ELECTROSOURCE INC
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<TYPE>EX-10
<SEQUENCE>2
<FILENAME>0002.txt
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                       CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT (the "Agreement"), made effective
the 31st day of July, 2000, is between ELECTROSOURCE, INC.
("Electrosource"), a Delaware corporation, having its principal
offices at 2809 Interstate 35 South, San Marcos, Texas 78666 and
Audrey Dearing, (Consultant) having her principal place of
business at Pflugerville, Texas.

                       W I T N E S S E T H:

     WHEREAS, Consultant possesses knowledge and experience in
Corporate Governance Matters, Annual Meeting of Shareholders,
Corporate Records, Stock Transfer, Securities Markets, Directors
and Officers Matters, and Compliance/Regulatory Matters (basic
Corporate Secretary Duties and Responsibilities); and

     WHEREAS, Electrosource desires the assistance of Consultant;

     NOW, THEREFORE, in consideration of the promises and the
mutual agreements hereinafter contained, the parties hereto
intending to be legally bound, agree as follows:

1.   Term

     1.1  Electrosource hereby engages Consultant as independent
contractor for a term commencing on July 31, 2000 and ending on
July 31, 2001.

     1.2  Electrosource shall have the right to extend this
Agreement by written notification at the same rate of
compensation provided for in Section 3 by written notice not less
than two (2) weeks prior to the last day of the initial term of
this Agreement or Amendment to same.

     1.3  Electrosource may cancel this Agreement at its sole
discretion with thirty (30) days advance written notice to
Consultant.  Electrosource's sole liability will be for hours
worked at the rate specified, and for reasonable travel or
business expenses incurred in accordance with Section 4.

     1.4  Notwithstanding any other provision of this Agreement,
if Consultant breaches any of its provisions, Electrosource may
terminate this Agreement immediately upon written notice to
Consultant.

     1.5  Upon termination of this Agreement in accordance with
any of its provisions, Electrosource shall have no obligation to
make further payments to Consultant for services performed after
notice is received by Consultant.  Notice may be hand carried or
sent by certified mail.  Notice is effective upon receipt or
within five (5) days of mailing, whichever is earlier.

2.   Duties

     2.1  Consultant shall use her best efforts to assist
Electrosource with respect to all matters pertaining to Corporate
Secretary duties and responsibilities, as well as governing
history of Electrosource. Consultant shall not during the term of
this Agreement accept any other engagement as consultant, or
enter into any employment relationship, with respect to which any
portion of her duties would entail assisting any other entity in
the field of energy storage or batteries. Consultant shall be
reasonably available on an on-call, as-needed basis to perform
such advising and consulting duties as may be assigned from time
to time by Electrosource. Such consulting services shall be
provided either at the offices of Electrosource or Consultant, or
at such other locations as the parties may agree.

     2.2  Specific duties shall include, but not be limited to,
serving the particular needs of Benny E. Jay, Don Perriello and
others designated by either.

3.   Compensation

     As full compensation for the services which Consultant
renders to Electrosource under this Agreement, Electrosource
shall pay to Consultant $60.00 per hour.  Invoices Consultant
submits to Electrosource for services rendered shall include the
heading "a professional consulting firm (or individual)."

4.   Expenses

     Electrosource shall reimburse Consultant for all proper and
reasonable expenses incurred by her pursuant to Consultant's
consulting duties.  Such expenses may include necessary actual
expenses of out-of-town travel costs, communications, hotel
accommodations, meals and the like provided that Consultant shall
keep receipts and provide Electrosource an accurate and complete
accounting of all such expenses so incurred, and shall obtain
Electrosource's prior written consent to any such expenses.
Reimbursement of expenses will be issued within ten (10) days of
receipt of complete accounting, with receipts, of same.

5.   Confidential and Proprietary Information

     5.1  The parties agree that from time to time during
performance of this Agreement confidential or proprietary
technical or business information may be provided either orally
or in written form to Consultant. Consultant shall keep
confidential all such information furnished by Electrosource and
safeguard same from disclosure or use by any unauthorized
individuals for any purpose other than in performance of this
Agreement.

     5.2  Consultant shall restrict the disclosure of
Electrosource's confidential and/or proprietary technical and
business information to those of her employees who need to know
the same for purposes of carrying out this contract, and
Consultant shall have non-disclosure agreements with all such
persons.  Consultant shall advise all such employees of
Consultant's obligations of confidentiality under this Agreement.

     5.3  In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees promptly
to deliver to Electrosource all written information of any sort
made available to Consultant or created by it under the terms of
this Agreement.

     5.4  Work product created by Consultant shall become the
confidential proprietary property of Electrosource.  Consultant
agrees to treat such work product in the same manner as
confidential proprietary information of Electrosource.
Consultant agrees that any remedy at law would be inadequate or a
violation of this provision; consequently, Consultant agrees that
Electrosource is entitled to obtain an injunction against
Consultant's disclosure of any confidential proprietary
information.

     5.5  Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under this Section 5.

