ENVIRONMENTAL RIDER
                                                   RIDER NO.  01

      This  Rider  is  a  part  of that certain  Equipment  Lease
Agreement  dated as of April 6, 1995 (the "Lease")  between  ALLY
CAPITAL   CORPORATION   ("Lessor")   and   ELECTROSOURCE,    INC.
("Lessee").

      In  addition  to  and without limiting  any  of  the  other
provisions  of  this  Lease, Lessee and Lessor  hereby  agree  as
follows:

      A.   DEFINITIONS AND RULES OF CONSTRUCTION.  Section 17  of
this  lease is hereby supplemented by adding the following terms,
which  when capitalized (or otherwise used) as below, shall  have
the following meanings:

     "Applicable Law":  shall also include any Applicable Permit.

      "Applicable  Permit":   any Permit, including  any  zoning,
environmental protection, pollution, sanitation, safety,  energy,
siting or building Permit that Lessee shall be required to obtain
to  comply  with  Applicable Law, including any  Permit  that  is
necessary   to  operate,  modify,  construct,  convey,  maintain,
acquire, own, lease, sublease or use the Equipment (including any
product  thereof), or related property, to own, lease or  operate
Lessee's  properties, conduct its business or necessary to  enter
into  any  of these Lease Documents or to consummate any  of  the
transactions contemplated thereby.

     "Claims":  shall also include all Environmental Claims.

      "Environmental  Claims":   any  Claims  by  a  Governmental
Authority or other person that are incurred, arise or effectuated
at  any  time  as a result of the existence of any  Environmental
Contamination or violation of any Environmental Law pertaining to
any   Equipment  or  related  property,  or  allegation  thereof,
regardless  of  whether the existence (alleged or  otherwise)  of
such   Environmental   Contamination   or   the   violation    of
Environmental  Law originated or resulted from the  Equipment  or
related  property  or  arose prior to the  present  ownership  or
operation  of the Equipment or related property, including:   (a)
Claims  for personal injury or injury to or destruction, loss  or
diminution  in  value of property or natural resources  occurring
to,  upon,  near  or  off  any  Equipment  or  related  property,
foreseeable or unforeseeable; (b) Claims relating to any Remedial
Action,   including   any  demolition  and  rebuilding   of   any
improvements  on  real  property; (c)  Claims  for  indemnity  or
reimbursement or for the disgorgement of amounts paid  to  Lessor
or  on  its  behalf,  or  resulting from any  failure  to  report
discharges promptly; and (d) Claims incurred for the services  of
attorneys,   engineers,   consultants,   contractors,    experts,
laboratories   and  all  other  costs  reasonably   incurred   in
connection with the investigation or Remedial Actions taken  with
respect  to  Hazardous Substances or violation  of  Environmental
Law,  including  the  preparation of any feasibility  studies  or
reports of the performance of any Remedial Action.

      "Environmental Contamination":  any existence,  uncontained
presence,  leak,  discharge, emission, aggregation,  release,  or
abandonment,  or threat or suspicion of any of the foregoing,  or
abandonment of Hazardous Substances in, upon, about, beneath,  or
off  the  Equipment  or  related property  or  arising  from  the
Equipment  or related property, that may require Remedial  Action
or  may result in a violation of any Environmental Law pertaining
to the Equipment or related property, or may result in Claims.

