Microsoft Contract No.:  0 113 99

                              PROCUREMENT AGREEMENT

THIS PROCUREMENT AGREEMENT (this "Agreement") is made as of the 13th day of
January, 1999 by and between Microsoft Corporation, a Washington corporation
having its main office and place of business at One Microsoft Way, Redmond, WA
98052-6399 (hereinafter referred to as "MICROSOFT") and Andrea Electronics
Corporation, a New York corporation having its main office and place of business
at 45 Melville Park Road, Melville, NY 11747 (hereinafter referred to as
"ANDREA").

                                    RECITALS

     1. MICROSOFT develops, markets, licenses and supports, among other things,
the speech-enabled Encarta Interactive English Learning software products (the
"Encarta Interactive English Learning Software Products"), which Encarta
Interactive English Learning Software Products will be marketed, distributed and
sold in various stockkeeping units for various markets and in various languages
(collectively, the "Encarta Interactive English Learning SKUs"). MICROSOFT
desires to procure and bundle ANDREA's NC8 microphone headset (each, an "NC8
Headset"; collectively, "NC8 Headsets") with certain Encarta Interactive English
Learning SKUs. Further, MICROSOFT desires to obtain from ANDREA upgrade
brochures (the "Upgrade Brochures") relating to Andrea headsets that are
upgrades from the NC8 Headset and other ANDREA products (the "Andrea Upgrade
Products") for inclusion in certain Encarta Interactive English Learning SKUs.

     2. ANDREA develops, markets and sells, among other products, headsets for
use with speech-enabled personal computer applications software, including,
among others, various models of the NC8 Headset. ANDREA desires to sell NC8
Headsets to MICROSOFT for bundling with Encarta Interactive English Learning
SKUs. Further, ANDREA desires to provide to MICROSOFT and MICROSOFT's designated
agents the Upgrade Brochures for inclusion in certain Encarta Interactive
English Learning SKUs. Further, ANDREA may provide consumer discounts to Encarta
Interactive English Learning SKU users upgrading from NC8 Headsets to ANDREA
Upgrade Products.

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, and subject to the terms and conditions set forth
herein, the parties hereto agree as follows:

1.   DEFINITIONS

     1.1  "Actual Number of Units covered by Purchase Orders" shall have the
          meaning ascribed thereto in Section 3.8.

     1.2  "Additional Promotional Literature" shall have the meaning ascribed
          thereto in Section 2.4.

     1.3  "Andrea Upgrade Products" shall have the meaning ascribed thereto in
          Recital No. 1.

     1.4  "Andrea Names, Marks and Materials" shall have the meaning ascribed
          thereto in Section 2.2.

     1.5  "Andrea IP Rights" shall mean those intellectual property rights,
          including copyrights, patents, trade secrets, trademarks, service
          marks and other proprietary rights owned or otherwise controlled by
          ANDREA and that are specifically embodied in the NC8 Headsets.

     1.6  "Andrea Upgrade Products" shall have the meaning ascribed thereto in
          Recital No. 1.

     1.7 "Claim" shall have the meaning ascribed thereto in Section 8.2(a).

     1.8  "Confidential Information" shall have the meaning ascribed thereto in
          Section 7. 1.

     1.9  "Designated Microsoft Subsidiaries and Third Party Subcontractors"
          shall mean Subsidiaries of Microsoft and other third parties with whom
          MICROSOFT has contracted to manufacture and distribute Encarta
          Interactive English Learning Software Products and which Subsidiaries
          or other third parties MICROSOFT identifies to ANDREA in one or more
          written notices from time to time during the term of this Agreement.

     1.10 "Encarta Interactive English Learning SKU - NC8 Headset Bundles" means
          Encarta Interactive English Learning SKUs into which NC8 Headsets have
          been bundled.

     1.11 "Encarta Interactive English Learning SKUS" shall have the meaning
          ascribed thereto in Recital No. 1.

     1.12 "Encarta Interactive English Learning Software Products" shall have
          the meaning ascribed thereto in Recital No. 1.

     1.13 "FOB" shall have the customary and usual commercial meaning of "Free
          on Board".

     1.14 "Forecast Number of Units covered by Purchase Orders" shall have the
          meaning ascribed thereto in Section 3.8.

     1.15 "Licensed Activities" shall have the meaning ascribed thereto in
          Section 2.2.

