EMPLOYMENT AGREEMENT


     THIS  AGREEMENT  is made and entered  into as of the 23 day of March,  1999
between EVERCEL,  INC., a Delaware  corporation  (the "Company"),  and ROBERT L.
KANODE,  an  individual  with a current  mailing  address  at 67  Lincoln  Lane,
Ridgefield,   Connecticut  06877,  (the  "the  Employee").  Unless  the  context
otherwise  requires,  the term "Company",  shall include the Company and each of
its subsidiaries.

                                W I T N E S E T H

     WHEREAS,  the Company  desires to employ the Employee as its  President and
Chief  Executive  Officer  and  the  Employee  desires  to be  employed  in such
capacities in accordance with the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the covenants, conditions, undertakings
and premises contained herein, the sufficiency which is hereby acknowledged, the
Company and the Employee agree follows:

                                    ARTICLE 1

                              EMPLOYMENT AND DUTIES

     Employment; Duties

     Subject to the terms and conditions set forth herein,  commencing April 19,
1999 (the "Commencement Date") the Company agrees to employ the Employee and the
Employee agrees to be employed as President and Chief  Executive  Officer of the
Company. In such position,  the Employee shall perform such duties as are or may
be assigned to the Employee by the Board of Directors of the Company (the "Board
of Directors")  from time to time. In connection  therewith,  the Employee shall
report to and be subject to the  supervision  of the Executive  Committee of the
Board of Directors.

     1.2 Full Time

     The  Employee  shall  devote his full working  time,  attention,  energies,
skills and best efforts  exclusively to the performance of his duties hereunder.
The  Employee  shall not during the term of this  Agreement  engage in any other
business  activity  whether or not such activity is pursued for gain,  profit or
other pecuniary  advantage,  except that the Employee,  on his own time, (a) may
manage his own investments, and those of his immediate family, and (b) may serve
as a member of the  board of  directors  of other  corporations  subject  to the
restrictions set forth in Section 5.1, so long as such activity (as described in
either  clause (a) or (b) above),  does not, in the  reasonable  judgment of the
Company's  Board of Directors,  adversely  affect the  performance of his duties
hereunder.


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<PAGE>


     1.3 Board Membership

     The Employee,  effective upon the Commencement  Date, shall become a member
of the Board of Directors and its Executive Committee.  Thereafter,  for so long
as the  Employee  is serving as Chief  Executive  Officer  of the  Company,  the
Company will nominate the Employee for  re-election  as a management  nominee of
the Board of Directors and use its reasonable best efforts to cause the Employee
to be so re-elected  and, if so elected,  to appoint the Employee as a member of
the Executive  Committee of the Board of Directors.  If at any time the Employee
ceases to serve as President and Chief Executive Officer of the Company,  if the
Board of Directors  so  requests,  the  Employee  shall  immediately  tender his
resignation  from the Board of Directors  and shall  automatically  be deemed to
have so resigned whether or not such resignation is tendered.

                                    ARTICLE 2

     2.1 Term

     The  term of the  Employee's  employment  by the  Company  hereunder  shall
commence on the  Commencement  Date and,  except as  otherwise  provided in this
Agreement with respect to earlier  termination,  shall continue until terminated
by either party pursuant to Article 7.

                                    ARTICLE 3

                                  COMPENSATION

     3.1 Base Salary

     For all  service to be  rendered  by the  Employee  under  this  Agreement,
including services as an officer, director and member of any committee, and such
other duties as the Board of Directors or the Executive  Committee may assign to
him in  accordance  with  Section  1.1  hereof,  the  Company  agrees to pay the
Employee a base salary of $250,000 per annum.  The Employee's  base salary shall
be subject to periodic  review and  adjustment  by the Board of Directors in its
sole discretion, provided that the base salary may not be reduced below $250,000
per year.  The base salary  shall be payable at such times as is  customary  for
employees of the Company and in accordance with the normal payroll  practices of
the Company.

