ANDREA ELECTRONICS CORPORATION
                                  1998 STOCK PLAN

1.   PURPOSES OF THE PLAN. The purposes of this Stock Plan are: to attract and
     retain the best available personnel for positions of substantial
     responsibility, to provide additional incentive to Employees, Directors and
     Consultants, and to promote the success of the Company's business. Options
     granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
     Options, as determined by the Administrator at the time of grant. Stock
     Purchase Rights may also be granted under the Plan.

2.   DEFINITIONS. As used herein, the following definitions shall apply:

     a.     "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

     b. "Applicable Laws" means the requirements relating to the administration
of stock option plans under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or jurisdiction where Options or Stock Purchase Rights are, or will be, granted
under the Plan.

     c.     "Board" means the Board of Directors of the Company.

     d. "Code" means the Internal Revenue Code of 1986, as amended.

     e. "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.

     f.     "Common Stock" means the Common Stock of the Company.

     g.     "Company" means Andrea Electronics Corporation, a New York
corporation.

     h.     "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is
compensated for such services.

     i.     "Director" means a member of the Board.

     j. "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.

     k. "Employee" means any person, including Section 16(b) Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

     l. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     m. "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:

          (i) if the Common Stock is listed on any established stock exchange or
a national market system, including without limitation the Nasdaq National
Market or The Nasdaq Small Cap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day prior to the time of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable;

          (ii) if the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, based on such source as the Administrator deems reliable;

          (iii) in the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Administrator.

     n. "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     o. "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.

     p. "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.

     q. "Section 16(b) Officer" means a person who is an officer of the Company
within the meaning of Section 16(b) of the Exchange Act and the rules and
regulations promulgated thereunder.

     r. "Option" means a stock option granted pursuant to the Plan.

     s. "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

     t. "Option Exchange Program" means a program whereby outstanding options
are surrendered in exchange for options with a lower exercise price.

     u.     "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.

     v. "Optionee" means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.

     w. "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

     x.     "Plan" means this 1997 Stock Plan.

     y. "Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of Stock Purchase Rights under Section 11 below.

     z. "Restricted Stock Purchase Agreement" means a written agreement between
the Company and the Optionee evidencing the terms and restrictions applying to
stock purchased under a Stock Purchase Right. The Restricted Stock Purchase
Agreement is subject to the terms and conditions of the Plan and the Notice of
Grant.

     aa.     "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

     bb.     "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.

     cc.     "Service Provider" means an Employee, Director or Consultant.

     dd.     "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

     ee.     "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

     ff.     "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3.   STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of the
     Plan, the maximum aggregate number of Shares that may be optioned and sold
     under the Plan is 2,000,000 Shares, plus any adjustments as provided for
     herein. If an Option or Stock Purchase Right expires or becomes
     unexercisable without having been exercised in full, or is surrendered
     pursuant to an Option Exchange Program, the unpurchased Shares which were
     subject thereto shall become available for future grant or sale under the
     Plan (unless the Plan has terminated); provided, however, that Shares that
     have actually been issued under the Plan, whether upon exercise of an
     Option or Right, shall not be returned to the Plan and shall not become
     available for future distribution under the Plan, except that if Shares of
     Restricted Stock are repurchased by the Company at their original purchase
     price, such Shares shall become available for future grant under the Plan.

4.   ADMINISTRATION OF THE PLAN.

     a.     PROCEDURE.

          (i) Multiple Administrative Bodies. The Plan may be administered by
different Committees with respect to different groups of Service Providers.

          (ii) Section 162(m). To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more "outside directors" within the
meaning of Section 162(m) of the Code.

          (iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the Plan shall be administered by the
Board or a Committee of two or more "non-employee directors" within the meaning
of Rule 16b-3.

