AMENDMENT TO THE BUSINESS ALLIANCE
                      AND LICENSE AGREEMENT

      This  Amendment (the "Amendment") to the Business  Alliance
and  License  Agreement dated September 1, 1993  by  and  between
Electrosource, Inc. ("Electrosource") and Electric Power Research
Institute  ("EPRI")  as  amended  on  September  17,  1993   (the
"Agreement") shall be entered into effective as of this 1st  date
of November, 1995.  Capitalized terms used herein and not defined
have the same definitions as set forth in the Agreement.

      WHEREAS, EPRI purchased certain equipment listed on Exhibit
A  hereto  in  connection with research activities undertaken  by
Electrosource  on  behalf of EPRI and the  parties  now  wish  to
transfer title of such equipment to Electrosource.

       WHEREAS,  pursuant  to  the  Agreement,  EPRI  granted  to
Electrosource a personal, nontransferable, perpetual,  worldwide,
royalty-bearing  license  to use EPRI's  Patent  Rights  and  the
Technology,  if any, and the parties now desire to  transfer  all
right,  title  and  interest in the EPRI Patent  Rights  and  the
Technology,  if any, to Electrosource subject to any rights  held
by the Participating Utilities set forth in the agreements listed
on Exhibit B hereto.

      WHEREAS,  EPRI has agreed to pay an additional $200,000  to
Electrosource  as  full  payment  of  all  obligations  owed   to
Electrosource pursuant to the Agreement.

       WHEREAS,  the  parties  wish  to  provide  that   if   any
Participating  Utility  chooses not  to  convert  its  rights  to
receive  royalties into equity of Electrosource, then EPRI  shall
receive  the  shares that otherwise would have been allocated  to
such  Participating Utility and the Participating  Utility  shall
receive  a proportionate part of the cash royalties as set  forth
in the Agreement.

      NOW THEREFORE, the parties hereto, intending to the legally
bound, agree as follows:

      1.   Section 3 of the Agreement is amended and restated  in
its entirety as follows:

          "3.  Transfer of Title.  In consideration for this
          Amendment  to  the Agreement, EPRI sells  conveys,
          assigns,  transfers and delivers to  Electrosource
          all  right, title and interest of EPRI  in  EPRI's
          Patent Rights and the Technology, if any, free and
          clear  of  all  liens, pledges,  charges,  claims,
          security    interests   or   other   encumbrances;
          provided,  however, that such  transfer  shall  be
          subject   to   the  rights  of  the  Participating
          Utilities  set forth in the agreements  listed  in
          Exhibit  B  hereto, copies of which  Electrosource
          hereby acknowledges receiving."

     2.    Section  4  of the Agreement is  deleted  in  its
     entirety.

      3.   Title of Equipment.  EPRI purchased the equipment
listed   on  Exhibit  A  attached  to  this  Amendment   for
$581,339.26   and   such  equipment  is   now   located   at
Electrosource facilities.  EPRI hereby transfers all  right,
title and interest in the equipment listed on Exhibit A (the
"Transferred Equipment") to Electrosource.

     4.   Settlement of Outstanding Obligations.  EPRI agree
to   pay  Electrosource  $200,000  upon  execution  of  this
Amendment  and such payment shall be in final settlement  of
all  amounts  or  obligations  owed  or  owing  by  EPRI  to
Electrosource under the Agreement.

     5.   Royalties.

           a.   Electrosource hereby acknowledges and agrees
that  EPRI  and the Participating Utilities,  or  both,  are
deemed  to  have  provided funds in an  amount  satisfactory
under Sections 5.2(b), 5.3 and 5.4 of the Agreement to  give
EPRI  and the Participating Utilities the right to elect  to
exercise the conversion rights under Subarticle 5.3  of  the
Agreement.    Electrosource  agrees  that   ELSI   and   the
Participating  Utilities may exercise its right  to  receive
stock  in lieu of cash royalties at any time during the  six
month period following the effective date of this Amendment.
Electrosource   also  acknowledges   that   EPRI   and   the
Participating  Utilities shall be  issued  any  such  shares
pursuant  to  the  terms  of the Stock  Issuance  Agreements
attached as Exhibit A to the Agreement.

          b.   Section 5.4 of the Agreement shall be amended
and restated in its entirety as follows:

