Ratio in effect at any given time, as required by
this Agreement, based on (i) the Capital Contributions made by each Member and
the ownership of Units that reflect such Capital Contributions, and (ii)
Transfers of Units.

     "Stalemate" has the meaning set forth in Section 5.1(d)

     "Stalemate Determination" has the meaning set forth in Section 5.1(d)

     "Subsidiary" or "Subsidiaries" means the operating company or companies
formed by the Company subsequent to the Effective Date that are wholly-owned
(directly or indirectly) by the Company.

     "Supply Agreement" means that certain Chemicals, Equipment and Technical
Engineering Services Supply Agreement, dated as of the date hereof, by and
between ADA and the Company, in substantially the form attached hereto as
Exhibit 1 to the License Agreement.

     "Tax Distribution" has the meaning set forth in Section 4.3.

     "Tax Matters Partner" or "TMP" shall have the meaning set forth in Section
7.3.

     "Technology" has the meaning ascribed to such term in the License
Agreement.

     "Trade Secrets" has the meaning set forth in Section 11.8(a).

     "Transaction Agreements" shall means this Agreement, the Purchase
Agreement, the License Agreement, the Supply Agreement, as the same are in
effect as of the Effective Date.

     "Transfer" means, as a noun, the sale, assignment, gift, exchange,
transfer, pledge, hypothecation, change in beneficial interest of any trust or
estate, distribution from any trust or estate, or any other disposition of an
asset or, with respect to Units, the Units or any part thereof, directly or
indirectly, or (with respect to a Member) the sale, exchange, gift, pledge,
hypothecation, or other change of an ownership interest in a Member, and as a
verb, voluntarily or involuntarily, to transfer, sell, gift, exchange, pledge,
hypothecate grant a security interest, consent to a charging order, or otherwise
dispose of, whether directly or indirectly.

     "Transfer Notice" has the meaning set forth in Section 9.2(a).

     "Transferor" shall have the meaning ascribed to such term in Section
9.3(a).

                                       9
<PAGE>

     "Units" means units of membership interest in the Company, which
cumulatively represent all of the membership interests in the Company,
including, without limitation, the Unit owner's undivided right to share in the
profits and losses of the Company and the right to receive distributions of
assets and, in the case of Voting Units only, the right to participate in the
management of the Company. Units may be issued only in accordance with Section
5.6. The term "Units" herein shall be deemed to refer to Voting Units and
Non-voting Units, as appropriate, and as the context requires.

     "Voting Member" means a Person owning Voting Units and who has been
admitted as a Member of the Company in accordance with all requirements of this
Agreement.

     "Voting Units" means Units that have all associated voting, consent or
approval rights in addition to an economic interest in the Company and all other
rights associated with Units in the Company.

     2.2 Rules of Construction.

          (a) Section References. When a reference is made in this Agreement to
an Article, Section, Paragraph, Exhibit or Schedule such reference shall be to
an Article, Section or Paragraph of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. Unless otherwise indicated, the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole, and not to any particular Article, Section, Paragraph or
clause in this Agreement.

          (b) Construction. Unless the context of this Agreement clearly
requires otherwise: (i) references to the plural include the singular and vice
versa, (ii) the masculine shall include feminine and neuter, and the neuter
shall include the masculine and feminine, and (iii) "including" is not limiting.

          (c) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or any provision of this Agreement.

          (d) No Interpretation Against Author. For purposes of contract
interpretation or construction, the parties to this Agreement agree they are
joint authors and draftspersons of this Agreement.

          (e) Conflicts with Related Documents. The relationship of the parties
is being memorialized in this Agreement and in the other Transaction Agreements.
In the event of a conflict between any term(s) or provision(s) of this Agreement
and anything contained in any of the other Transaction Agreements, this
Agreement shall be overriding and controlling.

                                       10
<PAGE>

                                  ARTICLE III
                CAPITAL CONTRIBUTIONS AND ACCOUNTS; MEMBER LOANS
                ------------------------------------------------

     3.1 Initial Capital Contributions and Ownership Structure. Prior to the
Effective Date, in accordance with the Existing LLC Agreement, ADA previously
contributed One Thousand Dollars ($1000.00) and the Licensed Property to the
Company pursuant to the terms of the License Agreement, in receipt for which ADA
received One Hundred Units in the Company, representing one hundred percent
(100%) of the membership interests. In accordance with the Purchase Agreement
NexGen has agreed to purchase Fifty (50) of ADA's Units, and following such
purchase NexGen will own fifty percent (50%) of the total membership interests
in the Company. The Members agree that the Unit ownership and the Sharing Ratios
of the Members, on the Effective Date, shall be as set forth in Exhibit B
hereto.

     3.2 Additional Capital Contributions; Adjustment of Sharing Ratios.

          (a) Additional Capital Contributions. The Board shall consider any
capital requirements of the Company and will notify the Members, no less than
thirty (30) days prior to the need therefor, of any projected need for
additional Capital Contributions in order to fund operations or to further the
purposes of the Company. Additional Capital Contributions shall be required only
if approved by all of the Members in writing and, if not previously approved as
part of the Annual Business Plan, the Board shall give the Members notice of the
additional capital call ("Capital Call") and will include in such notice, in
reasonable detail, the purpose or purposes for which additional capital is
required and the number of additional Units, if any, to be issued as a result,
whether such Units will be Voting Units or Non-voting Units, and the
consideration to be paid for such Units. Except as otherwise provided herein or
in a resolution or agreement adopted by the Members in accordance with this
Agreement, the Members will have the preemptive right to acquire any additional
Units to be issued in return for additional capital, in accordance with Section
6.6(b) hereof.

          (b) Adjustment of Sharing Ratios. In the event the Members determine
not to issue additional Units in return for additional Capital Contributions,
the Sharing Ratios then in effect shall be adjusted in proportion to the
respective amounts of additional capital contributed by each Member in response
to a Capital Call, subject to the provisions of Section 3.3 in the event a
Member fails to timely make all or any portion of a Capital Call.

     3.3 Failure to Make a Required Additional Capital Contribution. If a Member
(the "Defaulting Member") does not contribute by the time required, all or any
portion of an additional Capital Contribution that such Defaulting Member is
required to make pursuant to a Capital Call under Section 3.2(a) (the "Default
Amount"), then the Company shall forthwith notify the other Members (the
"Non-Defaulting Members"), and the Non-Defaulting Members may take any of the
following actions:

          (a) Within 20 days after the Defaulting Members' default, the
Non-Defaulting Members may advance, in each Non-Defaulting Member's sole
discretion, an aggregate amount not in excess of the Default Amount in such
proportions as they may agree, or if they cannot agree, pro rata in accordance
with their respective Sharing Ratios (with any Non-Defaulting Member making such
an advance referred to as a "Participating Member").

                                       11
<PAGE>

          (b) Notwithstanding Section 3.3(a), if one or more Participating
Members advance the entire Default Amount, the provisions of this Section 3.3(b)
shall be the exclusive remedy for the failure by the Defaulting Member to make
such Capital Call. The Members holding a majority of the Voting Interests of the
Participating Members shall make an election within 10 days after the last
Participating Member makes an advance with respect to the Default Amount as to
whether all such advances are designated as being made under the provisions of
Section 3.3(b)(i) or are designated as being made under the provisions of
Section 3.3(b)(ii), and shall send a written notice to the Defaulting Member of
such election within office (5) days if the end of such 10-day period.

               (i) Advances designated under this Section 3.3(b)(i) shall
constitute a loan from the Non-Defaulting Members to the Defaulting Member and a
Capital Contribution of that sum to the Company by the Defaulting Member
pursuant to the applicable provisions of this Agreement, with the following
results:

                    (A) the principal balance of the loan and all accrued unpaid
interest thereon shall be due and payable in whole on the tenth day after
written demand therefor by Participating Members holding a majority of the
Voting Interests of the Participating Members to the Defaulting Member;

                    (B) at any time prior to the payment of the loan and all
accrued interest thereon, the Participating Members holding a majority of the
Voting Interests of all Participating Members may elect to deem the unpaid
amount of the loan and the interest thereon a Capital Contribution by the
Participating Members, in which case the provisions of Section 3.3(b)(ii) shall
thereafter apply to such Capital Contribution;

                    (C) the amount loaned shall bear interest at the Default
Interest Rate from the date that the Participating Members advance the entire
Default Amount until the date that the loan, together with all interest accrued
on it, is repaid to the Non-Defaulting Members (or until the date such loan is
converted into a Capital Contribution pursuant to clause (B) above);

                    (D) all distributions from the Company that otherwise would
be made to the Defaulting Member (whether before or after dissolution of the
Company and whether before or after demand for payment is made pursuant to
clause (A) above) instead shall be paid to the Participating Members pro rata
until the loan and all interest accrued thereon have been paid in full to the
Participating Members (with payments being applied first to accrued and unpaid
interest and then to principal);

                    (E) the Defaulting Members shall be deemed to have granted a
security interest to the Participating Members in and to all Units and any other
interests held by the Defaulting Members in the Company, and the Participating
Members shall have the right to exercise all rights of a secured party under the

                                       12
<PAGE>

Uniform Commercial Code of the State of Colorado, as well as any other rights
and remedies granted to them pursuant to this Agreement or available to them at
law or in equity as the Participating Members holding a majority of the Voting
Interests of all Participating Members may deem appropriate to obtain payment by
the Defaulting Members of the loan, including all accrued and unpaid interest
thereon, all at the cost and expense of the Defaulting Members (which shall
include all reasonable costs and attorney fees incurred by the Participating
Members in collecting any amounts due from any Defaulting Member);

                    (F) the Defaulting Members shall take any and all steps and
perform any and all acts reasonably requested by the Participating Members to
allow the Participating Members to perfect the security interest granted and
described in the foregoing paragraph, including, without limitation, signing and
delivering to the Participating Members any documents necessary to evidence or
perfect such security interest, including allowing a transcript of this Section
3.3 to be prepared and filed with any Person as evidence of the security
interest so granted, and allowing the Participating Members to prepare and file
such financing statements with the State of Colorado (or elsewhere) as may be
necessary or desirable to place such security interest of record; in addition,
the Defaulting Members shall deliver to the Participating Members any
certificates evidencing the Units; and

                    (G) during the period any interest or principal with respect
to any loan made to a Defaulting Member pursuant to this Section 3.3(b)(i)
remains outstanding, all rights of such Defaulting Member to vote, veto or
consent to any matter with respect to the Company, including any matter to be
acted upon pursuant to this Agreement or the Act, shall be suspended, and
neither the Sharing Ratio nor Voting Interest of such Defaulting Member shall be
deemed outstanding for purposes of determining whether a quorum exists at any
meeting of the Members or whether any specified percentage or majority of votes
required to adopt, consent to or approve any matter has been obtained; provided,
however, such suspension shall be effective only to the extent permitted by
applicable Law.

               (ii) Advances designated under this Section 3.3(b)(ii) shall be
treated as a Capital Contribution by the Participating Members and shall be
credited to the Capital Accounts of the Participating Members making the
advances. The Sharing Ratio of the Defaulting Member shall be adjusted (but not
below zero) to the following ratio (expressed as a percentage):

           (The Total Capital Contributions of the Defaulting Member)
           ----------------------------------------------------------
                (The Total Capital Contributions of All Members)

For purposes of this Section 3.3(b)(ii):

                                       13
<PAGE>

"Total Capital Contributions By the Defaulting Member" means the aggregate
Capital Contributions to the Company made since the inception of the Company
with respect to Units then owned by the Defaulting Member; and

"Total Capital Contributions By All Members" means the aggregate Capital
Contributions of the Members (including the Capital Contributions made by the
Defaulting Members and all other Members, including the Participating Members
pursuant to this Section 3.3(b)(ii)) since the inception of the Company.

The Sharing Ratio of the Participating Members shall be increased, pro rata in
accordance with the proportionate amount of the advances made by the
Participating Members, by an aggregate percentage equal to the reduction in the
Sharing Ratio of the Defaulting Member. Appropriate adjustments shall also be
made in the Capital Accounts of the Members to reflect the foregoing.

          (c) In the event Non-Defaulting Members elect not to make up all of
the Default Amount, the Company shall have the right to take any action
available at law or in equity against the Defaulting Member for failure to make
the required Capital Contribution, including suing for damages, specific
performance or any combination of available remedies. All remedies available to
the Company shall be cumulative, and the election of any one shall not preclude
the availability of another, to the extent permitted under applicable law. In
any action brought by the Company to enforce its rights hereunder, the
prevailing party in such action shall be entitled to recover all costs and fees
(including reasonable attorney fees) incurred by it in connection with such
action, including any appeals.

     3.4 No Third Party Right to Enforce. No Person other than the Company and a
Member shall have the right to enforce any obligation of a Member to contribute
capital hereunder and specifically no lender or other third party shall have any
such rights.

