Exhibit 10.45

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the first day of
January, 2001, by and between Illinois Superconductor Corporation, a Delaware
corporation (the “Company”), and Dennis Craig (the “Employee”).

W I T N E S S E T H :

     WHEREAS, the Employee is now employed by the Company as the Senior Vice
President — Manufacturing;

     WHEREAS, the Company wishes to ensure that it will continue to have the
benefits of the Employee’s services on the terms and conditions hereinafter set
forth; and

     WHEREAS, the Employee desires to continue to work for the Company on the
terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto hereby agree as follows:

             1. Employment; Term. The Company hereby employs the Employee, and
the Employee hereby accepts employment with the Company, in accordance with and
subject to the terms and conditions set forth herein. The term of this Agreement
shall commence on the date hereof (the “Effective Date”) and, unless earlier
terminated in accordance with Paragraph 5, shall end on December 31, 2002, with
the term of employment being that period between the Effective Date and
December 31, 2002 (that period, as extended pursuant to the following sentence,
the “Term”). As of January 1, 2003, and as of each subsequent January 1st, (each
an “Automatic Renewal Date”), unless either party shall have given to the other
written notice of non-extension at least sixty (60) days prior to such Automatic
Renewal Date, the Term shall, unless earlier terminated in accordance with
Paragraph 5, extend automatically for a period of one (1) year to the
anniversary of the then otherwise scheduled expiration date of this Agreement.
If there is a “Change of Control” (as defined in Paragraph 6(e) below), the Term
shall, unless earlier terminated in accordance with Paragraph 5, extend
automatically to the second anniversary of the date of the Change of Control,
provided that the second anniversary of the date of the Change of Control is
later than the last day of the Term as determined without regard to the Change
of Control. Certain provisions of this Agreement shall continue in effect after
the Term as specifically set forth herein.

 

--------------------------------------------------------------------------------

 

             2.     Employment.

                     (a)  The Employee shall serve as the Company’s Chief
Technology Officer. The Employee shall report to the Chief Executive Officer of
the Company.

                     (b)  The Employee shall have such authority and
responsibility as may reasonably be assigned by the Chief Executive Officer or
the Board of Directors of the Company (the “Board”).

                     (c)  During the period the Employee is employed by the
Company, the Employee shall devote the Employee’s normal full business time and
attention to the business and affairs of the Company and use the Employee’s best
efforts to perform faithfully the duties and responsibilities of the Employee’s
position as described herein.

             3.     Compensation.

                     (a)  The Company shall pay the Employee a base salary (the
“Base Salary”) of not less than One Hundred Sixty Thousand Dollars ($160,000)
per annum, payable at least monthly, in accordance with the Company’s payroll
practices less such deductions as shall be required to be withheld by applicable
law and regulations. The Board shall conduct an annual review of the Employee’s
Base Salary and Bonus (as defined in Paragraph 3(b)below), but in no event shall
the Base Salary be decreased without the consent of the Employee. Any increase
in the Base Salary or change in the Bonus shall be in the sole discretion of the
Board.

                     (b)  Subject to Paragraph 6(c) hereof, for each calendar
year completed during the Term, the Employee shall be eligible to receive a
bonus (the “Bonus”) of an amount up to 50% of the Base Salary for such year. The
amount of the Bonus payable to the Employee for a particular year, if any, shall
be based on the accomplishment of corporate and individual performance goals as
determined by the Board. The corporate and individual performance goals
referenced in the preceding sentence shall be established by the Board and
communicated to the Employee before the end of the first quarter of the
applicable year. In the event of a disagreement over the attainment of such
goals and objectives, the Compensation Committee of the Board shall have final
authority to determine the award of the Bonus. The Bonus payable for a
particular year, if any, shall be paid no later than March 15th of the following
year and may be paid in cash, Company stock or a combination of the two as
determined by the Board in its sole discretion.

             4.     Benefits.

-2-

--------------------------------------------------------------------------------

 

                     (a)  The Company agrees to reimburse the Employee for all
reasonable and necessary travel, business entertainment and other business
expenses incurred by the Employee in connection with the performance of the
Employee’s duties under this Agreement. Such reimbursements shall be made by the
Company within a reasonable time after submission by the Employee of vouchers in
accordance with the Company’s standard policies and procedures.

