EMPLOYMENT AGREEMENT


          This Agreement is entered into this 1st day of January, 1998 by and
   b e tween  METALCLAD  CORPORATION,  a  Delaware  corporation  (hereinafter
   referred  to  as the "Company"), and Grant S. Kesler (hereinafter referred
   to as "Executive") under the following terms and conditions:

                                    RECITALS:

         WHEREAS, the Company and Executive desire to set forth the terms and
   conditions on which (i) the Company shall employ Executive, (ii) Executive
   shall  render  services  to  the  Company,  and  (iii)  the  Company shall
   compensate Executive for such services; and 

             WHEREAS,  in  connection with the employment of Executive by the
   Company,  the  Company  desires  to restrict Executive s rights to compete
   with the business of the Company;

           NOW, THEREFORE, in consideration of the mutual promises, covenants
   and agreements hereinafter set forth, the parties hereto agree as follows:


        1.  EMPLOYMENT.

            The Company hereby employs Executive and Executive hereby accepts
   employment  with the Company upon the terms and conditions hereinafter set
   forth.


        2.  TERM.

            2.1  The term of this Agreement (the "Term") shall be for a three
   year period commencing on the Effective Date (as defined in Subsection 2.3
   below)  of  this  Agreement,  subject, however, to termination as provided
   herein in Sections 6 and 7 below.

               2.2  Each year, prior to the anniversary date, the company and
   executive shall meet to determine any additional compensation, if any, for
   the remaining contract term.

                2.3  The effective date of this Agreement shall be January 1,
   1998 (the "Effective Date").


        3.  COMPENSATION.

            3.1  For all services rendered by Executive under this Agreement,
   the  Company  shall  pay  or  cause one or more of its subsidiaries to pay
   Executive during the term hereof a salary at the rate of Two Hundred Fifty

   <PAGE>                           -1-
<PAGE>




   Thousand  Dollars  ($250,000.00)  per  year.    The Company shall pay such
   compensation  to  Executive  semi-monthly  in accordance with its standard
   practice for payment of compensation to its employees.  

                 3.2  Executive shall be entitled to periodic cash bonuses in
   accordance with the Metalclad Corporation Stock Option and Incentive Plan,
   any  other  incentive  bonus  plans or other forms of compensation, at the
   discretion  of the Company s Board of Directors, dependent upon Employee s
   performance.   Executive shall be entitled to participate in the Company s
   401(k) plan.


                 3.3  Executive shall be entitled to a car allowance, housing
   allowance and to health insurance for him and his dependents.

              3.4  All compensation shall be subject to customary withholding
   t a x  and  other  employment  taxes  as  are  required  with  respect  to
   compensation paid by a corporation to an employee.

                3.5  In order to provide proper incentives to those personnel
   engaged  in  developing waste processing facilities in Mexico, the Company
   recognizes  that  it  must  institute special bonus programs and incentive
   bonus  programs  from  time  to  time.    For  the calendar year 1998, the
   Compensation  Committee  has  approved both a special bonus program and an
   incentive bonus program as follows:

                      3.5.1  Special Bonus Program.  Because of the Company s
   involvement  in  a  NAFTA  arbitration  against  the Federal Government of
   Mexico,  it  requires an extraordinary effort on the part of key employees
   to  ensure  the  success  of the litigation on the part of the Company.  A
   total  of  five percent (5%) of the award, or the value of the settlement,
   is  to be shared with three key executives.  The Executive herein shall be
   entitled to two and one-quarter percent (2.25%) of the total award, or the
   total  value  of  the  settlement  of  the  case,  in the event there is a
   settlement.  

                 3.5.2  Incentive Bonus Program.  For the calendar year 1998,
   the  Board  of  Directors  has  set  three  major  objectives  for the key
   executives.  The objectives include opening the Aguascalientes project for
   commercial  operations,  keeping  the  Company  properly  capitalized  for
   growth,  and  respecting the public market participation in the Company to
   ensure  that  gains  made  by  the  Company  are  recognized by its public
   ownership  and  reflected  in  its  share price.  To the extent that these
   objectives  are  met, the key participants in the incentive bonus program,
   including  the  Executive herein, shall be entitled to a minimum of twenty
   percent (20%) of his base salary to a maximum of one hundred fifty percent
   (150%)  of  base salary, depending upon the extent to which the objectives
   have been achieved.

