This Employment Agreement ("Agreement") is made by and between KFx Inc. ("Employer") and
Robert I. Hanfling ("Executive") (individually, a "party" and together, the "parties"). This Agreement shall be
effective February 1, 2005.
1. Position . Executive will begin employment with Employer on February 1, 2005, as President
and Chief Operating Officer. Executive's precise responsibilities and job description are subject to change at any
time based on the discretion of the Employer's board of directors (the "Board"). Executive shall devote
substantially full time and attention to the business of the Employer during the term of this Agreement and shall
perform all duties as may be required of him.
2. At-will Employment . Executive and Employer expressly agree that Executive's employment with
Employer is "at-will," meaning that either Executive or Employer may terminate the employment relationship with
or without cause and with or without notice at any time. In the event that either Executive or the Employer
terminates the employment relationship, this Agreement shall also terminate, effective the same date as the
termination of the employment relationship. The at will nature of the employment relationship may only be
modified in a writing signed by Executive and Employer's Chief Executive Officer, as authorized by the Board.
3. Compensation .
3.1 Annual Salary . Employer shall pay to Executive an annual salary of $250,000. Salary
increases shall not be automatic, but instead shall be in the sole and absolute discretion of Employer's Board.
3.2 Bonus . After Executive's first year of employment, the Board shall grant Executive a
guaranteed first-year bonus of $100,000. Any subsequent bonuses are at the sole and absolute discretion of the
3.3 Options . The Board shall grant stock options to