EXHIBIT 10.5


                   AMENDMENT NO. 7 TO ORIGINAL LOAN AGREEMENT


     This Amendment No. 7 to Original Loan Agreement (this "AMENDMENT") is
entered into as of October 10, 2001 between Valence Technology, Inc.
(previously Ultracell, Inc.), a Delaware corporation ("BORROWER"), and Berg &
Berg Enterprises, LLC ("LENDER").

     A. Borrower is indebted to Lender pursuant to, among other documents, a
Loan Agreement, dated as of July 17, 1990 (the "ORIGINAL LOAN AGREEMENT"),
between Borrower and Baccarat Electronics, Inc. (the "ORIGINAL LENDER") and
amended as of March 15, 1991, as of March 24, 1992, as of August 17, 1992, as of
September 19, 1997, as of July 17, 1998, and as of November 27, 2000 (the Loan
Agreement and the amendments set forth in this sentence are referred to
collectively herein as the "ORIGINAL LOAN AGREEMENTS"), pursuant to which the
Original Lender agreed to provide a revolving line of credit to Borrower in an
aggregate principal sum of $15,000,000. Original Lender previously assigned all
of its rights, duties and obligations under the Original Loan Agreements and
related agreements to Lender.

     B. The outstanding principal balance and accrued and unpaid interests owing
under the Original Loan Agreements as of October 10, 2001 is $17,721,847. The
Loans made pursuant to the Original Loan Agreement are due and payable in full,
and the terms of the Loans expire, on August 30, 2002.

     C. In connection with the Original Loan Agreement, Borrower executed in
favor of Lender a Security Agreement dated as of July 17, 1990 (the "ORIGINAL
SECURITY AGREEMENT"), pursuant to which Borrower granted Lender a security
interest in substantially all of Borrower's assets.

     D. Borrower and Lender subsequently entered into that certain Loan
Agreement, dated October 5, 2001 ("NEW LOAN AGREEMENT"), whereby Lender agreed
to make advances of immediately available funds to Borrower up to an aggregate
principal amount of Twenty Million Dollars ($20,000,000) from time to time, on
the terms and conditions set forth therein.

     E. Pursuant to the New Loan Agreement, Borrower and Lender entered into
that certain Security Agreement, dated October 5, 2001 (the "NEW SECURITY
AGREEMENT"), pursuant to which Borrower's obligations under the Original Loan
Agreements and the New Loan Agreement are secured by a security interest in the
Collateral (as defined in the New Security Agreement).

     F. Borrower and Lender now desire to amend the Original Loan Agreement to
conform certain terms and conditions thereof with the New Loan Agreement.

     NOW THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties agree as follows:

     1. NO FUTURE LOANS UNDER ORIGINAL LOAN AGREEMENT. Borrower agrees that
Lender has no further obligation or commitment of any kind to make any loans or
advances to Borrower pursuant to the Original Loan Agreements. Borrower further
confirms that the balance of unpaid principal and accrued and unpaid interest
due under the Original Loan Agreements is as set forth in Recital B hereof.


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     2. DESCRIPTION OF CHANGE IN TERMS.

     A. MODIFICATION(S) TO BORROWER'S COVENANTS. Section 3 of the Original Loan
Agreement, as amended, is replaced in its entirety with the following:

     3.1. BORROWER'S AFFIRMATIVE COVENANTS

     Borrower covenants that until all obligations of Borrower under this
     Agreement, the Security Agreement and the Note are satisfied in full,
     Borrower:

     3.1.1. BORROWER SEC DOCUMENTS. Shall prepare and timely file all reports
     and other filings required under applicable U.S. federal securities laws in
     accordance with all relevant statutory requirements and the rules and
     regulations of the Securities and Exchange Commission.

     3.1.2. NASDAQ STOCK MARKET LISTING. Shall maintain the listing of the
     Common Stock on the Nasdaq National Market and shall timely comply with all
     applicable listing maintenance and continuity requirements of the Nasdaq
     Stock Market. In the event Borrower fails to meet any such requirements,
     Borrower shall take and cause to be taken such actions as are necessary and
     within its direct or indirect control to maintain the listing of the Common
     Stock on the Nasdaq National Market.

     3.1.3. COMPLIANCE WITH LAW. In addition to the covenant contained in
     Section 3.1.1, shall comply in all material respects with the requirements
     of all applicable laws, rules, regulations and orders of any governmental
     authority, and shall comply with all provisions of Borrower's certificate
     of incorporation and by laws.

