<PAGE>


                                                                   EXHIBIT 10.40

SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

                                                  STI HAS REQUESTED CONFIDENTIAL
                                                       TREATMENT FOR TEXT MARKED
                                                                      WITH *****


                            PATENT LICENSE AGREEMENT


                                     BETWEEN


                           LUCENT TECHNOLOGIES GRL LLC


                                       AND


                        SUPERCONDUCTOR TECHNOLOGIES INC.


                            EFFECTIVE AS OF EXECUTION


                        RELATING TO ********************


<PAGE>

SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT


                            PATENT LICENSE AGREEMENT

                                TABLE OF CONTENTS

ARTICLE I - GRANTS OF LICENSES

1.01       Grant
1.02       Duration and Extent
1.03       Scope
1.04       Ability to Provide Licenses
1.05       Joint Inventions
1.06       Publicity
1.07       Confidentiality

ARTICLE II - ROYALTY AND PAYMENTS

2.01       Royalty
2.02       Accrual
2.03       Records and Adjustments
2.04       Reports and Payments
2.05       Representations and Warranties

ARTICLE III - TERMINATION

3.01       Breach
3.02       Voluntary Termination
3.03       Survival

ARTICLE IV - MISCELLANEOUS PROVISIONS

4.01       Disclaimer
4.02       Nonassignability
4.03       Addresses
4.04       Taxes
4.05       Choice of Law
4.06       Integration
4.07       Other Conditions and Registration
4.08       Releases
4.09       Counterparts
4.10       Bankruptcy

DEFINITIONS APPENDIX


                                       i
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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT


                            PATENT LICENSE AGREEMENT

THIS PATENT LICENSE AGREEMENT (this "Agreement"), effective as of EXECUTION
("EFFECTIVE DATE"), is made by and between LUCENT TECHNOLOGIES GRL LLC, a
Delaware limited liability company ("LUCENT-GRL"), having an office at 2400 S.W.
145th Avenue, Miramar, Florida 33027, United States of America, and
SUPERCONDUCTOR TECHNOLOGIES INC., a Delaware Corporation ("LICENSEE"), with
offices at 460 Ward Drive Santa Barbara, California 93111-2310, United States of
America. LUCENT-GRL and LICENSEE are sometimes referred to herein individually
as a "Party" and collectively as the "Parties", the Parties agree as follows:*

WHEREAS, without admitting to the infringement or validity of any of
LUCENT-GRL's PATENTS, LICENSEE desires a license on the terms set forth below.

                                    ARTICLE I

                               GRANTS OF LICENSES

1.01 GRANT

LUCENT-GRL grants to LICENSEE under LUCENT-GRL's PATENTS personal, nonexclusive
and non-transferable licenses in the U.S., Canada, and the DESIGNATED COUNTRIES
for:

                           TYPE 1 LICENSED PRODUCTS; AND
                           TYPE 2 LICENSED PRODUCTS.

1.02 DURATION AND EXTENT

(a) Subject to any termination of a Party's licenses in accordance with Article
III of this Agreement, all licenses in the U.S. and Canada granted herein under
any patent shall continue for the entire unexpired term of such patent, for as
much of such term as the grantor has the right to grant.

(b) Subject to any termination of a Party's licenses in accordance with Article
III of this Agreement, all licenses in the DESIGNATED COUNTRIES granted herein
to a Party under any patent shall terminate on the earlier of (i) such patent's
expiration or for as much of a term as the grantor has the right to grant; or
(ii) the end of the LIMITED PERIOD.


----------
*Any term in capital letters which is defined in the body of this Agreement or
the Definitions Appendix shall have the meaning specified therein.


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT


1.03 SCOPE

(a) The licenses granted herein are licenses to (i) make, have made, use, lease,
sell, offer to sell, and import LICENSED PRODUCTS; (ii) make, have made, use and
import machines, tools, materials and other instrumentalities, insofar as such
machines, tools, materials and other instrumentalities are involved in or
incidental to the development, manufacture, testing or repair of LICENSED
PRODUCTS which are or have been made, used, leased, owned, sold or imported by
the grantee of such license; and (iii) convey to any customer of the grantee,
with respect to any LICENSED PRODUCT which is sold or leased by such grantee to
such customer, rights to use and resell such LICENSED PRODUCT as sold or leased
by such grantee (whether or not as part of a larger combination); provided,
however, that no rights may be conveyed to customers with respect to any
invention which is directed to (1) a combination of such LICENSED PRODUCT (as
sold or leased) with any other product regardless of whether such product is
hardware, software or another LICENSED PRODUCT, (2) a method or process which is
other than the inherent use of such LICENSED PRODUCT itself (as sold or leased),
or (3) a method or process involving the use of a LICENSED PRODUCT to
manufacture (including associated testing) any other product.