     3.5 Capital Accounts.

          (a) A separate Capital Account ("Capital Account") shall be
established and maintained for each Member, including any substituted or
additional Member who shall hereafter acquire an interest in the Company, in
accordance with the following provisions:

               (i) Each Member's Capital Account shall be increased by, the
amount of any money contributed by the Member to the Company, the fair market
value of any property contributed by the Member to the Company, the amount of
net profits allocated to the Member, and the amount of any Company liabilities
assumed by such Member (or taken subject to, if property is distributed to the
Member by the Company);

               (ii) Each Member's Capital Account shall be decreased by the
amount of any money distributed to the Member by the Company, the fair market
value of any property distributed to the Member by the Company, the amount of
net losses allocated to the Member, and the amount of any Member liabilities
assumed by the Company (or taken subject to if property is contributed to the
Company by the Member).The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations under Section 704(b) of the Code and, to the extent
not inconsistent with the provisions of this Agreement, shall be interpreted and
applied in a manner consistent with such Regulations.

                                       14
<PAGE>

          (b) Except as required by the Act, no Member shall have any liability
for the return of the capital contribution of any other Member. A Member who has
more than one membership interest in the Company shall have a single Capital
Account that reflects all such Interests, regardless of the class of Interest
owned and regardless of the time or manner in which the Interests were acquired.

     3.6 No Interest on Capital. No interest shall be paid by the Company on the
contributions to the capital of the Company by the Members, as reflected in
their Capital Accounts from time to time.

     3.7 Creditor's Interest in Company. No creditor of the Company (including,
without limitation, a creditor who makes a loan to the Company or a creditor who
provides goods or services to the Company) shall have or acquire, at any time as
a result of making the loan, any direct or indirect interest in the profits,
capital or property of the Company other than as a creditor.

     3.8 Return of Capital. No Member shall have the right to demand the return
of any Capital Contribution. Except as otherwise provided in this Agreement, no
Member shall have priority over any other Member either as to the return of
Capital Contributions or as to any cash or other distributions by the Company.
Except as otherwise provided in this Agreement, no Member shall have the right
to (i) receive property other than cash as a return of Capital Contributions or
as any other distributions, (ii) withdraw any part of the Member's Capital
Contributions or (iii) receive any funds or property of the Company.

     3.9 Member Loans. From and after the Effective Date, if the Company
requires funds in addition to the funds available from Capital Contributions to
be made by the Members pursuant to Section 3.1 or Section 3.2 or from third
party lenders to accomplish its purposes, the Board will give the Members
written notice thereof which will specify (i) the amount of funds requested,
(ii) the purpose for which the funds are required, and (iii) the date required.
Within ten (10) days from the date of the notice, any Member desiring to make a
"Member Loan" (herein so-called) to the Company will give written notice of its
intent to the Board together with the amount of the Member Loan the particular
Member desires to make. No Member shall be required to make a Member Loan to the
Company. If more than one Member elects to make such a loan, they shall make the
Member Loans in proportion to their respective Sharing Ratios. Member Loans will
be funded at the time specified in the notice and will bear interest at a
negotiated rate but not more than the maximum rate allowed under applicable law
and shall not be considered as part of the Company's equity or Members' Capital
Contributions. Member Loans will be repaid prior to any distributions to Members
except Tax Distributions (which will be paid before payments are required to be
made on Member Loans), with any payments being applied first to interest then to
principal. If more than one Member Loan is outstanding, the payments shall be
made in such order and in accordance with such priority as has been agreed to by
the Board and the Company with respect to each such Member Loan. Any such loan
shall be subordinate to any loans from any then existing third-party lender to
the Company if required by such lender, and shall be repaid prior to any other
distributions to the Members.

                                       15
<PAGE>

                                   ARTICLE IV
                          ALLOCATIONS AND DISTRIBUTIONS
                          -----------------------------

     4.1 General. The allocations of income and gain, as set forth herein, are
intended to be applicable after deducting amounts determined by the Board to be
payable to Officers and others as compensation in the form of salary and/or
bonuses.

     4.2 Allocations. Subject to the foregoing and except as may otherwise be
required by the Code and Regulations, all items of income, gain, loss, deduction
and credit of the Company shall be allocated as follows:

          (a) Income and Gain. Net income and gain of the Company for any Fiscal
Year (or part thereof for which it is appropriate to determine net income and
gain and for which such net income and gain must be allocated) will be allocated
to the Members in accordance with their respective Sharing Ratios subject,
however, to the principles set forth in Section 4.1, above.

          (b) Losses and Deductions. Net losses, deductions and credits of the
Company for any Fiscal Year shall be allocated to the Members in accordance with
their respective Sharing Ratios subject, however, to the principles set forth in
Section 4.1, above.

          (c) Additional Federal Income Tax and Allocation Concepts. The Board
shall cooperate in connection with implementing the general intent and
principles set forth in Section 4.1 and shall, to the extent reasonably
required, consult with accountants for the Company, as necessary or applicable.
The Board will take reasonable actions to attempt to comply with applicable
provisions of the Code and Regulations in connection with any special allocation
which may be necessary or appropriate for such purpose including, without
limitation, any allocations required pursuant to Section 704(c) of the Code and
Section 1.704-1(b)(2) of the Regulations.

     4.3 Distributions.

          (a) Distributions will be made to the Members at such time or times as
may be appropriate, as approved by the Board. As used herein, "Tax
Distributions" means a distribution of cash to the Members, if available, of an
amount reasonably estimated as the maximum amount necessary to pay the federal
and state tax liability on the ordinary income of the Members, exclusive of
environmental taxes, for a year in which such liability is attributable to an
allocation of income of the Company pursuant to Section 4.1 and 4.2. The amount
and timing of the Tax Distributions will be reasonably determined by the Board,
and, when so determined, will be paid to the Members pro-rata, in accordance
with their respective Sharing Ratios.

          (b) If the Company receives a promissory note or similar instrument as
payment of any part of the sale price for a division, subsidiary, business
segment or any other transaction involving a significant disposition of Company

                                       16
<PAGE>

assets, the promissory note or similar instrument will be distributed to the
Members in proportion to their Sharing Ratios as soon as sufficient proceeds
have been received by the Company from the promissory note or similar instrument
to pay whatever is determined by the Board to be appropriate with respect to the
establishment of the division, the subsidiary or business segment.

     4.4 Incorrect Payments. To the extent any payments made pursuant to this
Article IV are incorrectly paid, as previously or later determined by the
Company's books and records , any Member who receives more than should have been
paid to such Member shall promptly repay the amount of any such incorrect
payment, and any such repaid amounts shall be redistributed pursuant to this
Article IV or the Managers may offset the excess payments against future
distributions to the Member receiving such excess payments.

     4.5 Limitation Upon Distributions. No distribution shall be declared and
paid unless, the Company remains in compliance with all applicable Laws
including, but not limited to the Act, and banking requirements.

                                   ARTICLE V
                BOARD OF MANAGERS; POWERS AND DUTIES OF MANAGERS;
                             APPOINTMENT OF OFFICERS
                ------------------------------------------------

     5.1 Board of Managers.

          (a) General. The Members have established the Company as a
manager-managed limited liability company under the Act. The Company shall be
managed by a committee of four Persons, which shall manage the Company and its
business and affairs (this committee is referred to as the "Board" and the
Persons appointed to the Board are referred to as the "Managers"). The Managers
shall be representatives of the Members which appoint them, and shall derive all
of their right, power and authority under this Agreement as a result of a
delegation of such right, power and authority by the Members to the Managers.
Except as specifically provided in this Agreement, the Board may exercise all
powers of the Company and may do all such lawful acts and things as are not
specifically required by statute or by this Agreement to be exercised or done by
the Members. The Managers shall manage the affairs of the Company in a prudent
and businesslike fashion and, subject to Section 5.6, shall use their reasonable
efforts to carry out the purposes and Business of the Company. The Board may
delegate authority to act to any one Manager, in accordance with the provisions
of this Agreement.

          (b) Duties. Each Manager shall carry out their respective duties in
good faith, in a manner that he or she believes to be in the best interests of
the Company, and with such care as an ordinarily prudent Person in a like
position would use under similar circumstances. Each Manager shall devote such
time to the Business and affairs of the Company as it may determine, in
reasonable discretion, is necessary for the efficient carrying on of the
Company's Business.

          (c) Appointment and Qualifications. The Board shall consist of four
Managers. Initially ADA shall be entitled to appoint two (2) Managers (the "ADA
Managers"), and NexGen shall be entitled to appoint two (2) Managers (the

                                       17
<PAGE>

"NexGen Managers"). This arrangement shall continue for so long as ADA and
NexGen hold an equal number of Units. In the event a Member holds a lesser
number of Units than another Member, then the Member holding the lesser number
shall immediately, and without any further action by the Company, the Board or
the other Member, relinquish the right to appoint one (1) Manager and the other
Member shall immediately be entitled to appoint one (1) additional Manager.
Managers shall be appointed by the respective Members annually, for the term
beginning with the annual meeting of the Board as described in Section
5.2(a)(ii) hereof, and each Manager shall hold office until his or her successor
shall have been appointed and qualified or until his or her earlier death,
resignation or removal. Managers shall be natural persons, over the age of
eighteen (18), but Managers need not be Members of the Company. The Managers of
the Company as of the date hereof are listed on the attached Schedule 5.1(c).

          (d) Stalemate. In the event the Managers on the Board are unable to
agree upon a matter to be decided by the Board (a "Stalemate"), the Managers
agree to engage in discussions to attempt in good faith to negotiate a
resolution of the matter in question. The meeting to do so shall be held
promptly, but in no event later than ten (10) business days after the
determination that a Stalemate on an issue has occurred (a "Stalemate
Determination"). If the Managers are unable to resolve the Stalemate after
reasonable attempts have been made, which shall be no more than thirty (30) days
after the date of the Stalemate Determination (unless a longer or shorter time
is agreed upon by unanimous consent of the Board), the Board shall utilize the
services of the American Arbitration Association ("AAA"), in Denver, Colorado,
to appoint an arbitrator to resolve the Stalemate. The Board shall immediately
contact the AAA and open a proceeding to appoint a single arbitrator to decide
the Stalemate. The arbitrator so appointed shall be chosen by the Members by
mutual agreement from a list of proposed arbitrators designated by the AAA, who
have expertise in the area of the Company's Business, and to the extent
feasible, taking into account the specific matter to be determined by the
arbitrator. If the Board cannot agree on an arbitrator by consent, one shall be
appointed by the AAA in accordance with its Commercial Rules. The Board and the
arbitrator shall meet as soon as practicable after the appointment of the
arbitrator, and shall agree on the parameters of the proceeding to decide the
Stalemate, with emphasis on a determination being made in as expeditious and
cost-effective a manner as possible. Each of the Managers shall be entitled to
present relevant information to assist the arbitrator in reaching a decision.
The decision of the arbitrator shall be in writing, and shall be binding on the
Board and the Members. No appeal of such decision shall be taken to a court or
other adjudicatory body by and Manager, Member or other Person. All costs and
expenses of the arbitration shall be borne by the Company.

          (e) Vacancies. In the event of a vacancy in the office of any ADA
Manager, a successor shall be elected to hold office for the unexpired term of
such Manager by ADA. In the event of a vacancy in the office of any NexGen
Manager (except in the case of a vacancy resulting from a Withdrawal Election),
a successor shall be elected to hold office for the unexpired term of such
Manager by NexGen.

          (f) Removal. Except as otherwise provided in this Section 5.1(f), an
ADA Manager may only be removed by ADA and a NexGen Manager may only be removed
by NexGen, except that upon a Withdrawal Election, ADA shall have the right to
remove one (1) NexGen Manager and to fill the resulting vacancy with one (1)
Manager appointed by ADA, who shall thereafter be deemed an "ADA Manager" for
all purposes hereunder. Notwithstanding the foregoing, an individual Manager may

                                       18
<PAGE>

be removed by the affirmative vote of the Board (i) if such Manager is an
employee of the Company, upon the occurrence of an event that would be cause for
termination of the Manager's employment for cause, (ii) if the Manager is not an
employee of the Company, (A) if the Manager willfully breaches or habitually
neglects his or her duties pursuant to this Agreement, (B) if the Manager
commits an act of dishonesty or moral turpitude with respect to the Company or
its Business, or fraud outside Company Business (as finally determined by a
non-appealable order of a court of competent jurisdiction or as determined by a
unanimous Board decision without voting privilege from the suspected Manager),
or (C) as a result of the Manager's repeated failure to comply with the policies
and procedures adopted from time to time by the Company or the terms and
conditions of this Agreement and which adversely affect the performance of the
Manager's duties or responsibilities, or (iii) due to the Disability of the
Manager.