                  It is expected that the foregoing bonuses will be earned in
   1998,  unless  the  settlement or conclusion of the NAFTA litigation takes
   longer,  in  which  case that particular special bonus will go beyond 1998
   until  there  is  a  final  resolution.   It is expected that the Board of
   Directors will provide additional bonus incentives for years subsequent to




   <PAGE>                           -2-
<PAGE>




   1998,  provided  that for the life of the contract there will always be at
   least a minimum incentive bonus of twenty percent (20%) due in December of
   each year.
   


        4.  DUTIES AND RESPONSIBILITIES

               4.1  Executive shall, during the Term of this Agreement unless
   otherwise  agreed  by management, devote his full attention and expend his
   best  efforts,  energies, and skills on a full-time basis, to the business
   of  the  Company  and  any  corporation controlled by the Company (each, a
   "Subsidiary").    The  Company  acknowledges  that Executive is engaged in
   other  business  activities  separate  from  and  outside the scope of the
   business  of  the  Company.    The  Company  agrees  that  the devotion of
   reasonable  amounts  of  time  to  such other business activities will not
   violate  the  terms  of  this  Agreement  on  the conditions that (i) such
   activities  are  not corporate opportunities of the Company; and (ii) such
   activities  do  not  interfere  with the performance of Executive's duties
   hereunder.    For purposes of this Agreement, the term the "Company" shall
   mean the Company and all Subsidiaries.

             4.2  During the Term of this Agreement, Executive shall serve as
   the  President and Chief Executive Officer of the Company or in such other
   capacities  as  determined  by  the  Board  of  Directors or its Executive
   Committee except as provided for under Subsection 7.1.  In the performance
   of  all  of  his responsibilities hereunder, Executive shall be subject to
   all  of  the  Company s policies, rules, and regulations applicable to its
   executive  of comparable status and shall report directly to, and shall be
   subject  to,  the  direction and control of the Executive Committee of the
   Company  and  shall perform such duties as shall be assigned to him by the
   Board of Directors or the Executive Committee.  In performing such duties,
   Executive  will  be subject to and abide by, and will use his best efforts
   to cause other employees of the Company to be subject to and abide by, all
   policies  and  procedures  developed  by the Executive Committee or senior
   management of the Company.

             4.3  Without first obtaining the written permission of the Board
   of Directors of the Company, or its Executive Committee, in each instance,
   Executive  will not authorize or permit the Company to engage the services
   of,  or  engage in any business activity with, or provide any financial or
   other  benefit  to,  any affiliate of Executive.  The phrase "affiliate of
   Executive"  as  used  in  this  Subsection  4.3  shall  mean  and  include
   Executive  s  family  by blood or marriage (including, without limitation,
   parents,  spouse,  siblings,  children  and  in-laws), and any business or
   business  entity  which  is  directly or indirectly owned or controlled by
   Executive or any member of Executive s family or in which Executive or any
   member  of  Executive s family has a direct or indirect financial interest
   whatsoever.

                     4.4  To induce the Company to enter into this Agreement,
   Executive represents and warrants to the Company that (i) Executive is not
   a  party  or subject to any employment agreement or arrangement with other
   person,   firm,  company,  corporation  or  other  business  entity,  (ii)
   Executive  is subject to no restraint, limitation or restriction by virtue




   <PAGE>                           -3-
<PAGE>




   of  any  law  or  rule  of law or otherwise which would impair Executive s
   right or ability (a) to enter the employ of the Company, or (b) to perform
   fully his duties and obligations pursuant to this Agreement.


        5.  RESTRICTIVE COVENANTS

                     5.1    Executive  acknowledges  that  (i) he has a major
   responsibility  for  the operation, administration, development and growth
   of  the  Company  s  business,  (ii)  the  Company  s  business has become
   international in scope, (iii) his work for the Company has brought him and
   w i ll  continue  to  bring  him  into  close  contact  with  confidential
   information  of the Company and its customers, and (iv) the agreements and
   covenants  contained  in  this Subsection 5.1 are essential to protect the
   business interests of the Company and that the Company will not enter into
   this  Agreement  but  for  such  agreements  and  covenants.  Accordingly,
   Executive covenants and agrees as follows:

