<PAGE>


                      CONFIDENTIAL TREATMENT REQUESTED
                   UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
                           200.83 and 240.24b-2










                                                 LICENSE AND SUPPORT AGREEMENT
------------------------------------------------------------------------------














between

HANIL VALENCE CO., LTD.

and

VALENCE TECHNOLOGY B.V.

on

_____________, 1996


<PAGE>


THIS AGREEMENT, entered into as of ___________, 1996 ("Effective Date") by 
and between Valence Technology B.V. with offices at Hirsch Gebouw, 
Leidseplein 29, 1017 PS Amsterdam, The Netherlands ("Valence") and Hanil 
Valence Co., Ltd., with offices at YoJin Tower, 713-6, PungDukChun-Ri, 
SuJi-Eup, YongIn-Si, KyongGi-Do, Korea ("Hanil Valence Co.").

WHEREAS, Valence has the knowledge, expertise and technology to design, 
develop, manufacture and sell solid polymer electrolyte batteries, and 
Valence owns or has rights to certain patents, trademarks, know-how, 
technology and other intellectual property related to the design, 
manufacture, and sell such batteries, and the laminates that are used in such 
batteries;

WHEREAS, Hanil Valence Co. desires to enter the business of designing, 
manufacturing, marketing, selling, repairing, installing, maintaining, 
exploiting, applying, distributing and dealing in products that use such 
batteries;

WHEREAS, Hanil Valence Co., initially having no technology or know-how of its 
own on solid polymer electrolyte battery technology, desires to license from 
Valence the certain technology and know-how, and obtain from Valence certain 
support.

NOW, THEREFORE, In consideration of the mutual covenants and promises herein 
set forth, Joint Venture Hanil Valence Co. and Valence agree as follows:

1.    DEFINITIONS

1.1   AFFILIATED COMPANIES shall mean all subsidiaries, parent companies, and 
subsidiaries of parent companies, where the party or parent owns at least 
fifty percent (50%) of the subsidiary, or where the party's parent owns at 
least fifty percent (50%) of the party.

1.2   APPLICATIONS shall mean any application into which the Batteries may be 
incorporated, except for those applications for which Valence has already 
granted an exclusive license to another party, such as automotive, traction 
and utility load leveling markets licensed to General Motors, and 
personalized lighting systems and uninterruptable power supplies licensed to 
Goldtron Ltd.

1.3   BATTERIES shall mean the advanced rechargeable solid polymer 
electrolyte batteries manufactured by Hanil Valence Co. utilizing Laminate 
based on the solid polymer electrolyte technology owned by Valence.

1.4   GOVERNMENT APPROVAL shall mean of this Agreement, and other Transaction 
Documents, and the parties performance under the Agreement and other 
Transaction Documents ("Agreements and Performance"), such approval of or 
confirmation or consent to the Agreements and Performance together with such 
license, permits, or other permissions reasonably required for the Agreements 
and Performance, all as the statutes, decrees, regulations, and rules of 
governmental authority within Korea (collectively "Legal Authority"), may 
require to be obtain in connection with the Agreements and Performance from 
such Legal Authority or from political subdivisions thereof.  Wherever 
"Government Approval" is used herein, it shall be interpreted and construed 
to include the requirement that such approval be in form and substance 
acceptable to the parties hereto.

1.5   INTELLECTUAL PROPERTY RIGHTS shall mean all copyright, patent rights, 
trademark rights and all common law rights connected therewith and all other 
intellectual property rights, and shall include rights to new inventions, 
discoveries, works of authorship and improvements made during the term of 
this agreement.  Improvement shall mean any modification and/or innovation of 
Batteries for Applications developed by a party during the term of this 
Agreement, which is related to, or is useful in the commercial production of 
Batteries for Applications.

1.6   LAMINATES shall mean cathode, separator and anode laminates, or films, 
of the Battery, produced exclusively by Valence.


Page 2


<PAGE>


                          CONFIDENTIAL TREATMENT REQUESTED


1.7   SUBSIDIARY shall mean a subsidiary, where the party owns at least fifty 
percent (50%) of the subsidiary.

1.8   TERRITORY shall mean Korea.

1.9   TRANSACTION DOCUMENTS shall mean this Agreement, the Battery Laminate 
Supply Agreement and any other document contemplated in this Agreement or 
entered into by the parties or between each party and Hanil Telecom Co., 
Ltd., including the Joint Venture Agreement, in connection with this 
Agreement.

