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                                                                    EXHIBIT 10.5


                          MARKETING SERVICES AGREEMENT

         This Marketing Services Agreement (the "Agreement") is dated as of
March 3, 2000 (the "Effective Date") by and among Pegasus Technologies, Inc., a
South Dakota corporation with offices in Denver, Colorado and Mentor, Ohio
("Pegasus"), Net Power Solutions, LLC, a limited liability company formed under
the laws of the State of Colorado, with offices in Denver, Colorado (the
"Company" or "NPS"), KFuel, LLC, a Delaware limited liability company, with
offices in Denver, Colorado ("KFuel"), KFx Inc., a Delaware Corporation, with
offices in Denver, Colorado ("KFx") and Kennecott Energy Company, a Delaware
corporation with offices in Gillette, Wyoming and Denver, Colorado
("Kennecott"). Pegasus, NPS, KFuel, KFx and Kennecott are sometimes collectively
referred to herein as the "Parties" and individually as a "Party".

                                    RECITALS

         The Parties are entering into this Agreement for the following reasons:

         A. Pegasus is principally engaged in the development and installation
         of a neural net software and related technology, including any upgrades
         and improvements developed in connection therewith, which shall be
         referred to as the "Pegasus Products" for use in electric utility
         generation facilities for the purpose of improving the efficiency of
         coal-fired plants and reducing the emission of NOx and other
         potentially harmful pollutants from such plants;

         B. The majority and principal stockholder of Pegasus is KFx. KFx is
         also a 51% member of KFuel which is engaged in the development of a
         coal enhancement technology known as the "K-Fuel Process" that utilizes
         heat and pressure to form an upgraded coal ("K-Fuel Products") for use
         by electric utilities in coal-fired boilers;

         C. Kennecott is a minority stockholder in Pegasus, a major producer of
         coal in the United States and the largest producer of low sulfur coal
         from the Powder River Basin in Montana and Wyoming. Kennecott is also a
         49% member of KFuel;

         D. Kennecott and Pegasus formed the Company for the primary purpose of
         marketing Pegasus Products, the Coal Services and Coal Products (as
         hereinafter defined) to electric utilities throughout the United
         States;

         E. Kennecott believes that the successful implementation of Pegasus
         Products will have a beneficial effect on Kennecott's business and
         potential coal markets;

         F. Pegasus believes that the knowledge, sophistication, and resources
         of Kennecott in utility markets will enhance the ability of the Company
         to market Pegasus Products and related services and technology.

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                                    AGREEMENT

         THEREFORE, in consideration of the mutual promises exchanged herein and
         other good and valuable consideration, the receipt and sufficiency of
         which is hereby acknowledged, the Parties hereby agree as follows:

1.0      Marketing Services. The Company will provide marketing services and
         overall coordination of its marketing activities as required by Pegasus
         in connection with marketing Pegasus Products, Coal Products and Coal
         Services. The marketing services will include among other things, the
         preparation and annual update of a marketing plan to (a) identify
         potential customers and their specific needs, (b) provide an economic
         analysis to identify optimal pricing and economic returns for Pegasus
         Products, Coal Products and Coal Services with respect to targeted
         customers (the "Marketing Plan"), and (c) develop an integrated sales
         and marketing program for the Pegasus Products, Coal Products and Coal
         Services. The Company will coordinate the marketing of all Pegasus
         Products for the Company whether or not it is the entity that makes the
         direct sale. The Company will coordinate marketing of Pegasus Products
         with the marketing of Coal Products and Coal Services by Kennecott.

2.0      Kennecott Support.

         2.1      Marketing Manager. Kennecott will make available and the
                  Company will utilize the services of a Kennecott employee
                  experienced in coal marketing and utility analysis to direct
                  the marketing services to be provided by the Company to
                  Pegasus (the "Marketing Manager"). Kennecott will be
                  responsible for the compensation and benefits of the Marketing
                  Manager.

