<PAGE>
                                                                   EXHIBIT 10.39


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



                                                         JOINT VENTURE AGREEMENT
--------------------------------------------------------------------------------








between

ALLIANT TECHSYSTEMS INC.

and

VALENCE TECHNOLOGY, INC.
VALENCE TECHNOLOGY CAYMAN ISLANDS INC.

on

OCTOBER 7, 1996









ALLIANT / VALENCE CONFIDENTIAL


<PAGE>


THIS AGREEMENT, entered into as of October 7, 1996 ("Effective Date") by and 
between Valence Technology, Inc. with offices at 301 Conestoga Way, Henderson, 
Nevada ("Valence US") and its wholly-owned subsidiary Valence Technology Cayman 
Islands Inc. with offices at P.O. Box 309, Grand Cayman, Cayman Islands, 
British West Indies ("Valence Cayman") (collectively "Valence") and Alliant 
Techsystems Inc., with offices at Power Sources Center, 104 Rock Road, Horsham, 
Pennsylvania 19044 ("Alliant").

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, Alliant has the knowledge, expertise and technology to design, 
develop, manufacture and sell battery products that can incorporate solid 
polymer electrolyte batteries in the United States military, foreign military 
sales, and United States government specialized markets;

WHEREAS, the parties desire to form a Joint Venture Company for the purpose of 
carrying on the business of designing, manufacturing, marketing, selling, 
repairing, installing, maintaining, exploiting, applying, distributing and 
dealing in battery products that use such batteries;

WHEREAS, the parties hereto in order to give effect to the aforesaid have 
agreed to enter into this Agreement and accordingly are desirous of regulating 
their relationship inter se as shareholders of the joint venture Joint Venture 
Company and the activities of the joint venture Joint Venture Company in the 
manner hereinafter described.

NOW, THEREFORE, In consideration of the mutual covenants and promises herein 
set forth, Alliant 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 applications for use in the Joint 
Venture Markets, 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, personalized lighting 
systems and uninterruptable power supplies licensed to Goldtron Ltd., and any 
applications in Korea licensed to Hanil Telecom Co., Ltd.

1.3            BATTERIES (or BATTERY, singular) shall mean the advanced 
rechargeable solid polymer electrolyte batteries manufactured by the Joint 
Venture Company utilizing Laminates based on the solid polymer electrolyte 
technology owned and licensed by Valence.

1.4            BATTERY LAMINATE SUPPLY AGREEMENT shall mean the agreement to be 
entered into between the Joint Venture Company and Valence.

1.5            BOARD shall mean the board of directors of the Joint Venture 
Company.

1.6            BUSINESS shall mean the business described in Section 2.3.

1.7            JOINT VENTURE COMPANY shall mean the joint venture Joint Venture 
Company referred to in Section 2.

1.8            JOINT VENTURE MARKETS shall mean United States Military, foreign 
military sales and United States government specialized markets, not including 
Valence standard product sales into such markets.



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<PAGE>

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

1.10           LICENSE AND SUPPORT AGREEMENTS shall mean both the agreement to 
be entered into between the Joint Venture Company and Valence ("Valence License 
and Support Agreement"), and the agreement to be entered into between the Joint 
Venture Company and Alliant ("Alliant License and Support Agreement").

1.11           SPACE BASED APPLICATIONS shall mean Batteries intended for use 
on deployment in products in space.

1.12           TRANSACTION DOCUMENTS shall mean this Agreement, the Battery 
Laminate Supply Agreement, the License and Support Agreements and any other 
document contemplated in this Agreement or entered into by the parties or 
between each party and the Joint Venture Company in connection with this 
Agreement.

1.13           VALENCE shall mean Valence US and Valence Cayman jointly and 
separately, provided that Valence US shall accept any rights or obligations 
that arise under this agreement in the United States, Canada or Mexico, and 
Valence Cayman shall accept any rights or obligations that arise under this 
agreement in the remainder of the world.

2.             FORMATION

2.1            The parties shall form a joint limited liability company, to be 
formed in the state of Delaware, which shall be governed by the terms of this 
Joint Venture Agreement.

2.2            The joint venture company shall be named Alliant / Valence, LLC 
("Joint Venture Company"), or as otherwise agreed to by the parties.

3.             SHARE CAPITAL

3.1            Upon the completion of the share purchase, the Joint Venture 
Company shall have an authorized capital of an amount equivalent two million 
United States Dollars (US$2,000,000.00) divided into one thousand (1,000) 
ordinary shares of par value one  United States Dollar (US$1.00) each.

