ALL ACTIONS

This Stipulation and Agreement of Settlement (the “Stipulation”), dated September 30, 2016, is made and entered into by and among the following Settling Parties (as defined herein), each by and through their respective counsel: (i) plaintiffs to the above- captioned consolidated shareholder derivative action (the “Consolidated Action”), Garth Dull (“Dull”) and William Brown (“Brown”) (collectively, the “Plaintiffs”), derivatively on behalf of Advanced Emissions Solutions, Inc.; (ii) nominal defendant ADES; and (iii) defendants Michael D. Durham, Mark H. McKinnies, C. Jean Bustard, Sharon M. Sjostrom, Christine B. Amrhein, W. Phillip Marcum, Alan Bradley Gabbard, Kim B. Clarke, Derek C. Johnson, Paul A. Lang, Jeffrey C. Smith, Richard J. Swanson, Robert E. Shanklin, Ronald B. Johnson and Robert N. Caruso, all of whom are current or former members of ADES’s Board of Directors (the “Board”) and/or senior officers of ADES (collectively the “Individual Defendants” and, together with ADES, “Defendants”). This Stipulation, subject to the approval of the District Court for the County of Douglas, Colorado (the “Court”), is intended by the Settling Parties to fully, finally, and forever compromise, resolve, discharge, and settle the Released Claims (as defined herein) and to result in the complete dismissal of the Consolidated Action with prejudice, upon the terms and subject to the conditions set forth herein, and without any admission or concession as to the merits of any of the Settling Parties’ claims or defenses.

On June 27, 2014, plaintiff Dull initiated a shareholder derivative action in this Court on behalf of ADES, captioned Dull v. Durham, et al., Case No. 2014CV30709 (the “Dull Action”). Plaintiff Dull asserted claims against certain of the Individual Defendants for breach of the fiduciary duties of loyalty and good faith and unjust enrichment. On July 2, 2014, plaintiff Brown initiated a shareholder derivative action in the District Court for the City and County of Denver on behalf of ADES, captioned Brown v. Durham, et al., Case No. 2014CV32606. Plaintiff Brown asserted claims against certain of the Individual Defendants for breach of fiduciary duty, waste of corporate assets, and unjust enrichment. On July 17, 2014, plaintiff Brown moved to dismiss his derivative complaint without prejudice. On July 23, 2014, the Denver District Court granted Brown’s motion to dismiss his complaint without prejudice. On August 1, 2014, plaintiff Brown re-filed his shareholder derivative complaint in this Court on behalf of ADES, captioned Brown v. Durham, et al., Case No. 2014CV30814 (the “Brown Action”).

Plaintiffs alleged that the Individual Defendants breached their fiduciary duties by, inter alia, allegedly failing to maintain adequate internal and financial controls in connection with the restatement of the Company’s historical financial statements. Plaintiffs further alleged that certain of the Individual Defendants wasted corporate assets and were unjustly enriched in connection with compensation paid during the restatement periods.

On August 19, 2014, Plaintiffs, ADES, and the Individual Defendants filed with the Court a Stipulation and Proposed Order Consolidating Actions, Appointing Co-Lead Plaintiffs and Co-Lead Counsel and Staying Consolidated Action. On August 28, 2014, the Court approved this Stipulation and Proposed Order, which consolidated the Dull Action with the Brown Action under the caption In re Advanced Emissions Solutions, Inc. Shareholder Derivative Litigation, Consol. Civil Action No. 2014CV30709, appointed Plaintiffs Dull and Brown as Co-Lead Plaintiffs in the Consolidated Action, appointed the law firms of Kessler Topaz Meltzer & Check, LLP and Robbins Arroyo LLP as Co-Lead Counsel for Co-Lead Plaintiffs in the Consolidated Action, and stayed the Consolidated Action until at least 30 days after a decision by the U.S. District Court for the District of Colorado on the defendants’ motion to dismiss a related securities class action, captioned United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund v. Advanced Emissions Solutions, Inc., Civil Action No. 14-cv-01243-CMA-KMT (the “Class Action”).

In March 2016, the Settling Parties agreed to engage in discussions regarding a potential resolution of the Consolidated Action, and in furtherance thereof, to attend a mediation of the Consolidated Action (the “Mediation”) with Jed Melnick, Esq. of JAMS (the “Mediator”), an experienced and well-respected mediator. On May 24, 2016, the Settling Parties participated in an

in-person Mediation of the Consolidated Action in New York City, New York. ADES and counsel for certain of the Defendants participated in a separate Mediation of the Class Action on that same date, during which a tentative settlement was reached with respect to the Class Action. During the Mediation, the Settling Parties reached agreement on some of the material terms for settlement of the Consolidated Action. After extensive discussions over the next seven weeks with assistance from the Mediator, the Settling Parties reached an agreement-in-principle to resolve the Consolidated Action, subject to approval by the Board and the Settling Parties’ agreement on final documentation. On July 18, 2016, the Settling Parties executed a Term Sheet setting forth the terms of such agreement-in-principle (the “Term Sheet”). As a condition of the settlement reflected in this Stipulation (the “Settlement”), ADES agreed to present to its Board for its approval certain corporate governance reforms, the terms of which are fully set forth in Exhibits B–E hereto. The Settling Parties negotiated at arm’s length and with the assistance of the Mediator that Defendants or their insurers will not oppose Plaintiffs’ request for a reasonable fee award to Plaintiffs’ counsel in an amount up to $550,000. Following the execution of the Term Sheet, Plaintiffs engaged in confirmatory discovery, which included the Company’s production of non-public documents to Plaintiffs and Plaintiffs’ interviews of the Company’s Chief Executive Officer, Heath Sampson, and Vice President of Risk, Process and Controls, Christine Bellino, on July 26, 2016. After review of such documents and the completion of the interviews, Plaintiffs concluded that the terms of the Settlement are fair, reasonable and adequate to ADES and its stockholders. At its meeting on August 11, 2016, the Board approved the terms of the Settlement (subject to having the company’s counsel address one issue before they sign the Settlement, which was subsequently addressed) and adopted the corporate governance reforms set forth in Exhibits B and C (the Board had previously adopted the corporate governance reforms in Exhibits D and E). The parties agreed to sign this final Stipulation and Agreement of Settlement as of September 30, 2016.

Plaintiffs believe that the claims they have asserted in the Consolidated Action on behalf of ADES have merit. Plaintiffs, however, recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Consolidated Action against the Individual Defendants through trial and appeals. Plaintiffs and their counsel have also taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as the Consolidated Action, as well as the difficulties and delays inherent in such litigation. Plaintiffs and their counsel are also mindful of the inherent problems of proof and possible defenses to the claims asserted in the Consolidated Action. Based on their evaluation, Plaintiffs and their counsel have determined that the Settlement set forth in this Stipulation is in the best interests of ADES. Plaintiffs and their counsel believe that the Settlement set forth in this Stipulation confers substantial benefits upon ADES and its shareholders. Plaintiffs and their counsel base this conclusion upon, among other things, Plaintiffs’ Counsel’s extensive investigation during the development, prosecution and settlement of the Consolidated Action, which included, inter alia: (i) inspecting, reviewing and analyzing the Company’s press releases and filings with the Securities and Exchange Commission (“SEC”) and other publicly available information; (ii) researching corporate governance issues; (iii) researching the applicable law with respect to the claims asserted in the Consolidated Action and

the potential defenses thereto; (iv) reviewing certain non-public documents produced by the Company; and (v) interviewing the Company’s Chief Executive Officer, Heath Sampson, and Vice President of Risk Process and Controls, Christine Bellino.

The Individual Defendants have denied, and continue to deny, each and every claim and contention alleged by Plaintiffs in the Consolidated Action and affirm that they have acted properly, lawfully, and in full accord with their fiduciary duties, at all times. Further, the Individual Defendants have denied expressly, and continue to deny, all allegations of wrongdoing, fault, liability, or damage against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Consolidated Action and deny that they have ever committed or attempted to commit any violations of law, any breach of fiduciary duty owed to ADES or its shareholders, or any wrongdoing whatsoever. Had the terms of this Stipulation not been reached, the Individual Defendants would have continued to contest vigorously Plaintiffs’ allegations, and the Individual Defendants maintain that they had and have meritorious defenses to all claims alleged in the Consolidated Action. Defendants maintain that ADES always has been, and continues to be, committed to the implementation, enhancement and enforcement of rigorous corporate governance measures.