                   5.1.1  Except as otherwise provided for in this Agreement,
   during  the  Term  of  this  Agreement  Executive  shall  not, directly or
   indirectly,  compete  with  respect  to  any  services  or products of the
   Company  which are either offered or are being developed by the Company as
   of  the  date  of  termination; or, without limiting the generality of the
   foregoing,  by  or  become,  or  agree  to  be or become, interested in or
   associated  with,  in  any  capacity  (whether  as a partner, shareholder,
   owner,  officer, director, Executive, principal, agent, creditor, trustee,
   consultant,  co-venturer  or otherwise) any individual, corporation, firm,
   association,  partnership,  joint  venture or other business entity, which
   competes with respect to any services or products of the Company which are
   either  offered  or  are  being developed by the Company as of the date of
   termination;  provided,  however,  that  Executive  may  own, solely as an
   investment,  not  more than one percent (1%) of any class of securities of
   any  publicly  held  corporation  in  competition  with  the Company whose
   securities  are  traded  on any national securities exchange in the United
   States of America.

                   5.1.2  During the Term of this Agreement and, for one year
   thereafter  ("Termination  Period"),  Executive  shall  not,  directly  or
   indirectly,  (i)  induce  or  attempt  to  influence  any Executive of the
   Company  to  leave  its  employ,  (ii) aid or agree to aid any competitor,
   customer  or supplier of the Company in any attempt to hire any person who
   shall  have  been  employed  by the Company within the one (1) year period
   preceding  such requested aid, or (iii) induce or attempt to influence any
   person  or  business  entity who was a customer or supplier of the Company
   during  any  portion of said period to transact business with a competitor
   of the Company in Company s business.

                     5.1.  During the Term of this Agreement, the Termination
   Period and any time thereafter, Executive shall not disclose to anyone any
   information  about the confidential or proprietary affairs of the Company,
   i n c l u ding,  without  limitation,  trade  secrets,  trade  "know-how",
   inventions,  customer  lists, business plans, operational methods, pricing
   p o licies,  marketing  plans,  sales  plans,  identity  of  suppliers  or
   customers,  sales,  profits  or  other  financial  information,  which  is




   <PAGE>                           -4-
<PAGE>




   confidential  to  the  Company  or  is not generally known in the relevant
   trade,  nor  shall  Executive make use of any such information for his own
   benefit.

                  5.2  If Executive breaches Subsection 5.1 (the "Restrictive
   Covenants"),  the  Company  shall  have the following rights and remedies,
   each  of  which shall be enforceable, and each of which is in addition to,
   and not in lieu of, any other rights and remedies available to the Company
   at law or in equity:

                   5.2.1  Executive acknowledges and agrees that in the event
   of  a  violation  or  threatened  violation  of  any  of the provisions of
   Subsection  5.1.1,  the  Company  shall have no adequate remedy at law and
   shall therefore be entitled to enforce each such provision by temporary or
   permanent  injunctive  or  mandatory  relief  obtained  in  any  court  of
   competent  jurisdiction  without the necessity or proving damages, posting
   any  bond or other security, and without prejudice to any other rights and
   remedies which may be available at law or in equity.

            5.3  If any of the Restrictive Covenants, or any part thereof, is
   held  to  be  invalid  or  unenforceable,  the  same  shall not affect the
   remainder  of the covenant or covenants, which shall be given full effect,
   without regard to the invalid or unenforceable portions.  Without limiting
   the  generality  of the foregoing, if any of the Restrictive Covenants, or
   any  part  thereof, is held to be unenforceable because of the duration of
   such  provision or the area covered thereby, the parties hereto agree that
   the  court  making  such  determination shall have the power to reduce the
   duration  and/or  area  of  such  provision and, in its reduced form, such
   provision shall then be enforceable.

             5.4  The parties hereto intend to and hereby confer jurisdiction
   to  enforce  the Restrictive Covenants upon the courts of any jurisdiction
   within the geographical scope of such Restrictive Covenants.  In the event
   that  the  courts of any one or more of such jurisdictions shall hold such
   Restrictive  Covenants  wholly  unenforceable  by reason of the breadth of
   such  scope  or  otherwise, it is the intention of the parties hereto that
   such determination not bar or in any way affect the Company s right of the
   relief  provided above in the courts of any other jurisdictions within the
   geographical  scope  of such Restrictive Covenants, as to breaches of such
   covenants  in  such other respective jurisdictions, the above covenants as
   they  relate  to each jurisdiction being, for this purpose, severable into
   diverse and independent covenants.