1.10  US$ shall mean the lawful currency of the United States of America.

1.11  WON shall mean the lawful currency of Korea.

2.    LICENSES

2.1   Valence hereby grants to Hanil Valence Co. a personal, 
non-transferable, non-sublicensable license to all of Valence's Intellectual 
Property Rights and know-how necessary to design, manufacture, use, sell, and 
distribute Batteries, using Laminate supplied exclusively by 
Valence [                                             ] for use in 
Applications in the Territory.  This license shall be exclusive in the 
Territory.

2.2   Valence hereby grants to Hanil Valence Co. the right to manufacture, 
assemble, fabricate and package Batteries, using Valence supplied Laminate, 
for Applications of Valence as a sub-contractor of Valence, upon terms and 
conditions to be agreed between Hanil Valence Co. and Valence.

2.3   Hanil Valence Co. hereby grants to Valence, and its Affiliated 
Companies, a non-exclusive, personal non-transferable, non-sublicensable 
license to all of Hanil Valence Co.'s Intellectual Property Rights in respect 
of Batteries and associated technologies such as chargers and control 
circuits, except to design, manufacture, use, sell, and distribute Batteries 
for use in Applications in the Territory. Notwithstanding the forgoing, such 
license shall be assignable incident to the transfer of all or substantially 
all of Valence's, or its Affiliated Companies', business.

2.4   Patents arising out of inventions made jointly by employees of Valence 
and Hanil Valence Co. shall be jointly owned by the parties.  The parties 
shall mutually agree as to which party shall file any resulting patent 
applications. The cost for such applications shall be equally shared.

2.5   Valence hereby grants to Hanil Valence Co. a non-exclusive, personal, 
non-transferable, non-sublicensable license to Valence's Trademarks necessary 
to market, sell, and distribute Batteries for use in Applications, in the 
Territory.  Hanil Valence Co.'s use of the Valence trademarks shall inure to 
the benefit of Valence, and Hanil Valence Co. shall not register nor attempt 
to register such trademarks in its own name.  Other than the rights granted 
herein, each party recognizes the right, title, and interest of the other 
party and its affiliates in and to all service marks, trademarks, and trade 
names used by the other and agrees not to use any of the other party's 
service marks, trademarks, and trade names without the other party's express 
written permission, other than provided herein. Any promotional material 
produced by Hanil Valence Co. that specifically references any Battery 
performance specifications or promotes the additional value of such 
Batteries, shall also include a reference to Valence and an appropriate 
promotional copy supplied by Valence.  Valence must approve any 
specifications prior to publication or distribution.

2.6   Hanil Valence Co. shall mark all its Batteries with the Valence logo 
and/or name under the license provided above.  Because Valence's logo and/or 
name will be on the Batteries, Valence shall have right to stop 
manufacturing, sales and/or distribution of Batteries, if, in Valence's sole 
judgement, there is any safety defect.  Additionally, Valence shall have the 
right to cause Hanil Valence Co. to conduct a recall of Batteries, if such a 
defect is discovered in Batteries already distributed outside Hanil Valence 
Co.  Further, Valence shall review design and quality of products


Page 3


<PAGE>

                          CONFIDENTIAL TREATMENT REQUESTED

to assure such products meet Valence design and quality standards.  Hanil 
Valence Co. shall provide representative samples of Batteries prior to their 
first sale, and upon incorporation of any material change.  

2.7   Hanil Valence Co. shall market and sell the Batteries for the 
Applications under names, trade marks, trade names, designs, logos and get-up 
and all other trademark rights relating to the marketing and sale of the 
Batteries for the Applications.  Such Hanil Valence Co. created trademarks, 
except for any marks derived from, identical with or similar to Valence's 
trademarks or trade name, shall belong to and be the absolute property of 
Hanil Valence Co.

2.8   Hanil Valence Co. shall pay Valence license and support fees of:

2.8.1[                                 ] and

2.8.2[                                   ], or sooner as mutually agreed by 
the parties.

