Document:

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                                                                 EXHIBIT #: 10.7

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") is made and entered into as
of the 21st day of December, 2001, by and between Apogee Technology, Inc., a
Delaware corporation with its principal office at 129 Morgan Drive, Norwood,
Massachusetts 02062 (the "Company"), and Herbert M. Stein (the "Executive").

                                   WITNESSETH:

      WHEREAS, the Company desires to engage the full-time services of the
Executive;

      WHEREAS, the Executive desires to be so employed by the Company; and

      WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:

      1. Employment and Term. The Company hereby agrees to employ the Executive,
         -------------------
and the Executive hereby agrees to accept such employment, on the terms and
conditions set forth herein, for the three year period commencing on January 1,
2001 (the "Effective Date"), unless such employment is earlier terminated in
accordance with the terms and provisions of this Agreement. This Agreement shall
automatically renew for successive periods of two years (each a "Renewal Term")
unless either party notifies the other of its intention not to renew this
Agreement within ninety (90) days prior to expiration of the Initial Term or
Renewal Term, as appropriate (collectively, the Initial Term and Renewal Term(s)
are the "Term").

      2. Duties and Restrictions.
         -----------------------

            (a) Duties as Executive of the Company. The Executive shall, subject
                ----------------------------------
to the direction and supervision of the Company's Board of Directors, serve as
the Chief Executive Officer and President of the Company. The Executive shall
also serve as Chairman of the Company's Board of Directors, subject to the
rights of the Company's shareholders to elect the Company's directors. In his
capacity as President and Chief Executive Officer, the Executive's rights,
duties and responsibilities shall be as prescribed from time to time by the
Board of Directors of the Company, provided such duties are customary for a
president and chief executive officer. The Executive shall devote his entire
working time, attention and

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energy to the affairs of the Company during the Term of his employment pursuant
to this Agreement. The Executive shall perform his duties to the best of his
ability, pursuant to the policies and regulations of the Company, and shall use
his best efforts to promote the success of the present and future businesses of
the Company. The Executive, as Chief Executive Officer and President of the
Company, shall have primary responsibility for managing the business and
financial affairs of the Company. Notwithstanding anything to the contrary, the
Executive shall require Board approval to hire or fire Senior Management
Employees. For purposes hereof, the term "Senior Management Employees" shall
mean employees who are, or shall be, compensated with an annual base salary
equal to or greater than $150,000 or such other amount as approved by the
Compensation Committee of the Board of Directors.

            (b) Confidentiality. The Executive shall not, directly or
                ---------------
indirectly, during the Term and at any time during or following the termination
of his employment with the Company, reveal, divulge, or make known to any person
or entity, or use for the Executive's personal benefit (including, without
limitation, for the purpose of soliciting business competitive with any business
of the Company or any of its subsidiaries or affiliates), any information
acquired during the course of employment hereunder with regard to the financial,
technical, business or other affairs of the Company or any of its subsidiaries
or affiliates (including, without limitation, any list or record of persons or
entities with which the Company or any of its subsidiaries or affiliates has any
dealings), other than (1) material already in the public domain, (2) information
of a type not considered confidential by persons engaged in the same business or
a similar business to that conducted by the Company, (3) material known by the
recipients through disclosure by a third party who has a bona fide right to make
such disclosure, or (4) material that the Executive is required to disclose
under the following circumstances: (A) in the performance by the Executive of
his duties and responsibilities hereunder, which disclosure is reasonably
necessary or appropriate, to another executive of the Company or to
representatives or agents of the Company (such as independent public accountants
and legal counsel); (B) at the express direction of any authorized governmental
entity; (C) pursuant to a subpoena or other court process; or (D) as otherwise
required by laws or the rules, regulations, or orders of any applicable
regulatory body. The Executive shall, at any time requested by the Company
(either during or after his employment with the Company), promptly deliver to
the Company all memoranda, notes, reports, lists, and other documents (and all
copies thereof) relating to the business of the Company or any of its
subsidiaries or affiliates which he may then possess or have under his control.

            (c) Non-Solicitation. During the Term and Non-Solicitation Period
                ----------------
(as defined below), the Executive will not (i) solicit, or attempt to solicit,
any officer, director, consultant, executive or employee of the Company or any
of its subsidiaries or affiliates (each an "Employee") to leave their
employment, affiliation, or engagement with the Company or such subsidiary or
affiliate, (ii) call upon, solicit,

                                      -2-

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divert or attempt to solicit or divert from the Company or any of its affiliates
or subsidiaries any of their customers or suppliers, or potential customers or
suppliers, of whose names he was aware during the term of his employment with
the Company; or (iii) interfere with the business relationship or advantage
between the Company and any customer, supplier, or account of the Company, of
whose name he was aware during the term of his employment with the Company.

            (d) For purposes of this Agreement, the "Non-Solicitation Period"
shall mean a period of one year following the termination of the Executive's
employment for any reason; provided, however, that under no circumstances may
the Executive make any solicitations hereunder with respect to any former
Employee until six months has expired since such Employee's employment,
affiliation or engagement with the Company has terminated.

      3. Compensation and Benefits.
         -------------------------

            (a) Base Salary. During each Company Fiscal Year, the Executive
                -----------
shall receive a base salary (as adjusted, the "Base Salary"), payable in
accordance with the Company's payroll policies as in effect from time to time.
In addition, the Company's Board of Directors shall annually consider granting
increases in the Base Salary based on such factors as the Executive's
performance and the financial performance of the Company, but the Company shall
have no obligation to grant such increases in compensation. The first such
review shall take place on or around January 31, 2002. The Executive's initial
Base Salary shall be One Hundred Ninety-Five Thousand Dollars ($195,000.00). The
term "Company Fiscal Year" shall mean each one year period ending on December
31.

