Exhibit 4.3
APPENDIX I: ADA-ES, INC. INSIDER
TRADING POLICY
Why We Have a
Policy
The federal securities laws prohibit
the purchase or sale of securities by anyone who is aware of
material nonpublic information regarding the issuer of such
securities. These include shares of ADA-ES, Inc. common stock held
in your Retirement Plan held in you. They also prohibit the
disclosure of such information to others who then trade in the
issuer’s securities (“tippees”). The
Securities and Exchange Commission and U.S. attorneys pursue
insider trading violations vigorously, and violators are punished
severely. A company and its “controlling persons”
are subject to liability under the federal securities laws if they
fail to take reasonable steps to prevent insider trading by company
personnel.
The Board of Directors has adopted
this Policy both to satisfy the Company’s obligation to
prevent insider trading and to help employees avoid the severe
consequences associated with violations of the insider trading
laws. The Board also wishes to prevent even the appearance of
improper conduct on the part of anyone employed by or associated
with the Company. We have all worked hard over the years to
establish a reputation for integrity and ethical conduct, and we
cannot afford to have that reputation damaged.
Consequences of Insider
Trading Violations
The consequences of an insider
trading violation can be severe:
Traders and Tippers.
Employees who trade on inside
information and tippees are subject to the following
penalties:
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A civil penalty of up to three
times the profit gained or loss avoided;
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A criminal fine of up to
$1,000,000 (no matter how small the profit); and
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A jail term of up to ten
years.
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An employee who tips information to
a person who then trades is subject to the same penalties as the
tippee, even if the employee did not trade and did not profit from
the tippee’s trading.
Control Persons.
If the Company or its
supervisory personnel fail to take appropriate steps to prevent
illegal insider trading, then they are subject to the following
penalties:
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A civil penalty of up to
$1,000,000 or, if greater, three times the profit gained or loss
avoided as a result of the employee’s violation;
and
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A criminal penalty of up to
$2,500,000.
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Company-Imposed
Sanctions. If you
fail to comply with this Policy, you are subject to Company-imposed
sanctions, including dismissal for cause, whether or not your
failure to comply results in a violation of law. If you
violate the federal securities laws or become subject to an SEC
investigation, even if the investigation does not result in
prosecution, your reputation could be tarnished and your career
could be irreparably damaged.
The Policy
No employee who is aware of material
nonpublic information relating to the Company may, directly or
through family members or other persons or entities, (a) buy
or sell securities of the Company (other than pursuant to a
pre-approved trading plan that complies with SEC Rule 10b5-1(c) as
described below), or engage in any other action to take personal
advantage of that information, or (b) pass that information on
to others outside the Company, including family and
friends. In addition, no employee of the Company who, in the
course of working for the Company, learns of material nonpublic
information about a company with which the Company does business,
including a customer or supplier, may trade in that company’s
securities until the information becomes public or is no longer
material.
Please note that this Policy
prohibits even those transactions that you may feel are necessary
or justifiable for independent reasons (such as the need to raise
money for an emergency expenditure). The securities laws do
not recognize such mitigating circumstances, and, in any event,
even the appearance of an improper transaction must be avoided to
preserve the Company’s reputation for adhering to the highest
standards of conduct.
Disclosure of Information to
Others. The Company is
required under Regulation FD of the federal securities laws to
avoid the selective disclosure of material nonpublic information.
The Company has established procedures for releasing material
information in a manner that is designed to achieve broad public
dissemination of the information immediately upon its release. You
may not, therefore, disclose information to anyone outside the
Company, including family members and friends, other than in
accordance with those procedures. You also may not discuss the
Company or its business in an internet “chat room” or
similar internet-based forum.
If a shareholder or potential
shareholder calls to inquire about the status of projects,
financials, or other Company-sensitive information, these calls
must be directed to the President/Chief Executive Officer or Chief
Financial Officer of the Company or to the Company’s investor
relation’s consultant, which is currently The Equity
Group.
Material Information.
Material information is any
information that a reasonable investor would consider important in
making a decision to buy, hold, or sell securities. You should
consider any information that could be expected to affect the
Company’s stock price, whether it is positive or negative, as
material. Some examples of information that ordinarily would be
regarded as material are:
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Projections of future earnings or
losses or other earnings guidance;
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Earnings that are inconsistent
with the consensus expectations of the investment
community;
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A pending or proposed merger,
acquisition or tender offer;
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A pending or proposed acquisition
or disposition of a significant asset;
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A pending or proposed
financing;
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A change in dividend policy, the
declaration of a stock split, or an offering of additional
securities;
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A change in
management;
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Development of a significant new
product, service or process;
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Impending bankruptcy or the
existence of severe liquidity problems;
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News about a major contract award
or cancellation of an existing contract;
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The gain or loss of a significant
business partner;
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Significant legal exposure due to
actual, pending or threatened litigation; and
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Changes in the Company’s
auditors or a notification from the Company’s auditors that
the Company may no longer rely on the auditors’ audit
report.
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Remember, anyone scrutinizing your transactions
will be doing so after the fact, with the benefit of hindsight. As
a practical matter, before engaging in any transaction, you should
carefully consider how enforcement authorities and others might
view the transaction in hindsight.
When Information is
“Public”. If
you are aware of material nonpublic information, you may not trade
until the information has been disclosed broadly to the marketplace
(such as by press release or an SEC filing) and the investing
public has had time to absorb the information fully. To avoid the
appearance of impropriety, as a general rule, information should
not be considered fully absorbed by the marketplace until after the
second business day after the information is released. If, for
example, the Company makes an announcement on a Monday, you should
not trade in the Company’s securities until
Thursday.
Transactions by Family
Members. This Policy also
applies to your family members who reside with you, anyone else who
lives in your household, and any family members who do not live in
your household but whose transactions in company securities are
directed by you or are subject to your influence or control (such
as parents or children who consult with you before they trade in
company securities). You are responsible for the transactions of
these other persons and therefore should make them aware of this
Policy.
When and How You Can Trade
Company Securities
Trading Windows
Because the Company disseminates
material nonpublic information to employees on a regular basis, the
Board has determined to prohibit purchases and sales of Company
securities at any time other than during the “window”
period following release of the Company’s year-end or
quarterly earnings announcements (i.e. during the three-week period
beginning on the third business day following the date of the
earnings release). You may not engage in trading of the
Company’s securities in a window period, however, if you are
aware of material nonpublic information involving the Company. If
you are subject to the Company’s preclearance policy set
forth below, you must preclear your transactions even if they are
initiated during a window period. To reduce the burden of these
restrictions when you expect a need to sell the Company’s
securities at a specific time in the future, you may wish to
consider entering into a prearranged trading plan for that sale, as
discussed below.
From time to time the Company,
through the Chief Financial Officer, may close a trading window due
to material developments that are not public. In such events, known
as event-specific blackouts, the Chief Financial Officer may notify
particular individuals that they should not engage in any
transactions involving the purchase or sale of the Company’s
securities and should not disclose to others the fact that a
trading window has been closed. The failure of the Chief Financial
Officer to designate you as being subject to an event-specific
blackout will not relieve you of the obligation not to trade while
aware of material nonpublic information.
If you have an unexpected and urgent
need to sell Company securities in order to generate cash at a time
other than during a trading window, you may, in appropriate
circumstances, be granted a hardship exception. Hardship exceptions
may be granted only by the Chief Financial Officer and must be
requested at least two days in advance of the proposed
trade. A hardship exception may be granted only if the Chief
Financial Officer concludes that you do not possess any material
nonpublic information and that the Company does not know of any
such information that could be attributed to you. Under no
circumstance will a hardship exception be granted during an
event-specific blackout period.
Prearranged Trading Plans
An SEC rule, Rule 10b5-1(c),
provides a defense from insider trading liability if trades occur
pursuant to a pre-arranged “trading plan” that meets
specified conditions. Under this rule, if you enter into a binding
contract, an instruction or a written plan that specifies the
amount, price and date on which securities are to be purchased or
sold, and these arrangements are established at a time when you do
not possess material nonpublic information, then you may claim a
defense to insider trading liability if the transactions under the
trading plan occur at a time when you have subsequently learned
material nonpublic information. Arrangements under the rule may
specify amount, price and date through a formula or may specify
trading parameters that another person has discretion to
administer, but you must not exercise any subsequent discretion
affecting the transactions. In addition, if your broker or any
other person exercises discretion in implementing the trades, you
must not influence his or her actions, and he or she must not
possess any material nonpublic information at the time of the
trades. Trading plans can be established for a single trade or a
series of trades.
It is important that you properly
document the details of a trading plan. Please note that, in
addition to the requirements of a trading plan described above,
there are a number of additional procedural conditions to Rule
I0b5-1(c) that must be satisfied. Please check with your
broker or legal advisor on these conditions.
Pre-clearance Procedures for
Directors, Executive Officers and Other Designated
Employees
To help prevent