3.2            Each of Alliant and Valence shall have five hundred (500) member 
shares, and each will thus have fifty percent (50%) ownership of the Joint 
Venture Company.

               3.2.1     Valence shall pay for its shares by contributing 
               polymer lithium ion battery technology and know how required 
               for manufacturing of batteries under its License and Support 
               Agreement.
               
               3.2.2     Alliant shall pay for its shares by contributing the 
               flexible battery manufacturing know how, market and product 
               knowledge and technology for high performance military 
               applications under its License and Support Agreement.  
               Additionally, Alliant shall contribute all cash necessary to 
               operate Joint Venture Company for at least one (1) year, 
               including for salaries, operating costs, materials costs, 
               subcontract costs, and any necessary services and facilities.


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<PAGE>


4.             BOARD OF DIRECTORS

4.1            Unless otherwise agreed by the parties hereto, the number of 
directors in the Board shall be four (4), comprising two (2) directors 
appointed by Alliant and Valence, each.  The Board shall be headed by a 
Chairman, to be appointed from one of the directors.

4.2            The right of appointment conferred on a party hereto under 
Section 4.1 shall include the right by that party to remove and replace at any 
time from office, and to determine the period during which such person shall 
hold the office of director.

4.3            The quorum for all meetings of the directors shall be three (3) 
directors. Both parties shall use their best efforts to ensure that the minimum 
number of directors necessary for a quorum be available on at least forty-eight 
(48) hours notice.  The Articles of Association of the Joint Venture Company 
shall allow board meetings to be conducted by telephone conferencing, and 
adoption of resolutions without a board meeting by unanimous written consent.

4.4            All decisions of the Board shall be decided by a simple majority 
vote of those present and voting, except that at least one Board member 
appointed by each party must vote in favor of any matter being passed by the 
Board.

4.5            The Board shall meet at least four (4) times a year, with the 
location of the meeting alternating between Horsham, Pennsylvania and 
Henderson, Nevada.  All expenses incurred by Board members in attending the 
meetings shall be paid by the party that appointed that Board member, and shall 
not be charged to Joint Venture Company.

5.             SHAREHOLDER MEETING

5.1            No business shall be transacted at any general meeting of the 
Joint Venture Company unless a quorum is present.  Two (2) shareholders, with 
at least one Alliant and one Valence shareholder, shall form a quorum.  The 
word "shareholder" in the context of this section includes a person attending 
by proxy, attorney or representative.

5.2            All matters raised at any general meeting of the Joint Venture 
Company shall, save as required by law or as otherwise provided herein, be 
decided by ordinary resolution of the shareholders present at the meeting.  All 
resolutions must be passed by a simple majority vote of those shares voted at 
the meeting, save as required by law or as otherwise provided herein.

6.             INDEBTEDNESS AND ADDITIONAL CAPITALIZATION

The parties hereto agree that in the event any additional working capital is 
required by the Joint Venture Company, such working capital shall be met, to 
the extent possible, through the use of credit.  Such credit shall be from such 
financial institutions as the Board may from time to time agree.  Such credit 
shall be secured by all or such assets of the Joint Venture Company as the 
Board shall determine.  The parties hereto agree to use their best reasonable 
efforts to secure appropriate credit facilities for the Joint Venture Company 
on favorable terms.

7.             DIVIDEND POLICY

The dividends of the Joint Venture Company shall be such as shall be 
recommended by the Board from time to time who shall act in the best interests 
of the Joint Venture Company when making any recommendations therefor it being 
the intention of the parties to distribute profits by way of dividends subject 
to commercial necessity for reinvestment in the Joint Venture Company and 
subject to such method of distribution being to the mutual advantage of the 
shareholders.


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<PAGE>
                        CONFIDENTIAL TREATMENT REQUESTED


8.             TRANSFER OF SHARES

Except for a sale, transfer or assignment as described in section 17.1, or a 
sale, transfer or assignment to their subsidiaries or their divisions, the 
parties hereto shall not sell, transfer, part with or otherwise dispose of its 
ownership of any shares in the Joint Venture Company without the agreement of 
the other party, and then only upon mutually agreeable terms.

9.             TERMINATION

9.1            This Agreement shall renew automatically on each anniversary of 
the Effective Date unless earlier terminated in accordance with this section 9.

9.2            This Agreement shall terminate:

               9.2.1     upon mutual agreement of the parties;
               
               9.2.2     upon failure of the Joint Venture Company to meet 
               the financial goals as described in section 10.15; or
               
               9.2.3     upon failure of the Joint Venture Company to develop 
               the Joint Venture Market as described in section 10.9.