                     (b)  The Employee shall be entitled to participate in any
and all medical insurance, group health, disability insurance, pension and other
similar benefit plans which are made generally available by the Company to its
senior executives, which shall not be less favorable than those available to any
other group of employees of the Company. The Company, in its sole discretion,
may at any time amend or terminate its benefit plans or programs.

                     (c)  The Employee shall be entitled to receive four
(4) weeks of annual paid vacation in accordance with the Company’s vacation
policy for its senior executives. The Employee shall be entitled to all paid
holidays the Company makes available to its employees.

             5.     Termination. The Employee’s employment hereunder may be
terminated prior to the end of the Term under the following circumstances:

                     (a)  Death. The Employee’s employment hereunder shall
terminate upon the Employee’s death.

                     (b)  Total Disability. The Company may terminate the
Employee’s employment hereunder at any time after the Employee’s “Total
Disability.” “Total Disability” means (i) the Employee becomes entitled to
receive disability benefits under the Company’s long-term disability plan, or,
in the absence of such a plan, (ii) the Employee’s inability to perform the
duties and responsibilities contemplated under this Agreement for a period of
more than one hundred eighty (180) consecutive days due to physical or mental
incapacity or impairment. Such termination shall become effective five
(5) business days after the Company gives notice of such termination to the
Employee, or to the Employee’s spouse or legal representative (in case of mental
incapacitation).

                     (c)  Termination by the Company With or Without Cause. The
Company may terminate the Employee’s employment hereunder with or without Cause
at any time after the Company provides thirty (30) days’ written notice (or a
shorter period of time, to be determined in good faith by the Board to be
essential to prevent serious damage to the

-3-

--------------------------------------------------------------------------------

 

Company) to the Employee to such effect. The term “Cause” shall mean any of the
following: (i) willful malfeasance or willful misconduct by the Employee in
connection with the Employee’s employment; (ii) the Employee’s gross negligence
in performing any of the Employee’s duties under this Agreement; (iii) the
Employee’s conviction of, or entry of a plea of guilty to, or entry of a plea of
nolo contendere with respect to any crime other than a traffic violation or
infraction which is a misdemeanor; (iv) the Employee’s willful and continuing
breach of any written policy applicable to all employees adopted by the Company
concerning conflicts of interest, political contributions, standards of business
conduct or fair employment practices, procedures with respect to compliance with
securities laws or any similar matters, or adopted pursuant to the requirements
of any government contract or regulation; or (v) any other material breach by
the Employee of this Agreement after the Company provides written notification
to the Employee of such breach and the Employee fails within five (5) days of
receipt of such notification to cure the circumstances which gave rise to such
breach.

                     (d)  Termination by the Employee With or Without Good
Reason. The Employee’s employment hereunder may be terminated by the Employee as
specified below with, or upon thirty (30) days’ prior notice without, Good
Reason. For purposes of this Agreement, “Good Reason” means any of the
following, without the consent of the Employee: (i) any change in, or diminution
of, the Employee’s duties or responsibilities that is inconsistent in any
material and adverse respect with the Employee’s duties and responsibilities as
contemplated under Section 2 of this Agreement, provided that neither a change
in the Employee’s title nor a change in the Employee’s duties and
responsibilities alone, without a corresponding material adverse change in the
Employee’s duties or other responsibilities shall constitute Good Reason, and
provided further that changes in reporting relationships of other employees to
the Employee, including those which occur as a result of strategic business
developments such as the sale of a business unit or the outsourcing of a
business function, shall not be construed as “adverse” to the Employee for
purposes of determining whether Good Reason exists; (ii) any reduction of the
Employee’s Base Salary or maximum Bonus level; (iii) any other material breach
by the Company of this Agreement after the Employee provides written
notification to the Company of such breach and the Company fails within thirty
(30) days of receipt of such notification to cure the circumstances which gave
rise to such breach, or (iv) any requirement by the Company that the Employee
relocate the Employee’s principal office (currently located in Mount Prospect,
Illinois) to a location more than thirty-five (35) miles from the Employee’s
principal office at the time the Company makes such request. Notwithstanding the
foregoing, no act or omission by the Company shall constitute Good Reason
hereunder unless the Employee gives the Company written notice thereof within
thirty (30) days after he has actual knowledge of such act or

-4-

--------------------------------------------------------------------------------

 

omission, and the Company fails to remedy such act or omission within thirty
(30) days after receiving such notice.