      "Environmental Law" or "environmental law":  any Applicable
Law  relating  to  safety, land use, pollution or  protection  of
human health or species of wildlife or plants or the environznent
(including ambient air, surface water, groundwater, land  surface
or   subsurface   strata),  including,  Laws  relating   to   (a)
maintenance of a public or private nuisance, (b) carrying  on  of
an  abnormally  dangerous activity, (c) industrial  hygiene,  (d)
Environmental  Contamination,  including  to  air,  water,  land,
groundwater  or  personal  property, (e)  withdrawal  or  use  of
groundwater,  (f) Hazardous Substances, including the  treatment,
manufacture, processing, distribution, use, analysis, generation,
storage, disposal, handling or transportation thereof and (g) any
regulation, order, notice or demand issued pursuant to such Laws,
in  each  case, applicable to Lessee or Lessor, the Equipment  or
any  related  property,  or the ownership or  operation  thereof,
including the following:  (i) the Clean Air Act, (ii) the Federal
Water  Pollution Control Act, the Clean Water Act  and  the  Safe
Drinking Water Act, (iii) the Toxic Substances Control Act,  (iv)
the  Comprehensive Environmental Response Compensation  Liability
Act of 1980, as amended ("CERCLA"), (v) the Resource Conservation
and  Recovery  Act ("RCRA"), (vi) the Solid and  Hazardous  Waste
Amendments of 1984, (vii) the Occupational Safety and Health Act,
(viii) the Emergency Planning and Community Right-to-Know Act  of
1978,  (ix)  the  Solid  Waste Disposal Act,  (x)  the  Superfund
Amendment  and  Reauthorization Act ("SARA"), (xi) the  Hazardous
Material  Transportation Act, (xii) the Endangered  Species  Act,
(xiii)  the  Federal Insecticide, Fungicide and Rodenticide  Act,
(xiv)  the  Environmental Laws listed on  Annex  No.  2  to  each
Equipment  Schedule and (xv) any other Applicable Laws addressing
matters similar to the foregoing Laws.

      "Hazardous Substances" or "hazardous substances":  any  and
all   hazardous  or  toxic  substances,  materials,  and  wastes,
including  any material, waste or substance which is (a)  oil  or
petrolewn, or their products or by-products (including sludge  or
residue),  chemical liquids or solid, liquid or gaseous  products
or  by-products, (b) asbestos, (c) polychlorinated biphenils,  or
(d)  designated as hazardous or toxic or regulated as such  under
any Applicable Law, including RCRA, CERCLA, SARA, the Clean Water
Act,  the  United  States Department of Transportation  Hazardous
Materials  Table  or by the Environmental Protection  Agency,  or
defmed  as  a  "hazardous  material,"  "hazardous  substance"  or
"hazardous waste" under any other Applicable Laws.

      "herein" "hereof," "hereunder," etc.:  in, of, under,  etc.
this  Lease  (and not merely in, of, under, etc. the  section  or
provision where the reference occurs).

      "related property": with respect to any Equipment, the land
and  buildings at which such Equipment is or shall become located
or  any personalty or real property (including any body of water)
to  or upon which the Equipment may now or hereafter be attached,
situated on or near, or adjacent to.

      "Remedial Action": any clean-up, remedial action,  removal,
response,    abatement,    containment,   closure,    excavation,
restoration  or  monitoring  where  undertaken  to  comply   with
Envirorunental  Law, whether or not required  by  any  Government
Authority, or reasonably necessary to make full economic  use  of
the Equipment or related property.

     B.   REPRESENTATIONS, WARRANTIES AND COVENANTS.  In addition
to  the  representations, warranties and  covenants  provided  in
Section  2  of this Lease, Lessee hereby represents, warrants  to
and covenants with Lessor that:

      With  respect  to the Equipment covered by  each  Equipment
Schedule:   (i)  There  are  no  applicably  permitted  Hazardous
Substances  contained therein or at, upon, under  or  within  any
related  property  that  does or shall  cause  Lessee  to  be  in
violation  of this Lease or Applicable Law; (ii) Lessee  has  not
caused  or permitted to occur, or suffered the occurrence of  and
shall  not  permit to exist, any condition which  may  cause  any
Environmental Contan-dnation of such Equipment or at, upon, under
or within any related property that does or shall cause Lessee to
be  in  violation  of  this Lease or result  in  a  violation  of
Applicable  Law;  (iii) neither Lessee, nor any other  party  has
been,  is  or  will  be involved in activities  relating  to  the
Equipment  or  any related property that could lead  to  (1)  the
imposition  of liability on Lessor, Lessee, or on any  subsequent
or  former owner or operator of the Equipment or (2) the creation
of  a  Lien on the Equipment under Applicable Law (including  any
Environmental Laws); (iv) Lessee has not perznitted, and will not
permit,  any person to engage in any activity @ could  result  in
the  imposition  of  liability under any  Environmental  Laws  on
Lessee,  Lessor  or  any owner or operator of the  Equipment,  or
would  otherwise  impair  Lessor's  rights  or  title  pertaining
thereto;  (v)  all  of the Environmental Laws applicable  to  the
Equipment,  or to the operation or ownership thereof, are  listed
on  Annex No. I to such Equipment Schedule, and Lessee is in full
compliance   therewith;   and  (vi)   all   Applicable   Permits,
registrations, or notices necessary for Lessee to comply with any
Applicable  Laws,  are listed on Annex No. 2  to  such  Equipment
Schedule,  Lessee has obtained, completed or given, as  the  case
may  be,  and is maintaining in good standing, all such Perraits,
registrations, filings or notices and is 'in full compliance with
all  of  the terms thereof, all actions necessary for the renewal
thereof  have  timely been taken (including  the  filing  of  any
applications);  and all of the foregoing are in  full  force  and
effect and there are no proceedings or investigations pending or,
to  the  best  knowledge  of  Lessee, threatened  that  seek  the
revocation,  cancellation,  suspension  or  adverse  modification
thereof.

