<SUBMISSION>
<ACCESSION-NUMBER>0001000096-07-000179
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20070619
<FILING-DATE>20070430
<DATE-OF-FILING-DATE-CHANGE>20070430
<EFFECTIVENESS-DATE>20070430
<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>DEF 14A
<ACT>34
<FILE-NUMBER>000-50216
<FILM-NUMBER>07799698
</FILING-VALUES>
<MAIL-ADDRESS>
<STREET1>8100 SOUTHPARK WAY B
<CITY>LITTLETON
<STATE>CO
<ZIP>80120
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>adadefproxy.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
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<TITLE>AutoCoded Document</TITLE>
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<A NAME="A002"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES, INC.<BR>8100
SOUTHPARK WAY, UNIT B<BR>LITTLETON, COLORADO 80120<BR>Telephone:&nbsp;&nbsp;&nbsp;(303) 734-1727
<BR>Fax:&nbsp;&nbsp;&nbsp;(303) 734-0330</FONT></FONT> </P>



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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">April 30, 2007</FONT></FONT> </P>

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<A NAME="A006"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Securities
and Exchange Commission<BR>450 Fifth Street, N.W.<BR>Washington, DC 20549</FONT></FONT></P>


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<A NAME="A007"></A>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="97%"><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Re:&nbsp;&nbsp;&nbsp;
ADA-ES, Inc.; Proxy Materials</FONT></FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Gentlemen and
Ladies:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
behalf of ADA-ES, Inc. (the Company), we file with you herewith pursuant to Rule
14a-6(a) under the Securities Exchange Act of 1934, as amended, the proxy
material which the Company is mailing in definitive form on or about May 8,
2007, to its shareholders in connection with the solicitation of proxies for a
June 19, 2007 annual meeting of shareholders.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the foregoing, we deliver to you the following:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;
A copy of the Notice of an Annual Meeting of Shareholders and Proxy Statement (the
Notice), including the cover page  required by Rule 14a-6(m); and</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;
A form of Proxy.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will take appropriate action to comply with the broker, bank and nominee
notification requirements set forth by Rule 14a-13 regarding the forwarding of
definitive proxy and other soliciting materials. The Company plans to file a
Registration Statement on Form S-8 to register the options and rights and the
shares issuable upon the exercise thereof under the 2007 Stock Incentive Plan
within 60 days after shareholder approval is obtained.</FONT></FONT></P>

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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Very
truly yours, <BR>ADA-ES, Inc.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<A NAME="A008"></A>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>/s/&nbsp;&nbsp;&nbsp; Mark H. McKinnies</U><BR>Mark
H. McKinnies<BR>Secretary</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


<P style="PAGE-BREAK-BEFORE: always"></P>
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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">UNITED  STATES<BR>SECURITIES
AND EXCHANGE COMMISSION<BR>Washington, DC  20549</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">SCHEDULE 14A<BR>Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934</FONT></FONT> </P>


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<P align=left><FONT face="Times New Roman, Times, Serif"><FONT size=2>Filed by
the Registrant&nbsp;&nbsp;[X]<BR>Filed by a Party other than the
Registrant&nbsp;&nbsp;[&nbsp;&nbsp;&nbsp;]<BR><BR>Check the appropriate
box:<BR><BR>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preliminary Proxy
Statement<BR>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))<BR>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Definitive
Proxy
Statement<BR>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Definitive
Additional
Materials<BR>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Soliciting
Material Pursuant to Sec.240.14a-12</FONT></FONT> </P>

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<P align=center><FONT face="Times New Roman, Times, Serif"><FONT
size=2>ADA-ES, INC.
<BR>__________________________________________________________________________<BR>(Name
of Registrant as Specified In Its Charter)</FONT></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P align=center><FONT face="Times New Roman, Times, Serif"><FONT size=2>N/A
<BR>___________________________________________________________________________<BR>(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></FONT>
</P>
<!-- User-specified TAGGED TABLE -->
<TABLE cellSpacing=0 cellPadding=0 width="83%" border=0>
  <TR vAlign=top>
  <TD align=center colSpan=5><BR><FONT size=2><B></B></FONT></TD></TR>
  <TR vAlign=top>
  <TD align=center colSpan=5>
      <HR noShade>
      <FONT size=2></FONT></TD></TR>
  <TR vAlign=top>
    <TD colSpan=5><FONT size=2><BR>Payment of Filing Fee (Check the
      appropriate box):<BR>[X]&nbsp;&nbsp;&nbsp;&nbsp;No fee
      required<BR>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;Fee computed on
      table below per Exchange Act Rules 14a-6(i)(1) and&nbsp;0-11</FONT></TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>1)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Title of each class of securities to which
      transaction applies:<BR>_______________________________________</FONT>
     </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>2)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Aggregate number of securities to which
      transaction
      applies:<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>3)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Per unit price or other underlying value of
      transaction computed pursuant to Exchange Act Rule 0-11 (set forth the
      amount on which the filing fee is calculated and state how it was
      determined):<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>4)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Proposed maximum aggregate value of
      transaction:<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>5)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Total fee
      paid:<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2><BR><FONT
      face="Times New Roman, Times, Serif">[&nbsp;&nbsp;&nbsp;]<BR>[&nbsp;&nbsp;&nbsp;]</FONT></FONT></TD>
    <TD width="2%"><FONT size=2><BR>&nbsp;</FONT></TD>
    <TD colSpan=3><FONT size=2><BR>Fee paid previously with preliminary
      materials.<BR>Check box if any part of the fee is offset as provided by
      Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for which the
      offsetting fee was paid previously. Identify the previous filing by
      registration statement number, or the Form or Schedule and the date of its
      filing.</FONT></TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2><BR>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2><BR>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2><BR>1)</FONT></TD>
    <TD width="2%"><FONT size=2><BR>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2><BR>Amount Previously
      Paid:<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>2)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Form, Schedule or Registration Statement
      No.:<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>3)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Filing
      Party:<BR>_______________________________________</FONT>
    </TD></TR>
  <TR vAlign=top>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="4%"><FONT size=2>4)</FONT></TD>
    <TD width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD width="90%"><FONT size=2>Date
      Filed:<BR>_______________________________________</FONT>
     </TD></TR></TABLE>
<P style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align=center><FONT
face="Times New Roman" size=2></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2</FONT></FONT> </P>


<P style="PAGE-BREAK-BEFORE: always"></P>
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<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A015"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES,
INC.<BR>8100 SouthPark Way, Unit B<BR>Littleton, Colorado 80120<BR>
(303) 734-1727</B></FONT></FONT></P>

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<A NAME="A019"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS<BR>TO BE HELD JUNE 19, 2007</B></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">To Our
Shareholders:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">An
Annual Meeting (the &#147;Meeting&#148;) of Shareholders of ADA-ES, Inc.
(&#147;ADA-ES&#148; or the &#147;Company&#148;), a Colorado corporation, will be
held at 9:00 a.m. (local time) on June 19, 2007 at the Pinehurst Country Club,
located at 6255 West Quincy Street in Denver, Colorado, or at any postponement
or adjournment thereof, for the following purposes:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1.&nbsp;&nbsp;&nbsp;To elect
nine (9) directors of the Company;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2.&nbsp;&nbsp;&nbsp;To consider
and vote upon a proposal to approve the 2007 Equity Incentive Plan,  including approval
of shares of common stock reserved for issuance under the  Plan;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3.&nbsp;&nbsp;&nbsp; To
approve the Stock Issuance Plan for the issuance of shares of the  Company&#146;s  common
stock in excess of 20% of the amount of our outstanding  shares of common stock  and not
more than 3 million shares, including shares of  common stock underlying options  and
warrants, in connection with raising capital  for implementing our business plan for
being the market leader in mercury  control technology by manufacturing injection
equipment and activated carbon for  our power plant customers. This includes possible
acquisition of equipment  fabricator(s) and development of a &#147;Greenfield&#148; activated
carbon  manufacturing facility or other projects or ventures intended to provide the
Company and its customers with a long-term supply of activated carbon and  working
capital requirements; and</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4.&nbsp;&nbsp;&nbsp;To consider
and vote upon such other matters as may properly come before the  Meeting or any
postponement or adjournment thereof.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Shareholders
of record at the close of business on April 30, 2007 are entitled to notice of
and to vote at the Meeting.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Board of Directors of the Company extends a cordial invitation to all
shareholders to attend the Meeting in person. Whether or not you plan to attend
the Meeting, please fill in, date, sign and mail the enclosed proxy in the
return envelope as promptly as possible. Your proxy may be revoked at any time
prior to the Meeting. The prompt return of your completed proxy will assist the
Company in obtaining a quorum of shareholders for the Meeting, but will not
affect your ability to change your vote by subsequent proxy or by attending the
Meeting and voting in person. If you are unable to attend, your written proxy
will assure that your vote is counted.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Please
call on our toll-free number (888-822-8617) if you require directions or have
other questions concerning the Meeting.</FONT></FONT></P>

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<A NAME="A021"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">By Order of
the Board of Directors</FONT></FONT></P>

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<A NAME="A022"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U><BR>/s/&nbsp;&nbsp;&nbsp;Mark H.
McKinnies</U><BR>Mark H. McKinnies<BR>Secretary</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">April 30, 2007</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>


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<A NAME="A023"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>PROXY STATEMENT</B></FONT></FONT></P>

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<A NAME="A024"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES,
INC.<BR>8100 SouthPark Way, Unit B<BR>Littleton, CO 80120<BR>Telephone:&nbsp;&nbsp;&nbsp;(303) 734-1727</B></FONT></FONT></P>


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<A NAME="A028"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ANNUAL
MEETING OF SHAREHOLDERS<BR>TO BE HELD JUNE 19, 2007</B></FONT></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">This
Proxy Statement is furnished to the shareholders of ADA-ES, Inc. (the
&#147;Company&#148;), a Colorado corporation, in connection with the
solicitation of proxies by the Company&#146;s (&#147;our&#148;) Board of
Directors (the &#147;Board&#148;), to be voted at our ANNUAL MEETING OF
SHAREHOLDERS (the &#147;Meeting&#148;) to be held on Tuesday, June 19, 2007, at
the Pinehurst Country Club at 6255 West Quincy Street, Denver, Colorado and any
postponements or adjournments thereof. This Proxy Statement and accompanying
form of proxy is first being mailed or given to our shareholders on or about May
8, 2007. The shares represented by all proxies that are properly executed and
submitted will be voted at the Meeting in accordance with the instructions
indicated thereon, and if no instructions are given, then in the discretion of
the proxy holder. Throughout this Proxy Statement, the terms &#147;we,&#148;
&#147;us&#148; &#147;our&#148; and &#147;our company&#148; refer to ADA-ES,
Inc., and unless the context indicates otherwise, our subsidiaries on a
consolidated basis.</FONT></FONT></P>

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<A NAME="A030"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>VOTING
RIGHTS AND VOTE REQUIRED</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Board has fixed the close of business on April 30, 2007 as the record date for
determination of shareholders entitled to notice of and to vote at the Meeting.
At such date there were 5,637,837 shares of our common stock issued and
outstanding (hereinafter referred to as the &#147;Common Stock&#148;), each of
which entitles the holder thereof to one vote on all matters that may come
before the meeting. We do not have any class of voting securities other than
Common Stock. An abstention or withholding authority to vote will be counted as
present for determining whether the quorum requirement is satisfied. If a quorum
exists, actions or matters other than the election of the Board are approved if
the votes cast in favor of the action exceed the votes cast opposing the action
unless a greater number is required by the Colorado Business Corporation Act or
our Articles of Incorporation. Abstentions will not affect the election of
directors, but will have the same effect as a vote against the proposals to
approve our 2007 Stock Incentive Plan and the Stock Issuance Plan. A broker
non-vote occurs when a nominee holding shares for a beneficial holder does not
have discretionary voting power and does not receive voting instructions from
the beneficial owner. Such nominees will not have discretionary voting power
with respect to approving our 2007 Stock Incentive Plan or the Stock Issuance
Plan. Broker non-votes on a particular proposal will not be treated as shares
present and entitled to vote on the proposal and accordingly will have no effect
on the vote.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">A
minimum of one-third of the shares of Common Stock issued and outstanding must
be represented at the Meeting, in person or by proxy, in order to constitute a
quorum. Cumulative voting is not allowed for any purpose. Assuming a quorum is
present, the nine nominees receiving the highest number of votes cast will be
elected as Directors.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Unless
instructions to the contrary are marked, or if no instructions are specified,
shares represented by proxies will be voted:</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>o</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">
FOR the persons nominated by the Board for directors, being Robert N. Caruso, Michael D.
Durham, John W. Eaves, Derek C. Johnson, Ronald B. Johnson, Mark H. McKinnies, Rollie J.
Peterson, Jeffrey C. Smith and Richard Swanson.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>o</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">
FOR the approval of the 2007 Equity Incentive Plan.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>o</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> FOR
the approval of the Stock Issuance Plan for authorization to issue shares of the
Company&#146;s common stock in excess of 20% of the amount of our outstanding shares of
common stock and not more than 3 million shares, including shares of common stock
underlying options and warrants, in connection with raising capital for implementing our
business plan for being the market leader in mercury control technology by manufacturing
injection equipment and activated carbon for our power plant customers. This includes
possible acquisition of equipment fabricator(s) and development of a
&#147;Greenfield&#148; activated carbon manufacturing facility or other projects or
ventures intended to provide the Company and its customers with a long-term supply of
activated carbon and working capital requirements.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>


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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We do
not know of any other matter or motion to be presented at the Meeting. If any
other matter or motion should be presented at the Meeting upon which a vote must
be properly taken, the persons named in the accompanying form of proxy intend to
vote such proxy in accordance with that person&#146;s judgment, including any
matter or motion dealing with the conduct of the Meeting.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Any
shareholder who completes a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company (c/o
Mark H. McKinnies, Secretary), 8100 SouthPark Way, Unit B, Littleton, Colorado,
80120, by submitting a new proxy executed at a later date, or by attending the
Meeting and voting in person.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Company will pay solicitation expenses. In addition to solicitation by mail, our
directors, officers and other employees may, without additional compensation,
solicit proxies by mail, in person or by telecommunication.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A031"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ELECTION
OF DIRECTORS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><BR>At the Meeting,
the shareholders will elect nine directors of the Company.  Each director will hold
office until the next Annual  Meeting of Shareholders and thereafter until a successor is
elected and has qualified. Cumulative voting is not permitted in the  election of
directors. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE PERSON NAMED IN THE
ACCOMPANYING PROXY WILL VOTE IN FAVOR  OF THE ELECTION OF THE FOLLOWING PERSONS NAMED AS
OUR NOMINEES FOR DIRECTORS: ROBERT N. CARUSO, MICHAEL D. DURHAM, JOHN W. EAVES,  DEREK C.
JOHNSON, RONALD B. JOHNSON, MARK H. MCKINNIES, ROLLIE J. PETERSON, JEFFREY C. SMITH and
RICHARD J. SWANSON.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">All of
the nominees are currently members of the Board. Mr. Swanson was elected by the
board of directors in July, 2006 to fill a vacancy on the board created by an
incrase in size of the board. He was recommended for election by non-management
directors. Each of the nominees has consented to be named herein and to serve if
elected. It is not anticipated that any nominee will become unable or unwilling
to accept nomination or election, but if such should occur, the persons named in
the proxy intend to vote for the election in his stead of such other person as
the Board may recommend. It is the policy and practice of the Company that all
directors attend the Meeting. All of our directors attended our 2006 Annual
Meeting of Shareholders.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
following table sets forth certain information as to each current nominee and
director of the Company:</FONT></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="650">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Age</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Position and Offices</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director<BR>Since</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Term Expires</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>Robert N. Caruso</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">55</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Member of the Compensation and</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nominating and Governance Committees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Michael D. Durham</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">57</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, President</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John W. Eaves</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">49</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Member of the Compensation and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nominating and Governance Committees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Derek C. Johnson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">46</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Member of the Audit and Governance</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Committees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ronald B. Johnson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Chairman of the Compensation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Committee, Member of the Audit Committee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mark H. McKinnies</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">55</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Senior Vice President, Chief</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Financial Officer and Secretary</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Rollie J. Peterson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">59</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Chairman of the Nominating and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Committee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey C. Smith</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">55</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chairman of the Board of Directors, Member of</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Audit and Compensation Committees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard J. Swanson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">71</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director, Chairman of the Audit Committee,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Upon Successor&#146;s Election</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Member of the Compensation Committee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><BR>The
initial appointment of John Eaves to our Board was made pursuant to a
Subscription and Investment Agreement (&#147;Investment Agreement&#148;) with
Arch Coal, Inc. (&#147;Arch Coal&#148;) whereby our management agreed to make
available one seat on the Board for an Arch Coal designee so long as they
continue to hold at least 100,000 shares of our common stock. There are no other
arrangements or understandings between any directors or executive officers and
any other person or persons pursuant to which they were selected as directors or
executive officers.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. Eaves is
the COO,  President and a director of Arch Coal, a public  company  located in St. Louis
MO  (NYSE:ACI).  Mr.  Swanson has  served as a director and Audit Committee  Chairman of
AHPC Holdings,  Inc., a public company located in Glendale Heights,  Illinois and  parent
company of American  Health  Products  Corporation,  since 1998 and a director  and Audit
Committee  Chairman of Ascent  Solar  Technologies,  Inc., a public company located in
Lakewood,  Colorado since January 2007. None of the other  individuals named above are
directors of any other public companies.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>




<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 5; page: 5" -->


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. Caruso
currently  serves as a managing partner of B/3 Management  Resources,  LLC, a management
consulting and technical  services  firm,  since 1988.  Mr. Caruso has also served as
Vice  President of Ingenium  Technology,  since 2003.  From 1999 to 2001,  Mr. Caruso
was Vice  President  and  General  Manager of Applied  Science &amp; Technology,  a public
company at the time,  providing  reactive  gas  processing  systems  and  specialty
power  sources to the  semiconductor  and  medical  equipment  markets.  Mr.  Caruso has
a B.S. in  Engineering  Mechanics  and B.A.  in  General  Arts and  Sciences  from
Pennsylvania  State  University  and an MBA from  Wayne  State  University.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Dr. Durham was
a co-founder in 1985 of ADA  Technologies,  Inc., an Englewood,  Colorado private company
which contracts to the federal  government and others for development of emission
technologies.  ADA  Environmental  Solutions LLC, our wholly owned  subsidiary,  was
originally  spun-out of ADA  Technologies  in 1996.  Dr.  Durham has been  President,
CEO and a director of the Company since 1997 and  President  of ADA  Environmental
Solutions  since 1996.  Dr.  Durham has a B.S.  in  Aerospace  Engineering  from
Pennsylvania  State  University,  an M.S. and Ph.D. in Environmental  Engineering from
the University of Florida and an Executive MBA from the University of  Denver.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr.
Eaves currently serves as President, Chief Operating Officer and a director of
Arch Coal. Mr. Eaves previously held the position of Vice President of Marketing
for Arch Coal since that company&#146;s formation on July 1, 1997. Prior to that
time, he served as President of the marketing subsidiary of Arch Mineral
Corporation, one of Arch Coal&#146;s predecessor companies. He also held various
positions in sales and administration with Diamond Shamrock Company and Natomas
Coal Company. Mr. Eaves holds a B.S. degree from the University of Kentucky and
attended an Executive Management Program at the Wharton School of Business and
an Advanced Management Program at Harvard Business School.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr.
Derek Johnson has served as President of Fusion Specialties, a specialty
supplier to the retail industry, since November 2005. From 1984 to 2005, Mr.
Johnson was employed in various positions, most recently as President and Chief
Operating Officer, by CoorsTek, a manufacturer of technical products, supplying
critical components and assemblies for mining automotive, semiconductor,
aerospace, electronic, power generation, telecommunication and other
high-technology applications on a global basis. He has a Higher National
Certificate from Kirkcaldy College in Scotland and an Executive MBA from the
University of Denver.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr.
Ronald Johnson has been involved in all phases of the chemical industry,
including roles in production, compounding and distribution both domestically
and internationally, for 47 years. He has held executive, management, marketing,
development and strategic planning positions with Dupont, Industrial and
Biochemical Department; Gamlen Chemical, an international compounding company;
and Univar, a North American chemical distributor. He also served as a Board
member of Earth Sciences from 2000 to 2003 and of Charter National Bank and
Trust from 1988 to 2000. Mr. Johnson also serves as President and owner of
Twin-Kem International, Inc., a distributor of agricultural industrial
chemicals, since 1984, and as President of ExecuVest, Inc., an oil &amp; gas
exploration company, since 1987.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. McKinnies
has served as our Chief  Financial  Officer and  Secretary  since 2003 and was  appointed
as Senior Vice  President in  September,  2005. Mr. McKinnies was employed by Earth
Sciences from 1978 through 2000. A CPA, Mr.  McKinnies worked for Peat,  Marwick,
Mitchell &amp; Co. before  commencing  employment at Earth Sciences in 1978. Mr.  McKinnies
holds a bachelors degree in Accounting from the  University of Denver.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. Peterson,
a self-employed  businessman,  is President,  Treasurer and co-owner of Cobblestone
Development Inc., a commercial land  development  company in Minnesota  that he helped
found in 1987.  Since 2000,  he has also served as President of Keystone  Investments
Inc., a company engaged in managing investments for personal estates.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. Smith was
appointed a director of the Company in August 2003 and has been a  self-employed  lawyer
in the Law Office of Jeffrey C.  Smith since April 2003. From 1981 until April 2003, Mr.
Smith served as Managing Director of ESI  International,  providing  regulatory
consulting  services.  Mr. Smith is a past Executive  Director of the Institute of Clean
Air  Companies,  where he served for 17 years.  Mr. Smith holds a bachelors degree from
Duke University and a J.D. from the University of Michigan.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr.  Swanson
was appointed a director of the Company in July 2006 and serves as the Chairman of the
Audit  Committee.  Mr.  Swanson has  served as a consultant to Vistage  International,
Inc., which focuses on strategic coaching and corporate  troubleshooting for CEOs of
public and private  companies.  Since 1980,  he has also been the  President  of
Investment  Partners,  Inc.,  which is engaged in the  restructuring and
recapitalization of troubled companies,  and Real Estate Associates,  Inc., which focuses
on real estate acquisition  and development.  He has a B.A. in History from the
University of Colorado and an MBA from Harvard Business School.</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">No
family relationship exists between any directors or executive officers.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A032"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>PROPOSAL
NO. 2</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A033"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>APPROVAL OF
2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
shareholders are being asked to vote on the proposed 2007 Equity Incentive Plan
(the &#147;Plan&#148;) in order to provide us with a means to attract and
maintain the best possible personnel, to provide additional incentives to
employees, directors and consultants, and to promote the success of the
Company&#146;s business. We currently have nine directors and approximately 40
employees and 6 consultants who will be eligible to participate in the Plan. We
are proposing to replace our existing 2003 Stock Option Plan with the Plan,
which will provide us with needed flexibility in tailoring equity compensation
awards that we expect will assist us in securing and retaining key personnel
needed for our business.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A034"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>General
Description</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Plan permits grants of &#147;Awards,&#148; which include the grant of (1)
options to purchase Common Stock (&#147;Options&#148;) and (2)
&#147;restricted&#148; shares of Common Stock (&#147;Restricted Stock&#148;).
Under the Plan, incentive stock options (&#147;ISO&#146;s&#148;), within the
meaning of Section 422 of the Internal Revenue Code (the &#147;Code&#148;), can
be granted only to our employees or employees of any parent or subsidiary
corporation. Non-qualified stock options (&#147;NSO&#146;s&#148;) and Restricted
Stock may be granted to employees, directors and consultants. An Award may
include any combination of Options or Restricted Stock.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Plan provides for the grant of Options with exercise terms that will include a
fixed exercise price (<I>i.e.,</I> the price an optionee must pay for the stock
issued on exercise of the Option) which will be related to the market price of
our Common Stock on the date of grant. The exercise price will generally be no
less than the fair market value of the Common Stock at that time, except in the
case of owners of 10% or more of our Common Stock at the time of a grant, in
which case the exercise price will be no less than 110% of the per share fair
market value of the Common Stock. In addition, Awards of Options and Restricted
Stock will be subject to a vesting schedule or, in the case of Restricted Stock,
a &#147;reverse&#148; vesting schedule, which will be based on the passage of
time, the occurrence of one or more events or the satisfaction of performance
criteria or other conditions. The market value of our shares of common stock as
of April 25, 2007 was $19.05 per share.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Under
the Plan, we may grant Awards to such employees, directors or consultants who
are residing in foreign jurisdictions as the administrator of the Plan may
determine from time to time. The Plan is not a qualifying deferred compensation
plan under Section 401(a) of the Code and is not subject to the provision of the
Employee Retirement Income Security Act of 1974, as amended (&#147;ERISA&#148;).</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Plan was approved by our Board of Directors on April 27, 2007; however, the Plan
is subject to approval by our shareholders, which is being sought under this
Proposal at this meeting.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A035"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Shares
Reserved</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
number of shares of Common Stock authorized for issuance under the Plan will be
limited to not more than 1 million shares, which includes shares of Common Stock
that may be issued upon exercise of Options or as Restricted Stock issued under
the Plan. Initially, the number of shares reserved for issuance of Awards under
the Plan will be 600,000, with an &#147;evergreen&#148; provision pursuant to
which additional shares will automatically be added to the Plan on the first day
of each fiscal year, beginning with the fiscal year commencing January 1, 2008,
in an amount equal to ten percent (10%) of the increase in the total number of
shares of Common Stock outstanding on the last day of the immediately preceding
fiscal year over the number of outstanding shares of Common Stock on such date
one year prior, or such lesser number of shares as is later ratified by the
Board at their first meeting or action in such new fiscal year. In no event may
any annual increase exceed 300,000 shares and in no event can the total number
of shares authorized for issuance under the Plan exceed 1,000,000.</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A036"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Administration</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Plan will be administered by a &#147;Plan Administrator,&#148; which may be the
Board of Directors or a committee designated by the Board in such a manner as to
satisfy applicable laws. It is anticipated that the Compensation Committee of
the Board will administer the Plan. With respect to grants to directors or
employees who are also officers or directors of the Company, the administration
shall permit such grants and related transactions under the Plan to be exempt
from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. With
respect to awards subject to Section 162(m) of the Internal Revenue Code of 1986
(the &#147;Code&#148;), the committee will be comprised solely of two or more
&#147;outside directors&#148; as defined under Section 162(m) and applicable tax
regulations. For grants of awards to individuals not subject to Rule 16b-3 and
Section 162(m), our Board may authorize one or more officers to grant such
awards.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A037"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Limitations
on Award Grants</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
maximum number of shares of Common Stock that may be granted as to an Award to
any grantee in any fiscal year is limited to 30,000 shares, except for
Non-Management Directors, who may only be granted annual Awards covering up to
10,000 shares. However, in connection with his or her initial commencement of
services with us, a participant in the Plan who is an employee may be granted up
to an additional 30,000 shares, which do not count against the limit set forth
in the previous statement. These limitations ensure that any Options granted
under the Plan qualify as &#147;performance-based compensation&#148; under
Section&nbsp;162(m) of the Code. Under Code Section&nbsp;162(m) no deduction is
allowed in any taxable year for compensation in excess of $1&nbsp;million paid
to our chief executive officer and each of our four most highly paid other
executive officers who are serving in such capacities as of the last day of such
taxable year. An exception to this rule applies to compensation that is paid
pursuant to a stock incentive plan approved by our shareholders and that
specifies, among other things, the maximum number of shares with respect to
which options may be granted to eligible employees under such plan during a
specified period. Compensation paid pursuant to options granted under such a
plan and with an exercise price equal to the fair market value of our Common
Stock on the date of grant is deemed to be inherently performance-based, since
such awards provide value to employees only if the stock price appreciates. If
the Plan did not contain the Code Section&nbsp;162(m) share limits with respect
to which options may be granted to eligible employees during a specified period,
any compensation expense associated with the Options granted under the Plan in
excess of $1&nbsp;million for any of our five highest paid officers would not be
deductible to us under the Code.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A038"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Amendment
and Termination</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Board of Directors may at any time amend, suspend or terminate the Plan. To the
extent necessary to comply with applicable provisions of federal securities
laws, state corporate and securities laws, the Code, the rules of any applicable
stock exchange or national market system and the rules of any foreign
jurisdiction applicable to awards granted to residents therein, we will obtain
shareholder approval of any amendment to the Plan in such a manner and to such a
degree as required.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">If
approved by the shareholders, the Plan will terminate as of June 18, 2017, ten
years from the date the Plan was approved by our Board of Directors, unless
previously terminated by the Board.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A039"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Termination
of 2003 Stock Option Plan Upon Shareholder Approval of the Plan</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">If the
Plan is approved by our shareholders, we will terminate our 2003 Stock Option
Plan, under which there remain 140,706 shares of Common Stock reserved for the
grant of new options under the 2003 Stock Option Plan.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A040"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Other Terms
of Options</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Options
granted under the Plan and the rights and privileges evidenced by any Option may
not be transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than (i) by will or by the applicable laws
of descent and distribution, (ii) pursuant to a qualified domestic relations
order as defined in Section 414(p) of the Code, or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder or
(iii) as otherwise determined by the Plan Administrator and set forth in the
applicable Option agreement. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any Option under the Plan or of any right or
privilege conferred thereby, contrary to the Code or to the provisions of the
Plan, or the sale or levy or any attachment or similar process upon the rights
and privileges conferred thereby shall be null and void. The designation by an
Optionee of a beneficiary does not, in and of itself, constitute an
impermissible transfer under the Plan.</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">If the
Optionee&#146;s relationship with the Company or any related corporation ceases
for any reason other than termination for cause, death or total disability, and
unless by its terms the Option sooner terminates or expires, then the Optionee
may exercise, for a three-month period, that portion of the Optionee&#146;s
Option which is exercisable at the time of such cessation, but the
Optionee&#146;s Option shall terminate at the end of the three-month period
following such cessation as to all shares for which it has not theretofore been
exercised, unless, in the case of an NSO, such provision is waived in the
agreement evidencing the Option or by resolution adopted by the Plan
Administrator within 90 days of such cessation. If, in the case of an ISO, an
Optionee&#146;s relationship with the Company or related corporation changes
(i.e., from employee to non-employee, such as a consultant), such change shall
constitute a termination of an Optionee&#146;s employment with the Company or
related corporation and the Optionee&#146;s ISO will become an NSO.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Options
under the Plan must be issued within 10 years from the effective date of the
Plan which is expected to be on June 19, 2007 if our shareholders approve the
adoption of the Plan. Options granted under the Plan cannot be exercised more
than 10 years from the date of grant. Options issued to a 10% Shareholder are
limited to five-year terms.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Payment
of the option exercise price shall generally be made in full at the time the
notice of exercise of the Option is delivered to the Company and shall be in
cash, bank certified or cashier&#146;s check or personal check (unless at the
time of exercise the Plan Administrator in a particular case determines not to
accept a personal check). The Plan Administrator can determine at the time the
Option is granted for ISO&#146;s, or at any time before exercise for NSO&#146;s,
that additional forms of payment will be permitted. To the extent permitted by
the Plan Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state corporate
law), an Option may be exercised by delivery of shares of stock of the Company
held by an Optionee having a fair market value equal to the exercise price, such
fair market value to be determined in good faith by the Plan Administrator;
delivery of a properly executed exercise notice, together with irrevocable
instructions to a broker, all in accordance with the regulations of the Federal
Reserve Board, to promptly deliver to the Company the amount of sale or loan
proceeds necessary to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise; or
delivery of a properly executed exercise notice together with instructions to
the Company to withhold from the shares that would otherwise be issued upon
exercise that number of shares having a fair market value equal to the option
exercise price.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Any
unexercised Options that expire or that terminate upon an employee&#146;s
ceasing to be employed by the Company, or shares of Restricted Stock that are
repurchased by the Company become available again for issuance under the Plan.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
vesting of outstanding Options under the Plan will be subject to acceleration
upon certain changes in the ownership or control of the Company. The
acceleration of the vesting of Options in the event of such changes in control
may be seen as an anti-takeover provision and may have the effect of
discouraging a merger proposal, a takeover attempt or other efforts to gain
control of the Company.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">If the
Grantee is an officer, director or owner of greater than 5% of our Common Stock
at such time, and if we so request and a lead underwriter of any public offering
of our Common Stock demands, the Grantee will agree not to sell, contract to
sell, grant any option to purchase, transfer the economic risk of ownership in,
make any short sale of, pledge or otherwise transfer or dispose of any interest
in any of our Common Stock or any securities convertible into or exchangeable or
exercisable for or any other rights to purchase or acquire Common Stock (except
Common Stock included in such public offering or acquired on the public market
after such offering) during the 180-day period following the effective date of a
registration statement filed under the Securities Act of 1933, as amended, or
such shorter period of time as the Lead Underwriter may specify.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A041"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Other Terms
Applicable to Restricted Stock</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We may
award Restricted Stock under the Plan on terms determined by the Plan
Administrator at the time of grant. Generally, we will issue shares of
Restricted Stock to a grantee at a price (the &#147;Purchase Price&#148;) which
the Plan Administrator determines at the time of grant. The shares are then
classified as &#147;Restricted Shares,&#148; and are subject to our right to
repurchase them as set forth on a schedule to the Restricted Stock Agreement
entered into between us and the grantee, under which we lose our repurchase
rights, and the shares are no longer classified as &#147;Restricted
Shares.&#148; The number of shares as which our repurchase rights lapse will
generally be determined by the passage of time, but may also be based on the
happening of a specified event, such as the attainment of some predetermined
performance criteria or a change in corporate ownership or control. The Plan
Administrator will have discretion in determining the schedule and/or the events
that will specify the terms and conditions of the Company&#146;s repurchase
rights. Restricted Shares are required to be placed in escrow with us until such
time as our repurchase rights lapse. We will generally be entitled to exercise
our repurchase rights at any time within 90 days of the grantee&#146;s cessation
of &#147;Continuous Service&#148; with the Company by paying an amount equal to
the price paid by the grantee for the Restricted Shares.</FONT></FONT></P>