(b) Licenses granted herein to LICENSEE are not to be construed to include
licenses to contributorily infringe or induce infringement under U.S. law or a
foreign equivalent thereof.

(c) The grant of each license hereunder includes the right to grant sublicenses
within the scope of such license to a Party's RELATED COMPANIES for so long as
they remain its RELATED COMPANIES. Any such sublicense may be made effective
retroactively, but not prior to the EFFECTIVE DATE hereof, nor prior to the
sublicensees becoming a RELATED COMPANY of such Party.

(d) The grant of each license hereunder also includes the right of a Party to
sublicense (within the scope of its own licenses) any business which is divested
by that Party or any of its RELATED COMPANIES provided that the sublicense is
granted within sixty (60) days of divestiture and the divested business is
itself a legal entity at the time of divestiture or within sixty (60) days
thereafter. Such sublicense may continue for so long as the divested business
remains a legal entity and shall extend only to LICENSED PRODUCTS of the type
sold or furnished by the divested business prior to the divestiture and only for
the patents of the non-divesting Party licensed to the divesting Party in this
Agreement which are issued as of the date of divestiture. Furthermore, any
sublicense shall not extend to the products sold or services furnished by a
third party which acquires the divested business, even if they are of the same
kind or similar to those of the divested business and even if made, sold or
provided by the divested business. Any payment obligations of a divesting Party
under this Agreement shall continue in effect for all LICENSED PRODUCTS,
including the LICENSED PRODUCTS of the divested business. The divested business
shall be jointly and severally liable with the divesting Party for royalties
payable on account of the LICENSED PRODUCTS of the divested business. This
Section 1.03(d) shall apply regardless of whether the business is divested by a
distribution to existing shareholders, a sale of assets or as a sale of a legal
entity (e.g., sale of a SUBSIDIARY).



                                       2
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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

1.04 ABILITY TO PROVIDE LICENSES

(a) A Party's failure to meet any obligation hereunder, due to the assignment of
title to any invention or patent, or the granting of any licenses, to the United
States Government or any agency or designee thereof pursuant to a statute or
regulation of, or contract with, such Government or agency, shall not constitute
a breach of this Agreement.

(b) LUCENT-GRL represents that it has the right to grant the licenses under the
patent portfolio of Lucent Technologies Inc., LUCENT-GRL's parent company, as
set forth in this Agreement.

1.05 JOINT INVENTIONS

(a) There are countries (not including the United States) which require the
express consent of all inventors or their assignees to the grant of licenses or
rights under patents issued in such countries for joint inventions.

(b) Each Party shall give such consent, or shall obtain such consent from its
RELATED COMPANIES, its employees or employees of any of its RELATED COMPANIES,
as required to make full and effective any such licenses and rights respecting
any joint invention granted to the grantee hereunder by such Party and by
another licensor of such grantee.

(c) Each Party shall take steps which are reasonable under the circumstances to
obtain from third parties whatever other consents are necessary to make full and
effective such licenses and rights respecting any joint invention purported to
be granted by it hereunder. If, in spite of such reasonable efforts, such Party
is unable to obtain the requisite consents from such third parties, the
resulting inability of such Party to make full and effective its purported grant
of such licenses and rights shall not be considered to be a breach of this
Agreement.

1.06 PUBLICITY

Nothing in this Agreement shall be construed as conferring upon either Party or
its RELATED COMPANIES any right to include in advertising, packaging or other
commercial activities related to a LICENSED PRODUCT, any reference to the other
Party (or any of its RELATED COMPANIES), its trade names, trademarks or service
marks in a manner which would be likely to cause confusion or to indicate that
such LICENSED PRODUCT is in any way certified by the other Party hereto or its
RELATED COMPANIES.

