EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") is effective as of this 29th day
of January, 2001, by and between NVE Corp. ("Employer") and Daniel Baker
("Employee").  (The term "Employer" includes any present or future related or
affiliated companies.)

     WHEREAS, Employer desires to employ Employee as its President and Chief
Executive Officer and Employee desires to be employed by Employer in such
capacity.

     NOW THEREFORE, in consideration of the foregoing the mutual promises
contained in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties,
intending to be legally bound, agree as follows:

1.     EMPLOYMENT

     (a)  Employer agrees to employ Employee on a full time basis. Employee
          accepts such employment and agrees, so long as he continues to be
          employed by Employer, to devote his full time and skills to the
          conduct of Employer's business operations, performing such duties
          as are ordinarily performed by an employee in his position and as
          directed by the Board of Directors of Employer.  Employee agrees to
          serve Employer diligently and faithfully to advance its best
          interests.  Notwithstanding the foregoing, Employee is an employee
          at will and Employer has the right to terminate Employee at any
          time, with or without cause, under this Agreement.

     (b)  Employee will not, without the express written permission of
          Employer, engage in any substantial private business activities
          (whether or not entered into for profit) outside, or separate from
          his employment with Employer which would materially affect
          Employee's ability to perform his obligations hereunder.  Nothing
          in this Agreement prohibits Employee from investing resources in a
          business enterprise.

2.      COMPENSATION

     (a)  Salary. Upon the effective date of this Agreement Employee shall
          receive an annual base salary (the "Salary"), paid according to
          customary and usual payroll practices for employees of a similar
          class and status and subject to state and federal taxes, social
          security and other applicable withholdings, equal to one hundred
          seventy-five thousand dollars ($175,000).  Salary increases, if
          any, are to be paid as determined by Employer's Board of Directors,
          in its sole discretion.

     (b)  Bonus.  Employee shall also have the ability to earn an annual
          bonus in cash compensation equal to up to forty percent (40%) of
          the Salary (the "Bonus").  The Bonus shall be determined at the
          conclusion of each year of employment and shall be granted in the
          sole and absolute discretion of Employer's Board of Directors.

     (c)  Stock Options.  Upon the effective date of this Agreement Employer
          will, subject to compliance with applicable tax, securities laws,
          and other legal requirements, grant to Employee and option to
          purchase up to seven hundred thousand (700,000) shares of
          Employer's common stock (the "Option").  The Option will be granted
          pursuant to a separate written stock option agreement in the
          customary form provided under Employer's 2000 Stock Option Plan and
          Employer agrees to structure the grants in a way which is tax
          advantageous to the Employee (including a possible mix of qualified
          and non-qualified stock options).  The Option will have an exercise
          price not less than the fair market value of Employer's common
          stock on the date of grant, and will have a term of ten (10) years.
          The vesting of the Option will be as follows: 25% (175,000 shares)
          shall vest upon the effective date of this Agreement, An additional
          25% (175,000 shares) shall vest upon each of January 29, 2002,
          January 29, 2003, and January 29, 2004.

     (d)  Benefits.  Employer also agrees to provide Employee such benefits
          as are normally offered to other full time executive employees, all
          in accordance with the policies of Employer in effect from time to
          time during the term of this Agreement in connection with any such
          benefits.

3.  TERM AND TERMINATION. Employee's employment hereunder is terminable

at will by Employer or Employee at any time.  Accordingly, either Employer or
Employee may terminate Employee's employment by Employer at any time with or
without cause or reason.  Employee's right to receive the compensation and
benefits provided in this Agreement shall cease upon the effective date of
termination under this Agreement.  Any additional vesting of the Option shall
cease upon the effective date of the termination under this Agreement.