        6.  TERMINATION.

                6.1  The basic three-year term shall automatically be renewed
   each  year  on  the anniversary date of this Agreement, unless the Company
   elects  to  terminate  the  Agreement.    Upon  election  to terminate the
   Agreement, the Company may exercise two options.

                 (i)  It may elect to require the Executive to remain working
   as per his duties and responsibilities outlined in Section 4.





   <PAGE>                           -5-
<PAGE>




                 (ii)  It may ask Executive to leave the day-to-day employ of
   the  Company and (a) remain as a consultant or (b) sever all relationships
   with the Company whatsoever.

                       In either case, the Executive shall be entitled to his
   annual  compensation, including bonus and benefits during the remainder of
   the three-year term.

             6.2  The Company also may terminate Executive s employment under
   this  Agreement  at  any  time  for  Cause.   "Cause" shall exist for such
   termination  if  Executive (i) is adjudicated guilty of illegal activities
   by  a  court  of  competent jurisdiction, (ii) commits any act of fraud or
   intentional  misrepresentation,  (iii)  has engaged in serious misconduct,
   which  conduct  has,  or  would,  if generally known, materially adversely
   affect  the  good  will  or  reputation  of  the Company and which conduct
   Executive  has not cured or altered within ten (10) days following written
   notice  by  the  Board  to  Executive  regarding such conduct,  (iv) is in
   material breach under this Agreement, or (v) Executive habitually fails to
   perform  the duties and responsibilities of his employment as set forth in
   Section 4 of this Agreement or as may be assigned or delegated to him from
   time  to time by the Company, the Board, or the Executive Committee of the
   Board,  and,  with  regard  to  grounds  (iv)  and (v) the Board has given
   Executive  thirty  (30)  days  written  notice  of  the  grounds  for  the
   termination  and  the  conduct required by Executive to cure such failure,
   with  such conduct outlined with reasonable specificity, and Executive has
   not  cured such failure, within the thirty (30) day period provided in the
   written notice to Executive.

             6.3  If the Company terminates Executive s employment under this
   Agreement  pursuant  to the provisions of Subsections 6.2, Executive shall
   be entitled to receive only six months severance pay unless the arbitrator
   finds the he has been properly terminated pursuant to grounds (i) or (ii).

            6.4  If Executive s employment with the Company is terminated due
   to  the  death  or  permanent  disability  of Executive, the spouse of the
   Executive,  the  estate of Executive or the Executive, as the case may be,
   shall continue to receive compensation as determined in Section 7 below.

             6.5  If Executive s employment with the Company is terminated as
   the  result  of Executive s purely voluntary resignation for reasons other
   than  those  set forth in Section 7 below, Executive shall not be entitled
   to compensation after the effective date of such resignation.


        7.  TERMINATION COMPENSATION.

               7.1  Compensation as defined in Section 3 above shall continue
   for  a  period of three (3) years following the date of termination in the
   event:  (i) Executive is requested to resign pursuant to Section 6.1; (ii)
   the  death of Executive, said amount being paid to his spouse or estate as
   the  case may be; (iii) inability to discharge his responsibilities due to
   health  or  a  disability  in  which  case,  after  six  months  of such a
   condition, the Board may cancel the contract pursuant to paragraph 6.1; or
   (iv)  the  Executive  resigns  due to a substantial change in ownership or




   <PAGE>                           -6-
<PAGE>




   Board membership as defined below.

             7.2  A substantial change in ownership shall mean:  (i) the sale
   of  over 50% of the corporation's assets, or (ii) a change in ownership of
   over 50% of the outstanding stock of the Company; or (iii) the replacement
   or change of over 65% of the Board in one fiscal year.

            7.3  In the event Executive is requested to resign, employment is
   terminated  for  any  reason  by  the Company, including termination under
   Sections  5 or 6 or in the event Executive voluntarily resigns as a result
   of  any  of the events set forth in Section 7.1 above, then, and in any of
   such  events,  all  of  the  Executive  s rights under the Company s Stock
   Option  and Incentive Plan and all other incentive bonus plans shall fully
   and completely vest upon the date of such termination.