         2.2      Coal Products and Services. Assuming mutual agreement on
                  essential contractual terms can be reached, Kennecott will
                  provide NPS and its customers with access to coal from
                  Kennecott affiliated mines ("Kennecott Coal") and, where
                  appropriate, will broker coal from non-Kennecott affiliated
                  mines ("Third Party Coal") (together, the Kennecott Coal and
                  Third Party Coal will be known as "Coal Products"). Kennecott
                  will also provide coal transportation, coal delivery, coal
                  inventory management and other coal-related services ("Coal
                  Services") that may be requested or required by the Company to
                  assist it in marketing Pegasus Products.

3.0      K-Fuel Process. At such time as the K-Fuels Process becomes
         commercially feasible, NPS shall have the right to market K-Fuel
         Products on a non-exclusive basis. KFx, Kennecott and KFuel each agrees
         to provide NPS with the necessary rights and support to market K-Fuel
         Process and K-Fuel Products to the appropriate targeted customers.

4.0      Principles of Marketing. The Parties agree that the following
         principles will apply in connection with marketing of the Coal
         Products, Coal Services and the Pegasus Products:

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         4.1      Potential Customers. The Pegasus Products will be marketed to
                  utilities with the economic and technical wherewithal to
                  understand and appreciate the benefits and risks of utilizing
                  such products and to provide the appropriate indemnifications
                  to Pegasus and NPS in connection with such utilization (the
                  "Potential Customer(s)"). A transaction involving the sale of
                  Pegasus Products, Coal Services and Coal Products (or a mix
                  thereof) offered to a Potential Customer by NPS will be
                  referred to herein as a "Proposed Transaction".

         4.2      Kennecott Involvement. Kennecott will have the right but not
                  the obligation to market or sell Coal Products and Coal
                  Services as part of any Proposed Transaction, it being
                  understood that Kennecott shall have no obligation to provide
                  such Coal Services or Coal Products if the Proposed
                  Transaction is not deemed by Kennecott to be either viable or
                  sufficiently profitable to Kennecott.

         4.3      Pegasus Involvement. Pegasus will have the right to sell or
                  license the Pegasus Products through NPS for a Proposed
                  Transaction but it is not required to do so if the Proposed
                  Transaction is not deemed by Pegasus to be viable or
                  sufficiently profitable to Pegasus. Even if NPS is not
                  directly involved in a Proposed Transaction, Kennecott will
                  have the right to participate in communications with the
                  Potential Customer and, to the extent permitted by the
                  Potential Customer, to receive information provided by the
                  Potential Customer to Pegasus or NPS for use in the marketing
                  of Coal Products, Coal Services and Pegasus Products by NPS
                  and for the general use of Kennecott in understanding the
                  coal-related needs of the Potential Customer.

         4.4      Related Sales. The Parties acknowledge and agree that other
                  suppliers of services and products to Potential Customers may
                  become involved in attempting to market the Pegasus Products
                  to Potential Customers without any requirement to reimburse
                  NPS for services provided with respect to such sales ("Related
                  Sales"); provided, however, the Parties acknowledge that to
                  the extent practicable, that Related Sales' opportunities
                  shall be developed through NPS. .

         4.5      Marketing Information and Transaction Documentation; Marketing
                  Manager Approval. In order to assure coordination of the sales
                  efforts and the use and development of documentation
                  appropriate for the contemplated transactions, Pegasus agrees
                  that it will require all other parties to coordinate their
                  Related Sales activities with the Marketing Manager. No
                  written agreement involving a Related Sale or a Proposed
                  Transaction will be executed without prior review and approval
                  of the Marketing Manager as to the form of the written
                  documentation. The Marketing Manager will also coordinate and
                  approve any advertising

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                  materials or information brochures utilized in connection with
                  the development of a potential Related Sale or a Proposed
                  Transaction.

         4.6      Kennecott's Access to Information. To the extent permitted by
                  the Potential Customer and applicable law, Kennecott will have
                  the right to obtain coal-related information from the
                  Potential Customer for use in the marketing of Coal Products,
                  Coal Services, and Pegasus Products by NPS and for the general
                  use of Kennecott in understanding the coal-related needs of
                  the Potential Customer.