     3.2 Incentive Compensation

     The Employee shall be a participant in the Company's incentive compensation
plan generally  made available to executive  officers as it may be in effect and
revised from time to time. Employee's target bonus under such plan will be forty
percent  (40%) of his base salary  (prorata  for part of the fiscal  year).  The
Employee  understands  and  agrees  that  the 


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<PAGE>


implementation  of an  incentive  compensation  plan for the  Employee and other
executive   officers  will  be  subject  to  the  review  and  approval  of  the
Compensation Committee of the Board of Directors.

     3.3 Expenses

     (a) General.  In addition to base salary and  incentive  compensation,  the
Company shall  reimburse the Employee for all reasonable and necessary  business
expenses actually  incurred by him in the performance of his duties,  including,
without  limitation,   expenses  for  travel,  meals,  entertainment  and  other
miscellaneous  business expenses,  in accordance with the Company's policies and
practices as may be in effect from time to time.

     (b)  Relocation.  It is  understood  that  no  relocation  by  Employee  is
          required or offered.

     (c)  Signing Bonus. To assist employee in covering expenses relating to his
          employment  (e.g., an automobile),  the Company will provide  employee
          with a one-time  payment of $20,000,  half payable on his first day of
          employment at the Company and half 30 days later.

                                    ARTICLE 4

                                COMPANY BENEFITS

     4.1 Vacation

     The Employee  shall be entitled to receive four weeks of paid  vacation per
calendar  year (pro rated for any  partial  year),  which shall be taken at such
time or times as will not  unreasonably  hinder or interfere  with the Company's
business or operations.

     4.2 Severance Benefit

     If  during  the  Employee's  employment  pursuant  to this  Agreement,  the
Employee  ceases to be  employed  by the  Company  as a result of the  Company's
termination  of the Employee  without cause pursuant to Section 7.4 (which shall
not  include  any  termination  that  is  otherwise  within  Article  6) or  the
Employee's  termination of his  employment  for good reason  pursuant to Section
7.1,  the Company  shall pay the Employee as a severance  benefit,  (a) his then
base salary plus (b) an amount equal to the  Employee's  bonus from the Company,
if any, for the  immediately  preceding  year.  This severance  benefit shall be
payable by the  Company  through (i) the  continuation  of the  Employee's  base
salary  for a period of one year and (ii) the  payment  of the  balance  in four
equal quarterly installments, with the first such payment due three months after
the  termination and the final payment due one year after the  termination.  The
severance  obligation  set forth in this Section 4.2 shall be in lieu of and not
in addition to any other severance benefits made available to other employees of
the Company.


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<PAGE>


     4.3 Stock Options

     Effective on the  execution of this  Agreement,  the Company shall issue to
the Employee an option to purchase  100,000 shares of the Company's Common Stock
with an exercise price equal to $6.00,  pursuant to the Company's  standard form
of Option Agreement,  subject to the following provisions. The option shall vest
over a four year period at 25% per year (25,000 shares) on each anniversary date
of  the  Commencement  Date;  provided  however,  if the  Employee's  employment
hereunder is  terminated  without cause by the Company or for good reason by the
Employee  prior to the first  anniversary  date of the  Commencement  Date,  the
options to purchase the first 25,000 shares of the  Company's  Common Stock will
automatically vest. The options will also fully vest upon a change of control of
the Company.

     4.4 Other Benefit Plans

     The  Employee  shall  further be  entitled  to  participate  in and receive
benefits under any retirement, life insurance,  accident, disability, health and
dental insurance,  profit sharing,  or similar plans generally made available to
its employees.

     4.5 Indemnification

     The  Company  agrees to defend and shall  indemnify  and hold the  Employee
harmless  to the fullest  extent  permitted  by law from any and all  liability,
costs,  and expenses which may be assessed against the Employee by reason of the
performance  of  his  responsibilities  and  duties  under  the  terms  of  this
Agreement,  provided such liability  does not result from willful  misconduct or
gross negligence of the Employee.