          (g) Resignation. A Manager may resign at any time by giving written
notice to that effect to the Board. Any such resignation shall take effect at
the time of the receipt of that notice or any later effective time specified in
that notice; and, unless otherwise specified in that notice, the acceptance of
the resignation shall not be necessary to make it effective. Any vacancy caused
by any such resignation or by the death of any Manager or any vacancy for any
other reason shall be filled as provided in Section 5.1(e) hereof, and any
Manager so elected to fill any such vacancy shall hold office until his
successor is elected and qualified or until his or her earlier death,
resignation or removal.

     5.2 Actions by Board.

          (a) Action by Meetings.

               (i) All meetings of the Board shall be held at the principal
office of the Company or at such other place within or without the State of
Colorado as may be determined by the Managers, in accordance with this Article
V, and set forth in the respective notice or waivers of notice of such meeting.

               (ii) The annual meeting of the Board shall be held immediately
following the annual meeting of the Members as set forth in Article VI. Such
annual meeting shall be conducted in the same manner as provided in this
Agreement for special meetings of the Board, except that the purposes of such
meeting need be enumerated in the notice of such meeting only to the extent
required by law in the case of annual meetings.

               (iii) Special meetings of the Board may be called by any Manager
upon at least five business days (if the meeting is to be held in person) or
three business days (if the meeting is to be held by conference, telephone or
similar communications) oral or written notice to the Managers, or upon such
shorter notice as may be approved by all of the Managers. Any Manager may waive
such notice as to himself or herself. A record shall be maintained of each
meeting of the Board. Business transacted at all special meetings shall be
confined to the purposes stated in the notice.

                                       19
<PAGE>

               (iv) Any meeting of the Board may be held in person and by means
of a conference, telephone or similar communication equipment by means of which
all Managers and other persons participating in the meeting can hear each other,
and such telephone or similar participation in a meeting shall constitute
presence in person at the meeting.

               (v) Written or printed notice stating the place, day and hour of
the meeting and, in the case of special meetings, the purpose or purposes for
which the meeting is called, shall be delivered not less than five (5) days
before the date of the meeting (except as otherwise provided in (iii) above),
and may be given telephonically, via facsimile, personally, by mail, by
commercial delivery service or electronic mail, by or at the direction of the
person calling the meeting, to each Manager. If given by a means other than
United States Mail, such notice will be effective only upon receipt by the
Manager to whom given during normal business hours on a business day unless
actually received by the Manager during a time other than normal business hours
on a business day or on a day other than a business day, in which case notice
will be deemed given as of the start of the next business day. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
addressed to the Manager at his last known address as it appears on the records
of the Company, with postage prepaid. If given telephonically, a confirmation of
the telephone call shall be delivered via mail, facsimile or email at the last
address, facsimile number or email address shown in the records of the Company
for the Manager being notified. Attendance of a Manager at any meeting shall
constitute a waiver of notice of such meeting, except where a Manager attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.

               (vi) A majority of the Managers shall constitute a quorum at the
meetings of the Board. Once a quorum is present at the meeting of the Board, the
subsequent withdrawal from the meeting of any Manager prior to adjournment, or
the refusal of any Manager to vote shall not affect the presence of a quorum at
the meeting. If, however, such quorum shall not be present at any meeting of the
Board, the Managers at such meeting shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
the requisite number of Managers shall be present.

               (vii) At any meeting of the Board at which a quorum is present,
the affirmative vote of a majority of the Managers shall be the act of the
Board, unless the vote of a greater number is required by this Agreement. For
purposes of voting of the Board on each matter to be brought before the Board
for a vote, each Manager shall have one vote. In the event of a Stalemate, the
provisions of Section 5.1(d) shall apply to resolve the Stalemate.

               (viii) Minutes of all meetings of the Board shall be kept and
distributed to each Manager as soon as reasonably practicable following each
meeting. If no objection is raised in writing following receipt of minutes or in
any event at the next meeting of the Board of Managers, then such minutes shall
be deemed to be accurate and shall be binding on the Managers and the Company
with respect to the matters dealt with therein.

               (ix) Any Manager or the Member who elected such Manager may
designate in writing an individual to act as the temporary substitute for such
Manager at any meeting of the Board which such Manager is unable to attend, and

                                       20
<PAGE>

attendance at any meeting of the Board by any such designated individual shall
be deemed to constitute attendance at such meeting by the Manager for whom such
individual is designated. Any such designated individual who attends a meeting
of the Board as a temporary substitute as aforesaid shall have all the powers
that the absent Manager has in respect of that meeting and any matters to be
acted upon at such meeting.

          (b) Actions Without a Meeting and Telephone Meetings. Notwithstanding
any provision contained in this Article V, all actions of the Board provided for
herein may be taken by written consent without a meeting, or any meeting thereof
may be held by means of a conference telephone or other method or device
provided that all Managers participating may simultaneously hear each other
during the meeting (and any Manager participating through such means will be
deemed to be present in person at the meeting). Any such action which may be
taken by the Board without a meeting shall be effective only if the written
consent or consents are in writing, setting forth the action so taken, and are
signed by at least one ADA Manager, on behalf of the ADA Managers and at least
one NexGen Manager, on behalf of the NexGen Managers. In the event action is
taken by less than all of the Managers, the Managers who did not participate in
taking the action shall be given written notice of the action not more than ten
(10) days after the taking of the action without a meeting; provided that the
failure to give such notice will not invalidate the action so taken.

          (c) Access to Information. Upon request, the Officers shall supply to
a Member or Manager (i) any information required to be available to the Members
under the Act, and (ii) any other information requested by such Member or
Manager regarding the Company or its activities, provided that obtaining the
information described in this clause (ii) is not unduly burdensome to the
Company. During ordinary business hours, each Member and Manager and their
authorized representative shall have access to all books, records and materials
in the Company's offices regarding the Company or its activities.

          (d) Limitation on Actions. Nothing contained herein shall be construed
as permitting any action to be taken by the Managers unless and until any
required approvals of the Members have been obtained pursuant to Section 6.2.

          (e) Insurance. The Company shall maintain or cause to be maintained in
force at all times, for the protection of the Company, the Managers and the
Members to the extent of their insurable interests, such insurance as the Board
believes is warranted for the operations being conducted.

     5.3 Annual Business Plan. The Board shall, as soon as practicable after the
Effective Date, develop the first Annual Business Plan, which shall be presented
and approved by the Members to cover the period set forth therein. Thereafter,
an Annual Business Plan shall be formulated, presented, approved by the Members
and adopted by the Board to become effective as of January 1st of each calendar
year, and shall cover the succeeding twelve (12) month period thereafter.

                                       21
<PAGE>

     5.4 Appointment of Committees and Officers.

          (a) In the event the Board determines that it is reasonably necessary
or appropriate for the conduct of the Business of the Company (including, for
example, audit review, compensation recommendations, execution and delivery of
contracts or other documents, federal or applicable state income or other tax
returns) the Board may appoint a committee of the Managers or an officer or
officers ("Officer") and, if so appointed, such committees and/or Officers shall
have such duties and authority as provided by the Board upon such appointment.
Committee members and Officers shall serve at the discretion of the Board and
may be removed with or without cause upon approval of the Board, subject,
however to the terms and conditions of any applicable employment agreement. The
salaries or other compensation, if any, of the Officers of the Company shall be
fixed from time to time by the Board. Notwithstanding the foregoing, any
Officers or committees appointed and acting pursuant to this Section 5.4 shall
be subject to the limitations and approval requirements set forth in Sections
5.6 and 6.2.

          (b) No third party dealing with the Company shall be required to
ascertain whether an Officer is acting in accordance with the provisions of this
Agreement. All third parties may rely on a document executed by an Officer as
binding the Company. The foregoing provisions shall not apply to third parties
who are Affiliates of a Member, Manager or Officer.

     5.5 Compensation. The Managers shall be entitled to such compensation as
shall be set forth in the Annual Business Plan.

     5.6 Board Decisions. No Officer, Manager, Member or any other Person shall
have the authority to bind or take any action on behalf of the Company with
respect to any of the following matters unless such matter, in each case and
from time to time, has been approved by the Board:

          (a) any sale or Change of Control of any Subsidiary or division of the
Company;

          (c) the purchase, lease or other acquisition of real property the cost
of which exceeds the Board Decision Threshold;

          (d) the incurrence of any indebtedness (including contractual vendor
financing), other than trade payables incurred in the ordinary course of
business in any Fiscal Year in an aggregate amount of less than the Board
Decision Threshold;

          (e) the creation of any Lien on any property or assets of the Company
other than (i) purchase money security interests and other Liens created or
existing at the time of acquisition of an asset, but only to the extent the
aggregate indebtedness of the Company secured by all such purchase money
security interests and such other Liens does not exceed at any time the Board
Decision Threshold; and (ii) material mans', mechanics', contractors',
operators', tax and similar Liens or charges arising in the ordinary course of
business or by operation of law;

          (f) the providing of any guaranty (or other obligations that, in
economic effect, are substantially equivalent to a guaranty) of any amount owed
by or any obligation of any Person, but only to the extent the aggregate amount
of such guaranty or other obligation does not exceed at any time the Board
Decision Threshold;

                                       22
<PAGE>

          (g) the settlement of any claim against the Company for a settlement
in excess of the Board Decision Threshold;

          (h) the commencement of any lawsuit, arbitration or other legal action
against any Person, except a suit or legal action against a Member. A suit or
legal action against a Member does not require Board approval unless the purpose
of such action is to collect amounts due the Company from the Member or to
enforce any right of the Company hereunder. Any Member shall be entitled to
bring a suit on behalf of itself, or on behalf of the Company as, or in the
nature of, a derivative suit, against another Member;

          (i) the Company entering into a business or expanding the current
business of the Company outside the scope of the Business;

          (j) entering into any futures, swap or other hedging arrangements of
any type, or financial derivative instruments or agreements of any type where
the total potential liability exposure of the Company exceeds the Board Decision
Threshold;

          (k) the approval of any contract or transaction between the Company
and any Member or Manager or their respective Affiliates, or any amendment or
modification of any such contract or transaction;

          (l) any removal of or designation of a successor to the TMP pursuant
to Section 7.3;

          (m) the designation, removal or replacement of any Officers of the
Company pursuant to Section 5.4 and the approval of any compensation of any such
Officers;

          (n) the filing by the Company of any petition for relief under the
United States Bankruptcy Code or any other present or future federal or state
insolvency, bankruptcy or similar law;

          (o) making any other decision with respect to the Company that
specifically requires the approval of the Board or Members pursuant to this
Agreement;

          (p) entering into any contract, agreement or other obligation of any
nature or duration in which the aggregate financial obligation of the Company
actually or potentially exceeds the Board Decision Threshold.

     5.7 Exculpation and Indemnification.

          (a) In carrying out duties hereunder, no Manager or Officer shall be
liable to the Company nor to any Member for its good faith actions, or failure
to act, nor for any errors of judgment, nor for any act or omission believed in
good faith to be within the scope of authority conferred by this Agreement, but
shall only be liable for fraud, willful misconduct, or gross negligence in the
performance of his or her duties under this Agreement.

                                       23
<PAGE>

          (b) (i) Subject to the limitations and conditions of the Act and this
Section 5.7, the Company shall indemnify, defend, save and hold harmless each
Person who was or is made a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative,
(hereinafter a "Proceeding"), or any appeal in such a Proceeding or any inquiry
or investigation that could lead to such a Proceeding, by reason of the fact
that such Person, or a Person of whom he is the legal representative, is or was
a Manager or Officer of the Company, or while a Manager of the Company is
serving as an Officer of the Company, or is or was serving at the request of the
Company as a Manager, Officer, partner, venturer, proprietor, trustee, employee,
agent or similar position of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise, against judgments, penalties
(including excise and similar taxes and punitive damages), losses, claims,
liabilities, fines, damages, settlements and reasonable fees and expenses
(including, without limitation, attorneys' fees) and other amounts
(collectively, "Damages") actually incurred by such Person in connection with
such Proceeding, and indemnification under this Section 5.7 shall continue as to
a Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity hereunder. The rights granted pursuant to this Section 5.7
shall be deemed contract rights, and no amendment, modification or repeal of
this Section 5.7 shall have the effect of limiting or denying any such rights
with respect to actions taken, omissions, or Proceedings arising prior to any
such amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Section 5.7 could involve indemnification for
negligence or strict liability. Notwithstanding the foregoing, the Company's
indemnification of a Manager as to third party claims shall be only with respect
to such loss, liability, or damage that is not otherwise compensated by
insurance carried for the benefit of the Company and shall be limited to the net
assets of the Company, and no Member shall have any personal liability
whatsoever on account thereof.

               (ii) The right to indemnification conferred in this Section 5.7
shall include the right to be paid or reimbursed by the Company the reasonable
expenses incurred by a Person of the type entitled to be indemnified under
clause (b)(i) above who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding shall be
made only upon delivery to the Company of a written affirmation by such Person
of his good faith belief that he has met the standard of conduct necessary for
indemnification under this Section 5.7 and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Section 5.7 or otherwise.