     3.1.4. TAXES AND OTHER LIABILITIES. Shall pay and discharge when due any
     and all indebtedness, obligations, assessments and taxes, including federal
     and state income taxes, except such as Borrower may in good faith contest
     or as to which a bona fide dispute may arise; provided that provision is
     made to the satisfaction of Lender for eventual payment thereof in the
     event that it is found that the same is an obligation of Borrower.

     3.1.5. LITIGATION. Shall promptly give notice in writing to Lender of any
     litigation pending or threatened by or against Borrower with a potential
     liability in excess of $100,000.

     3.1.6. NOTICE TO LENDER. Shall promptly give notice in writing to Lender of
     (i) the occurrence of any Event of Default, or (ii) any change in name,
     identity or corporate structure of Borrower, regardless of whether such
     event is a breach of this Agreement, the Note or the Security Agreement.

     3.1.7. LEGAL EXISTENCE AND GOOD STANDING. Shall, and shall cause each of
     its Subsidiaries to, maintain its legal existence and its qualification and
     good standing in all jurisdictions in which the failure to maintain such
     existence


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     and qualification or good standing could reasonably be expected to have a
     material adverse effect on Borrower.

     3.1.8 MAINTENANCE OF PROPERTY; INSPECTION OF PROPERTY.

          (a) Shall, and shall cause each of its Subsidiaries to, maintain all
     of its Property necessary and useful in the conduct of its business, in
     good operating condition and repair, ordinary wear and tear excepted.

          (b) Shall permit representatives and independent contractors of Lender
     to visit and inspect any of its Property, to examine its corporate,
     financial and operating records, and make copies thereof or abstracts
     therefrom and to discuss its affairs, finances and accounts with its
     directors, officers and independent public accountants, at such reasonable
     times during normal business hours and as soon as may be reasonably
     desired.

     3.1.9. INSURANCE. Shall maintain, and shall cause each of its Subsidiaries
     to maintain, with financially sound and reputable insurers, insurance
     against loss or damage by fire with extended coverage, public liability and
     third party Property damage.

     3.2. BORROWER'S NEGATIVE COVENANTS

     Borrower further covenants that until payment in full of the Note and all
     other amounts due hereunder, Borrower will not without the prior written
     consent of Lender:

     3.2.1. GUARANTEES. Guarantee or become liable in any way as surety,
     endorser (other than as endorser of negotiable instruments in the ordinary
     course of business) or accommodation endorser or otherwise for the debts or
     obligations of any other person or entity.

     3.2.2. LOANS OR ADVANCES. Except as set forth on Schedule 3.2.2, make or
     permit to exist any loans or advances to, or investments in, any person or
     entity, except:

          (a) advances in the nature of accounts receivable, general intangibles
     or notes receivable arising from the licensing of software, from the sale
     of goods or services or otherwise in the ordinary course of business;

          (b) advances to employees of Borrower and its Subsidiaries in
     reasonable amounts approved by the board of directors of Borrower.

          (c) investments in cash and highly liquid investments with a maturity
     of 90 days or less at the date of purchase;

          (d) investments by Borrower in its existing wholly-owned Subsidiaries
     in the ordinary course of business;


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          (e) investments by existing wholly-owned Subsidiaries of Borrower in
     Borrower or any other wholly-owned Subsidiary of Borrower in the ordinary
     course of business;

          (f) securities received in connection with the satisfaction or
     enforcement of indebtedness or claims due or owing to Borrower or any of
     its Subsidiaries or as security of any such indebtedness or claim;

          (g) prepayments by Borrower or its Subsidiaries in the ordinary course
     of business; and

          (h) other loans, advances or investments in an aggregate amount not to
     exceed $1,000,000 outstanding at any time.

     3.2.3. DISTRIBUTIONS. Declare or pay any dividends or any other
     distributions on account of any shares of any class of capital stock of
     Borrower, either in cash or any other Property, to any stockholder or
     equity interest holder of or in Borrower or any Subsidiary, nor redeem,
     retire, repurchase or otherwise acquire any shares of capital stock of
     Borrower.

     3.2.4. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
     security interest in, or lien upon, all or any portion of Borrower's or any
     Subsidiary's assets now owned or hereafter acquired, except the liens of
     Lender or other liens permitted by Section 5.4 of that certain Loan
     Agreement between Borrower and Lender dated October 5, 2001.

     3.2.5. CONDUCT OF BUSINESS. Change the nature of the business heretofore
     conducted by Borrower in the usual, regular and ordinary course.

