ADA-ES, INC.
8100 SOUTHPARK WAY B
LITTLETON, COLORADO 80120
Telephone: (303) 734-1727
Fax: (303) 734-0330
April 10, 2006
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: ADA-ES, Inc.; Proxy Materials
Gentlemen and Ladies:
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 April
10, 2006, to its shareholders in connection with the solicitation of proxies for
a May 10, 2006 annual meeting of shareholders.
In connection with the foregoing, we deliver to you the following:
1. 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
2. A form of Proxy.
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.
Very truly yours,
ADA-ES, Inc.
Mark H. McKinnies
Secretary
United States
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities E
xchange Act of 1934
Filed by the Registrant [X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Sec. 240.14a-12
ADA-ES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
..........................................................................
2) Aggregate number of securities to which transaction applies:
..........................................................................
3) 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):
..........................................................................
4) Proposed maximum aggregate value of transaction:
..........................................................................
5) Total fee paid:
..........................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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.
1) Amount Previously Paid:
..........................................................................
2) Form, Schedule or Registration Statement No.:
..........................................................................
3) Filing Party:
..........................................................................
4) Date Filed:
..........................................................................
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ADA-ES, INC.
8100 SouthPark Way, B
Littleton, CO 80120
(303) 734-1727
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2006
To Our Shareholders:
An Annual Meeting (the "Meeting") of Shareholders of ADA-ES, Inc. ("ADA-ES" or
the "Company"), a Colorado corporation, will be held at 9:00 a.m. (local time)
on May 10, 2006 at the offices of the Company located at 8100 SouthPark Way,
Unit B, Littleton, Colorado, for the following purposes:
1. To elect eight (8) directors of the Company; and
2. To consider and vote upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 31, 2006 are entitled
to notice of and to vote at the Meeting.
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.
Please call on our toll-free number (888-822-8617) if you require directions or
have other questions concerning the Meeting.
By Order of the Board of Directors
Mark H. McKinnies
Secretary
April 10, 2006
PROXY STATEMENT
ADA-ES, INC.
8100 SouthPark Way, Unit B
Littleton, CO 80120
Telephone: (303) 734-1727
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2006
This Proxy Statement is furnished to the shareholders of ADA-ES, Inc. (the
"Company," "we," or "us"), a Colorado corporation, in connection with the
solicitation of proxies by the Company's ("our") Board of Directors (the
"Board"), to be voted at our ANNUAL MEETING OF SHAREHOLDERS (the "Meeting") to
be held on Wednesday, May 10, 2006, at the offices of the Company at 8100
SouthPark Way, Unit B, Littleton, Colorado. This Proxy Statement and
accompanying form of proxy is first being mailed or given to our shareholders on
our about April 10, 2006. 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.
VOTING RIGHTS AND VOTE REQUIRED
Our Board of Directors has fixed the close of business on March 31, 2006 as the
record date for determination of shareholders entitled to notice of and to vote
at the Meeting. At such date there were 5,620,040 shares of our common stock
issued and outstanding (hereinafter referred to as the "Common Stock"), each of
which entitles the holder thereof to one vote on all matters that may come
before the meeting. The Company has no 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 of Directors 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 be treated as
abstentions and not as a vote against the proposal. 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. Broker non-votes on a particular proposal will not be treated
as shares present and entitled to vote on the proposal.
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 eight nominees receiving the highest number of votes cast will be
elected as Directors.
Unless specified otherwise, each proxy submitted will be voted 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, and Jeffrey C. Smith.
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's judgment, including
any matter or motion dealing with the conduct of the Meeting.
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.
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.
ELECTION OF DIRECTORS
At the Meeting, the shareholders will elect eight 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
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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 and JEFFREY C. SMITH.
All of the nominees, except for Mr. Caruso and Mr. Johnson, are currently
members of the Board of 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 2005 Annual Meeting of Shareholders.
