Document:

Exhibit 10.74

Exhibit 10.74

	

 

	

MASTER AGREEMENT

	
 

	
 

	
 

	
Between

	
 

	
 

	
KFx Plant II, LLC

	
a Delaware limited liability company

	
 

	
 

	
 

	
and

	
 

	
 

	
 

	
ARCH COAL, INC.

	
a Delaware corporation

	
 

	
 

	
 

	
 

	
October 5, 2005

	
 

	
TABLE OF CONTENTS

		
Page

	
 

	
	
 

	
	
 

	
	
ARTICLE I DEFINITIONS AND INTERPRETATION

	
1

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
1.1

		
Definitions

	
1

		
1.2

		
References to Singular/Plural

	
5

		
1.3

		
References to Exhibits

	
5

		
1.4

		
Numbers and Headings

	
5

		
1.5

		
Gender References

	
5

		
1.6

		
Including

	
5

		
1.7

		
References to Agreement

	
5

		
1.8

		
References to Statutes

	
5

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE II ARCH COAL’S OPTION TO ENTER INTO OPERATIVE AGREEMENTS

	
5

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
2.1

		
Arch Coal’s Option to Enter into Operative Agreements

	
5

		
2.2

		
Operative Agreements

	
5

		
2.3

		
Delivery Requirements

	
6

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE III SITE OPERATIONS

	
6

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
3.1

		
Operator Activities

	
6

		
3.2

		
Third Party Grants

	
6

		
3.3

		
Data

	
7

		
3.4

		
Reclamation Obligation for Operator Activities

	
7

		
3.5

		
Initial Operator Performance Bond

	
7

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ARCH COAL

	
7

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
4.1

		
Corporate Status and Authority of Arch Coal and its Affiliates

	
7

		
4.2

		
No Conflicts

	
8

		
4.3

		
Consents

	
8

		
4.4

		
Litigation

	
8

		
4.5

		
Brokers

	
8

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE V REPRESENTATIONS AND WARRANTIES OF OPERATOR

	
8

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
5.1

		
Corporate Status and Authority

	
8

		
5.2

		
No Conflicts

	
9

		
5.3

		
Governmental Consents

	
9

		
5.4

		
Independent Evaluation

	
9

		
5.5

		
Brokers

	
10

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE VI COVENANTS

	
	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
6.1

		
Additional Covenants of Arch Coal

	
10

		
6.2

		
Additional Covenant of Operator

	
10

-i-

	
ARTICLE VII CONFIDENTIALITY

	
10

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
7.1

		
Confidentiality

	
10

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE VIII CONSENTS AND APPROVALS

	
11

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
8.1

		
Consents and Authorizations

	
11

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE IX ASSIGNMENT

	
11

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
9.1

		
Binding

	
11

		
9.2

		
Permitted Assignments

	
11

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE X TERMINATION AND DEFAULT

	
12

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
10.1

		
Termination

	
12

		
10.2

		
Default

	
12

		
10.3

		
Return of Data

	
12

		
10.4

		
Surrender of Possession and Removal of Equipment

	
13

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE XI INDEMNIFICATION

	
13

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
11.1

		
Survival and Independence of Indemnification Obligations

	
13

		
11.2

		
Indemnification of Operator

	
13

		
11.3

		
Indemnification of Arch Coal

	
13

		
11.4

		
Claims

	
13

		
11.5

		
Limitations

	
14

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

	
ARTICLE XII MISCELLANEOUS PROVISIONS

	
15

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

		
12.1

		
Exclusivity of Representations and Warranties; Relationship Between the Parties

	
15

		
12.2

		
Use of Names

	
15

		
12.3

		
No Other Representations Nor Grant of Reliance

	
15

		
12.4

		
Amendment

	
15

		
12.5

		
Notices

	
15

		
12.6

		
Entire Agreement

	
16

		
12.7

		
Severability

	
16

		
12.8

		
No Waiver

	
17

		
12.9

		
Counterparts

	
17

		
12.10

		
Survival

	
17

		
12.11

		
No Implied Covenants

	
17

		
12.12

		
Force Majeure

	
17

		
12.13

		
Other Business Opportunities/No Partnership

	
17

		
12.14

		
Further Assurance

	
18

		
12.15

		
Governing Law; Jurisdiction, Venue; Waiver of Jury Trial, Injunction

	
18

-ii-

	
   

	
         

	
   

	
                                                                                                                                                     

	
   

				
Exhibit A          Agreement for Purchase and Sale of Coal

	
				
Exhibit B          Master Guaranty Agreement

	
				
Exhibit C          Operating Agreement

	
				
Exhibit D          Site Lease Agreement

	

-iii-

	
MASTER AGREEMENT

            This Master agreement is dated and effective as of October 5, 2005 (the “Effective Date”), by and between KFx Plant II,
LLC, a Delaware limited liability company (“Operator”), and Arch Coal, Inc., a Delaware corporation (“Arch Coal”).

Recitals

            WHEREAS, Thunder Basin Coal Company, LLC, a Delaware limited liability company and a subsidiary of Arch Coal (“TBCC”), owns
and operates the Coal Creek Mine in Campbell County, Wyoming (the “Mine”);

            WHEREAS, Operator has licensed a proprietary process to upgrade high-moisture content fuels or other carbonaceous materials to solid fuel (including the
patents, licenses, trademarks, know-how, trade secrets and other items derivative or subsumed therein, “K-FuelTM Process”) owned by KFx Inc., a Delaware corporation (“KFx”); and

            WHEREAS, the Parties desire to establish the terms and conditions upon which (i) Operator will construct and operate a plant at the Mine (the
“Plant”) which will apply the K-FuelTM Process to coal mined by TBCC at the Mine, (ii) Arch Coal Sales Company, Inc., a Delaware corporation and a wholly-owned subsidiary of Arch Coal (“ACS”), will, as agent of
TBCC, sell coal produced by TBCC at the Mine to Operator for use in the Plant, (iii) Ark Land Company, a Delaware corporation and a wholly-owned subsidiary of Arch Coal (“Ark Land”), may, at Operator’s election, sell certain real
property located in Campbell County, Wyoming to Operator to be used for disposal of waste produced by the Plant, and (iv) Arch Coal will have a warrant to make investments in KFx’s common stock.

            NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

	
ARTICLE I

	
DEFINITIONS AND INTERPRETATION

            1.1       Definitions.

            “ACS” is defined in the Recitals.

            “Affiliate” of a specified party shall mean any Person or entity directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such party. For the purposes of this definition, “control”(including, with correlative meaning, the terms “controlling,”“controlled by”and “under
common control with”) means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person or entity, whether through the ownership of voting securities, by contract or
otherwise.

            “Agreement” means this Master Agreement, the Recitals and all Exhibits and Schedules.

            “Arch Coal” is defined in the Preamble.

-1-

            “Arch Coal Option” is defined in Section 2.1.

            “Arch Coal Option Notice” is defined in Section 2.1.

            “Ark Land” is defined in the Recitals.

            “Business Days” means all days other than any Saturday, Sunday or federal holiday.

            “Coal Supply Agreement” means the Agreement for Purchase and Sale of Coal by and between Operator and ACS attached hereto as Exhibit
A.

            “Claim Notice” is defined in Section 11.4.

            “Claims” is defined in Section 11.4.

            “Data” means, with respect to the Site, all (1) abstracts of title and other title information, (2) environmental reports,
(3) all maps, assays, surveys, technical reports, samples and engineering data, and (4) any other data relating to the Site.

            “Defaulting Party” is defined in Section 10.2.

            “Effective Date” is defined in the Preamble.

            “Execution Date” is defined in Section 2.2.

            “Fort Union Plant” means the plant located at the Fort Union site near Gillette, Wyoming, which will produce K-FuelTM.

            “Governmental Authority” means any federal, state, local, tribal or foreign court, tribunal, legislative, administrative or regulatory
authority or agency, or any division, department or commission of any of the foregoing with jurisdiction over one or both Parties or the subject matter of this Agreement.

            “Governmental Requirements”means any applicable Law, ordinance, regulation, permit, consent, order or decree or other requirement or
pronouncement having the effect of law of any Governmental Authority, as in effect from time to time.

            “Guaranty” means the Master Guaranty Agreement to be executed by certain Owners holding at least Seventy-Five Percent (75%) in the aggregate
of the equity ownership interest in Operator in favor of TBCC and ACS attached hereto as Exhibit B.

            “Indemnified Party” is defined in Section 11.4.

            “Indemnifying Party” is defined in Section 11.4.

            “Initial Period”is defined in Section 3.1.

            “Initial Operator Performance Bond” means a bond, letter of credit or other surety from a financial institution rated AA or better by
Standard & Poor’s and in a form acceptable to TBCC

-2-

in an aggregate amount of not less than One Million Dollars ($1,000,000) obtained by Operator pursuant to Section 3.5. 

            “K-FuelTM” means the refined, beneficiated coal product resulting from the K-FuelTM Process and containing a minimum BTU of
10,000/lb.

            “K-FuelTM Process” is defined in the Recitals.

            “KFx” is defined in the Recitals.

            “Laws” means any law, statute, code, ordinance, treaty, rule, regulation or ruling of any Governmental Authority relating to the Site and
Operator Activities.

            “License Agreement” means the Surface Access and Use License Agreement executed by TBCC in favor of Operator of even date herewith which
provides for certain activities to be conducted by Operator on the Site prior to the effective date of the Site Lease.

            “Loss” or “Losses” means any and all losses, costs, damages, demands, penalties, fines, settlements, response, remedial,
reclamation or inspection costs, reasonable expenses (including interest on any amount payable to a third party as a result of the foregoing), liabilities on account of taxes and assessments (including interest and penalties thereon) and any legal, accounting,
auditing, consulting, or other fees and expenses reasonably incurred in connection with investigating or defending any claims, actions or proceedings, whether or not resulting in any liability; provided, however, that the term “Losses” shall not be deemed
to include lost profits, opportunity costs, any other consequential damages or punitive damages, except and to extent such Losses arise from Third Party Claims.

            “Mine” is defined in the Recitals.

            “Moody’s” means Moody’s Investors Service, Inc., and its successors.