         4.7      Potential Kennecott Conflicts. The Company and Pegasus each
                  recognize that Kennecott may currently market and sell Coal
                  Products and Coal Services to the Potential Customers and that
                  Kennecott will continue its ongoing sales activities with such
                  Potential Customers while it may be marketing for or
                  negotiating with a particular Potential Customer with respect
                  to Coal Products and Coal Services associated with the
                  marketing and sale of the Pegasus Products.

         4.8      Potential Pegasus Conflicts. Kennecott recognizes that Pegasus
                  may currently market Pegasus Products to Potential Customers
                  who are also customers or Potential Customers of Kennecott,
                  independent from NPS. Kennecott acknowledges that Pegasus will
                  continue its ongoing activities while Kennecott may be
                  marketing for or negotiating with a particular Potential
                  Customer for Coal Products and Coal Services produced from the
                  operating affiliates of Kennecott and while the Company may be
                  marketing to or negotiating with Potential Customers with
                  respect to Pegasus Products.

         4.9      Pricing of Products. The Parties agree that the goal of NPS
                  will be to provide a "Power Solution" to Potential Customers
                  that will decrease their operating costs and/or improve their
                  operations (either by way of emissions reductions,
                  enhancements in efficiencies, or both). NPS will establish a
                  price for Pegasus Products, Coal Services and Coal Products
                  that covers the aggregated revenue that each of its
                  Participants would have received were they individually to
                  deal with the Potential Customers (the "Agreed Revenue") and
                  an amount to cover the costs plus an agreed markup for the
                  Marketing Manager and KFx personnel such as Ted Venners, when
                  working with NPS in selling its Power Solution, as applicable,
                  (together, the Agreed Revenue and the markup for the Marketing
                  Manager and KFx personnel shall be referred to as the "Base
                  Price"). As part of a Proposed Transaction, NPS will strive to
                  share in the benefit that the Potential Customer will enjoy
                  either from reduced costs or increased revenues (a "Successful
                  Transaction") to the Potential Customer and will provide a
                  formula for sharing in the resulting efficiencies to the
                  Potential Customer over and above the Base Price benefit (the
                  "Benefit Portion").

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5        Cost Sharing. Initially, Pegasus and Kennecott will each be responsible
         for its own costs and the reimbursement of its own employees associated
         with developing the Company's marketing activities. To the extent that
         a sale of Pegasus Products is made without a corresponding sale of Coal
         Products or Coal Services, Kennecott will be reimbursed for the time
         directly expended by its Marketing Manager in effecting the Successful
         Transaction. Similarly, to the extent that sales of Coal Services and
         Coal Products are made without a corresponding sale of Pegasus
         Products, KFx shall be reimbursed for the time directly expended by
         such party in effecting the Successful Transaction to the extent such
         time has not already been compensated for by Pegasus. To the extent
         that a sale of Pegasus Products is associated with a sale of Coal
         Products and/or Coal Services, Kennecott and KFx, as applicable, will
         not seek reimbursement for the time directly expended by the Marketing
         Manager or the KFx participant in connection with that Successful
         Transaction.

6        Revenue Sharing. After each Participant has received the Agreed Revenue
         for its own product or service from the Base Price, it will share in
         the additional upside available from the Benefit Portion of a
         Successful Transaction. This sharing will occur based on the relative
         value added by each Participant and will be agreed to prior to entry
         into any Proposed Transaction. Neither Pegasus nor Kennecott will be
         required to proceed with a joint or separate proposal if it is not
         satisfied with the "Agreed Revenue" or the determination of the
         "relative value" represented by the Base Price or the Benefit Portion.
         The difference between the Agreed Revenue and the Base Price shall be
         allocated among the Parties in a manner consistent with Section 4.10
         above.

7        Identified Supplier of Products and Services. To the extent that the
         Potential Customer wants a Pegasus Product, Pegasus will provide it. To
         the extent that the Potential Customer wants Coal Products or Coal
         Services, Kennecott will provide them. Neither Pegasus nor Kennecott
         will be required to enter into any agreement or provide any service or
         product unless it is satisfied with the profit potential and terms of
         the transaction. Each Participant will bear the cost of providing its
         respective Product and Service.

