WARRANT

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHIN THE UNITED STATES (AS THE TERM IS DEFINED IN REGULATION S
PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS
DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.

No. W-010                    Warrant to Purchase 169,333 Shares of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                            VALENCE TECHNOLOGY, INC.

                            VOID AFTER JUNE 29, 2003

This certifies that, for value received, ACQUA WELLINGTON VALUE FUND LIMITED, or
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase from Valence Technology, Inc. (the "Company"), a Delaware
corporation, 169,333 shares of the Common Stock of the Company, as constituted
on the date hereof (the "Warrant Issue Date"), upon surrender hereof, at the
principal office of the Company referred to below, with the subscription form
attached hereto duly executed, and simultaneous payment therefore in lawful
money of the United States or otherwise as hereinafter provided, at the Exercise
Price as set forth in SECTION 2 below. The number, character and Exercise Price
of such shares of Common Stock are subject to adjustment as provided below. The
term "Warrant" as used herein shall include this Warrant and any warrants
delivered in substitution or exchange therefore as provided herein.

1. TERM OF WARRANT. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, during the term commencing on
the Warrant Issue Date and ending at 5:00 p.m., Pacific Standard Time, on June
29, 2003 (the "Warrant Expiration Date"), and shall be void thereafter.

2. EXERCISE PRICE. The Exercise Price at which this Warrant may be exercised
shall be $18.4547 per share of Common Stock, as adjusted
from time to time pursuant to SECTION 11 hereof.

3. EXERCISE OF WARRANT.

     3.1 The purchase rights represented by this Warrant are exercisable by the
Holder in whole or in part, but not for less than 1,000 shares at a time (or
such lesser number of shares which


<PAGE>


may then constitute the maximum number purchasable; such number being subject to
adjustment as provided in SECTION 11 below), at any time, or from time to time,
during the term hereof as described in SECTION 1 above, by the surrender of this
Warrant and the Notice of Exercise annexed hereto duly completed and executed on
behalf of the Holder, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the Holder at
the address of the Holder appearing on the books of the Company), upon payment
(i) in cash or by check acceptable to the Company, (ii) by cancellation by the
Holder of indebtedness of the Company to the Holder, or (iii) by a combination
of (i) and (ii), of the purchase price of the shares to be purchased.

     3.2 This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of record of
such shares as of the close of business on such date. As promptly as practicable
on or after such date and in any event within ten (10) days thereafter, the
Company at its expense shall issue and deliver to the person or persons entitled
to receive the same a certificate or certificates for the number of shares
issuable upon such exercise. In the event that this Warrant is exercised in
part, the Company at its expense will execute and deliver a new Warrant of like
tenor exercisable for the number of shares for which this Warrant may then be
exercised.

4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the Exercise Price multiplied by such
fraction.

5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of loss, theft, or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company shall
execute and deliver, in lieu of this Warrant, a new warrant of like tenor and
amount. The Holder shall reimburse the Company for all reasonable expenses
incidental to replacement of this Warrant under this SECTION 5.

6. RIGHTS OF STOCKHOLDERS. Subject to SECTIONS 9 and 11 of this Warrant, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised and
the shares of Common Stock purchasable upon the exercise hereof shall have been
issued, as provided herein.


                                     Page 2
<PAGE>


7. TRANSFER OF WARRANT.

     7.1 WARRANT REGISTER. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
holder of this Warrant or any portion thereof may change his address as shown on
the Warrant Register by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant is
transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.

     7.2 WARRANT AGENT. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 7.1 above, issuing the Common Stock or other securities then issuable
upon the exercise of this Warrant, exchanging this Warrant, replacing this
Warrant, or any or all of the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be, shall be made at the
office of such agent.

     7.3 TRANSFERABILITY AND NON-NEGOTIABILITY OF WARRANT. The Holder, by
acceptance hereof, agrees that, absent an effective registration statement filed
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT") covering the disposition or sale of
this Warrant or the Common Stock issued or issuable upon exercise hereof, as the
case may be, and registration or qualification under applicable state securities
laws, such Holder will not sell, transfer, pledge, or hypothecate any or all of
this Warrant or such Common Stock, as the case may be, unless either (i) the
Company has received an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
required in connection with such disposition or (ii) the sale of such securities
is made pursuant to SEC Rule 144.

     7.4 EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for
exchange, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Securities Act and with the
limitations on assignments and transfers and contained in this SECTION 7, the
Company at its expense shall issue to, or on the order of, the Holder a new
warrant or warrants of like tenor, in the name of the Holder or as the Holder
(on payment by the Holder of any applicable transfer taxes) may direct, for the
number of shares issuable upon exercise thereof.