            “Non-Defaulting Party” is defined in Section 10.2.

            “Notice Period” is defined in Section 11.4.

            “Operating Agreement” means the Operating Agreement by and between Operator and TBCC attached hereto as Exhibit C.

            “Operative Agreements” means, collectively, (i) the Coal Supply Agreement; (ii) the Site Lease; (iii) the Operating Agreement; and (iv) the
Guaranty.

            “Operator” is defined in the Preamble.

            “Operator Activities” means any activities conducted by Operator on the Site in compliance with the License Agreement.

            “Operator Option Period” is defined in Section 2.1.

            “Operator Notice” is defined in Section 2.1.

-3-

            “Owner” means each holder of an equity ownership interest in Operator.

            “Parties” means Arch Coal and Operator, and “Party” refers to either one of them.

            “Permitted Assignee” means a Person (i) who is not, has not been in the past five (5) years, nor will be during the Term of this
Agreement, a Producer or an Affiliate of a Producer; and (ii) either (a) whose unsecured debt (unsupported by any affiliate or third party guaranty) has rating of at least BBB by Standard & Poor’s or Baa3 by Moody’s or (b) who has a net worth in
excess of Two Hundred Million Dollars ($200,000,000).

            “Permitted Owner” means any of (i) KFx or (ii) a Person (a) who is not, has not been in the past five (5) years, nor will be during the Term
of this Agreement, a Producer or an Affiliate of a Producer, and (b) either (x) whose unsecured debt (unsupported by any affiliate or third party guaranty) has rating of at least BBB by Standard & Poor’s or Baa3 by Moody’s or (y) who has a net worth
in excess of Fifty Million Dollars ($50,000,000).

            “Person” means any corporation, partnership (whether general, limited or otherwise), limited liability company, trust, association, joint
venture, unincorporated organization, Governmental Authority, or any other legal entity or any natural person.

            “Plant” is defined in the Recitals.

            “Producer” means a Person who derives greater than five percent (5%) of its revenues from the sale of coal in the Powder River Basin in
Wyoming.

            “Representative” means a director, manager, officer, employee, agent or other representative of Operator or Arch Coal.

            “Site” is defined in the Recitals of the License Agreement.

            “Site Lease” means the Site Lease Agreement by and between TBCC, as Lessor, and Operator, as Lessee, of the Site attached hereto as
Exhibit E.

            “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its
successors.

            “Stock Purchase and Warrant Agreement” means the Stock Purchase and Warrant Agreement by and between KFx and Arch Coal of even date
herewith.

            “TBCC” is defined in the Recitals.

            “Termination Date”means the date on which this Agreement terminates pursuant to the provisions of Article X.

            “Third Party Claim” means any claim or demand asserted against or sought to be collected from any Party to this Agreement by any Person,
including employees, managers, directors, shareholders, members, officers and agents of the Parties, other than Arch Coal or Operator.

-4-

            “Third Party Grant” is defined in Section 3.2.

            1.2       References to
Singular/Plural.  Terms denoting the singular only shall include the plural, and vice versa.

            1.3       References to
Exhibits.  Unless otherwise stated, a reference to the Preamble or a Recital, Article, Section, Schedule or Exhibit is a reference to the Preamble or a Recital, Article, Section, Schedule or Exhibit of this Agreement

            1.4       Numbers and
Headings.  Section numbers and headings are for convenience of reference only, and shall not affect the interpretation of this Agreement.

            1.5       Gender
References.  Reference to any gender includes the other.

            1.6       Including.  Reference to “including” means including, but not by way of limitation.

            1.7       References to
Agreement.  Unless otherwise expressly provided in this Agreement, reference to an agreement (including this Agreement), document or instrument is the same as amended, modified, novated or replaced from time to time.

            1.8       References to
Statutes.  Reference to a statute or other legislative act, by-law, rule, regulation or order is to the same as amended, modified or replaced from time to time and to any rule, regulation or order promulgated pursuant to such law.

	
ARTICLE II

	
ARCH COAL’S OPTION TO ENTER INTO OPERATIVE AGREEMENTS

            2.1       Arch Coal’s Option to Enter into Operative Agreements.  If, after
conducting Operator Activities, Operator intends to construct and operate the Plant, Operator shall deliver a notice to Arch Coal after March 1, 2006 but in any event on or before July 1, 2006 (the “Operator Option Period”) indicating such
intent (the “Operator Notice”).  Arch Coal shall have an option (the “Arch Coal Option”) for a period of thirty (30) days from its receipt of the Operator Notice, by delivery of notice to Operator (the
“Arch Coal Option Notice”), to enter into the Operative Agreements.  Upon receipt of the Operator Notice, Arch Coal shall make a good faith determination of the commercial viability of the proposed Plant.  In order to make such
determination, Arch Coal shall consider (i) the information supplied to Arch Coal by Operator pursuant to Section 2.3 hereof; (ii) Arch Coal’s general knowledge and experience with respect to the potential commercial market for the K-FuelTM product to be
produced and sold by the Plant; and (iii) such other information as Arch Coal may reasonably request from Operator.  If, after reviewing such information, Arch Coal determines, in its sole reasonable discretion, that the Plant is not reasonably certain to be
commercially viable for the term of the Operating Agreement, then Arch Coal can refuse to exercise the Arch Coal Option.

            2.2       Operative Agreements.  If Arch Coal exercises the Arch Coal Option by
timely delivery of the Arch Coal Option Notice, then the Parties and their Affiliates, as appropriate, shall, within ten (10) days of delivery of the Arch Coal Option Notice (the “Execution Date”),

-5-

execute and deliver each of the Operative Agreements in the form attached hereto.  Each of the Operative Agreements shall be effective as of the Execution Date.

            2.3       Delivery Requirements.  Except as prohibited in any existing
confidentiality agreement between Operator and a third party, so long as Operator has used its best efforts to obtain a release of such confidentiality agreement, (a) beginning on February 1, 2006, and on the tenth day of each month thereafter, and (b) upon the date
Operator provides the Operator Notice to Arch Coal, Operator shall deliver to Arch Coal a monthly accounting for the Fort Union Plant for the immediately preceding month, which accounting shall include, (i) the amount and quality of the K-FuelTM produced,
(ii) the amount and quality of the raw coal used as feedstock, (iii) the amount and quality of the screened-off undersize raw coal, (iv) the customers and plants to whom the K-FuelTM was sold, (v) the amount of K-FuelTM Operator shipped to
each of its customers from the Fort Union Plant, (vi) evidence of either firm financing commitments (or other established sources of funds) sufficient to construct and operate the Plant as contemplated by the Operative Agreements or efforts undertaken to secure
such firm financing commitments, and (vii) other information as Arch Coal in its sole reasonable discretion may require to assess whether to exercise the Arch Coal Option.  At Arch Coal’s request, Operator will also arrange for Arch Coal to meet with
Operator and the customers to whom the K-FuelTM has been sold.

	
ARTICLE
III

	
SITE OPERATIONS

            3.1       Operator Activities.  During the period from the Effective Date until the earlier to occur of (i)
the Execution Date or (ii) the Termination Date (such period being the “Initial Period”), Operator and its Affiliates shall have the right to enter into and conduct Operator Activities on the Site only in accordance with the provisions of
the License Agreement.   TBCC shall use reasonable efforts to coordinate Operator’s entrance onto the Site during the Initial Period, provided that Operator’s request for entrance upon the Site is reasonable and during normal business hours and
provided further that Operator provides TBCC at least 24-hours notice of its desire to enter the Site, subject, however in all cases, to existing third party rights and agreements affecting the Site.  Operator shall conduct all Operator Activities on the Site in
a good and workmanlike manner and consistent with good mining and engineering practices and in accordance with applicable Laws.  Operator shall not conduct any Operator Activities that result, or could reasonably be expected to result, in any adverse impact on
the coal reserves in the Mine or the ability of TBCC to mine on the Site or otherwise interfere with TBCC’s activities in the Mine.  Operator shall secure all permits, authorizations, approvals, insurance and bonds required to carry out the Operator
Activities.  Within ten (10) days of the end of each calendar month, Operator shall provide TBCC with a copy of each permit or authorization applied for or received from a Governmental Authority relating to the Site and a written description and map of
Operator’s existing and proposed Operator Activities, excluding any business, financial or operational information.

            3.2       Third Party Grants.  Ark Land or TBCC may grant rights in and to the Site to third parties for
right-of-ways, easements or access in and through the Site (each, a “Third Party Grant”) where necessary or reasonable for its activities and shall do the same at Operator’s request and expense with respect to Operator Activities,
provided that each such Third Party Grant by TBCC at the request of Operator shall (i) have a term no longer than the Initial Period,

-6-

(ii) be made in connection with the permitting and development of the Plant, and (iii) be subject to reasonable termination provisions which would allow Ark Land or TBCC, as the case may be, or their successors to terminate
such Third Party Grants on the Termination Date.

            3.3       Data.  During the Initial Period, Arch Coal shall make available to Operator all Data in its possession or reasonably available to
it relating to the Site.  Operator may copy any of the Data at Operator’s sole cost and expense.  Arch Coal makes no representation or warranty as to the accuracy, reliability or completeness of any of the Data, and Operator shall rely on the Data at
its sole risk.

           
3.4       Reclamation Obligation for Operator Activities.  In the event that this Agreement terminates (other than as a result of the execution of the Operative Agreements), Operator shall promptly commence
required reclamation obligations for Operator Activities conducted on or affecting the Site and shall use its commercially reasonable efforts to assure that any and all reclamation activities are conducted in a time and manner to avoid interference with any
activities of TBCC and its mining operations.  This Section 3.4 shall survive the termination of this Agreement.

            3.5       Initial Operator Performance Bond.  Prior to
undertaking any Operator Activities or any activities permitted by the License Agreement, Operator, at its sole cost and expense, shall secure, and shall maintain throughout the term of this Agreement and the License Agreement, the Initial Operator Performance Bond
in order to secure Operator’s obligations under this Agreement and the License Agreement.  The terms of the Initial Operator Performance Bond shall prohibit any amendment, revision, waiver or termination without the express written consent of Arch
Coal.  Arch Coal shall have the rights granted under this Agreement to call upon the Initial Operator Performance Bond.  The Initial Operator Performance Bond shall survive the termination of this Agreement until Operator has either satisfied all
obligations under this Agreement or has replaced the Initial Operator Performance Bond with the Operator Performance Bond pursuant to the provisions of the Operating Agreement.

