<PAGE>

                                                                    EXHIBIT 10.4



APOGEE TECHNOLOGY, INC. HAS OMITTED FROM THIS EXHIBIT 10.4 PORTIONS OF THE
AGREEMENT FOR WHICH APOGEE TECHNOLOGY, INC. HAS REQUESTED CONFIDENTIAL TREATMENT
FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE AGREEMENT FOR
WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH BRACKETS AND AN
ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.



                      DEVELOPMENT AND LICENSING AGREEMENT
<PAGE>

Confidential

                               Table of Contents

<TABLE>
<S>                                                                                                       <C>
1.   DEFINITIONS.........................................................................................  1

2.   CONFIDENTIAL INFORMATION............................................................................  4

   2.1.   Definition of Confidential Information.........................................................  4
   2.2.   Non-Use; Non-Disclosure........................................................................  4
   2.3.   Standard of Care...............................................................................  5
   2.4.   Disclosure Restrictions........................................................................  5
   2.5    Duties Concerning Confidential Information Upon Termination....................................  5
   2.6.   Governmental Orders............................................................................  5
   2.7.   Confidentiality of Terms and Conditions........................................................  6
   2.8.   Required "Confidential" Legend; Oral Information...............................................  6

3.   INITIAL DEVELOPMENT.................................................................................  6

   3.1.   Interface Development..........................................................................  6
   3.2.   ALST Provision of Information..................................................................  6
   3.3.   Completion of Initial Product Development......................................................  7
   3.4.   Ownership......................................................................................  7

4.   DELIVERY OF LICENSED TECHNOLOGY.....................................................................  7

   4.1.   DDX Controller Technology......................................................................  7
   4.2.   DDX Power Technology...........................................................................  8
   4.3.   Additional Initial Development Support.........................................................  8

5.   GRANT OF RIGHTS.....................................................................................  9

   5.1.   Field Of Use...................................................................................  9
   5.2.   Development Rights.............................................................................  9
   5.3.   Apogee-enhanced Products.......................................................................  9
   5.4.   Right To Make..................................................................................  9
   5.5.   Right To Have Made............................................................................. 10
   5.6.   Right To Use................................................................................... 10
   5.7.   Right To Sell.................................................................................. 10
   5.8.   Apogee's Ownership Rights...................................................................... 11
   5.9.   ALST's Ownership Rights........................................................................ 11
   5.10.  No Exploitation of ALST's Ownership Rights By Apogee........................................... 12
   5.11.  Non-Exclusive Nature of ALST's License......................................................... 12

6.   PROMOTIONAL MATERIALS; MARKING...................................................................... 12

   6.1.   Press Releases................................................................................. 12
   6.2.   Marking........................................................................................ 12

7.   LICENSE FEES AND ROYALTIES.......................................................................... 12

   7.1.   Initial License Fee............................................................................ 12
   7.2.   Royalties...................................................................................... 12
   7.3.   Royalty Reports................................................................................ 13
   7.4.   Late Payments.................................................................................. 13

8.   AUDIT RIGHT......................................................................................... 13

   8.1.   Obligation To Maintain Books And Records....................................................... 13
   8.2.   Audit.......................................................................................... 14
   8.3.   Costs Of Audit In The Event Of Underpayment.................................................... 14
9.   APOGEE PURCHASES FROM ALST.......................................................................... 14
</TABLE>
<PAGE>

Confidential


<TABLE>
<S>                                                                                                         <C>
10.  FUTURE COLLABORATIVE PRODUCT DEVELOPMENT.............................................................  14

   10.1.  Collaborative Development Efforts...............................................................  14
   10.2.  Scope oOf Collaborative Development Efforts......................................................  14
   10.3.  Collaborative Development Procedures; Apogee's "Opt Out" Right..................................  15
   10.4.  Licensing Terms, Royalties, And Ownership of The Results of Collaborative Development Efforts...  15
   10.5.  Consulting Fee..................................................................................  16
   10.6.  Additional Support Services.....................................................................  16

11.  INTELLECTUAL PROPERTY WARRANTIES, INFRINGEMENT, AND INDEMNIFICATION..................................  16

   11.1.  Apogee Non-infringement Warranty and Indemnification............................................  16
   11.2.  ALST Non-Infringement Warranty and Indemnification..............................................  16
   11.3.  Other Indemnification...........................................................................  17
   11.4.  Indemnification Obligations.....................................................................  17
   11.5.  Infringement Litigation.........................................................................  17

12.  TRADEMARKS AND TRADENAMES............................................................................  18

13.  EXPORT REGULATIONS...................................................................................  18

14.  WAIVER...............................................................................................  18

15.  FORCE MAJEURE........................................................................................  19

16.  GOVERNING LAWS; ARBITRATION; MEDIATION...............................................................  19

   16.1.  Choice of Law...................................................................................  19
   16.2.  Jurisdiction; Venue.............................................................................  19
   16.3.  Informal Dispute Resolution.....................................................................  19
   16.4.  Arbitration.....................................................................................  20

17.  GENERAL LIMITATION ON LIABILITY......................................................................  22

18.  GENERAL WARRANTIES...................................................................................  22

19.  NOTICE METHODS.......................................................................................  23

   19.1.  For ALST........................................................................................  23
   19.2.  For Apogee......................................................................................  23
   19.3.  For Altec.......................................................................................  23
   19.4.  Effective Date of Notices.......................................................................  23

20.  TERM.................................................................................................  24

21.  TERMINATION..........................................................................................  24

   21.1.  Payment Default.................................................................................  24
   21.2.  Material Breach.................................................................................  24
   21.3.  Insolvency......................................................................................  24
   21.4.  Commercialization by ALST.......................................................................  24

22.  SURVIVAL.............................................................................................  25

23.  CESSATION OF RIGHTS UPON TERMINATION OR EXPIRATION...................................................  25

   23.1.  End Of Licenses; Return or Destruction of Confidential Materials................................  25
   23.2.  Effect On STM Contract..........................................................................  25

24.  ASSURANCES OF PERFORMANCE............................................................................  25
</TABLE>

                                      ii
<PAGE>

Confidential


<TABLE>
<S>                                                                                                      <C>
25.   ASSIGNMENT.......................................................................................  25

26.   RELATIONSHIP OF THE PARTIES......................................................................  25

27.   SECTIONS AND SUBSECTIONS.........................................................................  26

28.   ENTIRE AGREEMENT.................................................................................  26
</TABLE>

                                      iii
<PAGE>

Confidential

         THIS AGREEMENT is made this 13th day of August, 1999 (the "Effective
Date"), by and between ALST Technical  Excellence Center, a Delaware corporation
with offices in Kfar Saba, Israel (hereinafter  referred to as "ALST") and Altec
Lansing Technologies,  Inc., a Pennsylvania  corporation with offices located in
Milford, Pennsylvania (hereinafter referred to as "Altec"), on the one hand, and
Apogee Technology, Inc., a Delaware corporation with offices located in Norwood,
Massachusetts (hereinafter referred to as "Apogee"), on the other hand.

                                   Recitals
                                   --------

         WHEREAS, ALST is a strategic partnership between Altec and
STMicroelectronics (hereinafter referred to as "STM") that develops joint
technologies and systems solutions for the computer, consumer electronics, and
communications technology markets; and

         WHEREAS, ALST is a majority owned subsidiary of Altec; and

         WHEREAS, Apogee is a research and development company specializing in
high efficiency audio amplification; and

         WHEREAS, Apogee has developed and owns certain technology relating to
digital, high efficiency audio amplification (the "Technology"); and

         WHEREAS, ALST wishes Apogee to undertake development efforts for
purposes of incorporating certain Apogee Technology into ALST's semiconductor
products ("Apogee-Enhanced Products"); and

         WHEREAS, ALST wishes to have Apogee-Enhanced Products produced by its
partner, STM; and

         WHEREAS, Apogee is willing to allow STM to produce Apogee-Enhanced
Products, for use in ALST's Products, if STM meets certain conditions, specified
herein; and

         WHEREAS, ALST wishes to license the Technology from Apogee for such
purposes, and Apogee is willing to license the same to ALST as specifically
provided herein;

         WHEREAS, the Parties contemplate engaging in future development
efforts, and wish to structure such development efforts;

         NOW, THEREFORE, upon the terms and conditions contained in this
Agreement, and based upon mutual promises contained herein and intending to be
legally bound, each of the Parties hereby agrees as follows:

                                   Agreement
                                   ---------

1.   DEFINITIONS
     -----------

     "Acceptance Deadline" shall have the meaning provided in Section 10.3.2.
      -------------------
<PAGE>

Confidential

     "Affiliate" shall mean any entity controlling, controlled by or under
      ---------
     common control with ALST. The term "control" as used herein shall mean the
     legal, beneficial or equitable ownership, directly or indirectly, of more
     than 50% of the aggregate of all voting equity interests in such entity.