8        Miscellaneous.


         8.1      Confidentiality. The Parties hereto acknowledge and agree that
                  all information obtained in connection with this Agreement or
                  the operations of the Company in the provision of services
                  hereunder and the receipt and review of information from any
                  Potential Customer (whether in written, oral or electronic
                  form) shall be maintained in confidence by such Party and its
                  employees, officers and agents and not disclosed to any third
                  party without the consent of the providing party or as may
                  otherwise be required by applicable law.

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         8.2      Notices. All notices required or permitted hereunder shall be
                  in writing and shall be deemed effectively given: (a) upon
                  personal delivery to the party to be notified: (b) when sent
                  by facsimile if sent during normal business hours of the
                  recipient, if not, then on the next business day; (c) five
                  days after having been sent by registered or certified mail,
                  return receipt requested, postage prepaid; or (d) two days
                  after deposit with a nationally recognized overnight courier
                  service, specifying next day delivery. All communications
                  shall be sent to the parties hereto at the respective
                  addresses set forth below:

                  If to Kennecott:       Kennecott Energy Corporation
                                         505 S. Gillette Ave.
                                         P.O. Box 3009
                                         Gillette, WY 82717-3009
                                         Attention: Patricia Britton
                                         Facsimile: (307) 687-6059

                  With a copy to:        Davis, Graham & Stubbs LLP
                                         4700 Republic Plaza
                                         370 Seventeenth Street
                                         Denver, CO 80202
                                         Attention: Christopher L. Richardson
                                         Facsimile: (303) 893-1379

                  If to KFx Inc.:        KFx Inc.
                                         1999 Broadway, Suite 3200
                                         Denver, CO 80202
                                         Attention: Chairman
                                         Facsimile: (303) 293-8430

                  With a copy to:        Morrison & Foerster LLP
                                         5200 Republic Plaza
                                         370 Seventeenth Street
                                         Denver, Colorado  80202
                                         Attention:  Warren L. Troupe
                                         Facsimile:  (303) 592-1510

                  If to the Company:     Net Power Solutions, LLC
                                         6300 South Syracuse Way
                                         Suite 433
                                         Englewood, CO 80111
                                         Facsimile: (303) 224-0449

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         If to Pegasus Technologies, Inc.:  Pegasus Technologies, Inc.
                                            5970 Heisley Road, Suite 300
                                            Mentor, Ohio  44060
                                            Attention:  Chairman
                                            Facsimile:  (440) 357-1119

         With a copy to:                    Morrison & Foerster LLP
                                            5200 Republic Plaza
                                            370 Seventeenth Street
                                            Denver, Colorado  80202
                                            Attention:  Warren L. Troupe
                                            Facsimile:  (303) 592-1510

8.3      Entire Agreement. This Agreement supersedes any other agreement,
         whether written or oral, that may have been made or entered into by the
         Parties relating to the matters contemplated hereby, including the Term
         Sheet dated as of February 8, 2000 among Kennecott, KFx and Pegasus,
         and constitutes the full and entire understanding and agreement between
         the Parties with regard to the subject matter hereof.

8.4      Term. Unless otherwise extended by the mutual agreement of the Parties
         hereto, this Agreement shall remain in full force and effect until the
         earlier of March 3, 2003 or the date the Parties hereto mutually agree
         to terminate the Agreement.

8.5      Assignment. Any Party hereto may assign this Agreement to the surviving
         party in any merger or consolidation in which it participates or to a
         purchaser of all or substantially all of its assets or capital stock.
         Otherwise, no Party to this Agreement may assign any rights or delegate
         any duties hereunder without the prior written consent of the other
         Parties, which consent shall not be unreasonably withheld.
         Notwithstanding the foregoing, any Party hereto may assign its rights
         and obligations hereunder to any wholly owned subsidiary or the parent
         thereof without the prior consent of any Party hereto.

