Joint Development Agreement

Exhibit 10.54


JOINT DEVELOPMENT AGREEMENT

By and Among

ADA-ES, INC.,

and

ENERGY CAPITAL PARTNERS I, LP

ENERGY CAPITAL PARTNERS I-A, LP

ENERGY CAPITAL PARTNERS I-B IP, LP

ENERGY CAPITAL PARTNERS I (CROWFOOT IP), LP

Dated as of October 1, 2008


* indicates portions of the exhibit that have been omitted pursuant to a request for confidential information. The non-public information has been filed with the Commission.

TABLE OF CONTENTS Page

ARTICLE I FORMATION OF DEVELOPMENT COMPANY; INITIAL CONTRIBUTIONS 2

1.1

Formation of Development Company 2

1.2

ECP Initial Capital Contribution 2

1.3

ADA-ES Asset Contribution 2

1.4

Contributed Assets 2

1.5

Excluded Assets 3

1.6

Assumed Liabilities 3

1.7

Excluded Liabilities 4

1.8

Third-Party Consents 5

1.9

Allocations of Value 6

ARTICLE II CLOSING 6

2.1

Location and Date 6

2.2

Contribution of Assets 6

2.3

Actions and Deliveries at Closing 7

2.4

Post-Closing Adjustments 9

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE ECP PARTIES 10

3.1

Corporate Existence of the ECP Party 10

3.2

Authority 10

3.3

No Conflicts 11

3.4

Governmental Approvals and Filings 11

3.5

Accredited Investor 11

3.6

Brokers, Etc. 12

3.7

Legal Proceedings 12

3.8

Availability of Funds 12

3.9

No Other Representations or Warranties 12

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ADA-ES 12

4.1

Corporate Existence of ADA-ES 12

4.2

AC Venture Companies 12

4.3

Authority 13

4.4

No Conflicts 13

4.5

Governmental Approvals and Filings 14

4.6

Intellectual Property 14

4.7

Liabilities 15

4.8

Legal Proceedings 15

4.9

Compliance with Laws and Orders 16


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4.10

Benefit Plans 16

4.11

Underlying Assets 16

4.12

Real Property 17

4.13

Capitalized Tangible Personal Property 19

4.14

LLC Interests 19

4.15

Utilities and Other Services 20

4.16

Business Contracts 20

4.17

Business Licenses 23

4.18

Insurance 24

4.19

Affiliate Transactions 24

4.20

Labor Relations 24

4.21

Environmental Matters 25

4.22

Brokers, Etc. 25

4.23

Accredited Investor 25

4.24

Reports and Financial Statements 26

4.25

Absence of Certain Changes 27

4.26

Accuracy of Statements and Information 27

4.27

Regulatory Matters 27

4.28

Confidentiality Agreements 27

ARTICLE V TAX MATTERS 28

5.1

Tax Matters 28

5.2

Tax Cooperation; Allocation of Taxes 28

ARTICLE VI COVENANTS 29

6.1

Interim Financial Statements 29

6.2

Maintenance of Insurance 29

6.3

Post-Closing Consultation and Cooperation 29

6.4

Confidentiality Agreements Enforcement 30

ARTICLE VII CONDITIONS TO CLOSING 30

7.1

Conditions to Obligations of Both Parties 30

7.2

Conditions to Obligations of ADA-ES 30

7.3

Conditions to Obligations of the ECP Parties 31

ARTICLE VIII SURVIVAL; NO OTHER REPRESENTATIONS 32

8.1

Survival of Representations, Warranties, Covenants and Agreements 32

ARTICLE IX INDEMNIFICATION 33

9.1

Indemnification 33

9.2

Method of Asserting Claims 35

9.3

Exclusive Remedy 37


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ARTICLE X DEFINITIONS 37

10.1

Definitions 37

ARTICLE XI MISCELLANEOUS 48

11.1

Notices 48

11.2

Entire Agreement 49

11.3

Expenses 50

11.4

Public Announcements 50

11.5

Confidentiality 50

11.6

Waiver 50

11.7

Amendment 51

11.8

Specific Performance 51

11.9

No Third Party Beneficiary 51

11.10

No Assignment; Binding Effect 51

11.11

Headings 51

11.12

Invalid Provisions 51

11.13

Mutual Drafting 52

11.14

Governing Law 52

11.15

Consent to Jurisdiction and Service of Process; Appointment of Agent for Service of Process 52

