a5830850ex10_1.htm


    
      EXHIBIT
10.1

      EXECUTIVE
EMPLOYMENT AGREEMENT

       

      EMPLOYMENT AGREEMENT (the
"Agreement"), as of the 1st day of August, 2008 by and between ANDREA ELECTRONICS CORPORATION
(the "Company"), a New York corporation, and DOUGLAS J. ANDREA (the
"Executive").

       

      WITNESSETH:

       

      WHEREAS, the Company desires
to continue the employment of the Executive and to enter into an employment
agreement embodying the terms of such continued employment;

       

      WHEREAS, the Executive desires
to enter into this Agreement and to accept such employment, subject to the terms
and provisions of this Agreement;

       

      NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a "Party" and together
the "Parties") agree as follows:

       

      
        	
                1.  

              	
                Definitions.

              


      

       

      (a) "Base
Salary" shall mean the Executive's base salary in accordance with Section 4(a)
below.

       

      (b) "Board"
shall mean the Board of Directors of the Company.

       

      (c) "Business"
shall mean the design, development and manufacture of state-of-the-art
microphone technologies and products for enhancing speech-based applications and
audio applications software and communications that require high quality, clear
voice signals primarily for the following markets: (i) personal computing
(primarily for speech recognition applications and voice communication over the
Internet); (ii) audio and video conferencing; (iii) in-vehicle communications
(to enable untethered, hands-free communication); and (iv) call
centers.

       

      (d) "Cause"
shall mean that the Board reasonably concludes, in good faith and after
investigation, that: (i) the Executive engaged in conduct which is a felony
under the laws of the United States or any state or political subdivision
thereof; (ii) the Executive engaged in conduct constituting breach of fiduciary
duty or breach of the duty of loyalty, willful misconduct relating to the
Company (including acts of employment discrimination or sexual harassment),
embezzlement, or fraud; (iii) the Executive breached his obligations or
covenants under this Agreement in any material respect; (iv) any material
violation by the Executive of any law or regulation applicable to the business
of the Company or any of its affiliates; (v) the Executive substantially and
willfully refused to follow a proper directive of the Board within the scope of
the Executive's duties.(which
shall be capable of being performed by the Executive with reasonable effort)
after written notice from the Board specifying the performance required and the
Executive's failure to perform within 30 days after such notice; (vi) the
Executive engaged in an act or acts of dishonesty or misrepresentation that
materially affects the business or the financial condition of the Company; or
(vii) the Executive's abuse of alcohol or drugs that, in the Company's
reasonable judgment, materially impairs his ability to perform his duties and
responsibilities hereunder or endangers other individuals in the
workplace.

       

      (e) "Code"
shall mean the Internal Revenue Code of 1986, as amended from time to
time.

       

      (f) "Date of
Termination" shall mean the effective date of the Executive's termination of
employment for any reason.

       

      (g) "Disability"
or "Disabled" shall mean the failure of the Executive due to illness, injury, or
physical or mental incapacity to carry out effectively the Executive's duties
with respect to the Company for a period of six (6) consecutive months or nine
(9) months in any eighteen-month (18) consecutive period.

       

      (h) "Effective
Date" shall mean the date of this Agreement as first written above.

       

      (i) "Term of
Employment" shall mean the period specified in Section 2 below.

       

      
        	
                2.  

              	
                Term of
      Employment.

              


      

       

      The
Company hereby employs the Executive, and the Executive hereby accepts such
employment, for a two-year term commencing on the Effective Date and ending on
July 31, 2010, subject to earlier termination as provided in Section 6
below.  The Agreement shall be subject to renewal as approved by the
Compensation Committee of the Board of Directors.

       

      
        	
                3.  

              	
                Position, Duties, and
      Responsibilities.

              


      

       

      On or
about the Effective Date and continuing for the remainder of the Term of
Employment, the Executive shall be employed as the Chief Executive Officer of
the Company.  The Executive shall be nominated for election as a
member of the Company's Board of Directors (the "Board"), and the Company shall
defend, hold harmless, and indemnify the Executive from any cost, liability or
judgment incurred by the Executive as a result of his actions or inactions as a
member of the Board, so long as they are in good faith.  The Executive
shall serve the Company and its affiliates faithfully, conscientiously and to
the best of the Executive's ability, shall promote the interests and reputation
of the Company and its affiliates and shall perform his duties hereunder in
accordance with the policies and procedures of the Company as in effect from
time to time.  Unless prevented by sickness or Disability, the
Executive shall devote all of the Executive's time, attention, knowledge, energy
and skills, during normal working hours, and at such other times as the
Executive's duties may reasonably require, to the duties of the Executive's
employment; provided, however, that this Agreement shall not be interpreted as:
(a) prohibiting the Executive from, in accordance with the policies and
procedures of the Company, managing his personal affairs, engaging in charitable
or civic activities; or (b) subject to prior approval of the Company and any
regulatory or self-regulatory process which may be required, serving as a
director of any other corporation or business entity not affiliated with or in
competition with the Company or its affiliates, so long as such activities do
not interfere in any material respect with the performance of the Executive's
duties and responsibilities hereunder.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      The
Executive, in carrying out his duties under this Agreement, shall report to the
Board.  The Executive's office shall be located at the Company's
headquarters, which is currently located at 65 Orville Drive, Suite One,
Bohemia, NY 11716, or within a thirty-mile radius thereof.

       

      
        	
                4.  

              	
                Compensation and
      Benefits.

              


      

       

      (a) Base
Salary.

       

      From the
effective date through July 31, 2009, the Company shall pay the Executive an
annual Base Salary ("Base Salary") of $312,500, and for the period of August 1,
2009 through July 31, 2010 the Base Salary shall be $325,000.  Base
Salary shall be payable in accordance with the Company's payroll practices with
respect to senior executives as in effect from time to time.

       

      (b) Bonus
Payments.

       

      The
Executive shall be eligible to receive both a quarterly performance bonus and an
annual performance bonus.

       

      (1)           Quarterly
Bonus.  The Executive shall be eligible to receive a quarterly bonus
equal to 25% of the Company’s pre-bonus net after tax quarterly earnings in
excess of $25,000 for a total quarterly bonus amount not to exceed
$12,500.  For example, if the Company has quarterly net earnings equal
to $60,000, the maximum quarterly bonus payable would be $8,750
(($60,000-$25,000) × 25%).  Any bonus shall be payable as soon as the
Company's cash flow permits.

       

      (2)           Annual
Bonus.  The Executive shall be eligible to receive an annual bonus
equal to 10% of the Company’s annual pre-bonus net after tax earnings in excess
of $300,000.  For example, if the Company had annual pre-bonus net
earnings equal to $450,000, the maximum annual bonus payable would be $15,000
(($450,000-$300,000) × 10%).  Any bonus shall be payable as soon as
the Company's cash flow permits.

       

      All bonus
determinations shall be made in the sole discretion of the Board or Compensation
Committee.  The Executive shall not participate in any deliberations
or determinations of the Board or Compensation Committee concerning his
bonus.  Any bonus shall be prorated: (i) through the Date of
Termination in the event that the Executive's employment is terminated for any
reason by either the Company or the Executive; and/or (ii) for any leave of
absence taken in the year for which the bonus is awarded to the extent permitted
by law.  Both the first and last quarterly bonus, if any, and the
annual bonus for 2008 and 2010 shall be pro-rated to coincide with the Company’s
quarterly and annual financial reporting.

       

      (c) Long-Term Incentive
Compensation Program.

       

      Subject to
the terms and conditions of the Andrea Electronics Corporation 2006 Stock Plan
(the "Plan") , the Company has granted the Executive three million (3,000,000)
stock options on August 8, 2008 and, subject to the approval of the Board, the
Compensation Committee will recommend a second grant of one million (1,000,000)
stock options as soon as practical after August 1, 2009, equal to the fair
market value of the traded shares as determined on or about the date of each
grant(s).  For the 3,000,000 stock options on August 8, 2008,
2,000,000 of the stock options vest in equal annual installments over a 3-year
period commencing on August 1, 2009 (i.e., the options vest 33.3% on each of
August 1, 2009, August 1, 2010, and August 1, 2011) and 1,000,000 of the stock
options vest in equal annual installments over a 3-year period commencing on
August 1, 2010 (i.e., the options vest 33.3% on each of August 1, 2010, August
1, 2011, and August 1, 2012).