            (b) Bonus. Beginning with the Company Fiscal Year ending December
                -----
31, 2002, and for each successive Company Fiscal Year during the Term, the
Executive shall be eligible to receive a bonus ("Bonus") at such time and in
such amount as shall be determined by the Company's Board of Directors in its
absolute and sole discretion.

            (c) Expenses. During the Term, the Executive shall be entitled to
                --------
receive prompt reimbursement for all reasonable business expenses incurred by
him (in accordance with the policies and procedures established from time to
time by the Company) in performing services hereunder, provided that the
Executive properly accounts therefor in accordance with Company policy.

            (d) Benefits. During the Term and subject to any contribution
                --------
generally required of employees of the Company, the Executive shall be entitled
to participate in any and all employee benefit plans from time to time in effect
for employees of the Company generally. Such participation shall be subject to
(i) the terms of the applicable plan documents and (ii) generally applicable
Company

                                      -3-

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policies. The Company may alter, modify or terminate its employee benefit plans
at any time as it, in its sole discretion, determines to be appropriate.

            (e) Vacations. The Executive shall be entitled to twenty (20) paid
                ---------
vacation days per Company Fiscal Year.

            (f) Proration. Any payments or benefits payable to the Executive
                ---------
hereunder in respect of any calendar year or any fiscal year during which the
Executive is employed by the Company for less than the entire year, unless
otherwise provided in the applicable plan or arrangement, shall be prorated in
accordance with the number of days in such calendar year or fiscal year during
which he is so employed.

            (g) Equity Compensation.
                -------------------

                  (i)   Grant. Within 30 days after the execution and delivery
                        -----
                        of this Agreement by each party, the Company shall grant
                        to Executive options for the purchase of one hundred
                        seventy-five thousand (175,000) shares of the common
                        stock of the Company, at an exercise price of $12.60 per
                        share, it being acknowledged that such exercise price
                        represents the fair market value of the Company's common
                        stock as of August 16, 2001.

                  (ii)  General Terms; Forfeiture & Vesting. The options shall
                        -----------------------------------
                        be subject to the provisions of the Company's applicable
                        stock option plan (the "Option Plan") and shall be
                        evidenced by each party's execution of a stock option
                        agreement (the "Option Agreement"). The Option Agreement
                        shall incorporate each of the following terms and
                        concepts: (i) the options shall be "non-qualified" stock
                        options (i.e. the options will not be incentive stock
                        options under Section 422 of the Internal Revenue Code
                        of 1996, as amended); (ii) the options shall be of not
                        less than ten (10) years duration; (iii) the options
                        shall be exercisable ("vested") as follows: 35,000
                        options shall be exercisable upon the one-year
                        anniversary of the Effective Date, and 35,000 options
                        shall thereafter be exercisable on each succeeding
                        annual anniversary until an aggregate of 175,000 options
                        have vested; (iv) upon the Executive's termination of
                        service with the Company in all capacities (including as
                        an employee, director or consultant) for other than
                        Cause, death or disability, the Executive may exercise
                        vested options for a period not to exceed one hundred
                        eighty (180) days following such termination of

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                        service; (v) upon the Executive's termination of service
                        (whether as an employee, director or consultant) for
                        Cause, all options shall be forfeited (vi) the options
                        shall become fully vested in the event of a Change of
                        Control, which term shall be defined in the Option
                        Agreement as mutually agreed but shall include the
                        transfer of equity interests of the Company pursuant to
                        a transaction or series of transactions in which greater
                        than twenty-five (25%) of the voting control of the
                        Company (directly or indirectly) shall have been
                        assigned (but excluding certain transfers made for
                        estate planning purposes); and (vii) upon the death or
                        disability of the Executive, the options shall become
                        fully vested and the Executive's legal representative
                        shall have one year to exercise the options.

      4. Termination. The Executive's employment hereunder may be terminated by
         -----------
the Company or the Executive, as applicable, without any breach of this
Agreement by the terminating party, under the following circumstances:

            (a) Death. The Executive's employment hereunder shall terminate upon
                -----
his death.

            (b) Disability. If, as a result of the Executive's incapacity due to
                ----------
physical or mental illness (as determined in good faith by the Company's Board
of Directors), the Executive shall have been unable, with reasonable
accommodation, to perform the essential functions of his duties and
responsibilities hereunder on a full-time basis for one hundred and eighty (180)
calendar days within any three hundred and sixty (360) consecutive days.

            (c) Cause. The Company may terminate the Executive's employment
                -----
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon:

                  (i)   The Executive having been convicted of, or having
                        pleaded guilty or nolo contendere to, any felony or any
                                          ---- ----------
                        crime involving moral turpitude;

                  (ii)  The Executive's willful or intentional failure to
                        perform the Executive's duties and responsibilities
                        hereunder or failure to follow a lawful written
                        directive of the Board of Directors (other than any such
                        failure resulting from the Executive's incapacity due to
                        physical or mental illness), upon thirty (30) days
                        notice and opportunity to cure;

                  (iii) The commission by the Executive of any fraud,
                        embezzlement or misappropriation of funds; or

                                      -5-

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                  (iv)  The breach by the Executive of any of the Executive's
                        material obligations under Sections 2(b), 2(c) or 7 of
                        this Agreement.