The following table sets forth certain information as to each current nominee
and director of the Company:
Director
Name Age Position and Offices Since Term Expires
---- --- -------------------- ----- ------------
Robert N. Caruso 54 Director nominee N/A Upon Successor's Election
Michael D. Durham 56 Director, President 2003 Upon Successor's Election
John W. Eaves 48 Vice Chairman of the Board of Directors, 2003 Upon Successor's Election
Member of the Audit Committee
Derek C. Johnson 45 Director nominee N/A Upon Successor's Election
Ronald B. Johnson 74 Director, Chairman of the Audit Committee 2003 Upon Successor's Election
Mark H. McKinnies 54 Director, Senior Vice President and Chief 2003 Upon Successor's Election
Financial Officer
Rollie J. Peterson 58 Director, Member of the Audit Committee 2003 Upon Successor's Election
Jeffrey C. Smith 53 Chairman of the Board of Directors, Member of 2003 Upon Successor's Election
Audit Committee
The appointment of Mr. Eaves to the Board was made pursuant to the investment
agreement with Arch Coal, Inc. whereby the management of the Company has agreed
to make available one seat on the Board so long as Arch continues to hold no
less than 100,000 shares. See "Certain Relationships and Related Transactions"
below. There are no other arrangements or understandings between any directors
and any other person or persons pursuant to which they were selected as
director. None of the individuals named above are directors of any other public
companies.
Mr. Caruso currently serves as a managing partner of B/3 Management Resources,
LLC, a management consulting and technical services firm, since 1998. Mr. Caruso
also serves as Vice President of Ingenium Technology, since 2003. From 1999 to
2001, Mr. Caruso was Vice President and General Manager of Applied Science &
Technology, a public company at the time, providing reactive gas processing
systems and specialty power sources to the semiconductor and medical equipment
markets.
Dr. Durham has served as our president since 1997. Dr. Durham has been involved
in the measurement and control of air pollution from utility and industrial
sources for the past 30 years. He has presented and published over 200 papers
and has been awarded eleven patents. He received the 2001 AWMA Award for
innovative air pollution control technology and a 2003 R&D 100 award for mercury
control technology. In 2002 he was appointed to the National Coal Council and is
on the Board of Directors of the American Coal Council and the Institute of
Clean Air Companies.
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'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's predecessor companies. He also held various
positions in sales and administration with Diamond Shamrock Company and Natomas
Coal Company.
Mr. Derek Johnson currently serves as President of Fusion Specialties, a
specialty supplier to the retail industry. 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.
3
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 Charter National Bank and Trust from 1987-2000. Mr. Johnson also
serves as Chairman of Twin-Kem International, Inc., a distributor of
agricultural industrial chemicals, since 1984, and as Chairman of ExecuVest,
Inc., an oil & gas exploration company, since 1987.
Mr. McKinnies has served as our Chief Financial Officer 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 & Co. before commencing employment at Earth Sciences
in 1978.
Mr. Peterson, a self-employed businessman, is president and co-owner of
Cobblestone Development Co., a commercial land development company in Minnesota
that he helped found in 1987.
Mr. Smith was appointed a director of the Company in August 2003 and is a
self-employed lawyer in the Law Office of Jeffrey C. Smith. Mr. Smith is a past
Executive Director of the Institute of Clean Air Companies, where he served for
17 years.
No family relationship exists between any individuals named above.
BOARD OF DIRECTORS
Our Board of Directors is responsible for establishing broad corporate policies
and monitoring the overall performance of the Company. However, in accordance
with corporate legal principles, the Board of Directors is not involved in
day-to-day operating matters. Members of the Board are kept informed of the
Company'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.
THE AUDIT, COMPENSATION AND NOMINATING AND GOVERNANCE COMMITTEES
The Board of Directors maintains audit, compensation and nominating and
governance committees. In calendar 2005 each committee was composed of John W.
Eaves, Ronald B. Johnson, Rollie J. Peterson and Jeffrey C. Smith, who all
qualify as "independent directors" as defined in NASD Rule 4200(a)(15). Mr.
Ronald Johnson served as the Chairman of each committee. The Charters of each
committee are available on our website at www.adaes.com under "Investor
Relations."
AUDIT COMMITTEE
Mr. Ronald Johnson is the Audit Committee Financial Expert, as determined by the
Board. Mr. Johnson is "independent" as that term is used in Item 7(d)(3)(iv) of
Schedule 14A under the Securities Exchange Act of 1934.
The role and functions of the audit committee are set out in the Audit Committee
Charter, as amended, originally adopted by the Company's Board of Directors and
most recently amended on September 23, 2005. The role of the Company's Audit
Committee is one of oversight of the Company's management and the Company's
outside auditors in regard to the Company's financial reporting and the
Company's controls over accounting and financial reporting. The Audit
Committee's functions include the following: reviewing and assessing the Audit
Committee Charter annually; reviewing the Company's relationships with its
outside auditors and assessing the impact such relationships may have on the
auditors' 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's financial
statements with the outside auditors and management; recommending whether the
Company's audited financial statements should be included in the Company's Form
10-KSB for filing with the Securities and Exchange Commission ("SEC"); and
reporting to the Board of Directors on all such matters. In performing its
oversight function, the Audit Committee relies upon advice and information
received in its discussions with the Company's management and independent
auditors.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has (i) reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2005 with the
Company's management; (ii) discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
regarding communication with audit committees (Codification of Statements on
Auditing Standards, AU sec. 380); and (iii) received the written disclosures and
the letter from the Company's independent accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
and has discussed with the Company's independent accountants the independent
accountants' independence.
Based on the review and discussions with management and the Company's
independent auditors referred to above, the Audit Committee recommended to the
4
Board of Directors that the audited consolidated financial statements as of
December 31, 2005 and for the years ended December 31, 2005 and 2004 be included
in the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2005 for filing with the SEC.
The Audit Committee: Ronald B. Johnson, Chairman John W. Eaves
Rollie J. Peterson Jeffrey C. Smith
NOMINATING AND GOVERNANCE COMMITTEE
The responsibilities of the Committee, as set forth in the Nominating and
Governance Committee Charter, include identifying and recommending to the Board
the nominees to be submitted to the Company's shareholders for election as
Directors at annual meetings of the shareholders; considering and making
recommendations to the Board regarding nominees for Director submitted by the
Company's shareholders; and recommending to the Board the election of
individuals to fill any vacancies occurring on the Board from time to time.
Criteria established for the selection of candidates for the Board of Directors
include independence, integrity, understanding and acceptance of the Company's
corporate philosophy, commitment to representing the long-term interest of the
shareholders and relevant experience and expertise in technical, financial,
operational or management areas which would be beneficial to the Company and its
shareholders. 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 of directors for a final discussion and vote.
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 may be submitted to the Committee in
care of Mark H. McKinnies, Secretary, at 8100 SouthPark Way, Unit B, Littleton,
Colorado 80120.
The Committee has recommended to our Board the slate of directors for this
Annual Meeting as set forth above. The new director nominees standing for
election to the Board were recommended by current directors. No third party was
used in identifying or evaluating nominees and we received no shareholder
recommendations for nominees.
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.
DIRECTOR COMPENSATION
The compensation plan for our non-management directors is reviewed annually. In
addition to the stock and option grants discussed below, under the existing
compensation arrangement, each non-management director was paid a fee in 2005 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 is paid the greater of $3,000 per month or an
amount equal to hours worked times an hourly rate.
During 2005, in addition to the stock and options issued to directors as
described below under "Stock Option Plans", Drs. Bisque and Bloom and Mr.
Lowdermilk received cash compensation of $4,653 and Messrs. Peterson, Smith and
Arch Coal (as a result of John Eaves' service) received $7,445 for their
participation in board and committee meetings. Dr. Bisque received $59,565 for
his participation in board meetings and consulting services provided to us. Mr.
Ronald Johnson received $43,044 for his participation in board meetings and his
service as chairman of the Audit, Compensation and Nominating and Governance
Committees.
DIRECTORS MEETINGS AND COMMITTEE MEETINGS
The Board of Directors met 6 times in 2005. At each of those meetings an
Executive Session is held where management of the Company is excluded. The Audit
Committee met 8 times in 2005. The Compensation Committee met 9 times in 2005
and the Nominating and Governance Committee met 9 times in 2005. All of the
directors were present for more than 75% of the meetings of Board of Directors
and committees of which they were members held during their individual
incumbencies.
SHAREHOLDER COMMUNICATIONS TO DIRECTORS
Any shareholder may communicate directly with the Board of Directors (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
5
through the "Contact the Board" 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's communication to the appropriate director. For any communication
relating to accounting, auditing or fraud, such communication will be forwarded
immediately to the Chairman of the Audit Committee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table provides information with respect to the beneficial
ownership of the Company'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, director nominees and named executive officers, as
defined below, and (3) all of our directors and executive officers as a group.
We base the share amounts shown on each person's beneficial ownership as of
March 10, 2006 (including options exercisable within 60 days thereof), unless we
indicate some other basis for the share amounts. With the exception of Mr.
Lowdermilk, each of the individuals named below has sole voting and investment
power for the respective shares.