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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">If the
Grantee is an officer, director or owner of greater than 5% of our Common Stock
at such time, and if we so request and a lead underwriter of any public offering
of our Common Stock demands, the Grantee will agree not to sell, contract to
sell, grant any option to purchase, transfer the economic risk of ownership in,
make any short sale of, pledge or otherwise transfer or dispose of any interest
in any of our Common Stock or any securities convertible into or exchangeable or
exercisable for or any other rights to purchase or acquire Common Stock (except
Common Stock included in such public offering or acquired on the public market
after such offering) during the 180-day period following the effective date of a
registration statement filed under the Securities Act of 1933, as amended, or
such shorter period of time as the Lead Underwriter may specify.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A042"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Certain
Federal Tax Consequences</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
grant of an NSO under the Plan will not result in any federal income tax
consequences to the optionee or to us. Upon exercise of an NSO, the optionee is
subject to income taxes at the rate applicable to ordinary compensation income
on the difference between the option exercise price and the fair market value of
the shares on the date of exercise. This income is subject to withholding for
federal income and employment tax purposes. We are entitled to an income tax
deduction in the amount of the income recognized by the optionee, subject to
possible limitations imposed by Section&nbsp;162(m) of the Code. Any gain or
loss on the optionee&#146;s subsequent disposition of the shares will receive
long-term or short-term capital gain or loss treatment, depending on whether the
shares are held for more than one year following exercise. We do not receive a
tax deduction for any such gain.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
grant of an ISO under the Plan will not result in any federal income tax
consequences to the optionee or to us. An optionee recognizes no federal taxable
income upon exercising an ISO (subject to the alternative minimum tax rules
discussed below), and we receive no deduction at the time of exercise. The tax
consequences of a disposition of stock acquired upon exercise of an ISO depends
upon how long the optionee has held the shares. If the optionee does not dispose
of the shares within two years after the ISO was granted, nor within one year
after the ISO was exercised, the optionee will recognize a long-term capital
gain (or loss) equal to the difference between the sale price of the shares and
the exercise price. We are not entitled to any deduction under these
circumstances.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">If the
optionee fails to satisfy either of the foregoing holding periods, he or she
must recognize ordinary income in the year of the disposition, which we refer to
as a disqualifying disposition. The amount of such ordinary income generally is
the lesser of (i)&nbsp;the difference between the amount realized on the
disposition and the exercise price, or (ii)&nbsp;the difference between the fair
market value of the stock on the exercise date and the exercise price. Any gain
in excess of the amount taxed as ordinary income will be treated as a long-term
or short-term capital gain, depending on whether the stock was held for more
than one year. We are entitled to a deduction equal to the amount of ordinary
income recognized by the optionee in the year of the disqualifying disposition.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
&#147;spread&#148; under an ISO,&nbsp;i.e., the difference between the fair
market value of the shares at exercise and the exercise price, is classified as
an item of adjustment in the year of exercise for purposes of the alternative
minimum tax calculation of the optionee.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
grant of restricted stock will subject the grantee to ordinary compensation
income on the difference between the amount paid for such stock and the fair
market value of the shares on the date that the restrictions lapse. This income
is subject to withholding for federal income and employment tax purposes. We are
entitled to an income tax deduction in the amount of the ordinary income
recognized by the grantee, subject to possible limitations imposed by
Section&nbsp;162(m) of the Code. Any gain or loss on the grantee&#146;s
subsequent disposition of the shares will receive long-term or short-term
capital gain or loss treatment depending on whether the shares are held for more
than one year and depending on how long the stock has been held since the
restrictions lapsed. We do not receive a tax deduction for any such gain.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Recipients
of restricted stock may make an election under Section&nbsp;83(b) of the Code to
recognize as ordinary compensation income in the year that such restricted stock
is granted the amount equal to the spread between the amount paid for such stock
and the fair market value on the date of the issuance of the stock. If such an
election is made, the grantee recognizes no further amounts of compensation
income upon the lapse of any restrictions and any gain or loss on subsequent
disposition will be long-term or short-term capital gain to the grantee. An
election under Section&nbsp;83(b) must be made within 30&nbsp;days from the time
the restricted stock is issued.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>The
foregoing is only a summary of the current effect of federal income taxation
upon the grantee and us with respect to the shares purchased under the Plan. You
should refer to the applicable provisions of the Code. In addition, the summary
does not discuss the tax consequences of a grantee&#146;s death or the income
tax laws of any municipality, state or foreign country to which the grantee may
be subject.</B></FONT></FONT></P>


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<A NAME="A043"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Plan Benefits</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We
have not issued or planned or committed to issue any Awards under the Plan as of
the date of this Proxy Statement. Assuming our shareholders approve the Plan,
and our 2003 Stock Option Plan is terminated, we expect to commence to use the
Plan for issuance of equity compensation as has been customary in the past.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A044"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Board
Recommendation</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148; THE PROPOSAL TO APPROVE THE
2007 EQUITY INCENTIVE PLAN.</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A045"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>PROPOSAL
NO. 3</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>STOCK ISSUANCE
PLAN &#150; ISSUANCE OF SHARES OF THE COMPANY&#146;S COMMON STOCK IN  EXCESS OF <BR>20% OF
THE AMOUNT OF OUR EXISTING OUTSTANDING SHARES AND NOT  MORE THAN 3 MILLION
SHARES, <BR>INCLUDING SHARES OF COMMON STOCK POTENTIALLY  UNDERLYING PREFERRED STOCK, OPTIONS
AND WARRANTS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A047"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Background
and Overview</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We
currently anticipate the likely need to raise additional capital to finance our
growth plans including the possible acquisition of an equipment manufacturer,
the development of a proposed activated carbon (&#147;AC&#148;) manufacturing
facility and/or to fund the future expansion of an existing AC manufacturing
facility, as well as for general working capital purposes. Since we believe we
currently have the financial resources available internally to fund the growth
activities presently approved by the Board, we believe that it would be
beneficial for the Company to be positioned to raise capital for future
financing needs on an expedited basis in order to take advantage of the timing
of favorable market conditions, and may be on terms and conditions where the
issuance of the security is not restricted or otherwise limited upon issuance,
conversion or exercise. Because our common stock is listed for trading on the
NASDAQ Capital Market (formerly the NASDAQ Small Cap), the issuance of our
common stock, or securities that are convertible or exercisable into common
stock, is subject to the NASDAQ Marketplace Rules, including Rule 4350. Under
Rule 4350(i)(1)(B) and 4350(i)(1)(D), shareholder approval must be obtained when
(a) the issuance or potential issuance will result in a change of control of the
issuer (the &#147;Change of Control Rule&#148;); or (b) where the transaction is
other than a public offering and involves: (x) the sale, issuance or potential
issuance of common stock at a price less than the greater of book or market
value which, together with sales by officers, directors or substantial
shareholders of the issuer, equals 20% or more of the common stock or 20% or
more of the voting power outstanding before the issuance; or (y) the sale,
issuance or potential issuance of common stock equal to 20% or more of the
common stock (or of the voting power) outstanding before the issuance for less
than the greater of book or market value of the stock (the &#147;20%
Rule&#148;). We are therefore seeking your approval now for the issuance of
common stock or securities exercisable for or convertible into common stock
that, absence such approval, would violate the Change of Control Rule and/or the
20% Rule. If this proposal is approved, we will be able to engage in a financing
transaction or a series of financing transactions in which we will be allowed to
issue more than 20% of our outstanding common stock (as of the date prior to the
newly authorized issuance) but not more than a total of 3 million shares, either
directly, upon conversion of a preferred stock, or through the exercise of
warrants issued in that financing.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A048"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Potential
Dilutive Effect on Existing Shareholders</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Regardless
of the type of security that is issued in connection with any future capital
raising efforts, it is anticipated that such security or securities will
constitute, either directly or by conversion or exercise, more than 20% of our
then issued and outstanding common stock and a total of not more than 3 million
shares and, accordingly, could be materially and substantially dilutive to our
existing shareholders. We currently anticipate raising up to $60 to 80 million
in new capital from a future financing or series of future financings, but the
terms of any such financing have not been determined at this time. However, we
would issue no more than 3 million shares of our common stock (either directly
or by the conversion of preferred stock and the exercise of warrants that would
be issued in connection with any such direct common stock or preferred stock
issuance or issuances. As a result, the maximum amount of dilution that may be
experienced by current shareholders would be an aggregate of 3 million shares of
common stock underlying the securities that may be issued in any such financing
or financings. It is currently anticipated that in connection with such
financing or series of financings, we will issue either common stock,
convertible preferred stock, warrants, or some combination thereof, which could
result in gross proceeds to us of up to $80 million in the aggregate, exclusive
of any proceeds we may receive upon exercise of warrants that may be issued in
such a financing. As it is anticipated that the future issuance price,
conversion price or exercise price, as applicable, will be determined in
relation to the market price of our common stock at the time of such issuance,
it is impossible to determine what that price will be at this time. Accordingly,
we can only provide you with information based upon the maximum amount of
dilution you would experience in the event the maximum number of shares reserved
for such purposes were issued in any such future financing or financings.
Finally, in order to provide our existing shareholders with as much dilution
protection as possible, the price per share, conversion price or exercise price,
as applicable, will not be greater than a 10% discount to the market price of
our common stock at such time.</FONT></FONT></P>


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<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A049"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Use of
Proceeds from the Financing</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">As
described in detail in our Annual Report on Form 10-K, we develop and implement
proprietary environmental technology and provide specialty chemicals that enable
coal-fueled power plants to enhance existing air pollution control equipment,
maximize capacity and improve operating efficiencies. As a part of this
business, we are actively involved in designing, marketing and supplying mercury
emissions control systems to coal-fueled power plants. A key compound used in
the mercury emissions control systems we provide is powdered activated carbon
(&#147;AC&#148;), which is typically injected in the ductwork after the boiler
and acts to reduce mercury emissions from the flue gas. An important aspect of
this part of our business requires that we be able to supply our customers with
an adequate supply of activated carbon meeting standards required for effective
mercury emissions reduction, and we have devoted substantial resources to be
able to do so. We believe that the existing and available supply of AC needed
for the developing mercury emissions control (&#147;MEC&#148;) market will be
unable to meet the demand for the material as early as 2010. We commissioned a
market study from a third party to address the current worldwide production and
expected future demand for activated carbon in both the conventional water
treatment markets and the developing MEC market. This study documented that the
current U.S. market for activated carbon, which is primarily for water
treatment, is approximately $200 million per year. With regulations in place
today to reduce mercury emissions, this could more than double by 2010, and in
addition, if a more stringent federal regulation comes into effect, the demand
could more than triple by that time. As a result, we have been investigating the
possibility of either purchasing an existing AC facility or developing a new
&#147;Greenfield&#148; facility to manufacture activated carbon. We are
currently pursuing plans to develop a new &#147;Greenfield&#148; facility, while
exploring the parallel possibility of entering into a collaborative project with
an existing AC manufacturer to increase capacity. We have committed
approximately $4 million for the preparatory phase of this project through
August, 2007, including plant location, design and permitting, as well as
determining and sourcing key capital equipment that would be required for such a
facility. A large-scale production facility, which is expected to cost in excess
of $200 million to develop, and which will have the capacity to produce
approximately $100 million worth of activated carbon per year, is being designed
to maximize efficiency and produce the most cost-effective product for the MEC
market. Such a project will require supplementary financing, and we anticipate
that financing will involve a combination of equity and debt funding from
financial and strategic partners. As a result, and if the Board determines to
move ahead with the project after the current preparatory phase, we would expect
to use the gross proceeds from the financing for which approval is being sought
hereby to finance the development of a proposed AC manufacturing facility or to
fund the future acquisition of an existing AC manufacturing facility, as well as
for general working capital purposes. For near-term AC supplies, ADA-ES and
Calgon Carbon Corporation have signed a MOU to explore working closely together
on both a marketing and product development basis, which is intended to result
in a formal joint marketing agreement to address the ever increasing MEC market,
within the next few several months.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A050"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Necessity
for Shareholder Approval</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">NASDAQ
Marketplace Rule 4350 includes both the Change of Control Rule and the 20% Rule.
Our Amended and Restated Articles of Incorporation allows us to issue both
common stock and preferred stock as to which the Board can designate the rights,
preferences and privileges of any series of such preferred stock. However,
unless the securities are issued in a public offering, the issuance of common
stock or the conversion of any such preferred stock that has a conversion price
below the market price on the date of issuance must comply with the 20% Rule, or
if the conversion price is at or above market and the conversion would result in
the issuance of greater than 20% of the outstanding common stock on a
post-conversion basis, such issuance must comply with the Change of Control
Rule. Although we do not yet know the price of the securities to be offered in a
future financing or series of financings, we are seeking shareholder approval at
this time in order to be able to complete any such future financings in a timely
manner in order to allow us to take advantage of favorable market conditions or
heightened investor interest. Furthermore, we believe that the ability to issue
securities without restriction on the issuance, conversion or exercise thereof
will provide us with better leverage in negotiating the terms of any such future
financing with potential investors.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
order to enable the Company to issue common stock, or allow purchasers of
preferred stock or warrants to fully convert or exercise such securities, we
must comply with the shareholder approval requirements of either the 20% Rule
for any anticipated financing (other than in a public offering) where we propose
to issue securities at a price below existing market, or the Change of Control
Rule for any anticipated financing where we propose to issue securities at a
price at or above market. We do not have terms, including the price of the
securities issuable pursuant to the proposed financing, at this time, although
the maximum amount of common stock or securities convertible into common stock
discussed above will be the maximum amount of dilution experienced by our
current shareholders as a result of any such issuance.</FONT></FONT></P>


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<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A051"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Recommendation</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Board believes that it is in the Company&#146;s best interest for the
shareholders to authorize the issuance of securities in a subsequent financing
or series of financings as described herein, so that the Company can take
advantage of market conditions and raise capital as needed to fund the
Company&#146;s expansion plans.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148; THE PROPOSAL TO APPROVE THE
ISSUANCE OF ADDITIONAL SHARES IN EXCESS OF 20% OF THE AMOUNT OF OUTSTANDING
SHARES.</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A052"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>BOARD
OF DIRECTORS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Board is responsible for establishing broad corporate policies and monitoring
the overall performance of the Company. However, in accordance with corporate
legal principles, the Board is not involved in day-to-day operating matters.
Members of the Board are kept informed of the Company&#146;s business by
participating in Board and committee meetings, by reviewing analyses and reports
sent to them each month, and through discussions with the President and other
officers.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A053"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>BOARD
COMMITTEES</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Board maintains audit, compensation and nominating and governance committees. In
calendar 2006 each committee was composed of directors who qualify as
&#147;independent directors&#148; as defined in NASD Rule 4200(a)(15). The
charters of each committee are available on our website at www.adaes.com under
&#147;Investor Relations.&#148;</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A054"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>AUDIT
COMMITTEE</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our Board has
an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as  amended (the &#147;Exchange Act&#148;), which consists of
Messrs. Derek Johnson, Ronald Johnson, Peterson, Smith and Swanson.  Mr. Swanson  serves
as the chairman of the Audit Committee.  Our Board has determined that Mr. Swanson is an
Audit Committee Financial Expert. Mr.  Swanson is &#147;independent&#148; as that term is
used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
role and functions of the Audit Committee are set out in the Audit Committee
Charter, as amended, originally adopted by the Company&#146;s Board and most
recently amended on September 23, 2005. The role of the Audit Committee is one
of oversight of our accounting and financial reporting processes and audits of
our financial statements. The Audit Committee&#146;s functions include the
following: reviewing and assessing the Audit Committee Charter annually;
reviewing the Company&#146;s relationships with its outside auditors and
assessing the impact such relationships may have on the auditors&#146;
objectivity and independence; taking other appropriate action to oversee the
independence of the outside auditors; reviewing and considering the matters
identified in Statement on Auditing Standards No. 61 with the outside auditors
and management; reviewing and discussing the Company&#146;s financial statements
with the outside auditors and management; recommending whether the
Company&#146;s audited financial statements should be included in the
Company&#146;s Form 10-K for filing with the Securities and Exchange Commission
(&#147;SEC&#148;); and reporting to the Board on all such matters. In performing
its oversight function, the Audit Committee relies upon advice and information
received in its discussions with the Company&#146;s management and independent
auditors.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A055"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Report
of the Audit Committee</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Audit Committee has (i) reviewed and discussed the Company&#146;s audited
financial statements for the fiscal year ended December 31, 2006 with the
Company&#146;s management; (ii) discussed with the Company&#146;s independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, as amended, as adopted by the Public Company Accounting Oversight Board
(&#147;PCAOB&#148;) in Rule 3200T regarding communication with audit committees
(AICPA Professional Standards, Vol. 1, AU section 380); and (iii) received the
written disclosures and the letter from the Company&#146;s independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as adopted by the PCAOB in
Rule 3600T, and has discussed with the Company&#146;s independent accountants
the independent accountants&#146; independence.</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Based
on the review and discussions with management and the Company&#146;s independent
auditors referred to above, the Audit Committee recommended to the Board that
the audited consolidated financial statements as of December 31, 2005 and 2006
and for the years ended December 31, 2004, 2005 and 2006 be included in the
Company&#146;s Annual Report on Form 10-K for the fiscal year ended December 31,
2006 for filing with the SEC.</FONT></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="28%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The Audit Committee:</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="36%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard Swanson, Chairman</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="26%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Derek Johnson</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ronald Johnson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Rollie J. Peterson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey C. Smith</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A056"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>NOMINATING
AND GOVERNANCE COMMITTEE</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Board has appointed a Nominating and Governance Committee consisting of Messrs.
Caruso, Eaves, Derek Johnson and Peterson. Mr. Peterson serves as the chairman
of the Nominating and Governance Committee. The responsibilities of the
Committee, as set forth in the Nominating and Governance Committee Charter,
include selecting director nominees for the Board, reviewing director
compensation and benefits and submitting to the entire Board for approval,
overseeing the annual self-evaluation of the Board and its committees,
recommending the structure and composition of Board committees to the entire
Board for approval and monitoring in conjunction with the Audit Committee
compliance with our Code of Conduct and granting any waivers thereto with
respect to directors and executive officers. Criteria established for the
selection of candidates for the Board include:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">a. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> An
understanding of business and financial affairs and the complexities of an organization
that operates as a public company  in the business of the Company;</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">b. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">A
genuine interest in representing all of our shareholders and the interests of  the
Company overall;</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">c. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">A
willingness and ability to spend the necessary time required to function  effectively as
a director;</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">d. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">An
open-minded approach to matters and the resolve and ability to independently  analyze
matters presented for consideration;</FONT></FONT> </P></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">e. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">A
reputation for honesty and  integrity that is  above reproach;</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">f. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Any
qualifications required of independent directors by the Nasdaq Stock Market and
applicable law; and</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">g. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">As
to any candidate who is an incumbent director (who continues to be otherwise  qualified),
the extent to which the continuing service of such person would  promote stability and
continuity in the Boardroom as a result of such  person&#146;s familiarity and insight
into the Company&#146;s affairs, and such  person&#146;s prior demonstrated ability to
work with the Board as a collective  body.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Director
nominees are generally identified by our officers, directors or shareholders
based on industry and business contacts. Regardless of the source of the
nomination, nominees are interviewed and evaluated by the Nominating and
Governance Committee, and other members of the management team or board of
directors as deemed appropriate by the Nominating and Governance Committee. The
Nominating and Governance Committee then presents qualified candidates to the
Board for a final discussion and vote.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Under
the Nominating and Governance Committee Charter, the Nominating and Governance
Committee will consider nominees submitted by our shareholders. Recommendations
of individuals that meet the criteria set forth in the Nominating and Governance
Committee Charter for election at our 2008 annual meeting of shareholders<B>
</B>may be submitted to the Committee in care of Mark H. McKinnies, Secretary,
at 8100 SouthPark Way, Unit B, Littleton, Colorado 80120 no later than January
5, 2008.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Committee has recommended to our Board the slate of directors for this Annual
Meeting as set forth above. No third party was used in identifying or evaluating
nominees and we received no shareholder recommendations for nominees.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A057"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>COMPENSATION
COMMITTEE</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Board has appointed a Compensation Committee consisting of Messrs. Caruso,
Eaves, Ronald Johnson, Swanson and Smith. Mr. Johnson serves as the chairman of
the Compensation Committee. The responsibilities of the Compensation Committee,
as set forth in the Compensation Committee Charter, include reviewing our
executive compensation programs to analyze their alignment with attracting,
retaining and motivating our executive officers to achieve our business
objectives; establishing annual and long-term performance goals for our
executive officers and evaluating their performance in light of such goals,
reviewing and making recommendations concerning our long-term incentive plans
and shareholder proposals related to compensation and administering our
equity-based and employee benefit plans. See &#147;Executive Compensation &#150;
Compensation Discussion and Analysis&#148; below for additional information.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A058"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>DIRECTORS
MEETINGS AND COMMITTEE MEETINGS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Board of Directors met 11 times in 2006. At each of the regularly scheduled
bi-monthly meetings an Executive Session is held where management of the Company
is excluded. The Audit Committee met 9 times in 2006. The Compensation Committee
met 8 times in 2006 and the Nominating and Governance Committee met 6 times in
2006. All of the incumbent directors, other than Mr. Swanson due to travels out
of the country, were present for more than 75% of the meetings of Board of
Directors and committees of which they were members held during their individual
terms.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>


<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 6; page: 6" -->

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A059"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>SHAREHOLDER
COMMUNICATIONS TO DIRECTORS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Any
shareholder may communicate directly with the Board (or any individual director)
by writing to the Chairman of the Board, ADA-ES, Inc., 8100 SouthPark Way, Unit
B, Littleton, Colorado 80120 or by emailing the Board through the &#147;Contact
the Board&#148; link on our website at www.adaes.com. Any such communication
should state the number of shares beneficially owned by the shareholder making
the communication. Provided that such communication addresses a legitimate
business issue, the Company or the Chairman will forward the shareholder&#146;s
communication to the appropriate director. For any communication relating to
accounting, auditing or fraud, such communication will be forwarded promptly to
the Chairman of the Audit Committee.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A060"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>EXECUTIVE
OFFICERS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Information
concerning our executive  officers who are not director  nominees is provided below. See
&#147;Election of Directors&#148; above for  information regarding Dr. Durham and Mr.
McKinnies.</FONT></FONT></P>




<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Age</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Positions and Offices</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="23%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jonathan S. Barr</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">49</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="62%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vice President Sales and Marketing</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">C. Jean Bustard</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">49</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chief Operating Officer</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard L. Miller</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">53</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vice President Business Development for Utility Systems</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard J. Schlager</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">55</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vice President Contract Research and Development</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sharon J. Sjostrom</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">40</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vice President Technology</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Each
of the officers named above serves from year to year at the pleasure of the
Board.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr.  Barr has
been Vice  President  Sales and  Marketing  of the  Company  since July 2004.  From 1998
to early  2004,  Mr.  Barr was a  National Vice  President of Sales and Regional Vice
President of Sales and  Marketing for Arch Coal.  From 1994 to 1998,  Mr. Barr was  with
the C&amp;O unit of CSX  Transportation,  where he served as the  Director  of River Coal
Marketing  and Market  Manager  for Utility  Coal.  Mr. Barr has a B.S. in Political
Science/Business Administration from Wittenburg University.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Ms. Bustard was
appointed Chief Operating Officer of the Company in June 2004.  Prior to that appointment
she served as Executive  Vice President of ADA Environmental Solutions, LLC, our wholly
owned subsidiary, beginning with its formation in 1996.  Ms. Bustard  was employed by ADA
Technologies from 1988 through 1996.  Ms. Bustard holds a B.S. in Physics Education from
Indiana University, an  M.A. in Physics from Indiana State University and an MBA from the
University of Colorado.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. Miller has
served as our Vice President of Business Development since November 2005.  He was
previously employed by Hamon  Research-Cottrell (HRC), from 1990 to November 2005, most
recently as Vice President of Sales with primary responsibility in  Particulate and
Mercury Control Technologies.  Prior to 1989, Mr. Miller was employed by Buell/GE
Environmental in various technical  and sales positions with direct responsibility for
all fabric filter technologies.  Mr. Miller has also served as Chairman of Fabric  Filter
Division of Institute of Clean Air Companies.  Mr. Miller has an A.A.S. in Marine Science
Technology from Southern Maine  Technology and a B.S. Degree in Management from Lebanon
Valley College.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr. Schlager
has been employed by the Company as Vice President,  Contract  Research and Development
since 2000 and was employed by ADA  Technologies  from 1989 until that time.  Mr.
Schlager  holds a B.S. in Chemistry and an M.S. in  Metallurgical  Engineering  from the
Colorado School of Mines.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Ms.  Sjostrom
was appointed a Vice  President  effective  January 1, 2007.  Previously  she served the
Company as Director,  Technology  Development  since 2003 when we acquired her company
EMC  Engineering,  LLC, where she served as President  since 2002. From 1998 until
September  2002,  Ms.  Sjostrom  served as Director of  Emissions  Control  for Apogee
Scientific,  LLC.  Ms.  Sjostrom  has a B.S. in  Mechanical  Engineering  from  Colorado
State  University  and an M.S.  in Mechanical  Engineering  from the  California
Institute of  Technology.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A061"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>CODE
OF ETHICS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We
adopted a Code of Conduct that applies to our officers, directors and employees,
including the principal executive officer, principal financial officer,
principal accounting officer or controller or other persons performing similar
functions, and includes a code of ethics as defined in Item 406(b) of Regulation
S-K. A copy of our Code of Conduct is available on our website at www.adaes.com.
We intend to disclose any amendments to certain provisions of our Code of
Conduct, or waivers of such provisions granted to executive officers and
directors, on our website.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT AND <BR>RELATED STOCKHOLDER MATTERS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
following table provides information with respect to the beneficial ownership of
the Company&#146;s common stock by (1) each of our shareholders whom we believe
are beneficial owners of more than 5% of our outstanding common stock, (2) each
of our directors and named executive officers and (3) all of our directors and
executive officers as a group. We base the share amounts shown on each
person&#146;s beneficial ownership as of April 15, 2007 (including options
exercisable within 60 days thereof), unless we indicate some other basis for the
share amounts. Except as noted below, each of the individuals named below has
sole voting and investment power for the respective shares.</FONT></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name and Address</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amount and Nature of<BR>Beneficial Ownership</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Percent of<BR>Class</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="60%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jonathan S. Barr (VP Sales and Marketing)</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="18%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="13%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">19,333</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">C. Jean Bustard (Chief Operating Officer)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">29,583</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robert Caruso (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Michael D. Durham (Director and President)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">164,983</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.9%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dynamis Advisors LLC</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">310 Fourth Street, NE, Suite 101, Charlottesville, VA</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">525,126</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9.3%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John W. Eaves (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Derek Johnson (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ronald B. Johnson (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,270</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mazama Capital Management, Inc.</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">One Southwest Columbia St.,Portland, OR</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">302,300</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5.4%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mark H. McKinnies (Director, Secretary, Senior VP and CFO)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">67,817</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1.2%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard Miller (VP Business Development of Utility Systems)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,997</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Rollie J. Peterson (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">32,580</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard J. Schlager (VP of Contract R&amp;amp;D)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24,855</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(9)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sharon M. Sjostrom (VP Technology)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,999</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey C. Smith (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,136</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(11)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard Swanson (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Littleton, CO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Wellington Management Co. LLP</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75 State Street, Boston, MA</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">490,075</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8.7%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Directors and Officers as a Group (14 individuals)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">379,917</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(12)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6.6%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">* Less
than 1%. <BR><B>Notes:</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
amount represents shares to which Mr. Barr has the right to acquire beneficial  ownership
through stock options.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 8,458 shares to which Ms. Bustard has the right to  acquire
beneficial ownership through stock options and 10,933 shares held in Ms.  Bustard&#146;s
Retirement Plan account.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>




<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 8; page: 8" -->

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(3)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 45,842 shares held in Dr. Durham&#146;s Retirement Plan  account
and 16,445 shares Dr. Durham has the right to acquire beneficial ownership through  stock
options.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(4)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">As
of December 31, 2006 per Schedule 13G filed with the U.S. SEC.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(5)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 8,603 shares held by the Johnson Family Trust and 1,667 shares to
which Mr. Johnson has the right to acquire beneficial ownership through stock options.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(6)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 33,117 shares held in Mr. McKinnies&#146; Retirement Plan
account, 500 shares held as trustee for the MJ Kraft Trust, and 12,281 shares Mr.
McKinnies has the right to acquire beneficial ownership through stock options.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(7)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 9,750 shares to which Mr. Miller has the right to acquire
beneficial ownership through stock options, 225 shares owned jointly with Mr.  Miller&#146;s
spouse and 22 shares owned by the Mrs. Jeanne R. Ferron and Richard L.  Miller Joint
Tenancy with Right of Survivorship (&#147;Tenancy&#148;), with respect to  which in both
cases Mr. Miller shares voting and investment power. Mr. Miller disclaims  beneficial
ownership of the 22 shares held by the Tenancy as they would automatically be  sold upon
Mrs. Ferron&#146;s death.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(8)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 3,333 shares to which Mr. Peterson has the right to  acquire
beneficial ownership through stock options.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(9)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 8,969 shares to which Mr. Schlager has the right to  acquire
beneficial ownership through stock options and 12,086 shares held in Mr.  Schlager&#146;s
Retirement Plan account.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(10)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 2,363 shares to which Ms. Sjostrom has the right to  acquire
beneficial ownership through stock options and 1,919 shares held in Ms.  Sjostrom&#146;s
Retirement Plan account.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(11)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Included
in the amount shown are 3,333 shares to which Mr. Smith has the right to acquire
beneficial ownership through stock options.</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(12)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
amount shown includes 85,933 shares to which individuals in the group have the right  to
acquire beneficial ownership through stock options</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A062"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>EXECUTIVE
COMPENSATION</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="A063"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Compensation
Discussion and Analysis</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
philosophy for executive compensation is set forth in a document entitled
&#147;ADA-ES Executive Compensation Plan&#148; (the &#147;EC Plan&#148;) which
was adopted by the Board on November 4, 2004. The EC Plan applies to the
Executive Team, which includes the President/Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer, and all Vice Presidents of the
Company. Executives become eligible to participate in this plan after completing
12 months of continuous service with ADA-ES. This may be modified based on
Board&#146;s approval.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
ADA-ES compensation philosophy was designed to support our goals in creating a
reputation that can be leveraged to build our business and reward shareholders,
executives and employees. The business goals include: creating a steady stream
of new and profitable products; developing sustainable, return business;
becoming the first company called for pollution control jobs; becoming a
household name in the utility industry; and ensuring a reputation for
outstanding service and value to customers. Compensation goals include: linking
the interests of shareholders with the interests of executives; maintaining a
reliable link to the market; giving the organization access to quality
candidates; and providing pay recognition for executives as a result of business
success.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Executive
compensation decisions are based on these considerations:</FONT></FONT></P>






<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Leveraged Reputation<BR>Goal</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Quantitative/Qualitative<BR>Performance Metric</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="44%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>Creating a steady stream of new and  profitable</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="48%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Product Performance and Effectiveness</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">products and chemicals,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Developing sustainable, return business</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Reported Revenue &amp; Net Income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Becoming the first company called for</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Utility Industry and Sorbent Industry Market Share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">pollution control jobs</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Recognized  leader for the products and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Government, Industry Partner and Customer Relations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">services we supply in the utility industry</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ensuring a reputation for outstanding service</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Customer Satisfaction</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">and value to customers</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>



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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Executive compensation
generally consists of three elements: base salary, performance incentives and
equity awards. Presently, all compensation is paid out currently and we do not
have any long-term plans related to compensation. The Compensation Committee
does not have specific policies for allocating between cash and non-cash
compensation.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Compensation Committee establishes the level of pay for all executive officers.
The CEO makes recommendations as to compensation of other executive officers to
the Committee. Base salary is defined as ongoing, cash compensation paid
bi-weekly based on such factors as job responsibilities, external
competitiveness, and the individual&#146;s experience and performance. Pay
ranges will be set based on the local market for similar positions, with
consideration given to national rates of pay. Base salary is typically increased
annually based on cost of living increases. The Compensation Committee approved
an additional increase in the compensation of the Chief Operating Officer in
2007 based on comparable rates of pay in the market for her position and those
employees who report to her. ADA-ES will attempt to ensure middle market pay for
solid performers and consider higher levels of pay for outstanding performers.
ADA-ES does not intend to be a market leader in base compensation. A decision to
materially increase or decrease compensation would be based on the
aforementioned factors. Any gains or losses that might have been realized from
prior option awards are not considered in establishing current compensation
levels. The Compensation Committee engaged Mountain States Employers Council
(MSEC) to assist in the design and application of the EC Plan. MSEC advised on
the appropriateness of bonus levels for executive positions and provided
assistance in setting the weight for metrics and in modeling the EC Plan. We
also use compensation survey information from MSEC to determine appropriate pay
ranges. We do not benchmark compensation based on any reports.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Annual
incentives are designed to motivate the management team to achieve critical
short-term goals, typically one to two years, which are expected to contribute
to the long-term health and value of the organization. Incentives may be paid in
cash or equity as determined by the Board. It is expected that in the early
years of the plan, payment will be primarily in stock, either through options or
restricted shares.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Incentive
amounts will be set based on organization level and market practices. The plan
will focus on specific business objectives set at the beginning of each year.
Objectives will be those quantitative metrics, such as revenue, income, or
market share, which management and the Board determine are most important to the
short and long term health and value of the organization. Potential incentive
amounts for 2005 and 2006 performance were established at 50% and 40% of base
salary for the CEO and other members of the executive team, respectively. In
2004, we adopted the Executive Stock Option Plan (the &#147;2004 ESO Plan&#148;)
discussed below, and granted all 200,000 options authorized under such plan to
our then five executive officers, expecting to utilize the acceleration of
vesting of such options, for so long as they are available, as the means for the
next several years to pay any incentive amounts earned by the executive officers
pursuant to the EC Plan who are also covered in the 2004 ESO Plan. To determine
the value of each vested option share considered for accelerated vesting, the
exercise price of $8.60 per share, which was the fair value on the date of
grant, was subtracted from the average closing stock price for the month of
December of that year (i.e. $22.39, $16.42 and $15.98 for 2004, 2005 and 2006,
respectively). As a result, for the fiscal years 2004, 2005 and 2006 a total of
27,080, 38,428 and 17,258, respectively, of options were vested in payment of
incentive amounts earned for those years. Of the original 200,000 options
granted under the 2004 ESO Plan, 117,234 options remain available for vesting
for future incentive payments. We have not granted options to the executive
officers who received options under the 2004 ESO Plan since 2004. We generally
grant options to new hires at the Board meeting following the commencement of
employment. Mr. Miller was awarded 13,000 options at the Board meeting following
his date of hire in December 2005 under the 2003 Plan described below. Our
share-based compensation, including options granted under the 2003 Plan and the
2004 ESO Plan, is accounted for under the Statement of Financial Accounting
Standards No. 123R (See Footnote 1 to the Consolidated Financial Statements
included in Item 8 of our Form 10-K for the year ended December 31, 2006).</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Options
granted under the 2004 ESO Plan are considered non-qualified stock options
(&#147;NQSO&#148;). A recipient is required to pay ordinary income tax on the
difference, or &#147;spread,&#148; between the grant price and the stock&#146;s
market value when he purchases (&#147;exercise&#148;) the shares. A loss may not
be recognized if the grant price is greater than the exercise price. The greater
of the grant price or the market value at the exercise date (the amount used for
calculating the amount of ordinary income to be taxed, if any) becomes the tax
basis of the stock for calculating future gains and losses upon disposition or
transfer of the stock. A disposition of NQSO stock generally refers to any sale,
exchange, gift or transfer of legal title of stock, including a transfer from a
decedent who held NQSO stock to an estate, a transfer by a bequest or
inheritance, or any transfer of NQSO stock between spouses or incident to a
divorce. Any subsequent appreciation or decline in the stock is taxed at capital
gains/loss rates when the stock is disposed of. If the NQSO stock is held for
more than a year, the long-term capital gain/loss rate will apply. If the NQSO
stock is held for one year or less, any gain or loss is short-term and generally
taxed as ordinary income. The Compensation Committee chose NQSOs as the means
for the next several years to pay any incentive amounts earned by the executive
officers pursuant to the EC Plan because it believed such options aligned the
interests of the executive officers with the interest of our shareholders,
provided potential additional value from appreciation and allowed the recipient
to determine the timing of tax consequences from the award.</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Specific
metrics to measure executive performance for 2006 were established in January
2006 and are shown in the following table. Performance metrics for 2007 were
established in January 2007. The Compensation Committee discussed the 2006
performance metric to determine if changes were needed for 2007. The discussion
centered on the appropriateness of the metrics and the weighting. It was
determined that the definition of income should be changed to reflect income
from operations rather than net income from all sources. It was further
determined that the income metric should have greater weight to balance the
importance of revenue and income. Also, in determining the appropriate merit
increase level, we have begun to look at the actual market change for various
job families in addition to published local CPI-U data. The market change is
determined by tracking the year-over-year change in the median rate for a given
position or job family using local salary surveys.</FONT></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">WEIGHTING</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">INCENTIVES METRICS</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2007</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="70%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Revenue growth</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">40</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Income before tax</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Market Share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Industry Partner Relations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Customer Relations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stock Price Appreciation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">TOTAL</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
metrics include both objective (i.e. revenue growth, net income and stock price
appreciation) and more subjective (i.e. market share, industry and customer
relations) measurements. For the most part the objective goals are measured
against the Company&#146;s approved budget. Management considered all of the
goals established for 2006 as aggressive but attainable stretch goals. The
actual earned percentage of the potential incentive amounts for 2006 was
determined based on the following table that translates the measured metric
performance. The incentive scale table for 2007 has not been established. As
shown in the table, no incentive is paid for performance below 75% and as much
as 130% of the potential incentive amount may be paid for performance of 110% of
the goals. For 2006, performance measured by the metrics was approximately 84%,
which, based on the table below, translates to an incentive percentage of
approximately 38%. Applying this percentage to the potential incentive amounts
for 2006 performance noted above of 50% and 40% of base salary for the CEO and
other members of the executive team, respectively, incentive payments for 2006
amounted to approximately 19% and 15% of base salary for the CEO and other
members of the executive team, respectively. For those executive officers
covered by the 2004 ESO Plan (all executive officers as of December 31, 2006
except Mr. Miller), such amounts were paid in 2007 by accelerated vesting of
options as discussed above. The incentive amount earned by Mr. Miller was paid
in cash in 2007.</FONT></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Minor" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>2006
Incentive Scale </B></FONT></FONT></P>




<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="450" ALIGN="CENTER">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Metric<BR>Performance</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Incentive %</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="51%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Performance Floor</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75</FONT></TD>
        <TD WIDTH="11%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.0%</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20.0%</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1st tier</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">81</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.0%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30.0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2nd tier</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">87</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.0%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">45.0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3rd tier</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">93</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.0%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">70.0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Plan</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.0%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100.0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Performance Max</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">110</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.0%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">130.0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><BR>Annual
incentives, if any, are approved for payment by the Compensation Committee/Board
of Directors and are planned for payment by February 28<SUP>th</SUP> of the
calendar year following the incentive period. Incentives paid in cash are
subject to payroll taxes. These incentives can be deferred and paid to a
designated beneficiary, although that has not been the case with any incentives
awarded thus far. The Compensation Committee/Board of Directors uses the
performance metrics as guidelines and may exercise discretion in determining
incentives awarded. In prior years, the Compensation Committee/Board of
Directors has elected to increase individual incentives awarded for specific
performance beyond that measured by the metrics. For 2006, the Compensation
Committee/Board of Directors elected to exclude the costs associated with the
sale of the joint venture interest to NexGen in the determination of the net
income before tax metric given that the $1,000,000 payment for such interest was
recognized as an equity transaction rather than revenue.</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">From
time to time the Board of Directors may feel it necessary to recognize exemplary
performance of any executive with a cash award. Exemplary performance will be
performance that the Board determines to have required significant effort and
commitment and is determined to have had a significant positive impact on the
current or future performance of the organization. No such payments were made in
2006.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
use of equity payments, such as using accelerated vesting of options granted
under the 2004 ESO Plan to make incentive payments, is intended to link
short-term success to long-term performance and decision making, and to align
management and shareholder interests. Payments may be made in restricted shares
or options, as determined by the Board, considering accounting and regulatory
restrictions, and the financial condition of the Company. No equity awards were
made in 2006; however, vesting on previously granted stock options was
accelerated for incentives earned in 2006 as noted above and as shown below in
the &#147;Option Exercises and Stock Vested During Year Ended 12/31/06&#148;
table.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">There
is no severance pay policy or other benefits payable after termination for any
executive. See &#147;Employment Contracts and Termination of Employment and
Change-in-Control Arrangements&#148; below regarding executives&#146;
obligations after termination.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In the
event of a restatement of income, any over-payments made to executives may be
reclaimed at the discretion of the Board of Directors.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
2006 we obtained key man term insurance for our CEO, COO and CFO in the amount
of $2 million for each individual. The policies may be assigned to the
individuals upon termination of employment other than for cause whereupon the
executive would be responsible for any premium payments.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Executives
are encouraged to own a number of shares of stock equal to a value of at least
one (1) times the annual base salary as a condition of continued employment with
ADA-ES. Executives have five (5) years from the later of November 4, 2004 (the
date the EC Plan was adopted) or the date of hire to accomplish this level of
ownership. Ownership is calculated considering holdings of restricted stock,
whether or not the restrictions have expired, private holdings, and shares held
in retirement accounts. Holding of options also will be considered in the
ownership calculation by adding the value of the spread of in-the-money options
to the total value of other holdings. No analysis was performed for 2006 to see
if encouraged ownership levels were met.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">After
ownership requirements have been met, executives may sell unrestricted stock
they have owned for a period greater than 12 months, and may not exercise vested
stock options and sell shares to pay for the exercise price and withholding tax,
except as otherwise provided for in the underlying stock option agreement. The
Company must be advised of any sale of stock options or shares of stock at least
30 days in advance or be engaged in a pre-announced program sale in compliance
with federal securities laws, and such sales must be made in compliance with our
insider trading policy.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Executives
leaving the company are required to hold their stock in the company for at least
6 months after leaving the company.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Executives
may also be eligible to participate in the Company&#146;s Profit Sharing Plan
(&#147;PSP&#148;). For fiscal 2006 the profit sharing pool was established as
twenty-four percent (24%) of net earnings before taxes, investment income and
certain other adjustments at the end of the fiscal year. In February 2007 the
Compensation Committee/Board of Directors approved a total payment of $147,000
for 2006 on reported net earnings and also approved an additional $100,000
discretionary bonus, which would have been earned under the PSP if the costs
associated with the sale of the JV interest to NexGen had been excluded for the
calculation of net earnings. The Committee/Board considered such exclusion
appropriate given the significance to the Company of the $1,000,000 payment
received from NexGen although such payment was not recognized as revenue. The
pool is expected to be distributed to our employees by no later than February
15th as follows:</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Retirement
Plan (50%)</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Company-Wide
Distribution (20%)</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Performance
Based Distribution (30%)</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Retirement
Plan (50%): </U>This portion of the PSP is distributed among our employees based
on meeting the participation requirements in our current qualified Retirement
Plan described below. Individual distributions are pro-rated as a percent of
total compensation as required by the Retirement Plan. The distribution may be
made in either stock or cash at our Board of Director&#146;s discretion. Vesting
rules as outlined in the current PSP (described below) apply for these
distributions to employees. Employees with less than a year of service and
temporary employees, as defined in the PSP, are not eligible for this portion of
the pool.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Company-Wide
Distribution (20%): </U>This portion of the PSP is distributed evenly among all
of our full&#150;time permanent employees with pro-rated distributions for
partial years of service. Employees terminated during the year forfeit
eligibility for this portion of the PSP. An early distribution of this portion
of the PSP was offered in December 2006 to those employees electing it.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>





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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Performance
Based Distribution (30%): </U>This portion of the PSP is distributed to all of
our permanent full-time and part-time employees on a performance-based basis.
Employees terminated during the year forfeit eligibility for this portion of the
PSP. Employees are evaluated semi-annually by their direct supervisor based
informally on criteria that may also be used in the formal performance
appraisal, which is generally conducted annually. The current criteria that may
be used for the evaluation includes, but is not limited to, job knowledge;
communications; attitude and cooperation; leadership; planning, judgment and
resourcefulness; and initiative and responsibility.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
following rating system is used for each criterion: 1 Point &#151; Poor
Performance, 2 Points &#151; Improvement Needed, 3 Points &#151; Achieving
Expectations, 4 Points &#151; Exceeding Expectations, and 5 Points &#151;
Excellent Performance.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
employee&#146;s supervisor will complete the rating form, with input from
project managers or other personnel to whom said employee supports. Should an
employee receive an average rating for the two rating periods in 2006 of lower
than 2.0, the employee will not be eligible to receive any performance-based
distribution. Distributions are made based on the average rating and weighted by
the commercial rates that we would charge out an individual&#146;s time to
customers in effect at the end of the fiscal year.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Amounts
paid directly to the named executives for the performance-based portion of the
PSP are shown below in the Summary Compensation Table in the Bonus column. The
retirement plan and company-wide distributions paid from the PSP pool are
deposited to pension accounts under our Retirement Plan, a tax-qualified defined
contribution plan, and are included in the amounts shown in that same table
below in the All Other Compensation column.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Retirement Plan covers all eligible employees. Pursuant to that plan, we make
matching contribution to each eligible employee&#146;s account up to 5% of the
employee&#146;s eligible compensation, and may make, at the discretion of the
Board of Directors, contributions based on the profitability of the Company to
those accounts. Investments in an employee&#146;s account may be made in stocks,
bonds, mutual funds and other investments permitted by the Plan&#146;s
administrator.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Employee
contributions to the plan are 100% vested. Company contributions become 100%
vested if an employee&#146;s employment ends after the date such employee
attains normal retirement age (age 65), dies or becomes disabled. If an
employee&#146;s employment is terminated prior to the date the employee attains
normal retirement age (65) or dies or becomes disabled, the employee will become
vested in the Company&#146;s matching contributions and any profit sharing
contributions pursuant to the PSP according to the schedule below:</FONT></FONT></P>




<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="450" ALIGN="CENTER">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Years of Vesting Service</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vested Percentage</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="63%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="16%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="16%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Less than 2</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2 </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3 </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">40%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4 </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">60%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5 </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">80%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6 or more</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="CENTER">&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
following table show compensation during the fiscal years ended December 31,
2006, 2005 and 2004, of those persons who were, at December 31, 2006, our
principal executive officer (&#147;PEO&#148;), principal financial officer
(&#147;PFO&#148;) and the three most highly compensated executive officers other
than the PEO and PFO (collectively, &#147;named executive officers&#148; or
&#147;NEOs&#148;) of ADA-ES whose total compensation exceeded $100,000. The
structure of pay for each NEO is the same, although as noted above the potential
performance incentive amount for the PEO was established at 50% of base pay for
the years shown below and 40% for other NEOs.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>


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<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A064"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Summary
Compensation Table for Years Ended December 31, 2004, 2005 and 2006</B></FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="650">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Name of Individual<BR>and<BR>Principal Position</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Year</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Salary<BR>($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Bonus<BR>($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Stock<BR>Awards<BR>($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Option<BR>Awards<BR>($)(2)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Non-Equity<BR>Incentive<BR>Plan<BR>Compensation<BR>($)(3)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Change in<BR>Pension<BR>Value and<BR>Nonqualified<BR>Deferred<BR>Compensation<BR>Earnings ($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">All Other<BR>Compensation<BR>($) (4)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"><BR>Total ($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="15%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Michael D. Durham</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2006</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$197,866</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$10,291</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;5,436</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;17,984</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$231,577</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">President, CEO  and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$189,352</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$22,768</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;6,881</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;18,761</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$237,762</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Director (PEO)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$189,781</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$22,082</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;5,755</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;17,824</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$233,443</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Mark H. McKinnies</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$186,029</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;7,533</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;5,142</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;16,716</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$215,419</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Senior VP, CFO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$178,048</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$17,156</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;6,273</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;18,004</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$219,480</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">and Director (PFO)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$179,137</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$15,058</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;5,755</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;16,992</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$216,942</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Richard L. Miller</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$135,250</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$23,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;11,016</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$164,917</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">VP Business</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;10,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;10,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Development (1)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">C. Jean Bustard</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$142,242</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;5,918</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;4,973</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;13,582</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$166,715</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">COO</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$136,378</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$13,095</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;6,273</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;15,559</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$171,305</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$131,356</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;8,041</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;4,685</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;12,443</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$156,524</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Richard J. Schlager</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$134,904</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;5,613</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;4,805</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;12,333</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$157,655</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">VP of Contract</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$128,618</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$12,417</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;6,063</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;15,718</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$162,816</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">R&amp;D</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$112,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;7,639</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;4,685</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$&nbsp;&nbsp;12,126</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$137,350</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Mr.
Miller became an executive officer of the Company in December 2005.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> The
option amounts shown  represent the fair value  (computed at the date of grant in
accordance  with FAS 123R) of options to  acquire shares granted in 2004 pursuant to our
2004 ESO Plan as described below, for which  accelerated  vesting was awarded  in payment
of the EC Plan  performance  incentives  earned for the fiscal year. The  determination
of the 2006  performance  incentive  payments is described above. See Footnote 1 to the
Consolidated  Financial  Statements  included in Item 8 of our  Form 10-K for the year
ended December 31, 2006 for the assumptions made in determination of the FAS 123R amounts.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(3) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Amounts
represent  payments made or accrued for the periods shown for the  company-wide and
performance  based  distributions  pursuant to our PSP  described  above.  The amount
shown for Mr.  Miller for 2006 also  includes the  performance  incentive  earned
pursuant to the EC Plan  discussed  above.  Mr.  Miller is not covered under the 2004 ESO
Plan and his incentive was  paid in cash in 2007.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(4) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Amounts
represent  Company  pension  contributions  under our PSP plus  401(k)  matching
payments  made or  accruing  to the  Retirement Plan by the Company for the benefit of
the named individual.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Grants of
Plan-Based Awards in 2006</B></FONT></FONT></P>





<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Grant Date (1)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Estimated Future Payouts Under<BR>Non-Equity Incentive Plan Awards (2)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="52%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Michael D. Durham</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="19%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;5,436</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;6,881</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mark H. McKinnies</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;5,142</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;6,273</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">C. Jean Bustard</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;4,973</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;6,273</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard L. Miller</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$23,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard J. Schlager</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;4,805</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;6,063</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Awards
made  pursuant  to the PSP and, in the case of Mr.  Miller,  the EC Plan,  are
calculated  annually  after the fiscal  year-end.  The 2005 awards were paid in 2006 and
the 2006 awards were paid in 2007.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 14; page: 14" -->


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Amounts
represent  cash  payments  made  or  accrued  for the  periods  shown  for the
company-wide  and  performance  based  distributions  pursuant to our PSP described
above.  The amount shown for Mr.  Miller for 2006 also includes the  performance
incentive  earned  pursuant  to the EC Plan  discussed  above.  Mr.  Miller  is not
covered  under  the 2004 ESO Plan and his  incentive earned for 2006 was paid in cash in
2007.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Outstanding
Equity Awards at December 31, 2006</B></FONT></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Name</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Award Date</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Number of<BR>Securities<BR>Underlying<BR>Unexercised<BR>Options (#)<BR>Exercisable</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Number of<BR>Securities<BR>Underlying<BR>Unexercised<BR>Options (#)<BR>Unexercisable</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Equity<BR>Incentive Plan<BR>Awards: # of<BR>Securities<BR>Underlying<BR>Unexercised<BR>Unearned Options</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Option<BR>Exercise<BR>Price<BR>per Share</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Option<BR>Expiration<BR>Date</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(1)</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(2)</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(2)</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="24%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>Michael D. Durham</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,119</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">32,565</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,326</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
       <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD ALIGN="RIGHT"></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mark H. McKinnies</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,747</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24,629</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,534</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
       <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD ALIGN="RIGHT"></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">C. Jean Bustard</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,944</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">21,422</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,514</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
       <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD ALIGN="RIGHT"></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard L. Miller</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
        <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,750</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,250</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.18</FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11/30/15</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD ALIGN="RIGHT"></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard J. Schlager</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,792</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">19,331</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,177</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.60</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8/23/14</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD></TD><TD ALIGN="RIGHT"></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Award
dates reflect the timing of vesting of stock options granted on August 23, 2004 under the
2004 ESO Plan. Vesting was  accelerated based on performance under our EC Plan, which is
calculated annually after the fiscal year-end, as described  above, except in the case of
Mr. Miller whose award was made pursuant to the 2003 Plan described below.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> The
securities shown as &#147;Exercisable&#148; and &#147;Unexercisable&#148; as of December
31, 2006 represent options to acquire shares  granted in 2004 pursuant to our 2004 ESO
Plan described below, except in the case of Mr. Miller whose securities  represent
options to acquire shares granted in 2005 pursuant to our 2003 Plan described below.  The
securities shown as  &#147;Exercisable&#148; represent the options for which vesting has
occurred pursuant to the 2003 Plan in the case of Mr. Miller  or was accelerated under
our EC Plan for performance with respect to the years ended December 31, 2006 and 2005
and  vested by action of our Board of Directors on January 27, 2006 and February 26,
2007, respectively, for the other NEOs.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We have not
made any stock awards to the named executive officers.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Option
Exercises during Year Ended 12/31/06</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The table below
shows the number of options exercised and value realized in 2006 by the named executive
officers.</FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number of Shares Acquired<BR>on Exercise (#)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Value Realized on Exercise ($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="51%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Michael D. Durham</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="13%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="18%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$-0-</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mark H. McKinnies</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">C. Jean Bustard</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,000</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$13,500</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard L. Miller</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard J. Schlager</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$-0-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"></TD><TD></TD>
     <TD ALIGN="CENTER"></TD><TD></TD>
</TR>
</TABLE>


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<A NAME="A065"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><BR>Nonqualified
Deferred Compensation</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Although
our EC Plan allows for deferrals of payment, the Company does not currently have
any deferred compensation plans that apply to the NEOs.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>




<!-- *************************************************************************** -->
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<A NAME="A066"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Employment
Contracts and Termination of Employment<BR>and Change-in-Control Arrangements</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We
have executed employment agreements with every full-time employee, including our
executive officers, which contain the following provisions:</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Automatic
extensions for one-year periods.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Three
months&#146; prior written notice of intent to terminate by either the Company  other
than for cause, death or permanent disability or the employee.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Description
of position, duties, authority, compensation, benefits and  obligation of the employee to
devote full time to the fulfillment of his/her  obligations under the agreement.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Obligations
to disclose and Company ownership of inventions and confidential  subject matter, which
obligations survive for two years after termination of  employment.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">5. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Assignment
of inventions, obligations regarding inventions and confirmation of  no Company
obligation to commercialize inventions, all of which survive after  termination of
employment.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">6. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Acknowledgement
that copyright works are &#147;works for hire&#148; and  obligation of employee to
maintain written records of all inventions and  confidential subject matter.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">7. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Restrictive
obligations relating to confidential subject matter, which survive  after termination of
employment.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">8. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Acknowledgement
and agreement regarding no conflicting obligations and  obligations upon termination of
employment.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
compensation amounts included in the employment agreements are subject to annual
adjustment and the compensation levels for the named executive officers are
shown in the tables above. None of our employment contracts or other agreements
contain any provisions for the payment of any amounts that result from or will
result from the resignation, retirement or any other termination of any
executive officer&#146;s employment with us or from a change-in-control of the
Company or a change in the named executive officer&#146;s responsibilities
following a change-in-control except as described below.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Under
our stock incentive plans, unless otherwise provided in a stock option
agreement, options held by a director, executive or employee are exercisable
after such person&#146;s death or permanent disability without regarding to any
vesting requirements of such options.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Upon,
or in reasonable anticipation of, a change in control of the Company, approved
incentive compensation awards under the PSP may be made for the incentive period
during which the change in control occurs, and then paid immediately to a
trustee on such terms as our Chief Financial Officer deems appropriate
(including such terms as are appropriate to cause such payment, if possible, not
to be a taxable event to the executive). The incentive compensation awards may
be paid to executives either not later than the end of the first calendar
quarter following the end of the calendar year to which the incentive
compensation awards relate, or on a deferred basis in accordance with the
elections of the executives affected as to the timing of the receipt of
incentive compensation awards for such period. Executives who are eligible to
receive an incentive compensation award for the incentive period in which a
change in control occurs may be eligible to receive incentive compensation
awards for the incentive plan year following the change in control.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Guidelines
for determining the amount of the incentive compensation award payable to each  executive
include:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>o</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">One-half
of the maximum incentive compensation award payable (reduced as deemed  appropriate by
the Compensation Committee of the Board of Directors and approved by the  Board of
Directors, if applicable) to the executive if the change in control occurs during  the
first six months of the calendar year; or</FONT></FONT> </P></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>o</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
full maximum incentive compensation award payable (reduced as deemed appropriate by  the
Compensation Committee and approved by the Board, if applicable) to the executive if  the
change in control occurs during the second six months of the calendar year.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A068"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Compensation
Committee Report</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Compensation Committee has reviewed the Compensation Discussion and Analysis and
discussed it with management. Based on its review and discussions with
management, the Committee recommended to our Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy Statement and our
Annual Report on Form 10-K for the fiscal year ended December 31, 2006.</FONT></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="37%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The Compensation Committee:</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ronald Johnson, Chairman</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robert Caruso</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John Eaves</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard Swanson</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey C. Smith</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>

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<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A069"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>DIRECTOR
COMPENSATION</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Nominating and Governance Committee has responsibility for reviewing the
compensation plan for our non-management directors annually and making
recommendations to the entire Board for approval. In 2006, the Compensation
Committee conducted such analysis and made such recommendations. Neither
Committee has delegated authority to any other person to determine director
compensation. Our executive officers have not had any role in recommending the
amount or form of director compensation, but the two executive officers who
serve on our Board do vote on the recommendations for director compensation made
by the Committee to the Board. In the past, the Compensation Committee has
reviewed industry data from the Mountain States Employers Council and has sought
the input of representatives of such Council on its compensation structure and
amounts. Mountain States Employers Council has been engaged by the Compensation
Committee and was tasked with assisting in the design and application of the EC
Plan. MSEC advised on the appropriateness of incentive levels for executive
positions and provided assistance in setting the weight for metrics in modeling
the EC Plan.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
addition to the stock and option grants discussed below under &#147;Stock
Incentive Plans,&#148; in 2006, prior to the changes described below, each
non-management director was paid a fee of approximately $600 per regular
meeting, $300 per committee or telephonic meeting or $500 per committee meeting
for serving as chairman of the committee. The Chairman of the Audit Committee
was paid the greater of $3,000 per month or an amount equal to hours worked
times an hourly rate.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
August 2006, the Compensation Committee recommended, and the Board approved, a
cost of living increase in director compensation of 3.5% over the previous year
to bring it more in line with industry standards. Prior to that date the annual
retainer due each non-management director was to be paid solely in stock of not
more than 1,000 shares of stock per year. Under the new plan, each
non-management director is entitled to receive an $18,000 per year retainer
payable in stock and cash commencing May 2006 or upon their commencement of
service, with a cap of 1,000 shares of stock per year, and options to acquire
5,000 shares of our common stock upon initial appointment or election to the
Board. Our directors also receive $1,000 per Board meeting and $500 per Board
Committee or telephonic Board meeting. In addition, the Chairman of the Board
and Chairman of the Audit Committee receive $3,000 per year, the Chairman of the
Compensation Committee receives $2,000 per year, and the Chairman of our
Nominating and Governance Committee receives $1,000 per year for their services
in such positions. These amounts are all paid in cash.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In May
2006, the Company secured directors and officers insurance coverage for its
directors and executive officers. The annual cost of such coverage is
approximately $110,000.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A070"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Director
Compensation During Year Ended 12/31/06</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The following
amounts were paid to our non-management directors who served during 2006.  Dr. Durham and
Mr. McKinnies do not receive  any additional compensation for their service on the Board
of Directors.</FONT></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Name</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Fees Earned<BR>or Paid in<BR>Cash ($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Stock<BR>Awards</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Option<BR>Awards<BR></FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Non-Equity<BR>Incentive<BR>Plan<BR>Compensation<BR>($)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">All Other<BR>Compensation</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Total</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">($)(5)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">($)(6)</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="44%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ramon E. Bisque (former Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Duane N. Bloom (former Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-0-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robert N. Caruso (1) (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;13,868</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;6,618</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,486</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John W. Eaves (2) (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;21,569</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;10,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;52,670</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Derek Johnson (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;13,368</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;6,618</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;19,986</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ronald Johnson(3) (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;52,529</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;10,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;83,630</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robert H. Lowdermilk (former Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;1,605</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;21,805</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Rollie Peterson (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;22,258</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;10,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;53,359</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeff Smith (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;24,248</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;20,200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;10,901</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;55,349</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard Swanson(4) (Director)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;9,500</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;6,618</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;16,118</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Totals</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$158,945</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$141,400</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;63,459</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$333,457</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>