4.     CONFIDENTIAL INFORMATION ASSIGNMENT OF INVENTIONS

     (a)  CONFIDENTIAL INFORMATION means information, not generally known,
          and proprietary to Employer or to a third party for whom Employer
          is performing work, including, without limitation, patent or trade
          secret information, about Employer's processes and products,
          information relating to research, development, manufacture,
          purchasing, accounting, engineering, marketing, customer lists,
          merchandising, selling, leasing, servicing, finance and business
          systems and techniques.  All information disclosed to Employee, or
          to which Employee obtain access, whether originated by Employee or
          by others, during the period of his employment, which he has
          reasonable basis to believe to be Confidential Information, or
          which is treated by Employer as being Confidential Information,
          shall be presumed to be Confidential Information.

     (b)  INVENTIONS means discoveries, improvements and ideas (whether or
          not shown or described in writing or reduced to practice) and works
          of authorship, whether or not patentable or copyrightable, (1)
          which relate directly to the business of Employer, or (2) which
          relate to Employer's actual or demonstrably anticipated research or
          development, or (3) which result from any work performed by me for
          Employer, (4) for which equipment, supplies, facility or trade
          secret information of Employer is used, or (5) which is developed
          on any Employer time.

     (c)  With respect to Inventions made, authored or conceived by Employer,
          either solely or jointly with others during his employment, whether
          or not during normal working hours or whether or not at Employer's
          premises, Employee will:

          1.  Keep accurate, complete and timely records of such Inventions,
              which records shall be Employer property and be retained on
              Employer's premises.

          2.  Promptly and fully disclose and describe such Inventions in
              writing to Employer

          3.  Assign to Employer all of his rights to such Inventions, and to
              applications for letters patent and/or copyright in all
              countries and to letters patent and/or copyrights granted upon
              such Inventions in all countries.

          4.  Acknowledge and deliver promptly to Employer (without charge to
              Employer but at the expense of Employer) such written
              instruments and to do such other acts as may be necessary in
              the opinion of Employer to preserve property rights against
              forfeiture, abandonment or loss and to obtain and maintain
              letters patent and/or copyrights and to vest the entire right
              and title thereto in Employer.

     (d)  The above provision of this Agreement does not apply to an
          Invention for which no equipment, supplies, facility or trade
          secret information of Employer was used and which was developed
          entirely on Employee's own time, and (1) which does not relate (a)
          directly to the business of Employer or (b) to Employer's actual or
          demonstrably anticipated research or development, or (2) which does
          not result from any work performed by Employee for Employer.

     (e)  Except as required in Employee's duties to Employer, Employee will
          never, either during his employment by Employer or thereafter, use
          or disclose any Confidential Information as defined herein.

     (f)  Upon termination of his employment with Employer, all records and
          any compositions, articles, devices, and other items which disclose
          or embody Confidential Information including all copies or
          specimens thereof in Employee's possession, whether prepared or
          made by Employee or others, will be returned by Employer to
          Employee.

5.     GENERAL PROVISIONS

     (a)  Injunctive Relief.  In recognition of the irreparable harm that
          violation of the covenants contained herein would cause Employer,
          Employee agrees that, in addition to any relief afforded by law, an
          injunction against such violation or violations may be issued
          against him and every other person concerned thereby.  The parties
          understand that both damages and an injunction shall be proper
          modes of relief and are not to be considered alternative remedies.

     (b)  Governing Law and Venue. This Agreement shall be governed by and
          construed in accordance with the laws of the State of Minnesota.
          The parties agree that any action brought under the terms of this
          Agreement shall be venued in Hennepin County in the State of
          Minnesota.

     (c)  Attorneys' Fees.  If any legal action or other proceeding is
          brought to enforce this Agreement or because of an alleged dispute,
          breach, default or misrepresentation in connection with any
          provisions of this Agreement, the successful or prevailing party or
          parties shall be entitled to recover reasonable attorneys' fees and
          other costs incurred in that action or proceeding, in addition to
          any other relief to which it or they may be entitled.