8.6      Amendment. This Agreement may only be amended in writing by the
         agreement of all Parties hereto.

8.7      Governing Law.

         (a)      This Agreement shall be governed in all respects by the laws
                  of the State of Colorado as such laws are applied to
                  agreements between Colorado residents entered into and
                  performed entirely in Colorado

         (b)      Any legal action or other legal proceeding relating to this
                  Agreement or the enforcement of any provision of this
                  Agreement may be brought or otherwise commenced in any state
                  or federal

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                  court located in the City and County of Denver, Colorado. Each
                  Party to this Agreement:

                    (i)  expressly and irrevocably consents and submits to the
                         jurisdiction of each state and federal court located in
                         the County of Denver, Colorado (and each appellate
                         court located in the State of Colorado) in connection
                         with any such legal proceeding, including to enforce
                         any settlement, order or award;

                    (ii) agrees that each state and federal court located in the
                         City and County of Denver, Colorado shall be deemed to
                         be a convenient forum; and

                    (iii) waives and agrees not to assert (by way of motion, as
                         a defense or otherwise), in any such legal proceeding
                         commenced in any state or federal court located in the
                         City and County of Denver, Colorado, any claim that
                         such Party is not subject personally to the
                         jurisdiction of such court, that such legal proceeding
                         has been brought in an inconvenient forum, that the
                         venue of such proceeding is improper or that this
                         Agreement or the subject matter of this Agreement may
                         not be enforced in or by such court.

         (c)      Each Party hereto agrees to the entry of an order to enforce
                  any resolution, settlement, order or award made pursuant to
                  this Section by the state and federal courts located in the
                  County of Denver, Colorado and in connection therewith hereby
                  waives, and agrees not to assert by way of motion, as a
                  defense, or otherwise, any claim that such resolution,
                  settlement, order or award is inconsistent with or violative
                  of the laws or public policy of the laws of the State of
                  Colorado or any other jurisdiction.

         (d)      Each Party to this Agreement hereby knowingly, voluntarily,
                  and intentionally waives the right to a trial by jury in
                  respect of any litigation arising out of, under or in
                  connection with this Agreement, this waiver being a material
                  inducement for each such Party to enter into this Agreement.

8.8      Waiver. A provision of this Agreement may be waived only by a written
         instrument executed by or on behalf of the party waiving compliance.
         The failure of any Party at any time or times to require performance of
         any provision hereof shall in no manner affect the right at a later
         time to enforce the same. No waiver by any Party of any condition, or
         of any

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         breach of any term, covenant, representation or warranty contained in
         this Agreement, in any one or more instances, shall be construed to be
         a waiver of any other condition or of any other breach of the same or
         any other term, covenant, representation or warranty.

8.9      Counterparts; Facsimile. This Agreement may be executed in any number
         of counterparts, each of which shall be an original, but all of which
         together shall constitute one instrument. This Agreement (or any
         counterpart hereof) may be delivered by a Party by facsimile, which
         facsimile delivery shall be effective as if the original counterpart
         had been delivered.

8.10     Expenses. Each Party hereto will pay its own expenses incurred in
         connection with the transactions contemplated hereby, whether or not
         such transactions shall be consummated.

8.11     No Third Party Beneficiaries. This Agreement is intended for the
         benefit of the Parties hereto and their respective permitted successors
         and assigns and are not for the benefit of, nor may any provision
         hereof be enforced by, any other person.



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         IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE
EFFECTIVE DATE.


                                  KENNECOTT ENERGY COMPANY


                                  By: /s/ Kent W. Goates
                                     ------------------------------------------
                                     Kent W. Goates, Vice President and CFO



                                  KFx INC.


                                  By: /s/ Seth L. Patterson
                                     ------------------------------------------
                                     Seth L. Patterson, Executive Vice President
                                     and CFO



                                  PEGASUS TECHNOLOGIES, INC.


                                  By: /s/ Seth L. Patterson
                                     ------------------------------------------
                                     Seth L. Patterson, Vice President of
                                     Finance and CFO



                                  NET POWER SOLUTIONS, LLC

                                  By:  Kennecott Energy Company, its Manager


                                  By: /s/ Kent W. Goates
                                     ------------------------------------------
                                     Kent W. Goates, Vice President and CFO



                                  KFUEL, LLC

                                  By:  KFx Inc., its Manager


                                  By: /s/ Rudolph G. Swenson
                                     ------------------------------------------
                                     Rudolph G. Swenson, Vice President