     7.5 COMPLIANCE WITH SECURITIES LAWS.

         (a) The Holder, by acceptance hereof, acknowledges that this Warrant
and the shares of Common Stock to be issued upon exercise hereof are being
acquired solely for the Holder's own account and not as a nominee for any other
party, and for investment, and that the Holder will not offer, sell, or
otherwise dispose of this Warrant or any shares of Common Stock to be issued
upon exercise hereof except under circumstances that will not result in a
violation of the Act or any state securities laws. Upon exercise of this
Warrant, the Holder shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the shares of Common Stock so purchased
are being acquired solely for the Holder's own account and not as a nominee for
any other party, for investment, and not with a view toward distribution or
resale.


                                     Page 3
<PAGE>


         (b) The Holder is not a "U.S. Person" within the meaning of Rule 902(k)
of Regulation S.

         (c) The Warrant was not offered to the Holder in the United States and
at the time of execution of this Warrant and at the time of any offer to the
Holder to enter into this Warrant, the Holder was physically outside of the
United States.

         (d) The Holder is acquiring the Warrant in an "offshore transaction"
(as defined in Rule 902(h) of Regulation S).

         (e) The Holder, by acceptance hereof, acknowledges that the Company has
the exclusive right at its sole discretion to refuse to register any transfer of
the shares of Common Stock to be issued upon exercise of this Warrant not made
in accordance with the provisions of Regulation S promulgated under the
Securities Act of 1933, as amended.

         (f) This Warrant and all shares of Common Stock issued upon exercise
hereof shall be stamped or imprinted with a legend in substantially the
following form (in addition to any legend required by state securities laws):

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE
         REGULATIONS PROMULGATED THEREUNDER, THE "SECURITIES ACT"), AND MAY NOT
         BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHIN
         THE UNITED STATES (AS THE TERM IS DEFINED IN REGULATION S PROMULGATED
         UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS DEFINED
         IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
         FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS
         AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. HEDGING TRANSACTIONS
         INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
         WITH THE SECURITIES ACT.

8. RESERVATION OF STOCK. The Company covenants that during the Term this Warrant
is exercisable, the Company will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Common Stock
upon the exercise of this Warrant and, from time to time, will take all steps
necessary to amend its Certificate of Incorporation (the "Certificate") to
provide sufficient reserves of shares of Common Stock issuable upon exercise of
the Warrant. The Company further covenants that all shares that may be issued
upon the exercise of rights represented by this Warrant, upon exercise of the
rights represented by this Warrant and payment of the Exercise Price, all as set
forth herein, will be free from all taxes, liens, and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein). The Company agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty to executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the exercise of this
Warrant.


                                     Page 4
<PAGE>


9. NOTICES.

     9.1 In case:

         (i) The Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive any dividend or other distribution,
or any right to subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right, or

         (ii) of any capital reorganization of the Company, any reclassification
of the capital stock of the Company, any consolidation or merger of the Company
with or into another corporation, or any conveyance of all or substantially all
of the assets of the Company to another corporation, or

         (iii) of any voluntary dissolution, liquidation of winding-up of the
company, then, and in each such case, the Company will cause to be mailed by
first class or certified mail receipt requested postage prepaid to the Holder a
notice specifying, as the case may be, (A) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (B) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Such notice shall be mailed
at least 5 days prior to the date therein specified.

     9.2 MANNER OF NOTICE. Except as may be otherwise provided herein, all
notices, requests, waivers and other communications made pursuant to this
Warrant shall be in writing and shall be conclusively deemed to have been duly
given (a) when hand delivered to the other party; (b) when received when sent by
facsimile at the address and number set forth below; (c) three business days
after deposit in the U.S. mail with first class or certified mail receipt
requested postage prepaid and addressed to the other party as set forth below;
or (d) the next business day after deposit with a national overnight delivery
service, postage prepaid, addressed to the parties as set forth below with
next-business-day delivery guaranteed, provided that the sending party receives
a confirmation of delivery from the delivery service provider.

To Holder:                                  To the Company:

____________________________                Valence Technology, Inc.
____________________________                301 Conestoga Way
____________________________                Henderson, Nevada  89015
____________________________                Attn:  Jay L. King, Chief Financial
____________________________                            Officer
____________________________                Fax Number:  (702) 558-1001


                                     Page 5
<PAGE>


With copies to:                             With copies to:

____________________________                Troop Steuber Pasich Reddick &
____________________________                Tobey, LLP
____________________________                2029 Century Park East, 24th Floor
____________________________                Los Angeles, CA  90067-3010
____________________________                Attn:  Lisa H. Klein
____________________________                Fax Number:  (310) 728-2362

     Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this SECTION 9 by giving the other party written
notice of the new address in the manner set forth above.