                     6.     Compensation Following Termination Prior to the End
of the Term. In the event that the Employee’s employment hereunder is terminated
prior to the end of the Term, the Employee shall be entitled only to the
following compensation and benefits upon such termination:

                             (a)  Termination by Reason of Death or Total
Disability. In the event that the Employee’s employment is terminated prior to
the expiration of the Term by reason of the Employee’s death or Total
Disability, pursuant to Paragraph 5(a) or 5(b) hereof, respectively, the
Employee (or the Employee’s spouse or estate, as the case may be) shall be
entitled to the following amounts or benefits:

  i.   any accrued but unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of termination in
accordance with the Company’s standard payroll practices and any unpaid Bonus
previously awarded by the Board in respect of a completed calendar year pursuant
to Paragraph 3(b) hereof;     ii.   any incurred but unreimbursed expenses
required to be reimbursed pursuant to Paragraph 4(a) hereof; and     iii.   the
benefits to which the Employee and/or the Employee’s family may be entitled upon
such termination pursuant to the plans, programs and arrangements referred to in
Paragraph 4 hereof, as determined and paid in accordance with the terms of such
plans, programs and arrangements.

                             (b)  Termination by the Company Without Cause or
Termination by the Employee With Good Reason. In the event that the Employee’s
employment is terminated by the Company without Cause pursuant to Paragraph 5(c)
hereof, or by the Employee with Good Reason pursuant to Paragraph 5(d) hereof,
the Employee shall be entitled to the following amounts or benefits:

  i.   any accrued but unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of termination in
accordance with the Company’s standard payroll practices and any unpaid Bonus
previously awarded by the Board pursuant to Paragraph 3(b) hereof;

-5-

--------------------------------------------------------------------------------

 

  ii.   any incurred but unreimbursed expenses required to be reimbursed
pursuant to Paragraph 4(a) hereof;     iii.   subject to Paragraph 6(e) hereof,
continued payment of the Base Salary (as determined under Paragraph 3(a) hereof)
in accordance with the Company’s standard payroll practices for one (1) year
following the date of such termination; provided that such continued payments
shall be offset by any salary, wage, or similar payments paid or payable,
directly or indirectly, to the Employee during the year following the date of
termination from another employer or recipient of the Employee’s services (such
payments being determined without regard to any individual waivers or other
similar arrangements).     iv.   the benefits to which the Employee and/or the
Employee’s family may be entitled upon such termination pursuant to the plans,
programs and arrangements referred to in Paragraph 4 hereof, as determined and
paid in accordance with the terms of such plans, programs and arrangements; and
    v.   subject to Paragraph 6(e) hereof, continuation of health and insurance
benefits (other than disability insurance benefits) for one (1) year following
the date of such termination on the same terms and conditions as in effect
immediately prior to the termination; provided that the Company shall not be
required to provide benefits otherwise required by this clause (v) after such
time as the Employee becomes entitled to receive benefits of the same type from
another employer or recipient of the Employee’s services (such entitlement being
determined without regard to any individual waivers or other similar
arrangements).

                                (c)  Termination by the Company for Cause or
Termination by the Employee Without Good Reason. In the event that the
Employee’s employment is terminated prior to the expiration of the Term of this
Agreement by the Company for Cause pursuant to Paragraph 5(c) hereof or by the
Employee without Good Reason pursuant to Paragraph 5(d) hereof, the Employee
shall be entitled to the following amounts or benefits:

  i.   any accrued but unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of termination in
accordance with the Company’s standard payroll practices;     ii.   any incurred
but unreimbursed expenses required to be reimbursed pursuant to Paragraph 4(a)
hereof; and

-6-

--------------------------------------------------------------------------------

 

  iii.   the benefits to which the Employee and/or the Employee’s family may be
entitled upon such termination pursuant to the plans, programs and arrangements
referred to in Paragraph 4 hereof, as determined and paid in accordance with the
terms of such plans, programs and arrangements.