	
ARTICLE IV

	
REPRESENTATIONS AND WARRANTIES OF ARCH COAL

            Arch Coal represents and warrants to Operator as of the date of this Agreement and as of the Execution Date as follows:

           
4.1       Corporate Status and Authority of Arch Coal and its Affiliates.  Arch Coal and each of its Affiliates party to the Operative Agreements are entities validly
existing and in good standing under the laws of each entity’s state of formation and are in good standing as foreign entities in the State of Wyoming.  Arch Coal and its Affiliates have the requisite power and authority to execute and deliver this
Agreement and the Operative Agreements to which they are a party, perform their obligations under such agreements and to consummate the transactions and perform the obligations imposed upon them as contemplated by this Agreement and the Operative Agreements. 
The execution, delivery and performance by Arch Coal and its Affiliates of this Agreement and the Operative Agreements have been duly authorized by Arch Coal and its Affiliates party to the Operative Agreements and constitute all necessary action on the part of Arch
Coal and such Affiliates for such execution, delivery and performance.  This Agreement

-7-

has been duly executed and delivered by Arch Coal and, assuming valid execution and delivery by Operator, constitutes the valid and binding obligation of Arch Coal and its Affiliates, enforceable against Arch Coal in
accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application referring to or affecting the enforcement of creditors’ rights.  Upon execution,
the Operative Agreements shall be duly executed and delivered by Arch Coal and its Affiliates as appropriate and shall constitute the valid and binding obligations of Arch Coal and such Affiliates, enforceable against such companies in accordance with their
respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application referring to or affecting the enforcement of creditors’ rights.

           
4.2       No Conflicts.  Except as contemplated thereunder, the execution, delivery and performance by Arch Coal and its Affiliates of this Agreement
and the Operative Agreements and the consummation of the transactions contemplated by such agreements will not result in (i) any conflict with or violation of the organizational documents of Arch Coal and its Affiliates, or (ii) any breach or violation of or default
under, or result in the creation or imposition of any lien under, any statute, regulation, judgment, order or decree, or any mortgage, deed of trust, indenture, security agreement, pledge or any other similar instrument to which Arch Coal or its Affiliates is a party
or by which Arch Coal or its Affiliates or any of their properties or assets are bound.

            4.3       Consents.  No consent,
approval or authorization of or filing with any Governmental Authority or third party is required on the part of Arch Coal or its Affiliates in connection with the execution and delivery of this Agreement and the Operative Agreements or the consummation of the
transactions contemplated by such Agreements,except consents required from Governmental Authorities or third party lessors with respect to the Site Lease.

            4.4       Litigation.  There is no proceeding pending or, to Arch Coal and its Affiliates’
knowledge, threatened against or affecting any of them which would have a material adverse effect on the transactions contemplated by
this Agreement.

           
4.5       Brokers.  All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Arch Coal and its Affiliates directly with Operator without the
intervention of any Person on behalf of Arch Coal and its Affiliates in such manner as to give rise to any valid claim by any Person against Operator for a finder’s fee, brokerage commission or similar payment.

	
ARTICLE V

	
REPRESENTATIONS AND WARRANTIES OF OPERATOR

            Operator represents and warrants to Arch Coal as of the date of this Agreement and as of the Execution Date as follows:

            5.1       Corporate
Status and Authority.  Operator is an entity validly existing and in good standing under the laws of its state of formation and is in good standing as a foreign entity in the State of Wyoming.  Operator has all requisite
power and authority to execute and deliver this

-8-

Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement.  Operator has all requisite power and authority to execute and deliver the Operative Agreements, to
perform its obligations thereunder and to consummate the transactions contemplated by the Operative Agreements.  The execution, delivery and performance by Operator of this Agreement, the Operative Agreements have been duly authorized by Operator and constitute
all necessary action on the part of Operator for such execution, delivery and performance.  This Agreement has been duly executed and delivered by Operator and, assuming valid execution and delivery by Arch Coal, constitutes the valid and binding obligation of
Operator, enforceable against Operator in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application referring to or affecting the enforcement of
creditors’ rights.  Upon execution, the Operative Agreements shall be duly executed and delivered by Operator and shall constitute the valid and binding obligations of Operator, enforceable against Operator in accordance with their respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application referring to or affecting the enforcement of creditors’ rights.

           
5.2       No Conflicts.  The execution, delivery and performance by Operator of this Agreement and the consummation of the transactions contemplated
hereby will not result in:  (i) any conflict with the organizational documents of Operator or (ii) any breach or violation of or default under, or result in the creation or imposition of any lien under, any statute, regulation, judgment, order or
decree, or any mortgage, deed of trust, indenture, security agreement, pledge or any other similar instrument to which Operator is a party or by which Operator or any of its properties or assets are bound. The execution, delivery and performance by Operator of the
Operative Agreements and the consummation of the transactions contemplated thereby will not result in:  (i) any conflict with the organizational documents of Operator or (ii) any breach or violation of or default under, or result in the creation or
imposition of any lien under, any statute, regulation, judgment, order or decree, or any mortgage, deed of trust, indenture, security agreement, pledge or any other similar instrument to which Operator is a party or by which Operator or any of its properties or
assets are bound.

            5.3       Governmental Consents.  No consent, approval or
authorization of or filing with any Governmental Authority is required on the part of Operator in connection with the execution and delivery of this Agreement, the Operative Agreements or the consummation of the transactions contemplated hereby and thereby, except
permits and consents required from Governmental Authorities or third party lessors with respect to the Site Lease.

            5.4       Independent
Evaluation.

                        (a)        Operator has reviewed or received copies
of, or had the opportunity to review, such information from Arch Coal and its Affiliates as it has requested, and has had the opportunity to make such inquiry of Representatives of Arch Coal and its Affiliates as Operator deems appropriate.

                        (b)        OPERATOR
ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF ARCH COAL AND ITS AFFILIATES OR ANY AFFILIATE, EMPLOYEE OR AGENT OF ARCH COAL AND ITS AFFILIATES HAS

-9-

MADE ANY REPRESENTATION, PROMISE, COVENANT OR WARRANTY REGARDING ANY OF ARCH COAL AND ITS AFFILIATES, ITS PROPERTIES, ASSETS, BUSINESS, OPERATIONS, LIABILITIES OR OBLIGATIONS OR OTHERWISE.  ARCH COAL AND ITS AFFILIATES
DISCLAIMS ANY IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OPERATIVE AGREEMENTS.

            5.5      
Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Operator directly with Arch Coal without the intervention of any Person on behalf of Operator in such manner as
to give rise to any valid claim by any Person against Arch Coal or its Affiliates for a finder’s fee, brokerage commission or similar payment.

	
ARTICLE VI

	
COVENANTS

            6.1       Additional Covenants of Arch Coal.  From the Effective Date until the end of the Initial Period,
Arch Coal shall, or, if applicable, cause its Affiliates to:

                        (a)        Maintain existence and remain in good
standing as a foreign entity under the laws of the State of Wyoming;

                       
(b)        Maintain the Site and fully and timely pay all of its obligations with respect to the Site, including, without limitations, property taxes and lease payments;

                        (c)        Except for existing liens, liens executed
in connection with the financing activities of Arch Coal or its Affiliates and Third Party Grants, prevent the placing of any lien upon or in relation to the Site, and promptly cure and remove any such lien upon or in relation to the Site; and

                        (d)        Until the earliest to occur of (i) the
date on which Operator notifies Arch Coal that it will not construct the Plant, (ii) July 1, 2006, in the event Operator fails to deliver the Operator Notice to Arch Coal on or before such date, (iii) Arch Coal’s election not to exercise the Arch Coal Option,
or (iv) the execution and delivery of the Coal Supply Agreement, Arch Coal shall not enter into any contract for the sale of coal which would interfere with its ability to perform its obligations under the Coal Supply Agreement.

            6.2       Additional Covenant of Operator.  Operator
shall be owned solely by Permitted Owners.

	
ARTICLE
VII

	
CONFIDENTIALITY

            7.1       Confidentiality.  The terms and conditions
(including, without limitation, price) set forth in this Agreement are considered by the Parties to be confidential and proprietary information.  Neither Party shall disclose any such information to any third party without the other Party’s prior written
consent; provided, however, that no such consent shall be needed

-10-

where such disclosure (i) is required by law, regulation, or regulatory agencies having jurisdiction over one of the Parties or (ii) is necessary in connection with a Party's assertion of a claim or defense in a judicial or
administrative proceeding and that in either of these events, the Party intending to make such disclosure shall advise the other Party in advance and cooperate to the extent practicable to minimize the disclosure of any such information.  Notwithstanding the
foregoing provisions of this Section 7.1, either Party may disclose any information contained in this Agreement to a prospective purchaser of the stock, equity interests or assets of that Party or to a lender in connection with a financing transaction, or in the case
of TBCC only to a prospective purchaser of the Mine; provided, however, that any such prospective purchaser or lender shall be bound by the provisions of this Section 7.1.  For purposes of this Section 7.1, the term “third party” shall not
include (i) a Party’s parent, subsidiary, Affiliate, or sister corporation or (ii) a Party’s respective officers, directors, employees, legal advisers, accountants, lessors or consultants; provided further, that no exception to the confidentiality
provisions set forth in this Section 7.1 shall allow either Party to make any press release without the other Party’s prior written consent.

	
ARTICLE VIII

	
CONSENTS AND APPROVALS

            8.1       Consents and Authorizations.  Arch Coal, at Operator’s request and expense, shall use
commercially reasonable efforts to assist Operator and KFx in obtaining such consents, authorizations and approvals from Governmental Authorities and third parties as shall be necessary or appropriate to permit the consummation of the transactions contemplated by
this Agreement.