       

      Notwithstanding
any other provision of this Section 4(c) to the contrary: (i) upon the
Executive's Termination without Cause or Resignation With the Company's Consent
(defined in Section 6(d) below), the Executive's stock options will vest
immediately and shall be exercisable in accordance with Section 6(d) below; (ii)
upon a Change in Control (defined in Section 6(e) below) the Executive's stock
options will vest immediately and shall be exercisable in accordance with
Section 5(d) below; and (iii) in the event that the Executive terminates his
employment for any reason other than as provided in Sections 6(d) and 6(e)
below, all unvested options shall be treated in accordance with the terms and
conditions of the Plan.

       

      (d) Employee Benefit
Programs.

       

      During the
Term of Employment, the Executive shall be eligible to participate in the
various benefit programs, including health, medical, and accident benefits,
applicable to similarly situated senior executives of the Company subject to and
in accordance with the terms and conditions of such plans as are in effect from
time to time.  During the Term of Employment, the Company shall
maintain the current life insurance policy in effect for the Executive at the
Company's expense except if the Executive is terminated for Cause as defined in
paragraph 3 of this Agreement.

       

      
        
           

        

        
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      (e) Reimbursement of Business
Expenses.

       

      During the
Term of Employment, the Executive is authorized to incur reasonable business
expenses in carrying out his duties and responsibilities under this Agreement,
and the Company shall reimburse him for all such reasonable business
expenses reasonably incurred in connection with carrying out the business of the
Company, subject to and in accordance with the terms and conditions of the
policies applicable to similarly situated senior executives of the Company
regarding such expenses as are in effect from time to time.

       

      (f) Vacation.

       

      During the
Term, the Executive shall be entitled to twenty (20) days of paid vacation
annually.  Any accrued but unused vacation days may be rolled over to
the next 12-month period, provided that the number of unused vacation days for
any period shall not exceed forty (40) vacation days.  All vacation
leave is subject to and in accordance with the vacation policies of the Company
with respect to senior executives as are in effect from time to time; provided,
however, that the Executive shall be entitled to payment of any accrued but
unused vacation, if any, at the Date of Termination.

       

      
        	
                5.  

              	
                Change in
      Control.

              


      

       

      (a) For
purposes hereof, a "Change in Control" shall be defined as:

       

      (i) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13D-3 promulgated under the Exchange Act), directly or indirectly of 50% or
more of either (a) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (b) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of Directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control; (1) any acquisition
directly from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (4)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) below; or

       

      (ii) individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Incumbent Board, provided, however, that any individual becoming a
director subsequent to the date hereof whose election or nomination for election
by the Company's shareholders was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Incumbent Board;
or

       

      (iii) consummation
of a reorganization, merger, consolidation, or sale or other disposition of all
or substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting securities,
respectively, immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then outstanding
shares of common stock and the combined voting power, respectively, of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination, and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Incumbent Board, providing for such Business Combination;
or

       

      (iv) approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

       

      (b) All
restrictions on the restricted stock then held by the Executive will lapse
immediately, all stock options and stock appreciation rights then held by the
Executive will become immediately vested and exercisable and any performance
shares or units then held by the Executive will vest immediately, in full,
in the event of a
Change in Control and shall remain exercisable as provided in the grants and
under the Plan.

       

      
        
           

        

        
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                6.  

              	
                Termination of
      Employment.

              


      

       

      (a) Termination of Employment
Due to Death.  In the event of the Executive's death during the
Term of Employment, the Term of Employment shall end as of the date of the
Executive's death and his estate and/or beneficiaries, as the case may be, shall
thereupon be entitled to the following:

       

      (i) Base
Salary earned but not paid prior to the date of his death;

       

      (ii) Any annual
and quarterly bonuses under Section 4(b) with respect to any year prior to the
year of his death which have not yet been paid, together with the prorated
portion through the date of his death of the Executive's annual and quarterly
bonuses earned but unpaid for the year of his death;

       

      (iii) any
amounts earned, accrued, or owing to the Executive but not yet paid under
Section 4(d)-(f) above, subject to the terms and conditions of the applicable
benefit plans and programs;

       

      (iv) such other
or additional benefits, if any, as are provided under applicable plans, programs
and/or arrangements of the Company; and

       

      (v) any
unexercised or unvested stock options shall remain exercisable or vest upon the
Executive's death only to the extent provided in the applicable option plan and
option agreements.

       

      (b) Termination of Employment
Due to Disability.  Either the Company or the Executive may
terminate the Executive's employment due to Disability during the Term of
Employment upon written notice to the other Party in accordance with Section 20
below.  The Term of Employment shall end as of the Date of Termination
specified in the notice, and the Executive shall thereupon be entitled to the
following (in addition to the benefits due him under the then current disability
programs of the Company, if any):

       

      (i) Base
Salary earned but not paid prior to the Date of Termination;

       

      (ii) any annual
and quarterly bonuses under Section 4(b) with respect to any year prior to the
year of the Date of Termination which have not yet been paid
together with the prorated portion through the Date of Termination of the
Executive's annual and quarterly bonuses earned but unpaid for the year of his
Termination;

       

      (iii) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
4(d)-(f) above, subject to the terms and conditions of the applicable benefit
plans and programs;

       

      (iv) such other
or additional benefits, if any, as are provided under applicable plans, programs
and/or arrangements of the Company; and

       

      (v) any
unexercised or unvested stock options shall remain exercisable or vest upon the
Executive's termination only to the extent provided in the applicable option
plan and option agreements.

       

      (c) Termination of Employment by
the Company for Cause.  The Company may terminate the
Executive's employment for Cause during the Term of Employment following prior
written notice to the Executive which will be effective ten (10) calendar days
after the delivery of such notice to the Executive.  If the
Executive's employment is so terminated by the Company, the Term of Employment
shall end as of the effective date of the notice and the Executive shall
thereupon be entitled to the following:

       

      (i) Base
Salary earned but not paid prior to the Date of Termination;

       

      (ii) any annual
and quarterly bonuses under Section 4(b) with respect to any year prior to the
year of the Date of Termination which have not yet been paid, together with the
prorated portion through the Date of Termination of the Executive's quarterly
bonus;

       

      (iii) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
4(d)-(f) above, subject to the terms and conditions of the applicable benefit
plans and programs;

       

      (iv) such other
or additional benefits, if any, as are provided under applicable plans, programs
and/or arrangements of the Company; and

       

      (v) any
unexercised or unvested stock options shall remain exercisable or vest upon the
Executive's termination only to the extent provided in the applicable option
plan and option agreements.

       

      (d) Termination Of Employment By
The Company Without Cause Or Resignation With The Company's
Consent.  The Company may terminate the Executive's employment
without Cause during the Term of Employment following prior written notice to
the Executive which will be effective no less than thirty (30) calendar days
after the delivery of such notice to the Executive or the Executive may resign
with the Company's consent.  The Term of Employment shall end as of
the Date of Termination specified in the notice.  If the Executive's
employment is so terminated by the Company without Cause or he resigns with the
Company's consent, other than due to death or Disability or Termination by the
Company for Cause or as provided in Section 6(e) below, the Executive shall
thereupon be entitled to the following:

       

      
        
           

        

        
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      (i) Base
Salary earned but not paid prior to the Date of Termination;

       

      (ii) any annual
and quarterly bonuses under Section 4(b) with respect to any year prior to the
year of the Date of Termination which have not yet been paid, together with the
prorated portion through the Date of Termination of the Executive's annual and
quarterly bonuses earned but unpaid for the year of his
Termination;

       

      (iii) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
4(d)-(f) above, subject to the terms and conditions of the applicable benefit
plans and programs;

       

      (iv) such other
or additional benefits, if any, as are provided under applicable plans, programs
and/or arrangements of the Company;

       

      (v) all
granted but unvested stock options shall immediately vest in full and shall be
exercisable in accordance with the terms and conditions of the Plan;
and

       

      (vi) provided
that the Executive executes a separation agreement and general release in the
form annexed as Exhibit A and in accordance with the time frames and conditions
set forth therein, the Company shall also pay the Executive: (1) a severance
payment equal to six (6) months of the Executive's most recent Base Salary plus
the six (6) months prorated portion of the Executive's most recent annual and
quarterly bonuses, payable in equal amounts over a period of six (6) months in
accordance with the Company's normal payroll practices as are in effect from
time to time; and (2) in addition, the Company shall arrange and pay for
continuation of health insurance coverage for the Executive, and his spouse and
dependents for a period of twelve (12) months from the Date of Termination and
shall, for a period of eighteen (18) months from the expiration of such six
month period, provide COBRA continuation coverage to the Executive.