     "ALST Products" shall mean audio-based silicon solutions for the computer,
      -------------
     consumer electronics, automotive, or communications markets.

     "Apogee-Enhanced Products" shall have the meaning  provided in Section
      ------------------------
     5.3.

     "Channel" shall mean an independent audio signal that is converted or
      -------
     processed in whole or in part using DDX Controller Technology or amplified
     in whole or in part by DDX Power Technology.

     "Collaborative Development Efforts" shall have the meaning provided in
      ---------------------------------
     Section 10.1.

     "Confidential Information" shall have the meaning provided in Section
      -------------------------
     2.1.

     "DDX Controller Technology" shall have the meaning provided in Section 4.1.
      -------------------------

     "DDX Power Technology" shall have the meaning provided in Section 4.2.
      --------------------

     "Derivative Work" shall mean: (i) for copyrightable or copyrighted
      ---------------
     material, any modification, correction, addition, extension, upgrade,
     improvement, compilation, abridgement, or other form in which an existing
     work may be recast, transformed, or adapted; (ii) for patentable or
     patented material, any improvement thereon; and (iii) for material which is
     protected by trade secret, any new material derived from such existing
     trade secret material, including new material which may be protected by
     copyright, patent, and/or trade secret.

     "Development Rights" shall have the meaning provided in Section 5.2.
      ------------------

     "Effective Date" shall have the meaning provided in the Preamble.
      --------------

     "Enhancements" shall mean all improvements, additions, and any
      ------------
     modifications to a technology developed solely by Apogee. The term
     "Enhancements" shall include all upgrades, bug fixes, work-arounds,
     software patches, and other fixes, Derivative Works, and all works of
     authorship, data, know-how, technology, information, Inventions and/or
     discoveries related thereto which are conceived, or conceived and reduced
     to practice by Apogee, but excluding all modifications or improvements
     developed with third parties to the extent the right to license such
     modifications or improvements is not obtained, after reasonable efforts to
     do so.

     "Field of Use" shall have the meaning provided in Section 5.1.
      ------------

     "Initial Apogee-Enhanced Products" shall mean those items listed on Exhibit
      --------------------------------
     A.

                                       2
<PAGE>

Confidential

     "Intellectual Property Rights" shall mean any and all patent rights,
      ----------------------------
     copyrights, trade secrets and trademarks and any other rights to exclude,
     existing from time to time in a jurisdiction under patent law, copyright
     law, moral rights law, trade-secret law, semiconductor chip protection law,
     trademark law, unfair competition law, or other similar law.

     "Interface" shall have the meaning provided in Section 3.1.
      ---------

     "Inventions" shall mean any invention, discovery, process, art, method
      ----------
     (including mathematical algorithms), machine, manufacture, composition of
     matter, or improvement thereof, whether or not patentable. The terms
     "conceived," "reduced to practice," and other like and related terms shall
     have their ordinary meanings as they are used in the patent laws of the
     United States.

     "Licensed Patents" shall mean United States Patent No. 5,077,539, United
      ----------------
     States Patent No. 5,617,058, the inventions described and claimed therein,
     and any divisions or continuations thereof, patents issuing thereon or
     reissues thereof, and any and all foreign patents and patent applications
     corresponding thereto. The term "Technology" when used hereunder to refer
     to Apogee's Technology shall include within its meaning "Licensed Patents."

     "Licensed Technology" shall collectively mean the DDX Controller Technology
      -------------------
     and the DDX Power Technology.

     "Parties" shall mean ALST and Apogee and, where the context permits, ALST
      -------
     Apogee, and Altec.

     "Request for Collaborative Development" shall have the meaning provided in
      -------------------------------------
     Section 10.3.1.

     "RTL" shall mean Registered Transfer Level.
      ---

     "Source Code" shall mean software in human-readable form, including
      -----------
     programmer's comments, data files and structures, header and include files,
     macros, make files, object libraries, programming tools not commercially
     available, technical specifications, flowcharts and logic diagrams,
     schematics, annotations and documentation reasonably required or necessary
     to enable a competent independent third party programmer to create,
     operate, maintain, modify and improve such software without the help of any
     other person, and with data files containing Source Code in standard ASCII
     format readable by a text editor.

     "STM" shall mean STMicroelectronics SRL, incorporated under the laws of
      ---
     Italy, with registered offices in via C Olivetti 2, Agrate Brianza MI,
     Italy, and offices in Lexington, Massachusetts. ALST and Altec represent
     that STM and Altec are partners in ALST.

     "STM Contract" shall have the meaning provided in Section 5.5.2.
      ------------

                                       3
<PAGE>

Confidential

     "Technology" shall mean digital, high efficiency amplifier technology and
      ----------
     related information, including without limitation, and irrespective of
     whether such information is of a confidential nature, (i) all software
     (including both Source Code and object code), hardware, tools,
     documentation, data and know-how owned or invented by Apogee and in
     existence as of the Effective Date, and (ii) all Enhancements and
     Inventions relating thereto owned or invented by Apogee and in existence as
     of the Effective Date.

     "Term" shall have the meaning provided in Section 20.
      ----

     "VHDL" shall have the meaning provided in Section 4.1.1.
      ----

     "VHSIC" shall mean Very High Speed Integrated Circuit.
      -----

2.   CONFIDENTIAL INFORMATION

     In carrying out the development and production tasks specified herein, the
     Parties contemplate disclosing to each other Confidential Information, as
     defined in this Section 2, and agree that all Confidential Information so
     disclosed shall be subject to this Section 2.

     2.1. Definition of Confidential Information.

          "Confidential Information" shall mean information concerning any
          Party's Inventions, Intellectual Property Rights, technology, proposed
          or actual Enhancements to such technology, current products, future
          products, business plans, marketing plans, or research and
          development, and includes all instructive or descriptive material and
          know-how and show-how documentation of any Party, disclosed in
          written, digital, or oral form. The term "Confidential Information"
          shall not include information which:

          2.1.1  is known to the receiving Party before receipt thereof from any
                 other Party, as evidenced by written records kept by the
                 receiving Party in the ordinary course of business;

          2.1.2  is disclosed to the receiving Party by a third party who had a
                 right to make such disclosure;

          2.1.3  is made public by the originating Party including, but not
                 limited to, public disclosure as a consequence of the patent
                 process; or

          2.1.4  is or becomes part of the public domain otherwise than as a
                 consequence of a breach by the receiving Party of its
                 obligations hereunder.

     2.2. Non-Use; Non-Disclosure.

          Except as expressly provided herein, Confidential Information
          disclosed hereunder shall remain the property of the disclosing Party.
          The receiving Party shall not disclose or confirm any Confidential
          Information to third parties nor

                                       4
<PAGE>

Confidential

          publish the same for any purpose whatsoever, without the express
          written permission of the disclosing Party. In addition, the receiving
          Party and its employees shall not use any Confidential Information
          disclosed or obtained hereunder for any purpose other than strictly in
          connection with the receiving Party's rights under this Agreement.

     2.3. Standard of Care.

          In handling Confidential Information, the receiving Party shall use at
          least the same degree of care as it uses for safeguarding its own
          Confidential Information, but shall provide such Confidential
          Information no less than a reasonable degree of care in any event.

     2.4. Disclosure Restrictions.

          The receiving Party shall limit the disclosure of Confidential
          Information to its employees who have a need to know such Confidential
          Information for the purpose of acting in accordance with this
          Agreement, and such Confidential Information will be disclosed to only
          such of its employees who have agreed to be bound by restrictions on
          disclosure of Confidential Information which are at least as
          restrictive as those applicable to the receiving Party under Sections
          2.2 and 2.3 above. In any event, the receiving Party shall remain
          fully responsible for the conduct of such employees.

     2.5. Duties Concerning Confidential Information Upon Termination.

          Upon termination of this Agreement, the receiving Party shall promptly
          return to the disclosing Party any Confidential Information of the
          disclosing Party or, at the receiving Party's option, shall destroy
          such information and reasonably shall certify such destruction in
          writing to the disclosing Party.

     2.6. Governmental Orders.

          If a receiving Party is ordered by a court, administrative agency, or
          other governmental body of competent jurisdiction to disclose
          Confidential Information of a disclosing Party, or if it is served
          with or otherwise becomes aware of a motion or similar request that
          such an order is to be issued, then the receiving Party will not be
          liable to the disclosing Party for disclosure of its Confidential
          Information required by such order if the receiving Party complies
          with the following requirements:

          2.6.1  if an order which has already issued calls for immediate
                 disclosure, then the receiving Party shall immediately move for
                 or otherwise request a stay of such order to permit the owner
                 of the Confidential Information to timely respond to such
                 order, with the reasonable expense of any action required to be
                 taken by a receiving Party under this Section 2.6.1 to be at
                 the expense of the disclosing Party;

                                       5
<PAGE>

Confidential

          2.6.2  the receiving Party shall immediately notify the disclosing
                 Party of the motion or order by the most expeditious means
                 possible; and

          2.6.3  the receiving Party shall join or agree to (or at a minimum
                 shall not oppose) a motion or similar request by the disclosing
                 Party for an order protecting the confidentiality of the
                 Confidential Information, including joining or agreeing to (or
                 non-opposition to) a motion for leave to intervene by the owner
                 of the Confidential Information. The reasonable expense of any
                 action required to be taken by a receiving Party under this
                 Section 2.6.3 shall be at the expense of the disclosing Party.

     2.7. Confidentiality of Terms and Conditions.

          ALST and Apogee agree to maintain the pricing terms and conditions of
          this Agreement in confidence save for such disclosures as are
          necessary for reporting, accounting, or tax purposes.

     2.8. Required "Confidential" Legend; Oral Information.

          The Parties agree that Confidential Information (a) shall include
          written information only if such information is labeled "Confidential"
          or "Proprietary" at the time of disclosure or within thirty (30) days
          of such disclosure; and (b) shall include orally disclosed
          information, only if such information is reduced to writing and so
          marked within thirty (30) days of such oral disclosure. All notices of
          Confidential Information will be addressed and forwarded as directed
          in Section 19, "Notice Methods". Notwithstanding the provisions of
          this Section 2.8, the Parties agree that information which the
          receiving Party should reasonably understand to be Confidential
          Information shall be Confidential Information under this Section 2,
          irrespective of whether it is reduced to writing or marked
          "Confidential" or "Proprietary" at any point.

3.   INITIAL DEVELOPMENT
     -------------------

     3.1. Interface Development.

          As part of the delivery of the Licensed Technology, Apogee shall
          develop an interface (the "Interface") for incorporating its DDX
          Controller Technology into the Initial Apogee-Enhanced Products. The
          Initial Apogee-Enhanced Products for which the Interface is to be
          provided are identified as items 1 through 3 on Exhibit A.

     3.2. ALST Provision of Information.

          To allow Apogee to develop and test the Interface, ALST shall provide
          to Apogee good and sufficient product information and materials
          concerning the Initial Apogee-Enhanced Products, including, but not
          limited to, product specification, requirements, and reference
          schematics such that one of ordinary skill in the art could develop
          and test an Interface.

                                       6
<PAGE>

Confidential

     3.3. Completion of Initial Product Development.

          Conditioned upon ALST's prompt compliance with Section 3.2, Apogee
          shall use reasonable best efforts to develop the Interface within
          forty-five (45) days after Apogee's receipt of Interface information
          per Section 3.2. In the event that Apogee is unable to complete the
          Interface within 45 days after receiving the Interface information,
          Apogee shall notify ALST and explain the nature of the problem causing
          the delay, after which ALST may consent to extend the deadline for
          completed development as needed, which consent shall not be
          unreasonably withheld.

     3.4. Ownership.

          Apogee shall own all right, title, and interest in the Interface, and
          the Interface shall be deemed included within the definition of
          Licensed Technology hereunder.

4.   DELIVERY OF LICENSED TECHNOLOGY
     -------------------------------

     Upon completion of the Interface, Apogee shall promptly supply to ALST the
     below defined services and, strictly subject to the licenses granted in
     Section 5, Technology consisting of the DDX Controller Technology and the
     DDX Power Technology, as defined in Sections 4.1 and 4.2, below (the DDX
     Controller Technology and the DDX Power Technology are referred to
     collectively as the "Licensed Technology").

     4.1. DDX Controller Technology.

          Apogee has developed Technology for the design of integrated circuits
          that convert digital audio signals into Apogee patented modulation
          signals, as set forth in part in the Licensed Patents ("DDX Controller
          Technology").

          4.1.1  Licensed DDX Controller Technology. The DDX Controller
                 ----------------------------------
                 Technology licensed to ALST shall be in the form of VHSIC
                 Hardware Description Language ("VHDL"), that ALST or STM can
                 target and synthesize to specific, authorized semiconductor
                 processes. The Licensed DDX Controller Technology shall consist
                 of:

                 4.1.1.1.   Top level system specification and interface
                            definition;

                 4.1.1.2.   Verified VHDL RTL Code intended for synthesis and
                            test bench;

                 4.1.1.3.   Test vectors for integration verification; and

                 4.1.1.4.   The Interface developed in accordance with Section
                            3.

          4.1.2  Warranty. Apogee warrants that the DDX Controller Technology,
                 --------
                 at the VHDL RTL design level, shall perform in accordance with
                 Section 4.1.1.1.

                                       7
<PAGE>

Confidential

          4.1.3  Support. Apogee shall provide in a timely manner (and ALST
                 -------
                 shall request in a timely manner) up to three (3) weeks (120
                 man hours) of good and workmanlike engineering time for
                 Interface synthesis and production test development (assuming
                 scan insertion verification), with respect to the licensed DDX
                 Controller Technology for use in the Initial Apogee-Enhanced
                 Products (the "DDX Controller Technology Support").

     4.2. DDX Power Technology

          Apogee has developed Technology for the design and specification of
          integrated circuits that convert DDX Controller Technology outputs
          into audio power outputs ("DDX Power Technology"). The design consists
          of a digital interface, decode logic, power MOSFET H-Switches and
          protection circuitry and is applicable for low to medium audio power
          applications.

          4.2.1  Licensed DDX Power Technology. The DDX Power Technology shall
                 -----------------------------
                 be in the form of a detailed product specification that
                 defines:

                 4.2.1.1.   General requirements and minimum standards;

                 4.2.1.2.   Device functional block diagrams and application and
                            test schematics;

                 4.2.1.3.   Electrical performance characteristics and critical
                            design parameters; and

                 4.2.1.4.   Packaging information.

          4.2.2  Support. Apogee shall, upon timely request by ALST, deliver in
                 -------
                 a timely manner the following support services in connection
                 with the license of the DDX Power Technology for use in the
                 Initial Apogee-Enhanced Products (the "DDX Power Technology
                 Support"):

                 4.2.2.1.   Up to two (2) weeks (80 man-hours) of good and
                            workmanlike engineering time for device development.

                 4.2.2.2.   Up to four (4) weeks (160 man-hours) of good and
                            workmanlike engineering time for device
                            verification.

     4.3. Additional Initial Development Support

          At ALST's request, Apogee shall provide further engineering support
          over and above the agreed-upon DDX Controller Technology Support and
          the DDX Power Technology Support defined in Sections 4.1.3 and 4.2.2,
          respectively; provided, however, that any request by ALST for such
          additional support shall be reasonable in light of Apogee's then
          current engineering resources and project commitments. Additional
          support shall be invoiced and paid in accordance with Section 10.5 or
          10.6.

                                       8
<PAGE>

Confidential

5.   GRANT OF RIGHTS
     ---------------

     5.1. Field Of Use.

          For purposes of this agreement, the term "Field of Use" shall mean
          uses in connection with audio-based silicon solutions for the
          computer, consumer electronics, automotive or communications markets;
          provided, however, that the term "Field of Use" expressly does not
          cover uses in connection with commercial audio installations. Other
          products or applications may be added by the parties as mutually
          agreed upon, on a product by product or amendment of "Field of Use"
          basis.

     5.2. Development Rights.

          In consideration of ALST's and Altec's obligations hereunder, and for
          the Term of this Agreement, Apogee hereby grants ALST a world-wide,
          non-transferable, non-exclusive license to enhance, use, copy, modify,
          improve and adapt the Licensed Technology in existence as of the
          Effective Date (i) in order to develop specifications and design
          approaches for incorporating such Technology in ALST Products in the
          Field of Use, and (ii) in order to implement such specification and
          design approaches in ALST Products in the Field of Use (the
          "Development Rights"). Apogee expressly forbids ALST from sublicensing
          such Development Rights.

     5.3. Apogee-Enhanced Products.

          Any ALST Product or part thereof (i) which incorporates some or all of
          the Licensed Technology; (ii) which results from or arises out of the
          exercise of the Development Rights; or (iii) which results from or
          arises out of any Collaborative Development Efforts shall be
          considered an "Apogee-Enhanced Product" for the purposes of this
          Agreement. For Apogee-Enhanced Products, Apogee grants ALST, strictly
          subject to the terms and conditions of Sections 5.4 through 5.11, a
          world-wide, non-transferable, non-exclusive license to make, use, sell
          or import or have made or have sold on ALST's behalf. ALST shall
          provide Apogee with prompt written notice of the development of any
          Apogee-Enhanced Product, and shall include in such notice information
          and materials sufficient to enable Apogee to ensure compliance with
          Section 7.

     5.4. Right To Make.

          In consideration of ALST's and Altec's obligations hereunder, Apogee
          hereby grants ALST a worldwide, non-transferable license to make
          Apogee-Enhanced Products in the Field of Use for the Term of this
          Agreement. ALST may not sublicense such rights except as provided
          expressly in Section 5.5.

                                       9
<PAGE>

Confidential

     5.5. Right To Have Made.

          Apogee acknowledges that ALST desires to have Apogee-Enhanced Products
          made by STM. Apogee hereby grants ALST a limited, non-transferable
          right to have Apogee-Enhanced Products made by STM, provided that all
          of the following conditions (set forth in Sections 5.5.1 through
          5.5.4, inclusive) are maintained:

          5.5.1. ALST shall disclose to STM only that portion of the Apogee
                 Technology as is necessary for the production of the Apogee-
                 Enhanced Products, and STM shall not disclose such Apogee
                 Technology to any third party, and shall not use such
                 Technology except strictly in connection with its manufacture
                 of the Apogee-Enhanced Products.

          5.5.2. Any agreement or understanding between ALST and STM concerning
                 an Apogee-Enhanced Product shall provide (i) that ALST shall
                 enjoy audit and reporting rights with respect to STM that do
                 not materially differ from those provided to Apogee under
                 Section 7.3 and Section 8, below; (ii) that STM shall
                 compensate ALST on sales of Apogee-Enhanced Products such that
                 ALST shall meet its obligations to Apogee under Section 7.2;
                 and (iii) that STM shall not disclose Apogee Technology to any
                 third party, and shall not use such Technology except strictly
                 in connection with its manufacture of the Apogee-Enhanced
                 Products. An agreement or understanding between ALST and STM
                 that meets these criteria is referred to herein as an "STM
                 Contract."

          5.5.3. ALST shall exercise its audit rights under an STM Contract upon
                 reasonable request by Apogee, which exercise shall not occur
                 more than twice per year. ALST shall use best efforts in
                 conducting such audit, and shall promptly provide the results
                 and supporting work-papers from such audit to Apogee.

          5.5.4. ALST and Altec shall be responsible for STM's compliance with
                 STM Contracts, as provided in Section 24.

     5.6. Right to Use.

          In consideration of ALST's and Altec's obligations hereunder, and
          subject to Section 7, Apogee hereby grants ALST a worldwide right to
          use and to allow others to use Apogee-Enhanced Products for their
          intended purposes, in the Field of Use and for the Term of this
          Agreement.

     5.7. Right to Sell.

          5.7.1. ALST's Right to Sell. In consideration of ALST's and Altec's
                 --------------------
                 obligations hereunder, Apogee hereby grants ALST a worldwide,
                 non-transferable license to sell Apogee-Enhanced Products in
                 the Field of Use for the Term of this Agreement.

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          5.7.2. STM's Right to Sell. In consideration of ALST's and Altec's
                 -------------------
                 obligations hereunder, Apogee hereby authorizes ALST to grant
                 to STM a worldwide, non-transferable sublicense to sell Apogee-
                 Enhanced Products in the Field of Use for the Term of this
                 Agreement, on the express condition that, in making such sales,
                 STM acts in accordance with an STM Contract. In the event sales
                 take place which are not in accordance with the provisions of
                 an STM Contract identified in Section 5.5.2, Apogee shall have
                 the right, in its discretion, to terminate the grant of this
                 sublicense under this Section 5.7.2, without affecting the
                 remainder of this Agreement, after notifying ALST of its
                 intention to so terminate the sublicense, and after providing a
                 sixty (60) day opportunity to cure.

          5.7.3. Notice. ALST shall use best efforts to provide Apogee with
                 ------
                 timely notice of STM's non-compliance or threatened non-
                 compliance with an STM Contract.

     5.8. Apogee's Ownership Rights.

          ALST acknowledges that, as between the Parties, Apogee owns all right,
          title, and interest in the Licensed Technology, including but not
          limited to any associated Intellectual Property Rights. ALST agrees
          that it shall have no intellectual property claim on, or license to,
          any Apogee Enhancements to the Licensed Technology occurring after the
          Effective Date, except as provided in Section 10.

     5.9. ALST's Ownership Rights.

          Apogee agrees that ALST shall own (i) the Apogee-Enhanced Products and
          (ii) Inventions and modifications, enhancements or improvements
          arising from the Development Rights, or otherwise relating to the
          Licensed Technology, which meet each of the following conditions: (a)
          the Invention or modifications, enhancements or improvements must be
          embodied in an Apogee-Enhanced Product and (b) the Invention or
          modifications, enhancements or improvements must arise from the
          efforts of ALST or must arise through the Collaborative Development
          Efforts of ALST and Apogee under Section 10; provided, however, that:

          5.9.1. such rights in ALST shall be subject to and dominated by
                 Apogee's underlying ownership rights in the Licensed
                 Technology, as provided in Section 5.8; and

          5.9.2. such rights in ALST shall further be strictly subject to ALST's
                 royalty obligations under Section 7, concerning any and all
                 Apogee-Enhanced Products.

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     5.10. No Exploitation of ALST's Ownership Rights by Apogee.

           The Parties agree that an effect of ALST's ownership rights under
           Section 5.9 shall be that, except as expressly allowed by ALST,
           Apogee may not use or exploit rights owned or held by ALST in
           accordance with Section 5.9.

     5.11. Non-Exclusive Nature of ALST's License.

           ALST expressly acknowledges that its license to the Licensed
           Technology hereunder is strictly on a non-exclusive basis, and agrees
           that Apogee is free to exploit, use, adapt, enhance, and license this
           Licensed Technology as Apogee sees fit, without obligation to ALST.

6.   PROMOTIONAL MATERIALS; MARKING
     ------------------------------

     6.1.  Press Releases.

           ALST agrees that Apogee shall be entitled to issue press releases
           concerning this Agreement or any other developments of significance
           warranting disclosure by Apogee, in a form and manner acceptable to
           ALST subject to prior written approval of ALST, such approval not to
           be unreasonably withheld. ALST and Apogee agree that such releases
           shall not include the Confidential Information of the other.

     6.2.  Marking.

           ALST agrees to use reasonable best efforts to insure that suitable
           notice of patent rights (consisting of the word "patent" or its
           abbreviation "pat." together with the appropriate patent number)
           either (i) shall be included on those Apogee-Enhanced Products which
           rely upon or are derived from the Licensed Patents or (ii) shall be
           included in documentation (such as user manuals) delivered to
           purchasers with such Products.

7.   LICENSE FEES AND ROYALTIES.
     --------------------------

     7.1.  Initial License Fee.

           In consideration of the grant, during the Term, of the license rights
           set forth in Section 5.2, 5.4, and 5.5 and the support set forth in
           Sections 4.1.3, 4.2.2 and 3.1, ALST shall pay Apogee an initial
           license fee of [ * ]. This initial license fee shall be due and
           payable [ * ], the first of which ALST shall pay [ * ] and the second
           of which ALST shall pay [ * ], in accordance with Section 4, of (a) [
           * ] and (b) [ * ].

     7.2.  Royalties.

          7.2.1. [ * ]. The Parties contemplate that each Apogee-Enhanced
                 Product shall contain one or more [ * ].

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          7.2.2.  Royalty Amount. On all Apogee-Enhanced Products, Apogee shall
                  --------------
                  be paid [ * ] as follows:

                  7.2.2.1. [ * ]; and

                  7.2.2.2. [ * ].

          7.2.3.  Royalty Trigger. The royalty on an individual Apogee-Enhanced
                  ---------------
                  Product shall be deemed earned upon the sale of that Product.

          7.2.4.  [ * ]. Payment of all royalties earned under this Agreement
                  shall be made [ * ]. Upon timely notification of Apogee, ALST
                  shall be entitled to an extension of time as necessary, not to
                  exceed [ * ] to Apogee before such payment shall be considered
                  late pursuant to Section 7.4 ("Due Date").

          7.2.5.  Alterations. The royalty amount shall remain as provided in
                  -----------
                  Section 7.2.2 for the Term of this Agreement, unless Apogee
                  and ALST mutually agree to lower or raise the royalty amount
                  to meet competitive pricing demands from the relevant
                  market(s).

          7.2.6.  [ * ]. The Parties agree that Apogee shall be entitled to
                  royalty payments set forth in this Section 7 [ * ].

     7.3. Royalty Reports.

          Within thirty (30) days following the close of each [ * ] and
          simultaneously with payment of all requisite royalties under Section
          7.2, ALST shall submit to Apogee, with respect to the Apogee-Enhanced
          Products a complete and accurate royalty report ("Royalty Report")
          setting forth (i) an itemized summary of the quantity and sales of
          products subject to royalty, identifying whether the products were
          sold by ALST or by STM; (ii) an itemized summary of the [ * ]; and
          (iii) the payments due to Apogee under the terms of this Agreement,
          showing in detail the manner of calculating the same. Upon timely
          notification of Apogee, ALST shall be entitled to an extension of time
          as necessary, not to exceed fifteen (15) days, to submit such royalty
          reports to Apogee.

     7.4. Late Payments.

          Any payments due and owing by ALST to Apogee if not made within 7 days
          of the Due Date set forth in Section 7.2.4, shall bear interest at the
          rate of [ * ], beginning on the date the payment was due.

8.   AUDIT RIGHT
     -----------

     8.1. Obligation To Maintain Books And Records.

          With respect to the subject matter of this Agreement, ALST (the
          "Audited Party") shall each keep books and records pertaining to the
          sale, distribution, pricing, and

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           payments made under this Agreement in accordance with generally
           accepted accounting principles. The Audited Party shall keep such
           books and records for purposes of allowing Apogee to verify amounts
           payable under this Agreement and to verify compliance with this
           Agreement and any STM Contract.

     8.2.  Audit.

           Upon twenty (20) days written notice and not more than twice per
           year, Apogee or its designee may inspect such books and records
           during the Audited Party's normal business hours. The Audited Party
           shall make such books and records available in the form in which such
           records are maintained (including digital form as well as print form,
           if so maintained by the Audited Party), and shall provide reasonable
           assistance during such audit, at the Audited Party's expense. Apogee
           may exercise this audit right during the Term of this Agreement, and
           for a period of two years thereafter.

     8.3.  Costs Of Audit In The Event Of Underpayment.

           If such audit shows that Apogee has been underpaid by more than ten
           percent (10%), ALST shall reimburse Apogee for all reasonable costs,
           including travel, incurred by Apogee or its designee in connection
           with the audit, upon submission of supporting invoices. ALST
           acknowledges that such reimbursement shall be in addition to, and
           shall not effect or impair Apogee's rights to recover for a breach of
           this Agreement or any STM Contract.

9.   APOGEE PURCHASES FROM ALST
     --------------------------

     Apogee shall have the right to purchase semiconductor chips embodying the
     Licensed Technology direct from ALST. Apogee's purchases shall be subject
     to the provisions of ALST's standard order administration, with the
     exception that Apogee shall enjoy (a) pricing which shall be equal to the
     lowest price offered by ALST to other related or unrelated persons or
     entities for such semiconductor chips, and (b) any other special provisions
     established by ALST for the sale of such semiconductor chips; provided,
     however, that Apogee shall not resell semiconductor chips purchased under
     this Section 9 in the same form in which Apogee purchases them.

10.  FUTURE COLLABORATIVE PRODUCT DEVELOPMENT
     ----------------------------------------

     10.1. Collaborative Development Efforts.

           The Parties may collaborate for purposes of developing additional
           Apogee-Enhanced Products (the "Collaborative Development Efforts").

     10.2. Scope of Collaborative Development Efforts.

           Collaborative Development Efforts shall consist of (a) Apogee
           considering opportunities presented by ALST to develop custom audio
           processing or system prototyping to support additional Apogee-
           Enhanced Products; and (b) Apogee

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           providing reasonable engineering consulting support services to ALST
           in connection with the Development Efforts.

     10.3. Collaborative Development Procedures; Apogee's "Opt Out" Right.

           The procedure for initiating a Collaborative Development Effort shall
           be as follows:

           10.3.1  Initiation by ALST. ALST shall notify Apogee of its desire to
                   ------------------
                   engage in a Collaborative Development Effort (a "Request for
                   Collaborative Development"). Subject to Section 10.3.4,
                   below, a Request for Collaborative Development shall contain
                   information and materials sufficient to allow Apogee to
                   assess the desirability, in Apogee's sole discretion, of
                   engaging in the proposed Collaborative Development Effort.

           10.3.2  Assessment by Apogee. Within ten business days of Apogee's
                   --------------------
                   receipt of a Request for Collaborative Development (the
                   "Acceptance Deadline"), Apogee shall notify ALST in writing
                   whether it desires to engage in the proposed Collaborative
                   Development Efforts. Apogee shall have the right, in its sole
                   discretion, to decline to engage in proposed Development
                   Effort(s). If Apogee does not respond by the close of the
                   Acceptance Deadline under this Section 10.3.2, ALST shall
                   deem its Request for Collaborative Development declined by
                   Apogee.

           10.3.3  Assent by Apogee. In the event Apogee determines, in its sole
                   ----------------
                   discretion, to accept a Request for Collaborative
                   Development, Apogee shall notify ALST of such acceptance in
                   writing, on or before the Acceptance Deadline. The parties
                   shall then proceed as they see fit, in accordance with the
                   scope of such Collaborative Developments Efforts provided
                   under Section 10.2.

           10.3.4  Level of Disclosure. ALST shall not include in a Request for
                   -------------------
                   Collaborative Development any materials deemed by ALST to be
                   Confidential Information, unless Apogee requests such
                   materials in writing. If Apogee makes such a written request,
                   then materials ALST determines, in its sole discretion, to
                   provide in response shall be considered Confidential
                   Information under this Agreement.