               (iii) The Company, by adoption of a resolution of the Board, may
indemnify and advance expenses to an Officer, employee or agent of the Company
to the same extent and subject to the same conditions under which it may
indemnify and advance expenses to a Manager under this Section 5.7; and, the

                                       24
<PAGE>

Company may indemnify and advance expenses to Persons who are not or were not
Managers, or Officers, employees or agents of the Company but who are or were
serving at the request of the Company as a manager, Manager, officer, partner,
venturer, proprietor, trustee, employee, agent or similar position of another
foreign or domestic limited liability company, corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person to the same extent that
it may indemnify and advance expenses to the Manager under this Section 5.7.

               (iv) Notwithstanding any other provision of this Section 5.7, the
Company may pay or reimburse expenses incurred by the Manager in connection with
his appearance as a witness or other participation in a Proceeding at a time
when he is not a named defendant or respondent in the Proceeding.

               (v) The right to indemnification and the advancement and payment
of expenses conferred in this Section 5.7 shall not be exclusive of any other
right which a Manager or other Person indemnified pursuant to clause (b)(iii)
above may have or hereafter acquire under any law (common or statutory),
provision of this Agreement or the other Transaction Agreements or otherwise.

               (vi) The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager, or
as an Officer, employee or agent of the Company or is or was serving at the
request of the Company as a manager, Manager, officer, partner, venturer,
proprietor, trustee, employee, agent or similar position of another foreign or
domestic limited liability company, corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise against
any expense, liability or loss, whether or not the Company would have the power
to indemnify such Person against such expense, liability or loss under this
Section 5.7.

               (vii) If this Section 5.7 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless the Manager and other
Person indemnified pursuant to this Section 5.7 as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative to the full extent permitted by any
applicable portion of this Section 5.7 that shall not have been invalidated and
to the fullest extent permitted by applicable law.

         5.8 Reliance. In performing his or her duties, each of the Managers and
the Officers shall be entitled to rely in good faith on the provisions of this
Agreement and on information, opinions, reports or statements (including
financial statements and information, opinions, reports or statements as to the
value or amount of the assets, liabilities, Profit or Loss of the Company or any
facts pertinent to the existence and amount of assets from which distributions
to Members might properly be paid), of the following other Persons or groups:
(i) one or more other Officers or employees of the Company, (ii) any attorney,
independent accountant or other Person employed or engaged by the Company, or
(iii) any other Person who has been selected with reasonable care by or on

                                       25
<PAGE>

behalf of the Company, in each case as to matters which such relying Person
reasonably believes to be within such other Person's professional or expert
competence. No individual who is a Manager or an Officer of the Company, or any
combination of the foregoing, shall be personally liable under any judgment of a
court, or in any other manner, for any debt, obligation or liability of the
Company, whether that liability or obligation arises in contract, tort or
otherwise, solely by reason of being a Manager or an Officer of the Company or
any combination of the foregoing.

                                   ARTICLE VI
                            MEMBERS; TYPES OF UNITS;
                 ISSUANCE OF UNITS AND OPTIONS TO PURCHASE UNITS
                 -----------------------------------------------

     6.1 Members. The Members and any Person to whom additional Units are
granted shall be Members and such term shall include such other Person as may be
admitted as a Member in the Company in accordance with the terms of this
Agreement.

     6.2 Authority and Power. Except as expressly provided below, it is not
intended that the Members will participate in the conduct of the business of the
Company or have any power or authority, by reason of their status as a Member,
to bind or obligate the Company or to take part in the operations, activities,
contracts, decisions or other matters involving the business of the Company,
except with respect to the following matters, which shall require the
affirmative vote or consent of all of the Members:

          (a) To effect a Change of Control of the Company.

          (b) To act in contravention of or in a manner not authorized by this
Agreement.

          (c) To dissolve or liquidate the Company.

          (d) To file a voluntary petition or otherwise initiate proceedings to
have the Company adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Company, or file
a petition seeking or consenting to reorganization or relief of the Company as
debtor under any applicable federal or state law relating to bankruptcy,
insolvency, or other relief for debtors with respect to the Company, or seek or
consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) of the Company
or of all or any substantial part of the properties and assets of the Company,
or make any general assignment for the benefit of creditors of the Company, or
admit in writing the inability of the Company to pay its debts generally as they
become due or declare or effect a moratorium on the Company debt or take any
action in furtherance of any action.

          (e) Amend this Agreement or the Articles in a manner that adversely
affects one or more Members.

          (f) Change the purposes of the Company as stated in Section 1.5.

          (g) The issuance or grant to any Person of (i) any additional Units
(whether or not as Voting Units) or other security of the Company, (ii) the
right to receive or subscribe for Units, or (iii) any security convertible into
or exchangeable for Units, which is not issued and outstanding as of the
Effective Date.

                                       26
<PAGE>

          (h) To perform any act that would subject any Member to any liability
to which such Member has not consented.

     6.3 Voting; Approval of the Members. Each Member holding Voting Units shall
initially be entitled to one vote for each Voting Unit held by such Member on
each matter expressly provided by this Agreement to be brought before the
Members for a vote or approval. At such time as the Sharing Ratios of the
Members holding Voting Units are no longer directly proportional to the number
of Voting Units held by the Members, the Members holding Voting Units shall be
entitled to cast that number of votes based on their respective Sharing Ratios,
with the total number of votes to be cast equal to 100, and each Member casting
that number of votes equal to their respective Sharing Ratios (including
fractional votes), expressed as a percentage.

     6.4 Liability to Third Parties. No Member, in its capacity as a Member,
shall be liable for the debts, obligations or liabilities of the Company,
including under a judgment decree or order of a court.

     6.5 Actions by Members.

          (a) Action by Meetings.

               (i) All meetings of the Members shall be held at the principal
office of the Company or at such other place within or without the State of
Colorado as may be determined by the Managers, in accordance with this Article
VI, and set forth in the respective notice or waivers of notice of such meeting.

               (ii) The annual meeting of the Members of the Company shall be
held at such time and date as shall be designated by the Chairman, from time to
time and stated in the notice of the meeting. The "Chairman" shall be elected on
Approval by the Members and shall continue in such capacity until a successor is
elected; provided that the Chairman may be removed and replaced at any time upon
Approval of the Members. Until otherwise designated, Charlie McNeil shall serve
as Chairman. Such annual meeting shall be called in the same manner as provided
in this Agreement for special meetings of the Members, except that the purposes
of such meeting need be enumerated in the notice of such meeting only to the
extent required by law in the case of annual meetings.

               (iii) Special meetings of the Members may be called by the
Chairman, the Managers (by vote of a majority), or any Member holding at least
ten percent (10%) of the outstanding Voting Units. Members who own only
Non-voting Units or who own less than ten percent (10%) of the outstanding
Voting Units shall not be entitled to call a meeting of the Members. Non-voting
Units will not be counted for purposes of determining the ten percent (10%)
requirement. Business transacted at all special meetings shall be confined to
the purposes stated in the notice.

                                       27
<PAGE>

               (iv) Written or printed notice stating the place, day and hour of
the meeting and, in the case of special meetings, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten (10) nor more
than sixty (60) days before the date of the meeting, either personally or by
mail, by or at the direction of the person calling the meeting, to each Member
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail addressed to the
Member at his address as it appears on the transfer records of the Company, with
postage prepaid.

               (v) Members holding a majority of the outstanding Voting Units of
the Company at the time of the meeting shall constitute a quorum at the meetings
of the Members, except as otherwise provided by law or the Certificate. Once a
quorum is present at the meeting of the Members, the subsequent withdrawal from
the meeting of any Member prior to adjournment or the refusal of any Member to
vote shall not affect the presence of a quorum at the meeting. If, however, such
quorum shall not be present at any meeting of the Members, the Members entitled
to vote at such meeting shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until the holders
of the requisite amount of Units shall be present or represented. At any meeting
of the Members at which a quorum is present, the vote of the Members owning a
majority of the Units entitled to vote who are at the meeting (in person or by
proxy) shall be the act of the Members, unless the vote of a greater number is
required by law, the Certificate or this Agreement. Members may vote or appear
at a meeting of the Members either in person or by written proxy held by and
appointing another Member as proxy provided that the Member holding the proxy is
present in person or by telephone.

               (vi) For purposes of voting on matters other than a matter for
which the affirmative vote of the holders of a specified portion of the Units
entitled to vote is required by the Act or this Agreement, at any meeting of the
Members at which a quorum is present, the act of Members shall be the
affirmative vote of those Members entitled to vote holding a majority of the
Units present and voting at the meeting.

               (vii) The Chairman shall make, at least ten (10) days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting, or any adjournment of such meeting, arranged in alphabetical order,
with the address of and the Units held by each, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the registered office
of the Company and shall be subject to inspection by any Member at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection of any
Member during the whole time of the meeting. However, failure to comply with the
requirements of this Section shall not affect the validity of any action taken
at such meeting.

               (viii) The Company shall be entitled to treat the holder of
record of any Units as the holder in fact of such Units for all purposes, and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such Units on the part of any other person, whether or not it shall
have express or other notice of such claim or interest, except as expressly
provided by this Agreement or the laws of the State of Colorado.

                                       28
<PAGE>

          (b) Actions Without a Meeting and Telephone Meetings. Notwithstanding
any provision contained in this Article VI, all actions of the Members provided
for herein may be taken by written consent without a meeting, or any meeting
thereof may be held by means of a conference telephone or other method or device
provided that all Members participating may simultaneously hear each other
during the meeting (and any Member participating through such means will be
deemed to be present in person at the meeting). Any such action which may be
taken by the Members without a meeting shall be effective only if the written
consent or consents are in writing, set forth the action so taken, and are
signed by the holder or holders of Units constituting not less than the minimum
amount of Units that would be necessary to take such action at a meeting at
which the holders of all Units entitled to vote on the action were present and
voted. In the event action is taken by less than all of the Members entitled to
vote on the action, the Members who did not participate in taking the action
shall be given written notice of the action not more than then (10) days after
the taking of the action without a meeting; provided that the failure to give
such notice will not invalidate the action so taken.

     6.6 Admission of Additional Members; Creation of Additional Units and
Options.

          (a) Authorized Units; Modification of Units; Issuance of Additional
Units. The Members shall determine, from time to time, the number of authorized
Units of the Company and the attributes of any such authorized Units. On the
date of this Agreement, the Members agree that Exhibit B reflects the number of
Units authorized, issued and outstanding, and that all of such Units have the
same rights, including voting rights. Additional Members may be admitted,
existing Units may be modified, additional Units may be issued and/or created
only as approved by the Members and, when so approved and when a new member (or
members) is admitted, Exhibits A, B and C shall be updated to reflect the
appropriate information, and as so amended, shall be attached to, and become a
part of, this Agreement.

          (b) Preemptive Rights.

               (i) Each existing Member shall have the preemptive right to
acquire its pro rata share of any Units or other securities which are proposed
to be issued by the Company from and after the Effective Date, on the same terms
and conditions set by the Board in accordance with, and as notified pursuant to,
Section 3.2.

               (ii) If the Company proposes to issue any Units or other
securities, it shall give each Member written notice of its intention,
describing the securities, the price and the terms and conditions upon which the
Company proposes to issue the same. Each Member shall have fifteen (15) days
from the giving of such notice to agree to purchase its pro rata share of the
securities for the price and upon the terms and conditions specified in the
notice by giving written notice to the Company and stating therein the quantity
of securities to be purchased. Notwithstanding the foregoing, the Company shall
not be required to offer or sell such securities to any Member who would cause
the Company to be in violation of applicable federal securities laws by virtue
of such offer or sale.

                                       29
<PAGE>

               (iii) If not all of the Members elect to purchase their pro rata
share of the securities, then the Company shall promptly notify in writing the
Members who do so elect and shall offer such Members the right to acquire such
unsubscribed securities. The Members shall have five (5) days after receipt of
such notice to notify the Company of its election to purchase all or a portion
thereof of the unsubscribed securities. If the Members fail to exercise in full
the rights of first refusal, the Company shall have ninety (90) days thereafter
to sell the securities in respect of which the Member's rights were not
exercised, at a price and upon general terms and conditions not materially more
favorable to the purchasers thereof than specified in the Company's notice to
the Members pursuant to Section 6.6(b)(ii) hereof. If the Company has not sold
such securities within ninety (90) days of the notice provided pursuant to
Section 6.6(b)(ii), the Company shall not thereafter issue or sell any
securities, without first offering such securities to the Members in the manner
provided above.

               (iv) The preemptive rights of each Member under this Section 6.6
may be transferred only to the same parties and shall be subject to the same
restrictions as any Transfer of Units, pursuant to Section 9.1 and Section 9.3.

          (c) Rights Attributable to Units. Units created or issued pursuant
hereto will have such rights as approved by the Board including, without
limitation, voting rights. If any Units issued by the Company in accordance
herewith have any characteristics which are different from previously issued
Units (other than voting rights), such Units shall be described in an amendment
or addendum to this Agreement, which shall be as approved by the Board and the
Members in accordance with Section 6.2.