       

      (e) Termination Following a
Change in Control.  If, during the Term of Employment, the
Company shall, for its convenience, terminate the Executive's employment within
the later of the remaining term of the agreement or six (6) months following a
Change in Control, then the Company shall provide the Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be:

       

      (i) Those
payments and benefits described in Section 6(d)(i), (ii), (iii), and (iv), which
shall be immediately due and payable;

       

      (ii) a sum
equal to two (2) years of the Executive's most recent Base Salary plus a pro
rated portion of the Executive's most recent annual and four quarterly bonuses
paid immediately preceding the Change of Control.  Such payments shall
be paid in equal monthly installments during the twenty-four (24) month period
following the Executive's termination; and

       

      (iii) continuation
for two (2) years of health and medical benefits coverage substantially
equivalent to the coverage maintained by the Company for the Executive prior to
his termination, except to the extent such coverage may be changed in its
application to all Company employees on a nondiscriminatory basis, and shall,
for a period of eighteen (18) months from the expiration of such two (2) year
period, provide COBRA continuation coverage, if available, to the
Executive.  Notwithstanding the foregoing, such coverage shall cease
in the event that the Executive becomes covered by comparable coverage from
another employer.  In no event is the Executive entitled to receive
cash consideration in lieu of the continued coverage provided by this
subparagraph 6(e)(iii).

       

      All stock
options, whether then vested or unvested, shall vest and/or become exercisable
in accordance with Section 5(b).

       

      (f) Termination of Employment by
the Executive.  The Executive may voluntarily terminate his
employment during the Term of Employment (other than for death or Disability) by
giving at least 30 days prior written notice to the Company in accordance with
Section 20 below.  The Executive's employment shall terminate upon the
date specified in his notice of termination.  Thereafter, the
Executive shall thereupon be entitled to the same payments and benefits as
provided in Section 6(c)(i)-(iv) above.  All unexercised or unvested
options shall be subject to the terms and conditions of their grant and the
Plan.

       

      (g) Non-renewal.  In
the event this Agreement is not renewed, the Executive's employment shall
terminate at the expiration of the Term of Employment, and the Executive shall
thereupon be entitled to through the date of termination those sums described in
Section 6(c)(i)-(iv) above, which shall be immediately
due and payable.  All benefits shall cease in accordance with the
terms of the applicable Company policies or plans, and any unexercised or
unvested stock options shall remain exercisable or vest only to the extent
provided in the applicable option plan and option agreements.  In no
event shall the Executive be entitled to any severance payments or other
compensation other than those described in Section 6(c) above.

       

      
        
           

        

        
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      (h) Upon
termination of the Executive's employment for any reason or if the Agreement is
not renewed, whichever is earlier, the Executive agrees to immediately resign
all director and officer positions with the Company effective as of the Date of
Termination, or expiration of the Term, as applicable.  The Board may,
in its discretion, accept Executive's resignation or invite Executive to remain
on the Board.

       

      
        	
                7.  

              	
                Confidentiality;
      Assignment of Rights.

              


      

       

      (a) The
Executive acknowledges that during the Term of Employment, the Company will
disclose to and entrust to him trade secrets, and other confidential and
proprietary information, including, but not limited to: (i) information
disclosed to it by third parties (whether pursuant to a confidentiality
agreement or otherwise); (ii) knowledge of certain proprietary information and
trade secrets concerning the past, present, and future strategies, plans,
business activities, finances, methods, operations, customers, accounts,
service, product information, and employees of the Company and its customers,
including, but not limited to: certain technical know-how and specifications,
copyrights, training, software source and object codes, technology, research,
market information and data, formulas, processes, methods, machines,
manufacturers, products, compositions, developments, discoveries, plans,
customer lists, customers, partners, pricing, business planning, vendors, costs,
pricing, other activities of the Company and its customers, and information
(e.g., customer
or client lists, names, addresses, telephone numbers, identity of contact
persons, and financial information) with respect to individuals and entities who
have entered into, or have been solicited to enter into, relationships with the
Company; and (iii) other non-public, proprietary or confidential information of
the Company, its affiliates or their respective customers or clients
(collectively "Business Information").  The Executive acknowledges and
agrees that all Business Information is and shall remain the sole property of
the Company.

       

      (b) Except as
required by law, the Executive will not, whether during or after the termination
or cessation of his employment hereunder, reveal to any person, association or
company any of the trade secrets or confidential information concerning the
organization, business, or finances of the Company so far as they have come or
may come to his knowledge, except as may be required in the ordinary course of
performing his duties as an employee of the Company or except as may be in the
public domain through no fault of the Executive or as required to be disclosed
by law or court order, and the Executive shall keep secret all matters entrusted
to him and shall not use or attempt to use any such information in any manner
which may injure or cause loss or may be calculated to injure or cause loss
whether directly or indirectly to the Company.

       

      (c) The
Executive acknowledges and agrees that during his employment hereunder he shall
not make, use, or permit to be used any notes, memoranda, drawings,
specifications, programs, data, or other materials of any nature relating to any
matter within the
scope of the business of the Company or concerning any of its dealings or
affairs otherwise than for the benefit of the Company.  The Executive
further acknowledges and agrees that he shall not, after the termination or
cessation of his employment hereunder, use or permit to be used any such notes,
memoranda, drawings, specifications, programs, data, other materials, or
Business Information it being agreed that
any of the foregoing shall be and remain the sole and exclusive property of the
Company and that immediately upon the termination or cessation of his employment
he shall deliver all of the foregoing, and all copies thereof, to the Company,
at its main office.

       

      (d) If at any
time or times during his employment hereunder, the Executive shall (either alone
or with others) make, conceive, discover, reduce to practice, or become
possessed of any invention, modification, discovery, design, development,
improvement, process, formula, data, technique, know-how, secret, or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright or similar statutes or subject to
analogous protection) (herein called "Inventions") that relates to the business
of the Company or any of the products or services being developed, manufactured,
marketed, sold, or otherwise provided by the Company or which may conveniently
be used in relation therewith, or results from tasks assigned to him by the
Company or results from the use of premises or equipment owned, leased, or
contracted for by the Company, such Inventions and the benefits thereof shall
immediately become the sole and absolute property of the Company, and the
Executive shall promptly disclose to the Company (or any persons designated by
it) each such Invention and hereby assign any nights he may have or acquire in
the inventions.  and benefits and/or rights resulting therefrom to the
Company without compensation and shall communicate, without cost or delay, and
without publishing the same, all available information relating thereto (with
all necessary plans and models) to the Company.  The Executive hereby
further represents and acknowledges that any and all such Inventions made,
conceived, discovered, or reduced to practice prior to the date hereof, whether
or not he is the named inventor; are owned solely by the Company, and that he
has no right, title, or interest therein, and he agrees that upon the request of
the Company, and without any compensation to him, he will take such action and
execute such documents as the Company may request to evidence and perfect the
Company's ownership of the such Inventions.