     1.16 "Microsoft IP Rights" shall mean those intellectual property rights,
          including copyrights, patents, trade secrets, trademarks, service
          marks and other proprietary rights owned or otherwise controlled by
          MICROSOFT and that are specifically embodied in the Encarta
          Interactive English Learning Software Products and the Encarta

          Interactive English Learning SKUs.

     1.17 "NC8 Headset" shall have the meaning ascribed thereto in Recital No.
          1.

     1.18 "NC8 Headset Documentation" shall have the meaning ascribed thereto in
          Section 2.1.

     1.19 "Product Warranty" shall have the meaning ascribed thereto in Section
          2.3.

     1.20 "Purchase Order" shall have the meaning ascribed thereto in Section
          3.1.

     1.21 "Subsidiary" of any party shall mean any legal entity, more than fifty
          percent (50%) of whose outstanding shares or securities representing
          the right to vote for the election of directors or other managing
          authority are, now or hereafter, owned or controlled, directly or
          indirectly, by that party (but only so long as such conditions exist).

     1.22 "Upgrade Brochures" shall have the meaning ascribed thereto in
          Recital No. 1.

2.  PROCURED PRODUCT

     2.1  Headsets. ANDREA hereby agrees on the terms set forth herein to sell
          the NC8 Headset models specified in Schedule 2.1 to this Agreement,
          together with the related documentation and other materials specified
          in Schedule 2.1 (the "NC8 Headset Documentation"). The parties agree
          that Schedule 2.1 may be revised from time to time during the term of
          this Agreement upon the mutual agreement of the parties.

     2.2  Trade Names, Trade Marks and Copyrighted Materials. ANDREA hereby
          grants to MICROSOFT and Designated Microsoft Subsidiaries and Third
          Party Subcontractors, for whose performance and satisfaction of the
          terms and conditions of this Agreement MICROSOFT shall be liable, a
          non-transferable, non-exclusive, right and license during the term of
          this Agreement to use the trade names, trade marks and copyrighted
          materials of ANDREA identified in Schedule 2.2 attached hereto (the
          "Andrea Names, Marks and Materials") in connection with (i) the
          bundling of NC8 Headsets with the Encarta Interactive English
          Learning SKUs and subsequent marketing, distribution and sale of such
          bundled products and (ii) the inclusion of the Upgrade Brochures in
          Encarta Interactive English Learning SKUs that are subsequently
          marketed, distributed and sold by Microsoft. Such activities as are
          licensed under this Section 2.2 are referred to as the "Licensed
          Activities". Microsoft acknowledges and agrees that the only rights
          transferring from ANDREA to MICROSOFT pursuant to this Agreement are
          the license rights specifically granted in this Section 2.2. Nothing
          in this Agreement is intended to transfer title to any Andrea IP
          Rights or to take away from ANDREA its ownership rights in the Andrea
          IP Rights. 

     2.3  Product Warranty. ANDREA covenants that each and every NC8 Headset
          delivered to MICROSOFT for the purpose of bundling with Encarta
          Interactive English Learning SKUs shall be accompanied by and
          packaged with a copy of the product warranty that ANDREA ordinarily
          and customarily provides to purchasers of NC8 Headsets and set forth
          in Schedule 2.3 attached hereto (such product warranty in such form
          being referred to as the "Product Warranty"). MICROSOFT covenants
          that each and every NC8 Headset bundled with Encarta Interactive
          English Learning SKUs shall be bundled as it was received by
          MICROSOFT in packaging that contains the Product Warranty and any
          other documentation ANDREA elects to include in such packaging.
          MICROSOFT shall incur no liability in the event any Encarta
          Interactive English Learning SKU - NC8 Headset Bundle contains an NC8
          Headset that was not packaged by ANDREA with a Product Warranty or
          other documentation. 

     2.4  Promotional Literature. In addition to the printed materials provided
          by ANDREA to MICROSOFT relating to the NC8 Headsets described in
          Schedule 2.1 and the Upgrade Brochures, ANDREA shall permit MICROSOFT
          and Designated MICROSOFT Subsidiaries and Third Party Subcontractors
          to insert additional promotional literature about the NC8 Headsets
          and ANDREA's other products ("Additional Promotional Literature")
          into the Encarta Interactive English Learning SKU packaging and
          mailings made by MICROSOFT to MICROSOFT customers and prospective
          customers; provided however, that ANDREA shall have the right to
          review any Additional Promotional Literature reasonably prior to the
          publication and distribution thereof, and the right to prohibit the
          use of any Additional Promotional Literature that ANDREA reasonably
          believes could damage the image or customer appeal of ANDREA or any
          of ANDREA's products, or that is misleading about the capabilities,
          use or function of the NC8 Headsets or ANDREA's other products or the
          customer's rights to the NC8 Headsets or ANDREA's other products. 