      C.    NOTICES.   In  addition to the  notices  required  by
Section 3 of this Lease, Lessee shall provide, vm'tlen notice  to
Lessor (i) promptly upon Lessee becoming aware of (A) any alleged
violation  of  Applicable Law, or (B) any  threatened  or  actual
suspension,  revocation or recision of any Permit  necessary  for
Lessee  to  be  in  compliance with the terms hereof-,  and  (ii)
promptly  after  any  of  the  Equipment  becomes  lost,  stolen,
missing, destroyed, materially damaged, wom out, or subject to or
causing,    or    threatening   to   cause,   any   Environmental
Contamination.

      D.    CONDITIONS PRECEDENT.  In addition to the  conditions
precedent  set  forth  in  Section  4  of  this  Lease,  Lessor's
obligations  under  each Equipment Schedule  (including  Lessor's
obligation  to purchase and participate in the financing  of  the
Equipment to be leased thereunder) are conditioned upon  Lessor's
having  received  all  of the following, in  form  and  substance
satisfactory to Lessor, at least two (2) business days  prior  to
the  date  upon  which  Lessor purchases  the  Equipment  or  has
committed  to  purchase  same  (if sooner):  (i)  to  the  extent
requested by Lessor, a report, audit or opinion, as the case  may
be,  from an appraiser, environmental engineer, or other  expert,
regarding any matters specified by Lessor (1) including the value
of  the  Equipment  as  of the effective date  of  the  Equipment
Schedule,  and  at  the expiration of the Initial  Term  and  any
Renewal Term, or (2) the then existing condition of the Equipment
or  any  of the related property, including, the absence  of  any
past  or  existing  violations of Applicable Law  (including  any
Envirorunental  Laws);  and  (ii) if  Lessor  is  purchasing  the
Equipment   from  Lessee,  (1)  all  of  the  operating   records
pertaining to the storage or transportation of the Equipment  and
any Envirorunental Contamination relating to the Equipment or the
related  property and (2) copies of all enforcement  actions  for
alleged  violations  of Applicable Laws (including  Environmental
Laws),  and  any  and  all  information  concerning  any  pending
investigations  pertaining to alleged  violations  of  Applicable
Laws (including any Environmental Laws).