2.9   However, should a tax exemption not be available for these license and 
support fees, and Valence incurs a withholding tax, Hanil Valence Co. shall 
increase the fee amounts such that Valence has the above amounts after the 
payment of the withholding taxes.

2.10  The parties acknowledge that other, potentially broader, business 
opportunities may arise in the future, and either party may raise such 
opportunities with the other party.  In such an event, the parties may 
mutually agreed to alter this Agreement, if necessary, to pursue such 
opportunities.

3.   EXCLUSIVE USE OF VALENCE SUPPLIED LAMINATE

3.1  Hanil Valence Co. shall only design, manufacture, use, sell, and 
distribute Batteries, using Laminate supplied by Valence,[

                                               ]

3.2  Hanil Valence Co. hereby covenants and warrants that it will not design, 
develop, manufacture Laminate or any replacement or substitute for Laminate.  
Hanil Valence Co. further warrants that it will not decompose or reverse 
engineer Laminate.  These requirements are subject to change by mutual 
agreement of the parties.

4.   VALENCE PERSONNEL SUPPORT

4.1  During the term of this Agreement, Valence shall supply such Valence 
personnel as necessary to support Hanil Valence Co., without any additional 
charge to Hanil Valence Co.

4.2  Valence may fulfill this obligation by providing a variety of qualified 
Valence engineers, depending on the needs of Hanil Valence Co., and their 
availability from Valence.  Hanil Valence shall establish, within a 
reasonable amount of time, a complete battery design and test laboratory.  
Hanil Valence Co. may, if it so desires, direct these Valence engineers to 
assist Hanil Valence Co. in setting up the complete battery design and test 
laboratory.

4.3  Valence employees at Hanil Valence Co., shall at all times remain 
employees of Valence. Hanil Valence Co. shall not be liable for any expenses 
of such visiting Valence employees.


Page 4


<PAGE>

                          CONFIDENTIAL TREATMENT REQUESTED

5.   INITIAL APPLICATIONS DESIGNS AND PROTOTYPES

5.1  Valence shall provide design services for [                      ]
Additionally, Hanil Valence Co. shall be entitled to [               
                                    
         ] without any additional charge to Hanil Valence Co.

5.2  Following [                   ] Hanil Valence Co. shall be responsible 
for its own Battery designs.

5.3  Valence may provide Hanil Valence Co. [                               
                                  ] at mutually agreeable costs, terms and 
scheduling.

6.   TRAINING

6.1  Valence will provide to Hanil Valence Co. the formal training program 
described in the Formal Training Program Exhibit, attached, without any 
additional charge to Hanil Valence Co.

6.2  In addition to the formal training program, Hanil Valence Co. may send a 
reasonable number of its employees to Valence in Mallusk, Northern Ireland, 
to observe and learn what information is needed to design and manufacture 
Batteries.

6.3  Hanil Valence Co. employees at Valence, shall at all times remain 
employees of Hanil Valence Co.  Valence shall not be liable for any expenses 
of such visiting Hanil Valence Co. employees.

7.   MANUFACTURING EQUIPMENT

7.1  Valence grants, without any additional charge, Hanil Valence Co. the 
rights to use battery manufacturing equipment designed by or for Valence, and 
manufactured by Valence or its authorized equipment suppliers.  These rights 
include the rights to the designs of the battery manufacturing equipment 
designed by or for Valence listed in the Manufacturing Equipment Exhibit.

7.2  Valence shall use its best efforts to either sell, upon terms and 
conditions acceptable to Valence and Hanil Valence Co., or assist Hanil 
Valence Co. in procuring from Valence's equipment vendors, Battery 
manufacturing equipment.  However, Hanil Valence Co. may also purchase 
Battery manufacturing equipment from vendors other than Valence or its 
vendors.

7.3  Valence will specify the first manufacturing line for Hanil Valence Co.
Additionally, Valence shall assist in the start up of that line and offer 
assistance until Hanil Valence Co. has sufficient technical support to do so 
by itself.  Hanil Valence Co. shall use its reasonable efforts to become self 
sufficient .  Valence shall provide Hanil Valence Co. with the documents 
listed in the Documentation Exhibit, attached hereto, subject to the 
availability of such documents.