11.16

Waiver of Jury Trial 52

11.17

* 53

11.18

Counterparts 53


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EXHIBITS

Exhibit A ADA-ES Pre-Closing Contributed Capital Schedule

Exhibit B Conveyance of Underlying Assets to AC Venture Companies

Exhibit C Contribution and Assumption Agreements

Exhibit D Crowfoot Development Limited Liability Company Agreement

Exhibit E Red River Environmental Products Limited Liability Company Agreement

Exhibit F Underwood Environmental Products Limited Liability Company Agreement Exhibit G Morton Environmental Products Limited Liability Company Agreement

Exhibit H Crowfoot Supply Company Limited Liability Company Agreement

Exhibit I Master Services Agreement Exhibit J Intellectual Property License Agreement

Exhibit K ECP Managing Member Certificate

Exhibit L ADA-ES Secretary' s Certificate

Exhibit M IP Assignments

Exhibit N Legal Opinions Exhibit O Securities Purchase Agreement

Exhibit P Owned Real Property Legal Description

Exhibit Q Joint Press Release


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JOINT DEVELOPMENT AGREEMENT This JOINT DEVELOPMENT AGREEMENT, dated as of October 1, 2008 (the " Effective Date" ), is made and entered into by and among ADA-ES, INC., a Colorado Corporation (" ADA-ES" ), ENERGY CAPITAL PARTNERS I, LP, a Delaware limited partnership (" ECP I" ), ENERGY CAPITAL PARTNERS I-A, LP, a Delaware limited partnership (" ECP I-A" ), ENERGY CAPITAL PARTNERS I-B IP, LP, a Delaware limited partnership (" ECP I-B" ), and ENERGY CAPITAL PARTNERS I (CROWFOOT IP), LP, a Delaware limited partnership (" ECP Crowfoot" ). ECP I, ECP I-A, ECP I-B and ECP Crowfoot collectively, are referred to herein as individually as an " ECP Party" and collectively as the " ECP Parties ." Each of the ECP Parties and ADA-ES is sometimes hereinafter referred to individually as a " Party" and collectively as the " Parties ." Capitalized terms used but not otherwise defined herein shall have the meanings set forth in Section 10.1 (Definitions).

WHEREAS, the Parties are interested in developing, financing, constructing, owning and operating activated carbon production facilities and related assets (each a " Project" and collectively the " Projects" );

WHEREAS, ADA-ES has, at its sole expense, commenced a project to evaluate, locate, design and build an initial Project located in Coushatta, Red River Parish, Louisiana, the " Red River Project" and has invested substantial sums in and made substantial progress on the development of this initial Project, including, without limitation, the identification of a site, the submission of an air permit application and the execution of various agreements granting rights to purchase land and coal from the local coal mine, and has formed Red River Environmental Products, LLC, a Delaware limited liability company (the " Red River Project Company" ), to own this initial Project;

WHEREAS, ADA-ES has, at its sole expense, commenced additional Projects located in Bowman, Morton County, North Dakota (the " Morton Project" ) and Underwood, McLean County, North Dakota (the " Underwood Project" ), and has formed Morton Environmental Products, LLC, a Delaware limited liability company (the " Morton Project Company" ) and Underwood Environmental Products, LLC, a Delaware limited liability company (the " Underwood Project Company" ), respectively, to own such additional Projects; WHEREAS, ADA-ES has, at its sole expense, purchased equipment, entered into a material supply agreement, leased facilities and taken other actions to provide for the interim supply and processing of activated carbon in Murchison, Texas (the " Murchison Project" ), has identified a potential additional facility for the interim processing of activated carbon, and has established Crowfoot Supply Company, LLC, a Delaware limited liability company (the " Supply Company" ), to own the interim supply operations;