----------------------------------------------------------------------------------------------------------
Amount and Nature of Percent of
Name and Address Beneficial Ownership Class
----------------------------------------------------------------------------------------------------------
Jonathan S. Barr (VP Sales and Marketing)
8100 SouthPark Way, B, Littleton, CO 80120 10,677(1) *
----------------------------------------------------------------------------------------------------------
C. Jean Bustard (Chief Operating Officer)
8100 SouthPark Way, B, Littleton, CO 80120 27,296(2) *
----------------------------------------------------------------------------------------------------------
Robert N. Caruso (Director nominee)
8100 SouthPark Way, B, Littleton, CO 80120 - -
----------------------------------------------------------------------------------------------------------
Michael D. Durham (Director and President)
8100 SouthPark Way, B, Littleton, CO 80120 161,864(3) 2.9%
----------------------------------------------------------------------------------------------------------
Dynamis Advisors LLC
310 Fourth Street, NE, Suite 101, Charlottesville, VA 460,574(4) 8.2%
----------------------------------------------------------------------------------------------------------
John W. Eaves (Director)
8100 SouthPark Way, B, Littleton, CO 80120 1,000 *
----------------------------------------------------------------------------------------------------------
Derek C. Johnson (Director nominee)
8100 SouthPark Way, B, Littleton, CO 80120 - -
----------------------------------------------------------------------------------------------------------
Ronald B. Johnson (Director)
8100 SouthPark Way, B, Littleton, CO 80120 10,270(5) *
----------------------------------------------------------------------------------------------------------
Robert H. Lowdermilk (Director)
8100 SouthPark Way, B, Littleton, CO 80120 186,605(6) 3.3%
----------------------------------------------------------------------------------------------------------
Mark H. McKinnies (Director, Secretary, Senior VP and CFO)
8100 SouthPark Way, B, Littleton, CO 80120 64,770(7) 1.2%
----------------------------------------------------------------------------------------------------------
Richard Miller (VP Business Development of Utility Systems)
8100 SouthPark Way, B, Littleton, CO 80120 - -
----------------------------------------------------------------------------------------------------------
Rollie J. Peterson (Director)
8100 SouthPark Way, B, Littleton, CO 80120 30,914(8) *
----------------------------------------------------------------------------------------------------------
Richard J. Schlager (VP of Contract R&D)
8100 SouthPark Way, B, Littleton, CO 80120 22,063(9) *
----------------------------------------------------------------------------------------------------------
Jeffrey C. Smith (Director)
8100 SouthPark Way, B, Littleton, CO 80120 9,470(10) *
----------------------------------------------------------------------------------------------------------
Wellington Management Co. LLP
75 State Street, Boston, MA 804,200(4) 14.3%
----------------------------------------------------------------------------------------------------------
Directors and Officers as a Group (13 individuals) 627,181(11) 11.3%
----------------------------------------------------------------------------------------------------------
* Less than 1%.
Notes:
(1) Included in the amount shown are 10,677 shares to which Mr. Barr has the
right to acquire beneficial ownership through stock options.
(2) Included in the amount shown are 6,514 shares to which Ms. Bustard has the
right to acquire beneficial ownership through stock options and 10,933
shares held in Ms. Bustard's pension fund account.
(3) Included in the amount shown are 45,852 shares held in Dr. Durham's pension
fund account and 11,326 shares Dr. Durham has the right to acquire
beneficial ownership through stock options.
(4) As of December 31, 2005 per Schedule 13G filed with the U.S. SEC.
(5) Included in the amount shown are 1,667 shares to which Mr. Johnson has the
right to acquire beneficial ownership through stock options.
6
(6) Included in the amount shown are 13,000 shares registered in the name of
Mr. Lowdermilk's wife, 500 shares held jointly with Mr. Lowdermilk's wife,
666 shares held as custodian for a minor child, 109,000 shares held by TCC
and 1,667 shares to which Mr. Lowdermilk has the right to acquire
beneficial ownership through stock options. Mr. Lowdermilk is the president
and majority shareholder of TCC.
(7) Included in the amount shown are 33,117 shares held in Mr. McKinnies'
pension fund account, 500 shares held as trustee for the MJ Kraft Trust,
and 8,534 shares Mr. McKinnies has the right to acquire beneficial
ownership through stock options.
(8) Included in the amount shown are 1,667 shares to which Mr. Peterson has the
right to acquire beneficial ownership through stock options.
(9) Included in the amount shown are 6,177 shares to which Mr. Schlager has the
right to acquire beneficial ownership through stock options and 12,086
shares held in Mr. Schlager's pension fund account.