      E.    USE AND MAINTENANCE.  In addition to the requirements
of  Section  6 of this Lease, and without limiting the generality
of  subsection (a) of Section 4 of this Lease, Lessee  agrees  to
comply  strictly  and  in all respects with all  Applicable  Laws
(including all Environmental Laws) pertaining to the Equipment or
related  property (without regard to which person such Applicable
Laws  shall, by their terms, be nominally imposed), unless Lessee
shall  be  contesting the validity thereof in good faith  and  by
appropriate proceedings, but only so long as Lessee's failure  to
so  comply during the existence of such proceedings shall not (i)
involve any material risk of the sale, forfeiture or loss of such
Equipment,  or any part thereof or interest therein, (ii)  result
in,  or involve any substantial probability of resulting in,  the
creation  of any Lien (other than a Permitted Lien)  on  or  with
respect  to  such  Equipment, or any  part  thereof  or  interest
therein, and (iii) involve the risk of the imposition of civil or
criminal  fines or penalties on Lessor, Lessee, or  generally  to
the  operators or holders of title to or other interests  in  the
Equipment,  Lessee  will  maintain all records,  logs  and  other
materials   required   by  any  Governmental   Authority   having
jurisdiction  to  be  maintained in  respect  of  any  Equipment,
without  regard to which person any such requirements  shall,  by
their  terms, be nominally imposed.  Lessee will procure and  pay
for  all  Permits, franchises, inspections and licenses necessary
or  appropriate in connection with any Equipment and any  repair,
restoration,  replacement,-  renewal,  addition  or   improvement
thereof  and thereto that may be required pursuant to  the  first
sentence  of  this paragraph.  Lessee shall promptly  forward  to
Lessor  copies  of all orders, notices, Permits, applications  or
other communications and reports in connection with any discharge
or  the presence of any Hazardous Substances or any other matters
relating to the Environmental Laws or similar Applicable Laws, as
they  may  affect Lessee, the Equipment or Lessor's  or  Lessee's
right,  title,  or interest therein.  Promptly upon  the  written
request of Lessor, from time to time, Lessee shall provide Lessor
with   environmental  site  assessments  or  environmental  audit
reports  prepared by an environmental engineering firm acceptable
to  Lessor,  to assess with a reasonable degree of certainty  the
presence or absence of any Hazardous Substances and the potential
cost  in  connection with any Remedial Action pertaining  to  the
Equipment or related propertv.

      F.   DISCLAIMER OF WARRANTIES.  In addition to the waivers,
disclaimers  and  acknowledgements made in  the  Lease  and  each
Equipment Schedule, Lessee further acknowledges that: Lessor  has
made  the Equipment available to Lessee for examination, demanded
that  Lessee  inspect the Equipment using a professional  in  the
field  of  inspections  pertaining to such  Equipment  (including
compliance with the Environmental Laws), and Lessee has, pursuant
to  such demand examined the Equipment (using such an experienced
inspector);  the Equipment is not to be used, and  is  not  being
acquired hereby, for use in any respect for Lessee's or any other
person's  personal or family purposes, and as such, the Equipment
does  not  constitute "consumer goods" as such  term  is  defined
under Applicable Law; the Equipment was selected by Lessee on the
basis  of its own respective judgment, Lessee has not asked  for,
been  given  or  relied  upon  any  statements,  representations,
guaranties or warranties of Lessor; Lessor is not in the business
of  manufacturing  or assembling Equipment or  otherwise  in  the
business  of  being a vendor or supplier, but is instead  in  the
business  of  providing financial accommodations including  lease
financing; AND THE PROVISIONS OF THIS PARAGRAPH F AND  SECTION  7
OF  THIS  LEASE  HAVE BEEN NEGOTIATED BY LESSOR AND  LESSEE  AND,
EXCEPT  FOR THE WARRANTY MADE BY LESSOR IN SECTION 16(d)  HEREOF,
ARE  INTENDED  TO  BE A COMPLETE EXCLUSION AND  NEGATION  OF  ANY
REPRESENTATIONS, GUARANTIES, OBLIGATIONS OR WARRANTIES OF  LESSOR
EXPRESS  OR IMPLIED WITH RESPECT TO THE EQUIPMENT THAT MAY  ARISE
PURSUANT TO ANY APPLICABLE LAW (INCLUDING ANY ENVIRONMENTAL  LAW)
NOW OR HEREAFTER IN EFFECT.

      G.   INSURANCE.  In addition to the requirements of Section
10  of this Lease, to the extent available, both the casualty and
liability  insurance coverage shall insure  against  loss  of  or
damage  to  the  Equipment, or liability  to  Lessor  or  Lessee,
resulting from Environmental Claims; provided, that Lessee  shall
be available at an aggregate cost, with respect to the Equipment,
of  no  greater  than  2.5% of the Total  Invoice  Cost  thereof;
provided, further, that notwithstanding the then current cost  of
said coverage, Lessee shall obtain such coverage to the extent it
is  typically obtained and maintained by companies and businesses
similar  to  Lessee,  in  connection  with  their  ownership   or
operation  of, or other activities in connection with,  equipment
that is the same as or similar to the Equipment, or to the extent
Lessee  currently  maintains such coverage with  respect  to  its
other similar equipment.  All said insurance shall be in form and
amount and with companies reasonably satisfactory to Lessor.