Without admitting the validity of any of the claims that Plaintiffs have asserted in the Consolidated Action, or any liability with respect thereto, Defendants have concluded that it is desirable that the claims be settled on the terms and subject to the conditions set forth herein. Defendants are entering into this Settlement because it will eliminate the uncertainty, distraction, disruption, burden, and expense of further litigation of the Consolidated Action. Neither this Stipulation, nor any of its terms or provisions, nor any act performed or document executed pursuant to or in furtherance of the Settlement: (a) is, may be construed as, or may be used as an admission of, or evidence of, the truth or validity of any of the Released Claims, of any claims or allegations made in the Consolidated Action, or of any purported acts or omissions by the Defendants; (b) is, may be construed as, or may be used as an admission of, or evidence of, any fault, omission, negligence, or wrongdoing by the Defendants, or any concession of liability whatsoever; or (c) is, may be construed as, or may be used as an admission of, or evidence of, a concession by any Defendant of any infirmity in the defenses that Defendants asserted or could have asserted in the Consolidated Action or otherwise.

Plaintiffs (for themselves and derivatively on behalf of ADES), the Individual Defendants, and nominal defendant ADES, by and through their respective counsel or attorneys of record, hereby stipulate and agree that, subject to approval by the Court, in consideration of the benefits flowing to the Settling Parties hereto, the Consolidated Action and all of the Released Claims shall be fully, finally, and forever compromised, settled, released, discharged and dismissed with prejudice, upon the terms and subject to the conditions set forth herein as follows:

As used in this Stipulation, the following terms have the meanings specified below. In the event of any inconsistency between any definition set forth below and any definition set forth in any document attached as an exhibit to this Stipulation, the definition set forth below shall control.

Person has or may have, including, but not limited to, any rights any Released Person has or may have related to any pending or threatened civil or government proceedings.

against any Released Persons in the Consolidated Action or in any other court, tribunal, forum or proceeding (including, but not limited to, any claims arising under U.S. federal, state or local law, foreign law, common law, statutory law, administrative law, rule, regulation, or at equity), relating to:

alleged fraud, breach of any duty (including, but not limited to, breaches of fiduciary duties, breaches of the duty of care, or breaches of the duty of loyalty), negligence or gross negligence, mismanagement or gross mismanagement, corporate waste, abuse of control, unjust enrichment, disgorgement, recoupment, contribution or indemnification, violations of the federal securities laws, or otherwise, that are based upon, arising from, or related to:

(i) the claims, facts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures to act, or any other circumstances, which were alleged or referred to in the Consolidated Action; (ii) any compensation, pay, bonus, severance, or benefits received by any Released Person, as relating to or in connection with any allegations made in the Consolidated Action; (iii) any of the Company’s public disclosures or filings through the date of the Stipulation of Settlement regarding its restated financial results disclosed in February 2016; and/or (iv) the settlement of the Consolidated Action and the reasonable attorneys’ fees, costs, and expenses incurred in defense thereof.

Released Claims shall not include claims to enforce the Settlement, or any indemnification, advancement or insurance claims that any Released Person may have, including, but not limited to, any rights any Released Person has or may have related to any pending or threatened civil or government proceedings. Released Claims also does not include claims asserted in the Class Action, which is the subject of separate settlement agreements.

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

Plaintiffs and ADES shall expressly waive, and each of ADES’s stockholders shall be deemed to have, and by operation of the Judgment shall have, expressly waived any and all provisions, rights, and benefits conferred by any U.S. federal law or any law of any state or territory of the United States, or principle of common law or foreign law, which is similar, comparable or equivalent in effect to California Civil Code § 1542. The Settling Parties acknowledge that they may discover facts in addition to or different from those now known or believed to be true by them with respect to the Released Claims, but it is the intention of the Settling Parties to completely, fully, finally, and forever compromise, settle, release, discharge, and extinguish any and all of the Released Claims known or unknown, suspected or unsuspected, contingent or absolute, accrued or unaccrued, apparent or unapparent, which now exist, or heretofore existed, or may hereafter exist, and without regard to the subsequent discovery of additional or different facts. Plaintiffs and ADES acknowledge, and ADES’s stockholders shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and was a material element of the Settlement. With respect to Defendants’ Released Claims, “Unknown Claims” means any and all Defendants’ Released Claims, of every nature and description, which the Released Persons do not know or suspect to exist in their favor at the time of the release of Plaintiffs or their

beneficiaries, Plaintiffs’ Counsel, or ADES which, if known by them, might have affected their decisions with respect to the release of Defendants’ Released Claims or the Settlement.

form of Exhibit F attached hereto, inter alia: (i) preliminarily approving the Settlement set forth in this Stipulation; (ii) approving the method of providing notice of the proposed Settlement to Current ADES Stockholders; (iii) approving the forms of Notice attached hereto as Exhibit G and Summary Notice attached hereto as Exhibit H; and (iv) setting a date for the Settlement Hearing. Plaintiffs’ motion shall request that the Court hold the Settlement Hearing no earlier than forty-nine (49) calendar days after the deadline for dissemination of notice described in Part IV.C.2 below.

(solely in their capacity as ADES stockholders) shall be deemed to have, and by operation of the Judgment shall have, covenanted not to sue any Released Person with respect to any Released Claims and any claims arising out of, relating to, or in connection with the defense, settlement or resolution of the Consolidated Action, and shall be permanently barred and enjoined from instituting, commencing or prosecuting the Released Claims against the Released Persons.

details to accomplish payment of the Fee Award to the Escrow Account by check and by wire transfer, including the name of the payee, the payee’s address where a payment by check is to be sent, and the bank account number, name of bank, bank address, a Sort Code or ABA Routing Number, wire transfer instructions, the Tax Identification Number, and an executed Form W-9. Defendants, Defendants’ Counsel, and Defendants’ insurers shall have no responsibility for, nor bear any risk or liability with respect to, the Escrow Account, its operation, and any taxes or expenses incurred in connection with the Escrow Account. Plaintiffs’ Counsel shall be solely responsible for any administrative costs associated with the Escrow Account as well as the filing of all informational and other tax returns with the Internal Revenue Service, or any other state or local taxing authority, as may be necessary or appropriate.

the Court or on appeal, the difference between the total amount of the Fee Award and the amount ultimately approved by the Court. Each of Plaintiffs’ Counsel that receives any portion of the Fee Award is subject to the Court’s jurisdiction for the purposes of enforcing this paragraph or the provisions related to the Fee Award. With respect to any amounts returned to ADES, payment should be made in accordance with instructions provided by Defendants’ Counsel.

(a)    the Court’s entry of the Judgment;

(b)    the payment of the Fee Award in accordance with Part IV.E.1-2 hereof;

(c)    the Judgment has become Final;

(d)    the Consolidated Action has been dismissed with prejudice and that dismissal order has become Final.

to attempt to remedy the issue. Any order or proceeding relating to the Fee Award, or any appeal from any order relating thereto or reversal or modification thereof, shall not operate to cancel the Stipulation, allow for the termination of the Settlement, or affect or delay the finality of the Judgment approving the Settlement.

competent legal counsel. Except in the event of termination of the Settlement, the Settling Parties agree not to assert under Rule 11 of the Colorado Rules of Civil Procedure or any similar law, rule or regulation, that the Consolidated Action was brought or defended in bad faith or without a reasonable basis. The Settling Parties also will request that the Judgment will contain a finding that during the course of the Consolidated Action the Settling Parties and their respective counsel at all times complied with the requirements of Colo. R. Civ. P. 11 and all other similar rules of professional conduct.

(a) the truth of any fact alleged by Plaintiffs or the validity, or lack thereof, of any claim that has been or could have been asserted in the Consolidated Action or in any litigation, or the deficiency or infirmity of any defense that has been or could have been asserted in the Consolidated Action or in any litigation, or of any fault, wrongdoing, negligence, or liability of any of the Released Persons;

(b) any statement or written document approved, issued, or made by any Released Person, or against Plaintiffs as evidence of any infirmity in their claims;

(c) any other reason as against the Released Persons, in any arbitration proceeding or other civil, criminal, or administrative action or proceeding in any court, administrative agency, or other tribunal.

