THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Valence Technology, Inc. (VLNC)

10/19/2005 Proxy Informtaion

In July 1998, we entered into an amended loan agreement with Berg & Berg Enterprises, LLC that allows us to borrow, prepay and re-borrow up to $10 million principal under a promissory note on a revolving basis. The managing member of Berg & Berg is Carl Berg, one of our directors and our principal stockholder. In November 2000, the loan agreement was amended to increase the maximum amount available to borrow to $15 million. As of June 30, 2005, the loan had an outstanding principal balance of $14.95 million. The loan bears interest at one percent over the lender's borrowing rate (approximately 9.0% at June 30, 2005). On July 13, 2005, the parties agreed to extend the loan's maturity date from September 30, 2006 to September 30, 2008 and we granted Berg & Berg a 90-day option, effective October 1, 2006, to require that interest will accrue on the loan as compound interest. As of June 30, 2005, accrued interest on the loan totaled $7.785 million. In fiscal 1999, we issued warrants to purchase 594,031 shares of common stock to Berg & Berg in conjunction with the loan. The warrants expired on June 16, 2004.

In October 2001, we entered into another loan agreement with Berg & Berg. Under the terms of the agreement, Berg & Berg agreed to advance us up to $20 million between the date of the agreement and December 31, 2003. Interest on the loan accrues at 8.0% per annum, payable from time to time. On July 13, 2005, Berg & Berg agreed to extend the maturity date for the loan principal and interest from September 30, 2006 to September 30, 2008 and we granted to Berg & Berg a 90-day option, effective October 1, 2006, to require that interest will accrue on the loan as compound interest. As of June 30, 2005, accrued interest on the loan totaled $5.49 million. In conjunction with the loan, Berg & Berg received a warrant to purchase 1,402,743 shares of the Company's common stock at the price of $3.208 per share. The warrant was exercisable beginning on the date it was issued and on July 13, 2005 the expiration date of the warrants was extended to September 30, 2008.

On June 10, 2003 Berg & Berg committed to provide an additional $10 million equity commitment to supplement an existing $4 million commitment. We drew down $3 million under this commitment on each of March 5, April 19, May 24 and June 28, 2004 and $2 million on July 27, 2004 at the then-current market value of our common stock.

In June 2004, Mr. Berg agreed to provide an additional $20 million backup equity funding commitment. This additional funding commitment was in the form of an equity line of credit and allowed the Company to request Mr. Berg to purchase shares of common stock from time to time at the average closing bid price of the stock for the five days prior to the purchase date. As of June 30, 2005, we have drawn down all amounts available under this funding commitment

On June 30, 2005 the Company drew down $2.5 million from a new $20 million funding commitment with Mr. Berg entered into on June 13, 2005. This draw took the form of a bridge loan, which was repaid in full by the Company on July 13, 2005, including interest at an annual rate of 5.0%.

On July 13, 2005 the Company secured a $20.0 million loan from a third party finance company. The Company utilized $2.5 million of this loan to repay the June 30, 2005 draw from Mr. Berg. In connection with the loan Mr. Berg received warrants to purchase 600,000 shares of the Company's common stock at a price of $3.20 per share.

9/30/2004 Proxy Information

In July 1990, we entered into a loan agreement with Baccarat Electronics, Inc. Baccarat subsequently assigned all of its rights, duties and obligations under that agreement, as the same has been amended from time to time, to Berg & Berg Enterprises, LLC, a company controlled by Carl Berg, a principal stockholder and director of ours. The loan agreement, as amended, allowed us to borrow, prepay and re-borrow up to $15.0 million under a promissory note on a revolving basis. The loan bears interest at one percent over the interest rate on the lender's principal line of credit each year (approximately 9% at March 31, 2004). Effective December 31, 2001, we further amended the loan agreement to provide that Berg & Berg has no further obligations to loan or advance funds to us under this loan agreement, as amended. As of June 30, 2004, the principal balance and accrued and unpaid interest owing under the July 1990 loan agreement, as amended, totaled $21,386,042. By amendment dated February 11, 2002, Berg & Berg agreed to extend the maturity date of the loan from August 30, 2002 to September 30, 2005. In fiscal 1998 and 1999, we issued warrants to purchase 594,031 shares of our common stock to Berg & Berg in conjunction with the amended loan agreement. The fair value of these warrants, totaling approximately $2,158,679, has been reflected as additional consideration for the loan from Baccarat.

In October 2001, we entered into a loan agreement with Berg & Berg Enterprises, LLC. Under the terms of the loan agreement, Berg & Berg agreed to advance us up to $20.0 million between the date of the loan agreement and September 30, 2003. Interest on the loans accrues at 8.0% per annum, and all outstanding amounts with respect to the loans are due and payable on September 30, 2005. As of June 30, 2004, the principal balance and accrued and unpaid interest owing under this loan agreement totaled $23,868,276. In conjunction with the loan agreement, Berg & Berg received a warrant to purchase 1,402,743 shares of our common stock at an exercise price of $3.208 per share. The warrants are currently exercisable and expire on October 5, 2005.