     H.   REDELIVERY.  In addition to the requirements of Section
12  of  this  Lease,  Lessee  agrees that  with  respect  to  any
Equipment or item thereof that Lessee shall be required to return
or  turn  over to Lessor, to the extent the continued  possession
and  operation of the Equipment or item of Equipment is necessary
for  Lessee  to remain in compliance with Applicable Law,  Lessee
shall  immediately replace such Equipment or item  of  Equipment,
and  in  any event, Lessee shall not upon such removal  take  any
action or fail to take any action the effect of which will result
in  a  violation  of Applicable Law (including any  Environmental
Law);  and without limiting the generality of any other provision
hereof,  Lessee  agrees  to  return such  Equipment  or  item  of
Equipment  to  Lessor,  free from any  Hazardous  Substances,  an
dispose  of  such  Hazardous Substances in  compliance  with  all
Applicable Law.

       I.     REMEDIES.   Section  14  of  the  Lease  shall   be
supplemented as follows: (a) Lessee agrees remedies  provided  in
Section  14 and certain other Sections, of this Lease shall  also
expressly  include  the  right to take  Remedial  Action  and  be
reimbursed, made whole, indemnified, held harmless and  otherwise
protected  by  Lessee  against any resulting  or  related  Claims
incurred or suffered in connection therewith; except that  Lessee
agrees  that  Lessor shall not have any obligation whatsoever  to
undertake  or  consummate the same or to  take  or  refrain  from
taking  any  other  action,  with respect  thereto  or  otherwise
relating  to  or  arising  in connection with  any  Environmental
Claim,   Environmental  Contamination,  Enviroiunental   Law   or
Hazardous Substance pursuant to the pertinent terms of this Lease
including Sections 12, 13 and 14;

      (b)   Lessee agrees that to the extent Lessor's ability  to
dispose of the Equipment in a commercially reasonable manner  may
be impeded by any violations of Applicable Law that have occurred
with  respect thereto, or Lessor's actions with respect  to  same
might  result  in an Environmental Claim, Lessee  hereby  waives,
without limiting the generality of any other waivers, disclaimers
or  indemnities  herein,  any claim,  right,  action  or  defense
otherwise available to it against Lessor in connection with  such
disposition   or  Lessor's  deficiency  claim.    Lessee   hereby
acknowledges  that:   (i) Lessor's election  to  dispose  of  the
Equipment any any point after a Default has occurred with respect
to  an Equipment Schedule may be affected by the Equipment's non-
compliance  with the provisions hereof; (ii) Lessee, pursuant  to
its  represenations,  agreements and  indemnities  hereunder,  is
ultimately  responsible to Lessor fo rany  harms  (including  any
Enviornmental Claims) suffered by Lessor in connection  with  any
such   non-compliance;  and  (iii)  to  avoid  or  mitigate   the
imposition  of Claims (including Environmental Claims)  resulting
from  such  non-compliance it willbenefit  Lessee  even  if  such
efforts (which may include abandoning the Equipment or selling it
expeditiously or after an extended period) result in there  being
a  deficiency,  or  greater amount thereof, under  the  Equipment
Schedules;  and  (iv)  and  furtherance  thereof,  Lessee  hereby
waives,  without  limiting the generality of any  other  waivers,
disclaimers  or indemnities herein, any claim, right,  aciton  or
defense  otherwise available to it against Lessor  in  connection
with such disposition or deficiency claim.

      J.    EFFECT OF RIDER.  Except as supplemented hereby, this
Lease  remains unmodified by the provisions of this Rider,  which
provisions  are, for all purposes, hereby incorporated  into  and
made a part of this Lease and each Equipment Schedule.

ALLY CAPITAL CORPORATION           ELECTROSOURCE, INC.