The fact that ADES has implemented, or has agreed to implement, changes, modifications, or enhancements to its corporate governance policies and practices shall not be construed as an admission that any such enhanced policies or practices

are legally required, or to the extent such policies or practices were not in place in the past, constituted a failure of compliance, a breach of any duty or any other wrongdoing.

The Released Persons may refer to the Settlement, and file the Stipulation and/or the Judgment, in any action that may be brought against them to effectuate the liability protections granted them hereunder, including, without limitation, to support a defense or claim based on principles of res judicata, collateral estoppel, full faith and credit, release, standing, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or claim under U.S. federal or state law or foreign law.

same instrument. A complete set of original executed counterparts shall be filed with the Court.

IN WITNESS WHEREOF, the Settling Parties hereto have caused the Stipulation to be executed, by their duly authorized attorneys, dated as of September 30, 2016.

The Company’s Board will adopt concurrent with its approval of this Stipulation of Settlement a revised “Board Responsibilities: Overview of Directors’ Function” document, a copy of which is attached as Exhibit B. A copy of that document will be posted on the investor resources section of the Company’s website.

The Company’s Board will adopt concurrent with its approval of this Stipulation of Settlement a revised Audit Committee Charter, a copy of which is attached as Exhibit C. A copy of that document will be posted on the investor resources section of the Company’s website.

In addition, on and after the Effective Date of the Settlement, the Audit Committee will ensure that the Company’s management is qualified to deal with GAAP and SEC financial reporting, and that all the people in its accounting department who prepare the Company’s financial statements have appropriate GAAP, SEC financial reporting, and accounting experience and training.

Once the following Triggering Events occur, the Company will expedite its compliance with any new Dodd Frank and/or SEC requirements on clawback of executive compensation no later than the later of the following dates:

a) six months after all the two Triggering Events are complete; or

b) March 30 following the expiration of the six month period after the completion of the Triggering Events.

Within 30 calendar days of the Effective Date, the Board will amend the Company’s bylaws with respect to director elections each year, to provide for a majority vote instead of a plurality vote, except in the event of a contested board seat. If, with respect to an election of directors not constituting a contested election and for which a quorum is present, any incumbent director does not receive a majority of the votes cast, following certification of the stockholder vote, the independent members of the Board will promptly address whether such director should tender his or her resignation from the Board, if the size of the Board should be reduced (subject to the provisions of the Term Sheet),

or if some other action should be taken as determined by the majority vote of the independent directors.

For at least one year from September 30, 2016 the Company will have an outside firm (Deloitte) oversee the independent testing of the Company’s internal controls. Before the end of that one year period the Audit Committee will include on its meeting agenda addressing the accomplishment of independent testing of internal controls, which may include extending Deloitte’s engagement, for an additional period beyond the current engagement, which runs through at least January 2017.

In December 2014, the Company appointed a Director of SEC Reporting and Technical Accounting, who is a CPA with Big Four auditing experience (Greg Marken) who was unanimously appointed by the Board as Chief Accounting Officer (“CAO”) effective June 12, 2016. The CAO will report to the Company’s Chief Executive Officer and have direct access to the Audit Committee.

An executive with direct access to the Audit Committee, who may be the CAO, Director of SEC Reporting and Technical Accounting, Vice President, or similar executive of the Company, will oversee the Company’s internal control function.

The Company has adopted an updated monthly close checklist, which details specific tasks to be completed on a monthly and quarterly basis and identifies the person responsible for each task. The Audit Committee will discuss with the CAO and the auditors that appropriate quarterly close activities have been completed each quarter before they close the review of each quarter’s financial statements.

Management has implemented entity-level controls, and they are under continuous review per the COSO framework. Under this framework, each group within the Company’s business is responsible for following established control procedures, certifying compliance, and being subject to review internally by the CAO and/or the Vice President of Risk, Process and Controls or other responsible executive as well as the third party reviewer. The Company has implemented remediation tracking and the third-party reviewer (Deloitte or its successor) will maintain a deficiency log.

The Nominating and Governance Committee Charter has been revised. A copy of the revised document is attached as Exhibit E.

•Adopting of the annual budget and reviewing financial results at regular intervals.

•Establishing and delegating authorities.

•Identify any barriers to the company’s progress and sense the timing for change.

 

1.The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Advanced Emissions Solutions, Inc. (the “Company”) is to oversee the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements. The Committee shall assist the Board with oversight of: the integrity of the Company’s financial statements; compliance with legal and regulatory requirements; qualifications and independence of the Company’s independent registered public accounting firm (“Independent Auditors”); the performance of the Company’s Independent Auditors; the Company’s internal audit function, as applicable; the Company’s systems of disclosure controls and procedures and internal control over financial reporting; and compliance with the Company’s Code of Ethics and Business Conduct (the “Code”).

2.The Committee has the sole authority to (1) select and retain the Company’s Independent Auditors for the purpose of auditing the Company’s annual financial statements, books, records, accounts and internal control over financial reporting, (2) set the compensation and terms of engagement of the Company’s Independent Auditors, (3) oversee and evaluate the work done by the Company’s Independent Auditors, (4) evaluate the outcome of any advisory vote by the Company’s stockholders regarding ratification of the Committee’s selection of the Company’s Independent Auditors, and (5) terminate the Company’s Independent Auditors, if necessary or appropriate.

3.The Committee may select, retain, compensate, oversee and terminate, if necessary, any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company.

4.The Committee shall pre-approve all audit and permitted non-audit and tax services that may be provided by the Company’s Independent Auditors or other registered public accounting firms, and establish policies and procedures for the Committee’s pre-approval of permitted services by the Company’s Independent Auditors or other registered public accounting firms on an on-going basis. Pre-approval may be delegated to one or more members of the Committee; provided, however, that the Committee shall review on a quarterly basis any services pre-approved by such designated member(s) under the policy and the Independent Auditors’ non-audit services and related fees.

5.The Committee has the authority to conduct investigations into any matters within its scope of responsibility. The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of independent outside counsel and such other advisors as it deems necessary to fulfill its duties and responsibilities under this Charter. The Committee shall set the compensation, and oversee the work, of any outside counsel and other advisors.

6.In carrying out its duties and responsibilities, the Committee shall also have the authority to meet with and seek any information it requires from employees, officers or directors of the Company, or external parties.

7.The Company will provide appropriate funding, as determined by the Committee, for compensation to the Company’s Independent Auditors, to any advisers that the Committee chooses to engage, and for payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

8.The Committee should provide for open communication among the Company’s Independent Auditors, management, the Company’s internal audit function, as applicable, and the Board.

9.In carrying out its purpose, the Committee relies on: management for the preparation and accuracy of the Company’s financial statements; management for establishing effective internal controls and procedures to ensure the Company’s compliance with accounting standards, financial reporting procedures and applicable laws and regulations; and the Company’s Independent Auditors for an unbiased, diligent audit or review, as applicable, of the Company’s financial statements and the effectiveness of the Company’s internal controls.

1.The Committee shall consist of three or more directors. Each member of the Committee shall be independent in accordance with the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules of the Nasdaq Stock Market LLC (“Nasdaq”). No member of the Committee can have participated in the preparation of the Company’s or any of its subsidiaries’ financial statements at any time during the past three years. Under exceptional and limited circumstances, the Board may appoint a member of the 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 stockholders. Such member must, however, meet the SEC’s independence criteria under Rule 10A-3 and must not be an officer or employee of the Company or a family member of an officer or employee of the Company. If such a member is appointed, he or she may serve for no more than two years and may not serve as Chairperson of the Committee. 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.

2.Each member of the Committee must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement. At least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting or other comparable experience or background that leads to financial sophistication. At least one member of the Committee must be an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of

Regulation S-K under the Exchange Act. A person who satisfies this definition of audit committee financial expert will also be presumed to have financial sophistication.

3.A member of the Committee may serve on the audit committees of up to two other public companies and may serve on additional audit committees of other public companies if it is determined by the other members of the Committee that such service does not impair his or her ability to serve as a member of the Committee.

4.The members of the Committee shall be appointed by the Board based on recommendations from the Nominating and Governance Committee of the Board. The members of the Committee shall serve for such term or terms as the Board may determine or until earlier resignation, disability, death, removal or replacement. The Board may remove any member from the Committee at any time with or without cause, for any or no reason.

