**Exhibit 4.3**

 

December 21, 2007

 

Carl E. Berg

Berg & Berg Enterprises, LLC

10050 Bandley Drive

Cupertino, CA 95014

 

                ***Re:******Series C-1 and C-2 Preferred Stock Dividends***

 

Dear Carl:

 

                Thepurpose of this letter is to memorialize certain prior understandings regardingthe cumulative dividends on certain preferred stock of Valence Technology, Inc.(**“*Valence*”**)held by Berg & Berg Enterprises, LLC (**“*Berg & Berg*”**).

 

                Byway of background, on July 14, 2005, Berg & Berg and Valenceentered into an assignment agreement whereby Valence assigned to Berg &Berg the right to purchase certain shares of Series C-2 ConvertiblePreferred Stock (the **“*Series **C-2**Agreement*”**). Similarly, on December 14, 2005, Berg &Berg and Valence entered into an assignment agreement whereby Valence assignedto Berg & Berg the right to purchase certain shares of Series C-1Convertible Preferred Stock (the **“*Series **C-1 Agreement,*”**and collectively with Series C-2 Agreement, the **“*Preferred Stock Agreements*”**). Pursuant to the Series C-1 Agreement, Berg & Bergpurchased 430 shares of Series C-1 Convertible Preferred Stock (the **“*Series **C-1 Preferred Stock*”**). Likewise, pursuant to the Series C-2Agreement, Berg & Berg purchased 431 shares of Series C-2Convertible Preferred Stock (the **“*Series C-2Preferred Stock,*”** and collectively with the Series C-1Preferred Stock, the **“*PreferredStock*”**). After such purchases, Berg & Berg holdsall of the outstanding shares of Preferred Stock.

 

                Therights and obligations with respect to the Preferred Stock are set forth in theCertificate of Designations, Preferences and Rights of Series C-1Convertible Preferred Stock of Valence (the **“*Series **C-1Preferred Stock Designation*”**) and the Certificate ofDesignations, Preferences and Rights of Series C-2 Convertible PreferredStock of Valence (the **“*Series **C-2**Preferred Stock Designation,*”** and collectively with the Series C-1Preferred Stock Designation, the **“*Preferred StockDesignations*”**). 

 

                Inaddition to conferring the right to purchase Preferred Stock, the PreferredStock Agreements specifically provided that Valence’s failure to redeem thePreferred Stock on December 15, 2005 in accordance with the terms of thePreferred Stock Designations did not constitute a default under the PreferredStock Designations. In addition, Berg & Berg waived the accrual of anydefault interest applicable as a result of Valence’s failure to redeem thePreferred Stock.

 

ValenceTechnology, Inc. 12201 Technology Blvd. Suite 150, Austin, TX 78727

Tel:512-527-2900, Fax: 512-527-2910

 

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                Although it is not specified in the Preferred Stock Agreements, thisletter confirms that it also was the mutual understanding of Berg & Berg and Valence that, until we agreedotherwise, Valence would notbe required to pay to Berg &Berg cumulative dividends on thePreferred Stock, as specified in the Preferred Stock Designations, which provided that such dividends would be due andpayable on a quarterly basis. Instead,such dividends would continue to cumulate and accrue (without interest) on thePreferred Stock according to the terms set forth in the Preferred Stock Designations, to be paid at such time as we maymutually agree, or upon redemption or conversion in accordance with the terms of the Preferred StockDesignations. Thus, Valence has not failed to make when due any payments ofPreferred Stock dividends owed to Berg & Berg and is not in default under the terms of the PreferredStock Designations.

 

                Ifthe facts and recitations set forthin this letter are in accord with your understanding, please sign, date and return the enclosed counterpart ofthis letter to us.

 
|   | Very truly yours,            |
|--------|------------------------------|
|   |                         |
|   | **VALENCE TECHNOLOGY, INC.** |
|   |                         |
|   | By:                     | /s/ Robert L. Kanode |
|   |                         | Robert L. Kanode |
|   |                         | President and Chief Executive Officer |

 

AGREED AND ACCEPTED THIS

21st day of December      , 2007

 

**BERG & BERG ENTERPRISES, LLC**

 
| By:  | /s/ Carl E. Berg |   |
|-----------|------------------|--------|
|      | Carl E. Berg     |

 

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