Notwithstanding the foregoing, in no event shall any unpaid Bonus previously
awarded by the Board pursuant to Paragraph 3(b) hereof be paid following a
termination by the Company for Cause pursuant to Paragraph 5(c) hereof or by the
Employee without Good Reason pursuant to Paragraph 5(d) hereof.

                                (d)  Termination due to Company’s Notice of
Non-Extension. In the event that during the Term the Company provides the
Employee with a notice of non-extension as described in Section 1 hereof, upon
the termination of the Employee’s employment by the Company pursuant to such
notice, the Employee shall be entitled to the following amounts or benefits:

  i.   any accrued but unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of termination in
accordance with the Company’s standard payroll practices and any unpaid Bonus
previously awarded by the Board pursuant to Paragraph 3(b) hereof;     ii.   any
incurred but unreimbursed expenses required to be reimbursed pursuant to
Paragraph 4(a) hereof;     iii.   continued payment of the Base Salary (as
determined under Paragraph 3(a) hereof) in accordance with the Company’s
standard payroll practices for six (6) months following the date of such
termination; provided that such continued payments shall be offset by any
salary, wage, or similar payments paid or payable, directly or indirectly, to
the Employee during the year following the date of termination from another
employer or recipient of the Employee’s services (such payments being determined
without regard to any individual waivers or other similar arrangements);     iv.
  the benefits to which the Employee and/or the Employee’s family may be
entitled upon such termination pursuant to the plans, programs and arrangements
referred to in Paragraph 4 hereof, as determined and paid in accordance with the
terms of such plans, programs and arrangements; and

-7-

--------------------------------------------------------------------------------

 

  v.   continuation of health and insurance benefits (other than disability
insurance benefits) for six (6) months following the date of such termination on
the same terms and conditions as in effect immediately prior to the termination;
provided that the Company shall not be required to provide benefits otherwise
required by this clause (v) after such time as the Employee becomes entitled to
receive benefits of the same type from another employer or recipient of the
Employee’s services (such entitlement being determined without regard to any
individual waivers or other similar arrangements).

                                (e)  Termination Upon or Following a Change of
Control. If there is a “Change of Control” (as defined below) and the Employee’s
employment is terminated by the Company without Cause or by the Employee with
Good Reason prior to the expiration of the Term of this Agreement and within two
(2) years following a Change of Control, the words “two (2) years” shall replace
the words “one (1) year” in clauses (iii) and (v) of Paragraph 6(b). For
purposes of this Agreement, a Change of Control shall be deemed to have occurred
if:

  i.   the stock of the Company ceases to be registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended; or     ii.   the
stockholders of the Company approve a definitive agreement (A) to merge or
consolidate the Company with or into another corporation other than a
majority-owned subsidiary of the Company, pursuant to which (x) the Company is
not the surviving or resulting entity or (y) the persons who were the members of
the Board prior to such approval do not represent a majority of the directors of
the surviving, resulting or acquiring entity or the parent thereof, or (B) to
sell or otherwise dispose of all or substantially all of the Company’s assets;
or     iii.   during any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board.

                                (f)  No Other Benefits or Compensation. Except
as may be specifically provided under this Agreement or under the terms of any
incentive compensation, employee benefit or fringe benefit plan applicable to
the Employee at the time of the termination

-8-

--------------------------------------------------------------------------------

 

of the Employee’s employment prior to the end of the Term, the Employee shall
have no right to receive any other compensation, or to participate in any other
plan, arrangement or benefit, with respect to any future period after such
termination.

                                (g)  Waiver of Personal Liability. To the extent
permitted by applicable law, Executive hereby acknowledges that he shall have
recourse only to the Company (and its successors-in-interest) with respect to
any claims he may have for compensation or benefits arising in connection with
his employment, whether or not under this Agreement or under any other plan,
program, or arrangement, including, but not limited to any agreement relating to
the grant or exercise of stock options or other equity rights in the Company. To
the extent permitted by applicable law, the Executive hereby waives any such
claims for compensation, benefits and equity rights against officers, directors,
stockholders or other representatives in their personal or separate capacities.