5.The Committee shall review and confirm the independence of the members of the Committee at least annually.

6.The members of the Committee are not employees of the Company and are not responsible for preparing the Company’s financial statements, conducting the audit or performing other accounting procedures.

1.The Committee shall designate a member of the Committee as the Chairperson based on a recommendation from the Nominating and Governance Committee of the Board. 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, at such times and places as it deems necessary to fulfill its responsibilities. All Committee members are expected to attend each meeting, in person or via tele-, video- or web-conference. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board set forth in the Company’s Bylaws.

2.The Committee Chairperson shall approve the agenda for the Committee’s meetings, with input from other members, in consultation with management, the Company’s internal audit function, as applicable, and the Company’s Independent Auditors, as appropriate.

3.The Committee shall at least annually meet separately with management, the Company’s internal audit function, as applicable, and representatives of the Company’s Independent Auditors, and shall invite such individuals to its meetings as it deems appropriate, to assist in carrying out its duties and responsibilities. The Committee shall also regularly hold executive sessions without such individuals present.

4.The Committee shall report regularly to the Board on its discussions and actions, including any significant issues or concerns that arise at its meetings, and shall make recommendations to the Board as appropriate.

In addition to the items set forth above, the Committee shall have the following duties and responsibilities:

1.At least annually, to obtain and review a report by the Company’s Independent Auditors that describes (1) the accounting firm’s internal quality control procedures, (2) any material issues raised by the most recent internal quality control review, peer review or Public Company Accounting Oversight Board (“PCAOB”) review or inspection of the firm or by any other inquiry or investigation by governmental or professional authorities in the past five years regarding one or more audits carried out by the firm and any steps taken to deal with any such issues, and (3) all relationships between the firm and the Company or any of its subsidiaries; and to discuss with the Company’s Independent Auditors such report and any relationships or services that may impact the objectivity and independence of the Company’s Independent Auditors.

2.At least annually, to evaluate the qualifications, independence and performance of the Company’s Independent Auditors, including an evaluation of the lead audit partner, and to assure the regular rotation of the lead audit partner at the Company’s Independent Auditors and consider regular rotation of the accounting firm serving as the Company’s Independent Auditors. In making its evaluation, the Committee should take into account the opinions of management and the Company’s internal audit function, as applicable.

3.To review and discuss with the Company’s Independent Auditors (1) the auditors’ responsibilities under generally accepted auditing standards and the responsibilities of management in the audit process, (2) the overall audit strategy including, without limitation, staffing, coordination of audit efforts to assure completeness of coverage and any use of independent public accountants other than the appointed Independent Auditors of the Company, (3) the scope and timing of the annual audit, (4) any significant risks identified during the auditors’ risk assessment procedures and (5) when completed, the results, including significant findings, of the annual audit.

4.To review and discuss with the Company’s Independent Auditors (1) all critical accounting policies and practices to be used in the audit; (2) all alternative treatments of financial information within generally accepted accounting principles (“GAAP”) that have been discussed with management, the ramifications of the use of such alternative treatments and the treatment preferred by the auditors; and (3) other material written communications between the auditors and management.

5.To review and discuss with the Company’s Independent Auditors and management (1) any audit problems or difficulties, including difficulties encountered by the Company’s

Independent Auditors during their audit work (such as restrictions on the scope of their activities or their access to information), (2) any significant disagreements with management and (3) management’s response to these problems, difficulties or disagreements; and to resolve any disagreements between the Company’s Independent Auditors and management.

6.To review with management and the Company’s Independent Auditors: any major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles; any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effects of alternative GAAP methods; and the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements.

7.To keep the Company’s Independent Auditors informed of the Committee’s understanding of the Company’s relationships and transactions with related parties that are significant to the company; and to review and discuss with the Company’s Independent Auditors the auditors’ evaluation of the Company’s identification of, accounting for, and disclosure of its relationships and transactions with related parties, including any significant matters arising from the audit regarding the Company’s relationships and transactions with related parties.

8.To review with management, the Company’s internal audit function, as applicable, and the Company’s Independent Auditors the adequacy and effectiveness of the Company’s financial reporting processes, internal control over financial reporting and disclosure controls and procedures, including any significant deficiencies or material weaknesses in the design or operation of, and any material changes in, the Company’s processes, controls and procedures and any special audit steps adopted in light of any material control deficiencies, and any fraud involving management or other employees with a significant role in such processes, controls and procedures, and review and discuss with management and the Company’s Independent Auditors disclosure relating to the Company’s financial reporting processes, internal control over financial reporting and disclosure controls and procedures, the Independent Auditors’ report on the effectiveness of the Company’s internal control over financial reporting and the required management certifications to be included in or attached as exhibits to the Company’s annual report on Form 10-K or quarterly report on Form 10-Q, as applicable.

9.To review and discuss with the Company’s Independent Auditors any other matters required to be discussed by PCAOB professional auditing standards regarding required communications with Audit Committees, including, without limitation, the auditors’ evaluation of the quality of the company’s financial reporting, information relating to significant unusual transactions and the business rationale for such transactions and the auditors’ evaluation of the Company’s ability to continue as a going concern.

10.To review and discuss with the Company’s Independent Auditors and management the Company’s annual audited financial statements (including the related notes), the form of audit opinion to be issued by those auditors on the financial statements, the disclosure under

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and “Risk Factors” to be included in the Company’s annual report on Form 10-K and the contents of the Chief Executive Officer and Chief Financial Officer certifications pursuant to Sections 302 and 906 of the Exchange Act (the “Certifications”) filed with the Form 10-K before the Form 10-K is filed.

11.To recommend to the Board that the audited financial statements and the MD&A section be included in the Company’s Form 10-K and produce the Audit Committee report required to be included in the Company’s proxy statement.

12.To review and discuss with the Company’s Independent Auditors and management the Company’s quarterly financial statements, the disclosure under MD&A and “Risk Factors” to be included in the Company’s quarterly reports on Form 10-Q and Certifications filed with the Form 10-Q before the Form 10-Q is filed.

13.To review and discuss with management: the Company’s earnings press releases, including the type of information to be included and its presentation and the use of any pro forma or adjusted non-GAAP information, before their release to the public; and any financial information and earnings guidance provided to analysts and ratings agencies, including the type of information to be disclosed and type of presentation to be made.

14.To set clear Company hiring policies for employees or former employees of the Company’s Independent Auditors that participated in any capacity in any Company audit.

15.To establish and oversee procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by Company employees and others of concerns regarding questionable accounting or auditing matters.

16.To review and discuss with management the risks faced by the Company, in accordance with the Company’s Enterprise Risk Management (“ERM”) program, and the policies, guidelines and process by which management assesses and manages the Company’s risks, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. Review and assess the ERM program annually.

17.To review the Company’s compliance with applicable laws and regulations and to review and oversee the Company’s policies, procedures and programs designed to promote and monitor legal and regulatory compliance.

18.To monitor compliance with the Code, to investigate any alleged breach or violation of the Code and approve any exceptions to the Code pursuant to the Code. In coordination with the Nominating and Governance Committee of the Board, establish, review and updated periodically the Code and determine whether management has established a system to enforce

the Code. Consult with legal counsel to determine whether the Code is in compliance with all applicable laws, rules and regulations.

19.To review, with the internal and outside legal counsel, legal and regulatory matters, including legal cases against or regulatory investigations of the Company and its subsidiaries, that could have a significant impact on the Company’s financial statements.

20.To review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) on an ongoing basis, in accordance with Company policies and procedures, and to develop policies and procedures for the Committee’s approval of related party transactions.

21.To review this Charter at least annually and recommend changes the Committee deems necessary or appropriate to the Board for approval. To review and approve changes the Committee deems necessary or appropriate to its Responsibilities Calendar and policies and procedures at least annually.

22.To perform such other functions consistent with the law and the Company’s Charter and Bylaws as the Board deems necessary or appropriate.

The Committee shall conduct an annual evaluation of the performance of its duties under this Charter and shall present the results of the evaluation to the Board. The Committee shall conduct this evaluation in such manner as it deems appropriate.

