RETENTION AGREEMENT


This  agreement is entered into as of February 2, 1996, by and between  KENETECH
Corporation (the "Company" and Mervin E. Werth, an individual currently employed
by the Company (the "employee" or "you").

This  agreement  pays a  retention  benefit as an  incentive  for an employee to
remain  employed  through a  designated  retention  period.  The Company and the
Employee  desire to enter into a written  employment  agreement on the terms set
forth below. The parties agree as follows:

                                    Agreement

1.  Retention Payment.

     a.   The Company and you have agreed  that,  if you remain  employed by the
          Company until December 31, 1996, you will receive $125,000,  an amount
          equal to 12 months of your  current  salary.  The full payment will be
          made on January 2, 1997.  The  Company  will deduct and  withhold  all
          Federal,  State and local income and employment  withholding taxes and
          any other  amounts  required to be deducted or withheld by the Company
          under the applicable statute or regulation.

     b.   If you are offered  continued  employment  with KENETECH or one of its
          successors,  you will receive the full retention  payment as described
          above.

     c.   Upon a Change in Control,  the Company  will be  obligated to make the
          full  retention  payment  on the  date  described  above.  "Change  in
          Control" means:

               (i)  a merger  or  acquisition  in which the  Company  is not the
                    surviving  entity,  except for a  transaction  the principle
                    purpose  of which is to change  the  State of the  Company's
                    incorporation;

               (ii) the  sale,   transfer  or  other   disposition   of  all  or
                    substantially   all  of  the   assets  of  the   Company  in
                    liquidation or dissolution of the Company;

               (iii)any  reverse  merger in which the  Company is the  surviving
                    entity,  but in  which  fifty  percent  (50%) or more of the
                    Company's outstanding voting stock is transferred to holders
                    different from those who held the stock immediately prior to
                    such merger; or

               (iv) the  acquisition  of more than  fifty  percent  (50%) of the
                    Company's  outstanding  voting stock pursuant to a tender or
                    exchange  offer made by a person or related group of persons
                    (other  than  the  Company  or a  person  that  directly  or
                    indirectly  controls,  is  controlled  by or is under common
                    control with the Company).

     d.   If you are  terminated  by  KENETECH  or one of its  successors  for a
          reason other than Termination for Cause, the Company will be obligated
          to make the full retention  payment on your termination date. You will
          also be eligible for severance benefits  applicable to you at the time
          of your termination.  If you are terminated for cause, you will not be
          paid the retention payment described above not severance benefits. You
          may be terminated for cause (a "Termination  for Cause") if you commit
          one or more acts of fraud, embezzlement,  misappropriation of property
          or  information  or engage in any other conduct  materially  adversely
          affecting the business reputation of the Company.

     e.   If you  voluntarily  terminate your  employment  prior to December 31,
          1996, you will not receive any portion of the retention payment.

2.   Employment  Duties. You agree to continue in your employment until December
     31,  1996 and to perform in good faith and to the best of your  ability all
     services which may be required of you in your  position.  You also agree to
     be available to render such services at all reasonable  times and places in
     accordance  with  reasonable  directives  and  assignments  issued  by  the
     Company's  President  and Board of  Directors.  You will  devote  your full
     effort to the business and affairs of the Company  within the scope of your
     responsibilities.
                        
3.   Health  Benefits.  Your  eligibility for health benefits in not impacted by
     this Agreement.  This Agreement does not provide for benefits  continuation
     beyond your termination date.

4.   Ownership Rights and General Employee Obligations.  You will continue to be
     bound  by  all  the  terms  and  provision  of  your  existing  Proprietary
     Information and Inventions Agreement and other agreements with the Company,
     and  nothing  in this  document  will  modify  or  affect  your  duties  or
     obligations as an executive in the Company.

5.   Miscellaneous.  The  provisions of this  Agreement will be binding upon the
     Company,  its successors and assigns (including,  without  limitation,  the
     surviving  entity or successor  party resulting from the Change in Control)
     and will be  construed  and  interpreted  under  the  laws of the  State of
     California. This Agreement may only be amended by written instrument signed
     by you and the President.

KENETECH Corporation




By Richard Saunders
President & Chief Executive Officer





Mervin E. Werth