WHEREAS, ADA-ES has established Crowfoot Development, LLC, a new Delaware limited liability company (the " Development Company" ), that will, on the Closing Date, serve as the vehicle through which the Parties jointly engage in the ownership and development, directly or indirectly, of activated carbon production and supply facilities, and will be governed by the terms and provisions of the Operating Agreement;

WHEREAS, ADA-ES desires to make a capital contribution to the Development Company consisting of the ADA-ES Contributed Assets in exchange for a 50% membership interest in the Development Company; and

WHEREAS, the ECP Parties desire to make a capital contribution to the Development Company consisting of the Initial ECP Capital Contribution in exchange for a 50% membership interest in the Development Company. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I FORMATION OF DEVELOPMENT COMPANY; INITIAL CONTRIBUTIONS

1.1 Formation of Development Company . As of the Effective Date, ADA-ES has formed the Development Company pursuant to the Certificate of Formation of Crowfoot Development, LLC filed on February 19, 2008 with the Secretary of State of the State of Delaware. At the Closing, the Parties will enter into the Operating Agreement and make the initial capital contributions to the Development Company described in this Article I . 1.2 ECP Initial Capital Contribution . Within 15 Business Days following the Closing, on the terms and subject to the conditions set forth in this Agreement, the ECP Parties hereby agree to contribute cash to the Development Company in the manner provided for in Section 2.3(b)(i) (Initial ECP Capital Contribution) in an aggregate amount equal to the Initial ECP Capital Contribution. Pursuant to the terms and subject to the conditions set forth in the Operating Agreement, the ECP Parties shall be obligated to fund additional capital requirements of the Development Company as more particularly set forth in the Operating Agreement.

1.3 ADA-ES Asset Contribution . At Closing, on the terms and subject to the conditions set forth in this Agreement, ADA-ES hereby agrees to transfer, convey, assign and deliver all of its right, title and interest in, to and under (a) the Underlying Assets to the Project Companies and the Supply Company, as applicable, and (b) the ADA-ES Contributed Assets to the Development Company, in each case in the manner forth in Section 2.2 (Contribution of Assets) hereof. At Closing, the Underlying Assets shall be free and clear of all Liens, except for Permitted Encumbrances and the ADA-ES Contributed Assets shall be free and clear of all Liens. Pursuant to the terms and subject to the conditions set forth in the Operating Agreement, ADA-ES shall be obligated to fund additional capital requirements of the Development Company as more particularly set forth in the Operating Agreement.

1.4 Contributed Assets . The " Underlying Assets" shall consist of:

(a) all Real Property and Real Property Leases relating to Real Property, and all rights with respect thereto, owned by any of the ADA-ES Entities on the Effective Date and on the Closing Date and used or held for use in connection with the Business or necessary to the conduct of the Business;

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(b) all Personal Property Leases, Business Contracts (other than the Development Company Assumed Contracts), Business Licenses (other than the Charter Documents of ADA-ES and each qualification of ADA-ES to do business as a foreign corporation in states outside of the State of Colorado), Prepaid Expenses, Business Books and Records, and all rights with respect thereto, owned, directly or indirectly, by any of the ADA-ES Entities on the Effective Date and on the Closing Date;

(c) all of the Tangible Personal Property for which ADA has incurred expenditures detailed on the ADA-ES Pre-Closing Contributed Capital Schedule attached hereto as Exhibit A , (such property, the " Capitalized Tangible Personal Property" ), as adjusted after the Closing in accordance with Section 2.4 ; and

(d) all assets listed on Section 1.4 of the Disclosure Schedule .

The " ADA-ES Contributed Assets" shall consist of (i) ADA-ES' s 100% limited liability company interest in each of the Project Companies and the Supply Company immediately following the transfer of the Underlying Assets pursuant to Section 2.2(a) (Contribution of Assets), (ii) all Transferred Intellectual Property, all copies and tangible embodiments of the Transferred Intellectual Property (in whatever form or medium) and all past, present or future claims or causes of action arising out of or relating to any infringement, dilution, misappropriation or other violation of any of the Transferred Intellectual Property, (iii) all goodwill associated with the Business and (iv) the Development Company Assumed Contracts.