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

               9.3.1     any representation, warranty or statement by such 
               party in any Transaction Document or in any document delivered 
               under any of them is not complied with or is or proves to have 
               been incorrect in any material respect when made; or
               
               9.3.2     such party does not perform or comply with any one 
               or more of its material obligations under any Transaction 
               Document 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.

9.4            In the event a party commits a breach or default, as described 
above in Section 9.1, 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 and thereupon such defaulting party shall transfer all of 
its shares in the Joint Venture Company to the other party and shall cause any 
directors appointed by such party to resign from office.

9.5            Save as hereinafter provided, Alliant shall be entitled to 
forthwith terminate this Agreement if the Valence License and Support 
Agreement, or Laminate Supply Agreement, is terminated or ceases to be in full 
force and effect for any reason whatsoever and without prejudice to any other 
rights and remedies.  Save as hereinafter provided, Valence shall be entitled 
to forthwith terminate this Agreement if the Alliant License and Support 
Agreement is terminated or ceases to be in full force and effect for any reason 
whatsoever and without prejudice to any other rights and remedies. [








                                                                 ] 

9.6            In the event that a party becomes insolvent, dissolves, or other 
wise ceases to exist, this Agreement shall immediately terminate.  Further, in 
such an event, the Joint Venture Company shall be immediately and automatically 
liquidated and dissolved, with its surplus assets (if any) upon such 
liquidation distributed to the shareholders.


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<PAGE>

9.7            The termination of this Agreement from any cause shall not 
release any party hereto from any liability which at the time of termination 
has already accrued to any party hereto, or which thereafter may accrue in 
respect of any act or omission prior to such termination.

9.8            In the event of any termination of this Agreement, regardless of 
cause or breach by either party, the License and Support Agreements and 
Laminate Supply Agreement shall immediately be terminated.

10.            VARIOUS CORPORATE MATTERS

10.1           The registered office of the Joint Venture Company shall be at 
such location as the Board may from time to time decide.

10.2           The Secretary of the Joint Venture Company shall be appointed by 
the Board.

10.3           The auditors of the Joint Venture Company shall be mutually 
agreed upon by the parties.

10.4           The financial year of the Joint Venture Company shall end on 31 
December in each calendar year.

10.5           The Joint Venture Company shall maintain accurate and complete 
accounting records, which shall be in accordance with Generally Accepted 
Account Principles (GAAP) and each party or its appointed representatives shall 
have full access to all accounting and other records of the Joint Venture 
Company at all reasonable times.  Each party shall have the right to audit the 
records of the Joint Venture Company, at its own expense.  The Joint Venture 
Company shall provide to each of the parties financial information of the Joint 
Venture Company necessary for each party to meet their financial reporting 
obligations, including reconciliation between the Joint Venture Company's 
general accepted accounting policies and those of each party, on a quarterly 
basis.

10.6           Each party shall have veto power over major decisions in the 
management of the Joint Venture Company.

10.7           The Board shall have the exclusive right to select, hire and 
discharge the most senior level position that is responsible for:

               10.7.1    the Joint Venture Company management (i.e. 
               President, Chief Executive Officer);
               
               10.7.2    manufacturing, operations (i.e. Chief Operating 
               Officer, Vice President of Manufacturing);
               
               10.7.3    finance (i.e. Chief Financial Officer);
               
               10.7.4    engineering, research and development (i.e. Chief 
               Technical Officer, Vice President of Engineering, Vice 
               President of Research and Development); and
               
               10.7.5    sales, marketing (i.e. Vice President of Marketing 
               and Sales).

10.8           Joint Venture Company general manager shall be a full time 
employee of Joint Venture Company reporting to Joint Venture Company Board.

10.9           Joint Venture Company shall not own any plant, property or 
equipment.  All manufacturing shall be subcontracted, primarily to Alliant.  
Alliant shall invest in the necessary production tooling and manufacturing 
equipment required to support the subcontracted manufacturing.  Alliant's 
investment in such tooling and equipment shall be triggered upon acceptance by 
the Joint Venture Company of a production contract.


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<PAGE>
                        CONFIDENTIAL TREATMENT REQUESTED

10.10          Joint Venture Company may rent office and fabrication space from 
Alliant at its Power Sources Center located in Horsham, Pennsylvania.

10.11          Joint Venture Company shall only use laminate materials supplied 
by Valence [                                       ] All other components may
be procured from other sources.  Joint Venture Company may purchase services 
for fabrication and packaging from the Alliant Power Sources Center.