8.   COVENANTS AND WARRANTIES

8.1  The parties each covenants to the other that it shall fully comply with 
any legislative and regulatory requirements (including any regulations, 
statutory or otherwise, relating to environmental controls) directly or 
indirectly applicable to the performance of its obligations hereunder.    
Because the rights licensed under this Agreement are in part based on some 
technology of United States origin, Hanil Valence Co. shall comply with all 
current and future United States export regulations, including export 
embargoes and export licensing provisions. Valence shall use its best efforts 
to notify Hanil Valence Co. of such regulations, and any changes thereto.

8.2  Valence warrants to Hanil Valence Co. that it is the legal and 
beneficial owner or licensee of the technology, intellectual property rights, 
knowledge and expertise granted to Hanil Valence Co. pursuant to this 
Agreement and has the power and capacity to enter into this Agreement.


Page 5


<PAGE>

8.3  Each party ("Indemnitor") shall, at its own expense, defend any suit 
that is instituted against the other ("Indemnitee") to the extent such suit 
alleges that any goods, information, designs, or any part, of Indemnitee, 
thereof sold hereunder infringe any patent, trademark, copyright, or trade 
secret.   Indemnitor shall not be liable to Indemnitee if such alleged 
infringement arises from any modification or addition made by anyone other 
than the Indemnitor, or the use as a part of or in combination with any other 
devices or parts or from the use to practice any method or process, if there 
would have been no infringement but for such acts. Indemnitee shall give the 
Indemnitor immediate notice in writing of any such suit and permits the 
Indemnitor, through counsel of its choice, to answer the charge of 
infringement and defend such suit.  Indemnitee shall give the Indemnitor all 
the needed information, assistance and authority, at the Indemnitor's 
expense, to enable the Indemnitor to defend or settle such suit. In the case 
of a final award of damages in any suit the Indemnitor, shall pay such award, 
but shall not be responsible for any settlement made without its prior 
written consent.  In the event the use, lease or sale of the goods is 
enjoined, the Indemnitor may at its own option and expense (i) procure for 
the Indemnitee the right to use, lease or sell such goods, (ii) replace such 
goods, (iii) modify such goods, or (iv) remove such goods and refund the 
aggregate payments made by the Indemnitee, less a reasonable sum for use, 
damage and obsolescence.  THIS ABOVE STATES THE INDEMNITOR'S TOTAL 
RESPONSIBILITY AND LIABILITY, AND THE INDEMNITEE'S SOLE REMEDY, FOR ANY 
ACTUAL OR ALLEGED INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT BY ANY 
GOODS DELIVERED HEREUNDER OR ANY PART THEREOF.  THIS SECTION IS IN LIEU OF 
AND REPLACES ANY OTHER EXPRESS, IMPLIED OR STATUTORY WARRANTY AGAINST 
INFRINGEMENT. 

8.4  The above indemnity obligation with regard intellectual property rights 
is the sole and only indemnity obligation owed by each party to the other 
party under this Agreement.

9.   TERM AND TERMINATION

9.1  This Agreement shall continue in effect until terminated pursuant to the 
provisions of this Agreement or by mutual agreement of the parties.

9.2  A party shall be deemed to have breached or defaulted if:

     9.2.1  any representation, warranty or statement by such party in this 
            Agreement or in any document delivered under this Agreement is not
            complied with or is or proves to have been incorrect in any
            material respect when made;           

    9.2.2  such party does not perform or comply with any one or more of its 
           material obligations under the Agreement and such party in breach
           shall fail to rectify that breach within sixty (60) days of
           written notice of breach being given to that party in the terms of
           this Section; or           

    9.2.4  a winding up or bankruptcy petition is presented, an order is made,
           an effective resolution passed or legislation enacted for the 
           winding-up other than for the purpose of reconstruction or
           amalgamation of such party or if a receiver and/or manager is
           appointed of the undertaking or part thereof of such party; or   

    9.2.5  such party is unable to pay its debts as they fall due or stops 
           payment of its debts generally or commences negotiations with its 
           creditors with a view to readjustment or rescheduling of its debts
           or compounds or enters into any arrangement with or makes any
           assignment for the benefit of its creditors generally or attempts
           to do any of the foregoing (except as part of or pursuant to a
           scheme for reconstruction or amalgamation);

9.3  In the event a party commits a breach or default, as described above in 
Section 2.1, the other party hereto shall, without prejudice to any other 
rights and remedies such party may have, be entitled by notice in writing to 
the party in breach or default to terminate this Agreement forthwith as 
against such party.