(10) Included in the amount shown are 1,667 shares to which Mr. Smith has the
right to acquire beneficial ownership through stock options.
(11) The amount shown includes 56,230 shares to which individuals in the group
have the right to acquire beneficial ownership through stock options.
EQUITY COMPENSATION PLAN INFORMATION
Number of securities remaining
Number of securities to Weighted-average exercise available for future issuance under
be issued upon exercise price of outstanding equity compensation plans
of outstanding options, options, warrants and (excluding securities reflected in
Plan category warrants and rights rights column (a))
------------- ------------------- ------------------------- ----------------------------------
(a) (b) (c)
Equity compensation plans
approved by security holders 172,138 $12.99 175,811
Equity compensation plans not
approved by security holders 259,345 $9.66 -
(1)
---------- ------- ---------
Total 431,483 $10.99 175,811
======= ====== =======
(1) The plans that were not approved by shareholders are our 2004 Executive
Stock Option Plan, options granted to Arch Coal and options granted to three
consultants. For a description of the material features of these plans and the
options granted to Arch Coal, please see "Stock Option Plans" and "Certain
Relationships and Transactions" below and Note 5 to our Consolidated Financial
Statements included in our Annual Report on Form 10-KSB. Options granted to
consultants include a ten-year option for 30,000 shares of our common stock with
an exercise price of $14.60, with vesting at the discretion of the board of
directors upon achievement of performance objectives; and ten-year options
granted to two consultants for 4,625 shares of our common stock with an exercise
price of $13.80, which vested at issuance.
EXECUTIVE COMPENSATION
The following tables show compensation during the fiscal years ended December
31, 2005, 2004 and 2003, and option grants and option exercises during the
fiscal years ended December 31, 2005, 2004 and 2003, of those persons who were,
at December 31, 2005 the five most highly compensated executive officers ("named
executive officers") of ADA-ES whose total compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation
-----------------------------------------
Long-Term
Compensation Awards
Name of Individual and Securities Underlying
Principal Position Year Salary Bonus Pension (1) Options (#) (2)
---------------------- ---- ------ ----- ----------- ---------------
Jonathan S. Barr 2005 $122,539 $ 5,486 $ 8,744 --
V.P., Sales and Marketing 2004 $ 52,512 $ 1,046 $ -- 42,600
C. Jean Bustard 2005 $136,378 $ 6,273 $ 15,559 --
Chief Operating Officer 2004 $131,356 $ 4,685 $ 12,443 33,900
2003 $118,668 $ -- $ 17,461 --
Michael D. Durham 2005 $189,352 $ 6,881 $ 18,761 --
President, CEO and 2004 $189,781 $ 5,755 $ 17,824 59,000
Director 2003 $168,637 $ -- $ 24,851 --
Mark H. McKinnies 2005 $178,048 $ 6,273 $ 18,004 --
Director, Senior Vice President 2004 $179,137 $ 5,755 $ 16,992 44,400
and Chief Financial Officer 2003 $167,892 $ -- $249,270 14,500
Richard J. Schlager 2005 $128,618 $ 6,063 $ 15,718 --
Vice President of Contract 2004 $112,901 $ 4,685 $ 12,126 32,100
Research & Development 2003 $117,828 $ -- $ 17,327 --
7
(1) Amounts represent pension and profit sharing contributions and 401(k)
matching payments made or accruing to a qualified plan by the Company for
the benefit of the named individual.
(2) The securities shown for 2003 represent options to acquire shares granted
pursuant to our 2003 Stock Option Plan, which is described below. The
securities shown for 2004 represent options to acquire shares granted
pursuant to our 2004 Executive Stock Option Plan, which is described below.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
None.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of securities
Shares underlying unexercised Value of unexercised
acquired on Value options at FY-end(#) (1) options at FY-End
Name exercise (#) realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- -------------------------
Jonathan S. Barr 3,000 $ 56,610 16,554/ 23,046 $159,581/$164,323
C. Jean Bustard 8,695 $169,278 13,028/ 16,872 $125,590/$162,646
Michael D. Durham 9,990 $188,012 11,850/ 37,160 $114,234/$358,222
Mark H. McKinnies 7,490 $138,415 11,558/ 25,352 $111,419/$244,393
Richard J. Schlager 3,800 $ 78,280 12,891/ 15,409 $124,269/$148,543
(1) The securities shown as "Exercisable" and "Unexercisable" as of December
31, 2005 represent options to acquire shares granted pursuant to our
Executive Stock Option Plan and 2003 Stock Option Plan described below. The
securities shown as "Exercisable" represent the options earned for the year
ended December 31, 2005 and vested by action of the Company's Board of
Directors on January 27, 2006.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
We have executed employment agreements with every full-time employee, including
our executive officers, which contain the following provisions:
1. Automatic extensions for one-year periods.
2. Three month written notice of intent to terminate by either the
Company or the employee.