1.07 CONFIDENTIALITY

The terms, but not the existence, of this Agreement shall be treated as
confidential information by the Parties, and no Party shall disclose such terms
to any third party without the prior written consent of the other Party;
provided however, that each Party may (i) represent to third parties that such
Party is licensed for the products and patents as provided by this Agreement;
(ii)


                                       3
<PAGE>

SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

disclose this Agreement and its terms to potential acquirers of, investors in or
lenders to such Party (including any representatives of the parties in such
transaction), or disclosures reasonably necessary in connection with the
divestiture of all or any portion of a Party's respective businesses, provided
such disclosure is made pursuant to a written confidentiality agreement binding
upon such potential acquirer, investor, lender or other parties which contains
confidentiality obligations which are no less protective than at least the same
degree of care the disclosing Party normally exercises to protect its own
proprietary information of a similar nature; (iii) disclose this Agreement and
its terms in any arbitration, mediation or other official dispute resolution
procedure pursuant to a written confidentiality agreement binding upon the
parties which contains confidentiality obligations which are no less protective
than at least the same degree of care the disclosing Party normally exercises to
protect its own proprietary information of a similar nature; and (iv) disclose
this Agreement and its terms which is requested pursuant to a judicial or
governmental request, requirement or order under law, provided that such Party
provides the other Party with sufficient prior notice in order to contest such
request, requirement or order or seek protective measures. In addition, this
Section 1.07 shall not prevent a Party from making disclosures reasonably
required by law or as required by a stock exchange.

                                   ARTICLE II

                              ROYALTY AND PAYMENTS

2.01 ROYALTY

        (a)     In consideration for the grant of licenses, rights and releases
                hereunder by LUCENT-GRL to LICENSEE, and in addition to the
                royalties specified in Sections 2.01(b), 2.01(c), and 2.01(d),
                LICENSEE shall pay to LUCENT-GRL the sum of

********************************************************************************
****************************************************************************

In no event shall such sum or any portion thereof be refunded to LICENSEE.

(b) Subject to Section 2.01(c), in consideration for the grant of licenses and
rights hereunder by LUCENT-GRL to LICENSEE, LICENSEE shall pay a royalty to
LUCENT-GRL as set forth below. For the convenience of the Parties, taking into
account the unexpired term of LUCENT-GRL PATENTS, and in lieu of royalties
otherwise payable with respect to patents licensed hereunder, royalty shall be
payable to LUCENT-GRL by LICENSEE in the form of royalty payments, for so long
as:

        (i)     any of the licenses in the DESIGNATED COUNTRIES granted
                hereunder are in effect, at the rate set forth below applied to
                the FAIR MARKET VALUE of each LICENSED PRODUCT which is sold,
                leased or put into use by LICENSEE anywhere in the DESIGNATED
                COUNTRIES, and for each LICENSED PRODUCT which is sold, leased
                or put into use by any of its RELATED COMPANIES anywhere in the
                DESIGNATED COUNTRIES;



                                       4
<PAGE>

SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

        (ii)    any of the licenses in ************* granted hereunder are in
                effect, at the rate set forth below applied to the FAIR MARKET
                VALUE of each LICENSED PRODUCT which is sold, leased or put into
                use by LICENSEE anywhere in ***********, and for each LICENSED
                PRODUCT which is sold, leased or put into use by any of its
                RELATED COMPANIES anywhere in ********.

        LICENSED PRODUCT                           RATE
        TYPE 1 LICENSED PRODUCT            ************
        TYPE 2 LICENSED PRODUCT            ************

Royalty payments under this Section 2.01(b) shall be payable semiannually, in
accordance with Section 2.04, commencing with the semiannual period during which
this Agreement is executed. LICENSEE shall furnish to LUCENT-GRL such LICENSED
PRODUCTS data and the FAIR MARKET VALUE data with each payment report pursuant
to Section 2.04 and such revenues shall be subject to an audit by LUCENT-GRL and
its auditors pursuant to Section 2.03.

(c) In the event that at any time the cumulative royalty accrued, in accordance
with under Section 2.02(a), in a single ANNUAL PERIOD by LICENSEE and payable to
LUCENT-GRL is equal to *********************************************************
********************************************************************************
********************************************************************************

(d) Commencing with the ANNUAL PERIOD beginning on ***********, on each October
1st, for so long as any of the licenses granted to LICENSEE hereunder are in
effect, LICENSEE shall pay an annual minimum royalty fee ("ANNUAL MINIMUM FEE")
of ************ The ANNUAL MINIMUM FEE paid under this Section 2.01(d) shall be
creditable with respect to royalties that may become payable pursuant to Section
2.01(b) for the single relevant ANNUAL PERIOD. In no event shall any ANNUAL
MINIMUM FEE for any ANNUAL PERIOD under this Section 2.01(d) or any portion
thereof be refunded to LICENSEE or credited towards royalties due for any other
ANNUAL PERIOD.

2.02 ACCRUAL

(a) Subject to Section 2.02(b), the royalty specified in Section 2.01(b) shall
accrue, and shall become payable in accordance with Section 2.04, in respect of
any LICENSED PRODUCT upon the first sale, lease or putting into use of such
LICENSED PRODUCT on or after the EFFECTIVE DATE. Obligations to pay royalties
under Section 2.01 for time periods prior to any termination of licenses and
rights pursuant to Article III shall survive such termination and the expiration
of any patent.