Page 6


<PAGE>

 9.4  In the event of a termination of this Agreement because of the breach 
or default of a party, all licenses granted to the other party, and its 
Affiliated Companies, under this Agreement shall terminate.

9.5  The provisions of this Agreement with regard to confidential information 
and intellectual property rights indemnity shall survive the termination of 
this Agreement.

9.6  If Hanil Valence Co. does not receive all necessary Government 
Approvals, including approvals on this Agreement, the Battery Laminate Supply 
Agreement, the Joint Venture Agreement, and any tax privileges available 
under the Foreign Capital Inducement Act of Korea, in from the Korean 
government within ninety (90) days of the Effective Date of this Agreement, 
then this Agreement shall immediately be terminated.

9.7  In the event of any termination of the Battery Laminate Supply Agreement 
between the parties or the Joint Venture Agreement between Valence and Hanil 
Telecom Co., Ltd., for any reason, then this Agreement shall immediately 
terminate.

10.  TAXES

10.1   Each party hereto shall be responsible for its own taxes, whether 
present or future including income tax payable in respect of any sum received 
by it, levies, goods and services tax, value added tax, impost, deductions or 
withholding imposed, assessed or collected by any political subdivision or 
taxing authority of any country in respect of this Agreement, any transaction 
or any documents contemplated herein.  In no circumstances shall either party 
be obliged to gross up the amount of any payment which it is otherwise 
obliged to make pursuant to this Agreement so as to ensure that the net 
amount received by the recipient equals that amount which the recipient would 
have been entitled to receive in the absence of any applicable withholding 
tax. However, Hanil Valence Co. shall be liable for any value added tax 
incurred by Valence's delivery of any goods or services to Hanil Valence Co.

11.  CONFIDENTIALITY AND PUBLIC DISCLOSURE

11.1   "Confidential Information" shall mean that information of either party 
which is disclosed to the other party ("Recipient") by reason of the parties' 
relationship hereunder, either directly or indirectly in any written or 
recorded form, orally, or by drawings or inspection of parts or equipment, 
and, either in writing and marked as confidential or proprietary, or if oral, 
reduced to writing similarly marked within thirty (30) days of disclosure.

11.2   Recipient shall receive and use the Confidential Information only for 
performance of Recipient's obligations hereunder, and will not use 
Confidential Information for any other purpose, and shall not disclose such 
Confidential Information to any person or persons who do not need to have 
knowledge of such Confidential Information in the course of their employment. 
Recipient further agrees that except as authorized by the Export 
Administration Regulations of the U. S. Department of Commerce it will not 
transmit, directly or indirectly, any "technical data" acquired from the 
other party hereto to any "Q, S, W, Y or Z" country as those terms are 
defined in the Regulations.

11.3   It is expressly understood that Recipient shall not be liable for 
disclosure of any Confidential Information if the same:

     11.3.1    was in the public domain at the time it was disclosed;     
     11.3.2    was known to Recipient at the time of disclosure;           
     11.3.3    is disclosed with the prior written approval of the other party
               hereto;
     11.3.4    is disclosed after five (5) years from the termination of
               this Agreement;


Page 7


<PAGE>

 
     11.3.5    was independently developed by Recipient; or
     
     11.3.6    becomes known to Recipient, on a non-confidential basis, from a
               source other than the other party hereto, without breach of this
               Agreement by Recipient.

11.4   Each party hereto shall not, except for Hanil Valence Co., except as 
authorized by the Board of Directors of Hanil Valence Co., or except for 
either party, as required by any applicable law or regulation of Korea, the 
Cayman Islands, the Netherlands or the United States of America, reveal to 
any person, firm or company any of the trade secrets, secret or confidential 
operations, processes or dealings or confidential information of Hanil 
Valence Co. or any information concerning the organization, business, 
finances, transitions or affairs of Hanil Valence Co. which may come to his 
knowledge hereunder and shall keep with complete secrecy all trade secrets 
and other confidential information entrusted to him and shall not use or 
attempt to use any such information in any manner which may injure or cause 
loss either directly or indirectly to Hanil Valence Co. or its Business or 
may be likely to do so.