6.   Classified Information

     6.1  Except in connection with authorized visits, classified
material shall not be possessed by the Consultant off the
premises of the Company.  The Company shall not furnish
classified material to the Consultant at any other location than
the premises of the Company and performance of the consulting
services by the Consultant shall be accomplished at the premises
of the Company; and classification guidance will be provided by
the Company.

     6.2  The Consultant and her certifying employees shall not
disclose classified information to unauthorized persons.

     6.3  Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the Consultant's
performance.

7.   Works of Authorship and Inventions

     7.1  Consultant shall convey to Electrosource all rights to
each work of authorship, whether or not patentable, which is
conceived, developed, written, or reduced to practice by
Consultant in performing the requirements of this Agreement.
Consultant agrees to execute all necessary patent and copyright
applications, assignments and other instruments at
Electrosource's expense and to give all lawful and proper
testimony in aid of Electrosource obtaining and maintaining in
its name full and complete patent protection on any such
invention.  Before final payment is made under this Agreement,
Consultant shall furnish Electrosource complete information with
respect to any invention and all work product subject to this
Section.

     7.2  Consultant hereby irrevocably appoints each officer and
director of Electrosource as her attorney-in-fact for purposes of
filing any applications or assignments necessary to properly
reflect the sole ownership by Electrosource of any invention or
work of authorship subject to this Section.

8.   Assignment and Subcontracting

     Neither this Agreement nor its performance, either in whole
or in part, shall be assigned or subcontracted by Consultant to a
third party without, in each case, the prior written consent of
Electrosource.

9.   No Conflicts

     9.1  Consultant represents and warrants that:

          (a)  She has full authority to enter into this
Agreement and to perform her obligations hereunder; and

          (b)  Performance by Consultant of her obligations
hereunder will not be in conflict with any other of her
obligations.

     9.2  Consultant shall advise Electrosource's General Counsel
of all clients under similar agreement to her within five (5)
days after execution of this Agreement.  Consultant shall not
contract for additional clients without first having notified
Electrosource in writing.

     9.3  Notwithstanding any other provision of this Agreement,
Electrosource shall have the right to terminate this Agreement
if, in Electrosource's sole opinion, a conflict of interest rises
or may arise between Consultant's representation of Electrosource
and its representation of its other clients.  Such termination
shall become effective upon five (5) days written notification by
Electrosource.

10.  Independent Contractor

     Consultant's relationship to Electrosource shall be solely
to provide personal services on an independent contractor basis.
In this capacity, Consultant will not be a regular employee of
Electrosource and will not be entitled to worker's compensation
coverage, unemployment insurance, or any other type or form of
insurance or benefit normally provided by Electrosource for its
employees, and Electrosource will not be responsible for
withholding federal income or social security taxes from the fees
paid to Consultant. The Consultant will be solely responsible for
reporting and paying all Federal, State and Local taxes arising
from her performance of this Agreement. The consultant is
generally free to perform the services hereunder in any manner
desired, subject to satisfactory completion of the subject task.

11.  Notice

     A notice communicated to Electrosource shall be sent to Don
Perriello, Vice President-Finance/CAO, Electrosource, Inc., 2809
Interstate 35 South, San Marcos, Texas 78666, or to such other
place or places as Electrosource by notice in writing shall
specify. Any notice to be served shall be deemed to be served if
the same be sent by registered or certified mail through the
United States mail, addressed to the party on which service is to
be effected at the address stated in the immediately preceding
sentences and shall be deemed to have been received on the day
indicated on the return receipt relating thereto.

12.  Binding Agreement

     This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of Electrosource and to the
successors and assigns of Consultant.

13.  Modification

     This Agreement supersedes all prior agreements or
understandings between Consultant and Electrosource relating to
the subject matter hereof, and no change, termination or
attempted waiver of any of the provisions hereof shall be binding
unless reduced to writing and signed by duly authorized officers
of Electrosource and by Consultant.

14.  Construction

     This Agreement shall be construed in accordance with the
laws of the State of Texas. Consultant hereby submits to the
continuing jurisdiction of the laws and the courts of the State
of Texas in the prosecution of any interpretation or dispute
under or arising out of this Agreement. Should any portion of
this Agreement be adjudged or held to be invalid, unenforceable
or void, such judgment shall not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties
hereto agree that the portion to be held invalid, unenforceable
or void shall, if possible be deemed amended or reduced in scope
or to otherwise be stricken from this Agreement to the extent
required for the purposes of validity and enforcement thereof.





     IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.

ELECTROSOURCE, INC.      CONSULTANT



By:                   /s/                                   By:     /s/

Printed Name:  Benny E. Jay, President/CEO     Printed Name: Audrey T. Dearing

Date:          July 31, 2000                   Date:         July 31, 2000

                                               SOCIAL SECURITY NUMBER OR
                                               FEDERAL IDENTIFICATION NUMBER:
                                                             ###-##-####

WITNESS:


By:                     /s/

Printed Name:   Donald C. Perriello

Date:           July 31, 2000

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