	
ARTICLE IX

	
ASSIGNMENT

            9.1       Binding.  This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns.

            9.2       Permitted Assignments.

                        (a)        Operator shall not assign all or any part
of its interest, rights or obligations in and to this Agreement without the prior written consent of Arch Coal, which consent may be withheld at Arch Coal’s sole discretion; provided however, that, consent shall not be required for a transfer by Operator
to a Permitted Assignee.

                        (b)        Arch Coal may, without the prior written consent of Operator, (i) assign
all (but not less than all) of this Agreement and transfer all (but not less than all) of the Site to a Person, provided that such assignee agrees in writing to be bound by all of the terms and conditions of this Agreement; and (ii) assign any or all of the
Site to an Affiliate, provided such Affiliate agrees in writing to be bound by all of the terms and conditions of this Agreement.

                        (c)        Any transfer or assignment in violation of this Article IX shall be void
and of no effect.

-11-

                        (d)        No assignment of this Agreement may be
made without a corresponding assignment of the License Agreement.  Any agreed transfer or assignment shall be subject in all cases to the continuance of the Initial Operator Performance Bond as set out in Section 3.5.

	
ARTICLE X

	
TERMINATION AND DEFAULT

            10.1     Termination.

                        (a)        This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned, for any reason, by the mutual written consent of the Parties. 

                        (b)        This Agreement shall terminate upon the termination of the License
Agreement.

                        (c)        This Agreement shall terminate upon the
execution of the Operative Agreements.

                        (d)        Operator may terminate this Agreement at
any time upon thirty (30) days prior written notice to Arch Coal.

                        (e)        If Operator has not delivered the
Operator Notice during the Operator Option Period, then this Agreement shall terminate and neither Arch Coal nor Operator shall have any further liability or obligations under this Agreement, except for those provisions of this Agreement that explicitly survive
termination and as otherwise set forth in this Article X.

                        (f)         If Arch Coal has not delivered the
Arch Coal Option Notice within thirty (30) days of its receipt of the complying Operator Notice, then this Agreement shall terminate and neither Arch Coal nor Operator shall have any further liability or obligations under this Agreement, except for those provisions
of this Agreement that explicitly survive termination and as otherwise set forth in this Article X.

            10.2     Default.  In the event of a
material default under this Agreement or the License Agreement on the part of a Party (the “Defaulting Party”), the non-defaulting Party (the “Non-Defaulting Party”) shall give to Defaulting Party written notice
specifying the particular default or defaults asserted, and Defaulting Party shall have thirty (30) days after the receipt of said notice within which either (i) to cure such specified default or defaults or (ii) to diligently undertake to cure the default or
defaults and promptly thereafter cure them.  In the event such curative action is not so completed or diligent efforts to cure such defaults are not undertaken within the applicable thirty (30) day period and thereafter diligently pursued to completion within
sixty (60) days from receipt of notice, the Non-Defaulting Party may elect to terminate this Agreement by notice to Defaulting Party.

            10.3     Return of Data.  Within ten (10) days of the Termination Date, Operator shall as soon as practicable return to Arch Coal all Data and other
information furnished by Arch Coal to Operator relating to the Site or destroy such Data and certify that such Data has been destroyed.

-12-

            10.4     Surrender of Possession and Removal of Equipment.  On the Termination Date, unless Operator and TBCC execute the Site Lease, Operator shall
surrender possession of the Site to TBCC, subject to the condition that Operator shall have the right at any time within ninety (90) days after such surrender to complete any required reclamation obligations and remove all of its tools, equipment, machinery,
supplies, fixtures, buildings, structures and other property erected or placed on the Site, provided, however, that Operator (i) shall use its reasonable efforts to remove such equipment as promptly as possible and in any event within ninety (90) days, and shall take
all reasonable steps to assure that such equipment is removed in a time and manner to avoid interference with any mining activities of TBCC and (ii) shall complete its reclamation obligations set forth in 0 as promptly as possible.  If the property described in
clause (i) is not removed within the time period set forth above, at Arch Coal’s election, (x) the title to such property shall automatically be transferred to Arch Coal or (y) Arch Coal may remove any such property and dispose of it in a commercially
reasonable manner at the expense of Operator.

	
ARTICLE XI

	
INDEMNIFICATION

            11.1     Survival and Independence of Indemnification Obligations.  The indemnification provisions of this Article XI relate to all indemnification
obligations of the Parties under this Agreement, except that the survival provisions of this Section 11.1 shall not apply to the indemnity obligations set forth in the Operative Agreements.  The indemnification obligations of the Parties set forth in this
Article XI shall survive until (but only until) (i) the Execution Date, or (ii) if this Agreement is terminated prior to the Execution Date, the second anniversary of the Termination Date.

            11.2     Indemnification of Operator.  Arch Coal shall indemnify and hold Operator and its managers,
members, directors, shareholders, Affiliates, employees and agents harmless from and against all claims, causes of action and Losses that Operator may suffer, sustain or become subject to by reason of or arising out of (i) any material breach of a representation,
warranty or covenant of Arch Coal contained in this Agreement or any other agreement or instrument executed by Arch Coal pursuant to this Agreement and (ii) claims arising out of activities or operations of or on behalf of Arch Coal or its Affiliates on or relating
to the Site.

            11.3     Indemnification of Arch Coal.  Operator shall indemnify and hold Arch Coal and its managers,
members, directors, shareholders, Affiliates, employees and agents harmless from and against all claims, causes of action and Losses that Arch Coal may suffer, sustain or become subject to by reason of or arising out of (i) any material breach of a representation,
warranty or covenant of Operator contained in this Agreement or any other agreement or instrument executed by Operator pursuant to this Agreement and(ii) claims arising out of activities or operations of or on behalf of Operator or its Affiliates on or
relating to the Site.

            11.4     Claims.  In the event that either Party (the “Indemnified Party”) has a claim or in the event that any claim or
demand for which the other Party (the “Indemnifying Party”) would be liable to the Indemnified Party is asserted against or sought to be collected by a third party (“Claims”), the Indemnified Party shall promptly
notify the Indemnifying Party of such Claim specifying the nature of such Claim and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such Claim) (the

-13-

“Claim Notice”), provided that the failure to promptly notify the Indemnifying Party shall not operate to waive, reduce or extinguish the Indemnified Party’s rights hereunder unless and to the
extent such failure prejudices the Indemnifying Party.  The Indemnifying Party shall have 10 Business Days from its receipt of the Claim Notice (the “Notice Period”) to notify the Indemnified Party (i) whether or not the
Indemnifying Party disputes its liability to the Indemnified Party with respect to such Claim and (ii) if it does not dispute such liability, whether or not it desires, at its sole cost and expense, to defend the Indemnified Party against such Claim; provided,
however, that the Indemnified Party is authorized prior to and during the Notice Period to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests; provided further, that the Indemnified Party shall use its
reasonable efforts to provide the Indemnifying Party with notice of any such filing and an opportunity to comment on such filing.  In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that the Indemnifying Party does
not dispute such liability and desire to defend against such Claim, then except as provided below, the Indemnifying Party shall have the right to defend by appropriate proceedings, which proceedings shall be promptly settled or prosecuted to a final conclusion in
such a manner as to avoid any risk of the Indemnified Party becoming subject to liability for any other matter.  If the Indemnified Party desires to participate in, but not control, any such defense or settlement it may do so at its sole cost and expense. 
If, in the reasonable opinion of the Indemnified Party, any such Claim involves an issue or matter that could have an adverse effect on the business, operations, assets, properties or prospects of the Indemnified Party or an Affiliate of the Indemnified Party, the
Indemnified Party shall have the right to control the defense or settlement of any such Claim, and its reasonable costs and expenses shall be included as part of the indemnification obligations of the Indemnifying Party under this Article XI.  If the
Indemnifying Party disputes its liability with respect to such Claim or elects not to defend against such Claim, whether by not giving timely notice as provided above or otherwise, then the amount of any such Claim, or, if the same be contested by the Indemnifying
Party, then that portion of such Claim as to which such defense is unsuccessful, shall be conclusively deemed to be a liability of the Indemnifying Party under this Agreement (subject, if the Indemnifying Party has timely disputed liability, to a determination that
the disputed liability is covered by these indemnification provisions).  Nothing herein shall be deemed to prevent the Indemnified Party from making a Claim hereunder for potential or contingent Claims provided the Claim Notice sets forth the specific basis for
any such potential or contingent Claim and the estimated amount of a Claim to the extent then feasible and the Indemnified Party has reasonable grounds to believe that such a Claim will be made.

           
11.5     Limitations.  THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO RECOVER ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES IN ANY ARBITRATION, LAWSUIT, LITIGATION OR PROCEEDING ARISING OUT OF OR RESULTING
FROM ANY CLAIM MADE PURSUANT TO THIS 0, EXCEPT TO THE EXTENT ARISING OUT OF A THIRD PARTY CLAIM FOR which A PARTY IS ENTITLED TO INDEMNIFICATION HEREUNDER FROM THE OTHER PARTY.

-14-

	
ARTICLE
XII

	
MISCELLANEOUS PROVISIONS

            12.1     Exclusivity of Representations and Warranties; Relationship Between the Parties.  It is the explicit intent and understanding of the Parties
that none of the Parties nor any of their respective Affiliates, Representatives, advisors or agents is making any representation or warranty whatsoever, oral or written, express or implied, other than those set forth in this Agreement and none of the Parties is
relying on any statement, representation or warranty, oral or written, express or implied, made by any other party or such other party’s Affiliates, Representatives, advisors or agents, except for the representations and warranties expressly set forth in such
agreements.  The Parties agree that this is an arm’s-length transaction in which the Parties’ undertakings and obligations are limited to the performance of their obligations under this Agreement.

            12.2     Use of Names.  Operator will not use any name affiliated with Arch Coal, TBCC, ACS, any
Affiliate of such entities, or any name affiliated with such entities’ mines in printed materials, signage, websites or similar identifying materials.

            12.3     No Other Representations Nor Grant of Reliance.  Except for
the express representations and warranties made by Arch Coal in this Agreement, Arch Coal makes no representation or warranty to Operator with respect to any reports or title opinions delivered by or on behalf of Arch Coal to Operator. 
Operator acknowledges that it is taking full responsibility for making its own evaluation of the adequacy and accuracy of all such reports and title opinions furnished to it.  In producing any Data to Operator, Arch Coal explicitly
is not granting any right of reliance to Operator or any Affiliate of Operator relating to the information, analysis or projections provided in such documents.

            12.4     Amendment.  This Agreement shall not be amended or
modified except by an agreement in writing duly executed by each of the Parties.

            12.5     Notices.  All notices provided for herein shall be given to the Parties at the following addresses:

                        If to Arch Coal:

                                    Arch Coal,
Inc.

                                    Suite 300 CityPlace One

                                    St. Louis, Missouri 63141

                                    Attention: V.P. Business Development

                                    Facsimile: (314) 944-2940

-15-

                                    With a Copy
to:

                                    Arch Coal,
Inc.

                                    Suite 300 CityPlace One

                                    St. Louis, Missouri 63141

                                    Attention: General Counsel

                                    Facsimile: (314) 944-2734

                        If to Operator:

                                    KFx Plant II,
LLC

                                    55 Madison Street, Ste. 500

                                    Denver, Colorado 80206

                                     Attention: President

                                    Facsimile: (303) 293-8430

                                    With a Copy
to:

                                    KFx Plant II,
LLC

                                    55 Madison Street, Ste. 500

                                    Denver, Colorado 80206

                                     Attention: General Counsel

                                    Facsimile: (303) 293-8430

or at such other address or number as shall be designated by either Party in a notice to the other Party given in accordance with this Section 12.5.  Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given, (a) in the case of a notice sent by regular mail, on the date actually received by the addressee, (b) in the case of a notice sent by registered or certified mail, on the date receipted for (or refused) on the return
receipt, (c) in the case of a notice delivered by hand, when personally delivered, (d) in the case of a notice sent by facsimile or electronic transmission, upon transmission subject to telephone confirmation of receipt, and (e) in the case of a notice
sent by overnight mail or overnight courier service, the date delivered at the designated address, in each case given or addressed as aforesaid.

            12.6     Entire Agreement.  This Agreement and the Schedules and
Exhibits which are incorporated by reference, and the License Agreement represent the entire agreement and understanding between the Parties with respect to the subject matter of this Agreement and supersedes, replaces and is in lieu of any and all prior oral and
written agreements, arrangements and understandings between the Parties, including any outstanding agreements granting Operator access to the Site, with respect to such subject matter and can be amended, supplemented or changed, and any provision hereof can be
waived, only by a written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such amendment, supplement, modification or waiver is sought.

            12.7     Severability.  If at any time subsequent to the date of this Agreement, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or

-16-

unenforceability of such provision shall have no effect upon and shall not impair the enforceability of any other provision of this Agreement.

            12.8     No Waiver.  The failure of a Party at any time or times to require performance of any provision this Agreement shall not affect the right at
a later time to enforce the same.  No waiver by a Party of any condition, and no breach of any provision, term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be
construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty of this Agreement. 

            12.9     Counterparts.  This Agreement may be executed in one or more counterparts, each of which, by facsimile or otherwise,
shall be deemed an original, but all of which together shall constitute but one and the same original instrument.

            12.10   Survival.  Except as otherwise expressly provided, all representations, warranties and covenants under this Agreement, except as otherwise noted, shall
survive until (but only until) the earlier to occur of (i) the Execution Date or (ii) the Termination Date.

            12.11   No Implied Covenants.  No implied term, covenant, condition or provision of any kind whatsoever shall affect either of the Parties’ respective
rights and obligations hereunder, including rights and obligations with respect to exploration, development, mining, processing and marketing of minerals, and the only terms, covenants, conditions or provisions which shall in any way affect any of their respective
rights and obligations shall be those expressly set forth in this Agreement.

            12.12   Force Majeure.  The Parties exclude and expressly waive any claim of delay, waiver or relief of compliance or release of obligation for reasons of force
majeure.  The Initial Period shall not be extended for any additional period of time based on a claim of force majeure.

            12.13   Other Business Opportunities/No Partnership.

                        (a)        This Agreement
is, and the rights and obligations of the Parties are, strictly limited to the matters set forth in this Agreement.  Subject to the provisions of Article VI relating to maintenance of the Site, each of the Parties shall have the free and unrestricted right to
independently engage in and receive the full benefits of any and all business ventures of any sort whatever, whether or not competitive with the matters contemplated by this Agreement, without consulting the other or inviting or allowing the other to participate
therein.   The doctrines of “corporate opportunity” or “business opportunity” shall not be applied to any other activity, venture or operation of either Party, whether adjacent to, nearby or removed from the Site, and neither Party shall
have any obligation to the other with respect to any opportunity to acquire any interest in any property outside the Site at any time, or within the Site after termination of this Agreement, regardless of whether the incentive or opportunity of a Party to acquire any
such property interest may be based, in whole or in part, upon information learned during the course of operations or activities under this Agreement.

                        (b)        Nothing contained
in this Agreement shall be deemed to constitute either Party the partner of the other, nor, except as otherwise herein expressly provided, to constitute

-17-

either Party the agent or legal representative of the other, nor to create any fiduciary relationship between them.  It is not the intention of the Party to create, nor shall this Agreement be construed to create, any
mining, commercial or other partnership.  Neither Party shall have any authority to act for or to assume any obligation or responsibility on behalf of the other Party, except as otherwise expressly provided herein.  The rights, duties, obligations and
liabilities of the Party shall be several and not joint or collective.

            12.14   Further Assurance.  At the request of either Party, the Parties shall take such reasonable actions, and execute and deliver any further instruments, agreements, documents or other papers reasonably
requested by either Party to effect the purposes of this Agreement and the transactions contemplated hereby.

            12.15   Governing Law; Jurisdiction, Venue; Waiver of Jury Trial, Injunction.  This Agreement shall be construed in accordance with and governed by the laws of the State of New York.  Each Party hereby (a) irrevocably submits
to the non-exclusive personal jurisdiction of any Wyoming state or federal court over any claim or dispute arising out of or relating to this Agreement and irrevocably agrees that all such claims and disputes may be heard and determined in such Wyoming state or
federal court, and (b) irrevocably waives, to the fullest extent permitted by applicable Law, any objection it may now or hereafter have to the laying of venue in any proceeding brought in a Wyoming state or federal court and any claim that any such proceeding
brought in a Wyoming state or federal court has been brought in an inconvenient forum; provided, however,that nothing contained in this Section 12.15 is intended to waive the right of either Party to remove any such action or proceeding commenced in any such
Wyoming state court to an appropriate Wyoming federal court to the extent the basis for such removal exists under applicable law.  Operator acknowledges and agrees that irreparable damage could occur to the Site if Operator fails to perform any of the provisions
of this Agreement in accordance with their specific terms.  Accordingly, Arch Coal shall be entitled to equitable relief, including the remedy of an injunction, to prevent breaches of this Agreement and to enforce specifically its provisions in any court of the
United States or any state having jurisdiction, this being in addition to any other remedy to which Arch Coal may be entitled at law or in equity.  Each Party hereby irrevocably agrees that service of process may be made on it by mailing, by certified mail, a
copy of such process to such Party at its address for notices specified herein.  Each Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by Governmental Requirements.  Nothing in this Section 12.15 shall affect the right of either Party to serve legal process in any other manner permitted by Governmental Requirements or affect the right of either Party to bring any action or
proceeding in the courts of any other jurisdictions, domestic or foreign.  ARCH COAL AND OPERATOR HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW OR IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS
AGREEMENT.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

-18-

            IN WITNESS WHEREOF, the Parties hereto have caused this Master Agreement to be duly executed with legal and binding effect by their respective authorized
officers as of the Effective Date.

	
                                    

	
KFx Plant II, LLC

	
	
 

		
	
 

		
		
By: /s/ JAMES P.
IMBLER                                         

	
		
Name: James P.
Imbler                                                

	
		
Title: Senior Vice President – Business Development    

	
	
 

		
	
 

		
		
Arch Coal, Inc.

	
	
 

		
	
 

		
		
By: /s/ HENRY
BESTEN                                            

	
		
Name: Henry
Besten                                                    

	
		
Title: Senior Vice
President                                          

	

	
Exhibit A

	
to

	
Master Agreement

	
 

	
 

	
Agreement for Purchase and Sale of Coal

	
Exhibit B

	
to

	
Master Agreement

	
 

	
 

	
Master Guaranty Agreement

	
Exhibit C

	
to

	
Master Agreement

	
 

	
 

	
Operating Agreement

	
Exhibit D

	
to

	
Master Agreement

	
 

	
 

	
Site Lease AgreementExhibit 10.75

Exhibit 10.75

	

 

	

STOCK PURCHASE AND WARRANT AGREEMENT

	
 

	
 

	
 

	
Between

	
 

	
 

	
KFx INC.

	
a Delaware limited liability company

	
 

	
 

	
 

	
and

	
 

	
 

	
 

	
ARCH COAL, INC.

	
a Delaware corporation

	
 

	
 

	
 

	
 

	
October 5, 2005

	
 

	
STOCK PURCHASE AND WARRANT AGREEMENT

            This Stock Purchase and Warrant Agreement (this “Agreement”), dated as of October 5, 2005 is between KFx Inc., a Delaware corporation
(“KFx”), and Arch Coal, Inc., a Delaware corporation (“Arch”).

	
Recitals

            A.        A coal beneficiation plant with an initial design capacity of 8,000,000 tons per year, using a patented technology
known as the K-Fuel Technology, is (subject to the terms of the Master Agreement referenced below) planned to be located and built on the Coal Creek Properties owned by Ark Land Company, an affiliate of Arch, in Campbell County, Wyoming (the “Coal Creek
Plant”) by KFx Plant II, LLC, an affiliate of KFx (“Operator”).

            B.         Simultaneously with the execution of this Agreement, KFx and Arch are entering into a Master Agreement that
contemplates the potential execution by the parties of certain required agreements related to the design, planning, permitting, development, construction and operation of the Coal Creek Plant (collectively, as defined in the Master Agreement, the “Operative
Agreements”).

