LICENSE ASSISTANCE AGREEMENT


     This License Assistance Agreement (this "Agreement"),  dated as of February
16, 1999, is entered into by and between ENERGY RESEARCH  CORPORATION ("ERC"), a
New York  corporation  with its  principal  place of business at 3 Great Pasture
Road,  Danbury,   Connecticut,   and  EVERCEL,  INC.  ("Evercel"),   a  Delaware
corporation  and  wholly-owned  subsidiary  of ERC with its  principal  place of
business at 3 Great Pasture Road, Danbury, Connecticut.

     WHEREAS,  ERC has entered into a Cooperative  Joint  Venture  Contract (the
"Joint  Venture  Contract"),  and  articles of  association  (the  "Articles  of
Association"),  each dated as of July 7, 1998,  with Xiamen  Three  Circles Co.,
Ltd.   ("Xiamen"),   which  provides  for  the  establishment  of  Xiamen  Three
Circles-ERC Battery Corp., Ltd., a Sino-Foreign Manufacturing Joint Venture (the
"Joint Venture") to manufacture and sell nickel zinc ("Ni-Zn") batteries;

     WHEREAS,  the Joint Venture,  Xiamen (formerly Xiamen Daily-Used  Chemicals
Co., Ltd.) and ERC have entered into a Technology  Transfer and License Contract
(the "License  Contract"),  dated as of May 29, 1998,  pursuant to which ERC has
licensed certain of its Ni-Zn battery technology to the Joint Venture;

     WHEREAS,  the registered  capital of the Joint Venture is US$6,100,000,  of
which ERC has contributed US$3,080,500 in cash representing a 50.5% share of the
registered capital and cooperative conditions of the Joint Venture;

     WHEREAS,  Evercel is a wholly-owned  subsidiary of ERC that has been formed
to develop the battery business of ERC following a spin-off of Evercel;

     WHEREAS, ERC wishes to transfer to Evercel the principal assets and related
liabilities of its battery business in anticipation of the spin-off;

     WHEREAS,  ERC also  wishes to assign  its  interests  in the Joint  Venture
Contract and the License Contract to Evercel in connection with the spin-off;

     WHEREAS,  such  assignment of ERC's interest in the Joint Venture  Contract
and the  License  Contract  will  require  the  consents of Xiamen and the Joint
Venture,  respectively,  and the  approval of the  appropriate  examination  and
approval  authority  of the  People's  Republic  of  China  (the  "PRC  Approval
Authority");

     WHEREAS, until such consents and approval are obtained and such assignments
are  effectuated  (such  assignments  collectively  referred  to  herein  as the
("Transfer")),  ERC and Evercel  desire that  Evercel bear the  obligations  and
receive the  benefits of ERC under the Joint  Venture  Contract  and the License
Contract.

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     NOW, THEREFORE,  for good and valuable  consideration,  receipt of which is
hereby acknowledged, ERC and Evercel hereby agree as follows:

     1.   Until the consents and approvals  referred to in Section 5 and Section
          6 below are obtained  with respect to the Transfer and the Transfer is
          completed,  ERC and Evercel  desire that Evercel bear the  obligations
          and receive the benefits of ERC under the Joint  Venture  Contract and
          the License Contract.  Therefore,  to effectuate such intent,  Evercel
          shall provide to ERC,  without  charge or expense to ERC, all services
          and assistance (including,  without limitation,  employee, technology,
          machinery,  equipment  and  materials  selection,  sales and marketing
          assistance  and  financial   assistance)   necessary  for  Evercel  to
          effectively  fulfill, on behalf of ERC, all of ERC's obligations under
          the Joint  Venture  Contract and the License  Contract.  In return for
          such services and assistance, ERC irrevocably agrees to pay to Evercel
          an  amount  equal  to  the  sum  of  all  money,  dividends,  profits,
          reimbursements,  distributions  (including liquidating  distributions)
          and  payments  actually  paid to ERC in cash or in kind,  or otherwise
          accruing to ERC,  pursuant to or in connection  with the Joint Venture
          Contract  and the License  Contract.  ERC will  provide to Evercel all
          information that ERC receives from the Joint Venture pertaining to the
          Joint Venture's annual income,  losses,  and operations  sufficient to
          enable  Evercel to report on its  annual  U.S.  federal  and state tax
          returns the allocable  amount of taxable income,  losses,  deductions,
          and  credits to which ERC would  otherwise  be  entitled  absent  this
          Agreement.  Further,  ERC will cause and enable Evercel to have access
          to all books and  records  of the Joint  Venture  or true and  correct
          copies thereof to which ERC is otherwise entitled.

     2.   Until the consents and approvals  referred to in Section 5 and Section
          6 below are obtained  with respect to the Transfer and the Transfer is
          completed,  ERC agrees that,  in the event of any vacancy in the Board
          of  Directors  (the  "Board")  of  the  Joint  Venture  relating  to a
          directorship  which ERC is entitled to appoint,  or in the position of
          Deputy  General  Manager  of the  Joint  Venture,  ERC will  request a
          nominee from Evercel to fill such vacancy. Within ten business days of
          receipt of such  request,  Evercel  will  notify ERC in writing of its
          nominee to fill such  vacancy  on the Board or as the  Deputy  General
          Manager,  as  applicable.  ERC will appoint  Evercel's  nominee to the
          Board or as the Deputy  General  Manager,  as  applicable,  unless ERC
          raises a reasonable  objection to such nominee.  Upon ERC's reasonable
          objection  to a  nominee,  Evercel  will  notify  ERC of a  substitute
          nominee,  which  substitute  nominee  (absent any  further  reasonable
          objection by ERC) shall be appointed by ERC. In addition, in the event
          that the  Transfer  has not taken place by the date that is six months
          from the date hereof,  upon the written  request of Evercel,  ERC will
          replace its appointees to the Board with nominees specified by Evercel
          in such  notice  (unless  ERC raises a  reasonable  objection  to such
          nominee(s),  in which  case  Evercel  will