                                    ARTICLE 5

                                  RESTRICTIONS

     5.1 Non-Competition

     (a) So long as the  Employee  is  employed  by the  Company,  serving  as a
Director or is receiving  payments  hereunder  (whether in  connection  with the
Employee's  employment  or as a  result  of the  termination  of the  Employee's
employment   hereunder)  and  for  a  period  of  two  years   thereafter   (the
"Noncompetition  Period"),  the  Employee  shall not,  directly  or  indirectly,
whether as owner, partner, shareholder,  director,  consultant, agent, employee,
guarantor,  surety or otherwise,  or through any person,  consult with or in any
way aid or assist any  competitor  of the Company or engage or attempt to engage
in any  employment,  consulting or other  activity  which directly or indirectly
competes with the Business of the Company.  For purposes of this Agreement,  the
term  "employment"  shall include the  performance of services by Employee as an
employee,  consultant,  agent,  independent contractor or otherwise and the term
"Business"  shall  mean  the  research,   development,   manufacture,   sale  or
distribution of fuel cells, batteries or related products and any other business
engaged in, planned or under development by the


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<PAGE>


Company   with  respect  to  which  the  Employee  has  had  access  to  Company
confidential   information  during  the  Noncompetition   Period.  The  Employee
acknowledges that his participation in the conduct of any such Business alone or
with any person other than the Company will  materially  impair the Business and
prospects of the Company.

     (b)  In  addition  to  and  without  limiting  the  foregoing,  during  the
Noncompetition Period, Employee shall not knowingly do, attempt to or assist any
other person in doing or  attempting  to do any of the  following:  (i) hire any
director,  officer,  employee, or agent of the Company (a "Company Employee") or
encourage any such person to terminate such  relationship  with the Company,  as
the case may be (for purposes  hereof,  the Employee  shall be deemed to have so
encouraged a Company Employee to terminate such relationship with the Company if
the Employee  hires or  otherwise  assists any person in hiring any such Company
Employee  within six months  after the Company  Employee  terminates  his or her
relationship with the Company), (ii) encourage any customer, client, supplier or
other  business   relationship  of  the  Company  to  terminate  or  alter  such
relationship,  whether  contractual  or otherwise,  to the  disadvantage  of the
Company;  (iii) encourage any prospective customer or supplier not to enter into
a business  relationship with the Company;  (iv) impair or attempt to impair any
relationship, contractual or otherwise, written or oral, between the Company and
any customer,  supplier or other business  relationship  of the Company;  or (v)
sell or  offer  to sell or  assist  in or in  connection  with  the  sale to any
customer or prospective customer of the Company any products of the type sold or
rendered by the Company.

     (c) Nothing in this Agreement  shall preclude  Employee from making passive
investments  of not  more  than  2% of a class  of  securities  of any  business
enterprise registered under the Securities Exchange Act of 1934.

     5.2 Intellectual Property

     Upon execution of this  Agreement,  the Employee shall execute the Evercel,
Inc.  Agreement  for  Assignment,  Confidentiality  and  Nonsolicitation,  which
agreement is hereby incorporated herein by reference.

     5.3 Injunctive Relief

     The Employee  acknowledges that the restrictions  contained in this Article
are  reasonable  in view of the nature of the  business  in which the Company is
engaged and his position with the Company which will provide him with  extensive
knowledge of the business.

     The Company and the Employee mutually agree that the Employee's obligations
under this  Article  are of a special  and unique  character  which gives them a
peculiar  value,   and  the  Company  cannot  be  reasonably  or  adequately  be
compensated  in damages in an action at law in the event the  Employee  breaches
such obligations.  The Employee therefore  expressly agrees that, in addition to
any other rights or remedies which the Company may possess, the Company shall be
entitled to injunctive  and other  equitable  relief to prevent a breach of this
Article by the Employee,  including a temporary  restraining  order or temporary
injunction from any court of


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<PAGE>


competent jurisdiction  restraining any threatened or actual violation, and each
party  hereby  consents  to the entry of such  order and  injunctive  relief and
waives the making of a bond as a  condition  for  obtaining  such  relief.  Such
rights  shall be  cumulative  and in addition  to any other  legal or  equitable
rights and remedies the Company may have.

