COMMON STOCK PURCHASE AGREEMENT

This Common Stock Purchase Agreement (this “ Agreement ”) is dated as of October 14, 2009, by and between Valence Technology, Inc., a Delaware corporation (the “ Company ”), and Seaside 88, LP, a Florida limited partnership (such investor, including its successors and assigns, “ Seaside ”).

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to Seaside, and Seaside desires to purchase from the Company, up to an aggregate of 16,900,000 shares of Common Stock on the Closing Dates;

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and Seaside agree as follows:

1.1            Definitions .  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

“ 3-Day VWAP ” means the daily volume weighted average of actual trading prices measured in hundredths of cents of the Common Stock of the Company on the Trading Market for the three consecutive Trading Days immediately prior to a Subsequent Closing Date.

“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144.

“ Closing ” means the Initial Closing and each Subsequent Closing.

“ Closing Dates ” means the Initial Closing Date and each Subsequent Closing Date.

“ Commission ” means the Securities and Exchange Commission.

“ Common Stock ” means the common stock of the Company, par value $0.001 per share, and any securities into which such common stock may hereafter be reclassified.

“ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“ Company Counsel ” means Andrews Kurth LLP, or other counsel (including in-house counsel) reasonably acceptable to Seaside.

“ Dollar Limit ” shall have the meaning ascribed to such term in Section 2.6(b).

“ DTC ” means the Depository Trust Company.

“ Disclosure Schedules ” means the disclosure schedules of the Company delivered concurrently herewith, as the same may be updated by the Company from time to time.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Floor ” shall mean $1.00 (as the same may be proportionately adjusted in respect of any stock split, stock dividend, combination, recapitalization or the like with respect to the Common Stock).

 “ GAAP ” shall have the meaning ascribed to such term in Section 3.1(h).

“ Initial Closing ” means the closing of the purchase and sale of the Common Stock pursuant to Section 2.1.

“ Initial Closing Date ” means October 15, 2009 or such later date when all of the Transaction Documents required to be executed and delivered in connection with the Initial Closing have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) Seaside’s obligations to purchase the Shares and (ii) the Company’s obligations to issue and deliver the Shares have been satisfied or waived.

“ Intellectual Property ” shall have the meaning ascribed to such term in Section 3.1(q).

“ Lien ” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“ Material Adverse Effect ” means any condition, event, change or effect that would reasonably be expected to have a material adverse effect on (i) the legality, validity or enforceability of any Transaction Document, (ii) the results of operations, assets, business, or financial condition of the Company and its Subsidiaries, taken as a whole, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document, but shall not mean or include any condition, event, change or effect which (1) is or results from events or occurrences relating to the economy in general (including arising from terrorist attacks, acts of war or the outbreak of war or international hostilities, or any escalation or material worsening thereof, civil unrest, sabotage or military actions, whether in the United States or elsewhere) or the Company’s industry in general and not specifically relating to the Company or having a disproportionate impact on the Company, (2) results from the announcement of this Agreement or the transactions contemplated hereby or by the other Transaction Documents, or (3) is or results from any breach of any representation, warranty, covenant or agreement contained in this Agreement or the other Transaction Documents by Seaside.

 “ Per Share Purchase Price ” shall be an amount equal to the daily volume weighted average of actual trading prices measured in hundredths of cents of the Common Stock of the Company on the Trading Market for the ten consecutive Trading Days immediately prior to a Closing Date multiplied by 0.88.

“ Permits ” shall have the meaning ascribed to such term in Section 3.1(r).

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“ Prospectus ” means the base prospectus, including all documents incorporated therein by reference, included in the Registration Statement, as it may be supplemented by any Prospectus Supplement, in the form of which such Prospectus and/or Prospectus Supplement have been most recently filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act with respect to the sale to Seaside, or the resale by Seaside, of the Shares as contemplated hereby.

“ Prospectus Supplement ” means the supplement or supplements to the base prospectus contained in the Registration Statement, which supplement is filed in connection with the sale to Seaside, or the resale by Seaside, of the Shares as contemplated hereby.

“ Registration Statement ” means, collectively, the registration statement of the Company, Commission File No. 333-148632, as the same may amended from time to time to include  the sale to Seaside, or the resale by Seaside, of the Shares as contemplated hereby, and including all documents filed as part thereof or incorporated by reference therein and any information contained in a Prospectus subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act, and also including any other registration statement filed pursuant to Rule 424(b) under the Securities Act. For the avoidance of doubt, any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein.  For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System.