10. AMENDMENTS.

     10.1 Any term of this Warrant may be amended with the written consent of
both the Company and the Holder.

     10.2 No waivers of or exceptions to any term, condition or provision of
this Warrant, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such term, condition or provision.

11. ADJUSTMENTS. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:

     11.1 MERGER, SALE OF ASSETS, ETC. If at any time, while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer which a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this SECTION 11. The foregoing provisions of this Section 11.2 shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the exercise of this Warrant. If the per share
consideration payable to the Holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such


                                     Page 6
<PAGE>


consideration shall be determined in good faith by the Company's Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.

     11.2 RECLASSIFICATION, ETC. If the Company, at any time while this Warrant,
or any portion thereof, remains outstanding and unexpired, shall, by
reclassification of securities or otherwise, change any of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change; the Exercise Price
therefore shall be appropriately adjusted, all subject to further adjustment as
provided in SECTION 11.

     11.3 SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.

     11.4 ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY. If
while this Warrant, or any portion hereof, remains outstanding and unexpired the
holders of the securities as to which purchase rights under this Warrant exist
at the time shall have received, or, on or after the record date fixed for the
determination of eligible stockholders of the Company, shall have become
entitled to receive, without payment therefore, other or additional stock or
other securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefore, the amount of such other or additional stock or other securities or
property (other than cash) of the Company which such holder would hold on the
date of such exercise had it been the holder of record of the security
receivable upon exercise of this Warrant on the date hereof and had thereafter,
during the period from the date hereof to and including the date of such
exercise, retained such shares and/or all other additional stock available by it
as aforesaid during such period, giving effect to all adjustments called for
during such period by the provisions of this SECTION 11.

     11.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment
or readjustment pursuant to this SECTION 11, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such holder, furnish or cause to be furnished to
such holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property which at the time
would be received upon the exercise of the Warrant.


                                     Page 7
<PAGE>


     11.6 NO IMPAIRMENT. The Company will not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this SECTION 11 and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holders of this Warrant against impairment.

12. MISCELLANEOUS.

     12.1 HEADINGS. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.

     12.2 LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.

     12.3 SEVERABILITY. If any term, provision, covenant or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

     12.4 COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each such
executed counterpart shall be, and shall be deemed to be, an original
instrument.

     12.5 SATURDAYS, SUNDAYS AND HOLIDAYS. If the Warrant Expiration Date falls
on a Saturday, Sunday or legal holiday, the Warrant Expiration Date shall
automatically be extended until 5:00 p.m. the next business day.

     12.6 ENTIRE AGREEMENT. This Warrant contains the sole and entire agreement
and understanding of the parties with respect to the entire subject matter of
this Warrant, and any and all prior discussions, negotiations, commitments and
understandings, whether oral or otherwise, related to the subject matter of this
Warrant are hereby merged herein.

     IN WITNESS WHEREOF, Valence Technology, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated:  June 29, 2000


                                          VALENCE TECHNOLOGY, INC.


                                          By:
                                          Title:



HOLDER:  ACQUA WELLINGTON VALUE FUND LIMITED


By:
Title:


                                     Page 8
<PAGE>


                               NOTICE OF EXERCISE

                            ------------------------

     (1) The undersigned hereby elects to purchase _________ shares of Common
Stock of Valence Technology, Inc., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.

     (2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned will not offer, sell, or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws.

     (3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:

                                            ----------------------------------
                                            [Name]

                                            -----------------------------------
                                            [Name]

     (4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:

                                            ----------------------------------
                                            [Name]

                                            -----------------------------------


----------------                            -----------------------------------
[Date]                                      [Signature]



                                     Page 9
<PAGE>


                                 ASSIGNMENT FORM

     FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:

NAME OF ASSIGNEE           ADDRESS                                NO. OF SHARES
-------------------------------------------------------------------------------





and does hereby irrevocably constitute and appoint ___________________ to make
such transfer on the books of Valence Technology, Inc. maintained for the
purpose, with full power of substitution in the premises.

         The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of stock to be issued
upon exercise hereof are being acquired for investment and that the Assignee
will not offer, sell or otherwise dispose of this Warrant or any shares of stock
to be issued upon exercise hereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Further, the Assignee has acknowledged that upon exercise of
this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.

DATED:

                                   -----------------------------
                                   Signature of Holder


                                   ------------------------------
                                   (Witness)