     5.4 Survival Enforceability

     It is expressly  agreed by the parties  hereto that the  provisions of this
Article shall survive the termination of this Agreement.

     If any one or more of the  provisions  contained in this Article  shall for
any reason in any  jurisdiction be held to be excessively  broad as to the time,
duration,  geographical  scope,  activity or subject, it shall be construed with
respect  to  such  jurisdiction,  by  limiting  or  reducing  it,  so  as  to be
enforceable  to  the  extent   compatible   with  the  applicable  law  of  such
jurisdiction as it shall then appear.

                                    ARTICLE 6

                                DEATH; DISABILITY

     6.1 Death

     If the Employee dies while  employed under this  Agreement,  this Agreement
shall terminate  immediately.  The Company will pay to the Employee's estate his
base salary  under  Section 3.1  through the last day of the  calendar  month in
which he dies, plus any incentive compensation awarded to the Employee under the
Incentive Compensation Plan, but not yet paid, and such death benefits as may be
provided pursuant to Section 4.4.

     6.2 Disability

     If the  Employee  fails to perform his duties under this  Agreement  due to
"Disability", as defined below, the Company may terminate this Agreement upon 30
days written  notice to him. In that event,  the Company  shall pay the Employee
his base salary  under  Section 3.1 through the date of  termination;  provided,
however,  that to the extent  the  Employee  is  receiving  disability  benefits
pursuant  to the  Company's  disability  insurance  policy,  the  amount of such
benefits shall be credited  against the Employee's base salary during the period
prior to the date of termination.  In addition,  upon any termination based upon
Disability,  the Company  shall pay to the Employee any  incentive  compensation
awarded to the Employee under the Incentive  Compensation Plan but not yet paid.
The term  "Disability"  shall mean the  inability of the Employee to perform for
the  Company  the duties  specified  in Section  1.1 by reason of any  medically
determinable  physical or mental impairment for (i) a period of four consecutive
months,  (ii) for shorter periods aggregating five months in any 12-month period
or (iii) if the  Board of  Directors  determines  that it is  probable  that the
Disability  will  continue for a length of time so as to constitute a Disability
under clauses (i) or (ii) above.  The  determination  of whether the Employee is
Disabled shall be made 


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<PAGE>


by the Board of Directors on the basis of written  medical  evidence  reasonably
satisfactory to it.  Notwithstanding  anything to the contrary in the foregoing,
in the event of a  termination  of the Employee  pursuant to clause  (iii),  the
Company  will pay the  Employee a minimum of four months  base salary  following
such  termination;  provided,  however,  that  to the  extent  the  Employee  is
receiving  disability  benefits pursuant to the Company's  disability  insurance
policy,  the amount of such benefits  shall be credited  against the  Employee's
base salary.

                                    ARTICLE 7

                                   TERMINATION

     7.1 Termination by the Employee for Good Reason

     The Employee may terminate  this Agreement for good reason upon ninety (90)
days written notice to the Company  setting forth with  specificity  the grounds
for termination upon the occurrence of any of the following:  (a) the failure of
the Company to observe or comply with any of its material obligations under this
Agreement,  if such  failure  has not been cured  within 30 days  after  written
notice  thereof  has  been  given  by the  Employee  to  the  Company;  (b)  the
dissolution  of the  Company;  or (c) any merger in which the Company is not the
surviving corporation and in which the stockholders of the Company own less than
50% of the voting  securities of the merged entity upon the effectiveness of the
merger,  or any  consolidation,  sale of substantially  all of the assets of the
Company or change of control  of the  Company,  provided  the  Employee  has not
approved the  transaction by voting for it either as a director or  shareholder.
For  purposes  of clause (a) a material  breach by the Company  shall  include a
material change in the reporting  responsibilities of the Employee such that the
Employee is no longer  effectively  serving as the President and Chief Executive
Officer of the Company, a material reduction in benefits or other perquisites of
office such that the Employee is not  receiving the benefits set forth herein or
the benefits and other  perquisites  generally  granted for executive  positions
within the  Company.  For  purposes  of clause (c) above,  a "change of control"
shall be presumed to have occurred if within any 12-month period a single person
or entity, or related group of persons or entities,  acquires 50% or more of the
outstanding voting stock of the Company.  In the event of a termination for good
reason  under this  Section,  the Company  shall pay the  Employee  (i) his base
salary as then in effect under Section 3.1 through the date of termination, (ii)
any  incentive   compensation  awarded  to  the  Employee  under  the  Incentive
Compensation  Plan, but not yet paid, and (iii) the severance  benefit set forth
in Section 4.2.