     B. MODIFICATIONS TO EVENTS OF DEFAULT. Section 4 of the Original Loan
Agreement, as amended, is replaced in its entirety with the following:

     4.1. EVENTS OF DEFAULT. With respect to the Note, the following events are
     "Events of Default":

     4.1.1. Default shall be made by Borrower in the payment of principal of or
     any interest on the Note when and as the same shall become due and payable,
     whether at maturity or at a date fixed for prepayment or by acceleration or
     otherwise;

     4.1.2. Default shall be made in the due performance or observance of-any
     other covenant, agreement or provision herein, in the Security Agreement,
     or in any other loan agreement to be performed or observed by Borrower, or
     a material breach shall exist in any representation or warranty herein
     contained or in the Note or the Security Agreement, and such default or
     breach shall have continued uncured for a period of 30 days after written
     notice thereof to Borrower from Lender;


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     4.1.3. Borrower shall be involved in financial difficulties as evidenced
     by:

          (a) an admission in writing by Borrower of its inability to pay its
     debts generally as they become due;

          (b) Borrower filing a petition in bankruptcy or for reorganization or
     for the adoption of an arrangement under the Bankruptcy Code (as now or in
     the future amended) or an admission seeking the relief therein provided;

          (c) Borrower making a general assignment for the benefit of its
     creditors;

          (d) Borrower consenting to the appointment of a receiver or trustee
     for all or a substantial part of the Property of Borrower or approving as
     filed in good faith a petition filed against Borrower under said Bankruptcy
     Code (in both cases without the consent of Borrower), which order shall not
     have been vacated or set aside or otherwise terminated within 60 days from
     the date of entry or shall have been unstayed for a period of 60 days;

          (e) the assumption of custody or sequestration by a court of competent
     jurisdiction of all or substantially all the Property of Borrower, which
     custody or sequestration shall not have been terminated within 90 days from
     its assumption or shall have been unsuspended for a period of 60 days; or

          (f) an attachment being made on any substantial part of the Property
     or assets of Borrower which shall not be discharged within 60 days from the
     making thereof.

     4.1.4. Default made by Borrower in (i) any other note, agreement or other
     instrument evidencing any other indebtedness for borrowed money between
     Borrower and Lender, or (ii) any agreement between Borrower and a third
     party giving the third party the right to accelerate any indebtedness for
     borrowed money exceeding $100,000 in principal amount.

     4.1.5. A money judgment(s) in the aggregate during the term of this
     Agreement of at least $100,000 is rendered against Borrower and is
     unsatisfied and unstayed for 10 days.

     4.1.6. Borrower terminates or suspends its business, or there is filed by
     or against Borrower any petition seeking the liquidation or dissolution of
     Borrower or the commencement of any other procedure to liquidate or
     dissolve Borrower, or there occurs any event, condition or circumstances
     which causes the liquidation or dissolution of Borrower.

     4.1.7. Borrower or any person acting for Borrower makes any material
     misrepresentation or material misstatement now or in the future in any
     warranty or representation in this Agreement or in any writing delivered to


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     Lender to induce Lender to enter this Agreement, the Note or the Security
     Agreement.

     4.1.8. The closing of (i) a merger, consolidation, reorganization,
     transaction or series of transactions which results in the stockholders of
     Borrower as constituted immediately prior to such event holding less than a
     majority of the voting power of Borrower or the surviving entity in such
     transaction(s); or (ii) a sale, transfer or other disposition of
     substantially all of the assets of Borrower (each a "CHANGE OF CONTROL").

     4.2. REMEDIES UPON DEFAULT.

     4.2.1. Upon the occurrence and during the continuation of any of the above
     Events of Default, Lender may, by notice to Borrower, terminate its
     commitment to make any further Loans and declare the unpaid principal and
     all accrued interest on the Loans and the Note, and all other amounts
     payable under this Agreement or the Security Agreement, to be immediately
     due and payable, whereupon all such principal, interest and other amounts
     shall be forthwith due and payable, without presentment, demand, protest or
     further notice of any kind; and provided that, in the case of occurrence of
     an Event of Default under 4.1.3 or 4.1.6, Borrower's commitment to make any
     further Loans shall be automatically terminated and all such principal,
     interest and other amounts shall be automatically due and payable, without
     presentment, demand, protest or further notice of any kind.