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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Notes:</B></FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Amounts
paid on behalf of services from Mr. Caruso are paid to B/3 Management Resources, LLC.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Amounts
paid on behalf of services from Mr. Eaves are paid to Arch Coal, Inc.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(3) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Amounts
paid on behalf of services from Mr. Ronald Johnson are paid to Twin-Kem International,
Inc.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(4) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Amounts
paid on behalf of services from Mr. Swanson are paid to R&amp;K Corp.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(5) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> The
fair value of stock  awards,  which  represents  the closing  price on the date of
issuance of $20.20  times the number of  shares  issued,  for awards in January  2006 to
each  non-management  director of 1,000 shares of common stock as a portion of  his
compensation for services  performed from October 1, 2005 through  September 30, 2006
pursuant to the 2005 Plan described  below.  The  aggregate  number of stock  awards for
each  non-management  director,  in the order  listed in the table,  as of  December 31,
2006 were 1,000, 1,000, 0, 1,000, 0, 1,000, 1,000, 1,000, 1,000, and 0.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(6) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> The
fair values of stock option  awards,  which were  computed in  accordance  with FAS 123R,
represent  grants of options to  purchase  5,000  shares of common stock to each new
Director in August 2006 and in May 2005 to the  continuing  Directors  all  pursuant to
the 2005 Plan  described  below.  These options vest at a rate of 33% per year. The full
grant date fair values of  the stock option awards for each non-management  director,  in
the order listed in the table were $-0-, $-0-,  $31,737,  $-0-,  $31,737,  $-0-,  $-0-,
$-0-,  $-0-,  and $-0-.  The aggregate  number of stock options  outstanding  for each
non-management  director,  in the order listed in the table, as of December 31, 2006 were
0, 0, 5,000,  5,000,  5,000, 3,333, 0, 5,000, 5,000,  and 5,000.  See  Footnote 1 to the
Consolidated  Financial  Statements  included in Item 8 of our Form 10K for the year
ended  December 31, 2006 for the assumptions made in determination of the FAS 123R
amounts.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Section
16(a) Beneficial Ownership Reporting Compliance</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Section 16(a)
of the  Securities  Exchange Act of 1934 requires our officers and directors and persons
who  beneficially  own more than  ten percent of a  registered  class of our equity
securities  to file  reports of  ownership  with the SEC.  Officers,  directors  and
greater than ten percent shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Based solely on
our review of the copies of such forms received by us, or written representations from
certain reporting persons, we  are aware of the following delinquent filings:  Jonathan
Barr, Jean Bustard, Michael Durham, Mark McKinnies and Richard Schlager each  failed to
report the full amount of a stock option grant on August 23, 2004 and instead reported
only the vested portion of such  options as they vested in 2005, 2006 and 2007; each
executive filed an amended Form 5 in April 2007 to report the entire grants.  Ms.
Bustard was late in reporting two sales of shares on Forms 4.  Mr. Miller and Ms.
Sjostrom each was late in filing an initial Form  3.  Robert Caruso was late in filing
his initial Form 3 and in filing a Form 4 reporting a stock option grant; Mr. Eaves
failed to  file a Form 4 reporting a stock award but reflected such award on a timely
basis on a Form 5, Derek Johnson was late in filing his  initial Form 3 and failed to
file a Form 4 reporting a stock option grant but reported such grant on an amended Form
5, each of Ron  Johnson, Rollie Peterson and Jeff Smith was late in filing a Form 4
reporting a stock award to him, and Mr. Swanson was late in  filing his Form 3 and in
filing a Form 4 reporting a stock option grant.  Each former director Ramon Bisque, Duane
Bloom and Robert  Lowdermilk was late in filing a Form 4 reporting a stock award to him
and have not filed Form 5s terminating their Section 16  reporting obligations.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>STOCK
INCENTIVE PLANS</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">During  2003,
we adopted  the ADA-ES,  Inc.  2003 Stock  Option Plan (the &#147;2003  Plan&#148;).  The
plan is  intended to  encourage  our key  employees,  through their individual efforts,
to improve our overall  performance and to promote  profitability by providing these key
employees with an opportunity  to  participate in the increased  value they help create.
The 2003 Plan is also intended to replace the  options  previously awarded by Earth
Sciences,  Inc., which has been cancelled.  Options granted under the 2003 Plan may be in
the form  of &#147;incentive  stock  options&#148; as defined under section 422 of the
Internal  Revenue Code of 1986, as amended,  or options that are not  incentive  stock
options.  The 2003 Plan is  administered  by our  Board&#146;s  Compensation  Committee.
The plan was  approved  by Earth  Sciences,  Inc. as our sole  shareholder  prior to the
spin-off  distribution of our shares.  We reserved  400,000 shares of our common  stock
for  issuance  under the 2003 Plan.  In general,  all options  granted  under the 2003
Plan will lapse ten years from the date of  grant. In general,  the exercise price of an
option will be determined by the Compensation  Committee 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,  which is typically  25%
every six months with total  vesting  over two years.  Under the 2003  Plan, the grant of
options is limited to 20,000 per individual.  During 2005 and 2006,  61,900 and 19,900,
respectively,  options were  granted  under the 2003 Plan. A total of 140,706  options
remain  available  for future  grants under the 2003 Plan.  These  available  options
will be cancelled if Proposal #2 is approved by the shareholders.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">During 2004, we
adopted the 2004 ESO Plan, which did not require shareholder approval. The 2004 ESO Plan
authorized the grant of up  to 200,000 options to purchase shares of our common stock to
our executive officers. The 2004 ESO Plan is intended to promote our  growth and
profitability by awarding options to purchase our common stock in exchange for services
performed and to be performed in  the future.  Options granted under the 2004 ESO Plan
are generally intended to be non-qualified stock options (&#147;NQSO&#148;) for federal
income tax purposes. The 2004 ESO Plan is administered by our Board&#146;s Compensation
Committee.  In general, the exercise price of an  option will be determined by the
Compensation Committee 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.  Under the 2004 ESO Plan, the grant of options is  limited to 60,000 per
individual.  The options are exercisable over a 10-year period based on a vesting
schedule, typically between  5% and 20% per year, which may be accelerated based on
performance of the individual recipients as determined by our Board&#146;s  Compensation
Committee.  During 2004, all 200,000 options were granted under the 2004 ESO Plan to five
executive officers, each of  whom is a full-time employee. In January 2005 and 2006 and
in February 2007, our Board&#146;s Compensation Committee authorized the  accelerated
vesting of 27,080 options, 38,428 options, and 17,258 options, respectively, under the
2004 ESO Plan based on performance  metrics in the EC Plan that were met.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">During 2004,
we adopted the 2004 Stock  Compensation  Plan #2 (the &#147;2004 Plan&#148;) for the
issuance of shares and the grant of options to  purchase  shares of our common  stock to
our  non-management  directors.  The 2004 Plan was  approved by our  shareholders  at our
2005  Annual  Meeting.  The 2004 Plan is intended to  compensate  our  non-management
directors  by awarding  shares and options to purchase  shares for services they rendered
during 2004 and 2005 and will  continue to render in  subsequent  years.  The 2004 Plan
provided for  the award of 603 shares of our common stock per  individual  non-management
director  (4,221 shares in total),  and the grant of 5,000  options  per  individual
non-management  director  (35,000 in  total),  all of which were  formally  granted  and
issued in 2005 after  approval  of the 2004 Plan by our  shareholders.  The stock  awards
and vested  portion of the stock  option  grants to  non-management  directors  represent
a portion of  compensation  for services  performed from October 2004 through  September
2005. 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 of Directors.  If such service is
terminated, the non-vested portion of the option is forfeited.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">During 2005 we
adopted the 2005  Directors&#146; Compensation  Plan (the &#147;2005 Plan&#148;),  which
authorized  the issuance of shares of common  stock and the grant of options to purchase
shares of our common stock to  non-management  directors.  The 2005 Plan was approved by
our  shareholders  at the 2005 Annual  Meeting.  The 2005 Plan is intended to advance our
interests  by providing  eligible  non-management  directors an  opportunity  to acquire
or increase an equity  interest in the Company,  create an increased  incentive to expend
maximum  effort for our growth and success and encourage such eligible  individuals  to
continue to service the Company.  The 2005 Plan provides  a portion of the annual
compensation  to our  non-management  directors in the form of awards of shares of common
stock and vesting of  options to purchase  common stock for services  performed for the
Company.  Under the 2005 Plan, the award of stock is limited to 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 is the market price on the date of grant,  the
shares of common stock  underlying the option will  vest 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  are  forfeited.
Shares may be issued and options  may be granted  under the 2005  Plan only to
non-management directors of the Company or its subsidiaries.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The 2005 Plan
will terminate ten years after the date of its adoption, if not earlier terminated by our
Board of Directors.  It may  be amended, modified or terminated at any time if and when
it is advisable in the absolute discretion of the Board, although certain  amendments are
subject to approval of regulatory bodies and our shareholders.  No such amendment may
adversely affect any options  previously granted under the Plan without the consent of
the recipient(s).  The 2005 Plan is administered by a committee appointed by  the Board,
which currently consists of all Board members.  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.  In August 2006, the Board of  Directors granted options to purchase
5,000 shares each or a total of 15,000 shares of common stock to the new directors
representing  a portion of their compensation, which vest at a rate of 33% per year.</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>EQUITY
COMPENSATION PLAN INFORMATION</B></FONT></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Plan category</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Number of securities to<BR>be issued upon exercise<BR>of outstanding options,<BR>warrants and rights</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Weighted-average<BR>exercise price of<BR>outstanding options,<BR>warrants and rights</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Number of securities remaining<BR>available for future issuance<BR>under equity compensation plans<BR>(excluding securities reflected in<BR>column (a))</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(a)</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(b)</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(c)</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="51%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>Equity compensation plans approved by</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">security holders (1)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">340,344</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.48</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,706</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Equity compensation plans not approved</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">by security holders (2)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">84,625</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.84</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">426,636</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.55</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,706</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: #000000 4px double; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">
Amounts shown represent options and/or shares covered under our 2003 Plan, our 2004 ESO
Plan, our 2004 Plan and our 2005 Plan described above.</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">
Amounts shown represent options to purchase 50,000 shares granted to Arch Coal as further
described below, 10-year options to purchase 30,000 shares granted to a consultant in 2005
at an exercise price of $14.60, and 10-year options to purchase a total of 4,625 shares
granted to two consultants in 2004 at an exercise price of $13.80.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
November 2006, we entered into an independent contractor agreement with an
individual who is serving as the Project Manager for our project to develop a
proposed activated carbon manufacturing facility. Her compensation package
includes a potential award of 1,448 shares of common stock, worth $20,000 in
value as of the close of business on the date of the Board meeting approving
such package. The stock award was earned in February 2007 upon successful
completion of certain milestones established at the time her compensation
package was approved. This was an individual award not made under any formal
plan and not approved by security holders. See &#147;Stock Incentive Plans&#148;
above for additional information.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A071"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A072"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Related Party
Transactions</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
July 2003, we executed the Investment Agreement with Arch Coal. Pursuant to such
agreement, in September 2003 Arch Coal purchased a $300,000 convertible
debenture from us, purchased 137,741 shares of our common stock and was granted
a five-year option to purchase 50,000 additional shares of our common stock for
$10.00 per share. We also granted Arch Coal certain &#147;piggyback&#148; rights
in the event we register certain other equity securities and certain demand
registration rights as part of the transaction. In October 2004, we registered
168,011 shares for resale by Arch Coal, which shares included 50,000 issuable
upon the exercise of the option described above. Until August 2006, we also
co-marketed Arch Coal&#146;s ADA-M product and performed certain testing and
research projects under agreements with Arch Coal. Under these arrangements, we
recorded revenue of $261,000 in 2006. A designee of Arch Coal has been appointed
a seat on our Board of Directors and our management has agreed in the future to
nominate and to vote all proxies and other shares of stock in the Company which
they are entitled to vote in favor of that designee so long as Arch Coal holds
at least 100,000 shares of our common stock. Mr. Eaves is Arch Coal&#146;s
current designee to our Board of Directors.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A073"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Review
and Approval of Related Party Transactions</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Our
Board of Directors recognizes that related party transactions present a
heightened risk of conflicts of interest and/or improper valuation (or the
perception thereof) and therefore has adopted a policy with respect to all
related party transactions involving the Company. Under this policy, any related
party transaction, as defined and which excludes transactions available to all
employees generally and transactions involving less than $5,000, may be
consummated or may continue only if:</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">the
Audit Committee has approved or ratified such transaction in accordance with the
guidelines set forth in the policy and if the transaction is on terms comparable  to
those that could be obtained in arm&#146;s length dealings with an unrelated  third party;</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">the
transaction has been approved by the disinterested members of the Board of  Directors; and</FONT></FONT> </P></TD>
</TR>
</TABLE>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3. </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">the
compensation with respect to such transaction has been approved by our  Compensation
Committee.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Management
must recommend any related party transactions it proposes that the Company enter
into to the Audit Committee at its first regularly scheduled meeting each year.
After review, the Audit Committee will approve or disapprove such transactions
and at each subsequently scheduled meeting, management must update the Audit
Committee as to any material change to those proposed transactions. If
management recommends any additional related party transactions subsequent to
such meeting, such transactions may be presented to the Audit Committee for
approval or preliminarily entered into by management subject to ratification by
such Committee. If the Audit Committee does not ratify the transaction, however,
management must make all reasonable efforts to cancel or annul such transaction.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>




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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Any
material related party transaction must be disclosed to our full Board of
Directors, and management must assure that all related party transactions are
approved in accordance with any requirements of our financing or other
agreements.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A074"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>RELATIONSHIP
WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Hein
&amp; Associates, LLP has been the independent accounting firm that audits the
financial statements of ADA-ES, Inc. and its subsidiaries since 1989. In
accordance with standing policy, Hein &amp; Associates, LLP periodically changes
the personnel who work on the audit.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Audit Committee of the Board has<B> </B>not yet selected the independent
auditors for work to be performed during the calendar year ending December 31,
2007. We intend to engage auditors for the audit of the financial statements for
the year ending December 31, 2007 no later than the second quarter of 2007.
We anticipate that a representative of Hein &amp; Associates, LLP, who
conducted the audit for the year ended December 31, 2006, and a representative
of our new auditors, if any are selected by then, will be present at the Annual
Meeting of Shareholders. There have been no disagreements on matters of
accounting principles or practices, financial statement disclosures or audit
scope or procedures between the Company and Hein &amp; Associates, LLP during
the two most recent fiscal years or any subsequent interim periods. The
representative of Hein &amp; Associates, LLP will be available to
respond to shareholder questions and will have the opportunity to make a
statement at that time if the representative desires to do so.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A075"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>AUDIT
FEES</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
addition to performing the audit of the Company&#146;s annual consolidated
financial statements, Hein &amp; Associates, LLP provided other services during
2005 and 2006. The aggregate fees billed in 2005 and 2006 for each of the
following categories of services are set forth below:</FONT></FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" ALIGN="CENTER" WIDTH="450">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fiscal Year</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT><HR WIDTH="100%" SIZE="1" COLOR="BLACK" NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="49%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Audit Fees(1)</FONT></TD>
     <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="19%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$167,009</FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="16%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$77,748</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Audit-Related Fees(2)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$213,766</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$13,785</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tax Fees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">All Other Fees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(1)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Includes
quarterly review services related to our Form 10-Q and 10-QSB filings and review
services related to the filing of a Registration Statement on Form S-3 in 2005.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(2)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Includes
review services related to Sarbanes-Oxley Section 404 in 2005.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A076"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>AUDIT
COMMITTEE APPROVAL OF SERVICES</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Audit Committee pre-approves all audit or non-audit services performed by its
principal accountant in accordance with Audit Committee policy and applicable
law. The Audit Committee generally provides pre-approval of audit services and
services associated with SEC registration statements, other SEC filings and
responses to SEC comment letters (Audit Fees) and services related to internal
control reviews, internal control reporting requirements and consultations with
our management as to accounting or disclosure treatment of transactions or
events and the impact of rules, standards or interpretations by the SEC and
other regulatory or standard-setting bodies (Audit-Related Fees) for each
12-month period within a range of approved fees. To avoid certain potential
conflicts of interest, the law prohibits us from obtaining certain non-audit
services from our independent accountant. The Audit Committee has delegated
authority to approve permissible services to its Chairman. The Chairman reports
such pre-approvals to the full Audit Committee at its next scheduled meeting.
The Audit Committee pre-approved 100% of the services provided by the
independent accountant in 2006. None of the services of the independent
accountant in 2006 were of the type specified in Rule 2-01(c)(7)(i)(C) of
Regulation S-X.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>

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<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A077"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>PROPOSALS
OF SHAREHOLDERS FOR PRESENTATION AT THE NEXT<BR>ANNUAL MEETING OF SHAREHOLDERS</B></FONT></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We
anticipate that our next Annual Meeting of Shareholders will be held in May
2008. Any Shareholder of record of the Company who desires to submit a proper
proposal for inclusion in the proxy material related to the next Annual Meeting
of Shareholders must do so in writing and it must be received at our principal
executive offices on or before January 5, 2008. If a shareholder intends to
submit a proposal at the meeting that is not included in the Company&#146;s
proxy statement, and the shareholder fails to notify the Company prior to March
23, 2008 of such proposal, then the proxies appointed by the Company&#146;s
management would be allowed to use their discretionary voting authority when the
proposal is raised at the annual meeting, without any discussion of the matter
in the proxy statement. The proponent must own 1% or more of the outstanding
shares or $2,000 in market value, of the Company&#146;s Common Stock and must
have continuously owned such shares for one year and intend to continue to hold
such shares through the date of the Annual Meeting in order to present a
shareholder proposal to the Company.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A079"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ANNUAL
REPORT ON FORM 10-K</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>We
will provide our Annual Report on Form 10-K concerning our operations during the
calendar year ended December 31, 2006, including certified consolidated
financial statements and any financial statement schedules for the year then
ended, to our shareholders without charge upon request to Mark H. McKinnies,
Secretary, ADA-ES, Inc., 8100 SouthPark Way, Unit B, Littleton, Colorado 80120.
Exhibits listed in the Form 10-K are available upon request to shareholders at a
nominal charge for printing and mailing.</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<A NAME="A080"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>INCORPORATION
BY REFERENCE</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">We
hereby incorporate by reference Items 6, 7, 8, and 9 of Part II of our Form 10-K
for the fiscal year ended December 31, 2006.</FONT></FONT></P>

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<A NAME="A081"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>OTHER
MATTERS</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
Board knows of no other business to be presented at the Annual Meeting of
Shareholders. If other matters properly come before the Meeting, the persons
named in the accompanying form of Proxy intend to vote on such other matters in
accordance with their best judgment.</FONT></FONT></P>


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<A NAME="A082"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>APPENDIX A</B></FONT></FONT></P>


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<A NAME="A001"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES,
INC.</B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>2007
EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;
<U>Purposes of the Plan</U>. The purposes of this Plan are to attract and retain  the
best available personnel, to provide additional incentives to Employees,  Directors and
Consultants and to promote the success of the Company&#146;s  business.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;<U>Definitions.</U> As used herein, the following definitions shall apply:</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
&#147;<U>Administrator</U>&#148; means the Board or any of the Committees  appointed to
administer the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
&#147;<U>Affiliate</U>&#148; and &#147;<U>Associate</U>&#148; shall have the  respective
meanings ascribed to such terms in Rule&nbsp;12b-2 promulgated under  the Exchange Act.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
&#147;<U>Applicable Laws</U>&#148; means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of  federal
securities laws, state corporate and securities laws, the Code, the  rules of any
applicable stock exchange or national market system and the rules  of any foreign
jurisdiction applicable to Awards granted to residents therein.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;
&#147;<U>Assumed</U>&#148; means that (i)&nbsp;pursuant to a Corporate  Transaction
defined in Section&nbsp;2(q)(i), 2(q)(ii) or 2(q)(iii), the  contractual obligations
represented by the Award are expressly assumed (and not  simply by operation of law) by
the successor entity or its Parent in connection  with the Corporate Transaction with
appropriate adjustments to the number and  type of securities of the successor entity or
its Parent subject to the Award  and the exercise or purchase price thereof which
preserves the compensation  element of the Award existing at the time of the Corporate
Transaction as  determined in accordance with the instruments evidencing the agreement to
assume  the Award or (ii)&nbsp;pursuant to a Corporate Transaction defined in  Section&nbsp;2(q)(iv)
or 2(q)(v), the Award is expressly affirmed by the  Company.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;
&#147;<U>Award</U>&#148; means the grant of an Option, Restricted Stock or other  right
or benefit under the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;
&#147;<U>Award Agreement</U>&#148; means the written agreement evidencing the  grant of
an Award executed by the Company and the Grantee, including any  amendments thereto.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;
&#147;<U>Board</U>&#148; means the Board of Directors of the Company.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;
&#147;<U>Cause</U>&#148; means, with respect to the termination by the Company or a
Related Entity of the  Grantee&#146;s Continuous Service, that such termination is for
&#147;Cause&#148; as such term is expressly defined in a then-effective written
agreement between the Grantee and the Company or such Related Entity, or in the  absence
of such then-effective written agreement and definition, is based on, in  the
determination of the Administrator, the Grantee&#146;s: (i)&nbsp;performance  of any act
or failure to perform any act in bad faith and to the detriment of  the Company or a
Related Entity; (ii)&nbsp;dishonesty, intentional misconduct or  material breach of any
agreement with the Company or a Related Entity; or  (iii)&nbsp;commission of a crime
involving dishonesty, breach of trust or  physical or emotional harm to any person.</FONT></FONT></P>



