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                          1990 STOCK OPTION PLAN


1.   PURPOSE
a.  The purpose of the Plan is to provide a means by which selected key
employees and directors (if declared eligible under paragraph 4) of and
consultants to Valence Technology, Inc., a Delaware corporation (the "Company"),
and its Affiliates, as defined in subparagraph 1(b), may be given an opportunity
to purchase stock of the Company.
b.  The word "Affiliate" as used in the Plan means any parent corporation or
subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
c.  The Company, by means of the Plan, seeks to retain the services of persons
now employed by or serving as consultants or directors to the Company, to secure
and retain the services of new employees/persons capable of filling such
positions, and to provide incentives for such persons to exert maximum efforts
for the success of the Company.
d.  The Company intends that the options issued under the Plan shall, in the
discretion of the Board of Directors of the Company (the "Board") or any
committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c), be either incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as incentive stock options ("Supplemental Stock
Options").  All options shall be separately designated Incentive Stock Options
or Supplemental Stock Options at the time of grant, and in such form as issued
pursuant to paragraph 5, and a separate certificate or certificates shall be
issued for shares purchased on exercise of each type of option.  An option
designated as a Supplemental Stock Option shall not be treated as an incentive
stock option.

2.  ADMINISTRATION
a.  The Plan shall be administered by the Board unless and until the Board
delegates administration to a committee, as provided in subparagraph 2(c). 
Whether or not the Board has delegated administration, the Board shall have the
final power to determine all questions of policy and expediency that may arise
in the administration of the Plan.
b.  The Board shall have the power, subject to, and within the limitations of,
the express provisions of the Plan:
    (1)  To determine from time to time which of the persons eligible under the
    Plan shall be granted options; when and how the option shall be granted;
    whether the option will be an Incentive Stock Option or a Supplemental
    Stock Option; the provisions of each option granted (which need not be
    identical), including the time or times during the term of each option
    within which all or portions of such option may be exercised; and the
    number of shares for which an option shall be granted to each such person.
    (2)  To construe and interpret the Plan options granted under it, and to
    establish, amend and revoke rules and regulations for its administration. 
    The Board, in the exercise of this power, may correct any defect, omission
    or inconsistency in the Plan or in any option agreement, in a manner and to
    the extent it shall deem necessary or expedient to make the Plan fully
    effective.
    (3)  To amend the Plan as provided in paragraph 10.
    (4)  Generally, to exercise such powers and to perform such acts as the
    Board deems necessary or expedient to promote the best interests of the
    Company.
c.  The Board may delegate administration of the Plan to a committee or 
committees ("Committee") of one or more members of the Board.  In the 
discretion of the Board, a Committee may consist solely of two (2) or more 
Outside Directors, in accordance with Code Section 162(m), or solely of two 
(2) or more Non-Employee Directors, in accordance with Rule 16b-3.  If 
administration is delegated to a Committee, the Committee shall have, in 
connection with the administration of the Plan, the powers theretofore 
possessed by the Board (and references in this Plan to the Board shall 
thereafter be to the Committee), subject, however, to such resolutions, not 
inconsistent with the provisions of the Plan, as may 

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be adopted from time to time by the Board.  The Board may abolish the 
Committee at any time and revest in the Board the administration of the Plan.
d.  "Non-Employee Director" means a director who either (I) is not a current
employee or officer of the Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933 ("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
e.  "Outside Director"  means a director who either (I) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

3.  SHARES SUBJECT TO THE PLAN
a.  Subject to the provisions of paragraph 9 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate Three Million Five Hundred Thousand
(3,500,000) shares of the Company's common stock.  If any option granted under
the Plan shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again become
available for the Plan.
b.  The stock subject to the Plan may be unissued reacquired shares, bought on
the market or otherwise.
c.  An Incentive Stock Option may be granted to an eligible person under the
Plan only if the aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which incentive stock options (as
defined in the Code) granted after 1986 are exercisable for the first time by
such optionee during any calendar year under all incentive stock option plans of
the Company and its Affiliates does not exceed one hundred thousand dollars
($100,000).  Should it be determined that an option granted under the Plan
exceeds such maximum for any reason other than the failure of a good faith
attempt to value the stock subject to the option, such option shall be
considered a Supplemental Stock Option to the extent, but only to the extent, of
such excess; provided, however, that should it be determined that an entire
option or any portion thereof does not qualify for treatment as an incentive
stock option by reason of exceeding such maximum, such option or the applicable
portion shall be considered a Supplemental Stock Option.