The Committee has the sole authority to engage and compensate compensation consultants and legal 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. However, the Committee shall not be required to implement or

act consistently with the advice or recommendations of its compensation consultant, legal counsel or other advisor and the authority granted in this Charter shall not affect the ability of the Committee to exercise its own judgment in fulfilment of its duties. The compensation consultant, outside counsel and any other advisors retained by the Committee shall be independent, as determined in the discretion of the Committee, to the extent required by applicable laws, regulations and rules of the Nasdaq Stock Market. The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K.

1.The Company shall provide the Committee with appropriate resources to ensure that Committee members receive appropriate orientation briefings and educational resources related to compensation matters relevant to the responsibilities of the Committee.

2.The Company shall provide the funding that the Committee determines is appropriate for advisors to the Committee.

3.The Company shall provide funding for ordinary administrative expenses of the Committee that are necessary or appropriate in connection with its duties.

1.Establish the Company’s philosophy for executive compensation and review the Company’s executive compensation programs to analyze their alignment with (a) attraction and retention of executive officers, (b) motivation of executive officers to achieve the Company’s business objectives and (c) the long-term interests of the Company’s shareholders.

2.Establish annual and long-term performance goals and objectives for executive officers.

3.Evaluate the performance of the Company’s executive officers in light of approved performance goals and objectives and approve the annual compensation, including salary, bonus and equity compensation, for executive officers. In determining executive compensation, review and consider a tally sheet for each executive officer setting forth all elements of past and current compensation and consider benchmarking of compensation to comparable companies. Establish policies for allocating between short-term and long-term compensation and between cash and non-cash compensation and review annually. Consider the results of the most recent stockholder advisory vote on executive compensation (i.e. Say on Pay Vote).

4.Review and approve the Company’s performance goals and objectives relevant to the compensation of the Company’s Chief Executive Officer (CEO), evaluate the CEO’s performance in light of these objectives and determine and approve the CEO’s compensation based on this evaluation. In determining the long-term incentive component of the CEO’s compensation, the Committee shall consider the Company’s performance

and relative shareholder return, the value of similar programs at comparable companies, the value of past awards and any other factors the Committee considers appropriate.

5.Review and approve compensation packages for new executive officers and any severance or termination packages proposed to be made to officers, as requested by management.

6.Review and discuss with the Board and senior executive officers plans for officer development and corporate succession plans for the CEO and other senior officers.

7.Review, approve and, when appropriate, make recommendations to the Board concerning the Company’s long-term incentive compensation plans, including equity-based plans, which includes the ability to adopt, amend and terminate such plans, and where appropriate or required, recommend for approval by the stockholders of the Company. Unless otherwise delegated by the Board, the Committee will be responsible for administering the Company’s equity-based and employee benefit plans and will discharge any responsibilities imposed on the Committee under those plans, including authorizing grants and awards and determining when grants and awards shall be made.

8.Review the Company’s incentive compensation arrangements to verify that measures (including financial and nonfinancial measures), targets, incentives and other rewards for executive officers and operating personnel are realistic (i.e. not unduly aggressive) and aligned with ethical values and performance related to internal control, and to determine whether they encourage excessive risk-taking. Review and discuss at least annually the relationship between risk management policies and practices and compensation and evaluate compensation policies and practices that could mitigate any such risk. Act to remove or reduce incentives or temptations that might prompt personnel to engage in dishonest, illegal or unethical acts.

9.Establish equity ownership guidelines for executive officers and review each officer’s holdings against such guidelines annually to determine whether such guidelines have been met.

10.In consultation with senior management, establish, review and evaluate the philosophy and long-term strategy of employee compensation and the components of the stock and other compensation plans used by the Company.

11.In consultation with management, oversee regulatory compliance with respect to compensation matters, including an analysis of accounting and tax ramifications to the Company and, if and when required, establishing performance goals and certifying that they have been attained for purposes of Section 162(m) of the Internal Revenue Code.

12.Review and make recommendations with respect to any shareholder proposals related to compensation matters.

13.Review executive compensation disclosures in the Company’s Annual Report on Form 10-K and annual Proxy Statement, including any Compensation Discussion and Analysis (“CD&A”) required by law, discuss with management and recommend to the Board whether the CD&A, if applicable, shall be included in the Annual Report on Form 10-K and Proxy Statement. Prepare an annual report of the Compensation Committee for

inclusion in the Annual Report and Proxy Statement in accordance with SEC rules. Review and approve the compensation with respect to any related party transaction, including any transaction required to be disclosed under applicable SEC rules (currently Item 404 of Regulation S-K promulgated by the SEC) in accordance with the Company’s Statement of Policy with respect to Related Party Transactions.

14.Conduct an annual self-assessment with the goal of continuing improvement, in any manner as it deems appropriate, and present the results of the evaluation to the Board.

15.Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Charter to the Board.

The Committee will perform such other functions consistent with law and the Company’s charter and bylaws as the Board of Directors deems necessary or appropriate

A. Advisors. The Committee has sole authority to retain and terminate outside counsel to the Committee, any search firm used to identify director candidates, or other experts or consultants, as it deems appropriate, including sole authority to approve the firms' fees and other retention terms. Any outside counsel and other advisors retained by the Committee shall be independent, as determined in the discretion of the Committee, to the extent required by applicable laws, regulations and rules of the Nasdaq Stock Market. 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.

The Committee shall receive appropriate funding from the Company, as determined by the Committee, to pay the fees of any such counsel and advisors.

B. Resources. The Committee will have the resources and authority necessary to discharge its duties and responsibilities. In furtherance thereof:

1.The Company shall provide the Committee with appropriate resources to ensure that Committee members receive appropriate orientation briefings and educational resources related to matters relevant to the responsibilities of the Committee.

2.The Company shall provide the funding that the Committee determines is appropriate to the Committee, including funding for ordinary administrative expenses of the Committee that are necessary or appropriate in connection with its duties.

recommend to the Board any changes thereto as are appropriate, following consultation with the Chairperson of any affected committee.

management directors; provided, however, that no member of the Committee shall act to fix his or her own compensation except for uniform compensation to directors for their services as such. The review to be conducted hereunder shall include assessment of the Company's Board compensation in relation to other comparable U.S. companies to ensure that the compensation offered by the Company is competitive and supports the ability of the Company to attract and retain the most qualified candidates.

WHEREAS, the parties to the above-captioned consolidated shareholder derivative action (the “Consolidated Action”) have made an application, pursuant to Colorado Rule of Civil Procedure 23.1, for an order: (i) preliminarily approving the Stipulation of Settlement dated September 30, 2016 (the “Stipulation”), which, together with the exhibits annexed thereto, sets forth the terms and conditions for the proposed settlement (the “Settlement”) and dismissal of the Consolidated Action with prejudice; and (ii) approving the form and content of dissemination of notice of the Settlement to Current ADES Stockholders;

WHEREAS, all capitalized terms contained herein shall have the same meanings as set forth in the Stipulation (in addition to those capitalized terms defined herein); and

WHEREAS, the Court has read and considered the Stipulation and the exhibits annexed thereto, and all Settling Parties have consented to the entry of this Preliminary Approval Order,

NOW THEREFORE, IT IS HEREBY ORDERED:

and releasing and enjoining the prosecution of any and all Released Claims; and (iii) whether Plaintiffs’ Counsel’s Fee Award should be finally approved. At the Settlement Hearing, the Court may hear or consider such other matters as the Court may deem necessary and appropriate.

have, in addition to the requirements of (1) above, filed with the Clerk of the Court: (a) a written notice of such Current ADES Stockholder’s intention to appear at the Settlement Hearing; (b) a statement that indicates the basis for such appearance; (c) the identities of any witnesses the Current ADES Stockholder intends to call at the Settlement Hearing and a statement as to the subjects of their testimony; and (d) any and all evidence that would be presented at the Settlement Hearing. If a Current ADES Stockholder files a written objection and/or written notice of intent to appear, such Stockholder must also simultaneously serve copies of such notice, proof, statement, and documentation, together with copies of any other papers or briefs such Current ADES Stockholder files with the Court (either by hand delivery or by first class mail) upon each of the following:

Any Current ADES Stockholder who does not make his, her, or its objection in the manner provided herein shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness, reasonableness, or adequacy of the Settlement or the Fee Award, as set forth in the Stipulation, unless otherwise ordered by the Court, but shall be forever bound by the Judgment to be entered, the dismissal of this Consolidated Action with prejudice, and any and all of the releases set forth in the Stipulation.