          (iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which Committee shall
be constituted to satisfy Applicable Laws.

     b. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

          (i) to determine the Fair Market Value;

          (ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;

          (iii) to determine the number of shares of Common Stock to be covered
by each Option and Stock Purchase Right granted hereunder;

          (iv) to approve forms of agreement for use under the Plan;

          (v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option or Stock Purchase Right granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;

          (vi) to institute an Option Exchange Program;

          (vii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

          (viii) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to subplans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;

          (ix) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to extend
the post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;

          (x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;

          (xi) to authorize any person to execute on behalf of the Company any
Instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;

          (xii) to make all other determinations deemed necessary or advisable
for administering the Plan.

     c. EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

5.   ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may be
     granted to Service Providers. Incentive Stock Options may be granted only
     to Employees.

6.   LIMITATIONS.

     a. Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.

     b. Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.

     c. The following limitations shall apply to grants of Options:

          (i) No Service Provider shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.

          (ii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 13.

          (iii) If an Option is canceled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction described
in Section 13), the canceled Option will be counted against the limits set forth
in subsections (i) and (ii) above. For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

7.   TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall become
     effective upon its adoption by the Board. It shall continue in effect for a
     term of ten (10) years unless terminated earlier under Section 15 of the
     Plan.

8.   TERM OF OPTION. The term of each Option shall be stated in the Option
     Agreement. In the case of an Incentive Stock Option, the term shall be ten
     (10) years from the date of grant or such shorter term as may be provided
     in the Option Agreement. Moreover, in the case of an Incentive Stock Option
     granted to an Optionee who, at the time the Incentive Stock Option is
     granted, owns stock representing more than ten percent (10%) of the voting
     power of all classes of stock of the Company or any Parent or Subsidiary,
     the term of the Incentive Stock Option shall be five (5) years from the
     date of grant or such shorter term as may be provided in the Option
     Agreement.

9.   OPTION EXERCISE PRICE AND CONSIDERATION.

     a.     EXERCISE PRICE.  The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

          (i) In the case of an Incentive Stock Option:

               (A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant;

               (B) granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.

          (ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

          (iii) Notwithstanding the foregoing, Options may be granted with a per
Share exercise price of less than 100% of Fair Market Value on the date of grant
pursuant to a merger or other corporate transaction.

     b. WAITING PERIOD AND EXERCISE DATES. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions which must be satisfied before the Option may be
exercised.

     c. FORM OF CONSIDERATION. The Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:

          (i) cash;

          (ii) check;

          (iii) promissory note;

          (iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

          (v) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;

          (vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

          (vii) any combination of the foregoing methods of payment; or

          (viii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.

10.  EXERCISE OF OPTIONS.

     a. PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence. An
Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse.

     Until the Shares are issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option.

     The Company shall issue (or cause to be issued) such Shares promptly after
the Option is exercised. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the Shares are issued,
except as provided in Section 13 of the Plan.

     Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

     b. TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an Optionee ceases
to be a Service Provider, other than upon the Optionee's death or Disability,
the Optionee may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent that he or she is entitled to
exercise it on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).

     In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for three (3) months following the Optionee's
termination. If, on the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

     c. DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, the Optionee may exercise his or her
Option at any time within twelve (12) months from the date of termination, but
only to the extent that the Optionee is entitled to exercise it on the date of
termination (and in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). If, on the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

     d. DEATH OF OPTIONEE. If an Optionee dies while a Service Provider, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee would have been entitled to exercise the
Option on the date of death. If, at the time of death, the Optionee is not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. The
Option may be exercised by the executor or administrator of the Optionee's
estate or, if none, by the person(s) entitled to exercise the Option under the
Optionee's will or the laws of descent or distribution. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

     e. BUYOUT PROVISIONS. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

11.  STOCK PURCHASE RIGHTS.

     a. RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it will
offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing or electronically, by means of a Notice of Grant, of the terms,
conditions and restrictions related to the offer, including the number of Shares
that the offeree shall be entitled to purchase, the price to be paid, and the
time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

     b. REPURCHASE OPTION. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
service with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.

     c. OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion.

     d. RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a shareholder, and shall
be a shareholder when his or her purchase is entered upon the records of the
duly authorized transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 13 of the Plan.

12.  NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless determined
     otherwise by the Administrator, an Option or Stock Purchase Right may not
     be sold, pledged, assigned, hypothecated, transferred, or disposed of in
     any manner other than by will or by the laws of descent or distribution and
     may be exercised, during the lifetime of the Optionee, only by the
     Optionee. If the Administrator makes an Option or Stock Purchase Right
     transferable, such Option or Stock Purchase Right shall contain such
     additional terms and conditions as the Administrator deems appropriate.