       

      (e) The
Executive will also promptly disclose to the Company, and the Company hereby
agrees to receive all such disclosures in confidence, any other invention,
modification, discovery, design, development, improvement, process, formula,
data, technique, know-how, secret, or intellectual property right whatsoever or
any interest therein (whether or not patentable or registrable under copyright
or similar statutes or subject to analogous protection) made, conceived,
discovered, reduced to practice, or possessed by him (either alone or with
others) at any time or times during his employment for the purpose of
determining whether they constitute Inventions.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      (f) With
respect to all Inventions, the Executive will, at the request and cost of the
Company (including reasonable compensation to the Executive if the request is
made following the termination of his employment), sign, execute, make, and do
all such deeds, documents, acts, and things as the Company and its duly
authorized agents may reasonably require:

       

      (i) to apply
for, obtain, and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights, or other analogous protection in
any country throughout the world and when so obtained or vested to renew and
restore the same; and

       

      (ii) to defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright, or other analogous protection.

       

      (g) In the
event the Company is unable, after reasonable effort, to secure the Executive's
signature on any letters patent, copyright, or other analogous protection
relating to an Invention, whether because of his physical or mental incapacity
or for any other reason whatsoever, the Executive hereby irrevocably designates
and appoints the Company and its duly authorized officers and agents as his
agent and attorney-in-fact, to act for and in his behalf and stead to execute
and file any such application or applications and to do all other lawfully
permitted acts to further the prosecution and issuance of letters patent,
copyright, or other analogous protection thereon with the same legal force and
effect as if executed by him.

       

      
        	
                8.  

              	
                Prohibited
      Activity.

              


      

       

      The
Executive acknowledges that he has and will have access to trade secrets and
other confidential and proprietary information of the business of the Company,
including confidential client lists.  Accordingly, as a condition of
continued employment, the Executive voluntarily enters into the following
covenants to provide the Company with reasonable protection of those
interests.  For purposes of this Section 8, the term "Company" shall
be deemed to include any successor entity to the Company.

       

      (a) Non-Competition: The
Executive covenants and agrees that (1) during the Term of Employment, and (2)
if his employment hereunder is terminated or ended under Section 6(c), 6(f) or
6(g) above, during the period ending twelve (12) months after the Date of
Termination, he shall not in any capacity, without the prior written consent of
the Board, either alone or as an owner, partner, officer, director, trustee,
joint venturer, employee, consultant, agent, independent contractor, lender,
advisor, or shareholder (other than as permitted by Section 8(d) below) of any
person, firm, company, business organization, or other entity, directly or
indirectly:

       

      (i) engage in
any "Competitive Activity." As used herein, "Competitive Activity" means: (1)
conducting or preparing to conduct a business substantially similar to and
competitive with the Business conducted by the Company or its affiliates during
the Executive's employment; or (2) providing or supporting, or preparing to
provide or support, a product or service substantially similar to and
competitive with that being developed, manufactured, marketed, sold, or
otherwise provided by the Company or its affiliates in connection with the
Business;

       

      (ii) interfere
with any business relationship between the Company or its affiliates, and the
customers, suppliers, vendors, partners, consultants, service providers,
advisors, or investors of either; or

       

      (iii) perform
any action, activity, or course of conduct that is substantially detrimental to
the business of the Company or any of its affiliates or business reputation of
the Company or any of its affiliates.

       

      (iv) an
exemption to this non-competition is expressly and specifically granted in
relation to the Executive and a certain patent granted with the United States
Patent office dated October 11, 1994, number 5,355,183 named Sealed Adjustable
Polarized Sunglasses.  Whereas in recognition that the Executive
developed this patent on his own time with his own funds and it does not appear
to compete directly with the companies purpose, the Company disavows any claims
or rights to this patent under this provision and the Company agrees and
acknowledges that it shall have no rights with respect to this patent under
Section 7 f this Agreement..

       

      (b) Non-Solicitation:  The
Executive also covenants and agrees that during the Term of Employment and for a
period of twelve (12) months after the termination or cessation of his
employment for any reason, he shall not in any capacity, without the prior
written consent of the Board, either alone or as an owner, partner, officer,
director, trustee, joint venturer, employee, consultant, agent, independent
contractor, lender, advisor, or as a shareholder (other than as permitted by
Section 8(d) below) of any person, firm, company, business organization, or
other entity, directly or indirectly:

       

      (i) solicit or
contact any Customer of the Company in connection with, or in furtherance of, a
Competitive Activity wherever located; or

       

      (ii) solicit or
attempt to persuade any employee of the Company to terminate his or her
employment with the Company in order to enter into any employment relationship
with, or perform services in any capacity for any other individual or business
entity, whether or not such individual or entity is engaged in a Competitive
Activity.

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      (c) If the
Executive’s employment is terminated or ended under Section 6(e), the period of
the restrictions under this Section 8(a) and 8(b) shall be twenty-four (24)
months.

       

      (d) For
purposes of this Agreement, "Customer" shall mean: (i) any business or client
account in which the Executive has participated or in any way been active prior
to the termination of his employment; (ii) any customer with whom the Executive
had substantial contact during the Term of Employment; (iii) any customer of the
Company with respect to whom the Executive acquired or had access to trade
secrets or other confidential or proprietary information relating to such
customer as a result of his employment, or (iv) all customers of the Company's
Melville, New York office in the twelve (12) months preceding the termination of
the Executive's employment.

       

      (e) Notwithstanding
anything to the contrary contained in this Section 8, the Company hereby agrees
that the foregoing restrictive covenants shall not be deemed breached by the
Executive as a result of the record or beneficial ownership by such Executive of
less than an aggregate of 1% of any class of stock of a corporation engaged,
directly or indirectly, in a Competitive Activity; provided that such stock is
listed on a national securities exchange or is quoted on the NASDAQ National
Market System and that the Executive is not an officer, director, or employee of
any such corporation.

       

      (f) The
Executive agrees that the foregoing restrictions are reasonable and justified in
light of the nature of the Company's nationwide business and customers due to;
(1) the confidential and proprietary information to which he has and will have
exposure and access during the course of his employment by the Company; and (2)
the need for the adequate protection of the business and the goodwill of the
Company.  In the event any such restriction is deemed to be
unreasonable by any court of competent jurisdiction, the Executive agrees to the
reduction of such restriction to such period or scope which such court shall
deem reasonable and enforceable.

       

      (g) Non-Disparagement:
The Executive agrees that, during the Term of Employment and following the
termination or cessation of his employment with the Company for any reason, he
will not make any statements or representations, or otherwise communicate,
directly or indirectly, in writing, orally, or otherwise, or take any action
which may, directly or indirectly, disparage the Company or any of its
affiliates or their respective products, officers, directors, employees,
advisors, representatives, agents, businesses, or
reputations.  Notwithstanding the foregoing, nothing in this Agreement
shall preclude the Executive from making truthful statements that are required
by applicable law or legal process.

       

      
        	
                9.  

              	
                Remedies.

              


      

       

      The
Executive's obligations under Sections 7 and 8 shall survive the termination or
cessation of the Executive's employment for any reason.  The Executive
agrees that any breach or threatened breach of his obligations under Sections 7
or 8 would subject or threaten to subject the Company to immediate, substantial,
and irreparable harm and that the Company shall not have an adequate remedy at
law.  Accordingly, in the event of an actual or threatened breach of
Section 7 or 8 above, the Company shall have, in addition to any and all
remedies available at law, the right to an injunction, specific performance, or
other equitable relief to prevent the violation of the Executive's obligations
hereunder.  The Company and Executive hereby submit to the
jurisdiction of the courts of the State of New York for the purpose of any
actions or proceedings instituted by the Company to obtain such relief and
further agrees that the successful party shall be entitled to an award of costs
and attorneys' fees incurred in any legal action to defend or enforce its
respective rights or obligations under Sections 7 and/or 8 of this
Agreement.

       

      
        	
                10.  

              	
                Withholding.

              


      

       

      The
payment of any amount pursuant to this Agreement shall be subject to applicable
withholding and payroll taxes, and such other taxes or deductions as may be
required under law or as authorized by the Executive.

       

      
        	
                11.  

              	
                Assignability; Binding
      Nature.

              


      

       

      This
Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors, heirs (in the case of the Executive), and assigns.  The
Company shall have the right to assign this Agreement
to its successors and assigns without the Executive's consent.  The
Executive shall not assign any rights or obligations under this Agreement
without the express written consent of the Chairman of the Board.

       

      
        	
                12.  

              	
                Representation.