1.5 Excluded Assets . The following assets shall be excluded from and shall not be transferred as part of the Underlying Assets (the " Excluded Assets" ):

(a) all assets of the ADA-ES Entities exclusively used or held for use in connection with any business conducted by the ADA-ES Entities other than the Business (the " Other Businesses" ); (b) all Intellectual Property primarily (but not exclusively) used or held for use in connection with the conduct of the Other Businesses, including the Intellectual Property listed on Part B of Section 4.6(a) of the Disclosure Schedule ; and

(c) all assets listed on Section 1.5 of the Disclosure Schedule .

1.6 Assumed Liabilities . At Closing, pursuant to the Contribution and Assumption Agreements described in Section 2.2 (Contribution of Assets) on the terms and subject to the conditions set forth in this Agreement, each AC Venture Company, as applicable, will, severally and not jointly, assume, and agree to pay, perform and discharge when due, all Liabilities under the Transferred IP accruing, arising out of or relating to events or occurrences happening after the Closing Date, and all Liabilities under the Real Property Leases, Personal Property Leases, Business Contracts and Business Licenses, in each case to the extent assigned to such AC Venture Company, as applicable, but excluding all of the Excluded Liabilities (such assumed liabilities, the " Assumed Liabilities" ). The AC Venture Companies shall indemnify ADA-ES against any loss, cost or liability arising out of the Assumed Liabilities.


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1.7 Excluded Liabilities . Notwithstanding anything to the contrary in this Agreement, none of the AC Venture Companies shall assume or become responsible for, and shall not be deemed to have assumed or to have become responsible for, and ADA-ES shall retain and assume, any Liabilities other than the Assumed Liabilities (such Liabilities, the " Excluded Liabilities" ), including the following:

(a) all Liabilities or obligations of the ADA-ES Entities to the extent arising out of, resulting from or relating to any Excluded Asset;

(b) all Liabilities of the ADA-ES Entities to the extent arising out of, resulting from or relating to any of the Other Businesses;

(c) all Liabilities with respect to the employees, officers, directors and consultants of the ADA-ES Entities, except to the extent arising from a Business Contract expressly assumed by an AC Venture Company pursuant to the Contribution and Assumption Agreement; and

(d) all Liabilities with respect to Benefit Plans of ADA-ES; (e) all Liabilities associated with or arising from ADA-ES' s obligations under this Agreement or any of the Operative Agreements;

(f) all Liabilities arising from the breach, noncompliance or default at any time on or prior to the Closing Date of any term, covenant or provision of any of the Real Property Leases, Personal Property Leases, Business Contracts or Business Licenses;

(g) all other Liabilities due and payable prior to the Closing Date;

(h) all Liabilities arising from any violation of or default under, or failure of the Business to be operated in compliance with, applicable Laws at any time on or prior to the Closing Date;

(i) all Liabilities in respect of any of the Real Property Leases, Personal Property Leases, Business Contracts or Business Licenses that would be included in the Underlying Assets or the ADA-ES Contributed Assets but for the provisions of Section 1.8 (Third-Party Consents);

(j) all Liabilities incurred in connection with obtaining any consent, authorization or approval in connection with the consummation of the Transactions;

(k) all Liabilities for Taxes of the ADA-ES Entities (other than Taxes assumed by the AC Venture Companies pursuant to Section 5.2(b) (Tax Cooperation; Allocation of Taxes) and Taxes of the AC Venture Companies arising after the Closing Date);

(l) all Liabilities of the ADA-ES Entities with respect to brokers' fees and expenses or similar fees and expenses contemplated by Section 4.22 (Brokers, Etc.), including all Liabilities arising out of or related to the Credit Suisse Letter other than the 1.875% Debt Financing Fee payable upon the closing of the credit facility in respect of the first line of the Red River Project pursuant to Section 5(a) thereof (the " Debt Financing Fee" ).