                       7.     Confidentiality, Ownership, and Covenants of
Non-Competition and Non-Solicitation.

                                (a)  Confidentiality. The Employee recognizes
that the Company’s business interests require the fullest practical protection
and confidential treatment of all information not generally known within the
relevant trade group or by the public, including all documents, writings,
memoranda, business plans, illustrations, designs, plans, processes, programs,
inventions, computer software, reports, sources of supply, customer lists,
supplier lists, trade secrets and all other valuable or unique information and
techniques acquired, developed or used by the Company relating to its
businesses, operations, employees and customers (hereinafter collectively termed
“Protected Information”). The Employee expressly acknowledges and agrees that
Protected Information constitutes trade secrets and confidential and proprietary
business information of the Company. No Protected Information shall include
information which is or becomes part of the public domain through no breach of
this Agreement by the Employee. The Employee agrees that Protected Information
is essential to the success of the Company’s business, and it is the policy of
the Company to maintain as secret and confidential Protected Information which
gives the Company a competitive advantage over those who do not know the
Protected Information and is expressly and implicitly protected by the Company
from unauthorized disclosure. Accordingly, the Employee agrees to keep secret
Protected Information and to treat confidentially and not to knowingly permit
any other entity to, directly or indirectly, appropriate, divulge, disclose or
otherwise disseminate to any other entity nor use in any manner for the
Employee, and not to intentionally use or aid others in using any such Protected
Information in competition with the Company or its Affiliates except to the
extent that disclosure is required by law; provided, however, that the Employee
shall provide the

-9-

--------------------------------------------------------------------------------

 

Company with notice as far in advance of any required disclosure as is
practicable in order for the Company to obtain an order for the assurance that
any information required to be disclosed will be treated as Protected
Information and the Employee shall use all reasonable efforts to cooperate with
the Company in connection therewith and in furtherance thereof. The obligation
of non-disclosure of information shall continue to exists for so long as such
information remains Protected Information. For purposes of this Agreement, trade
secrets are subject to the protection of the Illinois Trade Secret Act. The
provisions of this Paragraph 7(a) are not intended to supersede or limit the
effect of any prior confidentiality or proprietary rights agreements previously
executed by the Employee including the Confidential Information, Proprietary
Rights and Non-Competition Agreement between the Company and the Employee, a
copy of which is attached hereto as Exhibit B. However, if there is any conflict
between the terms and conditions of this Agreement and the Confidential
Information, Proprietary Rights and Non-Competition Agreement attached hereto as
Exhibit B, then the terms and conditions of this Agreement, as interpreted by
the Board, shall govern.

                                (b)  Ownership. The Employee hereby assigns to
the Company all of the Employee’s right (including patent rights, copyrights,
trade secret rights, and all other rights throughout the world), title and
interest in and to Inventions, whether or not patentable or registrable under
copyright or similar statutes, made or conceived or reduced to practice or
learned by the Employee, either alone or jointly with others, during the course
of the performance of services for the Company. The Employee shall also assign
to, or as directed by, the Company, all of the Employee’s right, title and
interest in and to any and all Inventions, the full title to which is required
to be in the United States government by a contract between the Company and the
United States government or any of its agencies. For the purpose of this
Agreement, the term “Inventions” collectively refers to any and all inventions,
trade secrets, improvements, ideas, processes, formulas, source and object
codes, data, programs, other works of authorship, know-how, improvements,
discoveries, developments, designs, and techniques regarding any of the
foregoing. The provisions of this Paragraph 7(b) are not intended to supersede
or limit the effect of any prior confidentiality or proprietary rights
agreements previously executed by the Employee including the Confidential
Information, Proprietary Rights and Non-Competition Agreement between the
Company and the Employee, a copy of which is attached hereto as Exhibit B.
However, if there is any conflict between the terms and conditions of this
Agreement and the Confidential Information, Proprietary Rights and
Non-Competition Agreement attached hereto as Exhibit B, then the terms and
conditions of this Agreement, as interpreted by the Board, shall govern.

