JUNE 22, 2000
-------------------------------------------------------------------------------

                BINDING LETTER OF INTENT FOR THE PURCHASE/SALE OF

                       UP TO $12,500,000 OF COMMON SHARES
                                       OF
                             VALENCE TECHNOLOGY INC.
                         ("VLNC" NASDAQ NATIONAL MARKET)

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

Valence Technology Inc. (the "COMPANY") hereby agrees to sell and Carl E. Berg
(the "PURCHASER") agrees to purchase, in each case subject to the terms and
conditions set forth herein, up to $12,500,000 (the "PROPOSED INVESTMENT") of
the Company's common stock, par value $0.001 (the "SHARES"). This Agreement is
intended to be a binding agreement. The agreements between the parties will be
evidenced by a Common Stock Purchase Agreement (as described below), Warrant
Agreement and other related agreements described herein (collectively, the
"DEFINITIVE AGREEMENTS"). Upon the execution of this Agreement, the parties
shall be obligated to enter into Definitive Agreements memorializing the terms
described herein.

I.       STRUCTURE OF TRANSACTION:

          (a)  MULTIPLE PURCHASES. The Company will be permitted to sell and
               Purchaser agrees to purchase the Shares in one or more
               transactions, each one of which will involve no less than
               $500,000 in proceeds. The Company will initiate each sale by
               providing an irrevocable written notice to Purchaser (the "SALE
               NOTICE") specifying the number of shares it wishes to sell.
               Purchaser's commitment to purchase the Shares hereunder will
               expire, to the extent not utilized by the Company hereunder, on
               March 31, 2001.

          (b)  PRICING PERIOD AND SETTLEMENT DATE. The pricing of the Shares
               (the "PURCHASE PRICE") will be determined based on the average of
               the Daily Prices (as defined below) over the five (5) trading
               days on the Nasdaq National Market (each a "TRADING DAY")
               starting on the first Trading Day following the date on which the
               Sale Notice is delivered to Purchaser (a "PRICING PERIOD"). The
               purchase of the Shares shall be settled on the third business day
               following the expiration of the applicable Pricing Period (a
               "SETTLEMENT DATE").

          (c)  DAILY PRICE. The "DAILY PRICE" for purposes of this Agreement
               shall mean the Volume Weighed Average Price (based on a trading
               day from 9:30 a.m. to 4:00 p.m.) on the Nasdaq National Market as
               reported by Bloomberg Financial LP using the AQR function for the
               Stock for such Trading Day.

          (d)  PURCHASE PRICE. The Purchase Price shall be 94% of the average
               Daily Prices during the Pricing Period.


<PAGE>


          (e)  WARRANTS. The Company shall issue to the Purchaser warrants to
               purchase up to 20% of the Shares purchased by Purchaser hereunder
               (the "Warrants"). The warrants issued will have a three (3) year
               life from the date of issuance and shall have an exercise price
               of 125% of the average Daily Prices during the applicable Pricing
               Period.

          (f)  RESTRICTED SECURITIES. The Shares, the Warrants and all Shares
               issuable upon the exercise of the Warrants have been and will be
               issued without registration under the Securities Act of 1933, as
               amended (the "Securities Act") and may not be sold, offered for
               sale, transferred, pledged or hypothecated without registration
               under the Act unless either (i) the Company has received an
               opinion of counsel, in form and substance satisfactory to the
               Company, to the effect that registration is not required in
               connection with such disposition or (ii) the sale of such
               securities is made pursuant to SEC Rule 144.

II.      SETTLEMENT

          (a)  On each Settlement Date, the Company and the Purchaser will each
               execute and deliver a Common Stock Purchase Agreement in the form
               of Exhibit A attached hereto. Upon delivery of the executed
               agreement by the Purchaser, the Company will cause the physical
               delivery of a certificate of whole shares of stock, as calculated
               above, to the Purchaser against payment therefore to the
               Company's designated account by wire transfer of immediately
               available funds (provided that the Shares are received by the
               Purchaser no later than 10:00 a.m. Eastern Time) or next day
               available funds if the Shares are received thereafter.

III.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

          (a)  ORGANIZATION, GOOD STANDING AND POWER. The Company is a
               corporation duly incorporated, validly existing and in good
               standing under the laws of Delaware and has the requisite
               corporate power to own, lease and operate its properties and
               assets and to conduct its business as it is now being conducted.
               The Company has the requisite corporate power and authority to
               enter into and perform its obligations under this Agreement and
               to issue and sell the Shares in accordance with the terms hereof
               and thereof. The execution, delivery and performance of this
               Agreement by the Company and the consummation by it of the
               transactions contemplated hereby have been duly and validly
               authorized by all necessary corporate action. The undersigned
               officer of the Company has full authority to execute this
               Agreement and to bind the Company thereby. This Agreement has
               been duly executed and delivered by the Company. This Agreement
               constitutes, or shall constitute when executed and delivered, a
               valid and binding obligation of the Company enforceable against
               the Company in accordance with its terms.

          (b)  ISSUANCE OF SHARES. The Shares to be issued under this Agreement
               and the Purchase Agreement have been duly authorized by all
               necessary corporate action and, when paid for or issued in
               accordance with the terms hereof, the Shares shall be validly
               issued and outstanding, fully paid and non-assessable, and the
               Purchaser shall be entitled to all rights accorded to a holder of
               Common Stock.



                                    Page 2
<PAGE>


IV.      REPRESENTATION OF THE PURCHASER.

          (a)  AUTHORIZATION AND POWER. Purchaser is an "accredited investor"
               within the meaning of Regulation D promulgated under the
               Securities Act. The Shares purchased by Purchaser hereunder will
               be acquired for Purchaser's own account, and not with a view to
               the public resale or distribution thereof, and Purchaser has no
               present intention of selling, granting any participation in, or
               otherwise distributing the same. This Agreement constitutes, or
               shall constitute when executed and delivered, a valid and binding
               obligation of the Purchaser enforceable against the Purchaser in
               accordance with its terms.


Signature: /S/ JAY L. KING                          Telephone: (702) 558-1015
           --------------------------------
Name:      Jay L. King                              Fax:         (702) 558-1310
                                                    Wire Instructions:
Address:          Valence Technology Inc.
                  301 Conestoga Way
                  Henderson, NV 89015               Contact Name:
                  USA




THE TERMS SET FORTH HEREIN ARE ACCEPTED BY CARL E. BERG.


Signature:  /S/ CARL E. BERG                              Date:
            --------------------------------              _____________________
Name:       Mr. Carl E. Berg
            Fax:
            Telephone: