EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

         This  Agreement  made  as of this  26th  day of  November,  1996 by and
between Annie's Homegrown, Inc., a Delaware corporation with its principal place
of business at 180 Second Street,  Suite 202, Chelsea,  Massachusetts 02150 (the
"Company") and Paul Nardone an individual  whose mailing address is 84 Reservoir
Avenue, Revere, Massachusetts 02151 (the "Employee").

                                   WITNESSETH

         WHEREAS, Employee is a senior executive of the Company and has made and
is expected to continue to make major contributions to the Company; and

         WHEREAS,  the Company desires  Employee to serve as President and Chief
Operating  Officer  and  Employee  is  willing to provide  such  services  under
mutually satisfactory terms and conditions as set forth herein;

         NOW,  THEREFORE,  for and in  consideration of the mutual covenants and
promises  herein  contained,  and other  good and  valuable  consideration,  the
receipt and  sufficiency of which is hereby  acknowledged,  Company and Employee
agree as follows:

         1. Term.  Subject to the terms and conditions  hereof, the term of this
Agreement will commence on November 1, 1996 and expire on December 31, 1998 (the
"Term").  The terms and  conditions  hereof  shall be reviewed by the parties at
least ninety (90) days prior to the  expiration  of the Term and this  Agreement
shall be either extended or amended upon mutual agreement of the parties, and if
the parties fail to agree, the Agreement shall be terminated upon the expiration
of the Term.

         2.  Budget/Projections.  The 1997 Budget  Projections  ("1997  Budget")
attached  hereto as Exhibit A shall serve as the benchmark for  performance  for
the first year of the Term. The 1998 Budget  Projections ("1998 Budget") will be
mutually  agreed to by the  parties  and  included  in this  Agreement  prior to
November 1, 1997, and will serve as the benchmark for  performance in the second
year of the Term.






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The 1997 Budget and the 1998 Budget are  collectively  referred to herein as the
"Budget/Projections."

         3.  Duties and Responsibilities.

                  (a) During the Term, the Employee shall serve as the President
and  Chief  Operating  Officer  of  the  Company.  In  the  performance  of  his
responsibilities  as the President  and Chief  Operating  Officer,  the Employee
shall  be  subject  to all of the  Company's  policies,  rules  and  regulations
applicable to its Employees of comparable  status and shall report  directly to,
and shall be subject to the  direction and control of, the Board of Directors of
the Company (the "Board"), and shall perform such duties as shall be assigned to
him by the Board. In performing such duties, the Employee will be subject to and
will substantially  abide by, and will use reasonable efforts to cause employees
of the Company to be subject to and  substantially  abide by, all  policies  and
procedures developed by the Company.

                  (b)  During the Term,  the  Employee  shall  devote all of his
business time,  energies,  skills and attention to the affairs and activities of
the Company. The Employee shall provide the services to the Company described in
this Agreement in a professional and diligent manner and in a manner  consistent
with the highest  standards of performance  in the retail food industry.  During
the Term,  the  Employee  shall not devote any of his business  time,  energies,
skills or  attention  to the  affairs or  activities  of any other  business  or
organization,  without the prior approval of the Board (which approval shall not
be  unreasonably  withheld).  The  Employee  shall  provide to the  Board,  on a
quarterly  basis,  a description of any  involvement  with any other business or
organization,  such  description  to  include  (i) the  name of the  company  or
organization;  (ii) type of  involvement;  and (iii) type of product;  provided,
however,  that no  description is required for a quarter where there has been no
change from the description last provided to the Board.

                  (c) To induce the  Company to enter into this  Agreement,  the
Employee  represents and warrants to the Company that: (i) the Employee is not a
party or subject  to any  employment  agreement  or  arrangement  with any other
person, firm, company,  corporation or other business entity 





                                      -3-


and the Employee is subject to no restraint, limitation or restriction by virtue
of any  agreement  or  arrangement,  or by  virtue  of any law or rule of law or
otherwise  which would impair the  Employee's  right or ability (A) to enter the
employ of the  Company,  or (B) to  perform  fully his  duties  and  obligations
pursuant to this Agreement,  and (ii) to the Employee's  knowledge,  no material
litigation  is pending or  threatened  against any  business or business  entity
owned or controlled or formerly owned or controlled by the Employee.

         4.  Insurance and  Indemnification.  The Company agrees that during the
Term of this Agreement,  without the consent of the Employee, it shall not amend
the provisions of Article VII Section 7 (Indemnification) of its By-laws.

         5.  Compensation.

         (a) Base Salary: So long as Employee remains employed,  during the Term
of this  Agreement,  Employee  shall  receive a monthly  gross salary (the "Base
Salary"),which  shall be paid in equal installments on the 15th and final day of
each month,  equal to: (i) five thousand five hundred  dollars  ($5,500.00)  for
each month during the period November 1, 1996 through December 31, 1996 (ii) six
thousand five hundred dollars  ($6,500.00)for  each month during the period from
January 1, 1997  through  December 31,  1997,  ; and (iii) seven  thousand  five
hundred  dollars  ($7,500.00)  for each month  during the period from January 1,
1998 through December 31, 1998.

         (b)  Bonuses:  (i) So long  as  Employee  remains  employed,  for  each
calendar  quarter  beginning  with the  quarter  starting  January 1,  1997,  in
addition to any and all other amounts  payable to Employee  hereunder,  Employee
shall receive a bonus payment, payable within forty-five (45) days of the end of
the quarter, as follows:

                           (A) If the  Company  has  achieved  less  than  fifty
         percent  (50%)  of  the  "net  income  before  operating  expenses"  as
         described  in the  Budget/Projections  for such  quarter,  the Employee
         shall receive no bonus for such quarter;

                           (B) If the Company has achieved  fifty  percent (50%)
         or more,  but less than one hundred 





                                      -4-

         percent  (100%)  of the  "net  income  before  operating  expenses"  as
         described  in the  Budget/Projections  for such  quarter,  the Employee
         shall  receive  a bonus  payment  for  such  quarter  equal  to one and
         one-half percent (1 1/2%) of the gross profit after "selling  expenses"
         for such quarter;

                           (C) If the Company has achieved  one hundred  percent
         (100%)  or  more of the  "net  income  before  operating  expenses"  as
         described  in the  Budget/Projections  for such  quarter,  the Employee
         shall  receive  a bonus  payment  for  such  quarter  equal  to two and
         one-half percent (2 1/2%) of the gross profit after "selling"  expenses
         for such quarter.

                  (ii) In addition to any bonus paid pursuant to Section 5(b)(i)
above,  if the actual gross profit after selling  expenses for any calendar year
during the Term exceeds one million  dollars  ($1,000,000),  the Employee  shall
receive a bonus  payment  equal to one percent  (1%) of the gross  profit  after
"selling expenses". Such additional annual bonus shall be paid within forty-five
(45) days following the end of the calendar year.

                  (iii)  For  purposes  of this  Agreement,  "selling  expenses"
include the costs outlined in the Budget/Projections and shall include,  without
limitation, price reductions, account advertising,  trade advertising,  ordinary
consumer marketing expenses,  trade show expenses,  brokerage expenses and other
ordinary selling expenses.

         6.  Expense   Reimbursement.   The  Employee  is  authorized  to  incur
reasonable  expenses in the performance of his duties hereunder during the Term.
The  Company  shall  reimburse  the  Employee  for all  such  expenses  upon the
presentation  by the of  signed,  itemized  accounts  of such  expenditures  and
vouchers,  all in  accordance  with the  Company's  procedures  and  policies as
adopted  and in effect  from time to time and  applicable  to its  employees  of
comparable status.

         7.  Vacation  Time.  The Employee  shall be entitled to paid  vacation,
personal  and sick  leave  during  the  Term in  accordance  with the  Company's
policies regarding such vacation and leaves.





                                      -5-

         8. Grant of Stock  Options.  The Company  shall grant  Employee a stock
option,  which option  shall be fully  vested on the date of grant,  to purchase
twelve thousand five hundred (12,500) shares of the Company's Common Stock (such
number of shares to be  adjusted  based on changes in  capitalization)  for each
calendar  quarter during the Term,  beginning  with the quarter  January 1, 1997
through March 31, 1997, that the Company has achieved one hundred percent (100%)
or  more of the  "net  income  before  operating  expenses"  as  defined  in the
Budget/Projections,  provided,  however,  that the aggregate number of shares of
the Company's Common Stock granted to Employee  pursuant to this Section 8 shall
not exceed 100,000 shares. Each option shall be granted pursuant to a stock plan
maintained by the Company in compliance  with Section 16b-3 under the Securities
Exchange Act of 1934, if applicable. The options shall be granted at an exercise
price equal to the fair market value of the  Company's  Common Stock on the date
of grant and such  options  shall be subject to the other  terms and  conditions
provided in the  Company's  stock  option  plan,  provided,  however,  that such
options granted pursuant to this Section 8 shall remain exercisable for a period
of five (5)  years,  subject  to the terms  and  conditions  of this  Agreement,
regardless of whether Employee remains employed with the Company.

         9.  Listing on an Exchange.
         (a) In the  event  the  Common  Stock of the  Company  is  listed  on a
national or  regional  exchange  or on the Nasdaq  Small Cap or Nasdaq  National
Market,  then the Company shall,  at the request of the Employee,  agree to lend
the Employee, for the sole purpose of exercising vested stock options, an amount
not to exceed $100,000, such loan to be evidenced by a full recourse note in the
form attached hereto as Exhibit B, bearing interest at a rate equal to the prime
rate as published by The First  National  Bank of Boston on the date the loan is
made, and for a term not to exceed the Term of this Agreement  regardless of any
extension thereto.  The note shall be secured by all of the capital stock of the
Company  owned,  at the time of the loan and in the future,  by the Employee and
any proceeds from the sale thereof.

         (b) The Employee agrees to execute and deliver, upon the request of the
Company, such instruments, including, but not limited to a pledge agreement, and
take such  further 





                                      -6-


actions,  as may be necessary  or  desirable  to evidence the security  interest
being granted to the Company pursuant to this Section 9.


         10. Payment in Connection with a Merger or Sale of the Company. So long
as  Employee  remains  employed,  upon  consummation  of a Change in Control (as
hereinafter defined),  Employee shall be entitled to receive from the Company an
amount equal to two percent (2%) of the Consideration  (as hereinafter  defined)
paid in connection with the Change in Control less (i) the amount due, including
all accrued interest, on all notes due to the Company from the Employee and (ii)
any gain received by Employee upon the exercise and sale of the Company's Common
Stock underlying the stock options (the "Change in Control  Payment").  In order
to receive the Change in Control  Payment,  Employee  must agree to terminate or
otherwise  cancel all stock options to purchase shares of Company's Common Stock
Employee  currently holds or is entitled to receive  pursuant to this Agreement.
For purposes  hereof,  "Change in Control"  means the  occurrence  of any of the
following  events during the Term: (a) The Company is merged or  consolidated or
reorganized  into or with another  corporation  or other legal person,  and as a
result of such merger,  consolidation or reorganization  less than a majority of
the combined voting power of the then-outstanding  securities of such surviving,
resulting  or  reorganized   corporation  or  person   immediately   after  such
transaction  is held in the  aggregate  by the  holders of the  then-outstanding
securities  entitled  to vote  generally  in the  election of  directors  of the
Company  ("Voting  Stock")  immediately  prior to such  transaction;  or (b) the
Company sells or otherwise  transfers all or substantially  all of its assets to
any other  corporation  or other legal  person,  and as a result of such sale or
transfer   less  than  a  majority  of  the   combined   voting   power  of  the
then-outstanding securities of such corporation or person immediately after such
sale or transfer is held in the  aggregate by the holders of Voting Stock of the
Company  immediately  prior  to such  sale or  transfer.  For  purposes  hereof,
"Consideration"  shall mean cash and  securities  paid to the Company and/or its
shareholders  upon  consummation  of the Change in Control and shall exclude (a)
any amount to be paid after the  





                                      -7-

consummation of the Change in Control and (b) any debt assumed by the acquiror.

         11.  Termination of Employment.

         (a) Voluntary  Termination.  The Employee may voluntarily terminate his
employment  with the Company upon sixty (60) days written notice to the Company.
In the event that Employee  voluntarily  terminates his employment with Company,
any and all of Employee's  right to payment under this  Agreement will terminate
as of the effective date of such termination;  provided,  however,  that Company
will pay Employee any sums which accrued to Employee prior to the effective date
of termination, including any accrued bonus earned but not yet paid, and Company
will grant Employee options pursuant to Section 8 that have accrued, but not yet
been granted.

         (b) Involuntary Termination.  Employee may be terminated by the Company
before the expiration of this Agreement with or without cause by a majority vote
of the Board of  Directors.  "Cause"  shall be defined  as:  (a) the  Employee's
conviction of any crime (whether or not involving the Company) which constitutes
a felony in the jurisdiction  involved;  (b) any intentional act of theft, fraud
or embezzlement by the Employee in connection with his work with the Company; or
(c) the  Employee's  continuing,  repeated  and  willful  failure  or refusal to
perform  his duties and  services  under this  Agreement  (other than due to his
incapacity  due to illness or injury).  In the event that Employee is terminated
for any reason other than Cause as defined herein, Company shall continue to pay
Employee  the Base  Salary,  as then in  effect,  and bonus  sums,  without  any
adjustments, for a period of six (6) months following such termination.

         (c) Nonrenewal.  If the Company does not extend or amend this Agreement
for the period of January 1, 1999 through  December 31, 1999,  the Company shall
pay the Employee severance equal to six (6) months Base Salary, then in effect.

      12.  Non-Competition.




                                      -8-


              (a)  During  the term of this  Agreement  and for a period  of two
years  following the voluntary  termination of the Employee  pursuant to Section
11(a)  above,  the  Employee  shall not,  directly  or  indirectly,  perform any
services  in the United  States for any person or entity  other than the Company
that is in the  business,  directly  or  indirectly,  of selling  pasta or other
specialty  pasta  products of the type the Company is selling,  or developing at
the time of the  Employee's  voluntary  termination;  or,  without  limiting the
generality of the foregoing,  be or become or agree to be or become,  interested
in or  associated  with,  in any  capacity  (whether as a partner,  shareholder,
owner,  officer,  director,  employee,   principal,  agent,  creditor,  trustee,
consultant,  co-venturer  or  otherwise)  any  individual,   corporation,  firm,
association,  partnership,  joint venture or other business entity that competes
with the Company;  provided,  however,  that the Employee may own,  solely as an
investment,  not more than one percent  (1%) of any class of  securities  of any
corporation that is publicly traded on any national  securities  exchange in the
United States of America or reported on the National  Association  of Securities
Dealers, Inc.'s Automated Quotation System.

              (b) During the term of this  Agreement and for a period of two (2)
years following any termination, the Employee shall not, directly or indirectly,
(i) induce or attempt to  influence  any  employee  of the  Company to leave its
employ,  (ii) aid or agree to aid any  competitor,  customer  or supplier of the
Company in any  attempt to hire any person who shall have been  employed  by the
Company within the one-year period preceding such requested aid, or (iii) induce
or attempt to influence any person or business  entity who was a customer of the
Company during any portion of the Term of this Agreement and for a period of two
(2) years following any termination,  to transact  business with a competitor of
the Company in the Company's  business.  Notwthstanding  the previous  sentence,
this  section  12(b)  shall not apply if Employee is  terminated  without  cause
during the Term of this Agreement.

      13.  Non-disclosure.  During the term of this  Agreement  and  thereafter,
except pursuant to his duties to the Company  hereunder,  the Employee shall not
disclose to anyone any material or confidential information about the affairs of
the Company,  including trade secrets,  recipes,  trade "know-





                                      -9-


how," inventions,  customer lists, business plans,  operational methods, pricing
policies, marketing plans, sales plans, identity of customers, sales, profits or
other  financial  information  which is  confidential  to the  Company or is not
generally known in the relevant trade.

      14. Notices. Notices will be sent by registered or certified mail, postage
prepaid, return receipt requested, or by a recognized expedited delivery service
to the  address  set forth on page one hereof,  unless  specifically  changed by
either party by written notice to the other.

      15.  Miscellaneous.

                (a) This  Agreement is a personal  contract,  and the rights and
interests  of the Employee  hereunder  may not be sold,  transferred,  assigned,
pledged  or  hypothecated,  except  as  otherwise  expressly  permitted  by  the
provisions of this Agreement. Except as otherwise expressly provided herein, the
Employee shall not have any power of  anticipation,  alienation or assignment of
payments  contemplated  hereunder,  and all rights and  benefits of the Employee
shall be for the sole  personal  benefit of the  Employee,  and no other  person
shall  acquire  any right,  title or interest  hereunder  by reason of any sale,
assignment,  transfer,  claim or judgment or bankruptcy  proceedings against the
Employee;  provided,  however,  that in the event of the Employee's  death,  the
Employee's  estate,  legal  representative or beneficiaries (as the case may be)
shall have the right to receive all of the benefits that accrued to the Employee
pursuant to, and in accordance  with, the terms of this  Agreement  prior to the
date of the Employee's death.

                 (b) The Company  shall have the right to assign this  Agreement
to any successor of  substantially  all of its business or assets,  and any such
successor shall be bound by all of the provisions hereof.

                 (c) This Agreement may not be changed,  amended,  terminated or
superseded  orally,  but only by an  agreement  in  writing,  nor may any of the
provisions hereof be waived orally, but only by an instrument in writing, in any
such case signed by the party against whom enforcement 




                                      -10-


of any  change,  amendment,  termination,  waiver,  modification,  extension  or
discharge is sought.

                 (d) Except as otherwise  provided herein,  this Agreement shall
be governed by and  construed  and enforced in  accordance  with the laws of the
Commonwealth  of  Massachusetts,  without  giving  effect to the  principles  of
conflict of laws thereof.

                 (e) All  descriptive  headings of the several  Sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

                 (f) If any provision of this  Agreement,  or part  thereof,  is
held to be unenforceable,  the remainder of this Agreement and provision, as the
case may be, shall nevertheless remain in full force and effect.

                 (g) Each of the parties hereto shall, at any time and from time
to time hereafter,  upon the reasonable  request of the other, take such further
action and  execute,  acknowledge  and deliver all such  instruments  of further
assurance as necessary to carry out the provisions of this Agreement.

                 (h)  This   Agreement   contains  the  entire   agreement   and
understanding  between the Company and the Employee  with respect to the subject
matter hereof. No  representations  or warranties of any kind or nature relating
to the  Company  or its  affiliates  or  their  respective  businesses,  assets,
liabilities,  operations,  future  plans or  prospects  have  been made by or on
behalf  of  the  Company  to the  Employee;  nor  have  any  representations  or
warranties  of any kind or nature  been  made by the  Employee  to the  Company,
expect as expressly set forth in this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






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

                                                     ANNIE'S HOMEGROWN, INC.


                                                     s/ Andrew Martin
                                                    -----------------------
                                                     By:
                                                     Title:Chairman


                                                      s/Paul B. Nardone
                                                     -----------------------
                                                     Paul Nardone