ADA-ES reaches $40.5MM settlement with Norit to resolve trade secret lawsuit

Source: ADA-ES

ADA-ES, Inc. (NASDAQ:ADES) (ADA or company) announced that it has entered into a Settlement Agreement with Norit Americas, Inc. and Norit International N.V. (collectively, Norit) pursuant to which the parties have agreed to settle all of their previously disclosed litigation, and that Norit also entered into a separate settlement agreement with other defendants involved in this dispute (collectively, the “Settlement Agreements”). The primary litigation took place before an arbitration panel, which rendered an interim award in April, 2011.

Under terms of the Settlement Agreements, ADA will pay Norit a lump-sum of $33 million on or before August 31, 2011, which ADA will fund using cash on hand. ADA has also agreed to pay Norit the sum of $7.5 million over the three-year period commencing on August 29, 2012, payable in three installments without interest of $2.5 million. The arbitration panel must confirm certain terms of the Settlement Agreements by the issuance of a Stipulated Final Award in order for the Settlement Agreements to become binding on the parties.

In addition, as provided in the arbitration panel’s preliminary determination, ADA and certain other defendants (the “AC Joint Venture Entities”) remain jointly and severally liable for royalties to Norit on certain past and future sales of activated carbon (“AC”) through mid-2018 from the production facility owned by ADA Carbon Solutions (Red River), LLC, in which ADA indirectly holds a minority interest. ADA estimates that less than $1 million in royalties have accrued to date, which we also expect to pay using cash on hand, most of which is due by September 30, 2011. Future payments of amounts due under the Running Royalty Award for each quarter are payable three months after such quarter ends. As between ADA and certain AC Joint Venture Entities, there is a dispute concerning the extent to which ADA must reimburse those AC Joint Venture Entities for any running royalties paid by those AC Joint Venture Entities to Norit. In the Settlement Agreements, Norit consents to any transfer or relinquishment by ADA of its interest in the AC Joint Venture Entities to ECP and/or one or more of the AC Joint Venture Entities.

Dr. Michael D. Durham, President and CEO of ADA, commented, “We are committed to serving the needs of our customers in the power generation industry and have overcome challenges to assure that they now have access to sufficient high-quality AC at a reasonable price to meet their needs for mercury control. We vehemently disagree with the decision by the Arbitrators and strongly feel that there was no unauthorized use of any trade secrets on our part. However, now that this settlement is behind us, we can focus our resources on the tremendous growth opportunities we are seeing as a result of rapidly developing markets for our emission control technologies. We remain optimistic for the remainder of 2011 and beyond, and we continue to be extremely busy executing on projects that we believe will position ADA as the market leader in clean coal technology.”

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