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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
&#147;<U>Change in Control</U>&#148;<B> </B>means a change in ownership or  control of
the Company effected through either of the following transactions:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
the direct or indirect acquisition by any person or related group of persons  (other than
an acquisition from or by the Company or by a Company-sponsored  employee benefit plan or
by a person that directly or indirectly controls, is  controlled by or is under common
control with, the Company) of beneficial  ownership (within the meaning of Rule&nbsp;13d-3
of the Exchange Act) of  securities possessing more than fifty percent (50%) of the total
combined voting  power of the Company&#146;s outstanding securities pursuant to a tender
or  exchange offer made directly to the Company&#146;s stockholders which a majority  of
the Continuing Directors who are not Affiliates or Associates of the offeror  do not
recommend such stockholders accept, or</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
a  change in the composition of the Board over a period of thirty-six (36) months  or
less such that a majority of the Board members (rounded up to the next whole  number)
ceases, by reason of one or more contested elections for Board  membership, to be
comprised of individuals who are Continuing Directors.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;
&#147;<U>Code</U>&#148; means the Internal Revenue Code of 1986, as amended.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;
&#147;<U>Committee</U>&#148; means any committee composed of Directors of the Board
appointed by the Board to  administer the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;
&#147;<U>Common Stock</U>&#148; means the common stock of the Company.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;
&#147;<U>Company</U>&#148; means ADA-ES, Inc., a Colorado corporation.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;
&#147;<U>Consultant</U>&#148; means any person (other than an Employee or a  Director,
solely with respect to rendering services in such person&#146;s  capacity as a Director)
who is engaged by the Company or any Related Entity to  render consulting or advisory
services to the Company or such Related Entity.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;
&#147;<U>Continuing Directors</U>&#148; means members of the Board who either  (i)&nbsp;have
been Board members continuously for a period of at least  thirty-six (36) months or (ii)&nbsp;have
been Board members for less than  thirty-six (36) months and were elected or nominated
for election as Board  members by at least a majority of the Board members described in
clause&nbsp;(i)  who were still in office at the time such election or nomination was
approved by  the Board.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;
&#147;<U>Continuous Service</U>&#148; means that the provision of services to  the
Company or a Related Entity in any capacity of Employee, Director or  Consultant is not
interrupted or terminated. In jurisdictions requiring notice  in advance of an effective
termination as an Employee, Director or Consultant,  Continuous Service shall be deemed
terminated upon the actual cessation of  providing services to the Company or a Related
Entity notwithstanding any  required notice period that must be fulfilled before a
termination as an  Employee, Director or Consultant can be effective under Applicable
Laws.  Continuous Service shall not be considered interrupted in the case of  (i)&nbsp;any
approved leave of absence, (ii)&nbsp;transfers among the Company,  any Related Entity or
any successor in any capacity of Employee, Director or  Consultant or (iii)&nbsp;any
change in status as long as the individual remains  in the service of the Company or a
Related Entity in any capacity of Employee,  Director or Consultant (except as otherwise
provided in the Award Agreement). An  approved leave of absence shall include sick leave,
military leave or any other  authorized personal leave. For purposes of each Incentive
Stock Option granted  under the Plan, if such leave exceeds ninety (90) days, and
reemployment upon  expiration of such leave is not guaranteed by statute or contract,
then the  Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the
day three (3) months and one (1) day following the expiration of such ninety  (90) day
period.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;
&#147;<U>Corporate Transaction</U>&#148; means any of the following  transactions:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
a  merger or consolidation in which the Company is not the surviving entity, except  for
a transaction the principal purpose of which is to change the state in which  the Company
is incorporated;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
the sale, transfer or other disposition of all or substantially all of the  assets of the
Company;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
the complete liquidation or dissolution of the Company;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;
any reverse merger or series of related transactions culminating in a reverse  merger
(including, but not limited to, a tender offer followed by a reverse  merger) in which
the Company is the surviving entity but in which securities  possessing more than fifty
percent (50%) of the total combined voting power of  the Company&#146;s outstanding
securities are transferred to a person or persons  different from those who held such
securities immediately prior to such merger  but excluding any such transaction or series
of related transactions that the  Administrator determines shall not be a Corporate
Transaction; or</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;
acquisition in a single or series of related transactions by any person or  related group
of persons (other than the Company or by a Company-sponsored  employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3  of the Exchange Act) of
securities possessing more than fifty percent (50%) of  the total combined voting power
of the Company&#146;s outstanding securities but  excluding any such transaction or
series of related transactions that the  Administrator determines shall not be a
Corporate Transaction.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;
&#147;<U>Covered Employee</U>&#148; means an Employee who is a &#147;covered  employee&#148; under
Section&nbsp;162(m)(3) of the Code.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;
&#147;<U>Director</U>&#148; means a member of the Board or the board of  directors of any
Related Entity.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;
&#147;<U>Disability</U>&#148; has the same meaning as defined under the  long-term
disability policy of the Company or the Related Entity to which the  Grantee provides
services regardless of whether the Grantee is covered by such  policy. If the Company or
the Related Entity to which the Grantee provides  service does not have a long-term
disability plan in place,  &#147;Disability&#148; means that a Grantee is unable to carry
out the  responsibilities and functions of the position held by the Grantee by reason of
any medically determinable physical or mental impairment for a period of not  less than
ninety (90) consecutive days. A Grantee will not be considered to have  incurred a
Disability unless he or she furnishes proof of such impairment  sufficient to satisfy the
Administrator in its discretion.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;
&#147;<U>Employee</U>&#148; means any person, including an Officer or Director,  who is
in the employ of the Company or any Related Entity, subject to the  control and direction
of the Company or any Related Entity as to both the work  to be performed and the manner
and method of performance. The payment of a  director&#146;s fee by the Company or a
Related Entity shall not be sufficient  to constitute &#147;employment&#148; by the
Company.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;
&#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as  amended.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;&nbsp;
&#147;<U>Fair Market Value</U>&#148; means, as of any date, the value of Common  Stock
determined as follows:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
If  the Common Stock is listed on any established stock exchange or a national  market
system, including without limitation, any of the markets operated by or  for NASDAQ, its
Fair Market Value shall be the closing sales price for such  stock (or the closing bid,
if no sales were reported) as quoted on such exchange  or system on the date of
determination (or, if no closing sales price or closing  bid was reported on that date,
as applicable, on the last trading date such  closing sales price or closing bid was
reported), as reported in <I>The Wall  Street Journal</I> or such other source as the
Administrator deems reliable;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
If the Common Stock is regularly quoted on an automated quotation system  (including the
OTC Bulletin Board) or by a recognized securities dealer, but  selling prices are not
reported, the Fair Market Value of a share of Common  Stock shall be the mean between the
high bid and low asked prices for the Common  Stock on the date of determination (or, if
no such prices were reported on that  date, on the last date such prices were reported),
as reported in <I>The Wall  Street Journal</I> or such other source as the Administrator
deems reliable; or</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
In the absence of an established market for the Common Stock of the type  described in
(i) and (ii), above, the Fair Market Value thereof shall be  determined by the
Administrator in good faith, and in a manner that comports  with the requirements of any
Applicable Law.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;
&#147;<U>Good Reason</U>&#148; means the occurrence after a Corporate Transaction or Change in
Control of any of the following events or conditions unless consented to by
the Grantee (and the Grantee shall be deemed to have consented to any such event or
condition unless the Grantee provides written notice of the Grantee&#146;s
non-acquiescence within 30 days of the effective time of such event or condition):</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
a  change in the Grantee&#146;s responsibilities or duties which represents a  material
and substantial diminution in the Grantee&#146;s responsibilities or  duties as in effect
immediately preceding the consummation of a Corporate  Transaction or Change in Control;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
a  reduction in the Grantee&#146;s base salary to a level below that in effect at  any
time within six (6) months preceding the consummation of a Corporate  Transaction or
Change in Control or at any time thereafter; or</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
requiring the Grantee to be based at any place outside a 50-mile radius from the  Grantee&#146;s
job location or residence prior to the Corporate Transaction or  Change in Control except
for reasonably required travel on business which is not  materially greater than such
travel requirements prior to the Corporate  Transaction or Change in Control.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;
&#147;<U>Grantee</U>&#148; means an Employee, Director or Consultant who  receives an
Award under the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&nbsp;&nbsp;
&#147;<U>Immediate Family</U>&#148; means any child, stepchild, grandchild,  parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,  mother-in-law,
father-in-law, son-in law, daughter-in-law, brother-in-law or  sister-in-law, including
adoptive relationships, any person sharing the  Grantee&#146;s household (other than a
tenant or employee), a trust in which  these persons (or the Grantee) have more than
fifty percent (50%) of the  beneficial interest, a foundation in which these persons (or
the Grantee)  control the management of assets, and any other entity in which these
persons  (or the Grantee) own more than fifty percent (50%) of the voting interests.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;&nbsp;&nbsp;
&#147;<U>Incentive Stock Option</U>&#148; means an Option intended to qualify as  an
incentive stock option within the meaning of Section&nbsp;422 of the Code.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)&nbsp;&nbsp;&nbsp;
&#147;<U>Non-Management Director</U>&#148; means a director of the Company who is not an
Employee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)&nbsp;&nbsp;&nbsp;
&#147;<U>Non-Qualified Stock Option</U>&#148; means an Option not intended to  qualify as
an Incentive Stock Option.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)&nbsp;&nbsp;&nbsp;
&#147;<U>Officer</U>&#148; means a person who is an officer of the Company or a  Related
Entity within the meaning of Section&nbsp;16 of the Exchange Act and the  rules and
regulations promulgated thereunder.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)&nbsp;&nbsp;&nbsp;
&#147;<U>Option</U>&#148; means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.</FONT></FONT> </P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)&nbsp;&nbsp;&nbsp;
&#147;<U>Parent</U>&#148; means a &#147;parent corporation,&#148; whether now or hereafter
existing, as defined in Section 424(e) of the Code.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)&nbsp;&nbsp;&nbsp;
&#147;<U>Performance-Based Compensation</U>&#148; means compensation qualifying as &#147;performance-based
compensation&#148; under Section 162(m) of the Code.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)&nbsp;&nbsp;&nbsp;
&#147;Plan&#148; means this 2007 Equity Incentive Plan.</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
&#147;<U>Related Entity</U>&#148; means any Parent or Subsidiary of the Company  and any
business, corporation, partnership, limited liability company or other  entity in which
the Company or a Parent or a Subsidiary of the Company holds a  substantial ownership
interest, directly or indirectly.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj)&nbsp;&nbsp;&nbsp;
&#147;<U>Replaced</U>&#148; means that (i) pursuant to a Corporate Transaction  defined
in Section&nbsp;2(q)(i), 2(q)(ii) or 2(q)(iii), the Award is replaced  with a comparable
stock award or a cash incentive program of the successor  entity or Parent thereof which
preserves the compensation element of such Award  existing at the time of the Corporate
Transaction and provides for subsequent  payout in accordance with the same vesting
schedule or a vesting schedule more  favorable to the Grantee applicable to such Award or
(ii) pursuant to a  Corporate Transaction defined in Section&nbsp;2(q)(iv) or 2(q)(v),
the Award is  replaced with a comparable stock award or a cash incentive program of the
Company or Parent thereof which preserves the compensation element of such Award
existing at the time of the Corporate Transaction and provides for subsequent  payout in
accordance with the same vesting schedule or a vesting schedule more  favorable to the
Grantee applicable to such Award. The determination of Award  comparability shall be made
by the Administrator and its determination shall be  final, binding and conclusive.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk)&nbsp;&nbsp;&nbsp;
&#147;<U>Restricted Stock</U>&#148; means Shares issued under the Plan to the  Grantee
for such consideration, if any, and subject to such restrictions on  transfer, rights of
first refusal, repurchase provisions, forfeiture provisions  and other terms and
conditions as established by the Administrator, as set forth  in a Restricted Stock
Agreement that is issued in connection with such Award.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll)&nbsp;&nbsp;&nbsp;
&#147;<U>Rule 16b-3</U>&#148; means Rule 16b-3 promulgated under the Exchange Act or any
successor thereto.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm)&nbsp;&nbsp;&nbsp;
&#147;<U>Share</U>&#148; means a share of the Common Stock.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn)&nbsp;&nbsp;&nbsp;
&#147;<U>Subsidiary</U>&#148; means a &#147;subsidiary corporation,&#148; whether now or
hereafter existing, as defined in Section 424(f) of the Code.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;<U>Stock Subject to the Plan.</U></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
Subject to the provisions of Section&nbsp;10 below, the stock subject to this  Plan shall
be the Company&#146;s Common Stock, no par value per share (the  &#147;Common Stock&#148;),
presently authorized but unissued or subsequently  acquired by the Company. Subject to
adjustment as provided in Section 10 hereof,  the aggregate amount of Common Stock to be
delivered upon the exercise of all  Awards granted under this Plan shall not exceed six
hundred thousand (600,000)  shares as such Common Stock as constituted on the effective
date of this Plan,  and no further options shall be granted after the date on which the
Company&#146;s stockholders approve this Plan, under the ADA-ES, Inc. 2003 Stock  Option
Plan (in effect as of such date). In addition, the shares reserved for  issuance of
Awards granted under this Plan will automatically be increased on  the first day of each
fiscal year, beginning with the fiscal year commencing  January 1, 2008, by an amount
equal to ten percent (10%) of the increase in the  total number of shares of Common Stock
outstanding on the last day of the  immediately preceding fiscal year over the number of
outstanding shares of  Common Stock on such date one year prior, or such lesser number of
shares as is  later ratified by the Board at their first meeting or action in such new
fiscal  year; provided, that in no event shall any such annual increase exceed three
hundred thousand (300,000) shares and provided further, that in no event shall  the total
number of shares authorized for issuance under this Plan exceed one  million (1,000,000)
shares.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
Any Shares covered by an Award (or portion of an Award) which are forfeited,  canceled or
expire (whether voluntarily or involuntarily) shall be deemed not to  have been issued
for purposes of determining the maximum aggregate number of  Shares which may be issued
under the Plan. Shares that actually have been issued  under the Plan pursuant to an
Award shall not be returned to the Plan and shall  not become available for future
issuance under the Plan, except that if unvested  Shares are forfeited or repurchased by
the Company, such Shares shall become  available for future grant under the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;<U>Administration of the Plan.</U></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
<U>Plan Administrator</U>.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
<U>Administration  with Respect to Directors and Officers</U>. With respect to grants of
Awards to  Directors or Employees who are also Officers or Directors of the Company, the
Plan shall be administered by (A)&nbsp;the Board or (B)&nbsp;a Committee  designated by
the Board, which Committee shall be constituted in such a manner  as to satisfy the
Applicable Laws and to permit such grants and related  transactions under the Plan to be
exempt from Section 16(b) of the Exchange Act  in accordance with Rule&nbsp;16b-3. Once
appointed, such Committee shall  continue to serve in its designated capacity until
otherwise directed by the  Board.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
<U>Administration With Respect to Consultants and Other Employees</U>. With  respect to
grants of Awards to Employees or Consultants who are neither  Directors nor Officers of
the Company, the Plan shall be administered by (A) the  Board or (B) a Committee
designated by the Board, which Committee shall be  constituted in such a manner as to
satisfy the Applicable Laws. Once appointed,  such Committee shall continue to serve in
its designated capacity until  otherwise directed by the Board.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
<U>Administration With Respect to Covered Employees</U>. Notwithstanding the  foregoing,
as of and after the date that the exemption for the Plan under  Section&nbsp;162(m) of
the Code expires, as set forth in Section&nbsp;18 below,  grants of Awards to any Covered
Employee intended to qualify as  Performance-Based Compensation shall be made only by a
Committee (or  subcommittee of a Committee) which is comprised solely of two or more
Directors  eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,  references to the
&#147;Administrator&#148; or to a &#147;Committee&#148; shall  be deemed to be references
to such Committee or subcommittee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
<U>Multiple Administrative Bodies</U>. The Plan may be administered by different  bodies
with respect to Directors, Officers, Consultants and Employees who are  neither Directors
nor Officers.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
<U>Powers of the Administrator</U>. Subject to Applicable Laws and the  provisions of the
Plan (including any other powers given to the Administrator  hereunder), and except as
otherwise provided by the Board, the Administrator  shall have the authority, in its
discretion:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
to  select the Employees, Directors and Consultants to whom Awards may be granted  from
time to time hereunder;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
to determine whether and to what extent Awards are granted hereunder;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
to determine the number of Shares or the amount of other consideration to be  covered by
each Award granted hereunder;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;
to approve forms of Award Agreements for use under the Plan;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;
to  determine the terms and conditions of any Award granted hereunder;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;
to establish additional terms, conditions, rules or procedures to accommodate  the rules
or laws of applicable foreign jurisdictions and to afford Grantees  favorable treatment
under such rules or laws; provided, however, that no Award  shall be granted under any
such additional terms, conditions, rules or  procedures with terms or conditions which
are inconsistent with the provisions  of the Plan;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;
to amend the terms of any outstanding Award granted under the Plan, provided  that any
amendment that would adversely affect the Grantee&#146;s rights under  an outstanding
Award shall not be made without the Grantee&#146;s written  consent;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;&nbsp;
to construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the<B> </B>Plan;
and</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;
to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
<U>Eligibility</U>. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted  only to
Employees of the Company or a Parent or a Subsidiary of the Company. An  Employee,
Director or Consultant who has been granted an Award may, if otherwise  eligible, be
granted additional Awards. Awards may be granted to such Employees,  Directors or
Consultants who are residing in foreign jurisdictions as the  Administrator may determine
from time to time.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;<U>Terms and Conditions of Awards.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
&nbsp;&nbsp;&nbsp;<U>Designation of Award</U>. Each Award shall be designated in the Award  Agreement. In
the case of an Option, the Option shall be designated as either an  Incentive Stock
Option or a Non-Qualified Stock Option. However, notwithstanding  such designation, to
the extent that the aggregate Fair Market Value of Shares  subject to Options designated
as Incentive Stock Options which become  exercisable for the first time by a Grantee
during any calendar year (under all  plans of the Company or any Parent or Subsidiary of
the Company) exceeds  $100,000, such excess Options, to the extent of the Shares covered
thereby in  excess of the foregoing limitation, shall be treated as Non-Qualified Stock
Options. For this purpose, Incentive Stock Options shall be taken into account  in the
order in which they were granted, and the Fair Market Value of the Shares  shall be
determined as of the grant date of the relevant Option.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
&nbsp;&nbsp;&nbsp;<U>Conditions of Award</U>. Subject to the terms of the Plan, the Administrator  shall
determine the provisions, terms and conditions of each Award including,  but not limited
to, the Award vesting schedule, repurchase provisions, rights of  first refusal,
forfeiture provisions, form of payment (cash, Shares, or other  consideration) upon
settlement of the Award, payment contingencies and  satisfaction of any performance
criteria. The performance criteria established  by the Administrator may be based on any
one of, or combination of, increase in  share price, earnings per share, total
stockholder return, return on equity,  return on assets, return on investment, net
operating income, cash flow,  revenue, economic value added, personal management
objectives or other measure  of performance selected by the Administrator. Partial
achievement of the  specified criteria may result in a payment or vesting corresponding
to the  degree of achievement as specified in the Award Agreement.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
&nbsp;&nbsp;&nbsp;<U>Acquisitions and Other Transactions</U>. The Administrator may issue Awards  under the
Plan in settlement, assumption or substitution for outstanding awards  or obligations to
grant future awards in connection with the Company or a  Related Entity acquiring another
entity, an interest in another entity or an  additional interest in a Related Entity
whether by merger, stock purchase, asset  purchase or other form of transaction.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
&nbsp; &nbsp;&nbsp;<U>Deferral of Award Payment</U>. The Administrator may establish one or more  programs
under the Plan to permit selected Grantees the opportunity to elect to  defer receipt of
consideration upon exercise of an Award, satisfaction of  performance criteria or other
event that absent the election would entitle the  Grantee to payment or receipt of Shares
or other consideration under an Award  (but only to the extent that such deferral
programs would not result in an  accounting compensation charge unless otherwise
determined and specifically  agreed to by the Administrator). The Administrator may
establish the election  procedures, the timing of such elections, the mechanisms for
payments of and  accrual of interest or other earnings, if any, on amounts, Shares or
other  consideration so deferred and such other terms, conditions, rules and procedures
that the Administrator deems advisable for the administration of any such  deferral
program. Irrespective of the rights of the Administrator to allow for  the deferral of
consideration hereunder, no such deferral shall be effective if  it would result in the
deferral constituting &#147;nonqualified deferred  compensation&#148; within the meaning
of Code Section 409A, unless such deferral  has been approved by the Board and agreed to
by the Grantee.</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
&nbsp;&nbsp;&nbsp;<U>Separate Programs</U>. The Administrator may establish one or more separate  programs
under the Plan for the purpose of issuing particular forms of Awards to  one or more
classes of Grantees on such terms and conditions as determined by  the Administrator from
time to time.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
&nbsp;&nbsp;&nbsp;<U>Individual Award Limits</U>. Following the date that the exemption from  application
of Section&nbsp;162(m) of the Code described in Section&nbsp;18 (or  any exemption having
similar effect) ceases to apply to Awards, the maximum  number of Shares with respect to
which Awards (including awards for Options or  Restricted Stock) may be granted to any
Grantee in any fiscal year of the  Company shall be thirty thousand (30,000) Shares;
provided, however, that  Non-Management Directors shall be entitled to receive Awards in
any fiscal year  for no more than ten thousand (10,000) Shares. In connection with a
Grantee&#146;s commencement of Continuous Service, a Grantee who is an Employee  may be
granted Options for up to an additional thirty thousand (30,000) Shares  which shall not
count against the limit set forth in the previous sentence. The  foregoing limitations
shall be adjusted proportionately in connection with any  change in the Company&#146;s
capitalization pursuant to Section&nbsp;10 below.  To the extent required by Section&nbsp;162(m)
of the Code or the regulations  thereunder, in applying the foregoing limitations with
respect to a Grantee, if  any Option is canceled, the canceled Option shall continue to
count against the  maximum number of Shares with respect to which Options may be granted
to the  Grantee. For this purpose, the repricing of an Option shall be treated as the
cancellation of the existing Option and the grant of a new Option.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)
&nbsp;&nbsp;&nbsp;<U>Early Exercise</U>. The Award Agreement may, but need not, include a  provision
whereby the Grantee may elect at any time while an Employee, Director  or Consultant to
exercise any part or all of the Award prior to full vesting of  the Award. Any unvested
Shares received pursuant to such exercise may be subject  to a repurchase right in favor
of the Company or a Related Entity or to any  other restriction the Administrator
determines to be appropriate.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
&nbsp;&nbsp;&nbsp;<U>Term of Award</U>. The term of each Award shall be the term stated in the  Award
Agreement, provided, however, that the term of an Incentive Stock Option  may not be more
than ten&nbsp;(10) years from the date of grant thereof.  However, in the case of an
Incentive Stock Option granted to a Grantee who, at  the time the Option is granted, owns
stock representing more than  ten&nbsp;percent (10%) of the voting power of all classes
of stock of the  Company or any Parent or Subsidiary of the Company, the term of the
Incentive  Stock Option shall be five&nbsp;(5) years from the date of grant thereof or
such  shorter term as may be provided in the Award Agreement.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
&nbsp;&nbsp;&nbsp;<U>Transferability of Awards</U>. Incentive Stock Options and other Awards may  not be
sold, pledged, assigned, hypothecated, transferred or disposed of in any  manner other
than by will or by the laws of descent or distribution and may be  exercised, during the
lifetime of the Grantee, only by the Grantee.  Non-Qualified Stock Options shall be
transferable by will, by the laws of  descent and distribution or to the extent and in
the manner authorized by the  Administrator, by gift to members of the Grantee&#146;s
Immediate Family.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)
&nbsp;&nbsp;&nbsp;<U>Time of Granting Awards</U>. The date of grant of an Award shall for all  purposes be
the date on which the Administrator makes the determination to grant  such Award or such
other date as is determined by the Administrator.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-10-</FONT></FONT> </P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;<U>Award Exercise or Purchase Price, Consideration and Taxes.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
&nbsp;&nbsp;&nbsp;<U>Exercise or Purchase Price</U>. The exercise or purchase price, if any, for  an Award
shall be as follows:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
In  the case of an Incentive Stock Option:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;
granted to an Employee who, at the time of the grant of such Incentive Stock  Option owns
stock representing more than ten percent (10%) of the voting power  of all classes of
stock of the Company or any Parent or Subsidiary of the  Company, the per Share exercise
price shall be not less than one hundred ten  percent (110%) of the Fair Market Value per
Share on the date of grant; or</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;
granted to any Employee other than an Employee described in the preceding  paragraph, the
per Share exercise price shall be not less than one hundred  percent (100%) of the Fair
Market Value per Share on the date of grant.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
In the case of a Non-Qualified Stock Option, the per Share exercise price shall  be not
less than eighty-five percent (85%) of the Fair Market Value per Share on  the date of
grant, unless otherwise determined by the Administrator.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
In the case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent  (100%) of
the Fair Market Value per Share on the date of grant.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing provisions of this Section&nbsp;7(a), in the case  of an
Award issued pursuant to Section&nbsp;6(c), above, the exercise or  purchase price for
the Award shall be determined in accordance with the  provisions of the relevant
instrument evidencing the agreement to issue such  Award.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
<U>Attribution Rule<B></B></U><B>.</B> For purposes of subsection 7(a)(i)(A)  above, in
determining stock ownership, an employee shall be deemed to own the  stock owned,
directly or indirectly, by his or her Immediate Family. Stock  owned, directly or
indirectly, by or for a corporation, partnership, estate or  trust shall be deemed to be
owned proportionately by or for its stockholders,  partners or beneficiaries. If an
employee or a person related to the employee  owns an unexercised option or warrant to
purchase stock of the Company, the  stock subject to that portion of the option or
warrant which is unexercised  shall not be counted in determining stock ownership. For
purposes of this  Section 7, stock owned by an employee shall include all stock owned by
him or  her which is actually issued and outstanding immediately before the grant of the
incentive stock option to the employee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
<U>Consideration</U>. Subject to Applicable Laws, the consideration to be paid  for the
Shares to be issued upon exercise or purchase of an Award, including the  method of
payment, shall be determined by the Administrator (and, in the case of  an Incentive
Stock Option, shall be determined at the time of grant). In  addition to any other types
of consideration the Administrator may determine,  the Administrator is authorized to
accept as consideration for Shares issued  under the Plan the following:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
cash;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
check;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;
delivery of Grantee&#146;s promissory note with such recourse, interest,  security and
redemption provisions as the Administrator determines as  appropriate (but only to the
extent that the acceptance or terms of the  promissory note would not violate an
Applicable Law and would not result in an  accounting compensation charge with respect to
the use of such promissory note  to pay the exercise price unless otherwise determined by
the Administrator);  <U>provided,however</U>, that no less than the greater of an
amount  equal to the &#147;par value&#148; of the Common Stock to be issued upon the
exercise of an Award (if such stock has a &#147;par value&#148;) or $.01 per  share shall
be paid in cash or other property having a value no less than the  par value of such
shares or $.01 per share, as applicable, and may not be  included in the amount of any
deferred obligation;</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;
surrender of Shares or delivery of a properly executed form of attestation of  ownership
of Shares as the Administrator may require which have a Fair Market  Value on the date of
surrender or attestation equal to the aggregate exercise  price of the Shares as to which
said Award shall be exercised (but only to the  extent that such exercise of the Award
would not result in an accounting  compensation charge with respect to the Shares used to
pay the exercise price  unless otherwise determined by the Administrator; generally an
accounting charge  will result if the Shares used to pay the exercise price were acquired
less than  six months before the exercise);</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;
with respect to Options, payment through a broker-dealer sale and remittance  procedure
pursuant to which the Grantee (A) provides written instructions to a  Company designated
brokerage firm to effect the immediate sale of some or all of  the purchased Shares and
remit to the Company sufficient funds to cover the  aggregate exercise price payable for
the purchased Shares and (B) provides  written directives to the Company to deliver the
certificates for the purchased  Shares directly to such brokerage firm in order to
complete the sale  transaction; or</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;
any combination of the foregoing methods of payment.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;
<U>Taxes</U>. No Shares shall be delivered under the Plan to any Grantee or  other person
until such Grantee or other person has made arrangements acceptable  to the Administrator
for the satisfaction of any foreign, federal, state or  local income and employment tax
withholding obligations, including, without  limitation, obligations incident to the
receipt of Shares or the disqualifying  disposition of Shares received on exercise of an
Incentive Stock Option. Upon  exercise of an Award, the Company shall withhold or collect
from Grantee an  amount sufficient to satisfy such tax obligations.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;<U>Procedure for Exercise; Rights as a Stockholder.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
Any Award granted hereunder shall be exercisable at such times and under such  conditions
as determined by the Administrator under the terms of the Plan and  specified in the
Award Agreement.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-12-</FONT></FONT> </P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
An  Award shall be deemed to be exercised when written notice of such exercise has  been
given to the Company in accordance with the terms of the Award by the  person entitled to
exercise the Award and full payment for the Shares with  respect to which the Award is
exercised has been made, including, to the extent  selected, use of the broker-dealer
sale and remittance procedure to pay the  purchase price as provided in Section&nbsp;7(c)(v).
Until the issuance (as  evidenced by the appropriate entry on the books of the Company or
of a duly  authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a  stockholder
shall exist with respect to Shares subject to an Award,  notwithstanding the exercise of
an Option or other Award. No adjustment will be  made for a dividend or other right for
which the record date is prior to the  date the stock certificate is issued, except as
provided in the Award Agreement  or Section&nbsp;10 below.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;<U>Conditions Upon Issuance of Shares.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
Shares shall not be issued pursuant to the exercise of an Award unless the  exercise of
such Award and the issuance and delivery of such Shares pursuant  thereto comply with all
Applicable Laws. Compliance with all Applicable Laws  shall be determined by counsel for
the Company.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
As  a condition to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any such exercise  that the
Shares are being purchased only for investment and without any present  intention to sell
or distribute such Shares if, in the opinion of counsel for  the Company, such a
representation is required by any Applicable Laws. <B>THE  COMPANY SHALL NOT BE
OBLIGATED, BY REASON OF THIS PROVISION OR OTHERWISE, TO  UNDERTAKE REGISTRATION OF THE
OPTIONS OR STOCK HEREUNDER.</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;
<U>Adjustments Upon Changes in Capitalization</U>. Subject to any required  action by the
stockholders of the Company, the number of Shares covered by each  outstanding Award, the
number of Shares which have been authorized for issuance  under the Plan but as to which
no Awards have yet been granted or which have  been returned to the Plan, the exercise or
purchase price of each such  outstanding Award, the maximum number of Shares with respect
to which Options<B> </B>may be granted to any Grantee in any fiscal year of the Company
as well as  any other terms that the Administrator determines require adjustment shall be
proportionately adjusted for (i)&nbsp;any increase or decrease in the number of  issued
Shares resulting from a stock split, reverse stock split, stock dividend,  combination or
reclassification of the Shares or similar transaction affecting  the Shares, (ii)&nbsp;any
other increase or decrease in the number of issued  Shares effected without receipt of
consideration by the Company and  (iii)&nbsp;as the Administrator may determine in its
discretion, any other  transaction with respect to Common Stock including a corporate
merger,  consolidation, acquisition of property or stock, separation (including a
spin-off or other distribution of stock or property), reorganization,  liquidation
(whether partial or complete) or any similar transaction; provided,  however that
conversion of any convertible securities of the Company shall not  be deemed to have been
&#147;effected without receipt of consideration.&#148; Such adjustment shall be made by
the Administrator, and its determination shall  be final, binding and conclusive. Except
as the Administrator determines, no  issuance by the Company of shares of stock of any
class, or securities  convertible into shares of stock of any class, shall affect, and no
adjustment  by reason hereof shall be made with respect to, the number or price of Shares
subject to an Award.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-13-</FONT></FONT> </P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;<U>Corporate Transactions and Changes in Control.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
<U>Termination of Award to Extent Not Assumed in Corporate Transaction</U>.  Effective
upon the consummation of a Corporate Transaction, all outstanding  Awards under the Plan
shall terminate. However, all such Awards shall not  terminate to the extent they are
Assumed in connection with the Corporate  Transaction.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
<U>Acceleration of Award Upon Corporate Transaction or Change in Control</U>.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;
<U>Corporate  Transaction</U>. Except as provided otherwise in an individual Award
Agreement,  in the event of a Corporate Transaction and:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;
for the portion of each Award that is Assumed or Replaced, then such Award (if  Assumed),
the replacement Award (if Replaced) or the cash incentive program (if  Replaced)
automatically shall become fully vested, exercisable and payable and  be released from
any repurchase or forfeiture rights (other than repurchase  rights exercisable at Fair
Market Value) for all of the Shares at the time  represented by such Assumed or Replaced
portion of the Award, immediately upon  termination of the Grantee&#146;s Continuous
Service if such Continuous Service  is terminated by the successor company or the Company
without Cause or  voluntarily by the Grantee with Good Reason within twelve (12) months
after the  Corporate Transaction; and</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;
for the portion of each Award that is neither Assumed nor Replaced, such portion  of the
Award shall automatically become fully vested and exercisable and be  released from any
repurchase or forfeiture rights (other than repurchase rights  exercisable at Fair Market
Value) for all of the Shares at the time represented  by such portion of the Award,
immediately prior to the specified effective date  of such Corporate Transaction.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;
<U>Change in Control</U>. Except as provided otherwise in an individual Award  Agreement,
following a Change in Control (other than a Change in Control which  also is a Corporate
Transaction) and upon the termination of the Continuous  Service of a Grantee if such
Continuous Service is terminated by the Company or  Related Entity without Cause or
voluntarily by the Grantee with Good Reason  within twelve (12) months after a Change in
Control, each Award of such Grantee  which is at the time outstanding under the Plan
automatically shall become fully  vested and exercisable and be released from any
repurchase or forfeiture rights  (other than repurchase rights exercisable at Fair Market
Value), immediately  upon the termination of such Continuous Service.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
<U>Effect of Acceleration on Incentive Stock Options</U>. Any Incentive Stock  Option
accelerated under this Section&nbsp;11 in connection with a Corporate  Transaction or
Change in Control shall remain exercisable as an Incentive Stock  Option under the Code
only to the extent the $100,000 dollar limitation of  Section&nbsp;422(d) of the Code is
not exceeded. To the extent such dollar  limitation is exceeded, a proportional fraction
of each share subject to such  Option will be allocated as part Incentive Stock Option
and part Non-Qualified  Stock Option.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-14-</FONT></FONT> </P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;
<U>Effective Date and Term of Plan</U>. The Plan shall become effective upon the  earlier
to occur of its adoption by the Board or its approval by the  stockholders of the
Company. It shall continue in effect for a term of ten (10)  years unless sooner
terminated. Subject to Section&nbsp;17 below, and Applicable  Laws, Awards may be granted
under the Plan upon its becoming effective.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;<U>Amendment, Suspension or Termination of the Plan; Code Section 409A Considerations.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
The Board may at any time amend, suspend or terminate the Plan. To the extent  necessary
to comply with Applicable Laws, the Company shall obtain stockholder  approval of any
Plan amendment in such a manner and to such a degree as  required.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
No  Award may be granted during any suspension of the Plan or after termination of  the
Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
No  suspension or termination of the Plan (including termination of the Plan under
Section&nbsp;12, above) shall adversely affect any rights under Awards already  granted
to a Grantee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;
Any amendment of the Plan may be accomplished in a manner calculated to cause  such
amendment not to constitute an &#147;extension,&#148; &#147;renewal&#148; or &#147;modification&#148; (each
within the meaning of Code Section&nbsp;409A)  of any Awards that would cause such Awards
to be considered &#147;nonqualified  deferred compensation&#148; (within the meaning of
Code Section&nbsp;409A).  Notwithstanding the foregoing, if at any time the Board or the
Administrator  determines that any Award&nbsp;may be subject to Code Section&nbsp;409A,
the  Board or the Administrator may, in its sole discretion, and without a  Grantee&#146;s
prior consent, amend the Plan or any Award as it&nbsp;may  determine is necessary or
desirable either for the&nbsp;Plan and Awards&nbsp;to  be exempt from the application of
Section&nbsp;409A or to satisfy the  requirements of Section&nbsp;409A, including by
adding conditions with respect  to the vesting and/or the payment of Awards.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;<U>Reservation of Shares.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
The Company, during the term of the Plan, will at all times reserve and keep  available
such number of Shares as are sufficient to satisfy the requirements of  the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company&#146;s counsel to be  necessary to
the lawful issuance and sale of any Shares hereunder, shall relieve  the Company of any
liability in respect of the failure to issue or sell such  Shares as to which such
requisite authority is not obtained.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-15-</FONT></FONT> </P>