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(m) all Liabilities arising out of or relating to that certain Repayment Agreement (DE-FR26 04NT42059), dated April 6, 2004, by and between the United States Department of Energy and ADA-ES, including Revision M001 thereto and the Toxecon Sorbent Sales Repayment Agreement, dated February 18, 2004, by and among Norit Americas Inc., ADA-ES and ADA Environmental Solutions, LLC (except the payment obligation set forth in subparagraph (3) of Revision M001 thereto to be assumed by the Development Company on or after the Closing Date). (n) all Losses and other Liabilities arising out of, resulting from or relating to (i) any Existing Actions or Proceedings, (ii) Actions or Proceedings brought by or against ADA-ES exclusively related to the Other Businesses and (iii) Actions or Proceedings arising out of or relating to the relationship between ADA-ES and Calgon Carbon Corporation, including that certain Memorandum of Understanding dated March 20, 2007, by and between Calgon Carbon Corporation and ADA-ES.

ADA-ES shall indemnify the AC Venture Companies against any loss, cost or liability arising out of the Excluded Liabilities.

1.8 Third-Party Consents . To the extent that any Real Property Lease, Personal Property Lease, Business Contract, Confidentiality Agreements or Business License is not assignable to any of the AC Venture Companies without the consent of another Person that is a party thereto, ADA-ES shall use its commercially reasonable efforts to obtain the consent of such other party to the assignment of any such Real Property Lease, Personal Property Lease, Business Contract or Business License to the applicable AC Venture Company in all cases in which such consent is required for such assignment. If any such consent shall not be obtained, ADA-ES and its Affiliates shall (i) continue to be bound thereby, (ii) cooperate with each AC Venture Company in any reasonable arrangement designed to provide to such AC Venture Company the benefits intended to be assigned to such AC Venture Company under the relevant Real Property Lease, Personal Property Lease, Business Contract or Business License, including enforcement of any and any rights of ADA-ES and its Affiliates against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise and (iii) enforce at the ECP Parties' request, any rights of ADA-ES and its Affiliates under any such Real Property Lease, Personal Property Lease, Business Contract or Business License against the issuer thereof or the other party or parties thereto (including the right to elect to terminate such of the foregoing in accordance with the terms thereof upon the request of the ECP Parties). ADA-ES, without further consideration therefor, and without right of set-off, shall pay and remit to the appropriate AC Venture Company promptly all monies, rights and other considerations received in respect of such performance; provided that, the respective AC Venture Company shall reimburse ADA-ES for the direct, out-of-pocket costs reasonably incurred by ADA-ES after the Closing in performing ADA-ES' s obligations under such Contracts that cannot be assigned. Each of the AC Venture Companies shall use commercially reasonable efforts to perform any portion of any such lease, Contract or license of which the benefits are being provided to such AC Venture Company in accordance with this Section 1.8 to the same extent required of ADA-ES or its Affiliates in such lease, Contract or license. Nothing contained in this Section 1.8 shall limit or impair the ECP Parties' rights in Section 7.3 (Conditions to Obligations of the ECP Parties).


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1.9 Allocations of Value . ADA-ES will prepare and deliver to the ECP Parties an allocation (the " Allocation" ) of the value of the assets of the AC Venture Companies in accordance with the Internal Revenue Code of 1986, as amended (" IRC" ), and the Treasury Regulations promulgated thereunder. The Allocation shall be delivered by ADA-ES to the ECP Parties within 60 days after the Closing Date for the ECP Parties' comment or approval. The Parties shall work in good faith to resolve any disputes relating to the Allocation within 45 days from the date on which the Allocation is delivered to the ECP Parties. If the Parties are unable to resolve any such dispute within such 45 day period, such dispute shall be resolved promptly by a nationally recognized independent registered public accounting firm reasonably acceptable to ADA-ES and the ECP Parties that is not rendering (and during the preceding two-year period has not rendered) audit services to either ADA-ES or the ECP Parties or any of their respective Affiliates, the costs of which shall be shared equally by ADA-ES on the one hand and the ECP Parties on the other hand. The Parties shall file all Tax Returns consistent with the final agreed-upon allocation.

ARTICLE II

CLOSING 2.1 Location and Date . The closing of the Transactions (the " Closing" ) shall be held at the offices of Latham & Watkins LLP on the date on which all conditions to the consummation of the Transactions set forth in Article VII (Conditions to Closing) have either been satisfied or waived. The date on which Closing occurs is referred to herein as the " Closing Date ."

2.2 Contribution of Assets . At the Closing, ADA-ES shall: (a) first, transfer or cause to be transferred, as applicable, the Underlying Assets together with the Assumed Liabilities directly related thereto, to the Project Companies and the Supply Company in the manner set forth on Exhibit B hereto and pursuant to the terms of a Contribution and Assumption Agreement, substantially in the form of Exhibit C-1 hereto, free and clear of all Liens other than Permitted Encumbrances; and

(b) second, immediately following consummation of the transfers contemplated by Section 2.2(a) , transfer or cause to be transferred, as applicable, the ADA-ES Contributed Assets (which, following the transfers contemplated by Section 2.2(a) , shall consist of 100% of the limited liability company interests of each of the Project Companies and the Supply Company, the Transferred Intellectual Property and the Development Company Assumed Contracts) together with the Assumed Liabilities directly related thereto, to the Development Company, pursuant to the terms of a Contribution and Assumption Agreement, substantially in the form of Exhibit C-2 (together with the form of Contribution and Assumption Agreement attached as Exhibit C-1 hereto the " Contribution and Assumption Agreements" ) free and clear of all Liens.


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2.3 Actions and Deliveries at Closing . At the Closing (or at such other time specified below), on the terms and subject to the conditions set forth in this Agreement, each of ADA-ES and the ECP Parties, as applicable, shall make the following deliveries and take or cause to be taken the following actions (the " Closing Actions and Deliveries" ):

(a) Mutual Closing Actions and Deliveries . (i) Development Company Operating Agreement . Each Party and the Development Company shall execute and deliver to the other Parties the limited liability company agreement for the Development Company, substantially in the form of Exhibit D hereto (the " Operating Agreement" ). (ii) AC Venture Company Operating Agreement . ADA-ES and the ECP Parties shall cause the Development Company to execute and deliver to each Project Company and the Supply Company, and each Project Company and the Supply Company shall execute and deliver to the Development Company the following, as applicable: (A) the limited liability company agreement for the Red River Project Company, substantially in the form attached hereto as Exhibit E , (B) the limited liability company agreement for the Underwood Project Company, substantially in the form attached here to as Exhibit F , (C) the limited liability company agreement for the Morton Project Company, substantially in the form attached here to as Exhibit G and (D) the limited liability company agreement for the Supply Company, substantially in the form attached hereto as Exhibit H .

(iii) Master Services Agreement . ADA-ES shall execute and deliver to the Development Company, and ADA-ES and the ECP Parties shall cause the Development Company to execute and deliver to ADA-ES, the Master Services Agreement, substantially in the form attached hereto as Exhibit I (the " Master Services Agreement" ).

(iv) Intellectual Property License Agreement . ADA-ES shall execute and deliver to the Development Company, and ADA-ES and the ECP Parties shall cause the Development Company to execute and deliver to ADA-ES, the Intellectual Property License Agreement, substantially in the form attached hereto as Exhibit J (the " Intellectual Property License Agreement" ).

(v) W-9 Deliveries . Each Party shall deliver to the Development Company an IRS Form W-9.

(vi) Additional Actions . The Parties shall execute and deliver, or cause to be executed and delivered, all other documents, and take such other actions, in each case as shall be necessary or appropriate, to consummate the Transactions, all in accordance with the provisions of this Agreement.


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(b) ECP Party Closing Actions and Deliveries . (i) Initial ECP Capital Contribution . Within 15 Business Days following the Closing, the ECP Parties shall pay to the Development Company by wire transfer of immediately available funds a cash contribution of $16,863,273, the " Initial ECP Capital Contribution" ). The Initial ECP Capital Contribution is based upon the assumption that ADA-ES has made ...