     7.2 Termination by the Company for Cause

     The Company may terminate  this Agreement for cause in the manner set forth
below. For purposes of this Section, "cause" shall mean (a) a material breach by
the  Employee  of the  terms of this  Agreement,  including  without  limitation
failure by the  Employee to perform a material  portion of his duties  hereunder
(not  otherwise  excused  by  the  disability  of  the  Employee)  (b)  criminal
misconduct  or unethical  conduct,  whether or not in relation to the  Company's
affairs  or  business,  which  reflects  adversely  upon  Employee's  honesty or
integrity in the  performance  of his duties as an employee of the  Company,  or
which otherwise is materially


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<PAGE>


detrimental to the interests of the Company; (c) if the Employee is found guilty
or pleads nolo  contendere to the  commission of a crime  classified as a felony
under any Federal,  state or local law; and (d) commission by the Employee of an
act of gross  incompetence in the course of his employment  hereunder.  The term
"cause"  as used in the  preceding  sentence  does not  include  the  Employee's
erroneous  judgment or judgments of a technical,  scientific,  financial,  legal
and/or  environmental  nature  which  were,  although  erroneous,   nevertheless
reasonable at the time and under the  circumstances  in which they were made. In
the event of  termination  under  this  Section,  the  Company  shall pay to the
Employee  his base salary  under  Section  3.1  through the date of  termination
stated in the notice plus any  incentive  compensation  awarded to the  Employee
under the Incentive  Compensation Plan but not yet paid, and the Employee shall,
if so requested by the Board of  Directors,  perform his duties under  Article 1
through the date of termination stated in the notice.

     7.3 Termination by the Company for Cause-Procedure

     Notwithstanding  anything to the  contrary set forth  herein,  the Employee
shall not be deemed to have been  terminated  for cause  without (i) delivery to
the  Employee of written  notice  setting  forth the  reasons for the  Company's
intention to terminate for cause, (ii) an opportunity for the Employee, together
with his counsel,  to be heard before the Board of Directors and (iii)  delivery
to the Employee of a notice of termination  from the Board of Directors  stating
that a majority of the members of the Board have  determined  in good faith that
the  Employee was guilty of conduct that  supports  the  termination  for cause,
specifying the conduct which gave rise to such termination.

     7.4 Termination by the Company or the Employee Without Cause

     Either the Company or the Employee may terminate this Agreement for reasons
other than as set forth  above in Section  7.1 or Section  7.2 and which are not
otherwise within Article 6 upon 30 days written notice by the Company or 90 days
written notice by the Employee. Upon such termination, the Company shall pay the
Employee  his base salary  under  Section  3.1  through the date of  termination
(provided,  however,  that the Employee continues to be available to perform the
services  required under Section 1.1 through the date of termination),  plus any
incentive  compensation awarded to the Employee under the Incentive Compensation
Plan,  but not yet  paid,  and any  accrued  vacation.  In  addition,  upon  the
Company's  termination  of the  Employee  without  cause,  the Company  shall be
required to pay the  Employee  the  severance  benefit set forth in Section 4.2.
Nothing  herein shall prohibit the Company from relieving the Employee of any or
all of his duties hereunder pending the expiration of the 30-day notice period.