(b) Royalties shall not accrue on a LICENSED PRODUCT under this Agreement if the
LICENSED PRODUCT is sold by the LICENSEE directly to LUCENT-GRL or its RELATED
COMPANIES and LICENSEE advises LUCENT-GRL in writing that such LICENSED


                                       5
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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

PRODUCT is sold directly to LUCENT-GRL or its RELATED COMPANIES before treating
any LICENSED PRODUCT as excluded, pursuant to this Section 2.02(b).

(c) When a company ceases to be a RELATED COMPANY of LICENSEE, royalties which
have accrued with respect to any products of such company, but which have not
been paid, shall become payable with LICENSEE's next scheduled royalty payment.

(d) Notwithstanding any other provisions hereunder, royalty shall accrue and be
payable only to the extent that enforcement of LICENSEE's obligation to pay such
royalty would not be prohibited by applicable law (including but not limited to,
for example, the law related to the doctrine of exhaustion).

2.03 RECORDS AND ADJUSTMENTS

(a) LICENSEE shall keep full, clear and accurate records with respect to all
LICENSED PRODUCTS and their FAIR MARKET VALUES, and shall furnish any
information which LUCENT-GRL may reasonably prescribe from time to time to
enable LUCENT-GRL to ascertain the proper royalty due hereunder. LICENSEE shall
retain such records with respect to LICENSED PRODUCTS and FAIR MARKET VALUES for
at least five (5) years. Not more than once per calendar year, LUCENT-GRL shall
have the right through its independent accredited auditors to make an
examination, following advance notice and during normal business hours, of all
records and accounts bearing upon the amount of royalty payable to it hereunder,
and the audit results will be maintained as confidential among the auditors, and
LUCENT-GRL, and LICENSEE pursuant to Section 1.07 of this Agreement. LICENSEE
shall have the right to review any errors or omissions disclosed by such
examination and discuss such errors or omissions with the auditors. Adjustments
shall be made within sixty (60) days to compensate for any errors or omissions
disclosed by such examination, except if within such sixty (60) days of the
completion of the examination, LICENSEE requests to review the errors or
omissions disclosed by such examination, then adjustments shall be made within
thirty (30) days of such errors and omissions being furnished to LICENSEE. If
such audit discloses a reported error of ***********or greater with respect to
the reported sums paid to LUCENT-GRL by LICENSEE during the applicable period
subject to such audit, LICENSEE shall fully reimburse LUCENT-GRL, promptly upon
demand, for the reasonable fees and disbursements for completing such audit.
Otherwise, LUCENT-GRL shall be responsible for the cost of each such audit.

(b) Independent of any such examination, LUCENT-GRL will credit to LICENSEE the
amount of any overpayment of royalties made in error which is identified, fully
explained and verified by LICENSEE's independent, accredited auditors in a
written notice to LUCENT-GRL delivered within nine (9) months after the due date
of the payment which included such alleged overpayment. LUCENT-GRL shall have
the right, pursuant to the provisions of Section 2.03(a), to verify to its own
satisfaction, the existence and extent of the overpayment.

(c) No refund, credit or other adjustment of royalty payments shall be made by
LUCENT-GRL except as provided in this Section 2.03. Rights conferred by this
Section 2.03 shall not be


                                       6
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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

affected by any statement appearing on any check or other document, except to
the extent that any such right is expressly waived or surrendered by a Party
having such right and signing such statement.

2.04 REPORTS AND PAYMENTS

(a) Within forty-five (45) days after the end of each semiannual period ending
on March 31st or September 30th commencing with the semiannual period during
which this Agreement is executed, LICENSEE shall furnish to LUCENT-GRL at the
address specified in Section 4.03 a statement, in a form acceptable to
LUCENT-GRL, certified by a responsible official of LICENSEE, showing:

        (i)     all LICENSED PRODUCTS which were sold, leased or put into use
                during such semiannual period in **********, and in any of the
                DESIGNATED COUNTRIES;

        (ii)    the FAIR MARKET VALUE of each of such LICENSED PRODUCTS;

        (iii)   the applicable royalty rate for each LICENSED PRODUCT;

        (iv)    all LICENSED PRODUCTS excluded under Section 2.02(b) (together
                with the requisite documentation related to such exclusion as
                set forth in Section 2.02(b)), which were sold, leased or put
                into use in the U.S., in Canada, and in any of the DESIGNATED
                COUNTRIES during such semiannual period;

        (v)     the amounts of fees payable on the LICENSED PRODUCTS, as
                rightfully reported in Section 2.04(a)(i) after excluding
                LICENSED PRODUCTS as rightfully reported in Sections
                2.04(a)(iv), prior to crediting the ANNUAL MINIMUM FEE;

        (vi)    the amounts of fees, if any, credited to the ANNUAL MINIMUM FEE
                in accordance with Section 2.01(d); and

        (vii)   the net amount of fees payable thereon after crediting the
                ANNUAL MINIMUM FEE.

(b) Within such forty-five (45) days, LICENSEE shall, irrespective of its own
business and accounting methods, pay to LUCENT-GRL at the address specified in
Section 4.03(b) the fees payable for such semiannual period as shown in the
statement required by Section 2.04(a).

(c) All payments under Section 2.01 shall be made in United States dollars to
LUCENT-GRL at the address specified in Section 4.03(b). Any conversion to United
States dollars shall be at the prevailing rate for bank cable transfers as
quoted for the last day of such semiannual period by leading United States banks
in New York City dealing in the foreign exchange market.



                                       7
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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

(d) Overdue payments hereunder shall be subject to a late payment charge
calculated at an annual rate of three percentage points (3%) over the prime rate
or successive prime rates (as posted in New York City by leading United States
banks) during delinquency. If the amount of such charge exceeds the maximum
permitted by law, such charge shall be reduced to such maximum.

                                   ARTICLE III

                                   TERMINATION

3.01 BREACH

In the event of a material breach of this Agreement by a Party (the "Breaching
Party"), the other Party (the "Non-Breaching Party") may, in addition to any
other remedies that the Non-Breaching Party may have, at any time terminate all
licenses and rights granted by it to the Breaching Party hereunder by not less
than two (2) months written notice specifying such material breach, unless
within the period of such notice all material breaches specified therein shall
have been remedied. For avoidance of doubt, the Parties agree that the failure
by LICENSEE to pay to LUCENT-GRL 1) the sum pursuant to Section 2.01(a), or 2)
the MINIMUM ANNUAL ROYALTY pursuant to Section 2.01(d), or 3) the fees payable
for a semiannual period pursuant to Section 2.04(b), at the times set forth in
the respective Sections, shall be a material breach of this Agreement.

3.02 VOLUNTARY TERMINATION

LICENSEE may voluntarily terminate all or a specified portion of the licenses
and rights granted to it hereunder by providing at least six (6) months prior
written notice of such termination; provided such termination shall not affect
any of the rights granted by the terminating Party to the other Party. Such
notice shall specify any affected patent, invention or product.

3.03 SURVIVAL

(a) If a company ceases to be a RELATED COMPANY of a Party, licenses and rights
granted hereunder with respect to patents of such company shall not be affected
by such cessation.

(b) Any termination of licenses and rights of a Party under the provisions of
this Article III shall not affect such Party's licenses, rights and obligations
with respect to any LICENSED PRODUCT made prior to such termination, and shall
not affect the other Party's licenses and rights (and obligations related
thereto) hereunder.

(c) The rights and obligations of the Parties which by their nature would
continue past termination of this Agreement shall survive and continue after any
such termination of this Agreement.


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
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                                   ARTICLE IV

                            MISCELLANEOUS PROVISIONS

4.01 DISCLAIMER

NEITHER PARTY NOR ANY OF ITS RELATED COMPANIES MAKES ANY REPRESENTATIONS,
EXTENDS ANY WARRANTIES OF ANY KIND, ASSUMES ANY RESPONSIBILITY OR OBLIGATIONS
WHATEVER, OR CONFERS ANY RIGHT OR LICENSE (EVEN IF SUCH A RIGHT OR LICENSE IS
NECESSARY TO EXERCISE THE RIGHTS EXPRESSLY GRANTED HEREIN) BY IMPLICATION,
ESTOPPEL OR OTHERWISE, OTHER THAN THE LICENSES, RIGHTS AND WARRANTIES HEREIN
EXPRESSLY GRANTED AND THE RESPONSIBILITIES AND OBLIGATIONS HEREIN EXPRESSLY
ASSUMED.

4.02 NONASSIGNABILITY

(a) The Parties hereto have entered into this Agreement in contemplation of
personal performance, each by the other, and intend that the licenses and rights
granted hereunder to a Party not be extended to entities other than such Party's
RELATED COMPANIES without the other Party's express written consent, except as
expressly permitted in this Agreement.