               10.11.1   Joint Venture Company shall purchase laminates from 
               Valence at Valence's Fully-Liquidated Manufacturing Cost (as 
               defined in the Battery Laminate Supply Agreement) plus [





                        ]
               
               10.11.2   Joint Venture Company shall purchase administrative 
               services from Alliant at Alliant's cost plus [               ]
               
               10.11.3   Joint Venture Company shall purchase manufacturing 
               services from Alliant at Alliant's cost plus [               ]
               
               10.11.4   Joint Venture Company shall purchase marketing 
               services from Alliant at Alliant's cost plus [             ]
               
               10.11.5   Joint Venture Company shall purchase distribution 
               services from Alliant at Alliant's cost plus [             ]

10.12          While all sales shall be between Joint Venture Company and its 
customers, Alliant shall be exclusively responsible for the marketing and 
distribution of Joint Venture Company products on behalf of Joint Venture 
Company.

10.13          The prices for Joint Venture Company products shall be set by 
the board of directors of Joint Venture Company.  Joint Venture Company shall 
be responsible for all royalties due on the sale of its products.

10.14          Joint Venture Company shall have exclusive rights to the Joint 
Venture Markets in the United States and non-exclusive rights to the Joint 
Venture Markets elsewhere.  Neither Valence nor Alliant shall enter into any 
joint venture, distribution arrangement or partnership in competition with 
Joint Venture Company in these markets.

10.15          Joint Venture Company must meet a gross sales and profitability 
goal of [                                                                 ] 
respectively, by the [     ] year and must increase the gross sales amount by 
[               ] each year and maintain the profitability margin each year 
thereafter.  Should Joint Venture Company fail to meet this measure of success, 
then either party may terminate the Agreement in accordance with section 9, and 
cause the dissolution of Joint Venture Company, and distribution of its assets.

10.16          Alliant shall be able to purchase products from Joint Venture 
Company for its own use (in systems and subsystems manufactured by Alliant) at 
a [               ] discount over the market pricing.  However, it shall be 
noted that Joint Venture Company shall have to pay royalties based on the fair 
market value of such sales.  Alliant shall not use its right to purchase 
products at a discount directly from Joint Venture Company as a way to 
circumvent direct sales by Joint Venture Company to customers.

10.17          Valence shall grant Joint Venture Company a right of first 
refusal to the Space Based Applications market for Valence's battery technology.


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<PAGE>


11.            GOOD FAITH AND RELATIONSHIP BETWEEN PARTIES

11.1           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.

11.2           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, including voting by Board members and the voting 
of shares.

11.3           Nothing in this Agreement shall be construed to imply the 
existence of a partnership between the parties hereto other than as 
shareholders in the Joint Venture Company in accordance with the terms of this 
Agreement.  Valence and Alliant 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 Alliant 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 Alliant 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.

12.            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.

13.            CONFIDENTIALITY AND PUBLIC DISCLOSURE

13.1           "Confidential Information" shall mean that information of either 
party which is disclosed to the other party or the Joint Venture Company 
("Recipient") by reason of the parties' relationship under the Joint Venture 
Agreement, 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.

13.2           Recipient shall receive and use the Confidential Information 
only for performance of Recipient's obligations under the Joint Venture 
Agreement, 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. 

13.3           It is expressly understood that Recipient shall not be liable 
for disclosure of any Confidential Information if the same was in the public 
domain at the time it was disclosed; was known to Recipient at the time of 
disclosure; is disclosed with the prior written approval of the other party 
hereto; is disclosed after five (5) years from the termination of the Joint 
Venture Agreement; was independently developed by Recipient; or becomes known 
to Recipient, on a non-confidential basis, from a source other than the other 
party hereto, without breach of the Joint Venture Agreement or this letter by 
Recipient.

13.4           Each party hereto shall not, except as authorized by the Board, 
or required by any applicable law or regulation of the Cayman Islands or the 
United States of America, reveal to any 


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<PAGE>


person, firm or Joint Venture Company any of the trade secrets, secret or 
confidential operations, processes or dealings or confidential information of 
the Joint Venture Company or any information concerning the organization, 
business, finances, transitions or affairs of the Joint Venture Company which 
may come to his knowledge under the Joint Venture Agreement and shall keep with 
complete secrecy all trade secrets and other confidential information entrusted 
to it 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 the Joint 
Venture Company or its business or may be likely to do so.

13.5           Valence and Alliant agree that the terms and conditions of the 
Joint Venture Agreement and this letter 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 Alliant shall publish or use any 
advertising, sales promotion, press release or publicity matters relating to 
the Joint Venture Agreement or this letter, without the prior written approval 
of the other, which approval shall not be unreasonably withheld.  
Notwithstanding the foregoing, either party may make such disclosures and press 
releases as are necessary to meet its disclosure requirements under the laws, 
regulation and rules of the Cayman Islands or the United States of America.