            (d) Termination by the Company Without Cause. The Company may
                ----------------------------------------
terminate the Executive's employment at any time without Cause effective upon at
least forty-five (45) days prior written notice.

      5. Compensation Upon Termination or Failure to Renew. Upon any termination
         -------------------------------------------------
of this Agreement, all payments, salary and other benefits shall cease, except
as specifically provided for in this Section 5:

            (a) Death. If the Executive's employment shall be terminated by
                -----
reason of his death, the Company shall pay to such person as shall have been
designated in a notice filed with the Company prior to the Executive's death,
or, if no such person shall be designated, to his estate, as a death benefit,
any payments which the Executive's spouse, beneficiaries, or estate may be
entitled to receive pursuant to any insurance or executive benefit plan or other
arrangement or life insurance policy maintained by the Company, the Executive's
Base Salary accrued through the Date of Termination at the rate in effect at the
time of death and any Bonus which the Board of Directors determines is
appropriate under Section 3(b).

            (b) Disability. During any period that the Executive fails to
                ----------
perform his duties and responsibilities hereunder as a result of incapacity due
to physical or mental illness, the Executive shall continue to receive his Base
Salary until the Executive's employment is terminated pursuant to Section 4(b)
hereof and thereafter the Executive shall receive the Executive's Base Salary
accrued through the Date of Termination at the rate in effect at the time Notice
of Termination is given and any Bonus which the Board of Directors determines is
appropriate under Section 3(b) and any disability insurance benefits the
Executive is entitled to receive.

            (c) Cause or Voluntary Termination. If the Executive's employment
                ------------------------------
shall be terminated by the Company for Cause, the Company's sole obligation
shall be to pay the Executive his Base Salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given. If the
Executive's employment shall be terminated voluntarily by the Executive, the
Company shall pay the Executive (i) his Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given;
and (ii) an amount equal to the highest Bonus previously received by the
Executive, to be paid at the time such bonuses are customarily paid, and
pro-rated in accordance with Section 3(f).

            (d) Without Cause. If the Company shall terminate the Executive's
                -------------
employment without Cause, then the Company shall pay the Executive:

                                      -6-

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                  (i)   his Base Salary accrued through the Date of Termination
                        at the rate in effect at the time Notice of Termination
                        is given;

                  (ii)  in lieu of any further salary payments to the Executive
                        for periods subsequent to the Date of Termination and as
                        severance pay to the Executive, following the Date of
                        Termination, Base Salary for a period equal to the
                        greater of twenty-four (24) months or the remaining
                        period in the Term, at the rate in effect at the time
                        the Notice of Termination is given and payable in
                        accordance with the Company's then-current payroll
                        policies;

                  (iii) amounts necessary to continue the Executive's coverage
                        under any medical plans in effect as of the Date of
                        Termination for a period of twenty-four (24) months
                        commencing on the Date of Termination; and

                  (iv)  an amount equal to the highest Bonus previously received
                        by the Executive, to be paid at the time such bonuses
                        are customarily paid, and pro-rated in accordance with
                        Section 3(f).

            (e) Failure to Renew. Notwithstanding anything contained in this
                ----------------
Agreement, the Executive shall not be entitled to any compensation in the event
that the Term of this Agreement is allowed to expire at its scheduled expiration
date.

            (f) Any payments paid to the Executive by the Company under this
Section 5 shall (i) be conditioned on the Executive's compliance with his
post-employment covenants, including without limitation, sections 2(b), 2(c) and
7; (ii) upon request, be conditioned on the delivery of a release satisfactory
to the Company and (iii) be deemed liquidated damages.

      6. Other Provisions Relating to Termination.
         -----------------------------------------

            (a) Notice of Termination. Any termination of the Executive's
                ---------------------
employment by the Company or by the Executive (other than termination because of
the death of the Executive) during the Term shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.

                                      -7-

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            (b) Date of Termination. For purposes of this Agreement, "Date of
                -------------------
Termination" shall mean: (1) if the Executive's employment is terminated by his
death, the date of his death; (2) if the Executive's employment is terminated
because of a disability pursuant to Section 4(b), then immediately after Notice
of Termination is given; (3) if the Executive's employment is terminated by the
Company for Cause then, immediately after a Notice of Termination is given; and
(4) if the Executive's employment is terminated by the Company without Cause,
then upon such date as is specified in the Notice of Termination.

        7. Non-Competition.
           ---------------

            (a) Executive hereby acknowledges that the Company has developed and
will develop substantial and valuable goodwill with its past, present and future
customers as a result of substantial investments of time, effort and capital.
Executive further acknowledges that he has acquired, and will continue to
acquire, a high level of skill and expertise in the Company's field(s) of
business (the "Business") as a direct result of Executive's employment by the
Company, and that the Company will likely suffer serious competitive damage if
Executive were to utilize that skill and expertise for the benefit of a
competitor of the Company. Accordingly, Executive hereby covenants and agrees
that, during the Term or any extension thereof and for a period of eighteen (18)
months after termination of his employment with the Company, for any reason or
from the date of any final judgment upholding the provisions of this Section 7,
whichever is later, Executive shall not, anywhere in the world, directly or
indirectly engage or invest in, own, manage, operate, control or participate in
the ownership, management, operation or control of, lend Executive's name or any
similar name to, or render services similar to those provided by Executive to
the Business and/or the Company, or render advice to, any person, entity or
business then engaged in a business that is competitive with any of the lines of
business conducted by the Company either at the date hereof or at the date of
termination of Executive's employment; provided, however, that Executive may
purchase or otherwise acquire five percent (5%) or less of the capital stock of
a competitive, publicly traded company.