13.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
     SALE.

     a. CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.

     Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option
or Stock Purchase Right.

     b. DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon
as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Optionee to have the right to
exercise his or her Option until ten (10) days prior to such transaction as to
all of the Optioned Stock covered thereby, including Shares as to which the
Option would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option or Stock Purchase Right will terminate immediately prior to
the consummation of such proposed action.

     c. MERGER OR ASSET SALE. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully vested and exercisable for a period of fifteen
(15) days from the date of such notice, and the Option or Stock Purchase Right
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

14.  DATE OF GRANT. The date of grant of an Option or Stock Purchase Right shall
     be, for all purposes, the date on which the Administrator makes the
     determination granting such Option or Stock Purchase Right, or such other
     later date as is determined by the Administrator. Notice of the
     determination shall be provided to each Optionee within a reasonable time
     after the date of such grant.

15.  AMENDMENT AND TERMINATION OF THE PLAN.

     a.     AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.

     b.     SHAREHOLDER APPROVAL.  The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws.

     c. EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration, suspension
or termination of the Plan shall impair the rights of any Optionee, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.

16.     CONDITIONS UPON ISSUANCE OF SHARES.

     a. LEGAL COMPLIANCE. Shares shall not be issued pursuant to the exercise of
an Option or Stock Purchase Right unless the exercise of such Option or Stock
Purchase Right and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

     b. INVESTMENT REPRESENTATIONS. As a condition to the exercise of an Option
or Stock Purchase Right, the Company may require the person exercising such
Option or Stock Purchase Right to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.

17.  INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
     authority from any regulatory body having jurisdiction, which authority is
     deemed by the Company's counsel to be necessary to the lawful issuance and
     sale of any Shares hereunder, shall relieve the Company of any liability in
     respect of the failure to issue or sell such Shares as to which such
     requisite authority shall not have been obtained.

18.  RESERVATION OF SHARES. The Company, during the term of this Plan, will at
     all times reserve and keep available such number of Shares as shall be
     sufficient to satisfy the requirements of the Plan.

19.  SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
     shareholders of the Company within twelve (12) months after the date the
     Plan is adopted. Such shareholder approval shall be obtained in the manner
     and to the degree required under Applicable Laws.

<PAGE>

                        ANDREA ELECTRONICS CORPORATION
                             STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

1.     NOTICE OF STOCK OPTION GRANT

(Optionee's Name and Address)

     You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

     Grant Number                          _________________________
     Date of Grant                         _________________________
     Vesting Commencement Date             _________________________
     Exercise Price per Share              $________________________
     Total Number of Shares Granted        _________________________
     Total Exercise Price                  $________________________
     Type of Option:                   ___ Incentive Stock Option
                                       ___ Nonstatutory Stock Option

Term/Expiration Date:                      _________________________

Vesting Schedule:

     This Option may be exercised, in whole or in part, in accordance with the
following schedule:

Termination Period:

     This Option may be exercised for _____ (days/months) after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for such longer period as provided in the Plan. In no
event shall this Option be exercised later than the Term/Expiration Date as
provided above.

2.   AGREEMENT

     a. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee") an option (the "Option") to purchase the number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 15(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.

     If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code. However, if this Option is intended to be an Incentive Stock
Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d)
it shall be treated as a Nonstatutory Stock Option ("NSO").

     b.     EXERCISE OF OPTION.

          (i) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

          (ii) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the secretary of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

     No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

     c.     METHOD OF PAYMENT.  Payment of the aggregate Exercise Price shall
be by any of the following, or a combination thereof, at the election of the
Optionee:

          (i) cash;

          (ii) check;

          (iii) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;

          (iv) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or

          (v) with the Administrator's consent, delivery of Optionee's
promissory note (the "Note") in the form attached hereto as Exhibit C, in the
amount of the aggregate Exercise Price of the Exercised Shares together with the
execution and delivery by the Optionee of the Security Agreement attached hereto
as Exhibit B. The Note shall bear interest at the "applicable federal rate"
prescribed under the Code and its regulations at time of purchase, and shall be
secured by a pledge of the Shares purchased by the Note pursuant to the Security
Agreement.

     d. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     e. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

     f. TAX CONSEQUENCES. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

     g.     EXERCISING THE OPTION.