“ Required Approvals ” shall have the meaning ascribed to such term in Section 3.1(e).

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Seaside Party ” shall have the meaning ascribed to such term in Section 4.6.

“ SEC Reports ” shall have the meaning ascribed to such term in Section 3.1(h).

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Shares ” means the shares of Common Stock issued or issuable to Seaside pursuant to this Agreement.

“ Short Sales ” shall include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO of the Exchange Act.

“ Subsequent Closing ” means each closing of the purchase and sale of the Common Stock pursuant to Section 2.2.

“ Subsequent Closing Date ” means the day two weeks subsequent to the prior Closing Date (or, if such day is not a Trading Day, then the first day thereafter that is a Trading Day) commencing two weeks following the Initial Closing Date and ending on or about the date that results in 26 Closings (including the Initial Closing), subject to reduction pursuant to Section 2.6, over a 52-week period, or such later dates when all conditions precedent to (i) Seaside’s obligations to purchase the Shares and (ii) the Company’s obligations to issue and deliver the Shares have been satisfied or waived, in each event with respect to such Subsequent Closing. Solely for administrative use, Exhibit C sets forth each anticipated Subsequent Closing Date, assuming that failure to satisfy the conditions precedent does not delay any Subsequent Closing Date and otherwise subject to adjustment as provided herein; Exhibit C shall be revised from time to time by the parties to reflect changes arising based on the application of the terms and conditions of this Agreement.

 “ Subsidiary ” shall have the meaning ascribed to such term in Section 3.1(a).

“ Trading Day ” means a day on which the Common Stock is traded on a Trading Market.

“ Trading Market ” means whichever of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the New York Stock Exchange, the NYSE Alternext Exchange, the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market.

“ Transaction Documents ” means this Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

2.1            Initial Closing .  On the Initial Closing Date, Seaside shall purchase from the Company, and the Company shall issue and sell to Seaside, 650,000 Shares at the Per Share Purchase Price.  Upon satisfaction or waiver of the conditions set forth in Sections 2.3, 2.4, 2.5 and 2.6, the Initial Closing shall occur at the offices of White White & Van Etten PC, 55 Cambridge Parkway, Cambridge, MA 02142, or such other location as the parties shall mutually agree.

2.2            Subsequent Closings .  On each Subsequent Closing Date, subject to Section 2.6, Seaside shall purchase from the Company, and the Company shall issue and sell to Seaside, 650,000 Shares at the Per Share Purchase Price.  Upon satisfaction or waiver of the conditions set forth in Sections 2.3, 2.4, 2.5 and 2.6, each Subsequent Closing shall occur at the offices of White White & Van Etten PC, 55 Cambridge Parkway, Cambridge, MA 02142, or such other location as the parties shall mutually agree.

2.3            Deliveries by the Company .  On each Closing Date, the Company shall deliver or cause to be delivered to Seaside the following:

(a)         subject to Section 2.6(b), 650,000 Shares, registered in the name of Seaside, via the DTC DWAC system, as specified on the signature pages hereto;

(b)         an officer’s certificate of the Company’s Chief Executive Officer or Chief Financial Officer in substantially the form of Exhibit A attached hereto; and

(c)         solely on the Initial Closing Date, a legal opinion of Company Counsel, in substantially the form of Exhibit B attached hereto.

2.4            Deliveries by Seaside .  On each Closing Date, Seaside shall deliver or cause to be delivered to the Company an amount equal to the Per Share Purchase Price for each such Closing multiplied by 650,000, subject to Section 2.6(b), in each case by wire transfer of immediately available funds to the account as specified in writing by the Company, and in each case less the amount due Seaside for reimbursement of its expenses pursuant to Section 5.2 hereof.

(a)           The obligations of the Company hereunder in connection with each Closing are subject to the satisfaction by Seaside, or waiver by the Company, of the following conditions:

(i)           the accuracy when made and on the Closing Date of the representations and warranties of Seaside contained herein;

(ii)           all obligations, covenants and agreements of Seaside required to be performed at or prior to the Closing Date shall have been performed;

(iii)           the delivery by Seaside of the items set forth in Section 2.4 of this Agreement; and

(iv)           with respect to any Subsequent Closing, the Floor, as set forth in Section 2.6(a) of this Agreement, has been reached.