            (b) Executive acknowledges that the Business is multinational in
scope and that the duration and geographic scope of the non-competition
provisions set forth in this Section 7 are therefore reasonable. In the event
that any court determines that the duration or the geographic scope, or both,
are unreasonable and that either such provision is to that extent unenforceable,
the parties hereto agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest area that would not
render it unenforceable. Executive expressly grants to the Company for a period
of up to eighteen (18) months, as the case may be, following the termination of
this Agreement the right to notify any person at any time of the terms of this
restrictive covenant.

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            (c) EXECUTIVE REPRESENTS AND WARRANTS THAT THE KNOWLEDGE, SKILLS AND
ABILITIES HE POSSESSES ARE SUFFICIENT TO PERMIT HIM, IN THE EVENT OF TERMINATION
OF HIS EMPLOYMENT HEREUNDER FOR ANY REASON, TO EARN, FOR A PERIOD OF UP TO
EIGHTEEN (18) MONTHS FROM SUCH TERMINATION, A LIVELIHOOD SATISFACTORY TO
EXECUTIVE WITHOUT VIOLATING ANY PROVISIONS OF THIS SECTION.

      8. Assignment. Neither the Company nor the Executive may make any
         ----------
assignment of this Agreement, or any interest in it, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Company shall effect
a reorganization, consolidate with, or merge into, any other person or transfer
all or substantially all of its properties or assets to any other person. This
Agreement shall inure to the benefit of and be binding upon the Company and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns.

      9. Enforcement of Covenants. The Executive acknowledges that the Executive
         ------------------------
has carefully read and considered all the terms and conditions of this
Agreement, including the restraints imposed upon the Executive pursuant to
Sections 2(b), 2(c) and 7. The Executive agrees that said restraints are
necessary for the reasonable and proper protection of the Company and its
affiliates and that each and every one of the restraints is reasonable in
respect to subject matter, length of time and geographic area. The Executive
further acknowledges that, were the Executive to breach any of the covenants
contained in Section 2(b), 2(c) or 7, the damage to the Company would be
irreparable. The Executive therefore agrees that the Company, in addition to any
other remedies available to it, shall be entitled to preliminary and permanent
injunctive relief against any breach or threatened breach by the Executive of
any of said covenants, without having to post bond.

      10. Conflicting Agreements. The Executive hereby represents and warrants
          ----------------------
that the execution of this Agreement and the performance of the Executive's
obligations hereunder will not breach or be in conflict with any other agreement
to which the Executive is a party or is bound and that the Executive is not now
subject to any covenants against competition or similar covenants that would
affect the performance of the Executive's obligations under this Agreement. The
Executive will not disclose to or use on behalf of the Company any proprietary
information of a third party without such party's consent.

      11. Notice. For purposes of this Agreement, all notices and all other
          ------
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d)

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if sent by any other means, upon receipt. Notices and all other communications
provided for in this Agreement shall be

      If to the Executive:

      Herb Stein

      -----------------------

      -----------------------

      If to the Company:

      Apogee Technology, Inc.
      129 Morgan Drive
      Norwood, MA  02062
      Attn:
             ----------------------

      With a copy to:

      Holland & Knight LLP
      Ten St. James Avenue
      Boston, Massachusetts 02116
      Attention: Ieuan Mahony, Esq.

or to such other address as either party may have furnished to the other in
writing in accordance herewith.

      12. Miscellaneous. No provision of this Agreement may be modified, waived,
          -------------
or discharged unless such waiver, modification, or discharge is agreed to in a
written instrument signed by the Executive and the Company. No waiver by either
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.

      13. Validity. The invalidity or unenforceability of any provision or
         --------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

      14. Counterparts. This Agreement may be executed in several counterparts,
         ------------
each of which shall be deemed to be an original, but all of which together will
constitute one and the same agreement.

                                      -10-

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      15. Entire Agreement: Effectiveness. This Agreement constitutes the entire
         --------------------------------
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior employment agreements and/or severance protection
letters, agreements, or arrangements between the Executive, on the one hand, and
the Company, or any other predecessor in interest thereto or any of their
respective subsidiaries, on the other hand.

      16. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
         --------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES
HERETO AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE THE RIGHTS OR
OBLIGATIONS OF ANY PARTY HERETO UNDER THIS AGREEMENT MAY BE COMMENCED AND
MAINTAINED IN ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE COMMONWEALTH OF
MASSACHUSETTS, AND THAT THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS SHALL HAVE NON-EXCLUSIVE JURISDICTION OVER ANY SUCH ACTION, SUIT
OR PROCEEDING BROUGHT BY ANY OF THE PARTIES HERETO. EACH OF THE PARTIES HERETO
FURTHER AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 11 HEREOF,
AND CONSENTS TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTIES WITH
RESPECT TO ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OF ANY
RIGHTS UNDER THIS AGREEMENT.

      17. Arbitration. Any dispute, controversy or claim arising out of, in
         ------------
connection with, or in relation to this Agreement (except for matters relating
to Sections 2(b), 2(c) or 7 of this Agreement) or any breach thereof shall be
finally settled by arbitration in Boston, Massachusetts, pursuant to the rules
then in effect of the American Arbitration Association. Any award shall be
final, binding and conclusive upon the parties and a judgment upon the award
rendered thereon may be entered in any court having jurisdiction thereof.