4.  ELIGIBILITY
a.  Incentive Stock Options may be granted only to employees (including
officers) of the Company or its Affiliates.  A director of the Company shall not
be eligible to receive Incentive Stock Options unless such director is also an
employee (including an officer) of the Company or any Affiliate.  Supplemental
Stock Options may be granted only to key employees (including officers) of,
directors of or consultants to the Company or its Affiliates.
b.  Subject to the provisions of Section 9 relating to adjustments upon changes
in stock, no person shall be eligible to be granted options covering more than
seven hundred thousand (700,000) shares of the Company's common stock in any
fiscal year.
c.  No person shall be eligible for the grant of an option under the Plan if,
at the time of grant, such person owns (or is deemed to own pursuant to Section
424(d) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates unless the exercise price of such option is at least one hundred ten
percent (110%) of the fair market value of such stock at the date of grant and
the term of the option does not exceed five (5) years from the date of grant.

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5.  OPTION PROVISIONS
Each option shall be in such form and shall contain such terms and conditions as
the Board or the Committee shall deem appropriate.  The provisions of separate
options need not be identical, but each option shall include (through
incorporation of provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
a.  The term of any option shall not be greater than ten (10) years from the
date it was granted.
b.  The exercise price of each Incentive Stock Option shall be not less than
one hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted.  The exercise price of each
Supplemental Stock Option shall be not less than eighty-five percent (85%) of
the fair market value of the stock subject to the option on the date the option
is granted.
c.  The purchase price of stock acquired pursuant to an option shall be paid,
to the extent permitted by applicable statutes and regulations, either:
    (i)  in cash at the time the option is exercised, or
    (ii) at the discretion of the Board or the Committee, either at the time of
    the grant or exercise of the option,
         (A)  by delivery to the Company of other common stock of the Company,
         (B)  according to a deferred payment or other arrangement (which may
         include, without limiting the generality of the foregoing, the use of
         other common stock of the Company) with the person to whom the option
         is granted or to whom the option is transferred pursuant to
         subparagraph 5(d), or
         (C)  in any other form of legal consideration that may be acceptable
         to the Board or the Committee.
In the case of any deferred payment arrangement, interest shall be payable at
least annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.
d.  An Incentive Stock Option shall not be transferable except by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Incentive Stock Option is granted only by
such person.  A Supplemental Stock Option may be transferred to the extent
provided in the option agreement; provided that if the option agreement does not
expressly permit the transfer of a Supplemental Stock Option, the Supplemental
Stock Option shall not be transferable except by will, by the laws of descent
and distribution or pursuant to a domestic relations order satisfying the
requirements of Rule 16b-3, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or any transferee
pursuant to a domestice relations order.  Notwithstanding the foregoing, the
person to whom the option is granted may, be delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the optionee, shall thereafter be entitled to exercise
the option.e. The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal).  From time to time during each of such installment periods, the option
may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the option
was not fully exercised.  During the remainder of the term of the option (if its
term extends beyond the end of the installment periods), the option may be
exercised from time to time with respect to any shares then remaining subject to
the option.  The provisions of this subparagraph 5(e) are subject to any option
provisions governing the minimum number of shares as to which an option may be
exercised.
f.  The Company may require any optionee, or any person to whom an option is
transferred under subparagraph 5(d), as a condition of exercising any such
option,
    (1)  to give written assurances satisfactory to the Company as to the
    optionee's knowledge and experience in financial and business matters
    and/or to employ a purchaser representative reasonably satisfactory to the
    Company who is knowledgeable and experienced in financial and business
    matters, and that he or she is capable of evaluating, alone or together
    with the purchaser representative, the merits and risks of exercising the
    option; and
    (2)  to give written assurances satisfactory to the Company stating that
    such person is acquiring the stock subject to the option for such person's
    own account and not with any present intention of selling or otherwise
    distributing the stock.  

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    These requirements, and any assurances given pursuant to such requirements, 
    shall be inoperative if
         (i)  the issuance of the shares upon the exercise of the option has
         been registered under a then currently effective registration
         statement under the Securities Act of 1933, as amended (the
         "Securities Act"), or
         (ii) as to any particular requirement, a determination is made by
         counsel for the Company that such requirement need not be met in the
         circumstances under the then applicable securities laws.
g.  An option shall terminate three (3) months after termination of the
optionee's employment or relationship as a consultant or director with the
Company or an Affiliate, unless
    (i)  such termination is due to such person's permanent and total
    disability, within the meaning of Section 422 (c)(7) of the Code, in which
    case the option may, but need not, provide that it may be exercised at any
    time within one (1) year following such termination of employment or
    relationship as a consultant or director; or
    (ii) the optionee dies while in the employ of or while serving as a
    consultant or director to the Company or an Affiliate, or within not more
    than three (3) months after termination of such relationship, in which case
    the option may, but need not, provide that it may be exercised at any time
    within eighteen (18) months following the death of the optionee by the
    person or persons to whom the optionee's rights under such option pass by
    will or by the laws of descent and distribution; or
    (iii)     the option by its terms specifies either
         (a)  that it shall terminate sooner than three (3) months after
         termination of the optionee's employment or relationship as a
         consultant or director, or
         (b)  that it may be exercised more than three (3) months after
         termination of such relationship with the Company or an Affiliate.
This subparagraph 5(g) shall not be construed to extend the term of any option
or to permit anyone to exercise the option after expiration of its term, nor
shall it be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment or relationship as a consultant or director.
h.  The option may, but need not, include a provision whereby the optionee may
elect at any time during the term of his or her employment or relationship as a
consultant or director with the Company or any Affiliate to exercise the option
as to any part or all of the shares subject to the option prior to the stated
vesting date of the option or of any installment or installments specified in
the option.  Any shares so purchased from any unvested installment or option may
be subject to a repurchase right in favor of the Company or to any other
restriction the Board or the Committee determines to be appropriate.
i.  To the extent provided by the terms of an option, the optionee may satisfy
any federal, state or local tax withholding obligation relating to the exercise
of such option by any of the following means or by a combination of such means:
    (1)  tendering a cash payment;
    (2)  authorizing the Company to withhold from the shares of the common
    stock otherwise issuable to the participant as a result of the exercise of
    the stock option a number of shares having a fair market value less than or
    equal to the amount of the withholding tax obligation; or
    (3)  delivering to the Company owned and unencumbered shares of the common
    stock having a fair market value less than or equal to the amount of the
    withholding tax obligation.

6.  COVENANTS OF THE COMPANY
a.  During the terms of the options granted under the Plan, the Company shall
keep available at all times the number of shares of stock required to satisfy
such options.
b.  The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of stock upon exercise of the options granted under the Plan;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option.  If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be

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relieved from any liability for failure to issue and sell stock upon exercise of
such options unless and until such authority is obtained.

7.  USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the Plan shall
constitute general funds of the Company.

8.  MISCELLANEOUS
a.  Neither an optionee nor any person to whom an option is transferred under
subparagraph 5(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such option unless and
until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
b.  Throughout the term of any option granted pursuant to the Plan, the Company
shall make available to the holder of such option, not later than one hundred
twenty (120) days after the close of each of the Company's fiscal years during
the option term, upon request, such financial and other information regarding
the Company as comprises the annual report to the stockholders of the Company
provided for in the bylaws of the Company.
c.  Nothing in the Plan or any instrument executed or option granted pursuant
thereto shall confer upon any eligible employee or optionee any right to
continue in the employ of the Company or any Affiliate (or to continue acting as
a consultant or director) or shall affect the right of the Company or any
Affiliate to terminate the employment or consulting relationship or directorship
of any eligible employee or optionee with or without cause.  In the event that
an optionee is permitted or otherwise entitled to take a leave of absence, the
Company shall have the unilateral right to
    (i)  determine whether such leave of absence will be treated as a
    termination of employment for purposes of paragraph 5(g) hereof and
    corresponding provisions of any outstanding options, and
    (ii) suspend or otherwise delay the time or times at which the shares
    subject to the option would otherwise vest.

9.  ADJUSTMENTS UPON CHANGES IN STOCK
a.  If any change is made in the stock subject to the Plan, or subject to any
option granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), then the Plan and outstanding options
shall be appropriately adjusted:
    (1)  in the class(es) and maximum number of shares subject to the Plan; and
    (2)  in the class(es) and number of shares and price per share of stock
    subject to outstanding options.
b.  In the event of:
    (1)  a merger or consolidation in which the Company is not the surviving
    corporation; or
    (2)  a reverse merger in which the Company is the surviving corporation but
    the shares of the Company's common stock outstanding immediately preceding
    the merger are converted by virtue of the merger into other property,
    whether in the form of securities, cash or otherwise;
then to the extent permitted by applicable law:
    (i)  any surviving corporation shall assume any Options outstanding under
    the Plan or shall substitute similar Options for those outstanding under
    the Plan, or
    (ii) such Options shall continue in full force and effect.
In the event any surviving corporation refuses to assume such Options, refuses
to continue such Options in full force and effect, or refuses to substitute
similar options for those outstanding under the Plan, then all such vested
Options shall be terminated if not exercised prior to such event, and all such
unvested Options shall terminate upon such event.  In the event of a dissolution
or liquidation of the Company, all vested Options outstanding under the Plan
shall terminate if not exercised prior to such event, and all unvested Options
outstanding under the Plan shall terminate upon such event.

10. AMENDMENT OF THE PLAN
a.  The Board at any time, and from time to time, may amend the Plan. However,
except as provided in paragraph 9 relating to adjustments upon changes in stock,
no 

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amendment shall be effective unless approved by the stockholders of the
Company to the extent stockholder approval is necessary for the Plan to satisfy
the requirements of Rule 16b-3 under the Exchange Act or any Nasdaq or
securities exchange listing requirements.
b.  It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee incentive stock
options and/or to bring the Plan and/or incentive stock options granted under it
into compliance therewith.
c.  Rights and obligations under any option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan unless
    (i)  the Company requests the consent of the person to whom the option was
    granted and
    (ii) such person consents in writing.

11. TERMINATION OR SUSPENSION OF THE PLAN
a.  The Board may suspend or terminate the Plan at any time.  Unless sooner
terminated, the Plan shall terminate ten (10) years from the date the Plan is
adopted by the Board or approved by the shareholders of the Company, whichever
is earlier.  No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
b.  Rights and obligations under any option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted.

12.      EFFECTIVE DATE OF PLAN
The Plan shall become effective as determined by the Board, but no options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, and, if required, an appropriate
permit has been issued by the Commissioner of Corporations of the State of
California.


ADOPTED BY THE BOARD OF DIRECTORS ON JULY 17, 1990
APPROVED BY THE STOCKHOLDERS ON JULY 23, 1990
AMENDED BY THE BOARD OF DIRECTORS ON OCTOBER 3, 1990
AMENDED BY THE BOARD OF DIRECTORS ON MARCH 14, 1992
APPROVED BY THE STOCKHOLDERS ON MARCH 23, 1992
AMENDED BY THE BOARD OF DIRECTORS ON JUNE 18, 1992
AMENDED BY THE STOCKHOLDERS ON SEPTEMBER 2, 1993
AMENDED BY THE BOARD OF DIRECTORS ON DECEMBER 18, 1996
AMENDED BY THE STOCKHOLDERS ON JANUARY 31, 1997

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