          (d) Certificates Representing Units. The Board may, at its election
and discretion, issue or cause the Company to issue certificates representing
Units to the Members. In such event, the certificates shall be issued
sequentially with respect to Voting Units, with Non-voting Units being issued in
a different sequence. Any certificates issued shall clearly state that the
rights of the holder of the Units are described in this Agreement and the Act,
and that transfer of Units, if at all, shall be only in accordance with this
Agreement and applicable securities laws. The certificates shall contain such
other information as may be directed by the Board.

     6.7 Restrictions on Transfer. No Transfer of Units may be made by any
Member except in accordance with and as provided by Article IX and applicable
securities laws.

     6.8 Effect of a Non-payment Election by NexGen under the Purchase
Agreement. Immediately upon the occurrence of a Non-payment Election (as defined
in the Purchase Agreement) by NexGen, (i) one (1) of the NexGen Managers shall
resign as a Manager and such vacancy shall be filled by ADA, and (ii) NexGen
shall be deemed to have resigned as the Tax Matters Partner. Upon a Non-payment
Election, Exhibit B and Schedule 5.1(c) shall be immediately amended to reflect
the Transfer of Units resulting from the Non-Payment Election.

                                       30
<PAGE>

     6.9 Duties of Members.

          (a) NexGen's Duties to the Company.

               (i) From and after the Effective Date until the earlier to occur
of (a) the termination of this Agreement, (b) NexGen making a Non-payment
Election, (c) the Board determining that the Company will only have a Chemicals
Business because there is no reasonable likelihood that the Company will become
a Section 45 Business or (d) the Members unanimously agreeing that they no
longer desire to pursue becoming a Section 45 Business, NexGen shall perform in
good faith the duties described on Schedule 6.9(a)(i) for the Company. It is
understood, agreed and acknowledged that the duties described on Schedule
6.9(a)(i) shall be performed by NexGen on behalf of the Company and its Members
and that NexGen shall not be entitled to receive, and shall not submit request
for, compensation or reimbursement from the Company or any of the Members or
their Affiliates for any of such duties, nor shall NexGen be entitled to credit
in the form of a Capital Contribution for performing such duties.

               (ii) In the event the Board determines that the Company only has
a Chemicals Business because the Board has determined that there is no
reasonable likelihood that the Company will become a Section 45 Business or the
Members unanimously have agreed that they no longer desire to pursue becoming a
Section 45 Business, from and after that point in time, until the earlier to
occur of (i) the termination of this Agreement, or (ii) NexGen making a
Non-payment Election, NexGen shall perform in good faith the duties described on
Schedule 6.9(a)(ii) for the Company. It is understood, agreed and acknowledged
that the duties described on Schedule 6.9(a)(ii) shall be performed by NexGen on
behalf of the Company and its Members and that NexGen shall not be entitled to
receive, and shall not submit request for, compensation or reimbursement from
the Company or any of the Members or their Affiliates for, any of such duties,
nor shall NexGen be entitled to credit in the form of a Capital Contribution for
performing such duties.

          (b) ADA's Duties to the Company. From and after the Effective Date
until the earlier to occur of (i) the termination of this Agreement, or (ii) a
Non-payment Election on the part of NexGen, ADA shall perform in good faith the
duties described on Schedule 6.9(b) for the Company. It is understood, agreed
and acknowledged that the duties described on Schedule 6.9(b) shall be performed
by ADA on behalf of the Company and its Members and that ADA shall not be
entitled to receive, and shall not submit request for, compensation or
reimbursement from the Company or any of the Members or their Affiliates for,
any of such duties, nor shall ADA be entitled to credit in the form of a Capital
Contribution for performing such duties.

          (c) Cessation of Above-Described Duties. Notwithstanding any other
provision of this Agreement, neither party shall be obligated to perform any of
the duties described in Sections 6.9(a) or 6.9(b) without compensation or credit
as a Capital Contribution after a Non-payment Election by NexGen.

          (d) NexGen's Reimbursable Services. From and after the Effective Date
until the earlier to occur of (i) the Board determining that the Company only
has a Chemicals Business because there is no reasonable likelihood that the
Company will become a Section 45 Business, (ii) ADA and NexGen unanimously

                                       31
<PAGE>

agreeing that they no longer desire to pursue becoming a Section 45 Business,
(iii) the termination of this Agreement, or (iii) NexGen making a Non-payment
Election, unless otherwise mutually agreed by the parties, NexGen shall perform
in good faith the duties and provide the services described on Schedule 6.9(d)
hereto for the Company, in exchange for which the Company shall pay NexGen a
commercially reasonable hourly rate, based on the nature of the services being
provided and the cost that would be chargeable for similar services being
provided by an unaffiliated provider in the Denver metropolitan area.

          (e) Force Majeure. If either party is prevented or delayed in the
performance of any of its obligations by Force Majeure and if such party gives
written notice thereof to the other party within twenty (20) days of the first
day of such event specifying the matters constituting Force Majeure, together
with such evidence as it reasonably can give, then the party so prevented or
delayed will be excused from the performance or punctual performance, as the
case may be, as from the date of such notice for so long as such Force Majeure
continues; provided, however, that Force Majeure shall not relieve any party of
the obligation to make any payments required hereunder unless normal banking
transactions are not available.

          (f) Travel and Associated Business Expenses. Notwithstanding anything
to the contrary contained herein, the reasonable travel and associated business
expenses of Member personnel contributing their time and expertise to the
Business (per Schedules 6.9(a)(i), 6.9(a)(ii), 6.9(b) and 6.9(d)), whether or
not such expenses are incurred in connection with a duty that is
non-reimbursable or reimbursable, shall be deemed a business expense of the
Company and paid to the party incurring such reasonable expense upon submission
to the Company of appropriate supporting documentation.

                                  ARTICLE VII
                  RECORDS, FINANCIAL STATEMENTS AND FISCAL YEAR
                  ---------------------------------------------

     7.1 Records. The Board shall cause to be kept accurate and complete books
of account of the Company wherein shall be recorded all of the contributions to
the capital of the Company and all of the transactions of the Company. All
Company records shall be kept at the principal place of business of the Company,
and each Voting Member and its authorized representatives shall have, at all
times during reasonable business hours, free access to and the right to inspect
and copy such records. Non-voting Members shall have such access to records of
the Company as is required or given pursuant to the Act.

     7.2 Financial Statements.

          (a) Monthly Financial Statements. On or before the thirtieth (30th)
day following the end of each month, the Board (or a designated Officer) shall
prepare or cause the Company's bookkeeper or accountant to prepare, and deliver
to the Board and the Members, financial statements as of the end of the
preceding month, consisting of the following statements: balance sheet;
statement of operations (profit and loss); and statement of cash flows. The
profit and loss and cash flow statements shall include cumulative figures for
the year to date. Such financial statements shall be prepared in accordance with
GAAP. In addition, the Board (or a designated Officer) shall prepare and provide
the Members with a monthly and year-to-date statement showing actual versus
budgeted expenditures by categories, prepared in a manner consistent with the
approved written budget as set forth in the Annual Business Plan.

                                       32
<PAGE>

          (b) Annual Financial Statements. On or before the forty fifth (45th )
day following the end each Fiscal Year, the Board (or a designated Officer)
shall prepare or cause the Company's bookkeeper or accountant to prepare, and
deliver annual financial statements (in draft form) to the Members as of the end
of the preceding year and for the entire year then ended, consisting of the
following statements: balance sheet; statement of operations (profit and loss);
statement of cash flows; and statement of capital accounts for each Member. Such
financial statements shall be prepared in accordance with GAAP. The Members
shall review such draft financial statements and shall tender any comments
thereto to the Board, who shall then finalize the statements so that they may be
submitted for audit.

          (c) Audit. Upon the request of either Member, the Company shall cause
the annual financial statements of the Company to be audited by a certified
public accountant to be appointed by the Members, which accountant shall be
qualified to audit financial statements to be included in filings under the
Securities Act. The expense of any such audit shall be borne by the Company.

     7.3 Tax Returns; Tax Matters Partner. The Board shall cause all income tax
returns required to be prepared and timely filed by the Company with the
appropriate taxing authorities. The Board shall also cause to be prepared
Schedules K-1 to Form 1065 or similar schedules showing the amount of Company
income, gain, loss, deduction or credit allocated or charged to such Member
pursuant hereto and the amount of any distributions made to such Member during
such Fiscal Year, and shall use reasonable efforts to deliver such tax returns
and schedules to the Members within seventy-five (75) days after the end of the
Fiscal Year. All Members shall provide to the Company within ten (10) days after
the date requested any and all information needed by the Company in order to
prepare properly the income tax returns for the Company in accordance with the
effective applicable rules and regulations pertaining thereto. NexGen is hereby
designated as "Tax Matters Partner" ("TMP") for federal tax purposes and the TMP
shall have the authority to represent the Company and the Members in this
regard. The Members agree to cooperate with the Tax Matters Partner with respect
to the conduct of any proceedings regarding tax matters. Notwithstanding the
foregoing, the Tax Matters Partner shall not have any authority to change any
tax returns, compromise any position of the Company with the Internal Revenue
Service or otherwise bind the Company or any Member unless Approved by the
Members. The Tax Matters Partner will promptly give each Member copies of any
notices or correspondence received in his role as such and shall promptly notify
each Member of and give the Members owning at least ten percent (10%) of the
Voting Units an opportunity to participate in and have full and complete access
and input to any and all proceeding, filings, or other matters arising in
connection with said role. The Tax Matters Partner may be removed and replaced
by the Members. In the event the Company has been dissolved and wound up, or is
otherwise unable to fund expenses incurred in a proceeding concerning tax
matters, each Member shall be responsible for its pro-rata share of any and all
amounts reasonably incurred by the Tax Matters Partner in any such proceeding,
based on the percentage ownership of the Members at the time, or as such
interests existed at the time of dissolution of the Company, if applicable. The
Members (or former members, in the case where the Company has been dissolved and
wound up), shall immediately pay such amounts upon request of the Tax Matters
Partner.

                                       33
<PAGE>

     7.4 Bank Accounts. The Managers shall open and maintain a bank account or
accounts in the name of the Company in a commercial bank, the deposits of which
are insured by an agency of the United States Government, in which shall be
deposited all funds of the Company. The Managers shall designate one or more
persons to have the authority to disburse funds from such accounts for the
Company purposes specified in this Agreement. There shall not be deposited in
any such accounts any funds other than funds belonging to the Company and no
other funds shall in any way be commingled with such funds. The Company may
invest such funds, as it deems appropriate, in short-term certificates of
deposit, government obligations or prime grade commercial paper.

                                  ARTICLE VIII
                           DISSOLUTION AND LIQUIDATION
                           ---------------------------

     8.1 Dissolution.

          (a) The Company shall be dissolved upon the occurrence of any of the
following events, whichever occurs earliest:

               (i) The sale or other disposition of all or substantially all of
the assets of the Company and (if any deferred payment is received in connection
with such sale or other disposition) the receipt of the final installment or
other deferred payment from such sale or other disposition;

               (ii) Upon the unanimous consent of the Members;

               (iii) The termination, dissolution, death, permanent disability
or bankruptcy of any of the Members. Upon the occurrence of any event described
in this paragraph (iii) of this Section 8.1(a), the Voting Members (excluding,
for this purpose, the Units held by the Member with respect to which the event
has occurred) may, within ninety (90) days after such event, elect to continue
the business of the Company. If the business of the Company is continued
pursuant to this Section 8.1(a)(iii), the Member with respect to whom the event
occurred shall retain and be entitled to its share of the profits, losses and
distributions of the Company to the same extent as though held by the Member,
except that the successor to or representative of said Member shall be a
Non-voting Member from and after the occurrence of the event; or

               (iv) at the option of a Member, upon a Change of Control of the
other Member.

                                       34
<PAGE>

     8.2 Liquidation.

          (a) Except as otherwise provided herein, upon the dissolution of the
Company, no further business shall be conducted except for the taking of such
action as shall be necessary for the winding up of the affairs of the Company
and the distribution of its assets to the Members pursuant to the provisions of
this section. The Members shall appoint a Person (who may be a Member) to act as
liquidating trustee who shall have full authority to wind up the affairs of the
Company and to make final distribution as provided herein. The liquidating
trustee may sell all of the assets of the Company, at the best price available
or distribute all or part of the Company's assets in kind; provided that, any
such sale shall be made only with ten (10) days advance written notice to the
Members.

          (b) Upon the liquidation of the Company, all of the assets of the
Company shall be applied and distributed, by the liquidating trustee in the
following order:

               (i) To the creditors of the Company, other than Members;

               (ii) To setting up reserves which the liquidating trustee may
deem necessary for contingent or unforeseen liabilities or obligations of the
Company arising out of or in connection with the operations of the Company or
its liquidation;

               (iii) To the Members with respect to any Member Loans or advances
(including accrued interest) made by them to the Company; and

               (iv) To the Members in accordance with Article IV.