                                      -11-

<PAGE>

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

                                          COMPANY:

                                          APOGEE TECHNOLOGY, INC.
                                          a Delaware corporation

                                          By: /s/ Sheryl Stein
                                               ----------------
                                              Name:  Sheryl Stein
                                              Title: Director

                                          By: /s/ Joel Levy
                                              -------------
                                              Name:  Joel Levy
                                              Title: Director

                                          By: /s/ Alan Tuck
                                              -------------
                                              Name:  Alan Tuck
                                              Title: Director

                                          THE EXECUTIVE:

                                          /s/ Herbert M. Stein
                                          --------------------
                                          Herbert M. Stein

                                      -12-<PAGE>

                                                                   EXHIBIT 10.50

                                   AGREEMENTS
                                BETWEEN ALGONQUIN
                                  AND COLONIAL

<PAGE>

                                                                   EXHIBIT 10.50

                               PRECEDENT AGREEMENT

      This PRECEDENT AGREEMENT ("Precedent Agreement") is made and entered into
this 13th day of June, 2001, by and between Algonquin Gas Transmission Company,
     ----        ----
a Delaware corporation ("Algonquin" or "Pipeline"), and Colonial Gas Company,
d/b/a KeySpan Energy Delivery New England, a Massachusetts corporation
("Customer"). Pipeline and Customer are sometimes referred to herein
individually as a ("Party"), or collectively as the ("Parties").

                                   WITNESSETH:

      WHEREAS, Pipeline owns and operates an interstate gas transmission system
in the Northeastern United States;

      WHEREAS, on October 10, 2000, in FERC Docket No. CP01-5, Pipeline filed an
application with the Federal Energy Regulatory Commission ("FERC" or
"Commission") for authorization to construct an extension of its mainline from a
point near Weymouth, Massachusetts, to an interconnection with Maritimes &
Northeast Pipeline, L.L.C.'s ("Maritimes") proposed Phase III project facilities
in Beverly, Massachusetts (the "HubLine/SM/" Project") (Maritimes' Phase III
project, which is more fully described in FERC Docket No. CP01-4, shall
hereinafter be referred to as the "Phase III Project");

      WHEREAS, Algonquin proposes to construct an expansion of its G system
lateral, pursuant to which Algonquin proposes to increase the capacity of the
lateral by replacing all or a portion of the lateral line pipe with a larger
diameter pipe (the "G System Expansion Project") (the HubLine/SM/ Project and
the G System Expansion Project shall collectively be referred to herein as the
"Project");

<PAGE>

      WHEREAS, Customer desires to obtain firm transportation service from
Pipeline as part of the Project for certain quantities of Customer's natural
gas; and

      WHEREAS, subject to the terms and conditions of this Precedent Agreement,
Pipeline is willing to endeavor to construct the Project and provide the firm
transportation service Customer desires;

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound, Pipeline and Customer agree
to the following:

      1. Subject to the terms and conditions of this Precedent Agreement,
Pipeline shall proceed with due diligence to obtain from all governmental and
regulatory authorities having competent jurisdiction over the premises,
including, but not limited to, the FERC, the authorizations and/or exemptions
Pipeline determines are necessary: (i) for Pipeline to construct, own, operate,
and maintain the Project facilities necessary to provide the firm transportation
service contemplated herein; and (ii) for Pipeline to perform its obligations as
contemplated in this Precedent Agreement. Pipeline reserves the right to file
and prosecute any and all applications for such authorizations and/or
exemptions, any supplements or amendments thereto, and, if necessary, any court
review, which are consistent with this Precedent Agreement in a manner it deems
to be in its best interest. During the term of the Precedent Agreement, Customer
expressly agrees to support and cooperate with, and to not oppose, obstruct or
otherwise interfere with in any manner whatsoever, the efforts of Pipeline to
obtain all authorizations and/or exemptions and supplements and amendments
thereto necessary for Pipeline to

                                      -2-

<PAGE>

construct, own, operate, and maintain the Project facilities and to provide the
firm transportation service contemplated in this Precedent Agreement and to
perform its obligations as contemplated by this Precedent Agreement. Provided,
however, that nothing herein shall prevent Customer from protesting any
regulatory filings contemplated by this Paragraph 1 that may be inconsistent
with this Precedent Agreement.

      2. Within ninety (90) days after execution of this Precedent Agreement,
Customer will advise Pipeline in writing of: (i) any facilities which Customer
must construct, or cause to be constructed, in order for Customer to utilize the
firm transportation service contemplated in this Precedent Agreement; and (ii)
any necessary or desirable governmental, contractual and/or regulatory
authorizations, approvals, certificates, permits and/or exemptions associated
with the facilities identified pursuant to (i) above ("Customer's
Authorizations").

      3. Subject to the terms and conditions of this Precedent Agreement,
Customer shall proceed with due diligence to obtain Customer's Authorizations.
Customer reserves the right to file and prosecute applications for Customer's
Authorizations, and, if necessary, any court review, in a manner it deems to be
in its best interest; provided, however, Customer shall pursue Customer's
Authorizations in a manner designed to implement the firm transportation service
contemplated herein in a timely manner. Pipeline agrees to use reasonable
efforts to assist Customer in obtaining Customer's Authorizations. Customer
agrees to promptly notify Pipeline in writing when each of the required
authorizations, approvals and/or exemptions are

                                      -3-

<PAGE>

received, obtained, rejected or denied. Customer shall also promptly notify
Pipeline in writing as to whether any such authorizations, approvals and/or
exemptions received or obtained are acceptable to Customer.

      4. To effectuate the firm transportation service contemplated herein,
Customer and Pipeline agree that, within thirty (30) days following the date on
which the Commission issues an order granting Pipeline a certificate of public
convenience and necessity to construct the HubLine/SM/ Project facilities, they
will execute a firm transportation service agreement under Pipeline's Rate
Schedule AFT-1 ("Service Agreement"), which (i) specifies a Maximum Daily
Transportation Quantity ("MDTQ") of 15,000 dekatherms per day ("Dth/d"),
exclusive of fuel requirements, effective on the Service Commencement Date (as
determined in accordance with Paragraph 5 of this Precedent Agreement), with the
quantity increasing to 25,000 Dth/d effective November 1, 2003 (which shall be
the initial MDTQ under the Service Agreement, in the event that the Service
Commencement Date occurs on or after November 1, 2003), (ii) specifies a primary
term that extends for ten (10) years from the first day of the first full month
following the Service Commencement Date ("Primary Term"), (iii) specifies a
Primary Point of Receipt at the interconnection between the HubLine/SM/ Project
facilities and the Phase III Project facilities in Beverly, Massachusetts (with
an MDRO equal to the MDTQ), (iv) specifies the interconnections between
Pipeline's facilities and Customer's facilities in or near Sagamore,
Massachusetts, and in or near Bourne, Massachusetts, respectively, as the
Primary Points of Delivery, with an MDDO at each point equal to sixty (60)
percent of the MDTQ at Sagamore and forty (40) percent of the MDTQ at Bourne and
a minimum delivery pressure at each point of 270 psig; (v) permits

                                      -4-

<PAGE>

Customer (aa) to assign, any time prior to the Service Commencement Date, or
(bb) to release, anytime after the Service Commencement Date (under Pipeline's
then-effective capacity release provisions in its FERC Gas Tariff), all or any
portion of such Service Agreement to any of its local gas distribution company
affiliates (provided that, Customer shall not be permanently discharged from its
obligations under the Service Agreement, unless the assignee (or its guarantor)
or replacement shipper (or its guarantor), as applicable, has an investment
grade credit rating for its long-term senior unsecured debt from a recognized
rating agency, or Pipeline otherwise determines, in its reasonable discretion,
that the assignee or replacement shipper, as applicable, is sufficiently
creditworthy to satisfy the assigned/released obligations). Service under the
Service Agreement shall be subject to an NGA Section 7(c) initial rate (unless
Pipeline and Customer mutually agree upon a negotiated or discounted rate), plus
fuel retainage and all applicable surcharges. Service pursuant to the Service
Agreement will commence on the date specified by Pipeline in its written notice
to Customer pursuant to Paragraph 5 of this Precedent Agreement.

      5. Upon satisfaction or waiver of all the conditions precedent set forth
in Paragraph 8 of this Precedent Agreement, Pipeline shall notify Customer of
such fact, and that service under the Service Agreement will commence on a date
certain, which date will be the later of: (i) November 1, 2002; (ii) the date
that all of the conditions precedent set forth in Paragraph 8 of this Precedent
Agreement are satisfied or waived; or (iii) the date on which Maritimes' Phase
III Project is commissioned, tested and made available for service ("Service
Commencement Date"). On and after the date on which Pipeline has notified
Customer that service under the Service Agreement will

                                      -5-

<PAGE>

commence, Pipeline shall provide firm transportation service for Customer
pursuant to the terms of the Service Agreement and Customer will pay Pipeline
for all applicable charges required by the Service Agreement.

      6. Pipeline will undertake the design of the Project facilities and any
other preparatory actions necessary for Pipeline to complete and file its
certificate application(s) with the Commission. Prior to satisfaction of the
conditions precedent set forth in Paragraph 8 of this Precedent Agreement (with
the exception of 8(A)(v)), Pipeline shall have the right, but not the
obligation, to proceed with the necessary design of facilities, acquisition of
materials, supplies, properties, rights-of-way and any other necessary
preparations to implement the firm transportation service under the Service
Agreement as contemplated in this Precedent Agreement.

      7. Upon satisfaction of the conditions precedent set forth in Paragraphs
8(A)(i) through 8(A)(iv), inclusive, and 8(B) of this Precedent Agreement, or
waiver of the same by Pipeline or Customer, as applicable, Pipeline shall
proceed (subject to the continuing commitments of all customers executing
precedent agreements and service agreements for service utilizing the firm
transportation capacity to be made available by the Project) with due diligence
to construct the authorized Project facilities and to implement the firm
transportation service contemplated in this Precedent Agreement on November 1,
2002. Notwithstanding Pipeline's due diligence, if Pipeline is unable to
commence the firm transportation service for Customer as contemplated herein on
November 1, 2002, Pipeline will continue to proceed with due diligence to
complete arrangements for such firm transportation service, and commence

                                      -6-

<PAGE>

the firm transportation service for Customer at the earliest practicable date
thereafter. Pipeline will neither be liable nor will this Precedent Agreement or
the Service Agreement be subject to cancellation if Pipeline is unable to
complete the construction of such authorized Project facilities and commence the
firm transportation service contemplated herein by November 1, 2002.