              


      

       

      The
Company represents and warrants that it is fully authorized and empowered to
enter into this Agreement and that the performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm,
or organization.  The Executive represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder
will not breach or be in conflict with any covenants against competition or
other restrictive covenants, or any other agreement to which the Executive is a
party.

       

      
        	
                13.  

              	
                Entire
      Agreement.

              


      

       

      This
Agreement contains the entire understanding and agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, between the Parties with respect thereto.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      
        	
                14.  

              	
                Amendment or
      Waiver.

              


      

       

      No
provision in this Agreement may be amended unless such amendment is agreed to in
writing and signed by the Executive and the full Board of
Directors.  No waiver by any Party of any breach by another Party of
any condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time.  Any waiver
must be in writing and signed by the Executive and the full Board of
Directors.

       

      
        	
                15.  

              	
                Severability.

              


      

       

      In the
event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.

       

      
        	
                16.  

              	
                Survivorship.

              


      

       

      The
respective rights and obligations of the Parties hereunder shall survive any
termination of the Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.  Without
limiting the generality of the foregoing, the Executive's obligations under
Sections 7 and 8 of this Agreement shall survive the termination or cessation of
his employment regardless of the manner of such termination or cessation and
shall be binding upon his heirs, executors, and administrators.

       

      
        	
                17.  

              	
                Beneficiaries/References.

              


      

       

      The
Executive shall be entitled, to the extent permitted under any applicable law
and under the terms of any applicable plan or program, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death by giving the Company written notice
thereof.  In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate, or
other legal representative.

       

      
        	
                18.  

              	
                Governing
      Law/Jurisdiction.

              


      

       

      This
Agreement shall be governed by and construed and interpreted in accordance with
the laws of the State of New York without reference to principles of conflict or
choice of laws thereof.

       

      
        	
                19.  

              	
                Resolution of
      Disputes/ Arbitration.

              


      

       

      (a) With the
sole exception of any action brought by the Company seeking equitable relief
and/or damages for a claimed violation by the Executive of his obligations under
Sections 7 and S hereof, the Parties agree to use final and binding arbitration
to resolve any controversy, claim, dispute, or question arising out of, relating
to, or in connection with the validity, interpretation, or effect of this
Agreement, or any alleged breaches or violations of it (hereinafter "Arbitrable
Dispute").

       

      (b) The
Arbitration:  The arbitration shall take place before the
American Arbitration Association ("AAA") under its Employment Dispute Resolution
Rules or any superceding rules except as otherwise set forth
below.  The arbitration shall be held in Suffolk County, New York
before an experienced employment arbitrator licensed to practice law in New York
who has been selected in accordance with the applicable Rules.  Such
arbitration shall be mandatory and binding on both Parties.  The
arbitrator may not modify or change this Agreement in any way, or make an award
or impose a remedy that is not available to a court of general jurisdiction
sitting in New York, and the jurisdiction of the arbitrator is limited
accordingly.  The arbitrator shall not be authorized to grant punitive
damages, except where punitive damages are expressly allowed by
statute.

       

      The
arbitrator shall apply New York substantive law, including any applicable
statutes of limitation.  Adequate discovery shall be permitted by the
arbitrator consistent with applicable law and the objectives of
arbitration.  The award of the arbitrator, which shall be in writing
and summarize the basis for the decision, shall be final and binding upon the
Parties (subject only to limited review as required by law) and may be entered
as a judgment in any New York court of competent jurisdiction, and the Parties
hereby consent to the jurisdiction of the courts of the State of New
York.

       

      (c) Fees and
Expenses:  All fees and costs of the arbitration, including the
filing fee, fees and costs of the arbitrator and the arbitration forum, cost of
any record or transcript of the arbitration, and administrative fees, shall be
paid in equal shares by the Company and the Executive, subject to an award of
such costs and fees made by the arbitrator.  Each Party shall pay its
own attorneys' fees, witness expenses, and any other expenses that Party incurs
in connection with the arbitration, except that the arbitrator may award the
successful party its attorneys' fees, costs and expenses.

       

      (d) Exclusive
Remedy:  Arbitration in this manner shall be the exclusive
remedy for any Arbitrable Dispute.  Should either Party attempt to
resolve an Arbitrable Dispute by any method other than arbitration pursuant to
this Section, the responding Party will be entitled to recover from the
initiating Party all damages, expenses, and attorneys' fees incurred as a result
of that breach, except as otherwise prohibited by law.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      
        	
                20.  

              	
                Notices.

              


      

       

      All
notices or communications hereunder shall be in writing and be delivered either
by hand; registered or certified mail, postage prepaid, return receipt
requested; or Federal Express or other nationally recognized method of prepaid
overnight courier delivery, and addressed as follows (or to such other address
as shall be specified by notice to the other Party delivered in accordance with
this Section 20):

       

      If to the
Company:

       

      Mr. Jonathan Spaet

      500 East 77th
Street

      Apartment 1215

      New York, NY 10162

       

      If to the
Executive:

       

      Douglas J. Andrea

      Andrea Electronics
Corporation

      65 Orville Drive

      Suite One

      Bohemia, NY 11716

       

      Notices
delivered by hand shall be deemed received on the date delivered; notices by
registered or certified mail shall be deemed received on the third (3rd) day
after mailing; notices by Federal Express or other overnight courier delivery
shall be deemed received one (1) day after mailing.

       

      
        	
                21.  

              	
                Confidentiality of
      Terms.

              


      

       

      The
Company shall cause its officers, directors, employees, representatives, agents,
and affiliates, and the Executive shall cause his representatives, agents, and
affiliates, to keep confidential the existence and terms of this Agreement,
except as required by applicable law, regulation, or legal process, and only
after adequate notice is given to the non-disclosing party so that it may seek
an appropriate remedy or waive compliance with the terms of this Section
21.

       

      
        	
                22.  

              	
                Headings.

              


      

       

      The
headings of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

       

      
        	
                23.  

              	
                Counterparts.

              


      

       

      This
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument.

       

      
        	
                24.  

              	
                Section 409A of the
      Code.

              


      

       

      (a) This
Agreement is intended to comply with the requirements of Section 409A of the
Internal Revenue Code (the “Code”), and specifically, with the “short-term
deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the
“separation pay exception:” under Treasury Regulation Section
1.409(A)-1(b)(9)(iii), and shall in all respects be administered in accordance
with Section 409A of the Code.  If any payment or benefit hereunder
cannot be provided or made at the time specified herein without incurring
sanctions on Employee under Section 409A of the Code, then such payment or
benefit shall be provided in full at the earliest time thereafter when such
sanctions will not be imposed.  For purposes of Section 409A of the
Code, all payments to be made upon termination of employment under this
Agreement may only be made upon a “separation from service” (within the meaning
of such term under Section 409A of the Code), each payment made under this
Agreement shall be treated as a separate payment, the right to a series of
installment payments under this Agreement (if any) is to be treated as a right
to a series of separate payments, and if a payment is not made by the designated
payment date under this Agreement, the payment shall be made by December 31 of
the calendar year in which the designated date occurs.  To the extent
that any payment provided for hereunder would be subject to additional tax under
Section 409A of the Code, or would cause the administration of this Agreement to
fail to satisfy the requirements of Section 409A of the Code, such provision
shall be deemed null and void to the extent permitted by applicable law, and any
such amount shall be payable in accordance with (b) below.  In no
event shall Employee, directly or indirectly, designate the calendar year of
payment.