By:       /s/                      By:         /s/
Name:  James A. Kamradt            Name:  James M. Rosel
Title: Vice President-Production   Title: Vice President
                                          Finance, Law & Contracts

                            Annex No. 1
                        Environmental Laws
                                 
     1.   Resource Conservation and Recovery Act (RCRA)
               Section 3010, Subtitle C
               Classification:  Small Quantity Generator of Hazardous Waste

     2.   National Pollutant Discharge Elimination System (NPDES)

     3.   Texas Natural Resource Conservation Commission  (TNRCC) Notice of 
               Registration Section 335, Chapter 31 of Texas Administrative
               Code (specifies the notification, recordkeeping, manifesting
               and reporting requirements)

     4.   Occupational Safety and Health Act
               Standards for General Industry (29 CFR 1910)
                    Lead Standard 29 CFR 1910.1025

                            Annex No. 2
                        Applicable Permits
                                 
     1.   Environmental Protection Agency
               Identification Number:  TXD988087219
               Region 9

     2.   National Pollutant Discharge Elimination System (NPDES)
               Storm Water General Permit Number TXR00F121

     3.   Texas Natural Resource Conservation Commission (TNRCC) Notice
               of Registration Solid Waste Registration Number:  81162
               County:  105 Hays
               Air Quality Identification Number:  HK-0077-L
                      Constructed under Standard Exemption (SE) 76, and
                      currently operated under SE 39, 50, 51, 61, 106, and
                      118 per authorization dated January 9, 1995.
                      Draft Air Permit Application is expected to be
                      submitted in final form as New Source Review Permit 
                      to TNRCC before the end of April, 1995.

     4.   Texas Department of Public Safety
                Permit for Precursor Chemicals and/or Laboratory Apparatus 
                      Number 1905

     5.   City of San Marcos Industrial User Permit
                Section 30-94 of Ordinance Number 1991-55 or as amended
                      Industrial User Permit Number:  930201
                National Categorical Standards (battery) CFR 461.35

                                                  Rider No.   02

This  Rider  is  a  part of that certain Equipment Lease  Agreement
dated  as  of  April  6, 1995 (this "Lease") between  ALLY  CAPITAL
CORPORATION ("Lessor") and ELECTROSOURCE, INC. ("Lessee").

In  addition to and without limiting any of the other provisions of
this  Lease,  Lessee  and  Lessor hereby  agree  to  the  following
covenants:

1) Lessee  shall  issue  to Lessor a Warrant to  purchase  Lessee's
   Common Stock on the terms set forth in the Warrant.

2) Lessee  shall,  during  the  full Term  of  the  Lease,  provide
   financial  statements on a quarterly basis to Lessor, within  60
   days of said quarter's end.

3) Lessee  shall,  during  the full Term.  of  the  Lease,  provide
   internal  company projections on a semi-annual basis to  Lessor,
   due  by  June 30th and December 30th annually.  Additionally,  a
   revised  company Business Plan shall be sent to Lessor as  often
   as it is updated by the company.

4) Lessee  shall,  during  the  full Term  of  the  Lease,  provide
   minutes to the Board of Director's meetings to Lessor, within  5
   business  days  of  said  meeting.   Lessee  shall  allow  David
   Sinutko,   Lessor's   designated  representative,   and/or   his
   designee  to attend Lessee's board meetings.  Lessee  shall  use
   its  best effort to provide Lessor at least 10 days prior notice
   of such meeting.

5) Lessee  shall provide Lessor with a 40% security deposit in  the
   form   of  a  letter  of  credit  in  favor  of  Lessor  or,   a
   certificate: of deposit held by Lessee pledged to Lessor.   Upon
   Lessee  achieving two (2) consecutive quarters of profitability,
   the  security  deposit shall be reduced to 25%.   Upon  two  (2)
   additional  consecutive quarters of profitability, for  a  total
   of  (4)  consecutive quarters, the security  deposit  shall  be,
   reduced  to  15%  with the balance released upon (2)  additional
   consecutive  quarters  of profitability,  for  a  total  of  (6)
   consecutive quarters or, a secondary public offering  by  Lessee
   raising  at least $20,000,000 net to Lessee.  These funds  shall
   be  released  provide  there is no material  adverse  change  in
   Lessee's  financial  position, Lessee is  not  in  default,  and
   Lessee is generally on plan per its projections dated March  20,
   1995.   In  the event Lessee does not meet the requirements  for
   early  release of the letter of credit or certificate of deposit
   during  the  Term  of  the  Lease,  the  letter  of  credit   or
   certificate  of  deposit  shall  be  fully  discharged  at   the
   successful termination of the Lease

6) Lessee  shall  not  pledge or encumber any of  its  intellectual
   property, including technology licenses, without Lessor's  prior
   written consent.