          (c) Any distributions in kind to the Members shall be valued at the
fair market value thereof, as reasonably determined by the liquidating trustee,
and the Capital Accounts of the Members shall be adjusted to reflect the income
or loss that would be realized if the item(s) of property were sold for an
amount equal to the fair market value as so determined.

          (d) The liquidating trustee shall comply with any requirements of the
Act or other applicable law, except as modified by this Agreement, pertaining to
the winding up of a limited liability company, at which time the Company shall
stand liquidated.

     8.3 Compliance with the Act. Upon the dissolution of the Company, the
liquidating trustee shall cause to be prepared and filed, and the Members shall
consent to and execute, where appropriate, such documents as my be necessary or
appropriate to comply with the relevant provisions of the Act including, without
limitation, filing a statement of commencement of winding up and a certificate
of termination.

                                   ARTICLE IX
                     PERMITTED TRANSFERS; OPTION TO PURCHASE
                     ---------------------------------------

     9.1 Permitted Transfers. A Member may Transfer all or a part of its Units
only in accordance with this Section 9.1 or upon compliance with the
requirements of Section 9.3. Any attempted Transfer of Units, any part of a

                                       35
<PAGE>

Unit, or any rights appurtenant thereto, other than in compliance with this
Section 9.1 or Section 9.3 shall be void and of no effect. The permitted
transfer ("Permitted Transfer") by a Member shall mean only the following and,
only a Person to whom a permitted Transfer is made pursuant hereto shall be a
"Permitted Transferee": (a) a direct or indirect Transfer of Units by a Member
to a Subsidiary or Affiliate, provided that control of the Units so Transferred
remains in a current Member or the Company, as appropriate, and the other
Members shall be entitled to rely on the transferring Member (or another Member)
for all purposes under and pursuant to this Agreement; (b) a Transfer of Units
by a Member to another Member (including a transfer back to ADA from NexGen
under the Purchase Agreement); or (c) any other direct or indirect Transfer
approved by the affirmative vote of a majority of the Members holding Voting
Units; provided, that, the Members will not unreasonably withhold, delay or
condition their approval for such a Transfer in the event the Transfer (i) does
not change the control of the Units proposed to be Transferred from the Person
designated as a Member on the Effective Date (if the Transfer is to an entity
owned or controlled by said Member), (ii) the transferee of the transferring
Member executes a counterpart of this Agreement agreeing to all of the relevant
terms hereof in addition to any additional restrictions on further Transfers of
the Units said new Member has received, and/or (iii) the proposed Transfer would
not constitute a Change of Control. In the event of a Transfer other than in
accordance with this Section 9.1 or Section 9.3 (including, without limitation,
a transfer upon bankruptcy or dissolution of a Member), the Units subject to the
Transfer shall immediately become Non-voting Units unless and until the Members
not transferring Units have unanimously approved the Transfer, in the sole and
absolute discretion of such Members, and the Units so Transferred shall be
subject to the purchase option set forth in Section 9.2, below.

     9.2 Purchase Right Upon Non-Approved Transfer. In the event any Units of
the Company are Transferred other than by a Permitted Transfer (including,
without limitation, a Transfer to the separate property of a Person not named as
the Member upon a transfer to a trustee in bankruptcy or a transfer upon the
dissolution of a Member to a Person who is not a Member), the Units shall, at
the election of the holders of a majority of the Voting Units outstanding (not
counting the Units then Transferred), become Non-voting Units, effective
retroactively to the date of such non-approved Transfer, and the Company and the
other Members shall have the right (but not the obligation), to purchase the
Units so Transferred (the "Option Units") in accordance with the terms of this
Section 9.2.

          (a) Company Option to Purchase. The Company shall first have the right
to elect to redeem the Option Units (subject to applicable law or restrictions
regarding such redemption) during the period (the "Company Option Period")
beginning on the later of (i) the day on which the Company received actual
notice, in writing, of the Transfer or (ii) the day on which the Company obtains
written confirmation from the transferee of the Option Units that a Transfer has
occurred (the "Transfer Notice") and ending on the later of (x) one (1) year
after the Transfer Notice or (y) thirty (30) days after receipt of the
"Appraised Value" (as defined herein) from the "Appraiser" (as defined herein).

          (b) Member Option to Purchase. In the event the Company elects not to
purchase all of the Option Units as provided in Section 9.2(a), the Members
other than the owner of the Option Units (the "Non-transferring Members") shall

                                       36
<PAGE>

have the right to elect to purchase the Option Units during the period (the
"Member Option Period") beginning on the earlier to occur of (i) the date on
which the Company gives the Non-transferring Member written notice that it does
not intend to exercise its option to redeem the Option Units or (ii) the end of
the Company Option Period, and ending sixty (60) days thereafter. The option to
purchase or redeem shall be exercised by the Company or the Non-transferring
Members, as the case may be, by written notice to the Person who owns or
controls the Option Units (the "Option Notice") delivered on or before the end
of the applicable period. In the event more than one (1) Non-transferring Member
desires to purchase the Option Units (the "Purchasing Members"), if the
Purchasing Members cannot agree on the number of Option Units each will
purchase, they shall have the right to purchase the percentage of Option Units
pro rata based upon their respective Sharing Ratios

          (c) Appraised Value; Appraisers. The value per Option Unit shall be
determined either by (i) agreement of the Person who owns or controls the Option
Units (the "Option Seller") and either the Company, in the case of Section
9.2(a), or the Purchasing Members, in the case of Section 9.2(b), or (ii) if no
agreement can be reached under the applicable portion of Section 9.2(c)(i), in
the case of either Section 9.2(a) or Section 9.2(b), by an Appraiser determining
the Appraised Value. The "Appraised Value" shall mean the fair market value of
the Option Units, taking into account any lack of liquidity of the Units, the
financial and business condition of the Company and such other factors an
Appraiser may take into account in determining fair market value of the Option
Units, including any lack-of-control or minority status in determining the value
of the Option Units. Any "Appraiser" shall be appointed upon Approval of the
Members and compensated by the Company and shall be qualified to appraise the
Units. The Appraiser shall give written notice of the Appraised Value to the
Option Seller and, as applicable, the Purchasing Members or the Company. The
purchase price shall be as agreed by the appropriate parties in the case of
Section 9.2(c)(i), or the Appraised Value per Option Unit multiplied by the
number of Units constituting the Option Units, in the case of Section 9.2(c)(ii)
(the "Purchase Price").

          (d) Closing The Closing of the purchase and sale of the Option Units,
whether pursuant to Section 9.2(a) or Section 9.2(b), shall occur within thirty
(30) days following the determination of the Purchase Price. At closing the
Option Seller shall deliver the Option Units to the Company or the Purchasing
Members, as the case may be, free and clear of any and all Liens (except this
Agreement) pursuant to such instrument or instruments as may be necessary or
appropriate for such purpose.

                                       37
<PAGE>

     9.3 Bona Fide Offer.

          (a) Any Member (a "Transferor") who receives and desires to accept a
Bona Fide Offer from a Person to buy the Member's Units (the "Offered Units")
must promptly send a written "Notice to Sell" to the Voting Members and shall
offer to sell the Offered Units to said Voting Members at the same price and on
the same terms as contained in the Bona Fide Offer. Such Notice to Sell shall be
in writing and contain a true and correct copy of the Bona Fide Offer, including
its price, terms, and conditions, and the name, address, business or occupation,
and financial statements dated within 12 months from the date of the Bona Fide
Offer of the person or persons making such Bona Fide Offer, or if the Bona Fide
Offer is for cash, written demonstration of the ability to pay. The Voting
Members shall have thirty (30) days after the receipt of the Notice to Sell to
notify the Transferor in writing that said Members elect to purchase all, but
not less than all, of the Offered Units. The Notice to Sell may be accepted by
all or less than all of the Voting Members who receive the Notice to Sell (the
"Electing Members").

          (b) If there is more than one Electing Member, each Electing Member
may purchase the number of Offered Units on which such Electing Members may
agree or, if no agreement can be reached, each Electing Member may purchase a
pro rata number of the Offered Units based upon the respective Sharing Ratios of
the Electing Members.

          (c) Unless otherwise agreed, the closing shall take place within sixty
(60) days after the date the Transferor receives notice that his offer has been
accepted by the Electing Members. Unless otherwise agreed, the closing shall
take place at the principal office of the Company and shall be at the price and
terms of the Bona Fide Offer.

          (d) If no Voting Members elect to timely purchase the Offered Units in
accordance with this Section 9.3, the Transferor may make a bona fide sale to
the prospective purchaser named in the Notice to Sell, but only on terms in
strict compliance with those set forth by the Transferor in the Notice to Sell
and in accordance with this Agreement. Any prospective purchaser shall, prior to
such Transfer, become a signatory hereto by executing a conformed counterpart of
this Agreement whereby such Person or Persons shall be deemed to have adopted
and agreed to be bound by all of the provisions of this Agreement, and shall
provide the Company and the other Members with reasonable proof and assurances
that such prospective purchaser will be able to timely and adequately perform
the duties of the Transferor pursuant to Section 6.9 hereof. Upon a failure to
provide such reasonable assurances and proof, the Company and any
non-transferring Member shall be entitled to object to the proposed transfer,
and such transfer shall be prohibited until such prospective purchaser is able
to provide such reasonable assurances and proof. If the Transferor shall fail to
make such sale within sixty (60) days following the expiration of the time
provided in this Section 9.3 for the election by the other Members, the Offered
Units shall then again become subject to all restrictions of this Agreement. Any
modification of the terms of the Bona Fide Offer between the prospective
purchase and the Transferor shall be deemed a new offer which shall again be
subject to this Section 9.3.

          (e) In connection with a Bona Fide Offer, a Transferor may disclose to
a prospective purchaser information regarding the Company, including
Confidential Information, provided the Transferor and prospective purchaser have
entered into a written agreement for the benefit of the Company and its Members
and providing that such information shall remain confidential and prohibiting
the use and further dissemination of such Confidential Information, containing
essentially the terms contained in Section 11.8.

                                       38
<PAGE>

                                    ARTICLE X
                                 INDEMNIFICATION
                                 ---------------

     10.1 Indemnification by Company.

          (a) In General. To the maximum extent permitted by law, and
notwithstanding any other provision relating to the rights of indemnity
hereunder or under the other Transaction Agreements, the Company shall indemnify
and hold harmless each Manager, Officer and Member and its members, managers,
partners, shareholders, officers, employees, agents, attorneys and Affiliates
(individually, an "Indemnitee") from and against any and all Damages arising
from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, in which the Indemnitee may be
involved, as a party or otherwise, arising out of or incidental to the business
or affairs of the Company or the Indemnitee's acting as a Member, a Manager or
an officer, Manager, employee or agent thereof, regardless of whether the
Indemnitee continues to be a Member, a Manager, an Affiliate, or an officer,
Manager, employee, partner or agent of such Member or of an Affiliate at the
time that such liability or expense is paid or incurred.

          (b) Advance Payment of Expenses. At the sole discretion of the
Managers (and subject to the Approval of the Managers) the Company may pay or
reimburse, in advance of the final disposition of a proceeding, reasonable
expenses incurred by an Indemnitee who is, was or is threatened to be a named
defendant or respondent in a proceeding, if the Company receives a written
undertaking constituting an unlimited general obligation of the Indemnitee
(without reference, however, to the Indemnitee's ability to repay) by or on
behalf of the Indemnitee to repay the amount paid or reimbursed if it is
ultimately determined that the Indemnitee has not met the applicable
requirements.

          (c) Report to Managers and Members. The Company shall promptly (but in
any case within twenty (20) days) notify the Managers and Members of any
indemnity payments made hereunder.

          (d) Future Amendments to the Act. Notwithstanding anything to the
contrary in this Section 10.1 or elsewhere in this Agreement, no amendment to
the Act after the date of this Agreement may reduce or limit in any manner the
indemnification provided for or permitted by this Section 10.1 unless the
reduction or limitation is mandated by the amendment for limited liability
companies formed prior to the enactment of the amendment.

     10.2 Indemnification by the Parties. To the maximum extent permitted by
law, and notwithstanding any other provision relating to the rights of indemnity
hereunder or under the other Transaction Agreements, each party shall indemnify
and hold harmless each other party and their respective members, managers,
partners, shareholders, officers, employees, agents, attorneys and Affiliates
from and against any and all Damages related to, arising out of or otherwise in

                                       39
<PAGE>

connection with any (i) breach or violation of any representation or warranty of
the indemnifying party contained in this Agreement or the other Transaction
Agreements, (ii) any default by such indemnifying party under any agreement or
covenant contained herein or in the other Transaction Agreements, or (iii) any
violation by such indemnifying party of any Law, in all cases except to the
extent any breach, violation or default directly results from the gross
negligence or willful misconduct of the party otherwise entitled to be
indemnified hereunder.