13.6           Joint Venture Company shall not enter into any agreement that 
would require it to disclose or encumber any Valence or Joint Venture Company 
confidential information or intellectual property rights.

14.            TRADEMARKS AND ADVERTISING, AND SAFETY

14.1           The joint venture Joint Venture Company shall market and sell 
the Batteries for Applications in the Joint Venture Markets 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 Applications in the 
Joint Venture Markets shall belong to and be the absolute property of the Joint 
Venture Company.

14.2           Valence may require Solid Polymer Electrolyte Batteries to be 
marked with the Valence logo and name in a reasonable size so as to be noticed 
by a consumer of such Solid Polymer Electrolyte Batteries.  Any promotional 
material produced by Alliant that specifically references any Solid Polymer 
Electrolyte Battery performance specifications or promotes the additional value 
of such Solid Polymer Electrolyte Batteries, shall also include a reference to 
Valence and an appropriate promotional copy supplied by Valence, upon Valence's 
request. Valence must approve any specifications regarding Batteries prior to 
publication, or distribution, outside the Joint Venture Company, Alliant or 
Valence.

14.3           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 the joint venture Joint 
Venture Company to conduct a recall of Batteries, if such a defect is 
discovered in Batteries already distributed outside Joint Venture Company.  The 
Joint Venture Company shall install and maintain a lot tracking system adequate 
to allow an effective and timely recall.  Further, Valence shall review design 
and quality of products to assure such products meet Valence's design and 
quality standards.

14.4           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.

15.            PERSONNEL

Alliant shall use its best endeavors to procure the relevant personnel required 
by the Joint Venture Company in respect of the management, administration and 
operations of the Joint Venture Company as well as the marketing of the Joint 
Venture Company's products.


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<PAGE>
                        CONFIDENTIAL TREATMENT REQUESTED

16.            INTELLECTUAL PROPERTY LICENSES

16.1           Valence and Alliant, and their Affiliated Companies, shall each 
grant the Joint Venture Company a world-wide, royalty-free, non-transferable, 
non-sublicensable, personal license to all intellectual property created by 
Valence or Alliant, or their Affiliated Companies, prior to, or during, the 
term of this Agreement necessary to design, manufacture, use, sell, and 
distribute Batteries, using Laminate supplied exclusively by Valence, [
                                        ] for Applications in the Joint Venture 
Markets, specifically not including intellectual property related to the 
composition or manufacturing of Laminates.  These licenses shall be exclusive 
in the United States and non-exclusive elsewhere.

16.2           The Joint Venture Company shall grant Valence and Alliant, and 
their Affiliated Companies, a non-exclusive, world-wide, royalty-free, 
non-transferable, non-sublicensable, personal license to all intellectual 
property created by the Joint Venture Company during the term of this Agreement.

17.            GENERAL

17.1           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.

17.2           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. 

17.3           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.

17.4           The validity, performance and construction of this Agreement 
shall be governed by the laws of the state of Delaware (excluding its conflict 
of laws provisions).

17.5           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.

17.6           Each party shall comply with all applicable  laws in performing 
under this Agreement.  

17.7           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.

17.8           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.

17.9           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.


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<PAGE>


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

17.11          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.

17.12          This Agreement, including exhibits, and the other Transaction 
Documents, 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 additional or conflicting terms which may be contained in 
either party's purchase orders or order acknowledgment forms.  In the event of 
any conflict between the provisions of this Agreement and the Articles of 
Incorporation / By-Laws of the Joint Venture Company, the provisions of this 
Agreement shall prevail over Articles of Incorporation / By-Laws.

ACCEPTED AND AGREED:

VALENCE TECHNOLOGY, INC.                 ALLIANT TECHSYSTEMS INC.
                    
By: /s/ Calvin L. Reed                   By:  /s/ Richard Schwartz
   -----------------------------------      -----------------------------------
signature of authorized representative   signature of authorized representative

Calvin L. Reed                           Richard Schwartz
--------------------------------------   --------------------------------------
printed name                              printed name

President                                President and CEO
--------------------------------------   --------------------------------------
title                                     title
10-7-96                                  10-7-96
--------------------------------------   --------------------------------------
date                                      date


VALENCE TECHNOLOGY CAYMAN ISLANDS INC.  
                    
By: /s/ Melvern Slates 
--------------------------------------
signature of authorized representative  

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

General Manager     
--------------------------------------
title          
10-7-96
--------------------------------------
date








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