3. Description of position, duties, authority, compensation, benefits and
obligation of the employee to devote fulltime to the fulfillment of
his/her obligations under the agreement.
4. Disclosure/ownership of inventions and confidential subject matter.
5. Assignment of inventions and confidential subject
matter/documentation/commercialization.
6. Copyright works and written records.
7. Restrictive obligations relating to confidential subject matter.
8. Conflicting obligations and obligations upon termination of
employment.
The compensation amounts included in the employment agreements are subject to
annual adjustment and the 2005 compensation levels 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's
employment with us or from a change-in-control of the Company or a change in the
named executive officer's responsibilities following a change-in-control.
8
STOCK OPTION PLANS
During 2003, we adopted the ADA-ES, Inc. 2003 Stock Option Plan (the "2003
Plan"). 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 "incentive stock options" 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'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. Under the 2003 Plan, the grant of options is limited to 20,000 per
individual. During 2005, 61,900 options were granted under the 2003 Plan.
During 2004, we adopted the ADA-ES, Inc. 2004 Executive Stock Option Plan (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 ("NQSO") for federal income tax purposes. The 2004 ESO Plan is
administered by our Board'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 that may be
accelerated based on performance of the individual recipients as determined by
our Board's Compensation Committee. During 2004, options were granted under the
2004 ESO Plan to five executive officers, each of whom is a full-time employee.
In January 2005 and January 2006, our Board's Compensation Committee authorized
the vesting of 27,080 options and 38,428 options, respectively, under the 2004
ESO Plan based on performance targets that were met.
During 2004, we adopted the 2004 Stock Compensation Plan #2 (the "2004 Plan")
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.
During 2005 we adopted the 2005 Directors' Compensation Plan (the "2005 Plan"),
which authorized the issuance of shares of common stock and the grant of options
to purchase shares of 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.
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
9
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We executed a Securities Subscription and Investment Agreement (the "Investment
Agreement") with Arch Coal in July 2003. Pursuant to the Investment 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 co-market Arch Coal's ADA-M product under an agreement with Arch Coal as
described above and perform certain testing and research projects under
agreements with Arch Coal. Under these arrangements with Arch Coal, we recorded
revenue of $230,000 and $25,000 in 2005 and 2004, respectively. We also granted
Arch Coal certain "piggyback" 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. 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 no less 100,000 shares
of our common stock. Mr. Eaves is Arch Coal's current designee to our Board of
Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that during
the fiscal year ended December 31, 2005, all filing requirements applicable to
our officers, directors and greater than ten percent beneficial owners were met.
CODE OF ETHICS
The Company has adopted a Code of Conduct that is applicable to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of our Code of
Conduct is filed as an exhibit to our Annual Report on Form 10-KSB for 2005 and
is posted on our website at www.adaes.com. Any amendments to, or waivers from,
any provision of the Code of Ethics applicable to these officers or persons will
be disclosed by posting the information on our website at www.adaes.com within
five business days.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Hein & 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 & Associates, LLP periodically changes the
personnel who work on the audit.
The Audit Committee of the Board has engaged Hein & Associates, LLP as the
independent auditors for work to be performed during the calendar year ending
December 31, 2006. Consistent with our standard practice, we intend to engage
auditors for the audit of the financial statements for the year ending December
31, 2006 in the fourth quarter of 2006. We anticipate that a representative of
Hein & Associates, LLP, who conducted the audit for the year ended December 31,
2005, 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
& Associates, LLP during the two most recent fiscal years or any subsequent
interim periods. The representative of Hein & 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.
10
AUDIT FEES
In addition to performing the audit of the Company's annual consolidated
financial statements, Hein & Associates, LLP provided other services during 2004
and 2005. The aggregate fees billed in 2004 and 2005 for each of the following
categories of services are set forth below:
Fiscal Year
-----------
2005 2004
---- ----
Audit Fees (1) $ 77,748 $ 58,513
Audit-Related Fees (2) $ 13,785 $ 1,896
Tax Fees -- --
All Other Fees -- --
(1) Includes quarterly review services related to our Form 10-QSB filings and
review services related to the filing of a Registration Statement on Form
S-3 in 2004 and Registration Statement on Form S-3 in 2005 and three
Registration Statements on Form S-8 in 2004.