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          notify ERC of substitute nominee(s)).  ERC also agrees to exercise any
          residual rights and powers in the Joint Venture  interest,  including,
          but not  limited to,  voting  rights,  in  accordance  with  Evercel's
          instructions,  provided  that  such  instructions  are not  materially
          adverse to ERC, in ERC's  reasonable  discretion.  In the event of any
          disagreement  relating to the foregoing,  ERC and Evercel will attempt
          to work out a mutually agreeable solution.

     3.   This  Agreement  does not constitute an agreement for a partnership or
          joint venture between ERC and Evercel. All expenses and costs incurred
          by Evercel in meeting Evercel's obligations under this Agreement shall
          be solely  those of  Evercel,  and ERC  shall not be liable  for their
          payment.  All  expenses and costs  incurrred  by ERC in meeting  ERC's
          obligations  under  this  Agreement  shall  be  reimbursed  in full by
          Evercel, provided that ERC, to the extent practical,  agrees to notify
          Evercel  prior to  incurring  any costs or  expenses  pursuant to this
          Agreement.  Neither party to this  Agreement  shall have  authority to
          make commitments with third parties, including the Joint Venture, that
          are binding  upon the other  party  hereto  without the other  party's
          written consent,  and neither party to this Agreement shall in any way
          hold itself out as having that power.

     4.   This Agreement is personal to both ERC and Evercel,  and neither party
          hereto can assign any rights or duties  arising  hereunder  to a third
          party,  whether by contract or by operation of law,  without the prior
          written consent of the other party to this  Agreement;  any attempt to
          do so shall be void.

     5.   Immediately following the execution of this Agreement by both parties,
          ERC shall  endeavor to obtain,  pursuant to a contract (the  "Transfer
          Contract") to be entered into by and among ERC, Evercel, and the Joint
          Venture,   the  written   consent  of  Xiamen  to  the  assignment  of
          obligations  and  benefits  under the Joint  Venture  Contract and the
          License  Contract and the written  consent of the Joint Venture in the
          form of a  unanimous  resolution  adopted by the Board  approving  the
          Transfer and making  application  to the PRC Approval  Authority,  the
          taking of all actions  necessary to  effectuate  such Transfer and the
          Amendment of the Joint Venture  Contract,  Articles of Association and
          the License  Contract of the Joint  Venture  pursuant to the  Transfer
          Contract.

     6.   Immediately  upon receiving the consents and following the adoption of
          the  unanimous  resolution  by the  Board of  Directors  of the  Joint
          Venture as set forth in Section 5 above, the parties to this Agreement
          will  endeavor  to assist  the Joint  Venture in  applying  to the PRC
          Approval  Authority and any other appropriate  governmental  agency of
          the PRC for approval of the Transfer Contract and of the corresponding
          amendments to the Joint Venture Contract,  Articles of Association and
          the License Agreement.  In connection


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          therewith,  the parties to this Agreement will endeavor to provide any
          documents or any assistance reasonably requested by the Joint Venture.

     7.   Each of the parties will use its  reasonable  best efforts to take all
          action and to do all things  necessary,  proper, or advisable in order
          to  carry  out  the  intent  of this  Agreement  as set  forth  in the
          preambles to this Agreement.

     8.   Unless earlier  terminated by mutual  agreement of the parties to this
          Agreement, the term of this Agreement shall commence on the date first
          written  above and  continue  until the  consents and the approval set
          forth in Section 5 above are  obtained,  at which time this  Agreement
          shall terminate and be of no further force or effect.  During the term
          of  this  Agreement,  ERC  agrees,  in  connection  with  any  of  its
          activities related to the Joint Venture,  to act in the best interests
          of Evercel at all times.  In the event that such consents and approval
          are not  obtained,  the  parties  hereto  agree  that the  contractual
          obligations  created hereby shall continue to exist  coterminous  with
          the Joint Venture Contract.

     9.   ERC agrees that, except as specifically  contemplated  herein, it will
          not enter into any  amendment  or  modification  to the Joint  Venture
          Contract,  Articles of Association or the License Contract without the
          express written consent of Evercel.

     10.  For   purposes   of  the   disclosure   of   information   under   the
          Confidentiality  Agreement  dated May 29, 1998  between ERC and Xiamen
          attached  to the  License  Contract,  the  parties  hereto  agree that
          Evercel is a legally authorized agent of ERC.

     11.  This  Agreement  shall  be  governed  by  the  laws  of the  State  of
          Connecticut, without regard to choice of law considerations.





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     IN WITNESS WHEREOF,  and intending to be legally bound, the duly authorized
representatives  of each party hereto have signed this  Agreement as of the date
first written above.


                                   ENERGY RESEARCH CORPORATION



                                           By:  /s/ Jerry D. Leitman
                                               ----------------------
                                   Name/Title:    Jerry D. Leitman
                                                  President and Chief Executive
                                                  Officer

                                   EVERCEL, INC.


                                           By:   /s/ Allen Charkey
                                               ----------------------
                                   Name/Title:     Allen Charkey
                                                   Executive Vice President and
                                                   Chief Operating Officer



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