        8.  EXPENSES.

                     8.1  Executive shall be entitled to reimbursement of all
   reasonable  expenses  actually  incurred  in the course of his employment.
   Executive  shall submit to the Company a standardized expense report form,
   provided  by  the  Company,  and  shall  attach  thereto  receipts for all
   expenditures.    Expenses  shall include housing, automobile expenses, and
   travel.

               8.2  The Company shall reimburse Executive within fifteen (15)
   days after submission by Executive of his expense report.

        9.  THE COMPANY S AUTHORITY.

             Executive agrees to observe and comply with the reasonable rules
   and  regulations  of  the  Company  as  adopted  by the Company s Board of
   Directors,  either  orally  or  in writing, respecting performances of his
   duties  and  to  carry  out  and  perform orders, directions, and policies
   stated  by the Board of Directors, to him from time to time, either orally
   or in writing.  Executive understands Company is a subsidiary of Metalclad
   Corporation, a Delaware Corporation that operates with both a Board and an
   Executive Committee.  Direction by such Board or Executive Committee shall
   constitute action by the Company s Board and be given the same respect and
   weight.


        10.  PAID VACATION; SICK LEAVE; INSURANCE.

               10.1  Executive shall be entitled to a paid vacation each year
   equal  to  not  less than three (3) weeks per year in addition to the paid
   holidays  on  which  the  Company s offices are closed pursuant to Company
   policy relating to paid holidays.

              10.2  Executive shall be entitled to reasonable periods of paid
   sick  leave  during  the  Term  of  the  Agreement  in accordance with the
   Company s policy regarding such sick leave.

                  10.3  The Company shall provide Executive, at the Company s




   <PAGE>                           -7-
<PAGE>




   expense,  participation  in  group medical, accident and health insurance,
   and  life insurance plans of the Company as may be provided by the Company
   from  time to time to Company executives of comparable status, subject to,
   and  to the extent that, Executive is eligible under such benefit plans in
   accordance with their respective terms.


        11.  LEGAL DEFENSE.

                     The Company acknowledges that the environmental services
   industry  is  a  highly  litigious industry whereby many regulatory fines,
   penalties  and  third-party suits are directed at the individuals involved
   in  ownership  and  operations.  The Company agrees to pay all legal fees,
   judgments,  awards,  bonds,  fines,  penalties  and  costs  related to the
   defense  and  outcome  whereby  Executive  was  acting  in  his  corporate
   capacity.


        12.  MISCELLANEOUS.

                 12.1  The Company may, from time to time, apply for and take
   out,  in  its  own  name  and  at its own expense, life, health, accident,
   disability  or  other  insurance upon Executive in any sum or sums that it
   may  deem  necessary to protect its interests, and Executive agrees to aid
   and cooperate in all reasonable respects with the Company in procuring any
   and  all  such  insurance, including without limitation, submitting to the
   usual  and  customary  medical examinations, and by filling out, executing
   and  delivering  such applications and other instruments in writing as may
   be  reasonably  required  by an insurance company or companies to which an
   application  or  applications for such insurance may be made by or for the
   Company.  

              12.2  This Agreement is a personal contract, and the rights and
   interests  of  Executive hereunder may not be sold, transferred, assigned,
   pledged  or  hypothecated  except  as otherwise expressly permitted by the
   provisions of this Agreement.  Executive shall not under any circumstances
   have  any  option  or right to require payment hereunder otherwise than in
   accordance  with the terms hereof.  Except as otherwise expressly provided
   herein,  Executive shall not have any power of anticipation, alienation or
   assignment of payments contemplated hereunder, and all rights and benefits
   of  Executive  shall be for the sole personal benefit of Executive, and no
   other  person  shall  acquire  any  right,  title or interest hereunder by
   reason  of any sale, assignment, transfer, claim or judgment or bankruptcy
   proceedings  against  Executive;  provided,  however, that in the event of
   E x e c utive  s  death,  Executive  s  estate,  legal  representative  or
   beneficiaries  (as the case may be) shall have the right to receive all of
   the benefit that accrued to Executive pursuant to, and in accordance with,
   the terms of this Agreement.

              12.3  The Company shall have the right to assign this Agreement
   to  any  successor of substantially all of its business or assets, and any
   such  successor  and  Executive  shall  be  bound by all of the provisions
   hereof.