     2.5  Export. MICROSOFT acknowledges that any export from the United States
          of NC8 Headsets, and all technical data related thereto, is subject
          to regulation under United States laws, including, without
          limitation, the Export Administration Act of 1979 and regulations
          issued thereunder. MICROSOFT agrees to: (a) comply with applicable
          export or asset control laws of the United States and regulations
          applicable to such exports; (b) comply, and take all permissible
          measures to insure its customers' compliance with, the applicable
          provisions of said laws and regulations, including, without
          limitation, record keeping requirements; and (c) refrain from selling
          or otherwise distributing NC8 Headsets, and all technical data
          related thereto, in violation of such laws and regulations.

3.   PURCHASE ORDERS, PURCHASE PRICE, PAYMENT, DELIVERY AND PROCUREMENT

          FORECASTS

     3.1  Minimum Amount. Each purchase order for an NC8 Headset model
          specified in Schedule 2.1 shall be for a minimum of [Confidential
          Treatment Requested] and shall be set forth in writing and delivered 
          to ANDREA by either electronic or hard copy in the form set forth in 
          Schedule 3.1 attached to this Agreement (each a "Purchase Order"; 
          collectively, the "Purchase Orders"). Only procurement personnel of 
          MICROSOFT, its subsidiaries or Microsoft-appointed subcontractors, 
          the identities of whom shall be designated in writing to ANDREA, 
          shall have the authority to issue Purchase Orders under the terms and 
          conditions of this Agreement. MICROSOFT shall have the right to 
          change or cancel any Purchase Order, provided that MICROSOFT notifies 
          ANDREA of the change or cancellation no later than [Confidential 
          Treatment Requested] prior to the order shipment to MICROSOFT by 
          ANDREA, and further provided that if and whenever MICROSOFT changes 
          or cancels any Purchase Order, MICROSOFT shall thereupon pay to 
          ANDREA a stock handling charge equal to [Confidential Treatment 
          Requested] for each NC8 Headset subject to such change or 
          cancellation.  Should MICROSOFT choose to change any Purchase Order 
          line item, MICROSOFT shall be required to submit a new Purchase 
          Order to ANDREA, indicating which line item(s) are changed. Line 
          item changes shall not affect the remaining items on MICROSOFT's 
          Purchase Order. Should MICROSOFT choose to cancel a Purchase Order, 
          MICROSOFT must provide ANDREA with a written cancellation request.

     3.2  Purchase Price. MICROSOFT shall pay to ANDREA for each delivery of
          NC8 Headsets purchased by MICROSOFT under this Agreement the total
          (the "Invoice Total") of: (i) the product of the purchase price set
          forth in Schedule 3.2 for each NC8 Headset, which such purchase price
          is quoted FOB shipping point, multiplied by the number of NC8
          Headsets in such delivery; (ii) any applicable discounts or
          surcharges in accordance with Sections 3.3 or 3.5, as the case may
          be; and (iii) the charges for freight, handling, insurance and taxes
          related to shipment of such NC8 Headsets to Microsoft's designated
          manufacturing facility.

     3.3  Discount. Any Purchase Order for [Confidential Treatment Requested] of
          any NC8 Headset model set forth in Schedule 2.1 shall entitle
          MICROSOFT to a purchase price discount of [Confidential Treatment
          Requested] from the purchase price that would otherwise apply to such
          Purchase Order.

     3.4  [Confidential Treatment Requested].