     10.3 Limits of Indemnification. Notwithstanding anything to the contrary in
this Agreement, any Transaction Agreement, or elsewhere or under applicable law,
under no circumstances will any Member be liable to any other Member for
consequential, incidental, special, or punitive damages for any breach of this
Agreement or any Transaction Agreement or howsoever else arising, and each
Member hereby waives all rights to such damages.


                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS
                            ------------------------

     11.1 Notices. All notices and other required communications hereunder shall
be in writing, addressed as follows:

     If to NexGen:
     -------------

     NexGen Refined Coal, LLC
     3300 South Parker Road, Suite 520
     Aurora, CO 80014
     Attn:  Charles S. McNeil, President
     Fax:  (303) 751-9210
     Email address:  cmcneil@nexgen-group.com

     With a copy to:

     Republic Financial Corporation
     3300 South Parker Road, Suite 500
     Aurora, CO  80014
     Attn:  Senior Vice President
     Fax:  (303) 751-4777
     Email address:  jstirbis@republic-financial.com

     If to ADA:

     ADA-ES, Inc.
     8100 SouthPark Drive, Unit B
     Littleton, CO _80120
     Attn:  Dr. Michael Durham
     Fax:  (303) 734-0330
     Email address: miked@adaes.com

                                       40
<PAGE>

Notices shall be given (a) by personal delivery to the other party, (b) by
facsimile or email, with confirmation sent by registered or certified mail,
return receipt requested, or (c) by registered or certified mail, return receipt
requested. All notices shall be effective and deemed delivered (i) if by
personal delivery, on the date of delivery if during business hours, otherwise
the next business day, (ii) if by facsimile, on the date the facsimile is
received if received during business hours, otherwise the next business day and
(iii) if solely by mail, upon receipt by the addressee, which receipt shall be
deemed to have occurred at such time as the party is provided with notice from
the postal authorities that a registered or certified letter is awaiting
delivery to the party. A party may change its address by notice to the other
party.

     11.2 Application of Colorado Law. This Agreement and the application of
interpretation hereof, shall be governed exclusively by the laws of the State of
Colorado, and specifically the Act. In a proceeding brought to enforce or
interpret this Agreement or any matter related hereto, the parties agree that
exclusive jurisdiction and venue shall exist in the Colorado District Courts
located in Arapahoe County, Colorado, and neither party shall be entitled to
move for a change of venue based on the grounds of inconvenience or for any
other reason.

     11.3 No Action for Partition. No Member shall have any right to maintain
any action for partition with respect to the property of the Company.

     11.4 Amendment of Articles or this Agreement. Except as otherwise expressly
set forth in this Agreement, the Articles or this Agreement may be amended,
supplemented or restated only upon the unanimous written consent or approval, as
the case may be, of the Members then entitled to vote thereon. Upon obtaining
the approval of any amendment to the Articles, the Members shall cause a
Certificate of Amendment in accordance with the Act to be prepared, and such
Certificate of Amendment shall be executed by a Manager or Member or Members (if
so required) and shall be filed in accordance with the Act.

     11.5 Binding Effect. Except as herein otherwise provided to the contrary,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Members, their distributees, legal representatives, executors,
administrators, successors and assigns.

     11.6 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original and shall be binding upon the
Company and the Member who executed the same, but all of such counterparts shall
constitute the same Agreement.

     11.7 Dates. The term "day" as used in this Agreement means a calendar day.
If the date of any required action or notice under this Agreement falls on a
Saturday, Sunday or legal holiday, the date of such required action or notice
shall be extended to the next business day.

     11.8 Confidentiality.

                                       41
<PAGE>

          (a) As used herein, the term "Confidential Information" means
information which is of a non-public, proprietary or confidential nature of the
disclosing Party or another Person providing information to the Company under an
agreement pursuant to which such information is required to be kept confidential
(whether such Confidential Information is marked or identified as confidential
or has been or is disclosed in circumstances that would lead a reasonable person
to believe such information is confidential) disclosed to the receiving Party by
the disclosing Party or Person or its officers, directors, agents or
representatives, including information disclosed in any conversations and
discussions between or among the Parties, or any of their officers, directors,
agents or representatives (including information disclosed prior to the
Effective Date), including, without limitation, all materials, documentation,
know-how, potential strategic relationships, reports and analyses, technical and
economic data, studies, forecasts, trade secrets, research or business
strategies or methods, business structures, monetization strategies, marketing
information and strategies, procedures, business, financial or contractual
information or other written or oral information regarding ADA, NexGen, the
Technology, the Company or the Business. Confidential Information may be in any
form whatsoever, including oral communications, writings, computer programs,
logic diagrams, component specifications, drawings, diagrams or other media. All
such information, howsoever disclosed, including by inspection or otherwise,
shall be deemed Confidential Information unless otherwise expressly agreed in
writing by the Party or Person disclosing such information.

          (b) Notwithstanding the provisions of paragraph (a) of this Section
11.8, the term "Confidential Information" shall not include, and neither Party
shall be under any obligation to maintain in confidence or not use, any
information (or any portion thereof) disclosed to it by the other Party to the
extent that such information:

               (i) is in the public domain at the time of disclosure; or

               (ii) following disclosure, becomes generally known or publicly
available through no act or omission on the part of the receiving Party: or

               (iii) is known, or becomes known, to the receiving Party from a
source other than the disclosing Party or its Representatives (as defined
herein), provided that disclosure by such source is not in breach of a
confidentiality agreement with the disclosing Party; or

               (iv) is independently developed by the receiving Party without
violating any of its obligations under this Agreement and without the use of or
reference to any Confidential Information of the other Party.

          (c) If a receiving Party is served with any legal process or in any
civil action or criminal action is subject to any motion or order requiring the
receiving Party to disclose to a third-party any Confidential Information of the
disclosing Party, the receiving Party will promptly notify the disclosing Party,
and unless the disclosing Party timely obtains, at its own instigation and cost,
an appropriate court order nullifying such process, motion, or order or
restraining the receiving Party from such disclosure, the receiving Party may
disclose such Confidential Information as and to the extent required by such
legal process, motion, or order. The receiving Party will promptly and fully
cooperate with all efforts of the disclosing Party to obtain such order.

                                       42
<PAGE>

          (d) The Parties hereby further agree that the Confidential Information
(i) may only be used by the receiving Party in connection with or in furtherance
of the Business, and (ii) will be kept confidential at all times hereunder and
not disclosed by the receiving Party to any other person, except that
Confidential Information may be disclosed to any of the receiving Party's
affiliates, directors, officers, employees, attorneys, accountants, consultants,
advisors and agents (collectively, its "Representatives") and to financing
sources and customers who require access to such information in connection with
the Business. Each of the Parties agrees that any of its Representatives to whom
Confidential Information is disclosed will be informed of the confidential or
proprietary nature thereof and of the receiving Party's obligations under this
Agreement, and that each Party shall be responsible for any use or[GRAPHIC
OMITTED][GRAPHIC OMITTED] disclosure of Confidential Information by any of its
Representatives. Confidential Information shall not be reproduced in any form
except as required to accomplish the intent of this Agreement or in furtherance
of the Business. Any reproduction of any Confidential Information shall remain
the property of the disclosing Party and shall contain all confidential or
proprietary notices or legends that appear on the original, unless otherwise
authorized in writing by the disclosing Party. Notwithstanding the foregoing,
Confidential Information incorporated in the ordinary course into any Party's
written board materials or minutes shall not be subject to the obligations set
forth in this paragraph as long as such materials or minutes are held consistent
with the procedures normally used by such Party to safeguard proprietary
information. Such Confidential Information shall continue to be subject to the
other terms and conditions of this Agreement.

          (e) The Parties agree that: (i) all rights to Confidential Information
disclosed pursuant to this Agreement are reserved to the disclosing Party; (ii)
except as otherwise prohibited by this Agreement, nothing in this Section 11.8
shall diminish or restrict in any way the rights that each Party has to conduct
its business or to disclose its own Confidential Information to third parties,
and (iii) except as specifically set forth in another Transaction Agreement, no
license or conveyance or any rights including intellectual property rights
relating to the Confidential Information is granted or implied by either Party
to the other.

          (f) The provisions of this Section 11.8 shall become effective as of
the Effective Date, shall survive termination of this Agreement, and shall
continue until such Confidential Information ceases to be Confidential
Information in accordance with the provisions of paragraph (b) of this Section
11.8, provided, however, that in the event of a dissolution of the Company
resulting in the parties no longer ceasing to engage in the Business as members
of the Company, the party who owns any such Confidential Information may use
such information for any purpose whatsoever.

          (g) Upon a disclosing Party's request, the receiving Party shall at
its option either destroy or return to the disclosing Party as promptly as
practicable, but in any event within thirty (30) days, all Confidential
Information received from the disclosing Party in the possession of the
receiving Party or its Representatives, including all copies of such
Confidential Information, all notes or other documents with respect to or
reflecting such Confidential Information, and of materials derived from such
Confidential Information. Upon completing the foregoing, the receiving Party
shall give the disclosing Party a certificate confirming its compliance with
this Section.

                                       43
<PAGE>

          (h) Each Party further agrees that all files, records, documents,
drawings, specifications, equipment, and similar items relating to the Business
and which are prepared by the Company in the course of conducting the Business,
whether prepared by a Member or others, are and shall remain exclusively the
property of the Company and that they shall be removed from the premises of the
Company only with the express prior written consent of the Company.

          (i) Prior to appointment of any Person as a Manager who is not also a
Member, such Person will be required to execute and deliver to the Company a
Confidentiality Agreement covering essentially the same items as covered hereby.

          (j) The receiving Party of any Confidential information acknowledges
and agrees that due to the unique nature of the Confidential Information, there
may be no adequate remedy at law for any breach of a receiving Party's
obligations hereunder, that any such breach or any unauthorized use or release
of any Confidential Information by a receiving Party may allow such receiving
Party or third parties to unfairly compete with the disclosing Party, resulting
in irreparable harm to the disclosing Party and therefore, that upon any such
breach or any, threat thereof, the disclosing Party shall be entitled to
appropriate equitable relief in addition to whatever remedies that the
disclosing Party might have at law, and the disclosing Party shall be entitled
to be indemnified by the receiving Party from any loss or harm, including,
without limitation, attorney's fees, in connection with any breach or
enforcement of the receiving Party's obligations hereunder or the unauthorized
use or release of any such Confidential Information. Notwithstanding the
forgoing or any law, under no circumstances shall either Party be liable for
special, incidental, consequential, or punitive damages with respect to any
breach of this Agreement other than the payment of attorney fees as is
specifically provided for in this Agreement.

     11.9 Covenant Not to Compete: Business Opportunities. Each Member agrees
that it will not compete with the Business of the Company during the term of
this Agreement. For this purpose, the term "compete" shall mean engaging in any
business or activity that is in competition with the Business or activity of the
Company in the same market the Company is engaged in or is marketing to (through
direct marketing efforts) at any time during the term of this Agreement and with
any customers of the Company at the time of termination for a period of three
years. In addition, during the term of this Agreement, each Member shall present
to the Company any business opportunity which relates to or in the furtherance
of, the ongoing Business of the Company, except that nothing in this Section
11.9 shall in any way limit the applicability of Section 1.6 hereof. In this
regard, the Members agree that they will use their best efforts to further the
purposes and business of the Company and shall not engage in any activities
which are or may be considered competitive with the Business or operations of
the Company. The Members agree that prior to the appointment of any Person as a
Manager who is not also a Member, such Person will be required to execute and
deliver to the Company a non-competition agreement containing terms and
conditions substantially the same as the foregoing Section 11.8 and 11.9.
Notwithstanding this Section 11.9, or any other provision of this Agreement,
such provisions shall not be construed in such a manner as to prevent ADA from
selling a product or service where such sales are not competitive with the
Company's Business.

                                       44
<PAGE>

     11.10 Invalidity of Provisions. Should any provision or part of any
provision of this Agreement be held to be invalid or unenforceable by a Court of
competent jurisdiction, such provision shall be deemed modified and amended to
the extent (but only to the extent) necessary to make such provision valid and
enforceable, and so amended, such provision shall be enforced. In the event a
Court finds that it cannot so modify or amend any such provision, such provision
shall be stricken from this Agreement and the remaining provisions of this
Agreement shall remain valid and enforceable to the fullest extent possible,
excluding such invalid provision.