(2) Includes review of preliminary Sarbanes-Oxley Section 404 documentation in
2004 and additional review services related to Sarbanes-Oxley Section 404
in 2005.
AUDIT COMMITTEE APPROVAL OF SERVICES
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 2005. None of the services of the independent
accountant in 2005 were of the type specified in Rule 2-01(c)(7)(i)(C) of
Regulation S-X.
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION AT THE NEXT
ANNUAL MEETING OF SHAREHOLDERS
We anticipate that our next Annual Meeting of Shareholders will be held in May
2007. 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 December 11, 2006. If a shareholder intends to
submit a proposal at the meeting that is not included in the Company's proxy
statement, and the shareholder fails to notify the Company prior to February 24,
2007 of such proposal, then the proxies appointed by the Company'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'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.
ANNUAL REPORT ON FORM 10-KSB
We will provide our Annual Report on Form 10-KSB concerning our operations
during the calendar year ended December 31, 2005, 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, B, Littleton, Colorado
80120. Exhibits listed in the Form 10-KSB are available upon request to
shareholders at a nominal charge for printing and mailing.
OTHER MATTERS
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.
11
APPENDIX A
ADA-ES INC.
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
I. Purpose. The Audit Committee ("Committee") is appointed by the Board of
Directors of the Company ("Board") to oversee the accounting and financial
reporting processes of the Company and the audit of the Company's financial
statements. In this oversight role, the Committee monitors the integrity of
the Company's financial statements, the independent auditor's
qualifications and independence, the performance of the Company's
independent auditors, compliance by the Company with legal, ethical and
regulatory requirements and the Company's processes to identify and manage
business and financial risk.
II. Composition. The Committee must be comprised of three or more directors as
determined by the Board. Committee members, including the Chairperson of
the Committee, shall be appointed by the Board on an annual basis upon the
recommendation of the Nominating and Governance Committee and may be
removed by the Board at any time. The members of the Committee shall meet
the independence requirements of applicable laws, regulations and rules of
the Nasdaq Stock Market.(1) In appointing committee members, the Board must
find that each member has the ability to read and understand fundamental
financial statements, that at least one member is an "audit committee
financial expert" as defined by the rules and regulations of the Securities
and Exchange Commission and that at least one member, who may also be the
financial expert, meets the financial sophistication standard required by
Nasdaq. No individual who has participated in the preparation of the
Company's financial statements during the preceding three years is eligible
to serve on the Committee. The Committee shall select a Chairperson from
among its members who shall serve for a term of not less than one year.
III. Meetings and Operations. The Committee shall meet at least on a quarterly
basis and at such additional times as may be deemed necessary or
appropriate by the Chairperson and at such times and places and by such
means as the Chairperson determines. Each regularly scheduled meeting will
conclude with an executive session without management present. The
Committee shall keep adequate and accurate minutes of all meetings and
Committee members will be furnished with copies of the minutes of each
meeting and any action taken by written consent. The Committee shall report
regularly to the Board with respect to its activities (no less often than
at each regularly scheduled meeting of the Board). A majority of the
members of the Committee shall constitute a quorum. The Committee shall be
governed by the same rules regarding meetings (including meetings by
conference telephone or similar communications equipment), action without
meetings, notice, waiver of notice, and quorum and voting requirements as
are applicable to the Board. The Committee is authorized and empowered to
adopt its own rules of procedure not inconsistent with (a) any provision of
this Charter, (b) any provision of the Bylaws of the Company, or (c)
applicable laws.
IV. Communication. The independent auditor shall report directly to the
Committee. The Committee shall meet periodically in separate executive
sessions with management and the independent auditor and have such other
direct and independent communication with such persons from time to time as
Committee members deem appropriate. The Committee may request any officer
or employee of the Company or the Company's outside counsel or independent
auditor to attend Committee meetings or to meet with any members of or
consultants to the Committee.
V. Authority.
A. Independent Auditor
1. The Committee has the sole authority to appoint, compensate, retain
and oversee the performance of Company's independent auditor, subject
to shareholder ratification if applicable.
-----------------------
(1) Under exceptional and limited circumstances, the Board may appoint a member
of the audit committee that does not meet the Nasdaq's independence requirements
if such individual's membership is required by the best interests of the Company
and its shareholders. Such member must, however, meet the SEC's independence
criteria under Section 10A(m)(3) of the Exchange Act and rules thereunder and
must not be an officer or employee or a family member of an officer or employee.
If such a member is appointed, he or she may serve for no more than two years
and may not serve as Chairperson. In addition, the Company must disclose in its
annual proxy statement the basis for the Board's determination and the nature of
the individual's relationship to the Company.
12
2. The Committee shall pre-approve all auditing services, internal
control-related services and permitted non-audit services to be
performed by the independent auditor, subject to the de minimis
exception for non-audit services approved by the Committee prior to
completion of the audit pursuant to Section 10A(i)(1)(B) of the
Exchange Act. The Committee may delegate this pre-approval to a
subcommittee of one or more members. Any such subcommittee must report
any pre-approvals to the full Committee at its next meeting.
B. Other Advisors
1. The Committee has the sole authority to engage and compensate
independent legal, accounting and other advisors to the Committee. Any
communications between the Committee and legal counsel in the course
of obtaining legal advice will be considered privileged communications
of the Company and the Committee will take all necessary steps to
preserve the privileged nature of those communications.
C. Resources
1. The Company shall provide the Committee with appropriate resources to
ensure that Committee members maintain appropriate financial literacy,
receive appropriate orientation briefings and educational resources
related to accounting principles, procedures and current accounting
topics relevant for the Company.
2. The Committee may investigate any matter brought to its attention, and
the Company shall cooperate with the Committee and provide the
Committee with sufficient resources to conduct such investigation.
3. The Company shall provide the funding that the Committee determines is
appropriate for the independent auditors and advisors to the
Committee.
4. The Company shall provide funding for ordinary administrative expenses
of the Committee that are necessary or appropriate in connection with
its duties.
VI. Responsibilities
1. The Committee's specific responsibilities in fulfilling its oversight
role are set forth in the Audit Committee Responsibilities Calendar,
which is an addendum to and an integral part of this Charter. The
Committee will review and update the Calendar annually to reflect
changes in regulatory requirements and authoritative guidance.
2. The Committee relies on the expertise and knowledge of management and
the independent auditors in carrying out its oversight
responsibilities. The independent auditor is responsible for planning
and conducting audits, and the Company's management is responsible for
determining that the financial statements are complete, accurate and
prepared in accordance with generally accepted accounting principles.
The Committee is not responsible for these tasks.
13
PROXY For an Annual Meeting of Shareholders of PROXY
ADA-ES, INC.
Proxy Solicited on Behalf of the Board of Directors
THIS PROXY WILL BE VOTED IN RESPECT OF THE MATTERS LISTED IN ACCORDANCE WITH THE
CHOICE, IF ANY, INDICATED IN THE SPACESPROVIDED. 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.
NOTES:
1. Please date and sign (exactly as the shares represented by this Proxy are
registered) and return promptly. Where the instrument is signed by a
corporation, its corporate seal must be affixed and execution must be made by an
officer or attorney thereof duly authorized. 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).
2. To be valid, this Proxy form, duly signed and dated, must arrive at the
office of the Company'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 adjournment thereof.
The undersigned shareholder of ADA-ES, Inc. (the "Company") 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
"Meeting") to be held at the offices of the Company, 8100 SouthPark Way, Unit B,
Littleton, Colorado on Thursday, May 10, 2006, at the hour of 9:00 a.m. (local
time),and at every adjournment thereof, and the undersigned hereby revokes any
former proxy given to attend and vote at the meeting.
THE NOMINEE IS HEREBY INSTRUCTED TO VOTE AS FOLLOWS WITH RESPECT TO THE
FOLLOWING MATTERS PROPOSED BY THE COMPANY:
1. FOR [ ] WITHELD [ ] Election of Directors.
Nominees:
Robert N. Caruso
Michael D. Durham
John W. Eaves
Derek C. Johnson
Ronald B. Johnson
Mark H. McKinnies
Rollie J. Peterson
Jeffrey C. Smith
[ ] For all nominees, except the following:
---------------------------------------------
2. To consider and vote upon such other matters as may properly come before the
Meeting or any adjournment thereof.
14
Dated this _____ day of ________________, 2006.
--------------------------------------------------------------------------------
Signature of Shareholder(s)
(Please sign exactly as your name(s) appear on the mailing label below.)
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(Please print name of Shareholder[s])
15