(b) Notwithstanding Section 4.02(a),

        (I)     all of LUCENT-GRL's rights, title and interest in this Agreement
                and any licenses and rights granted to it (and any obligations
                incurred by it) hereunder may be assigned to any RELATED COMPANY
                of LUCENT-GRL, or any direct or indirect successor to all or a
                portion of the business of LUCENT-GRL or any of its RELATED
                COMPANIES, which successor shall thereafter be deemed
                substituted for LUCENT-GRL as the Party hereto, effective upon
                such assignment; or

        (II)    LICENSEE may assign all rights, title and interest in this
                Agreement and any licenses and rights granted to it (and any
                obligations incurred by it) hereunder to a successor solely in
                the event of a CHANGE OF CONTROL, which successor shall
                thereafter be deemed substituted for LICENSEE as a Party hereto,
                subject to (A) written acceptance of such assignment (and all
                associated obligations thereto) by such successor; (B) payment
                of a fee by LICENSEE to LUCENT-GRL, the amount of the fee to be
                no greater than ***********, and (C) provided that under no
                circumstances shall LICENSEE be permitted to assign this
                Agreement in accordance with this Section 4.02(b) where:

                (i)     the intended third party assignee has an existing patent
                        license agreement with LUCENT-GRL or any of its RELATED
                        COMPANIES and such existing patent license agreement has
                        overlapping scope and grant as this Agreement; or

                (ii)    in all other cases from the foregoing (i), the intended
                        third party assignee at the time of the intended
                        assignment either:



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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

                        (1)     is a plaintiff or defendant in any proceeding
                                then pending before any domestic or foreign
                                court, arbitrator or arbitration body,
                                governmental regulatory authority or similar
                                adjudicative body, in which proceeding any of
                                the Lucent Technologies Inc.'s patents hereunder
                                (in whole or in part) are being disputed or
                                contested; or

                        (2)     has given LUCENT-GRL or any of its RELATED
                                COMPANIES a written demand, claim, notice or
                                other communication to the effect that such
                                person or entity is threatening or preparing to
                                file or otherwise commence or initiate such a
                                proceeding;

                        (3)     has received from LUCENT-GRL or any of its
                                RELATED COMPANIES a written demand, claim,
                                notice or other communication to the effect that
                                such person or entity is infringing upon or
                                otherwise violating any of the Lucent
                                Technologies Inc.'s patents hereunder (in whole
                                or in part), and has not undertaken to cure such
                                infringement or violation or has not agreed in
                                writing for the benefit of LUCENT-GRL or its
                                RELATED COMPANIES (as the case may be) to do so;
                                or

                        (4)     is not acquiring directly (whether by merger, or
                                sale of assets, or otherwise) all or
                                substantially all of the assets of LICENSEE or
                                its RELATED COMPANIES which relate to this
                                Agreement;

but neither this Agreement nor any licenses or rights hereunder shall be
otherwise assignable or transferable (in insolvency proceedings or otherwise) by
either Party without the express written consent of the other Party.

For avoidance of doubt, the Parties agree that Section 4.09 shall not apply to a
successor of LICENSEE, and for the purposes of Section 4.09 such successor not
be deemed substituted for LICENSEE.

4.03 ADDRESSES

(a) Any notice or other communication hereunder shall be sufficiently given to
the LICENSEE when sent by certified mail addressed to Superconductor
Technologies Inc., Attention: Robert B. Hammond, Senior Vice President and Chief
Technology Officer, 460 Ward Drive, Santa Barbara, California 93111-2358,, or to
LUCENT-GRL when sent by certified mail addressed to Lucent Technologies GRL LLC,
Intellectual Property Business, Attention: Contract Administrator, 2400 S.W.
145th Avenue, Miramar, Florida 33027, United States of America. Changes in such
addresses may be specified by written notice.

(b) Payments by LICENSEE shall be made to LUCENT-GRL at LUCENT-GRL's
account,*****************. Alternatively, payments to LUCENT-GRL may be made by
bank


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

wire transfers to LUCENT-GRL's account at *************. Changes in such address
or account may be specified by written notice.

4.04 TAXES

(a) LICENSEE shall bear all taxes, duties, levies and similar charges (and any
related interest and penalties), however designated, imposed as a result of the
existence or operation of this Agreement, except (i) any tax imposed upon
LUCENT-GRL in a jurisdiction other than the United States if such tax is
allowable as a credit against the United States income taxes of LUCENT-GRL; and
(ii) any net income tax imposed upon LUCENT-GRL by the United States or any
governmental entity within the United States (the fifty (50) states and the
District of Columbia). In order for the exception contained in (i) to apply,
LICENSEE must take the appropriate actions to ensure that the payment is subject
to any reduced rate of withholding available under any applicable tax treaty and
furnish LUCENT-GRL with evidence issued by the taxing authority in such
jurisdiction that such tax has been paid. The evidence must be furnished within
thirty (30) days of issuance by the taxing authority and must be sufficient to
satisfy United States taxing authorities that such tax has been paid.