     11.11 Representations and Warranties.

          (a) Each Member represents and warrants to the other Members and the
Company as follows:

               (i) It is the type of legal entity specified in the first
paragraph of this Agreement, duly organized and in good standing under the laws
of the jurisdiction of its organization and is qualified to do business and is
in good standing in those jurisdictions where necessary to carry out the
purposes of this Agreement;

               (ii) the execution, delivery and performance by it of this
Agreement and all transactions contemplated herein are within its entity powers
and have been duly authorized by all necessary entity actions;

               (iii) this Agreement constitutes its valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium and similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity; and

               (iv) the execution, delivery and performance by it of this
Agreement will not conflict with, result in a breach of or constitute a default
under any of the terms, conditions or provisions of (i) any applicable law, (ii)
its governing documents, or (iii) any agreement or arrangement to which it or
any of its Affiliates is a party or which is binding upon it or any of its
Affiliates or any of its or their assets.

          (b) Each Member recognizes that (i) the Units have not been registered
under the Securities Act or qualified under any state securities laws, and
covenants not to sell, offer for sale, or otherwise Transfer all or any part of
its Units in the absence of an effective registration statement covering such
interest under the Securities Act and qualification under applicable state
securities laws unless such sale, offer of sale, or other Transfer is exempt
therefrom, (ii) the Company has no obligation to register or qualify any
Member's Units for sale, or to assist in establishing an exemption from
registration or qualification for any proposed sale and may, in conjunction with
any proposed sale or Transfer, require the Transferring owner to provide the

                                       45
<PAGE>

Company with an opinion of counsel as to the legality of such transfer under
applicable Laws, and (iii) the restrictions on Transfer contained in this
Agreement, under the Securities Act and under applicable state securities laws
may severely affect the liquidity of a Member's investment. This Agreement and
any certificates representing Units may include a legend reflecting the
restrictions on Transfer set forth in this Section 11.11(b) or elsewhere in this
Agreement.

          (c) Each Member further represents and warrants to the other Members
and the Company as follows:

               (i) such Member has been advised (i) that a conflict of interest
exists among the Members' individual interests, (ii) that this Agreement has tax
consequences and (iii) that it should seek independent counsel in connection
with the execution of this Agreement;

               (ii) such Member has had the opportunity to seek independent
counsel and independent tax advice prior to the execution of this Agreement and
no Person has made any representation of any kind to it regarding the tax
consequences of this Agreement; and

               (iii) this Agreement and the language used in this Agreement are
the product of all parties' efforts and each party hereby irrevocably waives the
benefit of any rule of contract construction that disfavors the drafter of an
agreement.

          (d) The representations and warranties set forth in Section11.10(a),
(b) and (c) above shall survive the execution and delivery of this Agreement and
any documents of Transfer provided under this Agreement.

     11.12 Expenses. Except as otherwise specifically provided in this Agreement
and the Purchase Agreement, NexGen and ADA will each pay all costs and expenses
incurred by each of them on their own behalf, in connection with this Agreement
and the transactions contemplated hereby, including fees and expenses of their
own financial consultants, accountants and counsel.

     11.13 Public Announcements. No public announcement may be made by any
Person with regard to the transactions contemplated by this Agreement without
the prior consent of NexGen and ADA, provided that either party may make such
disclosure if advised by counsel that it is required to do so by applicable law
or regulation of any governmental agency or stock exchange upon which securities
of such party are registered. NexGen and ADA will discuss any public
announcements or disclosures concerning the transactions contemplated by this
Agreement with the other party prior to making such announcements or
disclosures.

     11.14 Entire Agreement. This Agreement and the other Transaction
Agreements, together with all respective exhibits and schedules hereto and
thereto, collectively constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all representations,
warranties, understandings, terms or conditions on such subjects that are not
set forth specifically herein or therein, including, without limitation, the
terms and conditions contained in the LOI.

                  [Remainder of Page Intentionally Left Blank]



                                       46
<PAGE>


     IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of November 3, 2006.

                                            COMPANY:
                                            --------

                                            ADA-NexCoal, LLC, a Colorado limited
                                            liability company

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


                                            MEMBERS:
                                            --------

                                            ADA-ES, Inc., a Colorado corporation

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


                                            NexGen Refined Coal, LLC, a Wyoming
                                            limited liability company

                                            By: /s/ Charles S. McNeil
                                            -------------------------
                                            Name:  Charles S. McNeil
                                            Title:  President




                                       47
<PAGE>

                         INDEX OF EXHIBITS AND SCHEDULES
                                       TO
                             OPERATING AGREEMENT OF

                                ADA-NEXCOAL, LLC
                                ----------------





         EXHIBIT                                 DESCRIPTION
         -------                                 -----------


            A                     [Reserved]
            B                     Unit Ownership and Sharing Ratios
            C                     Addresses of Members
            D                     License  Agreement  (to which the  Supply
                                  Agreement shall be attached as Exhibit 1)


        SCHEDULE                                 DESCRIPTION
        --------                                 -----------


         5.1(c)                   Managers

        6.9(a)(i)                 Non-reimbursable Duties of
                                  NexGen under Section
                                  6.9(a)(i)

       6.9(a)(ii)                 Non-reimbursable Duties of
                                  NexGen under Section
                                  6.9(a)(ii)

         6.9(b)                   Non-reimbursable   Duties  of  ADA  under
                                  Section 6.9(b)

         6.9(d)                   Reimbursable   Duties  of  NexGen   under
                                  Section 6.9(d)



<PAGE>

                                    EXHIBIT A
                                       TO
                               OPERATING AGREEMENT
                                       OF
                                ADA-NexCoal , LLC

                                   [Reserved]
                                   ----------




<PAGE>

                                    EXHIBIT B
                                       TO
                               OPERATING AGREEMENT
                                       OF
                                ADA-NexCoal, LLC

                        Unit Ownership and Sharing Ratios


            Member                       Units*              Sharing Ratios
            ------                       -----               --------------

   ADA-ES Inc.                             50                      50%

   NexGen Refined Coal, LLC                50                      50%



* All Voting Units


<PAGE>

                                    EXHIBIT C
                                       TO
                               OPERATING AGREEMENT
                                       OF
                                ADA-NexCoal, LLC

                                    Addresses
                                    ---------


            Member                                 Address
            ------                                 -------

         ADA-ES, Inc.                   8100 SouthPark Way, Unit B
                                        Littleton, CO 80120

   NexGen Refined Coal, LLC             3300 South Parker Road, Suite 520
                                        Aurora, CO 80014


<PAGE>

                                    EXHIBIT D
                                       TO
                               OPERATING AGREEMENT
                                       OF
                                ADA-NexCoal , LLC


[License Agreement dated November 3, 2006 between ADA-ES, Inc. and ADA-NexCoal,
LLC]



<PAGE>

                                 SCHEDULE 5.1(C)

                                    Managers
                                    --------

ADA Managers:  Dr. Michael Durham, Dr. Nina Bergan French

NexGen Managers:  Charles McNeil, Brian Humphrey



<PAGE>

                               Schedule 6.9(a)(i)
                               ------------------

NexGen's Non-reimbursable Duties under Section 6.9(a)(i):
---------------------------------------------------------

     o    Provide expanded market access to assist the Company in marketing the
          Technology.

     o    NexGen shall engage legal counsel (Keith Martin of Chadbourne & Parke
          LLP) to pursue appropriate and available legal, legislative or
          regulatory approaches to best enable the Company to qualify for
          Section 45 Tax Credits, which may include the preparation of a private
          letter ruling application to the IRS; provided, however, that, NexGen
          shall only be obligated to pay exclusively for the fees and expenses
          of such legal counsel up to $100,000, and, thereafter, any fees and
          expenses of legal counsel shall be an expense of the Company and paid
          pursuant to the terms of the Operating Agreement.

     o    NexGen shall initiate contact with its current section 29 tax credit
          monetizers and related parties and other prospective tax credit
          monetizers to attempt to structure and negotiate a sale of any Section
          45 Tax Credits for which the Company may qualify.

     o    Structure and assist in obtaining project finance funding for plant
          development and testing and additional funding necessary to support
          the Business' projected working capital and development capital needs.

     o    Provide the contributions and expertise of Charles McNeil, Jim Stirbis
          (finance and accounting), Kathy Matheny (tax), Mark Ziegler (project
          finance) and, except as provided in Exhibit D below, Brian Humphrey
          and George Davies (legal) or substantially equivalent Persons if
          NexGen is forced to sever their relationships with these persons.

     o    Serve as Tax Matters Partner for the Company.

     o    Provide marketing and consulting expertise of Ron Bosen.



<PAGE>

                               Schedule 6.9(a)(ii)
                               -------------------

NexGen's Non-reimbursable Duties under Section 6.9(a)(ii):
----------------------------------------------------------

     o    Structure and assist in obtaining project finance funding for plant
          development and testing and additional funding necessary to support
          the Business' projected growth.

     o    Provide expanded market access to assist the Company in marketing the
          Technology.

     o    Structure and assist in obtaining project finance funding for the
          Business' projected working capital and development capital needs.

     o    Provide the contributions and expertise of Charles McNeil, Jim Stirbis
          (finance and accounting), Kathy Matheny (tax), Mark Ziegler (project
          finance) and, except as provided in Exhibit D below, Brian Humphrey
          and George Davies (legal) or substantially equivalent Persons if
          NexGen is forced to sever their relationships with these persons.

     o    Serve as Tax Matters Partners for the Company.

     o    Provide marketing and consulting expertise of Ron Bosen.





<PAGE>

                                 Schedule 6.9(b)
                                 ---------------

ADA's Non-reimbursable Duties under Schedule 6.9(b):
----------------------------------------------------

     o    Provide technical, engineering and marketing resources to the Company.

     o    Continue to research and develop improvements to the Chemicals and
          Additives, as defined in the Supply Agreement.

     o    ADA shall be responsible for ensuring that all Chemicals and Additives
          comply with all applicable Laws, including, without limitation,
          obtaining and maintaining all governmental registrations, registration
          applications, temporary registrations, experimental use permits,
          applications and emergency use exemptions.

     o    ADA shall take such steps as may be reasonable or desirable under the
          circumstances to secure any necessary intellectual property or
          intellectual property rights to allow the Company to carry on the
          Business without undue burden, interference or objection (or
          unreasonable risk of burden, interference or objection) from any third
          party, and bear all costs associated therewith or related thereto.

     o    ADA shall develop, test, troubleshoot, and market the Technology as
          agreed upon from time to time by the parties in the Annual Business
          Plan, as well as provide usual and customary support for installations
          of the Technology in the field.

     o    ADA shall oversee all supply, design and fabrication work related to
          the Technology and all components thereof.

     o    ADA shall obtain and maintain, at ADA's sole cost and expense, all
          permits, licenses, and registrations required by Law for the sale of
          the Chemicals and Additives, unless such expense is properly
          determined to be an expense of the Company, as set forth in the Annual
          Business Plan.

     o    Provide order taking, order processing and invoicing for all contracts
          or agreements with customers of the Business who purchase Chemicals
          and Additives, Equipment, and/or Technical Engineering Services from
          the Company.

     o    Provide the contributions and expertise of Mike Durham, Nina French,
          Mark McKinnies, Jon Barr and Richard Schlager or substantially
          equivalent Persons if ADA is forced to sever their relationships with
          these Persons.

Arrange for the Equipment to be sold to the Company in furtherance of the
Business from third party suppliers or equipment manufacturers.



<PAGE>

                                 Schedule 6.9(d)
                                 ---------------

NexGen's Reimbursable Duties:
-----------------------------

     o    Arrange for the providing of legal work (corporate and tax) associated
          with all elements of structuring the accreditation of qualifying
          installations and contractual relationships with third parties so they
          are eligible for Section 45 Tax Credits.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>6
<FILENAME>ada90631-1.txt
<DESCRIPTION>CERTIFICATION
<TEXT>

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION
-------------------------------------

I, Michael D. Durham, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ADA-ES, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiary, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:

a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: November 7, 2006

/s/ Michael D. Durham
---------------------
Name: Michael D. Durham
Title: President and CEO

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>7
<FILENAME>ada90631-2.txt
<DESCRIPTION>CERTIFICATION
<TEXT>

EXHIBIT 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION
-------------------------------------

I, Mark H. McKinnies, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ADA-ES, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiary, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:

a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: November 7, 2006

/s/ Mark H. McKinnies
---------------------
Name: Mark H. McKinnies
Title: CFO


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>8
<FILENAME>ada90632-1.txt
<DESCRIPTION>CERTIFICATION
<TEXT>

Exhibit 32.1

Certification of Chief Executive and Chief Financial Officer of ADA-ES, Inc.
Pursuant to 18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of ADA-ES, Inc. (the
"Company") for the period ended September 30, 2006 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Michael D. Durham,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

/s/ Michael D. Durham
---------------------
Name: Michael D. Durham
Title: President
Date: November 7, 2006


In connection with the Quarterly Report on Form 10-Q of ADA-ES, Inc. (the
"Company") for the period ended September 30, 2006 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Mark H. McKinnies,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.


/s/ Mark H. McKinnies
---------------------
Name: Mark H. McKinnies
Title: Senior VP & CFO
Date: November 7, 2006


</TEXT>
</DOCUMENT>
</SUBMISSION>