          "5.4   Number  of Shares Issuable for  Conversion.
          If  EPRI  or the Participating Utilities elect  to
          exercise  the  conversion rights under  Subarticle
          5.3, EPRI and the Participating Utilities shall be
          entitled  to an aggregate of 2,158,000  shares  of
          Common  Stock  of  Electrosource which  amount  is
          equal  to  13%  of  a stipulated  16,600,000  full
          diluted  number  of  shares  of  Common  Stock  of
          Electrosource  as  of  December  31,   1994   (the
          "Electrosource Stock"), with EPRI  and  each  such
          Participating Utility pursuant to this  Agreement.
          A schedule of such pro rata amounts is attached as
          Exhibit   A   hereto.    In   addition,   if   any
          Participating Utility chooses not to exercise  its
          conversion rights under Subarticle 5.3 within  the
          six months period following the effective date  of
          this  Amendment, EPRI shall receive the shares  of
          Common Stock of Electrosource that otherwise would
          have   been  allocated  to  be  issued   to   such
          Participating Utility.:

      c.    The Participating Utilities who do not elect  to
exercise the conversion rights under Subarticle 5.3 of  this
Agreement will receive royalties on the terms set  forth  in
Section 5.1 and 5.2 of the Agreement based on their pro rata
contribution as set forth on Exhibit C.

       6.    Taxes.   Electrosource  agrees  to  pay  or  to
reimburse EPRI for any and all taxes incurred by either EPRI
or  Electrosource in connection with the equipment  transfer
contemplated by this Amendment.

     7.   Miscellaneous Provisions.

          a.   Counterparts.  This amendment may be executed
in any number of counterparts, each of which shall be deemed
an  original and all of which together shall be deemed to be
one and the same instrument.

           b.    Entire Agreement.  This Amendment, together
with the Agreement and the Exhibits thereto, constitutes the
entire agreement by and between the parties with respect  to
the  subject  matter hereof and supersedes  all  prior  oral
and/or   written  understandings  and  agreements   relating
thereto,  except for the Research and Development  Agreement
(RP2415-15/3593-2)   dated   July   21,   1992   (the   "R&D
Agreement").  Neither party nor any of its agents  has  made
any  representations to the other party  which  the  parties
intend  to  have any force or effect, except as specifically
set  forth  therein  and in the Agreement  or  the  Exhibits
thereto, and neither party, in executing or performing  this
Agreement,   is   relying  upon  any  statement,   covenant,
representation or information, or any nature, whatsoever, to
whomsoever  made or given, directly or indirectly,  verbally
or   in  writing,  by  any  person  or  entity,  except   as
specifically  set  forth herein and in the Exhibits  hereto.
This  Amendment may not be modified or amended, in any  way,
except  in writing signed by the parties.  In the  event  of
any  conflict  between the terms of this Amendment  and  the
Agreement and any of the Exhibits thereto the provisions  of
this Amendment shall be controlling.

           c.    New Agreement.  Prior to January 31,  1996,
the parties agree to use reasonable efforts to enter into  a
new  agreement  on  mutually  acceptable  terms  which  will
replace the Agreement and the R&D Agreement.

           d.   No Warranty.  The equipment is sold "AS IS,"
WITH  NO  WARRANTY, STATUTORY, EXPRESS OR IMPLIED (INCLUDING
WARRANTIES  OF MERCHANTABILITY AND FITNESS FOR A  PARTICULAR
PURPOSE  AND  WARRANTIES ARISING FROM COURSE OF  DEALING  OR
USAGE OF TRADE).

      IN  WITNESS WHEREOF, the parties have each caused this
Agreement to be duly executed as of the 1st day of November,
1995.

ELECTRIC POWER RESEARCH INSTITUTE  ELECTROSOURCE, INC.

By:____________________________    By:       /s/
                                       Michael G. Semmens
Title:__________________________       President, CEO and Chairman

Date:__________________________        Date:  October 30, 1995

                            Exhibit A
                                
                      Schedule of Equipment
       Purchased by EPRI for Electrosource for $581,339.26
                                
                        Serial     EPRI tag
 Description            Number      Number              Cost

FYE 12/31/92:
SFUDs Tester upgrade     n/a         23047            $14,573.00
Omnipower UPS            n/a         23046              1,350.00
Chiller                  3788        23045              2,831.22
Power supply             92PS584     23044              1,199.78
Power supply             92PS586     23043              1,199.78
Power supply             92PS583     23042              1,199.78
Power supply             92PS585     23041              1,199.78
Computer 486 MHz         n/a         23040              1,379.84
Computer 486 MHz         n/a         23039              1,338.58
Computer 486 MHz         n/a         23036              1,338.58
Computer 486 MHz         n/a         23037              1,338.58
Computer 486 MHz         n/a         23038              1,338.58
Computer 486 MHz         n/a         23035              1,338.58
Monitor w/keyboard       H2GB701149  n/a                  400.00
Monitor w/keyboard       H2GB701223  n/a                  400.00
Monitor w/keyboard       H2GB700982  n/a                  400.00
Monitor w/keyboard       H2GB701170  n/a                  400.00
Monitor w/keyboard       H2GB701150  n/a                  400.00
Monitor w/keyboard       H1CB803838  n/a                  400.00

FYE 12/31/93:
Power supply             n/a         24360              1,199.00
Power supply             n/a         24361              1,199.00
Mixer                    1930362     24303              1,250.00
Beater                   n/a         24304                553.00
Mixer and beater         1729085     24301              4,901.00
Freezer                  n/a         24298             10,390.00
Power supply             n/a         24362              1,210.00
Pump                     n/a         24296              8,075.00
Chiller                  4365        24349              2,622.00
Chiller                  4435        24353              2,701.00
Chiller                  4389        24352              5,513.00
Power supply             93PS743     24325              1,770.00
Power supply             93PS799     24305              2,063.00
Power supply             93PS786     24306              2,063.00
Power supply             93PS794     24307              2,063.00
Power supply             93PS793     24308              2,063.00
Power supply             93PS791     24309              2,063.00
Power supply             93PS802     24310              2,063.00
Power supply             93PS785     24311              2,063.00
Power supply             93PS784     24312              2,063.00
Power supply             93PS800     24313              2,063.00
Power supply             93PS789     24314              2,063.00
Power supply             93PS790     24315              2,063.00
Power supply             93PS787     24316              2,063.00
Power supply             93PS788     24317              2,063.00
Power supply             93PS783     24318              2,063.00
Power supply             93PS797     24319              2,063.00
Power supply             93PS795     24320              2,063.00
Power supply             93PS801     24321              2,063.00
Power supply             93PS792     24322              2,063.00
Power supply             93PS796     24323              2,063.00
Power supply             93PS798     24324              2,063.00
Electric Cabinet Oven    118791      24289              6,767.00
Chiller                  4425        24350              2,622.00
Chiller                  4540        24351              2,622.00
Chiller                  4172        24354              2,701.00
Vacuum chamber           n/a         24290              3,308.00
Acid converter           n/a         24291              3,293.00
Power supply             93PS737     24326              1,770.00
Power supply             93PS736     24327              1,770.00
Power supply             93PS738     24328              1,770.00
Power supply             93PS745     24329              1,770.00
Power supply             93PS746     24330              1,770.00
Power supply             93PS293     24356              1,782.00
Power supply             93PS290     24358              1,782.00
Power supply             93PS292     24357              1,782.00
Power supply             93PS739     24331              1,770.00
Power supply             93PS742     24332              1,770.00
Power supply             93PS747     24333              1,770.00
Power supply             93PS741     24334              1,770.00
Power supply             93PS744     24335              1,770.00
Power supply             93PS740     24338              1,770.00
Power supply             93PS289     24358              1,782.00
Power supply             93PS291     24359              1,782.00
Computer 386 40 MHz      n/a         24337                570.00
Computer 386 40 MHz      n/a         24338                570.00
Computer 386 40 MHz      n/a         24339                570.00
Computer 386 40 MHz      n/a         24340                570.00
Computer 386 40 MHz      n/a         24341                570.00
Computer 386 40 MHz      n/a         24342                570.00
Computer 386 40 MHz      n/a         24343                570.00
Computer 386 40 MHz      n/a         24344                570.00
Computer 386 40 MHz      n/a         24345                570.00
Computer 386 40 MHz      n/a         24346                570.00
Computer 386 40 MHz      n/a         24347                570.00
Computer 386 40 MHz      n/a         24348                570.00
Raritan computer         A8280015    24374              2,495.00
Computer 486 33 MHz      n/a         24365              1,444.00
Computer 486 33 MHz      n/a         24366              1,444.00
Computer 486 33 MHz      n/a         24367              1,444.00
Computer 486 33 MHz      n/a         24368              1,444.00
Computer 486 33 MHz      n/a         24369              1,444.00
Computer 486 33 MHz      n/a         24370              1,444.00
Computer 386 40 MHz      n/a         24371                579.00
Printer, laser           USA3807916  24373              1,737.00
Computer 486 50 MHz      n/a         24384              1,666.00
Station manifold         n/a         24295              2,125.00
Electronic balancer      0052310     24300              1,782.00
Micro-ohmmeter           B469        24299              3,134.00
Power supply             93PS752     24383             10,864.00
Discharge unit           n/a         24292             16,500.00
Wave solder machine      n/a         24302              2,815.00
Vacuum pump              14730       24293              5,684.00
Cutter                   930159      24294              7,997.00
Pump                     3993207003  24297              8,075.00
Data monitor             n/a         24372              3,217.00