(a) the truth of any fact alleged by Plaintiffs or the validity, or lack thereof, of any claim that has been or could have been asserted in the Actions or in any litigation, or the deficiency or infirmity of any defense that has been or could have been asserted in the Actions or in any litigation, or of any fault, wrongdoing, negligence, or liability of any of the Released Persons;

(b) any statement or written document approved, issued, or made by any Released Person, or against Plaintiffs as evidence of any infirmity in their claims; or

(c) any other reason as against the Released Persons, in any arbitration proceeding or other civil, criminal, or administrative action or proceeding in any court, administrative agency, or other tribunal.

The fact that ADES has implemented, or has agreed to implement, changes, modifications, or enhancements to its corporate governance policies and practices shall not be construed as an admission that any such enhanced policies or practices are legally required, or to the extent such policies or practices were not in place in the past, constituted a failure of compliance, a breach of any duty, or any other wrongdoing.

If finally approved, the Released Persons may refer to the Settlement, and file the Stipulation and/or the Judgment, in any action that may be brought against them to effectuate the liability protections granted them thereunder, including, without limitation, to support a defense or claim based on principles of res judicata, collateral estoppel, full faith and credit, release, standing, good faith settlement, judgment bar

or reduction or any other theory of claim preclusion or issue preclusion or similar defense or claim under U.S. federal or state law or foreign law.

IT IS SO ORDERED.

YOU ARE HEREBY NOTIFIED, pursuant to Colorado Rule of Civil Procedure 23.1 and an Order from the Honorable Paul A. King of the District Court for the County of Douglas, Colorado (the “Court”), that a proposed settlement agreement (the “Settlement”) has been reached among Plaintiffs, on behalf of themselves and derivatively on behalf of Advanced Emissions Solutions, Inc. (“ADES” or the “Company”), the Individual Defendants, and ADES in connection with the above-captioned consolidated stockholder derivative action entitled In re Advanced Emissions Solutions, Inc. Shareholder Derivative Litigation, Case No. 2014CV30709 (the “Consolidated Action”).

Plaintiffs filed complaints in the Consolidated Action derivatively on behalf of ADES to remedy the alleged harm caused to the Company by the Individual Defendants’ alleged breach of their fiduciary duties and other alleged misconduct. The proposed Settlement, if approved by the Court, would fully, finally and forever resolve the Consolidated Action on the terms set forth in the Stipulation and summarized in this Notice, including the dismissal of the Consolidated Action with prejudice.

As explained below, a Settlement Hearing shall be held before the Court on _____________________ ___, 2016 at _______ __.m., before the Honorable Paul A. King, at the District Court, County of Douglas, Colorado, 4000 Justice Way, Suite 2009, Castle Rock, CO 80109, to determine whether, inter alia, the proposed Settlement is fair, reasonable, and adequate, and should be finally approved by the Court and whether an award of attorneys’ fees and reimbursement of expenses for Plaintiffs’ counsel (the “Fee Award”), should be approved. You have the right to object to the Settlement and the Fee Award in the manner provided herein. If you fail to object in the manner provided herein at least fourteen (14) calendar days prior to the Settlement Hearing, you will be deemed to have waived your objections and will be forever bound by the Judgment to be entered and the releases to be given, unless otherwise ordered by the Court.

This Notice is not intended to be and should not be construed as an expression of any opinion by the Court with respect to the merits of the claims made in the Consolidated Action, but is merely to advise you of the proposed Settlement and of your rights as a Current ADES Stockholder.

On June 27, 2014, plaintiff Dull initiated a shareholder derivative action in this Court on behalf of ADES, captioned Dull v. Durham, et al., Case No. 2014CV30709 (the “Dull Action”). Plaintiff Dull asserted claims against certain of the Individual Defendants for breach of the fiduciary duties of loyalty and good faith and unjust enrichment. On July 2, 2014, plaintiff Brown initiated a shareholder derivative action in the District Court for the City and County of Denver on behalf of ADES, captioned Brown v. Durham, et al., Case No. 2014CV32606. Plaintiff Brown asserted claims against certain of the Individual Defendants for breach of fiduciary duty, waste of corporate assets, and unjust enrichment. On July 17, 2014, plaintiff Brown moved to dismiss his derivative

complaint without prejudice. On July 23, 2014, the Denver District Court granted Brown’s motion to dismiss his complaint without prejudice. On August 1, 2014, plaintiff Brown re-filed his shareholder derivative complaint in this Court on behalf of ADES, captioned Brown v. Durham, et al., Case No. 2014CV30814 (the “Brown Action”).

Plaintiffs alleged that the Individual Defendants breached their fiduciary duties by, inter alia, allegedly failing to maintain adequate internal and financial controls in connection with the restatement of the Company’s historical financial statements. Plaintiffs further alleged that certain of the Individual Defendants wasted corporate assets and were unjustly enriched in connection with compensation paid during the restatement periods.

On August 19, 2014, Plaintiffs, ADES, and the Individual Defendants filed with the Court a Stipulation and Proposed Order Consolidating Actions, Appointing Co-Lead Plaintiffs and Co-Lead Counsel and Staying Consolidated Action. On August 28, 2014, the Court approved this stipulation and proposed order, which consolidated the Dull Action with the Brown Action under the caption In re Advanced Emissions Solutions, Inc. Shareholder Derivative Litigation, Consol. Civil Action No. 2014CV30709, appointed Plaintiffs Dull and Brown as Co-Lead Plaintiffs in the Consolidated Action, appointed the law firms of Kessler Topaz Meltzer & Check, LLP and Robbins Arroyo LLP as Co-Lead Counsel for Co-Lead Plaintiffs in the Consolidated Action, and stayed the Consolidated Action until at least 30 days after a decision by the U.S. District Court for the District of Colorado on the defendants’ motion to dismiss a related securities class action, captioned United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund v. Advanced Emissions Solutions, Inc., Civil Action No. 14-cv-01243-CMA-KMT (the “Class Action”).

In March 2016, the Settling Parties agreed to engage in discussions regarding a potential resolution of the Consolidated Action, and in furtherance thereof, to attend a mediation of the Consolidated Action (the “Mediation”) with Jed Melnick, Esq. of JAMS (the “Mediator”), an experienced and well-respected mediator. On May 24, 2016, the Settling Parties participated in an in-person mediation of the Consolidated Action in New York City, New York. ADES and counsel for certain of the Defendants participated in a separate Mediation of the Class Action on that same date, during which a tentative settlement was reached with respect to the Class Action. During the Mediation, a tentative settlement was reached with respect to the Class Action, and the Settling Parties reached agreement on some of the material terms for settlement of the Consolidated Action. After extensive discussions over the next seven weeks with assistance from the Mediator, the Settling Parties reached an agreement-in-principle to resolve the Consolidated Action, subject to approval by the Board and the Settling Parties’ agreement on final documentation. On July 18, 2016, the Settling Parties executed a Term Sheet setting forth the terms of such agreement-in-principle (the “Term Sheet”). As a condition of the settlement reflected in this Stipulation (“Settlement”), ADES agreed to present to its Board for approval certain corporate governance reforms, the terms of which are fully set forth in Exhibits B–E to the Stipulation. The Settling Parties negotiated at arm’s length

and with the assistance of the Mediator that Defendants or their insurers will not oppose Plaintiffs’ request for a reasonable fee award to Plaintiffs’ counsel in an amount up to $550,000. Following the execution of the Term Sheet, the Plaintiffs engaged in confirmatory discovery, including the Company’s production of three non-public documents to Plaintiffs and Plaintiffs’ interviews of the Company’s Chief Executive Officer, Heath Sampson, and Vice President of Risk, Process and Controls, Christine Bellino, on July 26, 2016. After review of such documents and the completion of the interviews, Plaintiffs concluded that the terms of the Settlement are fair, reasonable and adequate to ADES and its stockholders. At its meeting on August 11, 2016, the Board approved the terms of the Settlement (subject to having the company’s counsel address one issue before they sign the Settlement, which was subsequently addressed) and adopted the corporate governance reforms set forth in Exhibits B and C (the Board had previously adopted the corporate governance reforms in Exhibits D and E). The parties agreed to sign the final Stipulation and Agreement of Settlement as of September 30, 2016.