      8. Commencement of service under the Service Agreement and Pipeline's and
Customer's rights and obligations under the Service Agreement are expressly made
subject to satisfaction of the following conditions precedent:

      (A) Only Pipeline shall have the right to waive the conditions precedent
set forth in Paragraph 8(A):

            (i)   Pipeline's receipt and acceptance by September 1, 2002, of all
                  necessary certificates and authorizations from the Commission
                  to construct, own, operate and maintain the Project
                  facilities, as described in Pipeline's certificate application
                  as it may be amended from time to time, necessary to provide
                  the firm transportation service contemplated herein and in the
                  Service Agreement and to charge the initial Section 7(c) rates
                  requested, as contemplated in this Precedent Agreement;

            (ii)  Pipeline's receipt of approval by September 1, 2002, from its
                  Board of Directors or similar governing body to expend the
                  capital necessary to construct the Project facilities;

                                      -7-

<PAGE>

            (iii) Pipeline's receipt of all necessary governmental
                  authorizations, approvals, and permits required to construct
                  the Project facilities necessary to provide the firm
                  transportation service contemplated herein and in the Service
                  Agreement other than those specified in Paragraph 8(A)(i);

            (iv)  Pipeline's procurement of all necessary rights-of-way
                  easements or permits in form and substance acceptable to
                  Pipeline; and

            (v)   Pipeline's completion of construction of the necessary Project
                  facilities required to render firm transportation service for
                  Customer pursuant to the Service Agreement and Pipeline being
                  ready and able to place such facilities into gas service; and

      (B) Customer's receipt and acceptance by July 1, 2002, of all Customer's
Authorizations (only Customer shall have the right to waive this condition
precedent).

      Unless otherwise provided for herein, the Commission authorization(s) and
approval(s) contemplated in Paragraph 1 of this Precedent Agreement must be
issued in form and substance reasonably satisfactory to both Parties hereto. For
purposes of this Precedent Agreement, such Commission authorization(s) and
approval(s) shall be deemed satisfactory if issued or granted in form and
substance as requested, or if issued in a manner acceptable to Pipeline and such
authorization(s) and approval(s), as issued, will not have, in Customer's sole
and absolute discretion, not to be exercised in an unreasonable manner, a
material adverse effect on Customer. Customer shall notify

                                      -8-

<PAGE>

Pipeline in writing not later than fifteen (15) days after the issuance of the
Commission certificate(s), authorization(s) and approval(s), including any order
issued as a preliminary determination on non-environmental issues, contemplated
in Paragraph 1 of this Precedent Agreement if such certificate(s),
authorization(s) and approval(s) are not satisfactory to Customer. All other
governmental authorizations, approvals, permits and/or exemptions that Pipeline
must obtain must be issued in form and substance reasonably acceptable to
Pipeline. All governmental approvals that Pipeline is required by this Precedent
Agreement to obtain must be duly granted by the Commission or other governmental
agency or authority having jurisdiction, and must be final and no longer subject
to rehearing or appeal; provided, however, Pipeline may waive the requirement
that such authorization(s) and approval(s) be final and no longer subject to
rehearing or appeal.

      9. If Customer: (i) terminates this Precedent Agreement for any reason;
(ii) otherwise fails to perform, in whole or in part, its material duties and
obligations hereunder; or (iii) during the term of this Precedent Agreement,
interferes with or obstructs the receipt by Pipeline of the authorizations
and/or exemptions contemplated by and consistent with this Precedent Agreement
as requested by Pipeline and, as a result of such actions by Customer, Pipeline
does not receive the authorizations and/or exemptions in form and substance as
requested by Pipeline or does not receive such authorizations and/or exemptions
at all, then Customer shall, at the option and election of Pipeline, reimburse
Pipeline for Customer's proportionate share (as prorated based on initial MDTQs
among all customers taking actions described in this Paragraph 9) of Pipeline's
costs incurred, accrued, allocated to, or for which Pipeline is contractually

                                      -9-

<PAGE>

obligated to pay in conjunction with its efforts to satisfy its obligations
under this Precedent Agreement ("Pre-service Costs"). Pre-service Costs will
include, but will not be limited to, those expenditures and/or costs incurred,
accrued, allocated to, or for which Pipeline is contractually obligated to pay
associated with engineering, construction, materials and equipment,
environmental, regulatory, and/or legal activities, and internal overhead and
administration and any other costs related to the firm service contemplated in
this Precedent Agreement incurred in furtherance of Pipeline's efforts to
satisfy its obligations under this Precedent Agreement. Customer's obligation to
pay Pre-service Costs hereunder shall be limited to a maximum amount of
$500,000.00. Notwithstanding the foregoing, Customer acknowledges and agrees
that Pipeline shall in no way be precluded from seeking recovery of additional
amounts from Customer for losses or damages related to breach of contract. For
breaches of contract that occur prior to thirty (30) days following the date on
which the Commission issues an order granting Pipeline a certificate of public
convenience and necessity to construct the HubLines/SM/ Project facilities,
neither Party shall be liable to the other Party for incidental, consequential
or punitive damages arising out of or in any way related to this Precedent
Agreement.

      10. If the conditions precedent set forth in Paragraph 8 of this Precedent
Agreement, excluding the condition precedent set forth in Paragraph 8 (A)(v),
have not been fully satisfied, or waived by Pipeline, by the earlier of the
applicable dates specified therein or March 1, 2004, and this Precedent
Agreement has not been terminated pursuant to Paragraphs 11 or 12 of this
Precedent Agreement, then either Pipeline or Customer may thereafter terminate
this Precedent Agreement and the

                                      -10-

<PAGE>

Service Agreement by giving ninety (90) days prior written notice of its
intention to terminate to the non-terminating Party; provided, however, if the
conditions precedent are satisfied, or waived by Pipeline or Customer, as
applicable, within such ninety (90) day notice period, then termination of such
agreements will not be effective.

      11. In addition to the provisions of Paragraph 10 of the Precedent
Agreement, Pipeline may terminate this Precedent Agreement at any time upon
fifteen (15) days prior written notice to the other Party hereto, if Pipeline,
in its sole discretion, determines for any reason that the Project contemplated
herein is no longer economically viable or if substantially all of the other
precedent agreements, service agreements or other contractual arrangements for
the firm service to be made available by the Project are terminated, other than
by reason of commencement of service.

      12. If this Precedent Agreement is not terminated pursuant to Paragraphs
10 or 11 of this Precedent Agreement, then this Precedent Agreement will
terminate by its express terms on the Service Commencement Date under the
Service Agreement (as such date is described in Paragraph 5 of this Precedent
Agreement), and thereafter Pipeline's and Customer's rights and obligations
related to the transportation transaction contemplated herein shall be
determined pursuant to the terms and conditions of such Service Agreement and
Pipeline's FERC Gas Tariff, as effective from time to time.

      13. Customer commits that it can and will, promptly upon request by
Pipeline, satisfy one of the following creditworthiness requirements:

                                      -11-

<PAGE>

      (A) Customer (or any entity that guarantees Customer's obligations under
the Service Agreement) has an investment grade rating for its long-term senior
unsecured debt from Moody's Investors Service, Inc. of Baa3 or higher or from
Standard & Poor's of BBB- or higher. In the event that Customer meets the
requirement contained in the immediately preceding sentence initially, but is
later downgraded below such investment grade rating, Customer will be required
to meet one of the requirements in Paragraph 13(B).

      (B) At any time and from time to time that Customer does not meet the
requirements set forth in the first sentence of Paragraph 13(A), Customer will
be accepted as creditworthy by Pipeline if (i) Pipeline determines that,
notwithstanding the absence of an acceptable credit rating, the financial
position of Customer (or an entity that guarantees Customer's obligations under
the Service Agreement) is acceptable to Pipeline and its lenders, or (ii)
Customer provides an irrevocable letter of credit or other security in such
amounts and with such other terms and conditions as shall be acceptable to
Pipeline and its lenders.

      (C) This Paragraph 13 shall survive the termination of the Precedent
Agreement and shall remain in effect until the Service Agreement terminates in
accordance with its terms.

      14. This Precedent Agreement may not be modified or amended unless the
Parties execute written agreements to that effect.

                                      -12-

<PAGE>

      15. (A) Any company which succeeds by purchase, merger, or consolidation
of title to the properties, substantially as an entirety, of Pipeline or
Customer, will be entitled to the rights and will be subject to the obligations
of its predecessor in title under this Precedent Agreement. Otherwise, except
with respect to Paragraph 15(B), neither Customer nor Pipeline may assign any of
its rights or obligations under this Precedent Agreement without the prior
written consent of the other Party hereto.

      (B) Customer acknowledges and agrees that Pipeline shall have the right to
assign, mortgage, or pledge all or any of its rights, interests, and benefits
under this Precedent Agreement and/or the Service Agreement to secure payment of
any indebtedness incurred or to be incurred in connection with the development
and construction of the Project facilities.

      16. Except as expressly provided for in this Precedent Agreement, nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any person not a Party hereto any rights, remedies or obligations under
or by reason of this Precedent Agreement.

      17. Each and every provision of. this Precedent Agreement shall be
considered as prepared through the joint efforts of the Parties and shall not be
construed against either Party as a result of the preparation or drafting
thereof. It is expressly agreed that no consideration shall be given or
presumption made on the basis of who drafted this Precedent Agreement or any
specific provision hereof.

                                      -13-

<PAGE>

      18. The recitals and representations appearing first above are hereby
incorporated in and made a part of this Precedent Agreement.

      19. This Precedent Agreement shall be governed by, construed, interpreted,
and performed in accordance with the laws of the Commonwealth of Massachusetts,
without recourse to any laws governing the conflict of laws.

      20. Except as herein otherwise provided, any notice, request, demand,
statement, or bill provided for in this Precedent Agreement, or any notice which
either Party desires to give to the other, must be in writing and will be
considered duly delivered when mailed by registered or certified mail to the
other Party's Post Office address set forth below:

             Pipeline:     1284 Soldiers Field Road
                           Boston, Massachusetts 02135
                           Attn: Vice President, Marketing

             Customer:     201 Rivermoor Street
                           West Roxbury, Massachusetts 02108
                           Attn: Director of Customer Choice and Gas Resource
                                 --------------------------------------------
                           Management
                           ----------

or at such other address as either Party designates by written notice. Routine
communications, including monthly statements, will be considered duly delivered
when mailed by either registered, certified, or ordinary mail.

      21. When used in this Precedent Agreement, and unless otherwise defined
herein, capitalized terms shall have the meanings set forth in Pipeline's FERC
Gas Tariff on file with the Commission, as amended from time to time.

                                      -14-

<PAGE>

       IN WITNESS WHEREOF, the Parties hereto have caused this Precedent
Agreement to be duly executed by their duly authorized officers as of the day
and year first above written.

Algonquin Gas Transmission Company          Colonial Gas Company,
                                            d/b/a KeySpan Energy Delivery
                                            New England

By: /s/ [ILLEGIBLE]                         By: /s/ [ILLEGIBLE]
    ----------------------                      ----------------------
Title: SVP                                  Title: PRESIDENT
       -------------------                         -------------------

                                      -15-

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