     7.5 Termination of Duties

     Notwithstanding  anything to the contrary set forth herein,  at any time on
or after delivery of written notice to the Employee, the Company may relieve the
Employee of all of his duties and responsibilities hereunder and may relieve the
Employee  of  authority  to act on behalf  of, or  legally  bind,  the  Company;
provided,  however,  that any such action by the  Company  shall not


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<PAGE>


relieve the Company of its  obligation  to pay to the Employee all  compensation
and benefits otherwise provided for in this Agreement.

                                    ARTICLE 8

                                  MISCELLANEOUS

     8.1 No Conflicting Agreements.

     The Employee  represents and warrants to the Company,  that the Employee is
not under any obligation to any person or entity which is  inconsistent  with or
in conflict  with any of the terms of this  Agreement  or which  would  prevent,
limit or impair in any way the  Employee's  performance of all the terms of this
Agreement  and the  Employee  agrees  not to enter  into any  agreement,  either
written or oral, in conflict herewith.

     8.2 Entire Agreement

     This Agreement contains the entire  understanding and agreement between the
Company and the Employee and cannot be amended, modified, or supplemented in any
respect except by subsequent written agreement entered into by both parties.

     8.3 Successors of the Company

     This  Agreement  shall  inure to the  benefit  of and be  binding  upon the
Company, its successors and assigns, including,  without limitation, any person,
firm,  corporation or other entity which may acquire all or substantially all of
the  Company's  assets and  business,  or with or into which the  Company may be
consolidated  or  merged,  and this  provision  shall  apply in the event of any
subsequent merger,  consolidation or transfer.  In every respect, this Agreement
shall  inure to the  benefit of and be  binding  upon the  Employee,  his heirs,
executors and personal  representatives and, being personal in nature, shall not
be assignable by the Employee.

     8.4 Effect of Waiver

     The waiver by either party of a breach of any  provision of this  Agreement
shall not operate as or be construed as a waiver of any subsequent breach.

     8.5 Notices

     Any notice,  request, demand or other communication in connection with this
Agreement must be in writing and shall be deemed to have been given and received
three days after a  certified  or  registered  letter  containing  such  notice,
properly  addressed,  with postage  prepaid,  is deposited in the United  States
mail; and, if given otherwise than by registered or certified mail, it shall not
be deemed to have been given until  actually  delivered  to and  received by the
party to whom it is addressed.


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<PAGE>


          A.   Notice to the  Company  shall be given at its  principal  mailing
               address,  which at the time of execution  of this  Agreement is 3
               Great  Pasture  Road,  Danbury,  Connecticut,  06813,  Attention:
               Chairman of the Board of  Directors,  or at such other address as
               it may designate.

          B.   Notice to the Employee shall be given at his home address,  which
               at the time of  execution  of this  Agreement  is the address set
               forth in the heading of this Agreement,  or at such other address
               as he may designate.

     8.6 Counterparts

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

     8.7 Severability

     If, in any jurisdiction, any provision of this Agreement or its application
to any party or circumstances is restricted,  prohibited or unenforceable,  such
provision shall, as to such  jurisdiction,  be ineffective only to the extent of
such  restriction,  prohibition or  unenforceability  without  invalidating  the
remaining provisions hereof and without affecting the validity or enforceability
of such provision in any other  jurisdiction or its application to other parties
or circumstances.

     8.8 Survival

     Each of the terms and  provision of this  Agreement  which are expressly or
impliedly so intended shall survive the termination of this Agreement.

     8.9 Applicable Law

     This Agreement shall be governed by and construed  according to the laws of
the State of Connecticut.

     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the day
and year first stated above.

                                                     EVERCEL, INC.


                                                     By:  /s/ Jerry Leitman
                                                          ---------------------
                                                          Jerry Leitman
                                                          Chairman of the Board


                                                          /s/ Robert L. Kanode
                                                          --------------------
                                                          Robert L. Kanode



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