            C.        Arch desires to purchase shares of KFx common stock in connection with its entry into the Master Agreement and
this Agreement.

            D.        KFx and Arch desire to set forth the terms on which KFx shall grant Arch a warrant to purchase a certain
additional amount of KFx common stock.

	
Agreement

            In consideration of the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, KFx and Arch hereby agree as follows:

            1.         Purchase of Common Stock.  Arch hereby agrees to purchase the number of shares of the common
stock, par value $.001 per share, of KFx (the “Common Stock”) equal to the result obtained by dividing (x) the amount of $3,000,000 by (y) the Pre-Announcement Price (as defined below).  Arch is, contemporaneously with its execution and
delivery to KFx of this Agreement and the Master Agreement, delivering the amount of $3,000,000 to KFx by wire transfer in immediately available funds, to an account designated in writing by KFx.

            2.         Warrant.

                        2.1       Grant of the Warrant.  KFx hereby
grants to Arch the right and option (this “Warrant”) to purchase, on the terms and conditions hereinafter set forth, shares of Common Stock, in the following tranches:

Page 2 of 16

	
Tranche A

The number of shares of Common Stock for which the Warrant shall be exercisable under Tranche A (the “Tranche A Shares”) shall be equal to the result obtained by dividing (x) the amount of $7,000,000 by (y)
the Pre-Announcement Price (as defined below).  The purchase price of the Tranche A Shares shall be the Pre-Announcement Price multiplied by the number of Tranche A Shares being purchased (the “Tranche A Exercise Price”).

The Warrant shall be exercisable for Tranche A Shares from the date hereof until 5 p.m., Denver time, on the 30th day immediately following the date on which Arch receives written notice from KFx of Completion of Fort Union
Plant Commissioning (as defined below), at KFx’s plant at 3574 Garner Lake Road, Gillette, Wyoming (the “Fort Union Plant”).  The “Completion of  Fort Union Plant Commissioning” shall mean the first calendar day
after the successful completion of a performance test (over three consecutive days) covering each processor in the Fort Union Plant that shows that each processor is achieving a minimum of 75% of its initial design capacity.

	
Tranche B

The number of shares of Common Stock for which the Warrant shall be exercisable under Tranche B (the “Tranche B Shares”) shall be equal to the result obtained by dividing (x) the amount of $10,000,000 by (y)
the Pre-Announcement Price plus $1.00.  The purchase price of the Tranche B Shares shall be the Pre-Announcement Price plus $1.00 multiplied by the number of Tranche B Shares being purchased (the “Tranche B Exercise Price”).

The Warrant shall be exercisable for Tranche B Shares from the date hereof until 5 p.m., Denver time, on the 30th day immediately following the date on which the Operative Agreements are executed and delivered by the
parties.

	
Tranche C

The number of shares of Common Stock for which the Warrant shall be exercisable under Tranche C (the “Tranche C Shares”) shall be equal to the result obtained by dividing (x) the amount of $10,000,000 by (y)
the Pre-Announcement Price plus $3.00.  The purchase price of the Tranche C Shares shall be the Pre-Announcement Price plus $3.00 multiplied by the number of Tranche C Shares being purchased (the “Tranche C Exercise Price”).

The Warrant shall be exercisable for Tranche C Shares from the date hereof until 5 p.m., Denver time, on the 30th day immediately following the date on which Arch receives written notice from KFx of the issuance to
the owner of the Coal Creek Plant of all necessary permits to build and operate the Coal Creek Plant.

	
Tranche D

The number of shares of Common Stock for which the Warrant shall be exercisable under Tranche D (the “Tranche D Shares”) shall be equal to the result obtained by dividing (x) the amount of $20,000,000 by (y)
the Pre-Announcement Price plus $5.00.   The purchase price of the Tranche D Shares shall be the Pre-Announcement Price plus $5.00 multiplied by the number of Tranche D Shares being purchased (the “Tranche D Exercise Price”).

Page 3 of 16

The Warrant shall be exercisable for Tranche D Shares from the date hereof until 5 p.m., Denver time, on the first anniversary of the date on which Arch receives written notice from KFx of the Completion of Coal Creek Plant
Commissioning (as defined below) of Coal Creek.  The “Completion of Coal Creek Plant Commissioning” shall mean the first calendar day after the successful completion of a performance test (over three consecutive days) covering each processor
in the Coal Creek Plant that shows that each processor is achieving a minimum of 75% of its initial design capacity.

“Pre-Announcement Price” shall mean $15.69, being the average of the daily high and low reported sales price of shares of the Common Stock on the American Stock Exchange over the 20 trading days immediately
prior to the date of the public announcement of the Master Agreement and the transactions contemplated thereby.

                        2.2       Exercise of the Warrant.

                                   
(a)        Subject to the other terms and conditions hereof, the Warrant may be exercised as to all or any portion of each exercisable Tranche at any time, and from time to time, during and prior to the expiration of each respective
exercise window set forth above.  The failure of Arch to exercise all or any portion of any Tranche hereunder shall not affect its rights with regard to any other Tranche hereunder.  Each exercise of the Warrant, or any part thereof, shall be evidenced by a
notice in writing to KFx.  The respective exercise price of the shares of Common Stock as to which the Warrant may be exercised shall be paid in full at the time of exercise, and shall be paid to KFx by wire transfer in immediately available funds.

                                   
(b)        Arch shall not have any of the rights of a stockholder of KFx with respect to the shares of Common Stock covered by this Agreement except to the extent that one or more certificates of such shares shall have been
delivered to Arch, or Arch has been determined to be a stockholder of record by the KFx Board of Directors, upon due exercise of the Warrant.

                                   
(c)        Prior to any exercise of the Warrant by Arch, Arch may provide KFx written notice of such proposed exercise.  Within ten calendar days of KFx’s receipt of such notice, KFx shall provide to Arch an
officer’s certificate to the effect that, except as set forth in an accompanying disclosure schedule or in KFx’s public filings available via the Securities and Exchange Commission’s Edgar System, each of the representations and warranties of KFx
set forth in Section 4 hereof is true and correct as of the date of such certificate (except to the extent that such representations and warranties speak as of another date).

                        2.3       Issuance of Shares.  Upon
KFx’s determination that the Warrant has been validly exercised as to any of the shares of Common Stock issuable hereunder, the KFx Board of Directors shall cause the Secretary of KFx to promptly issue certificates in Arch’s name for such
shares.

            3.         Warrant Term; Adjustments.

                        3.1       Warrant Term.  Notwithstanding the
provisions of Section 2 hereof, the term of the Warrant (including without limitation each Tranche hereunder, whether or not then exercisable) shall continue only until the earliest to occur of (i) December 31, 2010,

Page 4 of 16

(ii) August 1, 2006 in the event Operator fails to deliver the “Operator Notice” (as defined in the Master Agreement” on or prior to July 1, 2006, or (iii) thirty (30) days after Arch receives
a notice from Operator that it will not build the Coal Creek Plant, which date shall not be earlier than August 1, 2006.

                        3.2       Adjustments.  In case KFx shall (a)
(i) reorganize its capital, (ii) reclassify its capital stock, (iii) consolidate or merge with or into another entity (in which KFx is not the surviving corporation or in which there is a change in or distribution with respect to the Common Stock), or (iv) sell,
transfer or otherwise dispose of all or substantially all its property, assets or business to another entity or person and, (b) pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common
stock of the successor or acquiring entity, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring
entity or person ("Other Property"), are to be received by or distributed to the holders of Common Stock, then Arch shall have the right thereafter to receive, upon exercise of the Warrant, the number of shares of common stock of the successor or
acquiring entity or of KFx, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which
the Warrant is exercisable immediately prior to such event.  In the event (except in the case of transactions covered above) that as a result of recapitalization, stock split, combination of shares or stock dividends payable with respect to the Common Stock, the
outstanding shares of Common Stock are at any time increased or decreased or changed into or exchanged for a different number or kind of share or other security of KFx, then appropriate adjustments in the price, number and kind of such securities then subject to the
Warrant shall be made effective as of the date of such occurrence so that the position of Arch upon exercise will be substantially the same as it would have been had it owned immediately prior to the occurrence of such events the Common Stock subject to the
Warrant.  Each such adjustment shall be made successively whenever any event listed above shall occur, and KFx shall notify Arch of each such adjustment.

            4.         Representations and Warranties of KFx.  KFx represents and warrants to Arch that, as of the date
of this Agreement, except as set forth in an accompanying disclosure schedule or in KFx’s public filings available via the Securities and Exchange Commission’s Edgar System:

                        4.1       KFx is a corporation validly existing and in
good standing under the laws of the State of Delaware.

                        4.2       KFx has the corporate power to enter into this
Agreement and to carry out its obligations hereunder, and the execution, delivery and performance by KFx of this Agreement has been duly authorized by all necessary corporate action.

                        4.3       When issued in accordance with the terms of
this Agreement (including, without limitation, the receipt by KFx of the appropriate purchase or exercise price), the shares of Common Stock to be issued by KFx to Arch hereunder will be validly issued, fully-paid and non-assessable. 

Page 5 of 16

                        4.4       There is no fact known to KFx (other than
general economic or industry conditions known to the public generally) that has not been fully disclosed to the Arch that (i) reasonably could be expected to have a material adverse effect on KFx or the price of its Common Stock or (ii) reasonably could be expected
to materially and adversely affect the ability of KFx to perform its obligations pursuant to this Agreement.

                        4.5       There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to KFx's knowledge, threatened, by or before any court or public or governmental authority which, if determined adversely to KFx or any of its subsidiaries, would have a material adverse effect on KFx.

                        4.6       No “Event of Default”
(as defined in any agreement or instrument to which KFx or any of its subsidiaries is a party) and no event which, with notice, lapse of time or both, would constitute an Event of Default (as so defined), has occurred and is continuing with respect to KFx, or to the
knowledge of KFx with respect to any other party to any such agreement, which could have a material adverse effect on KFx.