     4.2.2. Upon the occurrence and during the continuation of any of the above
     Events of Default, Lender shall have, in addition to all other rights and
     remedies provided herein or by applicable law, all of the rights and
     remedies of a secured party under the Uniform Commercial Code of the State
     of California, including, but not limited to, the right to take possession
     of the collateral covered by the Security Agreement, and for that purpose
     Lender may, and Borrower hereby authorizes Lender to, enter upon any
     premises on which any such collateral may be located or situated and remove
     the same therefrom or without removal render the same unusable and may use
     or dispose of any such collateral on such premises without any liability
     for rent, storage, utilities or other sums, and upon request Borrower
     shall, to the extent practicable, assemble and make any such collateral
     available to Lender at a place to be designated by Lender, which is
     reasonably convenient to Borrower and Lender. Borrower agrees that, to the
     extent notice of sale shall be required by law, at least five days' notice
     to Borrower of the time and place of any public sale or the time after
     which any private sale or any other intended disposition is to be made
     shall constitute reasonable notification of such sale or disposition.
     Lender shall also have the right to apply for and have a receiver appointed
     by a court of competent jurisdiction in any action taken by Lender to
     enforce its rights and remedies hereunder, to manage, protect and preserve
     any such collateral or continue the operation of the business of Borrower,
     and Lender shall be entitled to collect all revenues and profits thereof
     and apply the same to the payment of all expenses and other charges of such
     receivership, including the compensation of the receiver, and


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     to the payment of the Note until a sale or other disposition of such
     collateral shall be finally made and consummated. In the event of any
     disposition or collection of or any other realization upon all or any part
     of such collateral, Lender shall apply the proceeds of such disposition,
     collection or other realization as follows:

          (a) First, to the payment of the reasonable costs and expenses of
     Lender in exercising or enforcing its rights hereunder, including, but not
     limited to, reasonable costs and expenses incurred in retaking, holding
     and/or preparing the collateral for sale, lease or other disposition;

          (b) Second, to the payment of the Note and all other obligations under
     this Agreement or the Security Agreement; and

          (c) Third, the surplus, if any, shall be paid to Borrower or to
     whomsoever may be lawfully entitled to receive such surplus.

     3. CONSISTENT CHANGES. The Original Loan Agreement is hereby amended
wherever necessary to reflect the changes described in paragraphs 2A and 2B
above.

     4. NO DEFENSE OF BORROWER. Borrower agrees that it has no defenses against
the obligation to pay any amounts under the Loans pursuant to the Original Loan
Agreements.

     5. COLLATERAL. Borrower agrees that in addition to collateral pledged to
Lender under the Original Security Agreement and all of the rights of Lender
thereunder (which are not affected by this Amendment), the Collateral also
secures Borrower's obligations under the Original Loan Agreements and any notes
evidencing Loans thereunder, and Borrower shall have the rights and remedies
under the New Security Agreement with respect to the Collateral if Lender
enforces its rights with respect thereto for payment of the obligations under
the Original Loan Agreement and any notes evidencing Loans thereunder.

     6. CONTINUING VALIDITY. Borrower understands and agrees that in modifying
the Original Loan Agreement, Lender is relying upon Borrower's representations,
warranties and agreements as set forth in the Original Loan Agreement. Except as
expressly modified pursuant to this Amendment, the terms of the Original Loan
Agreement remain unchanged and in full force and effect. This Amendment shall in
no way shall obligate Lender to make any future modifications to the Original
Loan Agreement. Nothing in this Amendment shall constitute a satisfaction of any
obligations under or relating to the Original Loan Agreement. The terms of this
Section 6 apply not only to this Amendment, but also to all subsequent
amendments. Borrower further confirms the continuing validity and effectiveness
of the Original Security Agreement, the pledge of collateral made thereunder and
the rights of Lender thereunder.

     7. INTEGRATION. This Amendment, the Original Loan Agreements and related
agreements constitute the entire agreement and understanding among the parties
relating to the subject matter hereof, and supersede all prior and
contemporaneous proposals, negotiations, agreements and understandings relating
to the subject matter. In entering into this Amendment, Borrower acknowledges
that it is relying on no statement, representation, warranty, covenant or
agreement of any kind made by Lender or any employee or agent of Lender, except
for the agreements of Lender set forth herein. No modification, rescission,
waiver, release or amendment of


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any provision of this Amendment shall be made, except by a written agreement
signed by Lender and Borrower.

     By signing below, Borrower understands and agrees to the terms of this
Amendment. This Amendment No. 7 to the Original Loan Agreement is executed as of
the date first written above.

BORROWER:                                   LENDER:

VALENCE TECHNOLOGY, INC.,                   BERG & BERG ENTERPRISES, LLC
a Delaware corporation


By: /S/ KEVIN MISCHNICK                     By:  /S/ CARL BERG
   -------------------------------              -------------------------------

Title:  VICE PRESIDENT OF FINANCE           Title:  MEMBER AND MANAGER
      ----------------------------                -----------------------------


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