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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;
<U>No Effect on Terms of Employment/Consulting Relationship</U>. The Plan shall  not
confer upon any Grantee any right with respect to the Grantee&#146;s  Continuous Service
and shall not interfere in any way with his or her right or  the right of the Company or
any Related Entity to terminate the Grantee&#146;s  Continuous Service at any time, with
or without Cause and with or without  notice. The ability of the Company or any Related
Entity to terminate the  employment of a Grantee who is employed at will is in no way
affected by its  determination that the Grantee&#146;s Continuous Service has been
terminated for  Cause for the purposes of this Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;&nbsp;&nbsp;
<U>No Effect on Retirement and Other Benefit Plans</U>. Except as specifically  provided
in a retirement or other benefit plan of the Company or a Related  Entity, Awards shall
not be deemed compensation for purposes of computing  benefits or contributions under any
retirement plan of the Company or a Related  Entity, and shall not affect any benefits
under any other benefit plan of any  kind or any benefit plan subsequently instituted
under which the availability or  amount of benefits is related to level of compensation.
The Plan is not a  &#147;Retirement Plan&#148; or &#147;Welfare Plan&#148; under the
Employee  Retirement Income Security Act of 1974, as amended.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;&nbsp;&nbsp;
<U>Stockholder Approval</U>. The grant of Incentive Stock Options under the  Plan,
excluding Incentive Stock Options issued in substitution for outstanding  Incentive Stock
Options pursuant to Section 424(a) of the Code, shall be subject  to approval of the Plan
by the stockholders of the Company within twelve (12)  months before or after the date
the Plan is adopted. Such stockholder approval  shall be obtained in the degree and
manner required under Applicable Laws. The  Administrator may grant Incentive Stock
Options under the Plan prior to approval  by the stockholders, but until such approval is
obtained, no such Incentive  Stock Option shall be exercisable. If stockholder approval
is not obtained  within the twelve (12) month period provided above, all Incentive Stock
Options  previously granted under the Plan shall be exercisable as Non-Qualified Stock
Options.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;&nbsp;&nbsp;
<U>Effect of Section&nbsp;162(m) of the Code</U>. At any time while the Company  is
subject to the reporting obligations of Section 12 of the Exchange Act, the  Plan and all
Awards (except Awards of Restricted Stock that vest over time)  issued thereunder are
intended to be exempt from the application of  Section&nbsp;162(m) of the Code, which
restricts under certain circumstances the  Federal income tax deduction for compensation
paid by a public company to named  executives in excess of $1&nbsp;million per year. The
exemption is based on  Treasury Regulation Section&nbsp;1.162-27(f), in the form existing
on the  effective date of the Plan, with the understanding that such regulation
generally exempts from the application of Section&nbsp;162(m) of the Code  compensation
paid pursuant to a plan that existed before a company becomes  publicly held. Under such
Treasury Regulation, this exemption is available to  the Plan for the duration of the
period that lasts until the earliest of  (i)&nbsp;the expiration of the Plan, (ii)&nbsp;the
material modification of the  Plan, (iii)&nbsp;the exhaustion of the maximum number of
shares of Common Stock  available for Awards under the Plan, as set forth in Section&nbsp;3(a),
(iv)&nbsp;the first meeting of stockholders at which directors are to be elected  that
occurs after the close of the third calendar year following the calendar  year in which
the Company first becomes subject to the reporting obligations of  Section&nbsp;12 of the
Exchange Act, or (v)&nbsp;such other date required by  Section&nbsp;162(m) of the Code
and the rules and regulations promulgated  thereunder. To the extent that the
Administrator determines as of the date of  grant of an Award that (i)&nbsp;the Award is
intended to qualify as  Performance-Based Compensation and (ii)&nbsp;the exemption
described above is no  longer available with respect to such Award, such Award shall not
be effective  until any stockholder approval required under Section&nbsp;162(m) of the
Code  has been obtained.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-16-</FONT></FONT> </P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;&nbsp;&nbsp;
<U>Code Section 409A Matters</U>. Except as may be expressly provided with  respect to
any Award granted under the Plan, the Plan and the Awards are not  intended to constitute
a &#147;nonqualified deferred compensation plan&#148; within the meaning of Code Section&nbsp;409A,
but rather are intended to be  exempt from the application of Code Section&nbsp;409A. To
the extent that the  Plan and/or Awards are nevertheless deemed to be subject to Code
Section&nbsp;409A, the Plan and Awards shall be interpreted in accordance with  Code
Section&nbsp;409A and any applicable Department of Treasury regulations and  other
interpretive guidance issued thereunder, including without limitation any  such
regulations or other guidance that may be issued after the grant of any  Award.
Notwithstanding any provision of the Plan or any Award to the contrary,  in the event
that the Administrator determines that any Award may be or become  subject to Code Section&nbsp;409A,
the Administrator may adopt such amendments  to the Plan and the affected Award (as
described above) or adopt other policies  and procedures (including amendments, policies
and procedures with retroactive  effect), or take any other actions, that the
Administrator determines are  necessary or appropriate (a)&nbsp;to exempt the Plan and
any Award from the  application of Code Section&nbsp;409A and/or preserve the intended
tax treatment  of the benefits provided with respect to the Award, or (b)&nbsp;to comply
with  the requirements of Code Section&nbsp;409A.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;&nbsp;&nbsp;<U>Qualified Domestic Relations Orders.</U></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
Anything in the Plan to the contrary notwithstanding, rights under Awards may be
assigned to an Alternate Payee to the extent that a QDRO so provides. (The terms  &#147;Alternate
Payee&#148; and &#147;QDRO&#148; are defined in paragraph 20(c)  below.) The assignment
of an Award to an Alternate Payee pursuant to a QDRO  shall not be treated as having
caused a new grant. The transfer of an Incentive  Stock Option to an Alternate Payee may,
however, cause it to fail to qualify as  an Incentive Stock Option. If an Award is
assigned to an Alternate Payee, the  Alternate Payee generally shall have the same rights
as the grantee under the  terms of the Plan; provided however, that (i)&nbsp;the Award
shall be subject to  the same vesting terms and exercise period as if the Award were
still held by  the grantee and (ii)&nbsp;an Alternate Payee may not transfer an Award.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
In  the event of the Administrator&#146;s receipt of a domestic relations order or  other
notice of adverse claim by an Alternate Payee of a grantee of an Award,  transfer of the
proceeds of the exercise of such Award, whether in the form of  cash, stock or other
property, may be suspended. Such proceeds shall thereafter  be transferred pursuant to
the terms of a QDRO or other agreement between the  Grantee and Alternate Payee. A Grantee&#146;s
ability to exercise an Award may  be barred if the Administrator receives a court order
directing the Plan  administrator not to permit exercise.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
The word &#147;QDRO&#148; as used in the Plan shall mean a court order  (i)&nbsp;that
creates or recognizes the right of the spouse, former spouse or  child (an &#147;Alternate
Payee&#148;) of an individual who is granted an Award  to an interest in such Award
relating to marital property rights or support  obligations and (ii)&nbsp;that the
administrator of the Plan determines would be  a &#147;qualified domestic relations order,&#148; as
that term is defined in  section 414(p) of the Code and section 206(d) of the Employee
Retirement Income  Security Act (&#147;ERISA&#148;), but for the fact that the Plan is
not a plan  described in section 3(3) of ERISA.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-17-</FONT></FONT> </P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;&nbsp;&nbsp;
<U>Section 16(b) Compliance and Bifurcation of Plan</U>. It is the intention of  the
Company that this Plan comply in all respects with Section 16(b) and Rule  16b-3 under
the Exchange Act, to the extent applicable, and, if any Plan  provision is later found
not to be in compliance with such Section or Rule, as  the case may be, the provision
shall be deemed null and void, and in all events  the Plan shall be construed in favor of
its meeting the requirements of Section  16(b) and Rule 16b-3 under the Exchange Act.
Notwithstanding anything in the  Plan to the contrary, the Board, in its absolute
discretion, may bifurcate the  Plan so as to restrict, limit or condition the use of any
provision of the Plan  to participants who are officers and directors or other persons
subject to  Section 16(b) of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other participants.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned, being the Secretary of ADA-ES, Inc. hereby certifies that the  foregoing is
a true and correct copy of the ADA-ES, Inc. 2007 Equity Incentive  Plan, as adopted by
the Board of Directors on April 27, 2007, and as  adopted by the shareholders
on ___________________, 2007.</FONT></FONT></P>


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<A NAME="A003"></A>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES,
Inc.</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<A NAME="A004"></A>
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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">By:&nbsp;&nbsp;<U>/s/ &nbsp;&nbsp;&nbsp;Mark H. McKinnies</U><BR>Mark H. McKinnies, Secretary</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-18- </FONT></FONT> </P>


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<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES
2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>NOTICE OF
STOCK OPTION AWARD</U></B></FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee&#146;s Name and Address:</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="65%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
(the &#147;Grantee&#148;) have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of  this Notice of Stock Option Award (the &#147;Notice&#148;),
the ADA-ES 2007 Equity Incentive Plan, as amended from time to time (the &#147;Plan&#148;)
and the Stock Option Award Agreement (the &#147;Option Agreement&#148;) attached hereto,
as follows.  Unless otherwise defined herein, the  terms defined in the Plan shall have
the same defined meanings in this Notice.</FONT></FONT></P>

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<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="45%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Award Number</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="41%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date of Award</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vesting Commencement Date</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price per Share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Number of Shares Subject</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to the Option (the &#147;Shares&#148;)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Exercise Price</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Type of Option:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________&nbsp;&nbsp;&nbsp;Incentive Stock Option</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________&nbsp;&nbsp;&nbsp;Non-Qualified Stock Option</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>

<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expiration Date:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Post-Termination Exercise Period:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Three (3) Months</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Vesting
Schedule:</U></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the Grantee&#146;s Continuous Service and other limitations set forth in this
Notice, the Plan and the Option Agreement, the Option may be exercised, in whole
or in part, in accordance with the following schedule:</FONT></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="450" ALIGN="CENTER">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="46%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Period of Grantee's</FONT></TD>
     <TD WIDTH="6%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="46%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Continuous Relationship</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">With the Company or</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Affiliate From the Date</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Portion of Total Option</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the Option is Granted</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Which is Exercisable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">End of ___ months</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Each month thereafter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___ months</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>



<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
any authorized leave of absence, the vesting of the Option as provided in this
schedule shall be suspended after the leave of absence exceeds a period of
ninety (90) days. Vesting of the Option shall resume upon the Grantee&#146;s
termination of the leave of absence and return to service to the Company or a
Related Entity. The Vesting Schedule of the Option shall be extended by the
length of the suspension.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of termination of the Grantee&#146;s Continuous Service for Cause, the
Grantee&#146;s right to exercise the Option shall terminate concurrently with
the termination of the Grantee&#146;s Continuous Service, except as otherwise
determined by the Administrator.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of the Grantee&#146;s change in status from Employee to Consultant or
from an Employee whose customary employment is 20 hours or more per week to an
Employee whose customary employment is fewer than 20 hours per week, vesting of
the Option shall continue only to the extent determined by the Administrator as
of such change in status.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree
that the Option is to be governed by the terms and conditions of this Notice,
the Plan and the Option Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES,
INC., a Colorado corporation<BR><BR>By: &nbsp;&nbsp;&nbsp;________________________________________ <BR><BR>Title: &nbsp;&nbsp;&nbsp;______________________________________</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>The
Grantee acknowledges and agrees that the Shares subject to the Option shall
vest, if at all, only during the period of the Grantee&#146;s Continuous Service
(not through the act of being hired, being granted the Option or acquiring
Shares hereunder). The Grantee further acknowledges and agrees that nothing in
this Notice, the Option Agreement or the Plan shall confer upon the Grantee any
right with respect to future Awards or continuation of the Grantee&#146;s
Continuous Service or interfere in any way with the Grantee&#146;s right or the
right of the Company or Related Entity to which the Grantee provides services to
terminate the Grantee&#146;s Continuous Service, with or without cause and with
or without notice. The Grantee acknowledges that unless the Grantee has a
written employment agreement with the Company to the contrary, the
Grantee&#146;s status is at will.</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Grantee acknowledges receipt of a copy of the Plan and the Option Agreement and
represents that he or she:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;is
familiar with the terms and provisions thereof and hereby accepts the Option,  effective
as of the date of grant stated above, subject to all of the terms and  provisions hereof
and thereof;</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;has
reviewed this Notice, the Plan and the Stock Option Award Option Agreement  being
executed and delivered herewith in their entirety, has had an opportunity  to obtain the
advice of counsel prior to executing this Notice and fully  understands all provisions of
this Notice, the Plan and the Option Award  Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee
hereby agrees that all disputes arising out of or relating to this Notice, the
Plan and the Option Agreement shall be resolved in accordance with Section 18 of
the Option Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee
further agrees to notify the Company upon any change in the residence address
indicated in this Notice.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee
agrees, as a condition precedent to any exercise of the Option, to deliver to
the Company:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> an
executed Exercise Notice in the form provided by the Company, which notice  may include
(i) written assurances satisfactory to the Company as to  Grantee&#146;s knowledge and
experience in financial and business matters and/or  that Grantee has employed a
purchaser representative who has such knowledge and  experience in financial and business
matters, and that Grantee is capable of  evaluating, alone or together with a purchaser
representative engaged by  Grantee, the merits and risks of exercising the Option; and
(ii)&nbsp;written  assurances satisfactory to the Company stating that Grantee is
acquiring the  Common Stock subject to the Option for such person&#146;s own account and
not  with any present intention of selling or otherwise distributing the Common  Stock.
(These requirements, and any assurances given pursuant to such  requirements, shall be
inoperative if, and only if: (x)&nbsp;the issuance of the  shares upon the exercise of
the Option has been registered under a then  currently effective registration statement
under the Securities Act of 1933, as  amended (the &#147;Securities Act&#148;); or (y)&nbsp;as
to any particular  requirement, a determination is made by counsel for the Company that
such  requirement need not be met in the circumstances under the then applicable
securities law.); and</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> an
executed Shareholders Agreement (if any) in the form existing at the time of  exercise of
the Option (as modified by the Company in its discretion);</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _________________________________</FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Signed: _________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Grantee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-3-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->

zzz


<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES
2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>NOTICE OF
STOCK OPTION AWARD</U></B></FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee&#146;s Name and Address:</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="65%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
(the &#147;Grantee&#148;) have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of  this Notice of Stock Option Award (the &#147;Notice&#148;),
the ADA-ES 2007 Equity Incentive Plan, as amended from time to time (the &#147;Plan&#148;)
and the Stock Option Award Agreement (the &#147;Option Agreement&#148;) attached hereto,
as follows.  Unless otherwise defined herein, the  terms defined in the Plan shall have
the same defined meanings in this Notice.</FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="45%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Award Number</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="41%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date of Award</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vesting Commencement Date</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price per Share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Number of Shares Subject</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to the Option (the &#147;Shares&#148;)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Exercise Price</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Type of Option:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________&nbsp;&nbsp;&nbsp;Incentive Stock Option</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________&nbsp;&nbsp;&nbsp;Non-Qualified Stock Option</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>

<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expiration Date:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Post-Termination Exercise Period:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Three (3) Months</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Vesting
Schedule:</U></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the Grantee&#146;s Continuous Service and other limitations set forth in this
Notice, the Plan and the Option Agreement, the Option may be exercised, in whole
or in part, in accordance with the following schedule:</FONT></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="450" ALIGN="CENTER">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="46%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Period of Grantee's</FONT></TD>
     <TD WIDTH="6%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="46%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Continuous Relationship</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">With the Company or</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Affiliate From the Date</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Portion of Total Option</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the Option is Granted</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Which is Exercisable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">End of ___ months</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Each month thereafter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___%</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___ months</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>



<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
any authorized leave of absence, the vesting of the Option as provided in this
schedule shall be suspended after the leave of absence exceeds a period of
ninety (90) days. Vesting of the Option shall resume upon the Grantee&#146;s
termination of the leave of absence and return to service to the Company or a
Related Entity. The Vesting Schedule of the Option shall be extended by the
length of the suspension.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of termination of the Grantee&#146;s Continuous Service for Cause, the
Grantee&#146;s right to exercise the Option shall terminate concurrently with
the termination of the Grantee&#146;s Continuous Service, except as otherwise
determined by the Administrator.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of the Grantee&#146;s change in status from Employee to Consultant or
from an Employee whose customary employment is 20 hours or more per week to an
Employee whose customary employment is fewer than 20 hours per week, vesting of
the Option shall continue only to the extent determined by the Administrator as
of such change in status.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree
that the Option is to be governed by the terms and conditions of this Notice,
the Plan and the Option Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES,
INC., a Colorado corporation<BR><BR>By: &nbsp;&nbsp;&nbsp;________________________________________ <BR><BR>Title: &nbsp;&nbsp;&nbsp;______________________________________</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>The
Grantee acknowledges and agrees that the Shares subject to the Option shall
vest, if at all, only during the period of the Grantee&#146;s Continuous Service
(not through the act of being hired, being granted the Option or acquiring
Shares hereunder). The Grantee further acknowledges and agrees that nothing in
this Notice, the Option Agreement or the Plan shall confer upon the Grantee any
right with respect to future Awards or continuation of the Grantee&#146;s
Continuous Service or interfere in any way with the Grantee&#146;s right or the
right of the Company or Related Entity to which the Grantee provides services to
terminate the Grantee&#146;s Continuous Service, with or without cause and with
or without notice. The Grantee acknowledges that unless the Grantee has a
written employment agreement with the Company to the contrary, the
Grantee&#146;s status is at will.</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Grantee acknowledges receipt of a copy of the Plan and the Option Agreement and
represents that he or she:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;is
familiar with the terms and provisions thereof and hereby accepts the Option,  effective
as of the date of grant stated above, subject to all of the terms and  provisions hereof
and thereof;</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;has
reviewed this Notice, the Plan and the Stock Option Award Option Agreement  being
executed and delivered herewith in their entirety, has had an opportunity  to obtain the
advice of counsel prior to executing this Notice and fully  understands all provisions of
this Notice, the Plan and the Option Award  Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee
hereby agrees that all disputes arising out of or relating to this Notice, the
Plan and the Option Agreement shall be resolved in accordance with Section 18 of
the Option Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee
further agrees to notify the Company upon any change in the residence address
indicated in this Notice.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantee
agrees, as a condition precedent to any exercise of the Option, to deliver to
the Company:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> an
executed Exercise Notice in the form provided by the Company, which notice  may include
(i) written assurances satisfactory to the Company as to  Grantee&#146;s knowledge and
experience in financial and business matters and/or  that Grantee has employed a
purchaser representative who has such knowledge and  experience in financial and business
matters, and that Grantee is capable of  evaluating, alone or together with a purchaser
representative engaged by  Grantee, the merits and risks of exercising the Option; and
(ii)&nbsp;written  assurances satisfactory to the Company stating that Grantee is
acquiring the  Common Stock subject to the Option for such person&#146;s own account and
not  with any present intention of selling or otherwise distributing the Common  Stock.
(These requirements, and any assurances given pursuant to such  requirements, shall be
inoperative if, and only if: (x)&nbsp;the issuance of the  shares upon the exercise of
the Option has been registered under a then  currently effective registration statement
under the Securities Act of 1933, as  amended (the &#147;Securities Act&#148;); or (y)&nbsp;as
to any particular  requirement, a determination is made by counsel for the Company that
such  requirement need not be met in the circumstances under the then applicable
securities law.); and</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Roman" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> an
executed Shareholders Agreement (if any) in the form existing at the time of  exercise of
the Option (as modified by the Company in its discretion);</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _________________________________</FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Signed: _________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Grantee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-3-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Award
Number: ___________</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES
INC. 2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>STOCK OPTION AWARD AGREEMENT</U></B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp; <U>Grant
of Option</U>. ADA-ES, Inc., a Colorado corporation (the &#147;Company&#148;),  hereby
grants to the Grantee (the &#147;Grantee&#148;) named in the Notice of Stock Option
Award (the &#147;Notice&#148;), an option (the &#147;Option&#148;) to purchase the Total
Number of Shares of Common Stock subject to the Option (the &#147;Shares&#148;) set forth
in the Notice, at the Exercise Price per Share set forth in the Notice (the &#147;Exercise
Price&#148;) subject to the terms and provisions of the Notice, this Stock Option Award
Agreement (the &#147;Option Agreement&#148;) and the Company&#146;s 2007 Equity Incentive
Plan, as amended from time to time (the &#147;Plan&#148;), which are incorporated herein
by reference. Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
designated in the Notice as an Incentive Stock Option, the Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code.
However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of Shares subject to Options designated as Incentive Stock Options
which become exercisable for the first time by the Grantee during any calendar
year (under all plans of the Company or any Parent or Subsidiary of the Company)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
designated in the Notice as a Nonqualified Stock Option, the Option is NOT
intended to qualify as an Incentive Stock Option.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the extent any Stock Option is designated as an Incentive Stock Option, but for
any reason (including the reason described above) fails to qualify as an
Incentive Stock Option, such option shall be treated as a Nonqualified Stock
Option.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp; &nbsp;&nbsp;<U>Exercise
of Option</U>.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <U>Right
to Exercise</U>. The Option shall be exercisable during its term in  accordance with the
Vesting Schedule set out in the Notice and with the  applicable provisions of the Plan
and this Option Agreement. The Option shall be  subject to the provisions of Section&nbsp;11
of the Plan relating to the  exercisability or termination of the Option in the event of
a Corporate  Transaction or Change in Control. The Grantee shall be subject to reasonable
limitations on the number of requested exercises during any monthly or weekly  period as
determined by the Administrator. In no event shall the Company issue  fractional Shares.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <U>Method
of Exercise</U>. The Option shall be exercisable by delivery of an  exercise notice (a
form of which is attached hereto as <U>Exhibit A</U>) or by  such other procedure as
specified from time to time by the Administrator which  shall state the election to
exercise the Option, the whole number of Shares in  respect of which the Option is being
exercised and such other provisions as may  be required by the Administrator. The
exercise notice shall be delivered in  person, by certified mail or by such other method
(including electronic  transmission) as determined from time to time by the Administrator
to the  Company accompanied by payment of the Exercise Price. The Option shall be deemed
to be exercised upon receipt by the Company of such notice accompanied by the  Exercise
Price, which, to the extent selected, shall be deemed to be satisfied  by use of the
broker-dealer sale and remittance procedure to pay the Exercise  Price provided in Section&nbsp;4(d)
below.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; <U>Shareholders
Agreement</U>. As a condition precedent to any exercise of the  Option, the Grantee shall
deliver to the Company at the time of exercise, an  executed Shareholders Agreement in
the form existing at the time of exercise of  the Option (as modified by the Company in
its discretion as of such time).</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; <U>Taxes</U>.
No Shares will be delivered to the Grantee or other person  pursuant to the exercise of
the Option until the Grantee or other person has  made arrangements acceptable to the
Administrator for the satisfaction of  applicable income tax and employment tax
withholding obligations, including,  without limitation, such other tax obligations of
the Grantee incident to the  receipt of Shares or the disqualifying disposition of Shares
received on  exercise of an Incentive Stock Option. Upon exercise of the Option, the
Company  or the Grantee&#146;s employer may offset or withhold (from any amount owed by
the Company or the Grantee&#146;s employer to the Grantee) or collect from the  Grantee
or other person an amount sufficient to satisfy such tax obligations  and/or the employer&#146;s
withholding obligations.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp; <U>Grantee&#146;s
Representations</U>. The Grantee understands that neither the Option nor  the Shares
exercisable pursuant to the Option have been registered under the Securities  Act of
1933, as amended or any United States securities laws. If the Shares purchasable
pursuant to the exercise of the Option have not been registered under the Securities Act
of 1933, as amended, at the time the Option is exercised, the Grantee shall, if requested
by the Company, concurrently with the exercise of all or any portion of the Option,
deliver to the Company his or her Investment Representation Statement in the form
attached  hereto as <U>Exhibit B</U>.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp; <U>Method
of Payment</U>. Payment of the Exercise Price shall be made by any of the  following, or
a combination thereof, at the election of the Grantee; provided, however,  that such
exercise method does not then violate any Applicable Law:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; cash;</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; check;</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; surrender
of Shares or delivery of a properly executed form of attestation of ownership of  Shares
as the Administrator may require (including withholding of Shares  otherwise deliverable
upon exercise of the Option) which have a Fair Market  Value on the date of surrender or
attestation equal to the aggregate Exercise  Price of the Shares as to which the Option
is being exercised (but only to the  extent that such exercise of the Option would not
result in an accounting  compensation charge with respect to the Shares used to pay the
exercise  price);<B> </B>or</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->