       

      (b) If when
separation from service occurs Employee is a “specified employee” within the
meaning of Section 409A of the Code and if the cash severance payment under the
Agreement would be considered deferred compensation under Section 409A of the
Code, and, finally, if an exemption from the 6-month delay requirement of
Section 409A(a)(2)(B)(i) of the Code is not available, the Company will make the
severance payment under this Agreement to Employee in a single lump sum without
interest of the first payroll date that occurs after the date that is six (6)
months after the date on which Employee separate from service.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      (c) If (x)
under the terms of the applicable policy or policies for the insurance or other
benefits specified in this Agreement it is not possible to continue coverage for
Employee and his dependents, or (y) when a separation from service occurs
Employee is a “specified employee” within the meaning of Section 409A of the
Code, and if any of the continued insurance coverage or other benefits specified
in this Agreement would be considered deferred compensation under Section 409A
of the Code, and, finally, if an exemption from the six-month delay requirement
of Section 409A(a)(2)(B)(i) of the Code is not available for that particular
insurance or other benefit, the Company shall pay to Employee in a single lump
sum an amount in cash equal to the present value of the Company’s projected cost
to maintain that particular insurance benefit (and associated income tax
gross-up benefit, if applicable) had Employee’s employment not terminated,
assuming continued coverage for 36 months.  The lump-sum payment shall
be made thirty (30) days after employment termination or, if provision b of this
section applies, on the first payroll date that occurs after the date that is
six (6) months after the date on which Employee separates from
service.

       

      (d) Reference
in this Agreement to Section 409A of the Code include rules, regulations, and
guidance of general application issued by the Department of the Treasury under
Internal Revenue Section 409A.

       

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

       

      
        
          	 
      	
                  ANDREA
      ELECTRONICS CORPORATION

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	 
      	
                  /s/ Jonathan Spaet

                	 
      
	 
      	
                  Jonathan
      Spaet

                
	 
      	
                  Chairman
      of the Compensation Committee of the Board of Directors,
      Andrea

                  Electronics
      Corporation

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                  /s/ Douglas J. Andrdea

                	 
      
	 
      	
                  Douglas
      J. Andrea

                


        

      

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      EXHIBIT
A

       

      SEPARATION
AGREEMENT AND GENERAL RELEASE

       

      SEPARATION
AGREEMENT AND GENERAL RELEASE (the "Agreement") entered into as of the ___ day
of _____, 200_, by and between I, Douglas J. Andrea, and Andrea Electronics
Corporation (the "Company").

       

      Section
1  -   Recitals

       

      My last
day of employment with the Company will be __________ ___, 200_.  I
hereby submit my written resignation from all positions as director or officer
of the Company and its affiliates without requirement of further consideration
and in the form annexed hereto as Exhibit l.

       

      Section
2  -   Benefits

       

      (a) In General: Except as
otherwise provided in this Section, the Company will pay me the amounts or
benefits set forth in this Section within thirty (30) calendar days after I sign
this Agreement, but only if I do not revoke this Agreement, which I may do
within seven (7) calendar days after I sign it.  I acknowledge that
the Company is not otherwise required to pay or provide to me the amounts or
benefits described in Section 2(b) and that these payments are more than the
Company or any of its affiliated or related companies are required to pay me
under the Company's normal policies and procedures.

       

      (b) Cash Payment: In consideration
for my acceptance of the terms of this Agreement, the Company agrees to pay
me:

       

      (i) severance
compensation in the amount of ____________________ dollars ($______.00), less
withholding for taxes and any other deductions the Company is required by law to
make from wage payments to employees, payable in equal amounts over a period of
six (6) months in accordance with the Company's regular payroll practices with
respect to senior executives.  This amount represents six (6) months'
base salary;

       

      (ii) payment in
the amount of _______________________________ dollars ($___________) less withholding
for taxes and other deductions the Company is required to make from wage
payments to employees representing six months of the Executive's most recent
annual and quarterly bonuses payable over six months; and

       

      (iii) payment in
the amount of __________________________ dollars ($_________.00), payable in
equal amounts over a period of six (6) months.  This amount represents
the equivalent of six months of the premium cost for COBRA continuation coverage
for me, and my spouse and dependents who are eligible for COBRA continuation
coverage and, in addition, COBRA coverage for a period of eighteen (18) months
from the expiration of the six month period referred to above.

       

      (c) Compensation and Benefit
Plans: Except as otherwise provided in my employment agreement dated
August 1, 2008 (the "Employment Agreement"), I will cease to be eligible to
participate under any stock option, bonus, incentive compensation, commission,
medical, dental, life insurance, retirement, and other compensation or benefit
plans of the Company following the termination of my employment on , 200, except
as otherwise provided herein.  Thereafter, I will have no rights under
any of those plans, except as follows:

       

      (i) I will
have the right to COBRA continuation coverage as to any company-provided
medical, dental, or vision plan in which I participated which means that I will
be entitled to buy continued health plan coverage under the normal COBRA health
care continuation rules.

       

      (ii) I will
retain my vested benefits in all qualified retirement plans of the Company and
all rights associated with such plans as determined under the official terms of
those plans.

       

      Section
3  -   Complete
Release

       

      (a) In General:  I
irrevocably and unconditionally release all the Claims described in Sections
3(b) and (c) that I may now have against the Released Parties listed in Section
3(d).  However, I am not releasing: (1) my right to enforce this
Agreement; (2) any rights or claims under the Age Discrimination in Employment
Act or other laws that arise after I sign.  this Agreement; (3) my
right, if any, to government-provided unemployment benefits; and (4) any claims
which by law cannot be waived, including the right to file a charge with or
participate in an investigation conducted by certain government agencies;
provided however, that I am waiving my right to any monetary recovery should any
government agency or other person pursue any such claims.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (b) Claims Released: Subject only
to the exceptions just noted, I am releasing all known and unknown claims,
promises, causes of action, or similar rights of any type ("Claims") that I may
have with respect to any Released Party listed in Section 3(d).  These
include, but are not limited to, Claims that in any way relate to: (1) my
Employment Agreement, my employment with the Company, or the termination of that
employment, such as Claims for compensation, deferred Compensation, bonuses,
commissions, lost wages, unused accrued vacation, or sick pay; (2) the design or
administration of any employee benefit program; (3) any rights I may have to
severance or similar benefits or to post-employment health or group insurance
benefits; or (4) any Claims to attorneys' fees or other
indemnities.  I understand that the Claims I am releasing might arise
under many different laws,, including the following:

       

      Anti-discrimination
statutes, such as the Age
Discrimination in Employment Act and Executive Order 11141, which prohibit age
discrimination in employment; Title VII of the Civil Rights Act of 1964, Section
1981 of the Civil Rights Act of 1866, and Executive Order 11246, which prohibit
discrimination based on race, color, national origin, religion, or sex; the
Equal Pay Act, which prohibits paying men and women unequal pay for equal work;
the Americans With Disabilities Act and Sections 503 and 504 of the
Rehabilitation Act of 1973, which prohibit discrimination against the disabled;
and any other federal, state, or local law prohibiting employment discrimination
such as the New York State and City Human Rights Laws.

       

      Federal employment
statutes, such as the WARN Act, which requires that advance notice be
given of certain workforce reductions; the Employee Retirement Income Security
Act of 1974, which, among other things, protects employee benefits; the Fair
Labor Standards Act of 1938, which regulates wage and hour matters; the Family
and Medical Leave Act of 1993, which requires employers to provide leaves of
absence under certain circumstances; and any other federal laws relating to
employment, such as veterans' reemployment rights laws.

       

      Other laws, such as
any federal, state, or local law restricting an employer's right to terminate
employees, or otherwise regulating employment; any federal, state, or local law
enforcing express or implied employment contracts or requiring an employer to
deal with employees fairly or in good faith; any other federal, state, or local
law providing recourse for alleged wrongful discharge, physical or personal
injury, emotional distress, fraud, negligent misrepresentations, defamation, and
similar or related claims.

       

      The laws
referred to in this subsection include statutes, regulations, other
administrative guidance, and common law doctrines.

       

      (c) Unknown Claims:  I
understand that I am releasing Claims that I may not know about.  That
is my knowing and voluntary intent, even though I recognize that someday I might
learn that some or all of the facts I currently believe to be true are untrue
and even though I might then regret having signed this
Agreement.  Nevertheless, I am assuming that risk and I agree that
this Agreement shall remain effective in all respects in any such
case.  I expressly waive all rights I might have under any law that is
intended to protect me from waiving unknown claims.  I understand the
significance of doing so.