     (d)  Notices.  All notices, requests and other communications from any
          of the parties hereto to another shall be in writing and shall be
          personally served or sent by registered or certified mail, return
          receipt requested, and shall be deemed to have been given on the
          day when deposited in the United States Mails addressed to the
          other party as follows, provided that either party may from time to
          time change the address to which notices to it are to be sent by
          giving written notice to the other in accordance herewith.  Notices
          to Employer shall be given to Employer at its registered office
          which, as of the date of this Agreement, is 11409 Valley View Road,
          Eden Prairie, Minnesota 55344.  Notices to Employee shall be
          addressed to Employee at Employee's residence address as the same
          appears on Employer's records.

     (e)  Entirety of Agreement.  This Agreement constitutes the final
          expression of the parties' agreement, and it is a complete and
          exclusive statement of the terms of that agreement.  There are no
          agreements or understandings between Employer and Employee with
          respect to the subject matter hereof except as expressly herein
          stated.  This Agreement supersedes and replaces any prior
          employment agreement between the parties whether oral or written
          relating generally to the same subject matter.  Except as expressly
          provided herein, so long as Employee is employed by Employer,
          Employee will continue to be subject to Employer's written policies
          and procedures as may be amended from time to time and of which
          Employee receives a copy.

     (f)  Amendments.  This Agreement may be modified or rescinded only by an
          instrument in writing signed by Employer and Employee.  No
          amendment, alteration or modification of the express terms of this
          Agreement shall be binding unless set forth in an instrument in
          writing signed by Employer and Employee.

     (g)  Waiver.  Waiver by either Employer or Employee of a breach of any
          provision, term or condition hereof shall not be deemed or
          construed as a further or continuing waiver thereof or a waiver of
          any breach of any other provision, term or condition of this
          Agreement.

     (h)  Assignment.  The rights and obligations of Employer hereunder may
          be transferred or assigned to any successor, representative or
          assign of Employer.  No assignment of this Agreement shall be made
          by Employee, and any purported assignment shall be null and void.
          All obligations of Employer and Employee arising out of this
          Agreement shall be binding upon their heirs, spouses, legal
          representatives, successors and permitted assigns.

     (i)  Severability.  All provisions of this Agreement shall be deemed
          severable.  The enforceability, illegality or invalidity of any
          provision herein or portion thereof shall not affect the
          enforceability, legality or validity of any other, further or
          additional provision hereof, all of which shall remain valid,
          binding and enforceable in accordance with their terms.  Should any
          provision, term or condition of this Agreement be held
          unenforceable, illegal or invalid as being too broad with respect
          to duration, scope or subject matter, such provision, term or
          condition shall be deemed and construed to be reduced to the
          maximum duration, scope or subject matter allowable under
          applicable law.

     (j)  At-Will Employment.  No provision of this Agreement shall be
          construed as giving Employee any right of continuing employment
          with Employer, it being understood that this Agreement and the
          employment relationship between Employer and Employee are
          terminable at will by Employer, with or without cause or reason.

     (k)  Survival of Obligations.  Employee's obligations under Section 3
          shall survive the termination of this Agreement and Employee's
          employment with Employer.

     (l)  Counterparts.  This Agreement may be executed in any number of
          counterparts each of which shall be deemed an original, but all of
          which shall constitute one and the same instrument.

     (m)  Captions.  The captions contained in this Agreement are for
          convenience of reference only and do not affect the meaning of any
          terms or provisions.

     (n)  Consideration; Reasonable and Necessary Provisions.  The parties
          agree that the provisions of this Agreement are reasonable and
          necessary for the protection of Employer and that Employer's
          agreement to grant to Employee the Option constitutes consideration
          for Employee agreeing to be bound by the terms and conditions of
          this Agreement.

EMPLOYER:                      NVE CORP.

Dated: 1/29/01                 By /s/ James M. Daughton
                                  ------------------------------------------
                                  James M. Daughton, Chief Technical Officer
                                  (Print Name and Title)

EMPLOYEE:

Dated: 1/29/01                 By /s/ Daniel Baker
                                  -------------------------------------------
                                  Daniel Baker