Plaintiffs believe that the claims they have asserted in the Consolidated Action on behalf of ADES have merit. Plaintiffs, however, recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Consolidated Action against the Individual Defendants through trial and appeals. Plaintiffs and their counsel have also taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as the Consolidated Action, as well as the difficulties and delays inherent in such litigation. Plaintiffs and their counsel are also mindful of the inherent problems of proof and possible defenses to the claims asserted in the Consolidated Action. Based on their evaluation, Plaintiffs and their counsel have determined that the Settlement set forth in the Stipulation is in the best interests of ADES. Plaintiffs and their counsel believe that the Settlement set forth in the Stipulation confers substantial benefits upon ADES and its shareholders. Plaintiffs and their counsel base this conclusion upon, among other things, Plaintiffs’ Counsel’s extensive investigation during the development, prosecution and settlement of the Consolidated Action, which included, inter alia: (i) inspecting, reviewing and analyzing the Company’s press releases and filings with the Securities and Exchange Commission (“SEC”) and other publicly available information; (ii) researching corporate governance issues; (iii) researching the applicable law with respect to the claims asserted in the Consolidated Action and the potential defenses thereto; (iv) reviewing certain non-public documents produced by the Company; and (v) interviewing the Company’s Chief Executive Officer, Heath Sampson, and Vice President of Risk Process and Controls, Christine Bellino.

The Individual Defendants have denied, and continue to deny, each and every claim and contention alleged by Plaintiffs in the Consolidated Action and affirm that they have acted properly, lawfully, and in full accord with their fiduciary duties, at all times. Further, the Individual Defendants have denied expressly, and continue to deny, all allegations of wrongdoing, fault, liability, or damage

against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Consolidated Action and deny that they have ever committed or attempted to commit any violations of law, any breach of fiduciary duty owed to ADES or its shareholders, or any wrongdoing whatsoever. Had the terms of the Stipulation not been reached, the Individual Defendants would have continued to contest vigorously Plaintiffs’ allegations, and the Individual Defendants maintain that they had and have meritorious defenses to all claims alleged in the Consolidated Action. Defendants maintain that ADES always has been, and continues to be, committed to the implementation, enhancement and enforcement of rigorous corporate governance measures.

Without admitting the validity of any of the claims that Plaintiffs have asserted in the Consolidated Action, or any liability with respect thereto, Defendants have concluded that it is desirable that the claims be settled on the terms and subject to the conditions set forth herein. Defendants are entering into the Settlement because it will eliminate the uncertainty, distraction, disruption, burden, and expense of further litigation of the Consolidated Action. Neither the Stipulation, nor any of its terms or provisions, nor any act performed or document executed pursuant to or in furtherance of the Settlement: (a) is, may be construed as, or may be used as an admission of, or evidence of, the truth or validity of any of the Released Claims, of any claims or allegations made in the Consolidated Action, or of any purported acts or omissions by the Defendants; (b) is, may be construed as, or may be used as an admission of, or evidence of, any fault, omission, negligence, or wrongdoing by the Defendants, or any concession of liability whatsoever; or (c) is, may be construed as, or may be used as an admission of, or evidence of, a concession by any Defendant of any infirmity in the defenses that Defendants asserted or could have asserted in these Consolidated Action or otherwise.

The Settlement Hearing will be held before the Court on _____________________ ___, 2016 at _______ __.m., before the Honorable Paul A. King, at the District Court, County of Douglas, Colorado, 4000 Justice Way, Suite 2009, Castle Rock, CO 80109, to determine: (i) whether the proposed Settlement, upon the terms set forth in the Stipulation, should be finally approved in all respects as fair, reasonable, and adequate; (ii) whether the Judgment approving the Settlement, substantially in the form of Exhibit J attached to the Stipulation, should be entered, dismissing the Consolidated Action with prejudice and releasing and enjoining the prosecution of any and all Released Claims; and (iii) whether Plaintiffs’ Counsel’s Fee Award should be approved. At the Settlement Hearing, the Court may hear or consider such other matters as the Court may deem necessary and appropriate. The Court may adjourn the date of the Settlement Hearing without further notice to Current ADES Stockholders, and the Settlement Hearing may be continued by the Court at the Settlement Hearing, or at any adjourned session thereof, without further notice.

The terms and conditions of the proposed Settlement are set forth fully in the Stipulation. The following is only a summary of its terms.

In consideration for the Settlement, ADES shall adopt, or if already adopted, shall continue to maintain, certain corporate governance reforms (the “Reforms”), the terms of which are fully set forth in Exhibits A–E attached to the Stipulation (key changes from prior corporate governance materials are described in Exhibit A to the Term Sheet, which Plaintiffs have filed with the Court with their motion for preliminary approval of the Settlement). The Reforms relate to the duties and responsibilities of the Board of Directors and certain of its committees and the adoption of majority voting for the election of directors, a compensation clawback policy and certain accounting reforms.

Since the Consolidated Action was initiated, ADES has implemented a number of improvements to its corporate governance practices, business operations, and system of internal controls. The Consolidated Action, and other actions and regulatory proceedings, among other factors, significantly contributed to ADES’s evaluation of, and implementation of, certain changes to the Company’s structure, policies, and procedures to protect the Company from the risk of future losses, damages, litigation, and regulatory proceedings. ADES acknowledges that the pendency and settlement of the Consolidated Action is a material factor in the Company’s decision to adopt and/or enact changes, modifications, and enhancements to previously instituted remedial measures as well as the other Reforms set forth in Exhibits A–E to the Stipulation. The Settling Parties agree that the Reforms will provide benefits to ADES and Current ADES Stockholders.

ADES has already taken or will take within the time period described in Exhibit A to the Stipulation all necessary steps to adopt and implement the Reforms. Unless otherwise stated, the Reforms will stay in effect for at least four (4) years from the date of Court approval of the Settlement, except that ADES will not be required to continue a particular corporate governance measure if compliance with law or regulations requires different governance measures or the structure or business activities of ADES has changed in such a material way that such measure is no longer relevant to ADES’s current business operations. A determination that a particular corporate governance measure is no longer required or relevant to the Company’s current business operations must be made by majority vote of the independent directors and any amendments to governance documents made as a result of such determination will be disclosed as required by law and posted to ADES’s website.

In connection with the Court’s approval of the Settlement, the Settling Parties will jointly request entry of the Judgment by the Court, dismissing with prejudice all claims that Plaintiffs have alleged in the Consolidated Action and any other Released Claims.

Upon the Effective Date, ADES, Plaintiffs (individually and derivatively on behalf of ADES), and each of ADES’s stockholders (solely in their capacity as ADES stockholders) shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released,

relinquished, and discharged the Released Claims (including Unknown Claims) against the Released Persons and any and all claims arising out of, relating to, or in connection with, the defense, settlement or resolution of the Consolidated Action against the Released Persons. ADES, Plaintiffs (individually and derivatively on behalf of ADES) and each of ADES’s stockholders (solely in their capacity as ADES stockholders) shall be deemed to have, and by operation of the Judgment shall have, covenanted not to sue any Released Person with respect to any Released Claims and any claims arising out of, relating to, or in connection with the defense, settlement or resolution of the Consolidated Action, and shall be permanently barred and enjoined from instituting, commencing or prosecuting the Released Claims against the Released Persons.

Upon the Effective Date, each of the Released Persons shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished, and discharged each and all of Plaintiffs or their beneficiaries, Plaintiffs’ Counsel, or ADES with respect to any of Defendants’ Released Claims. The Released Persons shall be deemed to have, and by operation of the Judgment shall have, covenanted not to sue Plaintiffs or their beneficiaries, Plaintiffs’ Counsel, or ADES with respect to any of Defendants’ Released Claims, and shall be permanently barred and enjoined from instituting, commencing or prosecuting Defendants’ Released Claims against Plaintiffs or their beneficiaries, Plaintiffs’ Counsel, or ADES. Notwithstanding the foregoing, nothing herein is intended to release any indemnification, advancement or insurance claims that any Released Person has or may have under any insurance policy, contract, bylaw or charter provision, or under Delaware law, including but not limited to any rights any Released Person has or may have related to any pending or threatened civil or government proceedings.

Nothing in this Notice or the Stipulation shall in any way impair or restrict the rights of any Settling Party to enforce the terms of the Stipulation.

