1998 DIRECTORS NONQUALIFIED STOCK OPTION PLAN
I. Establishment and Purpose
a. There is hereby adopted by KFx Inc. (the "Company"), the KFx Inc. 1998 Directors' Stock Option Plan. The
Plan is intended to provide a means whereby eligible members of the Board may be given an opportunity to
purchase shares of Common Stock pursuant to options which are not intended to qualify as incentive stock
options under Section 422 of the Code.
b. The purpose of the Plan is to enable the Company to attract the best available individuals to serve as members
of the Board, to compensate such individuals for extraordinary efforts taken on behalf of the Company while
serving as directors, and to encourage their continued service on the Board.
Unless otherwise required by the context:
a. "Administrator" means the Board or any of its Committee(s) administering the Plan, in accordance with Section
IV of the Plan.
b. "Applicable Laws" means the legal requirements relating to the administration of stock option and equity
incentive plans under applicable state of Delaware corporate and securities laws and under the Code.
c. "Board" shall mean the Board of Directors of the Company.
d. "Committee" means a Committee appointed by the Board in accordance with
Section IV of the Plan.
e. "Common Stock" means the $.001 par value common stock of the Company that is traded on an approved
securities market pursuant to the Exchange Act.
f. "Company" shall mean KFx Inc., a Delaware corporation.
g. "Code" shall mean the Internal Revenue Code of 1986, as amended.
h. "Director" means a member of the Board.
i. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
j. "Fair Market Value" means, as of a specified date, the value of Common Stock determined by the
Administrator as follows:
(i) If the Common Stock is listed on any established stock exchange or quoted on a national market system,
including without limitation the National Market System of the Nati