                        4.7       KFx has delivered to Arch, or has made
available via the Securities and Exchange Commission’s Edgar system, true and complete copies of its Securities and Exchange Commission filings.  The   audited consolidated balance sheet as of the most recent year end and
the related audited consolidated statements of operations and cash, and the unaudited consolidated balance sheet as of the most recent quarter end and the related audited consolidated statements of operations and cash, including in each case the related notes and
schedules thereto, contained in such Commission filings (collectively, the “Financial Statements”) are complete and correct in all material respects, have been prepared in accordance with United States General Accepted Accounting Principles
(“GAAP”) (subject, in the case of the interim Financial Statements, to normal year-end adjust­ments and the absence of footnotes, and subject, in case of the Pro Forma balance sheet to the absence of footnotes) and in conformity with the
practices consistently applied by KFx without modification of the accounting principles used in the preparation thereof, and fairly present the financial position, results of operations and cash flows of KFx and its consolidated subsidiaries as at the dates and for
the periods indicated.

                        4.8       KFx and each of its subsidiaries is in
compliance with all laws, rules, regulations, codes, ordinances and statutes (collectively “Laws”) material to it or to the conduct of its business.  KFx and each of its subsidiaries possesses all permits, approvals, authorizations,
licenses, certificates and consents from all public and governmental authorities which are  material to the conduct of its business.

                        4.9       Except as set forth in filings with the
Securities and Exchange Commission, (i) neither KFx nor any of its officers, directors or “Affiliates” (as such term is defined in Rule 12b-2 under the Exchange Act) has borrowed any moneys from or has outstanding any indebtedness or other
similar obligations to KFx; (ii) owns any direct or indirect interest of any kind in, or controls or is a director, officer, partner, member or employee of, or consultant to or lender to or borrower from, or has the right to participate in the profits of, any person
or entity which is (x) a competitor, supplier, customer, landlord, tenant, creditor or debtor of KFx or any of its subsidiaries, (y) engaged in a business related to the business of KFx or any of its subsidiaries, or (z) a participant in any transaction to which KFx
or any of its subsidiaries is

Page 6 of 16

a party; or (iii) is a party to any contract, agreement, commitment or other arrangement with KFx or any of its subsidiaries.  Notwithstanding the foregoing, this paragraph does not require the disclosure by KFx to Arch
of any related party transactions not required to be disclosed in the Commission Filings.

                        4.10     KFx maintains property and casualty, general liability,
workers' compensation, environmental hazard, personal injury and other similar types of insurance with financially sound and reputable insurers that is adequate, consistent with industry standards and KFx's historical claims experience, to cover all loss
contingencies which forseeably may arise in the conduct of the business of KFx and its subsidiaries.  KFx has not received notice from, and has no knowledge of any threat by, any insurer (that has issued any insurance policy to KFx or any of its subsidiaries)
that such insurer intends to deny coverage under or cancel, discontinue or not renew any insurance policy presently in force.

                        4.11     The operations of KFx and each of its subsidiaries are in
compliance with all applicable Environmental Laws and all permits issued pursuant to Environmental Laws or otherwise;

	
       

	
            (a)  to its knowledge, KFx and each of its subsidiaries has obtained all permits required under all applicable Environmental Laws  material
to  the conduct of  its business;

	
 

	
		
            (b)  neither KFx nor any of its subsidiaries is the subject of any material outstanding written order of or agreement with any governmental authority
or person respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened Release of Hazardous Materials;

	
 

	
		
            (c)  neither KFx nor any of its subsidiaries has received any material written communication alleging either or both that KFx or any of its
subsidiaries may be in violation of any Environmental Law or any permit issued pursuant to Environmental Law, or may have any liability under any Environmental Law; and

	
 

	
		
            (d)  except as set forth in the Commission filings, to KFx's knowledge, there are no investigations of the business, operations, or currently or
previously owned, operated or leased property of KFx or any of its subsidiaries pending or threatened which could lead to the imposition of any material liability pursuant to any Environmental Law.

            For purposes of this Section 4.11:

            “Environmental Law” means any foreign, federal, state or local statute, regulation, ordinance, or rule of common law as now or hereafter in
effect in any way relating to the protection of human health and safety or the environment including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.

Page 7 of 16

§ 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the regulations promulgated pursuant thereto.

            “Hazardous Material” means any substance, material or waste which is regulated by the United States, Canada or any of its provinces, or any
state or local governmental authority including, without limitation, petroleum and its by-products, asbestos, and any material or substance which is defined as a “hazardous waste,” “hazardous substance,” “hazardous material,”
“restricted hazardous waste,” “industrial waste,” “solid waste,” “contaminant,” “pollutant,” “toxic waste” or toxic substance” under any provision of any Environmental Law;

            “Release” means any release, spill, filtration, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching
into the indoor or outdoor environment, or into or out of any property;

            “Remedial Action” means all actions to (x) clean up, remove, treat or in any other way address any Hazardous Material; (y) prevent the
Release of any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; or (z) perform pre-remedial studies and investigations or post-remedial monitoring and care.

                        4.12     There are no (i) strikes, work stoppages, slowdowns,
lockouts or arbitrations or (ii) material grievances or other labor disputes pending or, to the knowledge of KFx, threatened against or involving KFx or any of its subsidiaries.  There are no unfair labor practice charges, grievances or complaints pending or, to
the knowledge of KFx, threatened by or on behalf of any employee or group of employees of KFx which are reasonably likely to have a material adverse effect on KFx.

                        4.13     KFx has filed all tax returns which it is required to file
under applicable Laws.

                        4.14     No representation or warranty of KFx contained in this
Agreement, any schedule, annex or exhibit hereto or any agreement, instrument or certificate furnished by KFx to Arch pursuant to this Agreement, contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.

            5.         Representations of Arch.  Arch represents, warrants and covenants to KFx as follows:

                        5.1       Arch will acquire, and continue to hold, the
Warrant and the shares of Common Stock issuable hereunder for Arch’s own account for investment and not with a view to, or for sale or other disposition in connection with, any distribution of all or any part thereof, except for transfers (i) in an offering
covered by a registration statement declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), covering the Warrant or the shares of Common Stock issuable hereunder or (ii)
pursuant to an applicable exemption under the Securities Act.

Page 8 of 16

                        5.2       Arch is an accredited investor as defined in
Rule 501 of Regulation D under the Securities Act.

                        5.3       Arch understands that the Warrant and the
shares of Common Stock issuable hereunder have not been registered pursuant to the Securities Act or any applicable state securities laws and as such will be characterized as “restricted securities” under federal securities laws, and that under such laws
and applicable regulations, neither the Warrant nor the shares of Common Stock issuable hereunder can be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom.  Arch acknowledges that KFx is not obligated to
register the Warrant or the shares of Common Stock issuable hereunder under the Securities Act (except to the extent set forth below).  Arch represents that it is familiar with Rule 144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.

                        5.4       Arch understands that the certificates
evidencing the shares of Common Stock issuable hereunder will bear a legend indicating the such shares have not been registered under applicable federal and state securities laws and referring to the restrictions on transferability of such shares imposed by such
laws.  Arch agrees that such legend may be placed on any certificate(s) issued in replacement or upon transfer of the shares of Common Stock issuable hereunder and any transfer agent of KFx may be instructed to require compliance thereunder.

                        5.5       Arch acknowledges that KFx has relied and will
rely on the foregoing matters with respect to the availability of an exemption from registration of the offering and sale of the Warrant and the shares of Common Stock issuable hereunder under the Securities Act and applicable state securities laws.

            6.         Registration Rights.

                        6.1       KFx shall, within one-hundred and eighty days
of the date hereof, file a Registration Statement covering the registration of the shares of Common Stock issued in accordance with Section 1 hereof, any other shares of Common Stock then held by Arch and the shares of Common Stock issued or issuable under the terms
of the Warrant and shall use its commercially reasonable efforts to cause such shares to be registered for resale by Arch.  KFx shall have the right to delay such registration under certain circumstances for one period not in excess of forty-five (45) days in
any twelve (12) month period.

                        6.2       Notwithstanding the foregoing, KFx shall not be
obligated to effect a registration (i) during the one hundred eighty (180) day period commencing with the date of any public offering of KFx’s stock or (ii) if it delivers notice to Arch that KFx intends to file another registration statement regarding
KFx’s stock within 90 days (in which case Arch’s registration statement shall be delayed until the one hundred eighty (180) day period ending after the commencement date of any such public offering of KFx’s stock).

                        6.3       Arch shall be entitled to "piggy-back"
registration rights on all registrations of KFx (other than any S-4 and S-8 registrations) or on any demand registrations of

Page 9 of 16

any other investor subject to the right, however, of KFx and its underwriters to reduce the number of shares proposed to be registered by Arch in view of market conditions.

                        6.4       KFx shall bear registration expenses (exclusive
of underwriting discounts and commissions) of any of Arch’s demand and piggy-back registrations (but not including the expense of counsel of Arch).

                        6.5       These registration rights shall terminate when
Arch is entitled to sell all of its shares of Common Stock purchased or purchasable hereunder pursuant to Rule 144 (including Rule 144(k)).

                        6.6       Arch and KFx shall cross-indemnify each other
in connection with any such registration statements in accordance with prevailing industry standards.

                        6.7       If (a) the Registration Statement has not been
declared effective by the SEC on or before the 360th day after the date hereof (the “Default Date”), or (b) Arch’s use of the prospectus forming a part of the Registration Statement is suspended for more than 45 days in any 12-month period,
other than due to any action by Arch, KFx shall pay to Arch, as liquidated damages, an amount equal to one quarter percent (.25%) of that Tranche’s Purchase Price for each Share (adjusted for stock splits, stock dividends, and stock combinations) then held by
Arch and for each day after the Default Date that the Registration Statement is not declared effective or for each day in excess of 45 days in any 12 month period that  Arch’s use of the Registration Statement is suspended.

            7.         Dispute Resolution.

                        7.1       The parties will attempt to settle any claim or
controversy relating to this Agreement through negotiation in good faith and a spirit of mutual cooperation. If those attempts fail to achieve a settlement, then the dispute will be mediated by a mutually acceptable mediator to be chosen by the parties within 45 days
after written notice by either party demanding mediation. Neither party may unreasonably withhold consent to the selection of a mediator, and the parties will share the costs of mediation equally. The mediation hearing shall be conducted within 45 calendar days after
the selection of the mediator. Each party shall bear its own attorney’s fees and other costs.