-10-

--------------------------------------------------------------------------------

 

                                (c)  Covenants of Non-Competition and
Non-Solicitation. The Employee acknowledges that the Employee’s services
pursuant to this Agreement are unique and extraordinary, that the Company will
be dependent upon the Employee for the development and growth of its business
and related functions, and that the Employee will continue to develop personal
relationships with significant customers of the Company and to have control of
confidential information concerning, and lists of customers of, the Company. The
Employee further acknowledges that the business of the Company is international
in scope and cannot be confined to any particular geographic area of the United
States. For the foregoing reasons, the Employee covenants and agrees that at no
time during the Restriction Period (as defined below) shall the Employee either
alone or as a stockholder, partner, consultant, owner, agent, creditor,
co-venturer of any other entity or in any other capacity, directly or
indirectly, engage in the Business (as defined below); provided that nothing
herein shall prohibit the Employee from being an owner of not more than 5% of
the outstanding stock of any class of a corporation which is publicly traded, so
long as the Employee does not actively participate in the business of such
corporation. For the purpose of this Paragraph 7(c), the “Business” means the
business of developing, manufacturing and marketing high temperature
superconductivity products designed to enhance the quality, capacity, coverage
and flexibility of cellular, personal communication services and other wireless
telecommunications services.

                       For the reasons acknowledged by the Employee at the
beginning of this Paragraph 7(c), the Employee additionally acknowledges,
covenants, and agrees that at no time during the Term nor during the period
commencing on the date of termination of the Employee’s employment with the
Company and ending the day following the first anniversary of the date of
termination of the Employee’s employment with the Company for any reason, shall
the Employee, directly or indirectly, either alone or as a stockholder, partner,
consultant, adviser, owner, agent, creditor, co-venturer of any other entity, or
in any other capacity, (i) knowingly sell to or solicit sales of products
produced in the Business to any customer or account which was a customer or
account of the Company during the Employee’s employment with the Company, or
(ii) (other than through general, non targeted advertisements) intentionally
solicit, hire, knowingly attempt to solicit or hire, or knowingly participate in
any attempt to solicit or hire any person who was an employee of the Company or
any of its Affiliates during the Employee’s employment with the Company.

                       For purposes of this Agreement, the Restriction Period
means the Term and the period commencing on the date of termination of the
Employee’s employment with the Company and ending the day following the first
anniversary of the date of termination of the Employee’s employment with the
Company for any reason; provided that the Company may

-11-

--------------------------------------------------------------------------------

 

elect to extend the Restriction Period for up to one (1) year beyond the first
anniversary of the date of termination of the Employee’s employment with the
Company if (A) the Company provides written notice of its intent to so extend
the Restriction Period at least six (6) months prior to the date on which the
Restriction Period would otherwise expire and (B) the Company pays to the
Employee the Base Salary, without offset for salary, wages or similar payments
from another employer during such extended period, at the rate such Base Salary
was being paid to the Employee at the time of termination, for one (1) year
beyond the period for which the Company would otherwise be obligated to continue
the Base Salary pursuant to this Agreement in the absence of the extension of
the Restriction Period.

                       (d)  Equitable Remedies. The Employee acknowledges,
covenants and agrees that, in the event the Employee shall violate any
provisions of this Section 8, the Company will have the right to enforce this
Agreement by all remedies that may be available at law or in equity.

                       8.     Assignability; Binding Effect. This Agreement is a
personal contract calling for the provision of unique services by the Employee,
and the Employee’s rights and obligations hereunder may not be sold,
transferred, assigned or pledged. In the event of any attempted assignment or
transfer of rights hereunder by the Employee contrary to the provisions hereof
(other than as may be required by law), the Company will have no further
liability for payments hereunder. The rights and obligations of the Company
hereunder will be binding upon and run in favor of the successors and assigns of
the Company and, in connection therewith, and notwithstanding any other
provision of this Agreement to the contrary, in the event that there is such a
successor or assign, on and after the date of such succession or assignment,
“Company” shall thereupon instead refer to such successor or assign, as the case
may be. This Agreement does not create, and shall not be interpreted or
construed to create, any rights enforceable by any person not a party to this
Agreement, except as specifically provided herein.