7) Lessee  shall  obtain for Lessor an Intercreditor  Agreement  to
   Lessor's  satisfaction between any future  secured  Lenders  and
   Lessors of Lessee.

Except as supplemented hereby, this Lease remains unmodified by the
provisions  of this Rider, which provisions are, for all  purposes,
hereby  incorporated into and made a part of this  Lease  and  each
Equipment Schedule.

ALLY CAPITAL CORPORATION          ELECTROSOURCE, INC.


By:          /s/                 By:        /s/
Name:  James A. Kamradt          Name:  James  M. Rosel
Title: Vice President-Production Title: Vice President
                                        Finance, Law & Contracts

                                                   RIDER NO.  03
                            TEXAS RIDER

This  Rider  is  a  part of that certain Equipment Lease  Agreement
dated  as  of  April  6,  1995 (the "Lease") between  ALLY  CAPITAL
CORPORATION ("Lessor") and ELECTROSOURCE, INC. ("Lessee").

In  addition to and without limiting any of the other provisions of
the Lease, Lessee and Lessor hereby agree to the following:

  CONTINGENT  MAXIMUM  INTEREST RATE.   Lessor  and  Lessee  are
  corporations managed by individuals with substantial  business
  and  commercial  experience,  and  have  been  represented  by
  competent  counsel  at all stages of the  negotiation  hereof.
  Lessor  and Lessee desire that their relations be governed  by
  the laws of the state of California, and particularly that the
  law  of  the  state of California rather than the law  of  the
  state of Texas shall control in all respects, especially  with
  respect  to the maximum rate of interest that may be  lawfully
  charged.   Lessee on behalf of itself and its  successors  and
  assigns  waives any rights or remedies it may have  under  any
  provision of article 5069 or any successor provisions  thereto
  of  the Texas civil statutes and reiterates that in any  event
  said provision is without application to the relations of  the
  parties hereto.  This rider is required by Lessor pursuant  to
  its standard policies and documentation employed in connection
  with transactions having any contacts with the state of Texas.
  In  the  event,  and only in the event, that  Texas  law  with
  respect  to interest rates is applied to this transaction,  an
  event  that  both lessee and lessor acknowledge  would  be  in
  direct violation of their intention at the date hereof and  at
  any  conceivable time thereafter, then regardless of any other
  provision hereof, the interest rate contracted for, charged or
  received   herein  shall  be  the  maximum  amount   permitted
  thereunder, and if Lessor is deemed to contract for, charge or
  receive  amount that could be construed as interest in  excess
  thereof,  then said excess shall in no event be considered  as
  interest  but rather as amounts applied to an early penalties,
  and any remaining excess thereafter shall be promptly refunded
  to  Lessee,  and Lessor shall not be subject to any  penalties
  for  contraction for, charging or receiving interest in excess
  of  the  permitted amount.  The undersigned representative  of
  Lessee  represents and warrants to Lessor (A) that  he/she  is
  commercially  sophisticated (B) has read and understands  this
  paragraph   and   (C)  that  Lessee  has   no   intention   of
  characterizing any provision hereof as governed by Texas law.

Failure by Lessee to comply with the conditions of this Rider shall
constitute a Default under the Lease.

Except as supplemented hereby, the Lease remains unmodified by  the
provisions  of this Rider, which provisions are, for all  purposes,
hereby  incorporated into and made a part of  the  Lease  and  each
Equipment Schedule.

ALLY CAPITAL CORPORATION         ELECTROSOURCE, INC.

By:          /s/                 By:        /s/
Name:  James A. Kamradt          Name:   James M. Rosel
Title: Vice President-Production Title:  Vice President
                                         Finance, Law & Contracts