FYE 12/31/94:
Genie lift               0593-35239  See note 1         1,097.15
Injection mold           0033177     See note 1         4,509.00
Survo motor              n/a         See note 1         1,821.15
Survo motor              n/a         See note 1         2,386.35
Load bank on pack tester n/a         See note 1         2,545.52
Chiller 230 volt         n/a         See note 1         6,444.41
Chiller 230-volt         n/a         See note 1         6,444.41
Enclosure                n/a         See note 1         1,121.30
Buss                     n/a         See note 1         1,305.46
Air filtration system    n/a         See note 1        42,288.00
Oven drain pan           n/a         See note 1           840.78
DC contactor 535 amp     n/a         See note 1         1,602.09
Transformer 480 volt     n/a         See note 1         2,208.58
Explore  2010 Electron Microscope     E21029388      See  note  1
187,198.89
Pasting machine          n/a         See note 1        44,285.00
Portable lead getter     n/a         See note 1        16,916.00
BADICHEQ 2000            n/a         See note 1         3,240.00
Microscoper attachments  n/a         See note 1         3,435.56
PS9.0                    n/a         See note 1         1,113.53
                                     Total           $581,339.26

Note  1 - The 1994 capital items have not been submitted to  EPRI
          yet, thus there are no EPRI tag numbers assigned.
Note  2 - All other capital items billed to EPRI were relatively
          minor components used to assemble various machinery.

                            Exhibit B
                               
     Agreements between EPRI and the Participating Utilities
                                
Participating Utility           Agreement                               Date

Oklahoma Gas & Electric      Tailored Collaboration Agreement        05/18/93

Empire State Electric Energy
  Research Corporation       Cofunding Agreement                     05/02/94

Pacific Gas & 
  Electric Company           Cofunding Agreement                     12/22/93

Houston Lighting & Power 
  Master Agreement for Tailored
                             Collaboration Projects                  02/23/93

Centerior Energy Corporation Cofunding Agreement                     03/23/94

Southern California 
  Edison Company             Cofunding Agreement                     12/09/93

Consolidated Edison Company
  of New York, Inc.          Cofunding Agreement                     09/30/93

New York State Electric &
  Gas Corporation            Cofunding Agreement                     11/21/94


                            Exhibit C
                                
                      Funding Contributions
                                
EQUITY CALCULATION:
                                               Number of
Name                                             Shares

EPRI                                           1,571,859

Oklahoma Gas & Electric                          161,694

Houston Light & Power Company                    161,694

Pacific Gas & Electric Company                   101,059

Centerior Energy                                 161,694

         Total                                 2,158,000

ROYALTY SHARE CALCULATION:

       Name                              Amount Funded        % of Royalty

Southern California Edison Company          $200,000              20.0%

Empire State Electric Research Corporation   200,000              20.0

Consolidated Edison Company of New York      200,000              20.0

New York State Electric & Gas                400,000              40.0

        Total                             $1,000,000*            100.0%

*Cash royalties will be paid on $1,000,000 with each of the above
four utilities receiving the percentage of royalties indicated