<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; payment
through a broker-dealer sale and remittance procedure pursuant to which  the Grantee (i)
provides written instructions to a Company-designated brokerage  firm to effect the
immediate sale of some or all of the purchased Shares and  remit to the Company
sufficient funds to cover the aggregate exercise price  payable for the purchased Shares
and (ii) provides written directives to the  Company to deliver the certificates for the
purchased Shares directly to such  brokerage firm in order to complete the sale
transaction.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp; <U>Restrictions
on Exercise</U>. The Option may not be exercised if the issuance of the  Shares subject
to the Option upon such exercise would constitute a violation of any  Applicable Laws. In
addition, the Option may not be exercised until such time as the Plan  has been approved
by the shareholders of the Company.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp; <U>Termination
or Change of Continuous Service</U>. If the Grantee&#146;s Continuous  Service terminates
other than for Cause,<B> </B>the Grantee may, but only during the  Post-Termination
Exercise Period, exercise the portion of the Option that was vested at  the date of such
termination (the &#147;Termination Date&#148;). If the Grantee&#146;s  Continuous Service
is terminated for Cause, the Grantee&#146;s right to exercise the  Option shall, except
as otherwise determined by the Administrator, terminate concurrently  with the
termination of the Grantee&#146;s Continuous Service (also the &#147;Termination  Date&#148;).
In no event may the Option be exercised later than the Expiration Date set  forth in the
Notice. If the Grantee&#146;s status changes from Employee, Director or  Consultant to
any other status of Employee, Director or Consultant, the Option shall  remain in effect
and vesting of the Option shall continue only to the extent determined by  the
Administrator as of such change in status; provided, however, with respect to any
Incentive Stock Option that remains in effect after a change in status from Employee to
Director or Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day
three (3) months and one (1) day following such change in status. Except as provided in
Sections&nbsp;7 and&nbsp;8 below, to the extent that the Option was unvested on the
Termination Date, such unvested portion of the Option shall terminate. In addition,
except  as provided in Sections 7 and 8 below, if the Grantee does not exercise the
vested portion  of the Option within the Post-Termination Exercise Period, such vested
portion of the  Option shall terminate.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp; <U>Disability
of Grantee</U>. If the Grantee&#146;s Continuous Service terminates as a  result of his
or her Disability, the Grantee may, but only within twelve (12) months from  the
Termination Date (and in no event later than the Expiration Date), exercise the  portion
of the Option that was vested on the Termination Date; provided, however, that if  such
Disability is not a &#147;disability&#148; as such term is defined in Section  22(e)(3)
of the Code and the Option is an Incentive Stock Option, such Incentive Stock  Option
shall cease to be treated as an Incentive Stock Option and shall be treated as a
Non-Qualified Stock Option on the day three&nbsp;(3) months and one (1) day following the
Termination Date. To the extent that the Option was unvested on the Termination Date,
such  unvested portion of the Option shall terminate. In addition, if the Grantee does
not  exercise the vested portion of the Option within the time specified herein, such
vested  portion of the Option shall terminate. Section&nbsp;22(e)(3) of the Code provides
that an  individual is permanently and totally disabled if he or she is unable to engage
in any  substantial gainful activity by reason of any medically determinable physical or
mental  impairment which can be expected to result in death or which has lasted or can be
expected  to last for a continuous period of not less than twelve (12) months.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp; &nbsp;&nbsp;<U>Death
of Grantee</U>. If the Grantee&#146;s Continuous Service terminates as a result  of his
or her death, or in the event of the Grantee&#146;s death during the  Post-Termination
Exercise Period or during the twelve (12) month period following the  Grantee&#146;s
termination of Continuous Service as a result of his or her Disability, the  Grantee&#146;s
estate, or a person who acquired the right to exercise the Option by  bequest or
inheritance, may exercise the portion of the Option that was vested at the  Termination
Date, within twelve (12) months from the date of death (but in no event later  than the
Expiration Date). To the extent that the Option was unvested on the date of  death, such
unvested portion of the Option shall terminate. In addition, if the vested  portion of
the Option is not exercised within the time specified herein, such vested  portion of the
Option shall terminate.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp; &nbsp;&nbsp;<U>Transferability
of Option</U>. The Option, if an Incentive Stock Option, may not be  transferred in any
manner other than by will or by the laws of descent and distribution  and may be
exercised during the lifetime of the Grantee only by the Grantee. The Option,  if a
Non-Qualified Stock Option, may not be transferred in any manner other than by will  or
by the laws of descent and distribution, provided, however, that a Non-Qualified Stock
Option may be transferred to members of the Grantee&#146;s Immediate Family to the extent
and in the manner authorized by the Administrator. The terms of the Option shall be
binding upon the executors, administrators, heirs and successors of the Grantee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp; <U>Term
of Option</U>. The Option must be exercised no later than the Expiration Date set  forth
in the Notice or such earlier date as otherwise provided herein. After the  Expiration
Date or such earlier date, the Option shall be of no further force or effect  and may not
be exercised.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp; <U>Stop-Transfer
Notices</U>. In order to ensure compliance with the restrictions on  transfer set forth
in this Option Agreement, the Notice or the Plan, the Company may issue  appropriate
&#147;stop transfer&#148; instructions to its transfer agent, if any, and, if  the
Company transfers its own securities, it may make appropriate notations to the same
effect in its own records.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp; <U>Refusal
to Transfer</U>. The Company shall not be required (i) to transfer on its books  any
Shares that have been sold or otherwise transferred in violation of any of the
provisions of this Option Agreement or (ii) to treat as owner of such Shares or to accord
the right to vote or pay dividends to any purchaser or other transferee to whom such
Shares have been so transferred.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp; <U>Tax
Consequences</U>. Set forth below is a brief summary as of the date of this Option
Agreement of some of the federal tax consequences of exercise of the Option and
disposition of the Shares. <B>This summary is necessarily incomplete, and the tax laws
and  regulations are subject to change. The Grantee should consult a tax adviser before
exercising the Option or disposing of the Shares.</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <U>Exercise
of Incentive Stock Option</U>. If the Option qualifies as an  Incentive Stock Option,
there will be no regular federal income tax liability  upon the exercise of the Option,
although the excess, if any, of the Fair Market  Value of the Shares on the date of
exercise over the Exercise Price will be  treated as income for purposes of the
alternative minimum tax for federal tax  purposes and may subject the Grantee to the
alternative minimum tax in the year  of exercise. However, the Internal Revenue Service
issued proposed regulations  that would subject the Grantee to withholding at the time
the Grantee exercises  an Incentive Stock Option for Social Security and Medicare based
upon the  excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. These proposed regulations are subject to further  modification
by the Internal Revenue Service and, if adopted, would be effective  only for the
exercise of an Incentive Stock Option that occurs two years after  the regulations are
issued in final form.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <U>Exercise
of Incentive Stock Option Following Disability</U>. If the  Grantee&#146;s Continuous
Service terminates as a result of Disability that is  not permanent and total disability
as such term is defined in Section 22(e)(3)  of the Code, to the extent permitted on the
date of termination, the Grantee  must exercise an Incentive Stock Option within three
(3) months of such  termination for the Incentive Stock Option to be qualified as an
Incentive Stock  Option. Section&nbsp;22(e)(3) of the Code provides that an individual is
permanently and totally disabled if he or she is unable to engage in any  substantial
gainful activity by reason of any medically determinable physical or  mental impairment
which can be expected to result in death or which has lasted  or can be expected to last
for a continuous period of not less than twelve (12)  months.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; <U>Exercise
of Non-Qualified Stock Option</U>. On exercise of a Non-Qualified  Stock Option, the
Grantee will be treated as having received compensation income  (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair  Market Value of the Shares on
the date of exercise over the Exercise Price. If  the Grantee is an Employee or a former
Employee, the Company will be required to  withhold from the Grantee&#146;s compensation
or collect from the Grantee and  pay to the applicable taxing authorities an amount in
cash equal to a percentage  of this compensation income at the time of exercise, and may
refuse to honor the  exercise and refuse to deliver Shares if such withholding amounts
are not  delivered at the time of exercise.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; <U>Disposition
of Shares</U>. In the case of a Non-Qualified Stock Option, if  Shares are held for more
than one year, any gain realized on disposition of the  Shares will be treated as
long-term capital gain for federal income tax  purposes. In the case of an Incentive
Stock Option, if Shares transferred  pursuant to the Option are held for more than one
year after receipt of the  Shares and are disposed more than two years after the Date of
Award, any gain  realized on disposition of the Shares also will be treated as capital
gain for  federal income tax purposes and subject to the same tax rates and holding
periods that apply to Shares acquired upon exercise of a Non-Qualified Stock  Option. If
Shares purchased under an Incentive Stock Option are disposed of  prior to the expiration
of such one-year or two-year periods, any gain realized  on such disposition will be
treated as compensation income (taxable at ordinary  income rates) to the extent of the
difference between the Exercise Price and the  lesser of (i)&nbsp;the Fair Market Value
of the Shares on the date of exercise,  or (ii)&nbsp;the sale price of the Shares.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp; <U>Lock-Up
Agreement</U>.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <U>Agreement</U>.
The Grantee, if such person is an officer, director or owner of greater than 5%  of the
Common Stock of the Company at such time (including, for purposes of  determining stock
ownership, shares of Common Stock issuable upon exercise of  options or warrants, or
conversion of securities convertible into shares of  Common Stock), and if requested by
the Company and the lead underwriter of any  public offering of the Common Stock (the
&#147;Lead Underwriter&#148;), hereby  irrevocably agrees not to sell, contract to sell,
grant any option to purchase,  transfer the economic risk of ownership in, make any short
sale of, pledge or  otherwise transfer or dispose of any interest in any Common Stock or
any  securities convertible into or exchangeable or exercisable for or any other  rights
to purchase or acquire Common Stock (except Common Stock included in such  public
offering or acquired on the public market after such offering) during the  180-day period
following the effective date of a registration statement of the  Company filed under the
Securities Act of 1933, as amended, or such shorter  period of time as the Lead
Underwriter may specify. The Grantee further agrees  to sign such documents as may be
requested by the Lead Underwriter to effect the  foregoing and agrees that the Company
may impose stop-transfer instructions with  respect to such Common Stock subject to the
lock-up period until the end of such  period. The Company and the Grantee acknowledge
that each Lead Underwriter of a  public offering of the Company&#146;s stock, during the
period of such offering  and for the 180-day period thereafter, is an intended
beneficiary of this  Section 14.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <U>No
Amendment Without Consent of Underwriter</U>. During the period from  identification of a
Lead Underwriter in connection with any public offering of  the Company&#146;s Common
Stock until the earlier of (i) the expiration of the  lock-up period specified in Section&nbsp;14(a)
in connection with such offering  or (ii) the abandonment of such offering by the Company
and the Lead  Underwriter, the provisions of this Section 14 may not be amended or waived
except with the consent of the Lead Underwriter.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp; <U>Code
Section 409A Matters</U>. This option is not intended to constitute  &#147;nonqualified
deferred compensation&#148; within the meaning of Code  Section&nbsp;409A, but rather is
intended to be exempt from the application of Code  Section&nbsp;409A. To the extent that
this option is nevertheless deemed to be subject to  Code Section&nbsp;409A for any
reason, this option shall be interpreted in accordance with  Code Section&nbsp;409A and
Department of Treasury regulations and other interpretive  guidance issued thereunder,
including without limitation any such regulations or other  guidance that may be issued
after the date on which this option was granted (the  &#147;Grant Date&#148;).
Notwithstanding any provision herein to the contrary, in the  event that following the
Grant Date, the Administrator (as defined in the Plan) determines  that this option may
be or become subject to Code Section&nbsp;409A, the Administrator may  adopt such
amendments to the Plan and/or this option or adopt other policies and  procedures
(including amendments, policies and procedures with retroactive effect), or  take any
other actions that the Administrator determines are necessary or appropriate to  (a)&nbsp;exempt
the Plan and/or this option from the application of Code Section&nbsp;409A  and/or
preserve the intended tax treatment of the benefits provided with respect to this
option, or (b)&nbsp;comply with the requirements of Code Section&nbsp;409A. In the event
this Option and or the Award is deemed to be &#147;nonqualified deferred  compensation&#148; as
defined in Code Section 409A, the value of such nonqualified  deferred compensation could
become taxable to Grantee, and Grantee agrees to assume and  take full responsibility for
any such tax consequences.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-6-</FONT></FONT> </P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp; &nbsp;&nbsp;<U>Entire
Agreement: Governing Law</U>. The Notice, the Plan and this Option Agreement  constitute
the entire agreement of the parties with respect to the subject matter hereof  and
supersede in their entirety all prior undertakings and agreements of the Company and  the
Grantee with respect to the subject matter hereof, and may not be modified adversely  to
the Grantee&#146;s interest except by means of a writing or writings (including an
electronic or facsimile transmission) signed by the Company and the Grantee. Nothing in
the Notice, the Plan or this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties. The
Notice, the Plan and this Option Agreement are to be construed in accordance with and
governed by the internal laws of the<B> </B>State of Colorado without giving effect to
any  choice of law rule that would cause the application of the laws of any jurisdiction
other  than the internal laws of the State of Colorado to the rights and duties of the
parties.  Should any provision of the Notice, the Plan or this Option Agreement be
determined by a  court of law to be illegal or unenforceable, such provision shall be
enforced to the  fullest extent allowed by law and the other provisions shall
nevertheless remain effective  and shall remain enforceable.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;&nbsp;&nbsp; <U>Headings</U>.
The captions used in the Notice and this Option Agreement are inserted  for convenience
and shall not be deemed a part of the Option for construction or  interpretation.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp; &nbsp;&nbsp;<U>Dispute
Resolution</U>. The provisions of this Section 18 shall be the exclusive means  of
resolving disputes arising out of or relating to the Notice, the Plan and this Option
Agreement. The Company, the Grantee and the Grantee&#146;s assignees (the  &#147;parties&#148;)
shall attempt in good faith to resolve any disputes arising out of or  relating to the
Notice, the Plan and this Option Agreement by negotiation between  individuals who have
authority to settle the controversy. Negotiations shall be commenced  by either party by
notice of a written statement of the party&#146;s position and the name  and title of the
individual who will represent the party. Within thirty (30) days of the  written
notification, the parties shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to resolve the dispute. If the
dispute is not resolved by negotiation within ninety (90) days of the written
notification, the parties agree that any suit, action, or proceeding arising out of or
relating to the Notice, the Plan or this Option Agreement shall be brought in the United
States District Court for the District of Colorado (or should such court lack
jurisdiction  to hear such action, suit or proceeding, in a Colorado state court in
Arapahoe County,  Colorado) and that the parties shall submit to the jurisdiction of such
court. The parties  irrevocably waive, to the fullest extent permitted by law, any
objection the party may  have to the laying of venue for any such suit, action or
proceeding brought in such court.  <B>The parties also expressly waive any right they
have or may have to a jury trial of any  such suit, action or proceeding.</B> If any one
or more provisions of this Section 18  shall for any reason be held invalid or
unenforceable, it is the specific intent of the  parties that such provisions shall be
modified to the minimum extent necessary to make it  or its application valid and
enforceable.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;&nbsp;&nbsp; <U>Notices</U>.
Any notice required or permitted hereunder shall be given in writing and  shall be deemed
effectively given, (i) when delivered personally; (ii) when sent by  facsimile, with
written confirmation of receipt by the sending facsimile machine; (iii)  when sent by
electronic transmission, upon written confirmation of receipt by the  receiving party;
(iv) five business days after being sent by registered or certified mail,  return receipt
requested, postage prepaid; or (v) two business days after deposit with a  private
industry express courier, with written confirmation of receipt, addressed to the  other
party at its address as shown in these instruments, or to such other address as such
party may designate in writing from time to time to the other party.</FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _________________________________</FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Signed: _________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Grantee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>EXHIBIT A</U></B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES
2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>EXERCISE NOTICE</U></B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES, Inc.<BR>
8100 SouthPark Way, Unit B <BR> Littleton, CO  80120<BR><BR>Attention: Secretary</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp; Effective
as of today, ______________, the undersigned (&#147;Grantee&#148;) hereby elects  to
exercise the Grantee&#146;s option to purchase ___________ shares of the Common Stock
(the &#147;Shares&#148;) of ADA-ES, Inc. (the &#147;Company&#148;) under and pursuant to
the Company&#146;s 2007 Equity Incentive Plan, as amended from time to time (the  &#147;Plan&#148;)
and the [&nbsp;&nbsp;]&nbsp;Incentive [&nbsp;&nbsp;]&nbsp;Non-Qualified  Stock Option
Award Agreement (the &#147;Option Agreement&#148;) and Notice of Stock Option  Award (the
&#147;Notice&#148;) dated ______________, ________. Unless otherwise defined  herein, the
terms defined in the Plan shall have the same defined meanings in this  Exercise Notice.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp; <U>Representations
of the Grantee</U>. The Grantee acknowledges that the Grantee has  received, read and
understood the Notice, the Plan and the Option Agreement and agrees to  abide by and be
bound by their terms and conditions. Grantee further represents and  warrants that:
Grantee has such knowledge and experience in financial and business matters  and/or that
Grantee has employed a purchaser representative who has such knowledge and  experience in
financial and business matters such that Grantee is capable of evaluating,  either alone
or together with such purchaser representative engaged by Grantee, the merits  and risks
of exercising the Option and owning the Shares; and (ii)&nbsp;that Grantee is  acquiring
the Shares subject to the Option for his or her own account and not with any  present
intention of selling or otherwise distributing the Common Stock, unless the Shares  are
registered under the Securities Act of 1933, as amended, in which case Grantee will be
free to immediately sell the Shares into any market which may exist therefor.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp; <U>Rights
as Shareholder</U>. Until the stock certificate evidencing such Shares is issued  (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights
as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of
the Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a dividend or
other  right for which the record date is prior to the date the stock certificate is
issued,  except as provided in Section 10 of the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Grantee shall enjoy rights as a shareholder until such time as the Grantee
disposes of the Shares or the Company and/or its assignee(s) exercises the Right
of First Refusal or the<B> </B>Repurchase Right. Upon such exercise, the Grantee
shall have no further rights as a holder of the Shares so purchased except the
right to receive payment for the Shares so purchased in accordance with the
provisions of the Option Agreement, and the Grantee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp; <U>Shareholders
Agreement</U>. As a condition precedent to the exercise of the Option, the  Grantee
agrees to deliver to the Company an executed Shareholders Agreement in the form  existing
at the time of exercise of the Option (as modified by the Company in its  discretion).</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp; <U>Delivery
of Payment</U>. The Grantee herewith delivers to the Company the full Exercise  Price for
the Shares, which, to the extent selected, shall be deemed to be satisfied by  use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided  in Section&nbsp;4(d)
of the Option Agreement.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp; <U>Tax
Consultation</U>. The Grantee understands that the Grantee may suffer adverse tax
consequences as a result of the Grantee&#146;s purchase or disposition of the Shares. The
Grantee represents that the Grantee has consulted with any tax consultants the Grantee
deems advisable in connection with the purchase or disposition of the Shares and that the
Grantee is not relying on the Company for any tax advice.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp; <U>Taxes</U>.
The Grantee agrees to satisfy all applicable federal, state and local income  and
employment tax withholding obligations and herewith delivers to the Company the full
amount of such obligations or has made arrangements acceptable to the Company to satisfy
such obligations. In the case of an Incentive Stock Option, the Grantee also agrees, as
partial consideration for the designation of the Option as an Incentive Stock Option, to
notify the Company in writing within thirty&nbsp;(30) days of any disposition of any
shares acquired by exercise of the Option if such disposition occurs within two&nbsp;(2)
years from the Date of Award or within one&nbsp;(1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any federal, state or
local income or employment tax withholding obligations as a result of such an early
disposition, the Grantee agrees to satisfy the amount of such withholding in a manner
that  the Administrator prescribes.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp; <U>Restrictive
Legends</U>. The Grantee understands and agrees that unless the Shares are  presently
registered under the Securities Act of 1933, as amended, the Company may cause  the
legends set forth below or legends substantially equivalent thereto, to be placed upon
any certificate(s) evidencing ownership of the Shares together with any other legends
that  may be required by the Company or by state or federal securities laws:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
<TABLE WIDTH="90%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="3%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT  OF 1933
(THE &#147;ACT&#148;) OR ANY STATE SECURITIES LAWS AND MAY NOT BE  OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL  REGISTERED UNDER THE ACT
OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE  ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR  HYPOTHECATION IS IN COMPLIANCE THEREWITH.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp; <U>Successors
and Assigns</U>. The Company may assign any of its rights under this  Exercise Notice to
single or multiple assignees, and this agreement shall inure to the  benefit of the
successors and assigns of the Company. Subject to the restrictions on  transfer herein
set forth, this Exercise Notice shall be binding upon the Grantee and his  or her heirs,
executors, administrators, successors and assigns.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp; <U>Headings</U>.
The captions used in this Exercise Notice are inserted for convenience  and shall not be
deemed a part of this agreement for construction or interpretation.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp; <U>Dispute
Resolution</U>. The provisions of Section 18 of the Option Agreement shall be  the
exclusive means of resolving disputes arising out of or relating to this Exercise  Notice.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp; <U>Governing
Law; Severability</U>. This Exercise Notice is to be construed in accordance  with and
governed by the internal laws of the State of Colorado without giving effect to  any
choice of law rule that would cause the application of the laws of any jurisdiction
other than the internal laws of the State of Colorado to the rights and duties of the
parties. Should any provision of this Exercise Notice be determined by a court of law to
be illegal or unenforceable, such provision shall be enforced to the fullest extent
allowed by law and the other provisions shall nevertheless remain effective and shall
remain enforceable.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp; <U>Notices</U>.
Any notice required or permitted hereunder shall be given in writing and  shall be deemed
effectively given (i) when delivered personally; (ii) when sent by  facsimile, with
written confirmation of receipt by the sending facsimile machine; (iii)  when sent by
electronic transmission, upon written confirmation of receipt by the  receiving party;
(iv) five business days after being sent by registered or certified mail,  return receipt
requested, postage prepaid; or (v) two business days after deposit with a  private
industry express courier, with written confirmation of receipt, addressed to the  other
party at its address as shown below beneath its signature, or to such other address  as
such party may designate in writing from time to time to the other party.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp; <U>Further
Instruments</U>. The parties agree to execute such further instruments and to  take such
further action as may be reasonably necessary to carry out the purposes and  intent of
this agreement.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp; <U>Entire
Agreement</U>. The Notice, the Plan, the Option Agreement and Shareholders  Agreement, if
any, are incorporated herein by reference and together with this Exercise  Notice
constitute the entire agreement of the parties with respect to the subject matter  hereof
and supersede in their entirety all prior undertakings and agreements of the  Company and
the Grantee with respect to the subject matter hereof, and may not be modified  adversely
to the Grantee&#146;s interest except by means of a writing or writings  (including an
electronic or facsimile transmission) signed by the Company and the Grantee.  Nothing in
the Notice, the Plan, the Option Agreement and this Exercise Notice (except as  expressly
provided therein) is intended to confer any rights or remedies on any persons  other than
the parties.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-3-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
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<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Submitted by:</FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accepted by:</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">GRANTEE:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">ADA-ES, Inc., a Colorado corporation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By: __________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">____________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Title: ___________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Signature)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Address:</U></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Address:</U></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">____________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8100 SouthPark Way, Unit B</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">____________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Littleton, CO 80120</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Email:______________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Facsimile:__________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


<BR><BR><BR><BR><BR><BR><BR>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-4-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

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<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>EXHIBIT B</U></B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES
2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>INVESTMENT REPRESENTATION STATEMENT</U></B></FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="36%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">GRANTEE:</FONT></TD>
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">COMPANY:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">ADA-ES, Inc.</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">SECURITY:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">COMMON STOCK</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">AMOUNT:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">DATE:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD STYLE="Border-Top: Black 1px solid; Font-Size: 4pt">&nbsp;</TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">In
connection with the purchase of the above-described securities (the
&#147;Shares&#148;), the undersigned Grantee represents to the Company the
following:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; Grantee
is aware of the Company&#146;s business affairs and financial condition  and has acquired
sufficient information about the Company to reach an informed  and knowledgeable decision
to acquire the Shares. Grantee is acquiring these  Shares for investment for Grantee&#146;s
own account only and not with a view  to, or for resale in connection with, any &#147;distribution&#148; thereof
within the meaning of the Securities Act of 1933, as amended (the  &#147;Securities Act&#148;).</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; Grantee
acknowledges and understands that unless the Shares are registered under  the Securities
Act of 1933, as amended (the &#147;Securities Act&#148;), the  shares will constitute
&#147;restricted securities&#148; under the Securities  Act and will have not been
registered under the Securities Act in reliance upon  a specific exemption therefrom,
which exemption depends upon among other things,  the bona fide nature of Grantee&#146;s
investment intent as expressed herein.  Grantee further understands that the Shares must
be held indefinitely unless  they are subsequently registered under the Securities Act or
an exemption from  such registration is available. Grantee further acknowledges and
understands  that the Company is under no obligation to register the Shares. Grantee
understands that unless the Shares are registered under the Securities Act at  the time
of issuance, the certificate evidencing the Shares will be imprinted  with a legend which
prohibits the transfer of the Shares unless they are  registered or such registration is
not required in the opinion of counsel  satisfactory to the Company.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; Grantee
is familiar with the provisions of Rule 144, each promulgated under the  Securities Act,
which, in substance, permit limited public resale of  &#147;restricted securities&#148; acquired,
directly or indirectly from the  issuer thereof, in a non-public offering subject to the
satisfaction of certain  conditions.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the shares are not registered for resale under an effective registration  statement on
file with the Securities and Exchange Commission at the time of the  exercise of the
Option, then the Shares may be resold in certain limited  circumstances subject to the
provisions of Rule 144, which requires the resale  to occur not less than one year after
the later of the date the Shares were sold  by the Company or the date the Shares were
sold by an affiliate of the Company,  within the meaning of Rule 144; and, in the case of
acquisition of the Shares by  an affiliate, or by a non-affiliate who subsequently holds
the Shares less than  two (2) years, the satisfaction of the conditions set forth in
sections (1),  (2), (3) and (4) of the paragraph immediately above.</FONT></FONT></P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; Grantee
further understands that if all of the applicable requirements of Rule  144 are not
satisfied, that registration under the Securities Act, compliance  with Regulation A or
some other registration exemption will be required and  that, notwithstanding the fact
that Rule 144 is not exclusive, the Staff of the  Securities and Exchange Commission has
expressed its opinion that persons  proposing to sell private placement securities other
than in a registered  offering and otherwise than pursuant to Rules 144 will have a
substantial burden  of proof in establishing that an exemption from registration is
available for  such offers or sales, and that such persons and their respective brokers
who  participate in such transactions do so at their own risk. Grantee understands  that
no assurances can be given that any such other registration exemption will  be available
in such event.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
Grantee represents that Grantee is a resident of the state of ___________________.</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Signature
of Grantee:<BR><BR><BR>_______________________________________<BR><BR>_______________________________________<BR><U>[Print Name of Grantee]</U><BR><BR>Date: ___________________________, _____</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<BR><BR><BR><BR><BR>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>EXHIBIT C</U></B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Addendum
to the ADA-ES, Inc.<BR>2007 Equity Incentive Plan<BR>Option Agreement</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>For
California Residents Only</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Addendum is intended to comply with Section 25102(o) of the California  Corporations Code
and any rules or regulations promulgated thereunder by the  California Department of
Corporations. Any provision of the Plan or any Option  Agreement which is otherwise
inconsistent with this Addendum or Section 25102(o)  of the California Securities Code
shall, without further act or amendment by the  Company, be reformed to comply with
Section 25102(o) of the California  Securities Code. Both the Common Stock and the
Options that are the subject of  this Addendum if not yet qualified with the California
Department of  Corporations and not yet exempt from such qualification, are subject to
such  qualification, and the issuance of the Options prior to the qualification is
unlawful unless such issuance is exempt. The rights of the Company and the  Option holder
with respect to Options that are the subject of this Addendum are  expressly conditioned
on such exemption being available.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to those provisions set forth in the Plan, any Option Agreement and/or  the
Stockholders Agreement, Options granted to employees of the Company or an  Affiliate
resident in California (&#147;California Employees&#148;) will be  subject to the
following provisions:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 1" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1.</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Each
California Employee will receive financial statements of the Company annually during  the
period such California Employee has Options outstanding. This requirement does not  apply
to California Employees who are key employees whose duties in connection with the
Company or an Affiliate assure them access to equivalent information.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2.</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> California
Employees will have the right to exercise at least 20% of their Options per  year over 5
years from the date the Options are granted, subject to reasonable conditions  such as
continued employment. However, in the case of Options granted to California  Employees
who are officers, directors, managers, or consultants of the Company or an  Affiliate,
the Options may become fully exercisable, subject to reasonable conditions such  as
continued employment, at any time or during any period established by the Company or an
Affiliate.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3.</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Unless
employment of a California Employee is terminated &#147;for cause&#148; under  applicable
law, the terms of the Plan, the Option Agreement, the Option grant or  California Employee&#146;s
contract of employment, the right to exercise the California  Employee&#146;s Option in
the event of termination of his or her employment, to the extent  the California Employee
is entitled to exercise such Option on the date his or her  employment terminates, shall
be as follows:</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

<!-- *************************************************************************** -->
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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(i) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Such
Option may be exercised for at least 6 months from the date of such  termination, if
termination was caused by death or Disability.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Roman In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(ii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> Such
Option may be exercised for at least 30 days from the date of such  termination if
termination was caused by other than death or Disability.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
the foregoing, such Option may not be exercised after the expiration of the
stated period of the Option.</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4.</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> At
the discretion of the Committee, the Company may reserve to itself and/or its assignee
in the Option Agreement, or any other agreement with the California Employee, a right to
repurchase Common Stock held by a California Employee or his or her transferee in the
event of such California Employee&#146;s termination of employment with the Company or an
Affiliate at any time within 90 days after the date of such termination (or in the case
of  Common Stock issued upon exercise of an Option after such termination date, within 90
days  after the date of such exercise) for cash or cancellation of purchase money
indebtedness,  at:</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(A) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">no
less than the Fair Market Value of such Common Stock as of the date of such  termination
of employment, <U>provided</U> that such right to repurchase Common  Stock terminates
when the common Stock has become publicly traded; or</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(B) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> the
Option holder&#146;s original purchase price, <U>provided</U> that such  right to
repurchase Common Stock at the original purchase price lapses at the  rate of at lease
20% of the Common Stock subject to the Option per year over 5  years from the date the
Option is granted (without respect to the date the  Option was exercised or became
exercisable).</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
the foregoing, the Common Stock held by a California Employee who is an officer,
director, manager or consultant of the Company or an Affiliate may be subject to
additional or greater restrictions than those set forth in this item 4 above.</FONT></FONT></P>

<BR><BR><BR>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-2-</FONT></FONT> </P>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->


<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>RESTRICTED
STOCK PURCHASE AGREEMENT</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES,
INC. 2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><I>[Preliminary
Note: Language appearing in boldface and angle brackets in both the Notice and
the Agreement refers to provisions that are electable, and the language must be
reviewed and either included or removed, as appropriate, in the process of
finalizing all agreements.]</I></B></FONT></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>NOTICE OF
RESTRICTED STOCK PURCHASE AWARD</U></B></FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="65%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Grantee&#146;s Name and Address:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
have been granted the right to purchase shares of Common Stock of the Company,
subject to the terms and conditions of this Notice of Restricted Stock Purchase
Award (the &#147;Notice&#148;), under the ADA-ES, INC. 2007 Equity Incentive
Plan, as amended from time to time (the &#147;Plan&#148;) and the Restricted
Stock Purchase Award Agreement (the &#147;Agreement&#148;) attached hereto, as
follows. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice.</FONT></FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="28%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Award Number</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="67%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Grant Date</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vesting Commencement Date</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchase Price per Share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total Number of Shares</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">of Common Stock Awarded</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total Purchase Price</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_________________________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><U>Vesting
Schedule:</U></FONT></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to Grantee&#146;s Continuous Service and other limitations set forth in this
Notice, the Agreement and the Plan, the Shares will &#147;vest&#148; in
accordance with the following schedule:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="6%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>NOTE:
CHOOSE ONE OF THE FOLLOWING ALTERNATIVES, OR SOME OTHER VESTING SCHEDULE. ANY
INAPPLICABLE LANGUAGE SHOULD BE DELETED FOR FINALIZING THE DOCUMENTS FOR THE GRANT.</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="6%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;25%
of the Total Number of Shares of Common Stock Awarded shall vest twelve (12)  months
after the Vesting </B> <B>Commencement Date, and 1/48 of the Total Number  of Shares of
Common Stock Awarded shall vest each month thereafter </B> <B>until  the Shares are fully
vested.&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>


<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 1; page: 1" -->



<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="6%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;25%
of the Total Number of Shares of Common Stock Awarded shall vest twelve (12)  months
after the Vesting </B> <B>Commencement Date, and an additional 25% of the  Total Number
of Shares of Common Stock Awarded shall vest on each </B> <B>yearly  anniversary of the
Vesting Commencement Date thereafter.&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="6%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;25%
of the Total Number of Shares of Common Stock Awarded shall vest twelve (12)  months
after the Vesting </B> <B>Commencement Date, and 1/16 of the Total Number  of Shares of
Common Stock Awarded shall vest on each three (3) month </B> <B>anniversary of the
Vesting Commencement Date thereafter.&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="6%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;During
any authorized leave of absence, the vesting of the Shares shall be suspended  &lt;after
the leave of absence </B> <B>exceeds a period of &lt;ninety (90)&gt; days&gt;. Vesting of
the Shares shall resume upon the Grantee&#146;s termination  of the </B> <B>leave of
absence and return to Continuous Service. The Vesting  Schedule of the Shares shall be
extended to the </B> <B>length of the  suspension.&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush In 2" -->
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="6%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;In
the event of Grantee&#146;s change in status from Employee or Director to  Consultant,
the vesting of the Shares shall </B> <B>continue only to the extent  determined by the
Administrator as of such change in status.&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of this Notice and the Agreement, the term &#147;vest&#148; shall mean,
with respect to any Shares, that such Shares are no longer subject to repurchase
at the Purchase Price per Share; provided, however, that such Shares shall
remain subject to other restrictions on transfer set forth in the Agreement or
the Plan. Shares that have not vested are deemed &#147;<B>Restricted
Shares</B>.&#148; If the Grantee would become vested in a fraction of a
Restricted Share, such Restricted Share shall not vest until the Grantee becomes
vested in the entire Share. Notwithstanding the foregoing, the Shares subject to
this Notice will be subject to the provisions of the Agreement and Section 11 of
the Plan relating to the release of repurchase and forfeiture provisions in the
event of a Corporate Transaction or Change of Control.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree
that the Award is to be governed by the terms and conditions of this Notice, the
Plan, and the Agreement, <B>and that signed copies of this Notice and the
Agreement (including signed copies of Exhibits A, B and C thereto, as
applicable) have been exchanged between the parties.</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES, INC.</FONT></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">By:
______________________________________________________</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Title:
____________________________________________________</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->




<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">THE
GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SHALL VEST, IF AT ALL, ONLY
DURING THE PERIOD OF GRANTEE&#146;S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS AWARD OR ACQUIRING SHARES HEREUNDER). THE
GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE
AGREEMENT, NOR IN THE PLAN, SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT
TO CONTINUATION OF GRANTEE&#146;S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN
ANY WAY WITH THE GRANTEE&#146;S RIGHT OR THE COMPANY&#146;S RIGHT TO TERMINATE
GRANTEE&#146;S CONTINUOUS SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE, AND WITH
OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A
WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, GRANTEE&#146;S
STATUS IS AT WILL.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Grantee acknowledges receipt of a copy of the Plan and the Agreement (including
Exhibits A, B &amp; C thereto) and represents that he or she is familiar with
the terms and provisions thereof, and hereby accepts the Award subject to all of
the terms and provisions hereof and thereof. The Grantee has reviewed this
Notice, the Agreement and the Plan in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice and fully
understands all provisions of this Notice, the Agreement and the Plan. The
Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Agreement shall be resolved in accordance with Section
21 of the Agreement. The Grantee further agrees to notify the Company upon any
change in the residence address indicated in this Notice.</FONT></FONT></P>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="39%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="55%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: ______________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Signed: _________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Print Name: _____________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




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<P ALIGN="right"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><B>Award
Number: __________________</B></B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES
INC. 2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>RESTRICTED
STOCK PURCHASE AWARD AGREEMENT</U></B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp; <U>Purchase
of Shares</U>. ADA-ES INC., a Colorado corporation (the  &#147;Company&#148;), hereby
issues and sells to the Grantee (the  &#147;Grantee&#148;) named in the Notice of
Restricted Stock Purchase Award (the  &#147;Notice&#148;), the Total Number of Shares of
Common Stock Awarded set  forth in the Notice (the &#147;Shares&#148;) for a Purchase
Price per Share set  forth in the Notice (the &#147;Total Purchase Price&#148;), subject
to the  Notice, this Restricted Stock Purchase Award Agreement (the  &#147;Agreement&#148;)
and the terms and provisions of the Company&#146;s 2007  Equity Incentive Plan, as
amended from time to time (the &#147;Plan&#148;),  which is incorporated herein by
reference. Payment for the Shares in the amount  of the Total Purchase Price set forth in
the Notice shall be made to the Company  upon execution of the Notice. Unless otherwise
defined herein, the terms defined  in the Plan shall have the same defined meanings in
this Agreement. All Shares  sold hereunder will be deemed issued to the Grantee as fully
paid and  nonassessable shares, and the Grantee will have the right to vote the Shares at
meetings of the Company&#146;s shareholders. The Company shall pay any  applicable stock
transfer taxes imposed upon the issuance of the Shares to the  Grantee hereunder.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp; <U>Method
of Payment</U>. Payment of the Total Purchase Price shall be by any of  the following, or
a combination thereof, at the election of the Grantee;  provided, however, that such
payment method does not then violate an Applicable  Law:</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp; cash;</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)</FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp; check;
or</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>(c)</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;provided
that the Total Purchase Price for the Shares being purchased  exceeds &lt;______ thousand
dollars ($___,000)&gt;, payment </B> <B>pursuant to  a promissory note as described below.</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>(i)</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="82%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> <B>The
promissory note shall have a term of _____ (__) years with principal and  interest
payable in _______ (__) equal annual installments;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>(ii)</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="82%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> <B>The
promissory note shall bear interest at the minimum rate required by the  federal tax laws
to avoid the imputation of >interest income to the  Company and compensation
income to the Grantee;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>(iii)</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="82%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>The
Grantee shall be personally liable for payment of the promissory note and  the promissory
note shall be secured by the Shares purchased upon  delivery of the promissory
note, or such other collateral of equal or greater value, in a manner
satisfactory to the Administrator with such  documentation as the Administrator
may request; and</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>