       

      (d) Released
Parties:  The Released Parties are the Company, all related
entities, parents, subsidiaries, affiliates, partnerships, or joint ventures,
and, with respect to each of them, their predecessors and successors; and, with
respect to each such entity, all of its past and present employees, officers,
partners, directors, stockholders, owners, representatives, assigns, attorneys,
agents, insurers, employee benefit programs (and the trustees, administrators,
fiduciaries, and insurers of such programs), and any other persons acting by;
through, under, or in concert with any of the persons or entities listed in this
subsection.

       

      Section
4  -   Promises

       

      (a) Employment
Termination:  I agree that my employment with the Company and
its affiliates ended forever on _____________, 200__.

       

      (b) Pursuit of Released
Claims:  I have not filed, initiated, or caused to be filed any
lawsuit, complaint, claim, or charge with respect to any Claim I am releasing in
this Agreement, nor has any lawsuit, complaint,
claim, or charge been initiated or filed on my behalf.  Except as
otherwise prohibited by the Age Discrimination in Employment Act or other
applicable law, I promise: (i) never to file or prosecute a lawsuit, complaint,
claim, or charge based on the Claims released by this Agreement; (ii) to request
any government agency or other body assuming jurisdiction of any such action or
proceeding to withdraw from the matter or dismiss the matter with prejudice; and
(iii) not to accept any monetary relief or recovery from any such action or
proceeding filed on my behalf.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (c) Company Property:  I
have returned to the Company all files, memoranda, documents, records, diaries,
copies of the foregoing, credit cards, keys, and any other property of the
Company or its affiliates in my possession.  I have not taken or
destroyed any Company property, including without limitation any financial data,
records, or proprietary or confidential information.

       

      (d) Taxes:  I am
responsible for paying any taxes on amounts I receive because I signed this
Agreement.  I agree that the Company is to withhold all taxes it
determines it is legally required to withhold.  I further agree not to
make any claim against the Company or any other person based on how the Company
reports amounts paid under this Agreement to tax authorities or if an adverse
determination is made as to the tax treatment of any amounts payable under this
Agreement.  In addition, I understand and agree that the Company has
no duty to try to prevent such an adverse determination.

       

      (e) Ownership of Claims: I have
not assigned or transferred any Claim I am releasing, nor have I purported to do
so.

       

      (f) Age Acknowledgement: I
acknowledge that I was over forty (40) years of age at the time I signed this
Agreement.

       

      (g) Non-admission of
Liability:  I agree not to assert that this Agreement is an
admission of guilt or wrongdoing because the Released Parties do not believe or
admit that any of them has done anything wrong..  I acknowledge and
agree that I have not suffered any discrimination on account of my age and that
my age has never been an adverse factor used against me by the
Company.

       

      (h) No Disparagement or
Harm:  I agree not to make any critical, disparaging, or
derogatory remarks, comments, or statements about any Released Party, including,
but not limited to, the Company's business, policies, practices, decisions,
officers, members, managing directors, directors, or shareholders.  I
will not, directly or indirectly, publish, write, lecture, or otherwise
disseminate disparaging information about any Released Party except in response
to legal process or as otherwise required by law.

       

      (i) Implementation:  I
agree to sign any documents and do anything else that is necessary in the future
to implement this Agreement.

       

      (j) This Agreement to be Kept
Confidential:  I agree not to disclose the terms, amount, or
existence of this Agreement to anyone other than a member of my immediate
family, attorney, or other professional advisor and, even as to such a person,
only if the person agrees to honor this confidentiality
requirement.  This subsection does not prohibit my disclosure of the
terms, amount, or existence of this Agreement to the extent necessary legally to
enforce this Agreement, nor does it prohibit disclosures to the extent otherwise
legally required (but only if I notify the Company of a disclosure obligation or
request within three (3) days after I learn of it and permit the Company to take
all steps it deems to be appropriate to prevent or limit the required
disclosure).  I acknowledge that the Company would be irreparably
harmed if this subsection were violated.

       

      (k) Encouragement of
Claims:  I agree that under no circumstances will I induce,
encourage, or solicit any person or entity to file or pursue any proceeding of
any kind against any person or entity released by me under this
Agreement.  This Agreement does not prohibit me from cooperating with
an investigation conducted by any federal, state, or local government agency or
giving any statement or testimony pursuant to legal process or as otherwise
required by law.

       

      (l) Reasonableness of
Restrictions:  I acknowledge and agree that the restrictions
contained in Sections 8(a) and 8(b) of my Employment Agreement survive the
termination of my employment and are reasonable and justified in light of the
nature of the Company's nationwide business and customers, and in further light
of the confidential information to which I had exposure and access during the
course of my employment by the Company.  I acknowledge and agree
further that the restrictions referred to in Sections 8(a) and 8(b) of the
Employment Agreement are appropriate and that any lesser geographic restriction
would be inadequate because the Company will be injured by virtue of any
solicitation/or servicing of such customers irrespective of where such
solicitation originates or occurs.  I further acknowledge that the
temporal duration of the said restrictions is reasonable in light of the nature
of the Company's trade secrets and confidential information and the difficulty
of my engaging in the restricted activities without, even inadvertently, using
the Company's confidential information, during this period and the time required
for me or servicing to establish a relationship with those
customers.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      (m) Cooperation:  I
agree to cooperate fully, in good faith, and to the best of my ability with the
Company in connection with any and all pending, potential, or future claims,
investigations, or actions
which directly or indirectly relate to any action, event, or activity about
which I may have knowledge in connection with the Company.  Such
cooperation shall include all assistance that the Company, its counsel, or its
representatives may reasonably request, including but not limited to, reviewing
documents, meeting with counsel, providing factual information and material, and
appearing or testifying as a witness; provided, however, that the Company shall
reimburse me for all reasonable expenses incurred by me in fulfilling my
obligations hereunder.  I agree to use my best efforts to assure a
smooth transition of my internal work for the Company.

       

      (n) Consequences of Violating
Promises:  Except as otherwise prohibited by law, I agree to
pay the reasonable attorneys' fees and any damages any Released Party may incur
if any representation I made in this Agreement was false when made.  I
further agree that the Company would be irreparably harmed by any actual or
threatened violation of Sections 4 and 5 that involves the disclosure of the
existence, terms, or amount payable under this Agreement, or disclosure or use
of confidential information or trade secrets, or solicitation of employees or
customers, and that the Company shall have, in addition to any and all remedies
of law, the right to an injunction, specific performance, or other equitable
relief to prevent the violation of my obligations hereunder.

       

      Section
5  -   Confidential
Information

       

      (a) I
acknowledge that during my employment with the Company, I had access to, and
possession of,
trade secrets, confidential business information, and proprietary information of
the Company and its past, present, and potential clients.

       

      (b) By signing
this Agreement, I acknowledge that all confidential and proprietary information
that concerns the operations of, and methods and technology used by, the
Company, including, without limitation, its ideas, strategies, business plans
and methods, financial information, product cost data, proposals, manuals,
procedures and guidelines, programs, software, know-how and specifications,
copyrights, trade secrets, market information, and data, as well as information
(e.g., client
lists, names, addresses, telephone numbers, identity of contact persons, and
financial investment information) with respect to individuals and entities who
have entered into, or who have been solicited to enter into, relationships with
the Company (collectively "Business Information"), is and shall remain the sole
property of the Company.

       

      (c) I agree
that I shall keep confidential all Business Information received directly or
indirectly from the Company.  Except as required by law, I will not
reveal to any person, association or company any of the Business Information
concerning the organization, business, or finances of the Company so far as they
have come or may come in to my knowledge, except as may be in the public domain
through no fault of my own or as required to be disclosed by law or court
order.  I shall keep secret all matters entrusted to me and shall not
use or attempt to use any such information in any manner which may injure or
cause loss or may be calculated to injure or cause loss whether directly or
indirectly to the Company.

       

      (d) The
restrictions in this Section 5 apply to the transmittal of Business Information
by every manner or means of disclosure, transfer, or exchange of information,
whether orally, in writing, face to face, by telephone, by mail, by personal
delivery, by inter or intranet, by telex of facsimile, by electronic mail,
recording, or otherwise.