11.5   Valence and Hanil Valence Co. agree that the terms and conditions of 
this Agreement shall not be disclosed to any other party without the prior 
written consent of the other, which consent should not be unreasonably 
withheld.  Neither Valence nor Hanil Valence Co. shall publish or use any 
advertising, sales promotion, press release or publicity matters relating to 
this Agreement, without the prior written approval of the other, which 
approval shall not be unreasonably withheld.  Notwithstanding the forgoing, 
either party may make such disclosures and press releases as are necessary to 
meet its disclosure requirements under the laws, regulation and rules of 
Korea, the Cayman Islands, the Netherlands or the United States of America.

11.6   Hanil Valence Co shall place all its employees and contractors under 
appropriate confidential and intellectual property rights agreements prior to 
such persons receiving any confidential information or doing any work for 
Hanil Valence Co.


12.  GOOD FAITH AND RELATIONSHIP BETWEEN PARTIES

12.1   In entering into this Agreement the parties hereto recognize that it 
is impracticable to make provisions for every contingency that may arise in 
the course of the performance thereof. If by reason of any unforeseen 
occurrence or development the operation of this Agreement is likely to cause 
any inequitable hardship to any of the parties hereto, the parties hereto 
shall negotiate immediately in good faith as to what manner the terms and 
conditions of this Agreement may be modified in order to provide an equitable 
solution in so far as such is possible within the spirit of this Agreement 
for such unforeseen occurrence or development.

12.2   The parties hereto hereby agree and declare that they will execute and 
do all such acts and things as are necessary and within their power and 
authority for the time being to carry into effect and/or to comply with the 
provisions of this Agreement.

12.3   Nothing in this Agreement shall be construed to imply the existence of a 
partnership between the parties hereto.  Valence and Hanil Valence Co. each 
represent and warrant to the other that they have entered into no contracts, 
nor are subject to any obligations, which prevent them from entering into and 
performing this Agreement.  It is understood and agreed that Valence and 
Hanil Valence Co. are, and at all times shall remain, independent 
contractors.  At no time shall either Party represent to any third party that 
it is the agent of the other for any reason whatsoever.  Valence and Hanil 
Valence Co. further covenant that no authorization shall be given to any 
employee to act for the other Party to this Agreement.  In no event shall 
either Party at any time have authority to make any contracts or commitments 
on behalf of or as an agent of the other or otherwise make use of its 
relationship with the other, without the other's express consent in each 
instance.


Page 8

<PAGE>

13.  LIMITATION OF LIABILITY

In no event shall either party be liable for any indirect, special, 
incidental or consequential damages resulting from its performance or failure 
to perform under this Agreement, whether due to a breach of contract, breach 
of warranty, or such party's negligence.  Neither parties' liability 
hereunder shall exceed the amounts paid hereunder.

14.  GENERAL

14.1   Neither party may assign its rights or obligations under this 
Agreement without the prior consent of the other, and any purported 
assignment without such consent shall have no force or effect, except that a 
party may assign this Agreement incident to the transfer of all or 
substantially all of its business.  Subject to the foregoing, this Agreement 
shall bind and inure to the benefit of the respective parties hereto and 
their successors and assigns.

14.2   No failure or delay by either party to enforce or take advantage of 
any provision or right under this Agreement shall constitute a subsequent 
waiver of that provision or right, nor shall it be deemed to be a waiver of 
any of the other terms and conditions of this Agreement. 

14.3   Neither party to this Agreement shall be liable for its failure to 
perform any of its obligations hereunder during any period in which such 
performance is prevented by any cause beyond its reasonable control.  In the 
event of any such delay the date of delivery or performance hereunder shall 
be extended by a period equal to the time lost by reason of such delay.  In 
the event Valence's production is curtailed, Valence may allocate its 
available production, as reasonably equitable, among its various customers.

14.4   The validity, performance and construction of this Agreement shall be 
governed by the laws of the State of New York, United States (excluding its 
conflict of laws provisions).

14.5   Each party hereto shall bear its own costs and expenses in respect of 
the preparation, negotiation, finalize and execution of this Agreement and 
the other agreements or documents contemplated herein.

14.6   All notices or communications to be given under this Agreement shall 
be in writing and shall be deemed delivered upon hand delivery, upon 
acknowledged telex  or facsimile communication, or seven (7) days after 
deposit in the mail, postage prepaid, by certified, registered or first class 
mail, addressed to the parties at their addresses set forth above.

14.7   In the event that any provision of this Agreement is prohibited by any 
law governing its construction, performance or enforcement, such provision 
shall be ineffective to the extent of such prohibition without invalidating 
thereby any of the remaining provisions of the Agreement.

14.8   The terms and conditions of this Agreement may not be superseded, 
modified, or amended except in writing which states that it is such a 
modification, and is signed by an authorized representative of each party 
hereto.  This Agreement shall not be modified, supplemented, qualified, or 
interpreted by any trade usage or prior course of dealing not made a part of 
the order by its express terms.

14.9   Section titles used herein are for reference only and shall not be for 
purposes of interpretation.

14.10  This Agreement may be executed in several counterparts, each of which 
shall be deemed an original and all of which shall constitute one and the 
same instrument.

14.11  This Agreement, including exhibits, constitutes the entire Agreement 
between the parties as to the subject matter hereof, and supersedes and 
replaces all prior or contemporaneous agreements, written or oral, regarding 
such subject matter, and shall take precedence over any


Page 9

<PAGE>


additional or conflicting terms which may be contained in either party's 
purchase orders or order acknowledgment forms.


ACCEPTED AND AGREED:

VALENCE TECHNOLOGY B.V.                           HANIL VALENCE CO., LTD.
By:                                               By:
    ------------------------                         ------------------------
signature of authorized                           signature of authorized
representative                                    representative

Melvern Slates
--------------------------                        -------------------------
printed name                                      printed name

Managing Director
----------------------                            -------------------------
title                                             title

----------------------                            -------------------------
date                                              date


Page 10

<PAGE>


                         CONFIDENTIAL TREATMENT REQUESTED


Formal Training Exhibit


Valence shall provide the following formal training in one continuous 
training course for two to ten Hanil Valence Co. employees at the Valence 
Technology, Inc. facilities in Mallusk, Northern Ireland.  Starting date for 
the training course shall mutually be agreed upon.

1.  Basic Electrochemistry

    [




                                                                          ]


2.  Battery Technology

    [




                                                                          ]

    e.  Shipping Regulations

    f.  Battery Design Center Set-Up

    g.  Prototype Construction

    h.  Design for Manufacturing

3.  Cell Assembly, Manufacturing Equipment and Production Systems

    [




                                                                          ]

Page 11
<PAGE>


                         CONFIDENTIAL TREATMENT REQUESTED


[




                                                                          ]

4.  Quality Control

    a.  Concepts, Control Points, Specifications, Equipment

5.  Production Testing

    a.  Preliminary Screening, Quality Control Sampling

6.  Management Information Systems

    a.  Quality Control, Production, Testing

7.  Battery Cycler Network and Database

8.  Review of All Processes of Production Line from Beginning to End




Page 12

<PAGE>


                           CONFIDENTIAL TREATMENT REQUESTED


Manufacturing Equipment Exhibit

1.   [




                                                                          ]


2.   [




                                                                          ]
3.   [




                                                                          ]
4.   [




                                                                          ]
5.   [




                                                                          ]
6.   [




                                                                          ]



7.  Miscellaneous Equipment

    a.  Battery testing equipment

    b.  Battery tester network and database systems

    c.  Battery safety test equipment and test chambers

    d.  Specialized laboratory equipment for component testing

Page 13


<PAGE>


                          CONFIDENTIAL TREATMENT REQUESTED


Documentation Exhibit


1.  Building design guidelines

2.  Schematic diagrams of processes

3.  Manufacturing equipment layout

4.  Equipment and tooling design drawings

5.  Process control documents

6.  Manufacturing tooling specifications

7.  Quality control documents

8.  Product specifications

9.  [                                                                     ]

10. [                                                                     ]




Page 14