     10.4. Licensing Terms, Royalties, and Ownership of the Results of
           Collaborative Development Efforts.

           With respect to Apogee-Enhanced Products that result from or are
           derived through Collaborative Development Efforts under this Section
           10, the parties agree as follows:

           10.4.1  such Apogee-Enhanced Products shall be licensed in accordance
                   with Section 5;

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           10.4.2  such Apogee-Enhanced Products shall bear royalties as
                   provided in Section 7;

           10.4.3  ownership of such Apogee-Enhanced Products shall be in
                   accordance with Section 5.9; and

           10.4.4  such Apogee-Enhanced Products shall be treated under this
                   Agreement in all other ways the same as Apogee-Enhanced
                   Products which did not result from or were not derived
                   through Collaborative Development Efforts.

     10.5. Consulting Fee.

           In consideration of any Collaborative Development Efforts provided by
           Apogee under this Section 10 and in consideration of the rights
           granted ALST above in Section 10.4, ALST shall pay Apogee at the rate
           of [*] (the "Consulting Rate"). If Apogee has to contract external
           engineering services or purchase any other materials, Apogee will
           invoice ALST for the actual cost without any additional markup.
           Apogee shall have the right to increase the Consulting Rate;
           provided, however, that such increases shall not exceed [*] in any
           one year. Payment on invoices for Consulting Fees shall be due thirty
           (30) days from the date of the invoice.

     10.6. Additional Support Services.

           The Parties agree to negotiate in good faith the terms for such other
           support services and other matters as may be deemed necessary in
           connection with the Collaborative Development Efforts, which may
           include, but not be limited to: additional support services,
           allocation of extraordinary expenses in connection with the
           Collaborative Development Efforts and additional payment terms.

11.  INTELLECTUAL PROPERTY WARRANTIES, INFRINGEMENT, AND INDEMNIFICATION
     -------------------------------------------------------------------

     11.1. Apogee Non-Infringement Warranty and Indemnification.

           Apogee represents and warrants the Licensed Patents shall not
           knowingly (after a good faith search) infringe the patent,
           trademarks, mask rights, copyright, or trade secret rights of any
           third party. Apogee will defend, indemnify, and hold ALST and ALST's
           customers and suppliers harmless from any claim, suit, action, or
           expense (including reasonable attorney's fees) alleging that the
           Licensed Patents infringe any such rights.

     11.2. ALST Non-Infringement Warranty and Indemnification.

           ALST represents and warrants that its contributions to Apogee-
           Enhanced Products, including circuit designs, specifications, and any
           products or materials produced by it (or any combination of the
           foregoing) and submitted to Apogee or

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           incorporated into such Products ("ALST Contributions") shall not
           knowingly (after a good faith search) infringe the patent, trademark,
           mask rights, copyright, or trade secret rights of a third party. ALST
           will defend, indemnify, and hold Apogee and Apogee's customers and
           suppliers harmless from any claim, suit, action, or expense
           (including reasonable attorney's fees) alleging that ALST
           Contributions infringe any such rights.

     11.3. Other Indemnification.

           Apogee and ALST shall each indemnify the other from any claim or
           damages due to the injury or death of any individual, or the loss of,
           damage to, or misappropriation of real or personal property, in
           digital or other form, resulting from the willful or negligent acts,
           or omissions of the indemnifying party, its agents or employees.

     11.4. Indemnification Obligations.

           In the event indemnification is sought under Section 11.1, 11.2, or
           11.3, then the Party seeking such indemnification (the "Indemnitee")
           shall:

           11.4.1   Notify the other Party (the "Indemnitor) within 10 (ten)
                    days of receiving notice of such claim, suit, cause of
                    action or action (the "Claim") giving rise to the
                    Indemnitor's obligations

           11.4.2   Give the Indemnitor sole authority to defend or settle the
                    Claim; provided, however, that the Indemnitee shall be
                    entitled to appear, defend, and protect its rights and
                    interests, through settlement or otherwise, if the
                    Indemnitee reasonably believes it has grounds for
                    insecurity, and provided further, however, that the
                    Indemnitor shall not settle the Claim without the prior
                    written consent of the Indemnitee, which consent shall not
                    unreasonably be withheld;

           11.4.3   Responsibly cooperate and assist the Indemnitor (including,
                    but not limited to, the provision of information related to
                    the Claim) at the Indemnitor's expense with defense of the
                    Claim.

     11.5. Infringement Litigation.

           11.5.1   Apogee's Right To Pursue. Apogee shall have the sole right
                    ------------------------
                    to prosecute any claim, suit, or action (and to retain any
                    and all proceeds therefrom) arising from alleged
                    infringement of the Licensed Technology as embodied in an
                    Apogee-Enhanced Product (collectively, an "Infringement
                    Claim"). Apogee shall promptly notify ALST of the alleged
                    infringement.

           11.5.2   ALST's Right To Pursue. If Apogee elects not to pursue an
                    ----------------------
                    Infringement Claim, Apogee shall promptly notify ALST of
                    Apogee's decision not to pursue the Infringement Claim.
                    Within ten (10) business days of Apogee's notification
                    regarding Apogee's decision, ALST will notify Apogee

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                    whether ALST elects to pursue the Infringement Claim, during
                    which time Apogee may reconsider its decision concerning the
                    Infringement Claim. At the expiration of the ten (10)
                    business day period beginning on the date on which ALST was
                    notified, if Apogee still elects not to pursue the
                    Infringement Claim, then ALST may pursue such Infringement
                    Claim at its own expense. In the event ALST pursues such a
                    Infringement Claim, recoveries or reimbursements resulting
                    from such Infringement Claim shall be distributed and
                    disbursed at ALST's election. In the event that a
                    declaratory judgment action, claim, or counterclaim alleging
                    invalidity of any of the Licensed Patents shall be brought
                    against ALST or Apogee, Apogee at its sole option shall have
                    the right to intervene and take over the sole defense of the
                    action at its own expense.

           11.5.3   Cooperation. In any action for infringement, declaratory
                    -----------
                    judgment, invalidity, or other actions affecting the
                    intellectual property right of any Party to this Agreement,
                    each Party shall, at the request and expense of the other
                    Party cooperate of the fullest extent reasonably possible.
                    This provision shall not be construed to require either
                    Party to undertake any activities, including legal
                    discovery, at the request of any third party except as may
                    be required by lawful process of a court of competent
                    jurisdiction.

12.  TRADEMARKS AND TRADENAMES
     -------------------------

     Except as expressly provided herein, neither Party has the right to use any
     other Party's trademarks, logos, or trade names, directly or indirectly, in
     connection with marketing activities of any kind without the first Party's
     prior consent, which shall not be unreasonably withheld.

13.  EXPORT REGULATIONS
     ------------------

     Each Party agrees that it will abide by the United States Department of
     Commerce regulations concerning the export or re-export of United States
     source technical data, or the direct product thereof, to unauthorized
     destinations with regard to the type of information or products supplied by
     any other Party hereunder. ALST acknowledges that performance of this
     Agreement is expressly conditioned upon the obtaining of all appropriate or
     necessary export licenses or approvals.

14.  WAIVER
     ------

     Delay in exercise or non-exercise of the rights, authorities, or exemptions
     under this Agreement shall not function as waiver thereof, and partial or
     singular exercise of the rights, authorities, or exemptions under this
     Agreement shall not disturb the Party from exercising such rights,
     authorities, or exemptions.

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15.  FORCE MAJEURE
     -------------

     No Party shall be liable for failure to perform duties under this Agreement
     if such failure is due to fire, flood, earthquake, storm, strikes or any
     other circumstances beyond the control of the Parties.

16.  GOVERNING LAWS; ARBITRATION; MEDIATION
     --------------------------------------

     16.1. Choice of Law.

           The validity, interpretation, and performance of this Agreement shall
           be controlled by and construed under the laws of the Commonwealth of
           Pennsylvania, United States of America, without respect to its rules
           on conflicts of laws.

     16.2. Jurisdiction; Venue.

           For any controversy or claim not covered by Section 16.4, each Party
           (i) consents to the personal jurisdiction of, and venue in federal
           courts located in Philadelphia, Pennsylvania, or (ii) to the extent
           diversity jurisdiction is not present, or federal question subject
           matter jurisdiction does not exist, each Party consents to the
           jurisdiction of the State Courts located in Philadelphia,
           Pennsylvania.

     16.3. Informal Dispute Resolution.

           Except for any controversy or claim relating to the ownership by
           either Party of any Intellectual Property Rights, which shall not be
           subject to the provisions of this Section and shall be subject to the
           provisions of Section 16.2, any controversy of claim between the
           Parties arising from or in connection with this Agreement, whether
           based on contract, tort, common law, equity, statute, regulation,
           order or otherwise ("Dispute"), shall be resolved as follows:

           16.3.1   Upon written request of any Party hereto, each Party shall
                    appoint a designated representative whose task it will be to
                    meet for the purpose of endeavoring to resolve such Dispute.
                    The designated representatives shall meet as often as the
                    parties reasonably deem necessary to discuss the problem in
                    an effort to resolve the Dispute without the necessity of
                    any formal proceeding.

           16.3.2   In the event that such representatives are unable to resolve
                    the Dispute within 30 days after the Dispute is submitted to
                    them, or if after 10 days either party determines in good
                    faith prior to the expiration of such period that such
                    representatives are unlikely to be able to resolve such
                    matter, the Dispute shall be submitted to arbitration in
                    accordance with Section 16.4 hereof.

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     16.4. Arbitration.

           Except for any controversy or claim relating to the ownership by
           either Party of any Intellectual Property Rights, which shall not be
           subject to the provisions of this Section and shall be subject to the
           provisions of Section 16.2:

           16.4.1   If the Parties are unable to resolve any Dispute arising
                    after the Effective Date as contemplated by Section 16.3
                    hereof, such Dispute shall be submitted to mandatory and
                    binding arbitration at the election of a Party hereto (the
                    "Disputing Party"), in the City of Philadelphia,
                    Pennsylvania. Except as otherwise provided in this Section
                    16.4, the arbitration shall be pursuant to the Commercial
                    Arbitration Rules of the AAA.

           16.4.2   To initiate the arbitration, the Disputing Party shall
                    notify the other party in writing (the "Arbitration
                    Demand"), which shall describe in reasonable detail the
                    nature of the Dispute, state the amount of the claim,
                    specify the requested relief and name an arbitrator who has
                    been licensed to practice law in the U.S. for at least ten
                    years, is not then an employee of a Party or any Affiliate
                    thereof, and is experienced in representing clients in
                    connection with commercial agreements and experience in
                    dealing with software and computer issues (the "Basic
                    Qualifications"). Within 30 days after the other Party's
                    receipt of the Arbitration Demand, such other Party shall
                    file, and serve on the Disputing Party, a written statement
                    (i) answering the claims set forth in the Arbitration Demand
                    and including any affirmative defenses of such party; (ii)
                    asserting any counterclaim, which shall (A) describe in
                    reasonable detail the nature of the Dispute relating to the
                    counterclaim, (B) state the amount of the counterclaim, and
                    (C) specify the requested relief (an "Answer"); and (iii)
                    naming a second arbitrator satisfying the Basic
                    Qualifications. Promptly, but in any event within 30 days
                    thereafter, the two arbitrators so named will select a third
                    neutral arbitrator from a list provided by the AAA of
                    potential arbitrators who satisfy the Basic Qualifications
                    and who have no past or present relationships with the
                    parties or their counsel, except as otherwise disclosed in
                    writing to and approved by the parties. The arbitration will
                    be heard by a panel of the three arbitrators so chosen (the
                    "Arbitration Panel"), with the third arbitrator so chosen
                    serving as the chairperson of the Arbitration Panel.
                    Decisions of a majority of the members of the Arbitration
                    Panel shall be determinative. The powers of the Arbitration
                    Panel shall in all cases be limited to the specific powers
                    conferred under the arbitration law of Pennsylvania and, the
                    Arbitration Panel may not award damages not provided for
                    therein, or not provided for under this Agreement.

           16.4.3   If a panel of arbitrators has not been selected within
                    thirty (30) days of the filing of the Answer as provided
                    Section 16.4.2, then either Party may elect to waive the
                    Basic Qualification requirements set forth in

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                    Section 16.4.2, in which event the AAA shall provide the
                    Parties a list of proposed arbitrators, in accordance with
                    the AAA's standard practices, and such standard practices
                    shall govern the selection of the Arbitration Panel.

           16.4.4   The Party bringing a particular claim or asserting an
                    affirmative defense will have the burden of proof with
                    respect thereto. The arbitration proceedings and all
                    testimony, filings, documents and information relating to or
                    presented during the arbitration proceedings shall be deemed
                    to be information subject to the confidentiality provisions
                    of this Agreement. The Arbitration Panel will have no power
                    or authority, under the Commercial Arbitration Rules of the
                    AAA or otherwise, to relieve the parties from their
                    agreement hereunder to arbitrate or otherwise to amend or
                    disregard any provision of this Agreement, including,
                    without limitation, the provisions of this Section 16.4.

           16.4.5   Should an arbitrator refuse or be unable to proceed with
                    arbitration proceedings as called for by this Section 16.4,
                    the arbitrator shall be replaced by the party who selected
                    such arbitrator (unless an election under Section 16.4.3 has
                    occurred, in which event the AAA's standard procedures for
                    replacement shall govern), or it such arbitrator was
                    selected by the two party-appointed arbitrators, by such two
                    party-appointed arbitrators selecting a new third arbitrator
                    in accordance with Section 16.4.2 (unless an election under
                    Section has occurred, in which event the AAA's standard
                    procedures for replacement shall govern). Each such
                    replacement arbitrator shall satisfy the Basic
                    Qualifications. If an arbitrator is replaced pursuant to
                    this Section after the arbitration hearing has commenced,
                    then a rehearing shall take place in accordance with the
                    provisions of this Section 16.4 and the Commercial
                    Arbitration Rules of the AAA.

           16.4.6   Within 30 days after the closing of the arbitration hearing
                    and any post-hearing briefing, the Arbitration Panel shall
                    prepare and distribute to the parties a writing setting
                    forth the Arbitration Panel's findings of facts and
                    conclusions of law relating to the Dispute, including the
                    reasons for the giving or denial of any award. The findings
                    and conclusions and the award, if any, shall be deemed to be
                    information subject to the Confidentiality provisions of
                    this Agreement, Section 2.

           16.4.7   The Arbitration Panel is instructed to schedule promptly all
                    discovery and other procedural steps and otherwise to assume
                    case management initiative and control to effect an
                    efficient and expeditious resolution of the Dispute. The
                    Arbitration Panel is authorized to issue reasonable monetary
                    sanctions against either party if, upon a showing of good
                    cause, such party is unreasonably delaying the proceeding.

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           16.4.8   Any award rendered by the Arbitration Panel will be final,
                    conclusive and binding upon the parties and any judgment
                    hereon may be entered and enforced in any court of competent
                    jurisdiction.

           16.4.9   During the pendency of any proceeding pursuant to this
                    Section 16.4, each party will bear a pro rata share of all
                    fees, costs and expenses of the arbitrators, and
                    notwithstanding any law to the contrary, each party will
                    bear all the fees, costs and expenses of its own attorneys,
                    experts and witnesses; provided, however, that the
                    Arbitration Panel will be instructed and shall require the
                    non-prevailing party to pay all fees, costs and expenses,
                    including reasonable attorneys' fees, of the prevailing
                    party.

           16.4.10  In connection with any judicial proceeding to compel
                    arbitration pursuant to this Agreement or to confirm, vacate
                    or enforce any award rendered by the Arbitration Panel, the
                    prevailing party in such a proceeding will be entitled to
                    recover reasonable attorneys' fees and expenses incurred in
                    connection with such proceeding, in addition to any other
                    relief to which it may be entitled.

           16.4.11  The parties acknowledge and agree that performance of the
                    obligations under this Agreement necessitates the use of
                    instrumentalities of interstate commerce and,
                    notwithstanding other general choice of law provisions in
                    this Agreement, the parties agree that the Federal
                    Arbitration Act shall govern and control with respect to
                    relevant provisions of these Section 16.3 and 16.4.