       

      (e) I
acknowledge that the Company will be irreparably harmed if my obligations under
this Section 5 are not specifically enforced and that the Company would not have
an adequate remedy at  the event of an actual or threatened violation
by me of my obligations.  Therefore, I agree that the Company shall be
entitled to an injunction or specific performance for any violations or breaches
by me, my employees, or my agents without the necessity of the Company showing
that monetary damages would not afford an adequate remedy.

       

      (f) I
represent and warrant that I have not, directly or indirectly, taken any action
prior to the effective date of this Agreement which if taken by me would be a
breach of this Section 5.

       

      Section
6  -   Consideration of
Release

       

      (a) I
acknowledge that, before signing this Agreement, I was given a period of at
least twenty-one (21) calendar days to consider the Agreement, including the
release provision contained herein.  I expressly waive any right I
might have to additional time beyond this consideration period within which to
consider this Agreement.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      (b) I further
acknowledge that: (i) I took advantage of this period to consider this Agreement
before signing it, (ii) I carefully read this Agreement; (iii) I fully
understand it; and (iv) I am entering into it voluntarily.

       

      (c) I further
acknowledge that the Company strongly encouraged me to discuss this Agreement
with an attorney (at my own expense) before signing it and that I did so to the
extent I deemed appropriate.

       

      (d) Acceptance
must be made by delivering a signed copy of this Agreement to Joseph J.
Migliozzi, 11 Toddville Lane, Cortlandt Manor, New York, NY
10567-4314.  For such acceptance to be effective, the signed Agreement
must be received by Mr. Migliozzi or his designee no later than the close of
business on the twenty-first (21st) calendar day after my attorney or I receive
this Agreement.

       

      (e) I
HAVE BEEN ADVISED THAT I MAY REVOKE THIS AGREEMENT WITHIN SEVEN (7) CALENDAR
DAYS OF SIGNING IT.  REVOCATION MUST BE MADE BY DELIVERING A WRITTEN
NOTICE OF REVOCATION TO THE INDIVIDUAL NAMED IN THE PRECEDING
SENTENCE.  FOR SUCH REVOCATION TO BE EFFECTIVE, WRITTEN NOTICE MUST BE
RECEIVED BY DOUGLAS ANDREA NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH
(7TH) CALENDAR DAY AFTER I SIGN THIS AGREEMENT.  IF I REVOKE THIS
AGREEMENT, IT SHALL NOT BE EFFECTIVE OR ENFORCEABLE AND I WILL NOT RECEIVE THE
BENEFITS DESCRIBED IN SECTION 2(b) OF THIS AGREEMENT.

       

      (f) I
understand that this Agreement may be withdrawn if not executed and returned
within the consideration period.

       

      Section
7  -   Miscellaneous

       

      (a) Confidentiality Agreements: I
acknowledge that my Employment Agreement sets forth various restrictions that
survive the termination of my employment with the Company.  This
Agreement does not supersede or in any way affect my obligations under the
Employment Agreement or any other confidentiality agreement or non-disclosure
agreement that I may have signed during my employment with the
Company.

       

      (b) Entire Agreement: This is the
entire agreement between the Company and me.  This Agreement may not
be modified or cancelled in any manner except by a writing signed by both me and
an authorized Company official.  I acknowledge that the Company has
made no representations or promises to me (such as that my former position will
remain vacant), other than those in this Agreement.  If any provision
in this Agreement is found to be unenforceable, all other provisions will remain
fully enforceable.

       

      (c) Successors:  This
Agreement binds my heirs, administrators, representatives, executors,
successors, and assigns, and will inure to the benefit of all Released Parties
and their respective heirs, administrators, representatives, executors,
successors, and assigns.

       

      (d) Interpretation:  This
Agreement shall be construed as a whole according to its fair
meaning.  It shall not be construed strictly for or against any
Released Party or me.  Unless the context indicates otherwise, the
term "or" shall be deemed to include the term "and" and the singular or plural
number shall be deemed to include the other.  Captions are intended
solely for convenience of reference and shall not be used in the interpretation
of this Agreement.  This Agreement shall be governed by the statutes
and common law of the State of New York, excluding its choice of laws
principles.

       

      Section
8  -   Arbitration of
Disputes

       

      (a) Arbitrable Disputes: With the
sole exception of any action brought by the Company seeking equitable relief
and/or damages for a claimed violation by me of my obligations under Sections
4(j), 4(l), and 5 hereof or Sections 7 or 8 of my Employment Agreement, the
Company and I (individually a "Party" and collectively the "Parties") agree to
use final and binding arbitration to resolve any dispute ("Arbitrable Dispute")
between me and any Released Party.  This arbitration agreement applies
to, among others, any controversy, claim, dispute, or question arising out of,
relating to, or in connection with the validity, interpretation, or effect of
this Agreement, or any alleged breaches or violations of it or other statutory
violations or claims.

       

      (b) The
Arbitration:  Arbitration shall take place before the American
Arbitration Association ("AAA") under its Employment Dispute Resolution Rules or
any superceding rules except as otherwise set forth below.  The
arbitration shall be held in Suffolk County, New York before an experienced
employment arbitrator licensed to practice law in New York who has been selected
in accordance with the applicable Rules: Such arbitration shall be mandatory and
binding on both Parties.  The arbitrator may not modify or change this
Agreement in any way, or make an award or impose a remedy that is not available
to a court of general jurisdiction sitting in Suffolk County, and the
jurisdiction of the arbitrator is limited accordingly.  The arbitrator
shall not be authorized to grant punitive damages, except where punitive damages
are expressly allowed by statute.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      The
arbitrator shall apply New York substantive law, including any applicable
statutes of limitation.  Adequate discovery shall be permitted by the
arbitrator consistent with applicable law and the objectives of
arbitration.  The award of the arbitrator, which shall be in writing
and summarize the basis for the decision, shall be final and binding upon the
Parties (subject only to limited review as required by law) and may be entered
as a judgment in any New York court of competent jurisdiction, and the Parties
hereby consent to the jurisdiction of the courts of the State of New
York.

       

      (c) Fees and
Expenses:  All fees and costs of arbitration, including filing
fees, fees and costs of the arbitrator and the arbitration forum, cost of any
record or transcript of the arbitration, and administrative fees, shall be paid
in equal shares by the Company and me, subject to an award of costs and fees
made by the arbitrator.  Each Party shall pay its own attorneys' fees,
witness expenses, and any other expenses that Party incurs in connection with
the arbitration, except that the arbitrator may award the successful party its
attorneys' fees, costs and expenses.

       

      (d) Exclusive
Remedy:  Arbitration in this manner shall be the exclusive
remedy for any Arbitrable Dispute.  Should I or the Company attempt to
resolve an Arbitrable Dispute by any method other than arbitration pursuant to
this Section, the responding Party will be entitled to recover from the
initiating Party all damages, expenses, and attorneys' fees incurred as a result
of that breach, except as otherwise prohibited by law.

       

      
        
          
            	
                    TAKE
      THIS RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS
      BEFORE SIGNING IT: IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN
      CLAIMS.  IF YOU WISH, YOU SHOULD TAKE ADVANTAGE OF THE FULL
      CONSIDERATION PERIOD AFFORDED BY SECTION 6 AND YOU SHOULD CONSULT YOUR
      ATTORNEY.

                  


          

        

        


      

      


       

      Executed
at ________, __________________, this ____ day of _________, _____.

       

       

      
        
          	 
      
	
                  Douglas
      J.
Andrea

                


        
                              


      


      


      


      


      Executed
at ________, __________________, this ____ day of _________, _____.

       

       

      
        
          	 	
                  ANDREA
      ELECTRONICS CORPORATION

                
	 	 
      	 
      
	 	 
      	 
      
	 	 
      	 
      
	 	
                  By:

                	 
      
	 	
                  Name:

                	 
      
	 	
                  Title:

                	 
      


        

      

      
 

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      


      EXHIBIT
1

       

      __________________
___ 200_

       

      [Name]

      [Company
Name]

      [Address]

       

      


       

      Re:           Resignation
as Officer and Director

       

      Dear
________:

       

      I hereby
irrevocably resign as an officer and director of Andrea Electronics Corporation
effective as of the date of this letter.

       

      Very truly
yours,

       

      Douglas J.
Andrea