          (i) Nonstatutory Stock Option. The Optionee may incur regular federal
income tax liability upon exercise of a NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.

          (ii) Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.

     h.     DISPOSITION OF SHARES.

          (i) NSO. If the Optionee holds NSO Shares for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes.

          (ii) ISO. If the Optionee holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair
Market Value of the Shares acquired on the date of exercise and the aggregate
Exercise Price, or (B) the difference between the sale price of such Shares and
the aggregate Exercise Price. Any additional gain will be taxed as capital gain,
short-term or long-term depending on the period that the ISO Shares were held.

     i. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Optionee sells
or otherwise disposes of any of the Shares acquired pursuant to an ISO on or
before the later of (i) two years after the grant date, or (ii) one year after
the exercise date, the Optionee shall immediately notify the Company in writing
of such disposition. The Optionee agrees that he or she may be subject to income
tax withholding by the Company on the compensation income recognized from such
early disposition of ISO Shares by payment in cash or out of the current
earnings paid to the Optionee.

     j. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of New York.

     k. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

By your signature and the signature of the Company's representative below, you
and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE:                            ANDREA ELECTRONICS CORPORATION

--------------------------------     ----------------------------------
Signature                            By
                                     Title

--------------------------------
Print Name
Residence Address

<PAGE>

                                    EXHIBIT A
                                 1998 STOCK PLAN
                                 EXERCISE NOTICE

Andrea Electronics Corporation
11-40 45th Road
Long Island City, NY 11101
Attention: Secretary

1.   EXERCISE OF OPTION. Effective as of today, ________________, ____, the
     undersigned ("Purchaser") hereby elects to purchase ______________ shares
     (the "Shares") of the Common Stock of Andrea Electronics Corporation (the
     "Company") under and pursuant to the 1998 Stock Plan (the "Plan") and the
     Stock Option Agreement dated _____________, ____ (the "Option Agreement").
     The purchase price for the Shares shall be $_____________, as required by
     the Option Agreement.

2.   DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
     purchase price for the Shares.

3.   REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
     received, read and understood the Plan and the Option Agreement and agrees
     to abide by and be bound by their terms and conditions.

4.   RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the appropriate
     entry on the books of the Company or of a duly authorized transfer agent of
     the Company) of the Shares, no right to vote or receive dividends or any
     other rights as a shareholder shall exist with respect to the Optioned
     Stock, notwithstanding the exercise of the Option. The Shares so acquired
     shall be issued to the Optionee as soon as practicable after exercise of
     the Option. No adjustment will be made for a dividend or other right for
     which the record date is prior to the date of issuance, except as provided
     in Section 13 of the Plan.

5.   TAX CONSULTATION. Purchaser understands that Purchaser may suffer adverse
     tax consequences as a result of Purchaser's purchase or disposition of the
     Shares. Purchaser represents that Purchaser has consulted with any tax
     consultants Purchaser deems advisable in connection with the purchase or
     disposition of the Shares and that Purchaser is not relying on the Company
     for any tax advice.

6.   ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
     incorporated herein by reference. This Agreement, the Plan and the Option
     Agreement constitute the entire agreement of the parties with respect to
     the subject matter hereof and supersede in their entirety all prior
     undertakings and agreements of the Company and Purchaser with respect to
     the subject matter hereof, and may not be modified adversely to the
     Purchaser's interest except by means of a writing signed by the Company and
     Purchaser. This agreement is governed by the internal substantive laws, but
     not the choice of law rules, of New York.

Submitted by:                           Accepted by:
PURCHASER:                              ANDREA ELECTRONICS CORPORATION:

----------------------------            -------------------------------
Signature                               Name
                                        Title:

----------------------------
Print Name

Address:

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

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----------------------------------------------------------------Date Received