In March 2002, we obtained a $30 million equity line of credit with Berg & Berg Enterprises, LLC. At December 31, 2003, the equity line was fully drawn. Our financing commitment with Berg & Berg enabled us t to access up to $5 million per quarter (but no more than $30 million in the aggregate) in equity capital over the two years following the date of the commitment. This commitment was approved by stockholders at our 2002 annual meeting held on August 27, 2002. In exchange for the amounts funded pursuant to this agreement, we have issued to Berg & Berg restricted common stock at 85% of the average closing price of our common stock over the five trading days prior to the purchase date. We have agreed to register any shares it issues to Berg & Berg under this commitment.

On June 10, 2003, Berg & Berg Enterprises, LLC, an affiliate of Carl Berg, a principal stockholder and director of ours, committed to provide us $10 million in fiscal 2004, increasing its total available remaining financing commitments to $14 million ($10 million under this new financing commitment and $4 million under a then-existing commitment). Berg & Berg agreed to fund the commitments by purchasing shares of common stock from time to time as requested by us at the then-current market price. We have fully drawn down on this financing commitment.

In June 2004, Mr. Carl Berg, a principal stockholder and director of ours, agreed to provide an additional $20 million backup equity funding commitment. This commitment can be reduced by the amount of net proceeds received from the sale of the building or equipment from our Mallusk, Northern Ireland facility or the amount of net proceeds in a debt or equity transaction, and may be increased if necessary under certain circumstances. This additional finding commitment will come in the form of equity line of credit and will allow us to request Mr. Berg to purchase shares of common stock from time to time at the then-current market value.

7/29/2003 Proxy Information

Except as disclosed in this Proxy Statement, neither the nominees for election as directors, our directors or executive officers, nor any stockholder owning more than five percent of our issued shares, nor any of their respective associates or affiliates, had any material interest, direct or indirect, in any material transaction to which we were a party during fiscal 2003, or which is presently proposed.

In July 1990, we entered into a loan agreement with Baccarat Electronics, Inc. Baccarat subsequently assigned all of its rights, duties and obligations under that agreement, as the same has been amended from time to time, to Berg & Berg, a company controlled by Carl Berg, a principal stockholder and one of our directors. The loan agreement, as amended, allowed us to borrow, prepay and re-borrow up to $15.0 million under a promissory note on a revolving basis. The loan bears interest at one percent over the interest rate on the lender's principal line of credit each year (approximately 9% at March 31, 2003). Effective December 31, 2001, we further amended the loan agreement to provide that Berg & Berg has no further obligations to loan or advance funds to us under this loan agreement, as amended. As of March 31, 2003, the principal balance and accrued and unpaid interest owing under the July 1990 loan agreement, as amended, totaled $19,701,397. By amendment dated February 11, 2002, Berg & Berg agreed to extend the maturity date of the loan from August 30, 2002 to September 30, 2005. In fiscal 1998 and 1999, we issued warrants to purchase 594,031 shares of our common stock to Berg & Berg in conjunction with the amended loan agreement. The fair value of these warrants, totaling approximately $2,158,679, has been reflected as additional consideration for the loan from Baccarat.

In October 2001, we entered into a loan agreement with Berg & Berg. Under the terms of the loan agreement, Berg & Berg agreed to advance us up to $20.0 million between the date of the loan agreement and September 30, 2003. Interest on the loans accrues at 8.0% per annum, and all outstanding amounts with respect to the loans are due and payable on September 30, 2005. As of March 31, 2003, the principal balance and accrued and unpaid interest owing under this loan agreement totaled $21,837,165. In conjunction with the loan agreement, Berg & Berg received a warrant to purchase 1,402,743 shares of our common stock at an exercise price of $3.208 per share. The warrants are currently exercisable and expire on October 5, 2005.

In March 2002, Berg & Berg agreed to provide up to $30.0 million in equity capital. In exchange for any amounts funded pursuant to this commitment, we will issue to Berg & Berg restricted common stock at a purchase price of 85% of the average closing price of our common stock over the five trading days prior to the purchase date. We have agreed to register the resale of the shares of common stock issued to Berg & Berg. We have drawn $20 million from this commitment as of March 31, 2003. Pursuant to the terms of the equity line financing commitment, as a result of the offerings we completed in April 2002 and June 2003 and previous draws under the commitment, Berg & Berg may elect to reduce or eliminate its remaining commitment of $10 million. Berg & Berg has not elected to reduce their commitment to date. Further, the commitment expires on March 31, 2004 and our right to draw down on the line is limited to $5 million per quarter and is further conditioned upon Stephan Godevais remaining as CEO.

We have also received a $4 million working capital commitment from Berg & Berg. In addition, in June 2003 we received an additional $10.0 million funding commitment from Berg & Berg for which the terms will be negotiated at a later date.