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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>(iv)</B></FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="82%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>The
promissory note shall become due and payable upon the occurrence of any  or all of the
following events: (A) the sale or >transfer of the Shares  purchased with the
promissory note; (B)&nbsp;termination of the Grantee&#146;s  Continuous Service
for any reason other than death or disability; or (C)  the first anniversary of the
termination of the Grantee&#146;s  Continuous Service due to death or disability.&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="12%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>NOTE:
If the Company is going to extend credit, it must confirm that it complies with any
applicable Federal Reserve requirements relating to the extension of credit&gt;</B></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;
<U>Transfer Restrictions</U>. The Shares sold to the Grantee hereunder may not  be sold,
transferred by gift, pledged, hypothecated, or otherwise transferred or  disposed of by
the Grantee prior to the date when the Shares become vested  pursuant to the Vesting
Schedule set forth in the Notice. Any attempt to  transfer Restricted Shares in violation
of this Section&nbsp;3 will be null and  void and will be disregarded. Before the Shares
fully vest, the Shares will be  subject to the Company&#146;s Repurchase Rights as set
forth in Section 9 below.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;
<U>Escrow of Stock<B></B></U><B>.</B> For purposes of facilitating the  enforcement of
the provisions of this Agreement, the Grantee agrees, immediately  upon receipt of the
certificate(s) for the Restricted Shares, to deliver such  certificate(s), together with
an Assignment Separate from Certificate in the  form attached hereto as <B><U>Exhibit A</U></B>,
executed in blank by the  Grantee and the Grantee&#146;s spouse (if required for
transfer) with respect to  each such stock certificate, to the Secretary or Assistant
Secretary of the  Company, or their designee, to hold in escrow for so long as such
Restricted  Shares have not vested pursuant to the Vesting Schedule set forth in the
Notice  and continue to be subject to the Company&#146;s Repurchase Rights, with the
authority to take all such actions and to effectuate all such transfers and/or  releases
as may be necessary or appropriate to accomplish the objectives of this  Agreement in
accordance with the terms hereof. The Grantee hereby acknowledges  that the appointment
of the Secretary or Assistant Secretary of the Company (or  their designee) as the escrow
holder hereunder with the stated authorities is a  material inducement to the Company to
make this Agreement and that such  appointment is coupled with an interest and is
accordingly irrevocable. The  Grantee agrees that such escrow holder shall not be liable
to any party hereto  (or to any other party) for any actions or omissions unless such
escrow holder  is grossly negligent relative thereto. The escrow holder may rely upon any
letter, notice or other document executed by any signature purported to be  genuine and
may resign at any time. Upon the vesting of all Restricted Shares  and termination of the
Company&#146;s &lt;Right of First Refusal&gt; &lt;and  Repurchase Right&gt;, the escrow
holder will, without further order or  instruction, transmit to the Grantee the
certificate evidencing such Shares,  subject, however, to satisfaction of any withholding
obligations provided in  Section 6 below, <B>&lt;and subject to the terms of any security
agreement  executed in connection with the purchase of the Shares by means of a
promissory  note&gt;</B>.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;
<U>Distributions</U>. Except as set forth in Section 9(e), the Company shall  disburse to
the Grantee all dividends and other distributions paid or made in  cash with respect to
the Shares and Additional Securities (whether vested or  not), less any applicable
withholding obligations.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;
<U>Section 83(b) Election and Withholding of Taxes</U>. The Grantee shall  provide the
Administrator with a copy of any timely election made pursuant to  Section&nbsp;83(b) of
the Internal Revenue Code or similar provision of state  law (collectively, an &#147;83(b)
Election&#148;), a form of which is attached  hereto as <B><U>Exhibit B</U></B>.
If the Grantee makes a timely 83(b)  Election, the Grantee shall immediately pay the
Company the amount necessary to  satisfy any applicable foreign, federal, state, and
local income and employment  tax withholding obligations. If the Grantee does not make a
timely 83(b)  Election, the Grantee shall, as Restricted Shares vest, or at the time
withholding is otherwise required by any Applicable Law, pay the Company the  amount
necessary to satisfy any applicable foreign, federal, state, and local  income and
employment tax withholding obligations. The Grantee may satisfy his  or her withholding
obligations by authorizing the Company to transfer to the  Company the number of vested
Shares held in escrow that have an aggregate Fair  Market Value equal to the withholding
obligations. The Grantee hereby represents  that he or she understands (a)&nbsp;the
contents and requirements of the 83(b)  Election, (b)&nbsp;the application of Section&nbsp;83(b)
to the receipt of the  Shares by the Grantee pursuant to this Agreement, (c) the nature
of the election  to be made by the Grantee under Section&nbsp;83(b) and the consequences
of  either making or not making the 83(b) Election, and (d)&nbsp;the effect and
requirements of the 83(b) Election under relevant state and local tax laws. The  Grantee
further represents that he or she <B><U>intends OR does not  intend</U></B> to
file an election pursuant to Section&nbsp;83(b) with  the Internal Revenue Service within
thirty (30)&nbsp;days following the date of  this Agreement, and submit a copy of such
election with his or her federal tax  return for the calendar year in which the date of
this Agreement falls.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>[NOTE: Grantee
must cross through the inapplicable language in the preceding paragraph, and initial
here: _______________________.]</B></FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;
<U>Additional Securities</U>. Any securities received as the result of ownership  of the
Restricted Shares (the &#147;Additional Securities&#148;), including, but  not by way of
limitation, warrants, options and securities received as a stock  dividend or stock
split, or as a result of a recapitalization or reorganization  or other similar change in
the Company&#146;s capital structure, shall be  retained in escrow in the same manner and
subject to the same conditions and  restrictions as the Restricted Shares with respect to
which they were issued,  including, without limitation, the Vesting Schedule set forth in
the Notice and  the Company&#146;s Repurchase Rights. The Grantee shall be entitled to
direct  the Company to exercise any warrant, option or other right received as
Additional Securities upon supplying the funds necessary to do so, in which  event the
securities so purchased shall constitute Additional Securities, but  the Grantee may not
direct the Company to sell any such warrant, option or  right. If Additional Securities
consist of a convertible security, the Grantee  may exercise any conversion right, and
any securities so acquired shall  constitute Additional Securities. Appropriate
adjustments to reflect the  distribution of Additional Securities shall be made to the
price per share to be  paid upon the exercise of the Repurchase Right in order to reflect
the effect of  any such transaction upon the Company&#146;s capital structure. In the
event of  any change in certificates evidencing the Shares or the Additional Securities
by  reason of any recapitalization, reorganization or other transaction that results  in
the creation of Additional Securities, the escrow holder is authorized to  deliver to the
issuer the certificates evidencing the Shares or the Additional  Securities in exchange
for the certificates of the replacement securities.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp; &nbsp;
<U>Company&#146;s Repurchase Rights</U>.</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <U>Grant
of Repurchase Rights</U>. The Company is hereby granted the right to  repurchase all or
any portion of the Shares that are Restricted Shares (the  &#147;Repurchase Right&#148;)
exercisable at any time during the period  commencing on the date the Grantee&#146;s
Continuous Service terminates for any  reason, with or without cause (including death or
disability) (the  &#147;Termination Date&#148;) and ending ninety (90) days after the
first date  on which the Repurchase Right may be exercised without incurring an
accounting  expense with respect to such exercise (the &#147;Share Repurchase Period&#148;).</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <U>Exercise
of the Repurchase Right</U>. The Repurchase Right shall be  exercisable by written notice
delivered to the Grantee prior to the expiration  of the Share Repurchase Period. The
notice shall indicate the number of Shares  to be repurchased and the date on which the
repurchase is to be effected, such  date to be not later than the last day of the Share
Repurchase Period. On the  date on which the repurchase is to be effected, the Company
and/or its assigns  shall pay to the Grantee in cash or cash equivalents (including the
cancellation  of any purchase-money indebtedness) for Restricted Shares being
repurchased, the  Purchase Price per Share previously paid by the Grantee to the Company
for such  Shares. Upon such payment to the Grantee or into escrow for the benefit of the
Grantee, the Company and/or its assigns shall become the legal and beneficial  owner of
the Shares being repurchased and all rights and interest thereon or  related thereto, and
the Company shall have the right to transfer to its own  name or its assigns the number
of Shares being repurchased, without further  action by the Grantee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; <U>Assignment</U>.
Whenever the Company shall have the right to purchase Shares  under this Repurchase
Right, the Company may designate and assign one or more  employees, officers, directors
or shareholders of the Company or other persons  or organizations, to exercise all or a
part of the Company&#146;s Repurchase  Right.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; <U>Termination
of the Repurchase Right</U>. The Repurchase Right shall terminate  with respect to any
Shares for which it is not timely exercised. In addition,  the Repurchase Right shall
terminate, and cease to be exercisable, with respect  to all vested Shares upon<B> </B>the
date on which such shares cease to be  Restricted Shares.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp; <U>Corporate
Transaction/ Change of Control</U>. Immediately prior to the  consummation of a Corporate
Transaction described in Section 2(q)(i), (ii) or  (iii) of the Plan or a Change of
Control, the Repurchase Right as to all vested  Shares shall automatically lapse in its
entirety, except to the extent this  Agreement is Assumed, in which case the Repurchase
Right shall apply to the new  capital stock or other property received in exchange for
the vested Shares in  consummation of the Corporate Transaction or Change of Control, but
only to the  extent the vested Shares are at the time covered by such right. The
Repurchase Right as to Restricted Shares shall apply to the new capital stock or  other
property (including cash paid other than as a regular cash dividend)  received in
exchange for the Shares in consummation of the Corporate Transaction  and such stock or
property shall be deemed Additional Securities for purposes of  this Agreement, but only
to the extent the Shares are at the time covered by  such Repurchase Right. Appropriate
adjustments shall be made to the price per  share payable upon exercise of the Repurchase
Right to reflect the effect of the  Corporate Transaction or Related Entity Disposition.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4</FONT></FONT> </P>


<P style="PAGE-BREAK-BEFORE: always">
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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>&lt;NOTE:
This section does not contemplate the termination of the Repurchase Right for  unvested
Shares upon a Corporate Transaction or Related Entity  Disposition. If the
Repurchase Right for unvested Shares were to terminate on an  acquisition, the Award is
in effect &#147;accelerated,&#148; in that the  Grantee would receive full
consideration for the shares on a Corporate  Transaction although the vesting
time periods have not elapsed.  Consideration should be given to whether either of the
following provisions  should be added to all agreements or to agreements for
specific  individuals. &lt;To the extent that this Agreement will not be Assumed, the
Repurchase Right as to such Restricted Shares shall automatically  lapse.&gt; Another
possibility is to give the Company the <U>option</U> to  repurchase the unvested
Shares (at the Exercise Price per Share for the  unvested Shares) in a Corporate
Transaction if the Agreement is not Assumed. [Such a provision would mean that
the Grantee only receives the  acquisition consideration for the vested shares and results
in the  Grantee receiving the consideration that he would have received if he had vested
options rather than purchased shares.] &lt;To the extent that this  Agreement is
not Assumed, the Company shall have the Repurchase Right as to such  Restricted Shares
pursuant to Section 9(a) of this Agreement, except  that the Share Repurchase Period
shall be the sixty (60) day period immediately preceding the consummation of the
Corporate Transaction or  Related Entity Disposition.&gt;</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;
<U>Stop-Transfer Notices</U>. In order to ensure compliance with the  restrictions on
transfer set forth in this Agreement, the Notice or the Plan,  the Company may issue
appropriate &#147;stop transfer&#148; instructions to its  transfer agent, if any, and,
if the Company transfers its own securities, it may  make appropriate notations to the
same effect in its own records.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;
<U>Refusal to Transfer</U>. The Company shall not be required (i) to transfer on  its
books any Shares that have been sold or otherwise transferred in violation  of any of the
provisions of this Agreement or (ii) to treat as owner of such  Shares or to accord the
right to vote or pay dividends to any purchaser or other  transferee to whom such Shares
shall have been so transferred.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;
<U>Restrictive Legends</U>. Grantee understands and agrees that the Company may  cause
the legends set forth below or legends substantially equivalent thereto,  to be placed
upon any certificate(s) evidencing ownership of the Shares, as  applicable, together with
any other legends that may be required by the Company  or by state or federal securities
laws:</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="12%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT  OF 1933
(THE &#147;ACT&#148;) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE  TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT  OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES,  SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE  THEREWITH.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">5</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="12%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON  TRANSFER,
A REPURCHASE RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH  IN THE RESTRICTED
STOCK PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL  HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE  OF THE ISSUER SUCH TRANSFER
RESTRICTIONS AND REPURCHASE RIGHT ARE BINDING ON  TRANSFEREES OF THESE SHARES.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;
<U>Lock-Up Agreement</U>.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <U>Agreement</U>.
Grantee, if such person is an officer, director or owner of  greater than 5% of the
Common Stock of the Company at such time (including, for  purposes of determining stock
ownership, shares of Common Stock issuable upon  exercise of options or warrants, or
conversion of securities convertible into  shares of Common Stock), and if requested by
the Company and the lead  underwriter of any public offering of the Common Stock or other
securities of  the Company (the &#147;Lead Underwriter&#148;), hereby irrevocably agrees
not to  sell, contract to sell, grant any option to purchase, transfer the economic risk
of ownership in, make any short sale of, pledge or otherwise transfer or dispose  of any
interest in any Common Stock or any securities convertible into or  exchangeable or
exercisable for or any other rights to purchase or acquire  Common Stock (except Common
Stock included in such public offering or acquired  on the public market after such
offering) during the 180-day period following  the effective date of a registration
statement of the Company filed under the  Securities Act of 1933, as amended, or such
shorter period of time as the Lead  Underwriter shall specify. Grantee further agrees to
sign such documents as may  be requested by the Lead Underwriter to effect the foregoing
and agrees that the  Company may impose stop-transfer instructions with respect to such
Common Stock  subject until the end of such period. The Company and Grantee acknowledge
that  each Lead Underwriter of a public offering of the Company&#146;s stock, during  the
period of such offering and for the 180-day period thereafter, is an  intended
beneficiary of this Section 13.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <U>No
Amendment Without Consent of Underwriter</U>. During the period from  identification as a
Lead Underwriter in connection with any public offering of  the Company&#146;s Common
Stock until the earlier of (i) the expiration of the  lock-up period specified in Section&nbsp;13(a)
in connection with such offering  or (ii) the abandonment of such offering by the Company
and the Lead  Underwriter, the provisions of this Section 13 may not be amended or waived
except with the consent of the Lead Underwriter.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;
<U>Grantee&#146;s Representations</U>. In the event the Shares purchasable  pursuant to
this Agreement have not been registered under the Securities Act of  1933, as amended, at
the time of purchase, the Grantee shall, if required by the  Company, concurrently with
the purchase of the Shares, deliver to the Company  his or her Investment Representation
Statement in the form attached hereto as  <B><U>Exhibit </U></B><U></U>C.</FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">6</FONT></FONT> </P>


<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;
<U>Transferability</U>. No benefit payable under, or interest in, this Agreement  or in
the shares of Common Stock that are scheduled to be issued hereunder shall  be subject in
any manner to anticipation, alienation, sale, transfer,  assignment, pledge, encumbrance
or charge and any such attempted action shall be  void and no such benefit or interest
shall be, in any manner, liable for, or  subject to, your or your beneficiary&#146;s
debts, contracts, liabilities or  torts; <I>provided, however</I>, nothing in this
Section 14 shall prevent  transfer (i)&nbsp;by will, (ii)&nbsp;by applicable laws of
descent and  distribution or (iii)&nbsp;to an Alternate Payee to the extent that a QDRO
so  provides, as further described in Section&nbsp;20 of the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;
<U>No Contract for Employment</U>. This Agreement is not an employment or  service
contract and nothing in this Agreement shall be deemed to create in any  way whatsoever
any obligation of the Grantee to continue in the employ or  service of the Company, or of
the Company to continue to employ Grantee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;&nbsp;&nbsp;
<U>Applicability of Plan</U>. This Agreement is subject to all the provisions of  the
Plan, which provisions are hereby made a part of this Agreement, and is  further subject
to all interpretations, amendments, rules and regulations which  may from time to time be
promulgated and adopted pursuant to the Plan. In the  event of any conflict between the
provisions of this Agreement and those of the  Plan, the provisions of the Plan shall
control.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. &nbsp;&nbsp;&nbsp;
<U>No Compensation Deferral</U>. This Award is not intended to constitute  &#147;nonqualified
deferred compensation&#148; within the meaning of Code  Section&nbsp;409A, but rather is
intended to be exempt from the application of  Code Section&nbsp;409A. To the extent that
the Award is nevertheless deemed to  be subject to Code Section&nbsp;409A for any reason,
this Award shall be  interpreted in accordance with Code Section&nbsp;409A and Department
of Treasury  regulations and other interpretive guidance issued thereunder, including
without  limitation any such regulations or other guidance that may be issued after the
Grant Date. Notwithstanding any provision herein to the contrary, in the event  that
following the Grant Date, the Administrator (as defined in the Plan)  determines that the
Award may be or become subject to Code Section&nbsp;409A,  the Administrator may adopt
such amendments to the Plan and/or this Agreement or  adopt other policies and procedures
(including amendments, policies and  procedures with retroactive effect), or take any
other actions, that the  Administrator determines are necessary or appropriate to (a)&nbsp;exempt
the  Plan and/or the Award from the application of Code Section&nbsp;409A and/or
preserve the intended tax treatment of the benefits provided with respect to  this
option, or (b)&nbsp;comply with the requirements of Code Section&nbsp;409A.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;&nbsp;&nbsp;
<U>Acknowledgement</U>. By electing to accept this Agreement, you acknowledge  receipt of
this Agreement and hereby confirm your understanding that the terms  set forth in this
Agreement constitute, subject to the terms of the Plan, which  terms shall control in the
event of any conflict between the Plan and this  Agreement, the entire agreement and
understanding of the parties with respect to  the matters contained herein and supersede
any and all prior agreements,  arrangements and understandings, both oral and written,
between the parties  concerning the subject matter of this Agreement. The Company may, in
its sole  discretion, decide to deliver any documents related to Units awarded under the
Plan or future Units that may be awarded under the Plan by electronic means or  request
your consent to participate in the Plan by electronic means. You hereby  consent to
receive such documents by electronic delivery and agree to  participate in the Plan
through an on-line or electronic system established and  maintained by the Company or
another third party designated by the Company.</FONT></FONT></P>


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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">7</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>


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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;&nbsp;&nbsp;
<U>Entire Agreement: Governing Law</U>. The Notice, the Plan and this Agreement
constitute the entire agreement of the parties with respect to the subject  matter hereof
and supersede in their entirety all prior undertakings and  agreements of the Company and
the Grantee with respect to the subject matter  hereof, and may not be modified adversely
to the Grantee&#146;s interest except  by means of a writing signed by the Company and
the Grantee. These agreements  are to be construed in accordance with and governed by the
internal laws of the  State of Delaware, without giving effect to any choice of law rule
that would  cause the application of the laws of any jurisdiction other than the internal
laws of the State of Delaware to the rights and duties of the parties. Should  any
provision of the Notice or this Agreement be determined by a court of law to  be illegal
or unenforceable, the other provisions shall nevertheless remain  effective and shall
remain enforceable.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;&nbsp;&nbsp;
<U>Headings</U>. The captions used in this Agreement are inserted for  convenience and
shall not be deemed a part of this Agreement for construction or  interpretation.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;&nbsp;&nbsp;
<U>Dispute Resolution</U> The provisions of this Section 21 shall be the  exclusive means
of resolving disputes arising out of or relating to the Notice,  the Plan and this
Agreement. The Company, the Grantee, and the Grantee&#146;s  assignees (the &#147;parties&#148;)
shall attempt in good faith to resolve any  disputes arising out of or relating to the
Notice, the Plan and this Agreement  by negotiation between individuals who have
authority to settle the controversy.  Negotiations shall be commenced by either party by
notice of a written statement  of the party&#146;s position and the name and title of the
individual who will  represent the party. Within thirty (30) days of the written
notification, the  parties shall meet at a mutually acceptable time and place, and
thereafter as  often as they reasonably deem necessary, to resolve the dispute. If the
dispute  has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or relating to the Notice, the Plan or this  Agreement shall
be brought in the Courts of the State of Colorado, and the  parties shall submit to the
jurisdiction of such courts. The parties irrevocably  waive, to the fullest extent
permitted by law, any objection the party may have  to the laying of venue for any such
suit, action or proceeding brought in such  court. THE PARTIES ALSO EXPRESSLY WAIVE ANY
RIGHT THEY HAVE OR MAY HAVE TO A  JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions  of this Section 17 shall for any reason be held invalid or
unenforceable, it is  the specific intent of the parties that such provisions shall be
modified to the  minimum extent necessary to make it or its application valid and
enforceable.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;&nbsp;&nbsp;
<U>Compliance with Laws</U>. Notwithstanding anything contained in this  Agreement or the
Plan, the Company may not take any actions hereunder, and no  award shall be granted,
that would violate the Securities Act of 1933, as  amended (the &#147;<U>Act</U>&#148;),
the Securities Exchange Act of 1934, as  amended, the Code, or any other securities or
tax or other applicable law or  regulation. Notwithstanding anything to the contrary
contained herein, the  shares issuable upon vesting shall not be issued unless such
shares are then  registered under the Act, or, if such shares are not then so registered,
the  Company has determined that such vesting and issuance would be exempt from the
registration requirements of the Act.</FONT></FONT></P>


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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">8</FONT></FONT> </P>


<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>


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<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.&nbsp;&nbsp;&nbsp;
<U>Notices</U>. Any notice required or permitted hereunder shall be given in  writing and
shall be deemed effectively given upon personal delivery or upon  deposit in the United
States mail by certified mail (if the parties are within  the United States) or upon
deposit for delivery by an internationally recognized  express mail courier service (for
international delivery of notice), with  postage and fees prepaid, addressed to the other
party at its address as shown  beneath its signature in the Notice, or to such other
address as such party may  designate in writing from time to time to the other party.</FONT></FONT></P>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Signature
of Grantee:</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">_____________________________________</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">_____________________________________<BR><U>[Printed Name of Grantee]</U></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Date:
___________________ , ________ </FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES,
Inc.:</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">By:</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">_____________________________________<BR><U>[Printed Name and Title of Officer]</U></FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Date:
_____________________ , _______ </FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">9</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>EXHIBIT
A</B></FONT></FONT></P>

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<A NAME="A009"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>STOCK
ASSIGNMENT SEPARATE FROM CERTIFICATE</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>[Please
sign this document but do not date it. The date and information of the
transferee will be completed if and when the shares are assigned.]</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, ____________________________ hereby sells, assigns and transfers
unto _______________________, __________________ (____)&nbsp;shares of the
Common Stock of ADA-ES, Inc., a Colorado corporation (the &#147;Company&#148;),
standing in his name on the books of, the Company represented by Certificate
No.&nbsp;______ herewith, and does hereby irrevocably constitute and appoint the
Secretary of the Company attorney to transfer the said stock in the books of the
Company with full power of substitution.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">DATED:&nbsp;&nbsp;&nbsp;
________________</FONT></FONT></P>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">______________________________________________</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
undersigned spouse of ____________________ joins in this assignment.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Dated:&nbsp;&nbsp;&nbsp;
___________________</FONT></FONT></P>

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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">_________________________________<BR>(Spouse
of ________________________)</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>


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<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>EXHIBIT
B</U></B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ELECTION
UNDER SECTION 83(b)  <BR>OF THE INTERNAL REVENUE CODE OF 1986</FONT></FONT> </P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned taxpayer hereby elects, pursuant to the Internal Revenue Code, to  include in
gross income for 20__ the amount of any compensation taxable in  connection with the
taxpayer&#146;s receipt of the property described below:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;
The  name, address, taxpayer identification number and taxable year of the  undersigned
are:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TAXPAYER&#146;S
NAME:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPOUSE&#146;S
NAME:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TAXPAYER&#146;S
SOCIAL SECURITY NO.:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPOUSE&#146;S
SOCIAL SECURITY NO.:</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TAXABLE
YEAR:  Calendar Year 20____</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADDRESS:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
The  property which is the subject of this election is __________________ shares of
common stock of ADA-ES, Inc..</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
The  property was transferred to the undersigned on ____________, 20__.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
The property  is subject to the following restrictions.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
The  fair market value of the property at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms will never  lapse)
is:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$_______
per share x ________ shares = $___________.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.
The  undersigned paid $______ per share x&nbsp;_________ shares for the property
transferred or a total of $______________.</FONT></FONT></P>


<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
undersigned has submitted a copy of this statement to the person for whom the
services were performed in connection with the undersigned&#146;s receipt of the
above-described property. The undersigned taxpayer is the person performing the
services in connection with the transfer of said property.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned will file this election with the Internal Revenue Service office to
which he files his annual income tax return not later than 30 days after the
date of transfer of the property. A copy of the election also will be furnished
to the person for whom the services were performed. Additionally, the
undersigned will include a copy of the election with his income tax return for
the taxable year in which the property is transferred. The undersigned
understands that this election will also be effective as an election under
_____________ law.</FONT></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="43%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _______________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Taxpayer</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The undersigned
spouse of taxpayer joins in this election.</FONT></FONT></P>

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<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="43%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _______________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">___________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Spouse of Taxpayer</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2</FONT></FONT> </P>


<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>


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<!-- MARKER FORMAT-SHEET="Head Major" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>EXHIBIT
C</U></B></FONT></FONT></P>

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<A NAME="A013"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ADA-ES, INC.
2007 EQUITY INCENTIVE PLAN</B></FONT></FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>INVESTMENT
REPRESENTATION STATEMENT</U></B></FONT></FONT></P>


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<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="22%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">GRANTEE</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">:</FONT></TD>
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="58%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_______________________________________________</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">COMPANY</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_______________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">SECURITY</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">COMMON STOCK</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">AMOUNT</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">______________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">DATE</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">______________________________________________</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>

<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the purchase of the above-listed Securities, the undersigned Grantee
represents to the Company the  following:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;
Grantee is aware of the Company&#146;s business affairs and financial condition and has
acquired sufficient information about the  Company to reach an informed and knowledgeable
decision to acquire the Securities.  Grantee is acquiring these Securities for
investment for Grantee&#146;s own account only and not with a view to, or for resale in
connection with, any &#147;distribution&#148; thereof  within the meaning of the
Securities Act of 1933, as amended (the &#147;Securities Act&#148;).</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;
Grantee acknowledges and understands that the Securities constitute &#147;restricted
securities&#148; under the Securities Act and  have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption depends
upon  among other things, the bona fide nature of Grantee&#146;s investment intent as
expressed herein.  In this connection, Grantee  understands that, in the view of the
Securities and Exchange Commission, the statutory basis for such exemption may be
unavailable  if Grantee&#146;s representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains  period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the market
price of the  Securities, or for a period of one year or any other fixed period in the
future.  Grantee further understands that the Securities  must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption from
such registration is  available.  Grantee further acknowledges and understands that the
Company is under no obligation to register the Securities.  Grantee understands that the
certificate evidencing the Securities will be imprinted with a legend which prohibits the
transfer of  the Securities unless they are registered or such registration is not
required in the opinion of counsel satisfactory to the Company.</FONT></FONT></P>


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<HR align=center width="100%" color=#999999 SIZE=3>




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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;
Grantee is familiar with the provisions of Rule 144 promulgated under the Securities Act,
which, in substance, permit  limited public resale of &#147;restricted securities&#148; acquired,
directly or indirectly from the issuer thereof, in a non-public offering  subject to the
satisfaction of certain conditions.  The Securities may be resold in certain limited
circumstances subject to the  provisions of Rule 144, which requires the resale to occur
not less than one year after the later of the date the Securities were  sold by the
Company or the date the Securities were sold by an affiliate of the Company, within the
meaning of Rule 144; and, in the  case of acquisition of the Securities by an affiliate,
or by a non-affiliate who subsequently holds the Securities less than two  years, (1) the
resale being made through a broker in an unsolicited &#147;broker&#146;s transaction&#148; or
in transactions directly with a market  maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability
of  certain public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding  the limitations specified in Rule 144(e),
and (4) the timely filing of a Form 144, if applicable.  Other restrictions may also
apply  to sales of the Securities, and Grantee understands that the Securities may not be
readily resold, and that delays may occur in  selling the Securities, even if they are
eligible for sale under Rule 144.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;
Grantee further understands that in the event all of the applicable requirements of Rule
144 are not satisfied, registration  under the Securities Act, compliance with Regulation
A, or some other registration exemption will be required; and that,  notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission
has expressed its  opinion that persons proposing to sell private placement securities
other than in a registered offering and otherwise than pursuant  to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration is
available for such offers  or sales, and that such persons and their respective brokers
who participate in such transactions do so at their own risk.  Grantee  understands that
no assurances can be given that any such other registration exemption will be available
in such event, and that the  Securities may not be salable by Grantee.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;
Grantee represents that he is a resident of the State of ____________________.</FONT></FONT></P>


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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Signature
of Grantee:</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">________________________________________________</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">________________________________________________<BR>
[Print Name]</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Date:
__________________________________________ </FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2</FONT></FONT> </P>

<P style="PAGE-BREAK-BEFORE: always">
<HR align=center width="100%" color=#999999 SIZE=3>




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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ADA-ES,
INC.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">By:
____________________________________________ </FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>



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<TR VALIGN="TOP">
     <TD WIDTH="50%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Title:
_________________________________________ </FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3</FONT></FONT> </P>


<P style="PAGE-BREAK-BEFORE: always"></P>
<HR align=center width="100%" color=#999999 SIZE=3>

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<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="22%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">PROXY</FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="50%" ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">For an Annual Meeting of Shareholders of</FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">PROXY</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">ADA-ES, INC.</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD></TD><TD></TD>
</TR>
<TR VALIGN="BOTTOM">
     <TD>&nbsp;</TD><TD></TD>
     <TD></TD><TD></TD>
     <TD></TD><TD></TD>
</TR>
</TABLE>

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<A NAME="A086"></A>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><BR>Proxy
Solicited on Behalf of the Board of Directors</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>This
proxy will be voted in respect of the matters listed in accordance with the
choice, if any, indicated in the spaces provided. If no choice is indicated, the
proxy will be voted for such matter. If any amendments or variations are to be
voted on, or any further matter comes before the meeting, this proxy will be
voted according to the best judgment of the person voting the proxy at the
meeting. This form should be read in conjunction with the accompanying Notice of
Meeting and Proxy Statement.</B></FONT></FONT></P>

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<A NAME="A087"></A>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>NOTES:</B></FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1.&nbsp;&nbsp;&nbsp;
Please date and sign (exactly as the shares represented by this Proxy are
registered) and return promptly. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by the President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person. If no date is stated by
the shareholder(s), the Proxy is deemed to bear the date upon which it was
mailed by management to the shareholder(s).</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2. &nbsp;&nbsp;&nbsp;To
be valid, this Proxy form, duly signed and dated, must arrive at the office of
the Company&#146;s transfer agent, Computershare Investor Services, 350 Indiana
Street, Suite 800, Golden, Colorado 80401, not less than forty-eight (48) hours
(excluding Saturdays, Sundays and holidays) before the day of the Meeting or any
postponement or adjournment thereof.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">The
undersigned shareholder of ADA-ES, Inc. (the &#147;Company&#148;) hereby
appoints Michael D. Durham and Rollie J. Peterson or, failing them, Mark H.
McKinnies, as nominee of the undersigned to attend, vote and act for and in the
name of the undersigned at the Annual Meeting of the Shareholders of the Company
(the &#147;Meeting&#148;) to be held at the offices of the Company, 8100
SouthPark Way, Unit B, Littleton, Colorado on Tuesday, June 19, 2007, at the
hour of 9:00 a.m. (local time), and at any postponement or adjournment thereof,
and the undersigned hereby revokes any former proxy given to attend and vote at
the meeting.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">THE
NOMINEE IS HEREBY INSTRUCTED TO VOTE AS FOLLOWS WITH RESPECT TO THE FOLLOWING
MATTERS PROPOSED BY THE COMPANY:</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1.&nbsp;&nbsp;&nbsp; Proposal
to elect the following nominees to the board of directors:</FONT></FONT></P>

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<TR VALIGN="TOP">
     <TD WIDTH="40%">&nbsp;</TD>
     <TD><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Nominees:<BR>Jeffrey C. Smith <BR>Robert N. Caruso <BR>Michael D. Durham <BR>John W. Eaves <BR>Derek C. Johnson
<BR>Ronald B. Johnson <BR>Mark H. McKinnies <BR>Rollie J. Peterson <BR>Richard J. Swanson</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  FOR All
NOMINEES</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><BR>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  WITHHOLD
AUTHORITY FOR ALL NOMINEES</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  FOR ALL
NOMINEES, EXCEPT THE FOLLOWING:</FONT></FONT></P>

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<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2.&nbsp;&nbsp;&nbsp;Proposal
to consider and approve the 2007 Equity Incentive Plan, including approval of
shares of common stock reserved for issuance under the Plan.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  FOR</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  AGAINST</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  ABSTAIN</FONT></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" -->
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3.&nbsp;&nbsp;&nbsp;
Proposal to approve the Stock Issuance Plan for the issuance of shares of the
Company&#146;s common stock in excess of 20% of the amount of our outstanding
shares of common stock and not more than 3 million shares, including shares of
common stock underlying options and warrants, in connection with raising capital
for implementing our business plan for being the market leader in mercury
control technology by manufacturing injection equipment and activated carbon for
our power plant customers. This includes possible acquisition of equipment
fabricator(s) and development of a &#147;Greenfield&#148; activated carbon
manufacturing facility or other projects or ventures intended to provide the
Company and its customers with a long-term supply of activated carbon and
working capital requirements.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  FOR</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]  AGAINST</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]
ABSTAIN</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4.&nbsp;&nbsp;&nbsp;To
consider and vote upon such other matters as may properly come before the
Meeting or any postponement or adjournment thereof.</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Dated this
_____ day of ________________, 2007.</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">_____________________________________________________________<BR>
Signature of Shareholder(s)</FONT></FONT></P>

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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">_____________________________________________________________<BR>
(Please print name of Shareholder[s])</FONT></FONT></P>


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<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.</FONT></FONT></P>



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