                        7.2       Any dispute that cannot be resolved between the
parties through negotiation or mediation within 6 months of the date of the initial demand for mediation by one of the parties may then be submitted to arbitration for resolution under the provisions of Section 7.3.  The use of any mediation procedures will not
be construed under the doctrines of laches, waiver or estoppel to affect adversely the rights of either party.  Nothing in this Section 7 will prevent either party from resorting to judicial proceedings if interim relief from a court is necessary to prevent
serious and irreparable injury to that party or to others.

                        7.3       Subject to the provisions of Section 7.1 and
7.2, any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be
determined by arbitration in Denver, Colorado, before three arbitrators.  The arbitration shall be administered by JAMS pursuant to its Comprehensive

Page 10 of 16

Arbitration Rules and Procedures.  Judgment on the arbitration award may be entered in any court having jurisdiction.  This clause shall not preclude parties from seeking provisional remedies in aid of arbitration
from a court of appropriate jurisdiction.  The arbitrator may, in the arbitration award, allocate all or part of the costs of the arbitration, including the fees of the arbitrator and the reasonable attorneys’ fees of the prevailing party.

            8.         Miscellaneous.

                        8.1       Notices.  All notices and other
communications under this Agreement shall be in writing and delivered (a) personally, (b) by registered or certified mail with postage prepaid, and return receipt requested, (c) by recognized overnight courier service with charges prepaid, or (d) by facsimile
transmission, directed to the intended recipient as follows:

	
If to KFx:

	
 

	
	
          

	
KFx Inc.

		
55 Madison Street, Suite 500

		
Denver, Colorado  80206-5810

		
Attention:  William G. Laughlin

		
Facsimile:  (303) 293-8430

	
 

	
	
If to Arch:

	
 

	
		
Arch Coal, Inc.

		
One CityPlace Drive, Suite 300

		
St. Louis, MO  63119

		
Attention:  General Counsel

		
Facsimile:  (314) 994-2734

            A notice or other communication shall be deemed delivered on the earlier to occur of (i) its actual receipt, (ii) the fifth business day following its
deposit in registered or certified mail, with postage prepaid and return receipt requested, (iii) the second business day following its deposit with a recognized overnight courier service, with charges prepaid, or (iv) the date it is sent by confirmed facsimile
transmission (if sent before 4:00 p.m. local time of the receiving party on a business day) or the next business day (if sent after 4:00 p.m. of such local time or sent on a day that is not a business day).  Either KFx or Arch may change the address to which
notices and other communications hereunder can be delivered by giving the other party notice in the manner herein set forth.

                        8.2       Entire Agreement.  This Agreement,
together with the Master Agreement, constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all negotiations, prior discussions or prior agreements and understandings relating to such subject
matter.

                        8.3       Amendment and Waiver.  This
Agreement may not be altered or amended, nor any rights hereunder be waived, except by an instrument in writing and executed by the party or parties to be charged with such amendment or waiver.  No waiver of any term, provision or

Page 11 of 16

condition of this Agreement shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision or condition, or as a waiver of any other term, provision or condition hereof.

                        8.4       Severability.  If any provision of
this Agreement is invalid or unenforceable in any jurisdiction, such provision shall be fully severable from this Agreement and the other provisions hereof shall remain in full force and effect in such jurisdiction and the remaining provisions hereof shall be
liberally construed to carry out the provisions and intent hereof.  The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, nor shall
the invalidity or unenforceability of any provision of this Agreement with respect to any person or entity affect the validity or enforceability of such provision with respect to any other person or entity.

                        8.5       Relationship of Parties.  It is not
the intention of the parties to create, nor shall this Agreement be construed as creating, a partnership, joint venture, agency relationship, trust or other association that would render either party liable for the action of the other party.  Neither party shall
have any right, power or authority to act or to create any duty or obligation, express or implied, on behalf of the other party, or to hold itself out as a representative or agent of the other party.

                        8.6       Headings and References.  All
references in this Agreement to Schedules, Sections, Subsections, paragraphs, subparagraphs and other subdivisions refer to the Schedules, Sections, Subsections, paragraphs, subparagraphs and other subdivisions of this Agreement unless expressly provided
otherwise.  Titles and headings appearing at the beginning of any subdivision are for convenience only and do not constitute any part of any such subdivision and shall be disregarded in construing the language contained in this Agreement.  The words
“this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited.  The phrases
“this Section,” “this Subsection” “this paragraph,” “this subparagraph” and similar phrases refer only to the Sections, Subsections, paragraphs or subparagraphs hereof in which the phrase occurs.  The word
“or” is not exclusive.  All references to days are to calendar days unless otherwise specifically stated.  Pronouns in masculine, feminine and neuter gender shall be construed to include any other gender.  Words in the singular form shall
be construed to include the plural and words in the plural form shall be construed to include the singular, unless the context otherwise requires.

                        8.7       Assignment and Binding Effect. 
Neither KFx nor Arch may assign any portion of its rights or delegate any portion of its duties or obligations under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld.  This Agreement shall be
binding upon the parties hereto and, except as otherwise prohibited, their respective successors and assigns.  Except for the parties hereto, and their permitted successors and assigns, nothing in this Agreement, express or implied, is intended to confer upon
any other entity or person any benefits, rights or remedies.

                        8.8       Announcements.  KFx and Arch shall
consult with each other with regard to all press releases and other announcements concerning this Agreement or the transactions

Page 12 of 16

provided for herein and, except as may be required by applicable laws or the applicable rules and regulations of any governmental agency or stock exchange, neither KFx nor Arch shall issue any such press release or make any
other announcement without the prior written consent of the other party.

                        8.9       Governing Law and Jurisdiction. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

                        8.10     Execution and Counterparts.  This Agreement
may be executed in one or more original counterparts and shall become operative when each party has executed and delivered at least one counterpart.  Each counterpart shall be deemed to be an original for all purposes, and all counterparts shall together
constitute but one and the same instrument.  This Agreement may be delivered by facsimile or similar transmission, and a facsimile or similar transmission evidencing execution shall be effective as a valid and binding agreement between the parties for all
purposes.

                        8.11     Confidentiality Agreement.  On or before the
execution and delivery of this Agreement, Arch shall execute and deliver to KFx a confidentiality letter in the form attached hereto as Exhibit A.

	
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

Page 13 of 16

This Agreement is executed on the dates set forth below, to be effective as of the date first set forth above.

	
                                    

	
KFx Inc.

	
	
 

		
	
 

		
		
By: /s/ JAMES P.
IMBLER                                         

	
		
Name: James P.
Imbler                                                

	
		
Title: Senior Vice President – Business Development    

	
	
 

		
	
 

		
		
Arch Coal, Inc.

	
	
 

		
	
 

		
		
By: /s/ HENRY
BESTEN                                            

	
		
Name: Henry
Besten                                                    

	
		
Title: Senior Vice
President                                          

	

Page 14 of 16

	
EXHIBIT A

	
 

	
CONFIDENTIALITY LETTER

	
 

	
 

	
KFx INC.

	
55 Madison Street, Suite 500

	
Denver, Colorado  80206-5810

	
 

	
 

	
_______________ __, 200__

Arch Coal, Inc.

One CityPlace Drive, Suite 300

St. Louis, MO  63119

Attention:  _______________

Dear _________:

In connection with your current discussions with us relating to a proposed investment, KFx, Inc. (collectively with its subsidiaries and affiliates, the “Company”) is prepared to make available to you certain
information concerning strategic and other matters (collectively, the “Confidential Materials”).  As a condition to such Confidential Materials being furnished to Arch Coal, Inc. and its directors, officers, employees, attorneys, accountants,
consultants and other advisors (collectively, the “Representatives”), you agree to treat any Confidential Materials furnished to you or to your Representatives by or on behalf of the Company in accordance with the provisions of this letter agreement, and
to take or abstain from taking certain other actions hereinafter set forth.

The term “Confidential Material” shall be deemed to include all notes, analyses, compilations, studies, interpretations or other documents or materials prepared by you or your Representatives which contain, reflect
or are based upon, in whole or in part, the information furnished to you or your Representatives pursuant hereto. 

You hereby agree that you and your Representatives shall use the Confidential Material solely for the purpose of our discussions and in connection with evaluating your potential investment in the Company, and not for any other
purpose, and that the Confidential Material will be kept strictly confidential by you and your Representatives and not disclosed to any third party until such time (if ever) that the Company publicly discloses such information.

In addition, you agree that, without the prior written consent of the Company, you and your Representatives will not disclose to any other person the fact that the Confidential Material has been made available to you, that
discussions or negotiations are taking place between us or any of the terms, conditions or other facts with respect thereto (including the status thereof).

You understand and acknowledge that the Confidential Material contains material, non-public information concerning the Company.  Pursuant to the U.S. federal securities laws and other

Page 15 of 16

laws governing insider trading, it is likely that you and your Representatives would be limited in your or their ability to buy, sell or otherwise trade in securities of the Company once in possession of the Confidential
Material until such time as the information contained therein becomes publicly available or immaterial.  You further understand and agree that neither the Company nor any of its Representatives shall have any liability to you or to any of your Representatives
relating to or resulting from the use of the Confidential Material.  Upon request by the Company, you shall return all written Confidential Material provided by or on behalf of the Company to the Company and shall destroy all other Confidential Material in your
possession.

This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware and may not be amended or terminated except pursuant to a written agreement duly executed by you and the
Company.  This letter agreement may be executed in counterparts, each of which shall be deemed an original.

Please confirm your agreement with the foregoing by signing and returning one copy of this letter to the undersigned, whereupon this letter agreement shall become a binding agreement between you and the Company as of the date
above written.

	
Very truly yours,

	
	
 

	
	
KFx INC.

	
	
 

	
	
 

	
	
                                                           
           

	

Accepted and agreed as of

 the date first written above:

ARCH COAL, INC.

	
By:                                                      

	
Name: 
                                               

	
Title:                                                    

Page 16 of 16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}]]