(b)           The obligations of Seaside hereunder in connection with each Closing are subject to the satisfaction by the Company, or waiver by Seaside, of the following conditions:

(i)             the accuracy when made and on the Closing Date of the representations and warranties of the Company contained herein (as qualified and limited by the Disclosure Schedules, as updated through such Closing Date);

(ii)            all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed, and all Required Approvals shall have been obtained;

(iii)           the delivery by the Company of the items set forth in Section 2.3 of this Agreement;

(iv)          with respect to any Subsequent Closing, the Floor, as set forth in Section 2.6(a) of this Agreement, has been reached;

(v)           there shall have been no Material Adverse Effect with respect to the Company since the date hereof that has not been cured;

(vi)           the Registration Statement shall have been declared effective by the Commission and shall be in full force and effect; and

(vii)          from the date hereof to each Closing Date, trading in the Common Stock shall not have been suspended by the Commission and trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of Seaside, makes it impracticable or inadvisable to purchase the Shares at the Closing.

2.6            The Floor; Dollar Limit on Purchases .

(a)           In the event that the 3-Day VWAP does not equal or exceed the Floor, as calculated with respect to any Subsequent Closing Date, then such Subsequent Closing will not occur.  In each such event, there will be one fewer Subsequent Closing pursuant to this Agreement and the aggregate number of Shares to be purchased hereunder shall be reduced by 650,000 Shares for each such Subsequent Closing that does not occur because the Floor has not been reached or exceeded.

(b)           If for any Subsequent Closing the amount of the proposed investment by Seaside at such Closing is greater than two times the amount invested by Seaside at the immediately preceding Subsequent Closing (the “ Dollar Limit ”), then Seaside shall have the option to reduce the number of Shares purchased at such Subsequent Closing such that the amount of the investment at such Closing is an amount equal to (as near as possible) the Dollar Limit.

3.1            Representations and Warranties of the Company .  Except as set forth under the corresponding section of the Disclosure Schedules, which Disclosure Schedules may be updated before any Subsequent Closing and which shall be deemed a part hereof, the Company hereby makes the representations and warranties set forth below to Seaside as of the date hereof and as of each Closing Date ( provided that representations and warranties that speak as of a specific date shall continue to be true and correct as of such Closing with respect to such date):

(a)          Subsidiaries .  All of the significant subsidiaries (as that term is defined in Rule 1-02 of Regulation S-X promulgated by the Commission) of the Company are listed in the Company’s most recent Annual Report on Form 10-K as modified by any subsequent SEC Reports filed with the SEC (each a “ Subsidiary ”).  The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

(b)          Organization and Qualification .  The Company and each of the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not reasonably be expected to result in a Material Adverse Effect.  To the knowledge of the Company, no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c)          Authorization; Enforcement .  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and its stockholders, and no further action is required by the Company or its stockholders in connection therewith other than in connection with the Required Approvals.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d)          No Conflicts .  The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Shares at each Closing and the consummation by the Company of the other transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, violate or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary pursuant to, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement (written or oral), credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected, except in the case of each of clauses (ii) and (iii), such as could not reasonably be expected to result in a Material Adverse Effect.

(e)          Filings, Consents and Approvals .  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, the Trading Market or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) the filing of the Prospectus Supplement and (ii) any notice filings or SEC Reports as are required to be made following each Closing Date under applicable federal and state securities laws or under applicable rules and regulations of the Trading Market (collectively, the “ Required Approvals ”).

(f)          Issuance of the Shares .  The Shares are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.  The issuance by the Company to Seaside, or the resale by Seaside, of the Shares has been registered under the Securities Act and all of the Shares when delivered will be freely transferable and tradable on the Trading Market by Seaside without restriction (other than any restrictions arising solely from an act or omission of Seaside).  The Registration Statement is effective and available for the issuance or resale of the Shares thereunder and the Company has not received any notice that the Commission has issued or intends to issue a stop-order with respect to the Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so.  The “Plan of Distribution” section under the Prospectus as supplemented by the Prospectus Supplement permits the issuance and sale or resale of the Shares hereunder.

(g)          Capitalization.   The capitalization of the Company is as set forth in Section 3.1(g) of the Disclosure Schedule.  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock