Exhibit 10.7

                              EMPLOYMENT AGREEMENT

                                     PARTIES

     This Employment  Agreement (this "Agreement") dated as of December 19, 2000
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is  entered  into  by  and  between  Telaxis   Communications   Corporation,   a
Massachusetts   corporation  having  its  principal  place  of  business  at  20
Industrial Drive East, South Deerfield,  Massachusetts 01373 (the "Company") and
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John L.  Youngblood,  an  individual  with an  address at 29366  Duberry  Ridge,
Boerne, Texas 78015 (hereinafter called "Employee").
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                               TERMS OF AGREEMENT

     In  consideration  of this  Agreement and the  continued  employment of the
Employee by the Company, the parties agree as follows:

     1. Employment.  The Company hereby employs Employee,  on a full-time basis,
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to act as President and Chief Executive  Officer of the Company at the principal
place of business of the Company shown above during the Employment Period and to
perform  such acts and  duties  and  furnish  such  services  to the  Company in
connection  with and related to that  position as is customary  for persons with
similar  positions in like companies,  as the Company's Board of Directors shall
from time to time reasonably  direct.  Employee hereby accepts said  employment.
Employee  shall use his best and most diligent  efforts to promote the interests
of the Company; shall discharge his duties to the best of his ability; and shall
devote  his full  business  time  and his  best  business  judgment,  skill  and
knowledge  to the  performance  of his  duties and  responsibilities  hereunder.
Employee shall report to the Board of Directors of the Company.

     2.  Employment  Period.  The  period of  Employee's  employment  under this
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Agreement  shall commence on the date of this Agreement and shall continue for a
period  of  twenty-four  (24)  months  thereafter.  At the  end  of the  initial
twenty-four (24) month period and any extension period thereafter, the period of
Employee's employment under this Agreement,  in the absence of any other express
agreement between the parties, shall automatically be extended for an additional
period of three (3) months.  The employment period described above is subject to
earlier  termination  pursuant to Section 3.6, 4 or 5. The period of  Employee's
employment under this Agreement  (including all quarterly  extension periods) is
referred to as the "Employment Period."

     3.  Compensation and Benefits; Disability.
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     3.1 Salary.  During the Employment Period, the Company shall pay Employee a
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salary at an annualized rate equal to $255,216.00  payable in equal installments
pursuant to the  Company's  customary  payroll  policies in force at the time of
payment (but in no event less  frequently than monthly),  less required  payroll
deductions.  The Employee's  salary may be adjusted  upward from time to time in
the sole  discretion  of the Board of Directors of the Company,  except that the
Employee, if a Director, shall not be entitled to vote thereon.


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     3.2 Discretionary  Bonus.  During the Employment  Period,  the Employee may
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participate  in  such  bonus  plan or  plans  of the  Company  as the  Board  of
Directors,  acting  through  its  Compensation  Committee,  may  approve for the
Employee.  Nothing  contained  in this Section 3.2 shall be construed to require
the Board of  Directors  to approve a bonus plan or in any way grant to Employee
the right to receive bonuses not otherwise approved.

     3.3 Company  Automobile.  During the Employment  Period,  the Company shall
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provide  Employee with a full-sized  Company  automobile which shall be replaced
promptly  after (a) the expiration of every three (3) year period after the date
hereof or (b) the automobile reaches 60,000 miles, whichever occurs first.

     3.4 Insurance  Benefits.  During the Employment  Period, the Employee shall
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receive such health insurance,  disability  insurance,  life insurance and other
benefits as customarily  provided to other officers and management  employees of
the Company.

     3.5 Vacation. Employee may take four (4) weeks of paid vacation during each
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year at such times as shall be consistent with the Company's  vacation  policies
and (in the  Company's  judgment)  with  the  Company's  vacation  schedule  for
officers and other management employees. Employee shall also be entitled to paid
legal and religious  holidays,  sick days, and personal days in accordance  with
the Company's normal policies in effect from time to time.

     3.6 Disability. If during the Employment Period, Employee shall become ill,
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disabled  or  otherwise  incapacitated  so as to be unable to perform  his usual
duties (a) for a period in excess of one hundred twenty (120)  consecutive  days
or (b) for more than one hundred  eighty  (180) days in any  consecutive  twelve
(12) month period, then the Company shall have the right to terminate Employee's
employment under this Agreement, subject only to applicable laws, on thirty (30)
days' written notice to Employee. Termination pursuant to this Section 3.6 shall
not affect any rights Employee may otherwise have under any disability insurance
policies in effect at the time of such termination.

     3.7 Severance Pay.
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     3.7.1  Termination  By  Company.   In  the  event  the  Company  terminates
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Employee's  employment  under this Agreement  pursuant to Section 5, the Company
shall  provide to  Employee,  in exchange for a release as to any and all claims
Employee may have against the Company,  the Severance  Benefits for (a) a twelve
(12) month period after  termination if termination  shall occur (i) at any time
prior to any Change in Control,  (ii) after any Approved  Change in Control,  or
(iii) more than one (1) year after an  Unapproved  Change in  Control,  or (b) a
twenty-four  (24) month  period after  termination  if  termination  shall occur
within one (1) year after an Unapproved Change in Control.

     3.7.2  Termination  by Employee For Good Reason.  After a Change in Control
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and provided  Employee has Good Reason,  Employee may terminate  his  employment
under this  Agreement  upon fifteen (15) days written  notice to the Company and
the Company shall  provide to Employee,  in exchange for a release as to any and
all claims Employee may have against the Company, the Severance Benefits for (a)
a twelve (12) month period after  termination if

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<PAGE>


termination  shall  occur  within  one (1) year  after an  Unapproved  Change in
Control or (b) an initial six (6) month period, and thereafter until the earlier
to occur of the end of one (1)  additional  six (6)  month  period  or  Employee
obtaining regular  employment or consulting work, if termination shall occur (i)
after any  Approved  Change of  Control  or (ii) more than one (1) year after an
Unapproved Change in Control.

     3.7.3 Definitions. For purposes of this Section 3.7,
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          (a) a "Change in Control" shall mean:

               (i) The  completion of a merger or  consolidation  of the Company
with any other entity (other than a merger or consolidation in which the Company
is the surviving  entity and is owned at least 50%  collectively  by persons who
were  stockholders  of  the  Company  before  the  transaction),   the  sale  of
substantially  all of the Company's  assets to another entity,  the sale of more
than 50% of the outstanding  capital stock of the Company to an unrelated person
or group of persons acting  collectively in one or a series of transactions,  or
any change in "control" [as defined in Rule 12b-2  adopted under the  Securities
Exchange Act of 1934,  as amended  (the  "Exchange  Act")] of the Company  which
would be required to be reported  under either  Section 13 or 14 of the Exchange
Act whether or not the Company is then  subject to said Act,  including a change
whereby

                  (A) any "person"  [as such term is used in Sections  13(d) and
14(d) of the  Exchange  Act]  becomes a  "beneficial  owner" (as defined in Rule
13d-adopted  under the Exchange Act) of  securities of the Company  representing
50% or more of the  combined  voting  power of the  Company's  then  outstanding
securities; or

                  (B) there  ceases to be a majority  of the Board of  Directors
comprised of individuals described in subsection (iv) below.

               (ii) An "Approved  Change in Control" of the Company shall mean a
Change in Control that is approved by at least a majority of the Company's Board
of Directors.

               (iii) An "Unapproved Change in Control" of the Company shall mean
any Change in Control that is not an Approved Change of Control.

               (iv) For the purposes of Sections 3.7.3(a)(i) and (ii), "Board of
Directors" shall mean: (i) individuals who, on the date hereof,  constituted the
Board  of the  Company,  and  (ii)  any  successors  to  those  directors  whose
nomination  for election or election was approved by a majority of the directors
in office at the time of such nomination or election.

         (b) "Good Reason" shall mean the  occurrence  after a Change in Control
of any of the following  circumstances  without the Employee's  written  consent
unless,  in the case of  paragraphs  (A),  (B), (C) or (H),  such  circumstances
constitute an isolated,  insubstantial  and inadvertent  action not taken in bad
faith and which are fully remedied by the Company prior to the  Employee's  last
day of employment:

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<PAGE>


                  (A) the assignment to the Employee of any duties  inconsistent
with the  highest  position in the Company  that the  Employee  held at any time
during  the 90-day  period  immediately  preceding  the Change in Control of the
Company,  or a  significant  adverse  alteration  in the nature or status of the
Employee's  responsibilities or the conditions of the Employee's employment from
those in effect at any time during the 90-day period immediately  preceding such
Change in Control;

                  (B) any  violation  of Section 1 or Section 3.1 through 3.5 of
this Agreement;

                  (C) the failure by the Company to provide  the  Employee  with
the  greatest  number of  vacation  days to which the  Employee  is  entitled in
accordance  with the  Company's  normal  vacation  policy  in effect at any time
during the 90-day period immediately preceding the Change in Control;

                  (D) any requirement by the Company or of any person in control
of the Company that the location at which the  Employee  perform the  Employee's
principal  duties for the  Company be (1)  outside a radius of 50 miles from the
location at which the Employee  performed such duties  immediately  prior to the
Change in Control,  or (2) more than 25 miles in commuting distance further than
the  Employee's  commuting  distance  to the  location  at  which  the  Employee
performed such duties immediately prior to the Change in Control;

                  (E) the  failure  by the  Company to pay to the  Employee  any
portion of the Employee's current  compensation within seven (7) days after such
compensation is due;

                  (F) any requirement by the Company or any person in control of
the Company  that the  Employee  travel on an  overnight  basis to an extent not
substantially   consistent  with  the  Employee's  business  travel  obligations
immediately prior to the Change in Control;

                  (G) the  failure  of the  Company  to  obtain  a  satisfactory
agreement  from any successor to assume and agree to perform the  Agreement,  as
contemplated in Section 9.3; or

                  (H) any purported  termination  of the  Employee's  employment
which is not  effected  pursuant to the  requirements  of Section 5 and 8, which
purported termination shall not be effective for purposes of this Agreement.

     The Employee's  continued  employment shall not constitute consent to, or a
waiver of rights with  respect  to, any  circumstance  constituting  Good Reason
hereunder.

     For  purposes of this Section  3.7.3(b),  any good faith  determination  of
"Good Reason" made by the Employee shall be conclusive.

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         (c) "Severance  Benefits"  shall mean (i) Employee's base salary at the
highest level in effect during the 90-day period immediately  preceding the date
of  termination,  payable  in  equal  installments  pursuant  to  the  Company's
customary payroll policies in force at the time of payment (but in no event less
frequently  than  monthly),  less  required  payroll  deductions  and  (ii)  the
continuation  of all health,  welfare and other fringe  benefits (other than the
Company  automobile  allowance) which are provided to Employee  pursuant to this
Agreement on the date of termination  except to the extent the  continuation  of
any such benefits is not permitted by applicable law or the terms of any benefit
documentation   (provided,   however,  if  the  continuation  of  medical/health
insurance, dental insurance,  disability insurance, and/or life insurance is not
permitted, the Company shall pay Employee, at the beginning of the period during
which he is  entitled  to receive  Severance  Benefits,  an amount  equal to the
amount the Company would have had to pay to provide those insurances to Employee
if Employee had remained an employee of the Company for the period  during which
he  is  entitled  to  receive   Severance   Benefits   under  this   Agreement).
Notwithstanding  the  foregoing,   if  Employee  begins  regular  employment  or
consulting  work prior to the end of the period  during  which he is entitled to
receive  Severance  Benefits from the Company under this  Agreement,  the amount
Employee shall be entitled to receive  pursuant to clause (i) of this definition
of  "Severance  Benefits"  shall be  reduced  to the  amount,  if any,  by which
Employee's  base salary  described in clause (i) above exceeds  Employee's  base
salary from his new regular  employment or consulting  work.  Employee agrees to
notify the Company if he begins regular  employment or consulting  work prior to
the end of the period during which he is entitled to receive Severance  Benefits
from the Company under this Agreement.

     4.  Discharge for Cause.  The Company may discharge  Employee and terminate
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his employment  under this Agreement for cause without further  liability to the
Company by a majority vote of the Board of Directors of the Company  except that
the Employee,  if a Director,  shall not be entitled to vote thereon. As used in
this Section 4, "cause" shall mean any or all of the following:

         (a) gross or willful  misconduct  of Employee  during the course of his
employment;

         (b) conviction of a fraud or felony or any criminal  offense  involving
dishonesty, breach of trust or moral turpitude during the Employment Period; or

         (c)  Employee's  breach of any of the material  terms of this Agreement
which, if curable, is not cured within thirty (30) days of written notice to the
Employee.

     5.  Termination Without Cause.  Upon thirty (30) days prior written notice,
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the Company may terminate  Employee's  employment  under this Agreement  without
cause without  further  liability to the Company (except as set forth in Section
3.7 above) by a majority  vote of the Board of Directors  of the Company  except
that the Employee, if a Director, shall not be entitled to vote thereon.

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<PAGE>

     6. Expenses.  Pursuant to the Company's  customary policies in force at the
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time of payment, Employee shall be promptly reimbursed,  against presentation of
vouchers or receipts therefor,  for all authorized expenses properly incurred by
him on the Company's behalf in the performance of his duties hereunder.

     7.  Additional Agreements.  Upon execution of this Agreement,  the Employee
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shall  execute  and  deliver to the  Company,  unless  previously  delivered,  a
Confidential and Proprietary Information Agreement (the "Proprietary Agreement")
and an Agreement Not to Compete (the "Noncompetition Agreement") in the standard
forms signed by other management employees of the Company.

     8. Notices.  Any notice or  communication  given by any party hereto to the
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other party or parties shall be in writing and personally delivered or mailed by
certified mail,  return receipt  requested,  postage  prepaid,  to the addresses
provided above.  All notices shall be deemed given when actually  received.  Any
person  entitled to receive notice (or a copy thereof) may designate in writing,
by notice to the other, such other address to which notices to such person shall
thereafter be sent.

     9. Miscellaneous.
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     9.1 Entire Agreement.  This Agreement contains the entire  understanding of
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the parties in respect of its subject matter and supersedes all prior agreements
and  understandings  between the parties with  respect to such  subject  matter;
provided,  however that nothing in this  Agreement  shall affect the  Employee's
obligations under the Proprietary Agreement and Noncompetition Agreement.

     9.2 Amendment;  Waiver.  This  Agreement may not be amended,  supplemented,
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cancelled  or  discharged,  except by written  instrument  executed by the party
affected thereby. No failure to exercise, and no delay in exercising, any right,
power or privilege hereunder shall operate as a waiver thereof. No waiver of any
breach of any provision of this Agreement  shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision.

     9.3 Binding Effect, Assignment. Employee's rights or obligations under this
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Agreement  may not be assigned by  Employee;  except  that  Employee's  right to
compensation to the earlier of date of death or termination of actual employment
shall pass to Employee's  executor or administrator.  The rights and obligations
of this  Agreement  shall bind and inure to the  benefit of the  Company and its
successors and assigns.  The Company will require any successor  (whether direct
or  indirect,  by  purchase,  merger,  consolidation  or  otherwise)  to  all or
substantially  all of the  business  and/or  assets  of the  Company  to  assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such successor had
taken  place.  As used in this  Agreement,  "Company"  shall mean the Company as
hereinbefore  defined  and  any  successor  to its  business  and/or  assets  as
aforesaid  which  assumes and agrees to perform  this  Agreement by operation of
law, or otherwise.

     9.4 Headings.  The headings  contained in this  Agreement are for reference
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purposes  only and  shall not  affect  the  meaning  or  interpretation  of this
Agreement.

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<PAGE>

     9.5 Governing Law;  Interpretation.  This  Agreement  shall be construed in
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accordance  with and governed for all purposes by the laws and public  policy of
the  Commonwealth of  Massachusetts  applicable to contracts  executed and to be
wholly  performed  within such  Commonwealth.  Service of process in any dispute
shall be effective  (a) upon the  Company,  if service is made on any officer of
the Company  other than the  Employee;  or (b) upon the  Employee,  if served at
Employee's  residence last known to the Company with an information  copy to the
Employee at any other residence,  or care of a subsequent employer, of which the
Company may be aware.

     9.6 Further Assurances. Each of the parties agrees to execute, acknowledge,
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deliver  and  perform,  or cause to be  executed,  acknowledged,  delivered  and
performed,  at any  time,  or from  time to time,  as the case may be,  all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances  as may be necessary or proper to carry out the  provisions or intent
of this Agreement.

     9.7 Severability. If any one or more of the terms, provisions, covenants or
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restrictions  of this  Agreement  shall be  determined  by a court of  competent
jurisdiction to be invalid,  void or unenforceable,  the remainder of the terms,
provisions,  covenants and  restrictions  of this Agreement shall remain in full
force and effect and shall in no way be affected,  impaired or invalidated.  If,
moreover,  any one or more of the provisions  contained in this Agreement  shall
for  any  reason  be  determined  by a court  of  competent  jurisdiction  to be
excessively broad as to duration,  geographical  scope,  activity or subject, it
shall be construed,  by limiting or reducing it, so as to be  enforceable to the
extent compatible with then applicable law.

     10.  Replacement  Agreement.  This  Agreement  replaces in its entirety the
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Employment  Agreement,  dated as of January  25,  1994,  between the Company and
Employee.

                                    EXECUTION

         The parties  executed this  Agreement as a sealed  instrument as of the
date first above  written,  whereupon it became  binding in accordance  with its
terms.

                                  TELAXIS COMMUNICATIONS CORPORATION


                                  By:  /s/ David L. Renauld
                                       ---------------------------------------
                                       Name: David L. Renauld
                                       Title: Vice President

                                       /s/ John L. Youngblood
                                       ---------------------------------------
                                       Name: John L. Youngblood


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