                       9.     Entire Agreement. This Agreement represents the
entire agreement between the parties concerning the Employee’s employment with
the Company and supersedes all prior negotiations, discussions, understandings
and agreements, whether written or oral, between the Employee and the Company
relating to the subject matter of this Agreement. All prior employment
agreements, between the Company and the Employee shall remain in full force and
effect with respect all matters addressed in such prior employment agreements
occurring on or before the effective date of this Agreement.

                       10.     Amendment or Modification, Waiver. No provision
of this Agreement may be amended or waived unless such amendment or waiver is
agreed to in writing signed by

-12-

--------------------------------------------------------------------------------

 

the Employee and by a duly authorized officer of the Company other that the
Employee. No waiver by any party to this Agreement of any breach by another
party of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent time.

                       11.     Notices. All notices, demands or other
communications of any kind to be given or delivered under this Agreement shall
be in writing and shall be deemed to have been properly given if (a) delivered
by hand, (b) delivered by a nationally recognized overnight courier service,
(c) sent by registered or certified United States Mail, return receipt requested
and first class postage prepaid, or (d) facsimile transmission followed by a
confirmation copy delivered by a nationally recognized overnight courier
service. Such communications shall be sent to the parties at their respective
addresses as follows:

      If to the Employee   Dennis Craig

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  If to the Company:   Illinois Superconductor Corporation     451 Kingston
Court     Mount Prospect, IL 60056     Attention: Vice President of Human
Resources   with a copy to:   Barry M. Abelson, Esquire     Pepper Hamilton LLP
    3000 Two Logan Square     18th & Arch Streets     Philadelphia, PA
19103-2799     FAX: 215-981-4750

Either party may change such address for delivery to the other party by delivery
of a notice in conformity with the provisions of this Section specifying such
change. Notice shall be deemed to have been properly given (i) on the date of
delivery, if delivery is by hand, (ii) three (3) days after the date of mailing
if sent by certified or registered mail, (iii) one (1) day after date of
delivery to the overnight courier if sent by overnight courier, or (iv) the next
business day after the date of transmission by facsimile.

-13-

--------------------------------------------------------------------------------

 

                       12.     Severability. If any provision of this Agreement
or the application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable shall not be affected, and each
provision of this Agreement shall be validated and shall be enforced to the
fullest extent permitted by law. If for any reason any provision of this
Agreement containing restrictions is held to cover an area or to be for a length
of time that is unreasonable or in any other way is construed to be too broad or
to any extent invalid, such provision shall not be determined to be entirely
null, void and of no effect; instead, it is the intention and desire of both the
Company and the Employee that, to the extent that the provision is or would be
valid or enforceable under applicable law, any court of competent jurisdiction
shall construe and interpret or reform this Agreement to provide for a
restriction having the maximum enforceable area, time period and such other
constraints or conditions (although not greater than those currently contained
in this Agreement) as shall be valid and enforceable under the applicable law.

                       13.     Survivorship. The respective rights and
obligations of the parties hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.

                       14.     Headings. All descriptive headings of sections
and paragraphs in this Agreement are intended solely for convenience of
reference, and no provision of this Agreement is to be construed by reference to
the heading of any section or paragraph.

                       15.     Withholding Taxes. All salary, benefits,
reimbursements and any other payments to the Employee under this Agreement shall
be subject to all applicable payroll and withholding taxes and deductions
required by any law, rule or regulation of any federal, state or local
authority.

[THIS SPACE INTENTIONALLY LEFT BLANK]

-14-

--------------------------------------------------------------------------------

 

                       16.     Applicable Law/ Jurisdiction. The laws of the
State of Illinois shall govern the interpretation, validity and performance of
the terms of this Agreement, without reference to rules relating to conflicts of
law. The parties select and irrevocably submit to the exclusive jurisdiction of
a court of competent jurisdiction located in the State of Illinois for any
action to enforce, construe or interpret this Agreement. The Employee and the
Company each hereby waives any objection to venue in such state on the basis of
forum non-conveniens.

                       IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first above written.

          ILLINOIS SUPERCONDUCTOR CORPORATION     By:   /s/ George Calhoun      

--------------------------------------------------------------------------------

      GEORGE CALHOUN       Chief Executive Officer         /s/ Dennis Craig    
 

--------------------------------------------------------------------------------

      DENNIS CRAIG

-15-