In recognition of the benefits provided to ADES and Current ADES Stockholders as a result of the Settlement, ADES has agreed not to oppose, and cause its insurers to pay to Plaintiffs’ Counsel an award of attorneys’ fees and expenses not to exceed the total amount of $550,000.00 (the “Fee Award”), subject to approval by the Court. As discussed above, as part of the mediation process and with assistance from the Mediator, the Defendants and their insurers agreed not to oppose a reasonable fee award in an amount not to exceed $550,000. Defendants shall have no responsibility for the allocation or distribution of the Fee Award amongst Plaintiffs’ Counsel.

Any Current ADES Stockholder who continues to own their ADES stock may object and/or appear and show cause, if he, she, or it has any concern, why the Settlement should not be approved as fair, reasonable, and adequate, why Judgment should not be entered thereon, or why

the Fee Award should not be approved; provided, however, unless otherwise ordered by the Court, that no Current ADES Stockholder shall be heard or entitled to contest the approval of the terms and conditions of the Settlement, or, if approved, the Judgment to be entered approving the Settlement, or the Fee Award, unless that Current ADES Stockholder has, at least fourteen (14) calendar days prior to the Settlement Hearing: (1) filed with the Clerk of the Court a written objection to the Settlement setting forth: (a) the nature of the objection; (b) proof of current ownership of ADES common stock, including the number of shares of ADES common stock and the date of purchase; (c) any and all documentation or evidence in support of such objection; and (d) the identities of any cases, by name, court, and docket number, in which the Current ADES Stockholder or his, her, or its attorney has objected to a settlement in the last three years; (2) if a Current ADES Stockholder intends to appear and requests to be heard at the Settlement Hearing, such Current ADES Stockholder must have, in addition to the requirements of (1) above, filed with the Clerk of the Court: (a) a written notice of such Stockholder’s intention to appear at the Settlement Hearing; (b) a statement that indicates the basis for such appearance; (c) the identities of any witnesses the Current ADES Stockholder intends to call at the Settlement Hearing and a statement as to the subjects of their testimony; and (d) any and all evidence that would be presented at the Settlement Hearing. If a Current ADES Stockholder files a written objection and/or written notice of intent to appear, such Stockholder must also simultaneously serve copies of such notice, proof, statement, and documentation, together with copies of any other papers or briefs such Current ADES Stockholder files with the Court (either by hand delivery or by first class mail) upon each of the following:

Any Current ADES Stockholder who does not make his, her, or its objection in the manner provided herein shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness, reasonableness, or adequacy of the Settlement and the Fee Award, as set forth in the Stipulation, unless otherwise ordered by the Court, but shall be forever bound by the Judgment to be entered, the dismissal of the Consolidated Action with prejudice, and any and all of the releases set forth in the Stipulation.

The Settlement is conditioned upon the occurrence of certain events described in the Stipulation, which requires, among other things: (1) entry of the requested Judgment by the Court; (2) the Judgment has become Final; and (3) the dismissal order becomes Final. If, for any reason, any one of the conditions described in the Stipulation is not met and/or the entry of the Judgment does not occur, the Stipulation might be terminated and, if terminated, will become null and void; and the Settling Parties will be restored to their respective positions as of the date immediately preceding the date of the Stipulation.

This Notice contains only a summary of the terms of the Settlement. For a more detailed statement of the matters involved in the Consolidated Action, reference is made to the Stipulation, a copy of which is available at http://www.advancedemissionssolutions.com/ or http://www.robbinsarroyo.com/. Any inquiries regarding the Settlement or the Consolidated Action should be addressed in writing to the following:

THIS NOTICE IS GIVEN pursuant to an order of the District Court for the County of Douglas, Colorado (the “Court”), to inform you of a proposed stipulated settlement (the “Settlement”) in the above-captioned derivative action (the “Consolidated Action”). The Consolidated Action brought derivatively on behalf of Advanced Emissions Solutions, Inc. (“ADES”), against certain of its current and former directors and officers, alleges breaches of fiduciary duty and other claims.

YOU ARE HEREBY NOTIFIED THAT a hearing (the “Settlement Hearing”) will be held on ________________, 2016, at __:____ __.m., before the Honorable Paul A. King, at the District Court, County of Douglas, Colorado, 4000 Justice Way, Suite 2009, Castle Rock, CO 80109, for the purpose of determining whether the Settlement should be approved as fair, reasonable, and adequate and whether an award of attorneys’ fees and reimbursement of expenses for Plaintiffs’ counsel (the “Fee Award”) should be approved. Because this is a stockholder derivative action brought for the benefit of ADES, no individual Current ADES Stockholder has the right to receive any individual compensation as a result of the Settlement. In accordance with the terms of the Settlement, and in consideration for certain releases, ADES has agreed to implement certain corporate governance reforms, to be administered by ADES and the ADES Board of Directors. THIS ACTION IS NOT A “CLASS ACTION.” THERE IS NO COMMON FUND UPON WHICH YOU CAN MAKE A CLAIM FOR MONETARY PAYMENT.

IF YOU ARE AN OWNER OF ADES COMMON STOCK, YOUR RIGHTS MAY BE AFFECTED BY THE SETTLEMENT. This notice contains only a summary of the Actions and the terms of the Settlement. If you are a Current ADES Stockholder, you may obtain a copy of a

detailed Notice to Current ADES Stockholders (the “Notice”) describing the Actions, the proposed Settlement, and the rights of Current ADES Stockholders with regard to the Settlement, as well as a copy of the Stipulation of Settlement, by visiting the website http://www.advancedemissionssolutions.com/ or the website http://www.robbinsarroyo.com/. Should you have any other questions regarding the proposed Settlement of the Actions, please contact counsel for the Plaintiffs in the Consolidated Action:

Any Current ADES Stockholder may object and/or appear and show cause, if he, she or it has any concern, why the Settlement should not be finally approved as fair, reasonable, and adequate, why Judgment should not be entered thereon, or why the Fee Award should not be approved; provided, however, that no Current ADES Stockholder shall be heard or entitled to contest the approval of the terms and conditions of the Settlement, or, if approved, the Judgment to be entered approving the Settlement, or the Fee Award, unless that Stockholder has filed at least fourteen (14) calendar days prior to the Settlement Hearing an objection with the Court. Any objection to the Settlement or Fee Award must be filed, in accordance with the procedures set forth in the Notice, with the Honorable Paul A. King, care of the Clerk of the Court (District Court, County of Douglas, Colorado, 4000 Justice Way, Suite 2009, Castle Rock, CO 80109), no later than ________________, 2016 and served by hand or first class mail (postage prepaid) for delivery by the same date on Plaintiffs’ counsel and on counsel for Defendants:

This matter came before the Court for hearing pursuant to this Court’s Order Preliminarily Approving Derivative Settlement and Providing for Notice, dated ________, 2016 (the “Preliminary Approval Order”), on the application of the Settling Parties for final approval of the Settlement set forth in the Stipulation and Agreement of Settlement dated September 30, 2016 (the “Stipulation”). Due and adequate notice having been given to Current ADES Stockholders as required in said Preliminary Approval Order, and the Court having considered all papers filed and proceedings had herein and otherwise being fully informed in the premises and good cause appearing therefore, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that:

(a) the truth of any fact alleged by Plaintiffs or the validity, or lack thereof, of any claim that has been or could have been asserted in the Consolidated Action or in any litigation, or the deficiency or infirmity of any defense that has been or could have been asserted in the Consolidated Action or in any litigation, or of any fault, wrongdoing, negligence, or liability of any of the Released Persons;

(b) any statement or written document approved, issued, or made by any Released Person, or against Plaintiffs as evidence of any infirmity in their claims; or

(c) any other reason as against the Released Persons, in any arbitration proceeding or other civil, criminal, or administrative action or proceeding in any court, administrative agency, or other tribunal.

The fact that ADES has implemented, or has agreed to implement, changes, modifications, or enhancements to its corporate governance policies and practices shall not be construed as an admission that any such enhanced policies or practices are legally required, or to the extent such policies or practices were not in place in the past, constituted a failure of compliance, a breach of any duty, or any other wrongdoing.

This Judgment is a final, appealable judgment and should be entered forthwith by the Clerk.

IT IS SO ORDERED.

DATED:_________________            ____________________________________