(b) If LICENSEE is required to bear a tax, duty, levy or similar charge pursuant
to 4.04(a) above, LICENSEE shall pay such tax, duty, levy or similar charge and
any additional amounts as are necessary to ensure that the net amounts received
by LUCENT-GRL hereunder after all such payments or withholdings equal the
amounts to which LUCENT-GRL is otherwise entitled under this Agreement as if
such tax, duty, levy or similar charge did not apply.

4.05 CHOICE OF LAW

The Parties agree that the law of the State of New York, United States of
America, excluding the choice of law rules thereof, shall apply in any dispute
arising with respect to this Agreement.

4.06 INTEGRATION

This Agreement sets forth the entire agreement and understanding between the
Parties as to the subject matter hereof and merges all prior discussions between
them. Neither of the Parties shall be bound by any warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or in a writing signed with or subsequent to execution hereof by
an authorized representative of the Party to be bound thereby.

4.07 OTHER CONDITIONS AND REGISTRATION

(a) There are countries in which the owner of an invention is entitled to
compensation, damages or other monetary award for another's unlicensed
manufacture, sale, lease, use or importation involving such invention prior to
the date of issuance of a patent for such invention


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CONFIDENTIAL TREATMENT

but on or after a certain earlier date, hereinafter referred to as the
invention's "protection commencement date" (e.g., the date of publication of
allowed claims or the date of publication or "laying open" of the filed patent
application). In some instances, other conditions precedent must also be
fulfilled (e.g., knowledge or actual notification of the filed patent
application). The Parties agree that (i) an invention which has a protection
commencement date in any such country may be used in such country pursuant to
the terms of this Agreement on and after any such date, and (ii) all such
conditions precedent are deemed satisfied by this Agreement.

(b) There may be countries in which a Party hereto may have, as a consequence of
this Agreement, rights against infringers of the other Party's patents licensed
hereunder. Each Party hereby waives any such right it may have by reason of any
third party's infringement or alleged infringement of any such patents.

(c) LICENSEE hereby agrees to register or cause to be registered, to the extent
required by applicable law, and without expense to LUCENT-GRL or any of its
RELATED COMPANIES, any agreements wherein sublicenses are granted by it under
LUCENT-GRL's PATENTS. LICENSEE hereby waives any and all claims or defenses,
arising by virtue of the absence of such registration, that might otherwise
limit or affect its obligations to LUCENT-GRL.

4.08 RELEASES

(a) Subject to Section 4.09(b), and to the receipt by LUCENT-GRL of the sum
specified in Section 2.01(a), LUCENT-GRL, for itself and for its present RELATED
COMPANIES hereby releases, to the full extent of its right to do so, LICENSEE,
LICENSEE's present RELATED COMPANIES and customers (solely as specified in
Section 4.09(b)) thereof under any patent infringement arising prior to the
EFFECTIVE DATE for which the rights and licenses granted under this Agreement to
LICENSEE and its present RELATED COMPANIES would be a complete defense had this
Agreement been in effect at the time such patent infringement occurred.

(b) With respect to customers (purchasers and users) of a grantee, such releases
shall not extend to any invention which is directed to (1) a combination of such
LICENSED PRODUCT (as sold or leased) with any other product regardless of
whether such product is hardware, software or another LICENSED PRODUCT, (2) a
method or process which is other than the inherent use of such LICENSED PRODUCT
itself (as sold or leased), or (3) a method or process involving the use of a
LICENSED PRODUCT to manufacture (including associated testing) any other
product.

(c) For purposes of this Section 4.09, the term "present RELATED COMPANIES" with
respect to LICENSEE shall mean those companies which are RELATED COMPANIES of
LICENSEE as of LICENSEE's execution of this Agreement.

4.09 COUNTERPARTS


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

This Agreement may be executed by the Parties in identical counterparts, all of
which together shall constitute the final agreement. Executed counterparts may
be exchanged by facsimile transmission.

4.10 BANKRUPTCY

(a) The Parties agree that, for the purposes of Section 365(n) of title 11 of
the U.S. Code, the licenses granted herein constitute a license of intellectual
property ("INTELLECTUAL PROPERTY") within the meaning of title 11 of the United
States Code and that, the Parties shall be entitled to the full protections
afforded under 11 U.S.C. Section 365(n) as the same is in effect or may be
amended from time to time.