   <PAGE>                           -8-
<PAGE>




        13.  NOTICES.

             All notices, requests, demands and other communications provided
   for   by  this  Agreement  shall  be  in  writing  and  (unless  otherwise
   specifically provided herein) shall be deemed to have been given three (3)
   days  after having been mailed in any general or branch United States Post
   Office, enclosed in a registered or certified postpaid envelope, addressed
   to  the  parties stated below or to such changed address as such party may
   have fixed by notice:


           TO THE COMPANY:    METALCLAD CORPORATION
                              2 Corporate Plaza, Suite 125
                              Newport Beach, California  92660

                  COPY TO:    Bruce H. Haglund, Esq.
                              Gibson & Haglund
                              2010 Main Street, Suite 400
                              Irvine, California  92714

                EXECUTIVE:    Grant S. Kesler
                              3739 Brighton Point Drive
                              Salt Lake City, UT  84121


        14.  ENTIRE AGREEMENT.

            This Agreement supersedes any and all Agreements, whether oral or
   written,  between  the  parties  hereto, with respect to the employment of
   Executive  by the Company and contains all of the covenants and Agreements
   between  the parties with respect to the rendering of such services in any
   manner  whatsoever.    Each  party  to this Agreement acknowledges that no
   representations, inducements, promises or agreements, orally or otherwise,
   have  been  made  by  any  party, or anyone acting on behalf of any party,
   which  are  not embodied herein, and that no other agreement, statement or
   promise  with  respect  to such employment not contained in this Agreement
   shall  be  valid  or  binding.  Any modification of this Agreement will be
   effective only if it is writing and signed by the parties hereto.


        15.  PARTIAL INVALIDITY.

           If any provision in this Agreement is held by a court of competent
   jurisdiction   to  be  invalid,  void,  or  unenforceable,  the  remaining
   provisions  shall  nevertheless  continue in full force and effect without
   being impaired or invalidated in any way.


        16.  ATTORNEYS  FEES.

             Except  with  respect to paragraphs 5.3 and 5.4 which issues are
   reserved  for the court, any dispute regarding the negotiations leading up
   to  the execution of this Release and/or the interpretation or application
   of this Agreement or the alleged breach hereof, or any act which allegedly




   <PAGE>                           -9-
<PAGE>




   has,  or  would, violate any provision of this Agreement must be submitted
   to  arbitration  before  a  neutral  arbitrator.  The arbitration shall be
   conducted  in  accordance  with  the  rules  of  Judicial  Arbitration and
   Mediation  Services,  Inc.  of  Orange  County.    A  written  demand  for
   arbitration pursuant to Section 638 of the Code of Civil Procedure must be
   made  within  sixty  (60)  days  of  the  alleged  breach.  The results of
   arbitration will be the exclusive, final and binding remedy for such claim
   or dispute.


        17.  GOVERNING LAW.

          This Agreement will be governed by and construed in accordance with
   the laws of the State of California.


        18.  BINDING NATURE.

         This Agreement shall be binding upon and inure to the benefit of the
   parties hereto and their respective representatives, heirs, successors and
   assigns.


       19.  WAIVER.

        No waiver of any of the provisions of this Agreement shall be deemed,
   or  shall  constitute  a  waiver  of  any  other provision, whether or not
   similar,  nor  shall any waiver constitute a continuing waiver.  No waiver
   shall  be  binding  unless  executed  in  writing  by the party making the
   waiver.


        20.  CORPORATE APPROVALS.

             The  Company  represents and warrants that the execution of this
   Agreement by its corporate officer named below has been duly authorized by
   the  Board  of Directors of the Company, is not in conflict with any Bylaw
   or  other  agreement  and  will  be  a  binding obligation of the Company,
   enforceable in accordance with its terms.



















   <PAGE>                           -10-
<PAGE>




          IN WITNESS WHEREOF, the parties hereto have executed this Agreement
   as of the date above written.


   THE COMPANY:
   METALCLAD CORPORATION


                  By: /s/Anthony C. Dabbene
                     ------------------------------------
                     Its Authorized Office



           EXECUTIVE: /s/Grant S. Kesler
                     ------------------------------------
                     Grant S. Kesler

































                                    -11-
   <PAGE>