SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT

SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT


This SECURITIES SUBSCRIPTION AND INVESTMENT AGREEMENT dated as of the ____ day of August 2004, is made between ADA-ES, INC., a Colorado corporation with principal executive offices located at 8100 SouthPark Way, B, Littleton, Colorado 80120 (the "Company"), and certain investment advisory clients of _______________________________ detailed on the attached Schedule A, (individually, the "Purchaser", collectively, the "Purchasers").


W I T N E S S E T H:


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


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


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


1. PURCHASE AND SALE OF COMMON STOCK AND OPTION


a. Transaction and Purchase Price. The Purchasers hereby subscribe, upon the satisfaction of each of the conditions set forth in Section 9 hereto, for [_________________ ] shares of Common Stock (the "Shares") at a price per share is $8.00 for an aggregate total of ____________ (the "Purchase Price").


b. Form of Payment. SuchPurchasers shall pay the Purchase Price on the Closing Date by wire transfer or check of immediately available funds to the Company against receipt by each Purchaser or its designated depository of duly authorized, issued and executed certificates evidencing the Shares.


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


Colorado Business Bank ABA# 102003206 For the Account of: ADA-ES, Inc. Account# _____________


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


Purchasers represent and warrant to and covenant and agree with the Company as follows:


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


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


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


d. Each Purchaser acknowledges that it has been furnished with copies of the Company's Registration Statement on Form 10SB, the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003, the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31, 2004, respectively, and all other reports and documents heretofore filed by the Company with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") since December 31, 2003 (collectively the "Commission Filings").


e. Each Purchaser acknowledges that in making its decision to purchase the Shares it has (i) relied upon independent investigations made by it and its professional advisors, (ii) been given access and the opportunity to examine all agreements, books and records of the Company which Purchaser requested, and (iii) been given an opportunity to ask questions of and to receive answers from the Company's executive officers, directors and management personnel concerning the terms and conditions of the private placement of the Shares by the Company.


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


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


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h. Neither Purchaser nor its affiliates nor any person acting on its or their behalf has the intention of entering, or will enter into, prior to the Closing, any put option, short position or other similar instrument or position with respect to the Common Stock and neither Purchaser nor any of its affiliates nor any person acting on its or their behalf will use at any time shares of Common Stock acquired pursuant to this Agreement to settle any put option, short position or other similar instrument or position that may have been entered into prior to the execution of this Agreement or any issuance of the Shares. 3. THE COMPANY'S REPRESENTATIONS


The Company represents and warrants to each Purchaser that:


a. Capitalization.


(i) The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock and 50,000,000 shares of Preferred Stock, of which 3,744,191 shares of Common Stock were outstanding as of June 30, 2004. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. The Common Stock issuable upon purchase of the Shares has been duly and validly authorized and reserved for issuance by the Company, and when issued by the Company will be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such holder. There are no preemptive, subscription, "call" or other similar rights to acquire the Common Stock that have been issued or granted to any person, except as disclosed in the Commission Filings or otherwise previously disclosed in writing to each Purchaser.


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


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


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


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


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


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


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


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


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


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


k. Financial Statements; No Undisclosed Liabilities. The Company has delivered to each Purchaser true and complete copies of its audited consolidated balance sheet as at December 31, 2003 and the related audited consolidated statements of operations and cash flows for the fiscal years ended December 31, 2003 and December 31, 2002, including in all such cases the related notes and schedules thereto (collectively, the "Financial Statements"). Each of the


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Financial Statements is complete and correct in all material respects, has been prepared in accordance with United States General Accepted Accounting Principles ("GAAP") and in conformity with the practices consistently applied by the Company without modification of the accounting principles used in the preparation thereof, and fairly presents the financial position, results of operations and cash flows of the Company and its consolidated subsidiary as at the dates and for the periods indicated. For purposes hereof, the audited consolidated balance sheet of the Company and its subsidiary as at December 31, 2003 is hereinafter referred to as the "Balance Sheet" and December 31, 2003 is hereinafter referred to as the "Balance Sheet Date". Neither the Company nor its subsidiary has any indebtedness, obligations or liabilities of any kind (whether accrued, absolute, contingent or otherwise, and whether due or to become due) that would have been required to be reflected in, reserved against or otherwise described in the Balance Sheet or in the notes thereto in accordance with GAAP, which was not fully reflected in, reserved against or otherwise described in the Balance Sheet or the notes thereto or was not incurred in the ordinary course of business consistent with the Company's past practices since the Balance Sheet Date.


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


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


n. Insurance. The Company maintains property and casualty, general liability, workers' compensation, environmental hazard, personal injury and other similar types of insurance with financially sound and reputable insurers that is adequate, consistent with industry standards and the Company's historical claims experience, to cover all loss contingencies which forseeably may arise in the conduct of the business of the Company and its subsidiaries. The Company has not received notice from, and has no knowledge of any threat by, any insurer (that has issued any insurance policy to the Company or any of its subsidiaries) that such insurer intends to deny coverage under or cancel, discontinue or not renew any insurance policy presently in force.


o. Securities Law Matters. Based, in part, upon the representations and warranties of each Purchaser set forth in Section 2 hereof, the offer and sale by the Company of the Shares is exempt from (i) the registration and prospectus delivery requirements of the Securities Act and the rules and regulations of the Commission thereunder and (ii) the registration and/or qualification provisions of all applicable state securities and "blue sky" laws. Other than pursuant to


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an effective registration statement under the Securities Act, the Company has not issued, offered or sold the Shares or any shares of Common Stock (including for this purpose any securities of the same or a similar class as the Common Stock, or any securities convertible into or exchangeable or exercisable for the Common Stock or any such other securities) within the six-month period next preceding the date hereof, except as disclosed in the Commission Filings or otherwise previously disclosed in writing to each Purchaser, and the Company shall not directly or indirectly take, and shall permit any of its directors, officers or Affiliates directly or indirectly to take, any action (including, without limitation, any offering or sale to any person or entity of shares of Common Stock), so as to make unavailable the exemption from Securities Act registration being relied upon by the Company for the offer and sale to each Purchaser of Shares as contemplated by this Agreement. No form of general solicitation or advertising has been used or authorized by the Company or any of its officers, directors or Affiliates in connection with the offer or sale of Shares as contemplated by this Agreement or any other agreement to which the Company is a party.


p. Environmental Matters.


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


For purposes of this Section 3.p.:


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


"Hazardous Material" means any substance, material or waste which is regulated by the United States, Canada or any of its provinces, or any state or local governmental authority including, without limitation, petroleum and its by-products, asbestos, and any material or substance which is defined as a "hazardous waste," "hazardous substance," "hazardous material," "restricted


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hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant," "toxic waste" or toxic substance" under any provision of any Environmental Law;


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


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


Notwithstanding the foregoing, the Company shall not be deemed in breach of any of the representations set forth in this Section 3p unless such breach shall have a Material Adverse Affect on the Company or the value of the Shares.


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


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


For purposes of this Section 3.r.:


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


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


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


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


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


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


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


s. Tax Matters.


(i) The Company and each of its subsidiaries have filed all Tax Returns which
they are required to file under applicable Laws, except for such Tax
Returns in respect of which the failure to so file does not and could not
have a Material Adverse Effect; all such Tax Returns are true and accurate
and have been prepared in compliance with all applicable Laws; the Company
and each of its subsidiaries have paid all Taxes due and owing by them
(whether or not such Taxes are required to be shown on a Tax Return) and
have withheld and paid over to the appropriate taxing authorities all Taxes
which they are required to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third parties; and since the
Balance Sheet Date, the charges, accruals and reserves for Taxes with
respect to ...