(b) LUCENT-GRL shall not provide to LICENSEE: 1) any INTELLECTUAL PROPERTY
(including any embodiment) held by a duly appointed trustee in bankruptcy under
11 U.S.C. Section 365(n); or 2) any ownership interests in any INTELLECTUAL
PROPERTY.

(c) The Parties agree that this Section 4.11 shall: 1) in no way expand or
enlarge the rights afforded to either Party under 11 U.S.C. Section 365(n); and
2) in no way affect the LICENSEES right to assign this Agreement or any rights
and/or licenses granted herein.


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.

           LUCENT TECHNOLOGIES GRL LLC

           By:
              --------------------------------------------------
                               Bernard Zucker
                                 President

           Date:
                ------------------------------------------------



           SUPERCONDUCTOR TECHNOLOGIES INC.

           By:
              --------------------------------------------------
                        Robert B. Hammond
              Senior Vice President and Chief Technology Officer

           Date:
                ------------------------------------------------




              THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY
                IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
                        REPRESENTATIVES OF BOTH PARTIES.


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
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                              DEFINITIONS APPENDIX

GENERAL DEFINITIONS:

ANNUAL MINIMUM FEE has the meaning assigned in Section 2.01(d) hereof.

ANNUAL PERIOD means the time period commencing on October 1st and terminating
the following September 30th.

CHANGE OF CONTROL means, with respect to LICENSEE, the direct acquisition
(whether by merger, or sale of assets, or otherwise) of either (i) the majority
of the voting stock in LICENSEE, or (ii) all or substantially all of the assets
of LICENSEE, by another PERSON in a single transaction (or series of related
transactions). For purposes of clarity, a change in management control does not
in and of itself indicate a CHANGE OF CONTROL.

DESIGNATED COUNTRIES means all countries except *********.

EFFECTIVE DATE has the meaning assigned in the Preamble hereof.

EXECUTION means the date upon which the last Party executes this Agreement.

FAIR MARKET VALUE means, with respect to any LICENSED PRODUCT sold, leased or
put into use, the greater of (i) the selling price which a seller would realize
from an unaffiliated buyer in an arm's length sale of an identical product in
the same quantity and at the same time and place as such sale, lease or putting
into use; or (ii) the selling price actually obtained for such LICENSED PRODUCT
in the form in which it is sold, whether or not assembled (and without excluding
therefrom any components or subassemblies thereof which are included in such
selling price).

In determining "selling price" the following shall be excluded:

        (a)     usual trade discounts actually allowed to unaffiliated persons
                or entities;

        (b)     packing costs;

        (c)     costs of insurance and transportation; and

        (d)     import, export, excise, sales and value added taxes, and customs
                duties.

LICENSED PRODUCT(S) means, as to any grantee, any product listed for such
grantee in Section 1.01.

LIMITED PERIOD means the time period commencing on the EFFECTIVE DATE and
terminating on ******.


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SUPERCONDUCTOR TECHNOLOGIES INC. -REQUESTED
CONFIDENTIAL TREATMENT

LUCENT-GRL PATENTS means *******************************************************
RELATED COMPANIES means, with respect to LICENSEE, LICENSEE's SUBSIDIARIES and,
with respect to LUCENT-GRL, LUCENT-GRL's SUBSIDIARIES, its parent Lucent
Technologies Inc., its parent's SUBSIDIARIES other than LUCENT-GRL and any other
company so designated in writing signed by LUCENT-GRL and LICENSEE.

PERSON means any individual, corporation, or other legal entity, none of which
as of the EFFECTIVE DATE control or participate in control of LICENSEE's
management.

SUBSIDIARY of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly; but any such
corporation or other legal entity shall be deemed to be a SUBSIDIARY of such
company only as long as such control or ownership and control exists.

TECHNICAL DEFINITIONS:

EXCLUDED SUPERCONDUCTIVE MATERIAL means a material whose superconductive
properties are primarily based on high temperature superconductors having any of
the following compositions of matter:
********************************************************************************
********************************************************************************
*************************************************************************

SUPERCONDUCTIVE MATERIAL(S) means a material other than an EXCLUDED
SUPERCONDUCTIVE MATERIAL having a composition primarily adapted to exhibit
superconductive properties. The SUPERCONDUCTIVE MATERIAL may include but is not
limited to any material formed using **********************.

********************************************
********************************************

TYPE1 LICENSED PRODUCT means
******************************************************************************.


         TYPE 2 LICENSED PRODUCT means ********************************



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                                   SCHEDULE A

LUCENT-GRL PATENTS
**********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************


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