17.  GENERAL LIMITATION ON LIABILITY
     -------------------------------

     IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE FOR LOSS OF PROSPECTIVE
     PROFITS OR INDIRECT OR CONSEQUENTIAL DAMAGES TO ANY OTHER PARTY EVEN IF IT
     IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. IN ADDITION, THE LIABILITY OF
     ANY PARTY TO ANY OTHER PARTY UNDER THIS AGREEMENT SHALL NOT EXCEED AN
     AMOUNT EQUAL TO THAT PAID TO APOGEE WITHIN THE PREVIOUS TWELVE - MONTH
     PERIOD HEREUNDER. THESE LIMITATIONS ON LIABILITY SHALL NOT APPLY TO THE
     EXTENT SUCH LIABILITY ARISES FROM THE PARTIES' OBLIGATIONS AND LIABILITIES
     UNDER SECTIONS 2,7, 11.1-11.3, 11.5, 16.4.9 AND 24.

18.  GENERAL WARRANTIES
     ------------------

     Except as expressly provided herein, Technology and Confidential
     Information exchanged or licensed between the parties hereunder is without
     warranty of any kind, either expressed or implied, including, but not
     limited to the implied warranties of merchantability and fitness for a
     particular purpose.

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19.  NOTICE METHODS
     --------------

     All notices, request, demands, and other communications required or
     permitted hereunder shall be written in English and shall be delivered
     personally, or by air courier, or by telecopy, telex, or cable, or by
     registered mail (postage prepaid) addressed to the Parties hereof, at the
     addresses stated here:

     19.1. For ALST.

               ALST Technical Excellence Center
               2 Hanagar Street
               PO Box 2277
               44425 Kfar Saba (Industry District)
               Israel

               Attention:   Giora Sussmann
               Phone:       011-972-9766-1934
               Fax:         011-972-9766-1937

     19.2. For Apogee.

               Apogee Technology, Inc.
               129 Morgan Drive
               Norwood, Massachusetts 02062

               Attention:   Dave Meyers
               Phone:       (781)551-9450
               Fax:         (781) 440-9528

     19.3. For Altec.

               Altec Lansing Technologies, Inc.
               Route 6 & 209
               Milford, PA 18337

               Attention:   Edward Anchel
               Phone:       570-296-4434
               Fax:         570-296-6887

     19.4. Effective Date of Notices

           Notices, request, demands, and other communication delivered
           personally or by air courier shall be effective on the date of
           receipt; notices given by registered mail shall be effective ten (10)
           business days after the date of mailing. Any Party may change its
           address from time to time by providing written notice to the other
           Parties in the manner set forth above.

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20.  TERM
     ----

     The term ("Term") of this Agreement shall commence on the Effective Date
     and shall continue in force, unless sooner terminated in accordance with
     Section 21, until the last-to-expire of the Licensed Patents.

21.  TERMINATION
     -----------

     Without prejudice to other remedies, a Party may terminate this Agreement
     on the occurrence of one or more of the following:

     21.1. Payment Default.

           In the event ALST fails to make payments due hereunder, Apogee shall
           have the right to terminate this Agreement upon forty-five (45) days
           written notice (the "Late Payment Grace Period"). If ALST fails to
           make such payments, plus interest as provided under Section 7.4,
           within the Late Payment Grace Period, Apogee may immediately
           terminate the Agreement upon expiration of the Late Payment Grace
           Period.

     21.2. Material Breach.

           In the event that either of the Parties is in material breach of any
           obligation under this Agreement, the non-breaching Party may
           terminate this Agreement upon (i) providing the other Party with
           written notice of the breach (a "Notice of Breach") and (ii)
           providing thereafter a thirty (30) day opportunity to cure beginning
           on the date of receipt by the alleged breaching Party of the Notice
           of Breach.

     21.3. Insolvency.

           In the event a Party shall become insolvent, shall make an assignment
           for the benefit of creditors, or shall have a petition in bankruptcy
           filed for or against it, the other Party shall have the right to
           terminate this entire Agreement immediately upon providing written
           notice of such termination.

     21.4. Commercialization by ALST.

           In the event ALST (i) makes a business decision to not commercialize
           or to cease commercializing the Licensed Technology or (ii) makes a
           business decision to cease commercializing Apogee-Enhanced Products,
           ALST shall provide timely notice to Apogee of such decision, after
           which ALST and Apogee shall in good faith negotiate terms suitable
           for terminating the present Agreement, recognizing ALST's investment
           in Apogee-Enhanced Products, and the benefits received and foregone
           by Apogee due to this Agreement.

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22.  SURVIVAL
     --------

     The following terms and conditions shall survive termination or expiration
     of this Agreement: Sections 2, 3.4, 5.8, 5.9, 5.10, 8, 11, 16, 17, and 18.

23.  CESSATION OF RIGHTS UPON TERMINATION OR EXPIRATION
     --------------------------------------------------

     23.1. End Of Licenses; Return or Destruction of Confidential Materials.

           Upon termination or expiration of this Agreement, any and all
           licenses or sublicenses granted by Apogee hereunder shall immediately
           cease. Each Party (a) shall return to the other any and all
           Confidential Information received under this Agreement, or (b) shall
           destroy such Information, and promptly certify in writing to the
           other Party such destruction.

     23.2. Effect On STM Contract.

           Any STM Contract(s) granted under this Agreement shall provide that,
           upon termination or expiration of this Agreement, the STM Contract
           shall similarly expire or terminate.

24.  ASSURANCES OF PERFORMANCE
     -------------------------

     Altec hereby assures Apogee and warrants that ALST shall perform and comply
     with each of ALST's obligations under this Agreement. Altec shall indemnify
     Apogee from any and all damage or loss (including reasonable attorney's,
     consultants' and expert witness fees) arising from the conduct of ALST.
     ALST and Altec similarly assure Apogee and warrant that STM shall comply
     with its obligations under STM Contracts. ALST and Altec shall indemnify
     Apogee from any and all damage or loss (including reasonable attorney's,
     consultants' and expert witness fees) arising from the conduct of STM. Each
     of ALST and Altec acknowledge that Apogee has relied upon the assurances
     and obligations contained in this Section 24 as material inducements in
     entering this Agreement.

25.  ASSIGNMENT
     ----------

     No Party shall transfer or assign any or all of its rights or interests nor
     delegate any of its duties hereunder without the prior written consent of
     each other Party, which consent shall not be unreasonably withheld.
     Notwithstanding the foregoing, any Party may assign this Agreement to a
     party acquiring all or substantially all of its assets or business upon
     notice to the other Parties.

26.  RELATIONSHIP OF THE PARTIES
     ---------------------------

     No Party shall be deemed by operation of this Agreement or otherwise to be
     the agent or representative of any other Party for any purpose hereunder
     whatsoever. The Parties shall at all times be considered independent
     contractors. No Party shall have any right or authority to assume, create,
     or incur any liability or obligation of any kind in the name of

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     or on behalf of any other Party except in accordance with the provisions
     hereof, or as may otherwise be agreed by the Parties in writing.

27.  SECTIONS AND SUBSECTIONS
     ------------------------

     Reference to a Section shall include reference to all Sections junior to
     the referenced Section. By way of example only, reference to "Section 7"
     shall include reference to Section 7.1 and 7.2, and reference to "Section
     6.1" shall include reference to Section 6.1.1 and 6.1.2.

28.  ENTIRE AGREEMENT
     ----------------

     This Agreement contains the entire agreement and understanding between the
     Parties hereto, and merges and supersedes all prior discussions and
     writings with respect to the subject matter hereof Amendments, if any, to
     this Agreement shall be made in writing and shall be fully executed by a
     representative for each and every Party to the present Agreement.

           [the remainder of this page is intentionally left blank]

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         IN WITNESS WHEREOF, the duly authorized  representatives of the Parties
have executed this Agreement,. effective the day and year set forth on the first
page of this Agreement.

APOGEE:

Apogee Technology, Inc.


By:  ____________________
     David Spiegel
     President

ALST:

ALST Technical Excellence Center

By:    __________________
Name:  __________________
Title: __________________



ALTEC:

Altec Lansing Technologies, Inc.

By:    __________________
Name:  __________________
Title: __________________

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