     3.5  Delivery. All deliveries of NC8 Headsets covered by Purchase Orders
          received by ANDREA from MICROSOFT, its subsidiaries and its
          authorized subcontractors under this Agreement shall be made FOB
          shipping point. Each delivery of the NC8 Headset model covered by a
          Purchase Order shall be made by the [Confidential Treatment Requested]
          after receipt by ANDREA of such Purchase Order, provided that the 
          Actual Number of Units covered by Purchase Orders (as defined in 
          Section 3.8) for such NC8 Headset model within the month such 
          Purchase Order was received is no more than [Confidential Treatment 
          Requested] of the Forecast Number of Units to be covered by Purchase 
          Orders (as defined in Section 3.8) for such NC8 Headset model for 
          such month. For all units purchased in excess of [Confidential 
          Treatment Requested] of such Forecast Number of Units to be covered 
          by Purchase Orders, delivery shall be made by the [Confidential 
          Treatment Requested] after receipt of such Purchase Order.  All 
          deliveries hereunder shall be in bulk form and shall be made to such
          locations as are specified by MICROSOFT or its Designated
          Subsidiaries and Third Party Subcontractors. Such deliveries shall 
          be at MICROSOFT's expense and through such carriers as MICROSOFT or
          its Designated Subsidiaries and Third Party Subcontractors shall
          specify. ANDREA agrees that, if requested by MICROSOFT or its
          Designated Subsidiaries and Third Party Subcontractors, ANDREA will
          arrange for such deliveries through such carriers as MICROSOFT or
          its Designated Subsidiaries and Third Party Subcontractors may
          approve, and the cost of such deliveries shall be charged to
          MICROSOFT in accordance with the schedule of delivery and handling
          charges specified in Schedule 3.2.

     3.6  Title. Title to NC8 Headsets purchased hereunder shall pass to
          MICROSOFT upon delivery FOB shipping point; provided that ANDREA shall
          retain a security interest in such goods and the proceeds therefrom
          until ANDREA receives full payment for such goods, and MICROSOFT
          agrees to execute any and all instruments required to perfect such
          security interest.

     3.7  Payment. Payment of the Invoice Total to ANDREA by MICROSOFT in
          respect of the NC8 Headsets covered by any Purchase Order submitted
          by MICROSOFT, its subsidiaries or its authorized subcontractors under
          this Agreement shall be made in the following manner: [Confidential
          Treatment Requested] . Payment shall be made in U.S. dollars.  Any
          payments made after the due date shall bear interest at a rate of
          [Confidential Treatment Requested] per month. 

     3.8  Procurement Forecasts.

     (a)  MICROSOFT shall provide to ANDREA prior to the end of each calendar
          month during the Term of this Agreement a rolling forecast of the
          quantities of the NC8 Headset models specified in Schedule 2.1 and
          Upgrade Brochures for which Microsoft expects to submit Purchase
          Orders during the three calendar months immediately following such
          calendar month end; provided, however, that MICROSOFT shall have no
          obligation to submit Purchase Orders for such quantities, and shall
          have no obligation to purchase any NC8 Headsets during any calendar
          month period. Further, nothing shall obligate MICROSOFT to combine
          Encarta Interactive English Learning Software Products with NC8
          Headsets and/or Upgrade Brochures, and nothing shall be construed or
          intended to prevent or limit MICROSOFT from making or entering into
          any agreements with other persons, organizations or entities with
          respect to activities and/or products which are like or similar to
          those which are the subject of this Agreement.

     (b)  For each calendar month during the Term of this Agreement,
          beginning with March 1999, a comparison shall be made between the
          actual aggregate number of units covered by Purchase Orders for any
          NC8 Headset model specified in Schedule 2.1 received during such month
          (the "Actual Number of Units covered by Purchase Orders") and the
          aggregate number forecast for that month at the end of the calendar
          month two months prior to the calendar month for which such
          comparison is being made (the "Forecast Number of Units to be covered
          by Purchase Orders"). (For example, the first such comparison to be
          made would be for March 1999. For each NC8 Headset model specified in
          Schedule 2.1, the Actual Number of Units covered by Purchase Orders
          for March 1999 would be the actual aggregate number of units covered
          by Purchase Orders for that NC8 Headset model received during March
          1999, and the Forecast Number of Units to be covered by Purchase
          Orders for March 1999 would be the January 1999 forecast of such
          number.)

     (c)  For each NC8 Headset model specified in Schedule 2.1 for each calendar
          month during the Term of this Agreement, beginning with March 1999,

          (i)  in the event that the Actual Number of Units covered by Purchase
               Orders is at least [Confidential Treatment Requested] of the 
               Forecast Number of Units to be covered by Purchase Orders, 
               MICROSOFT shall be entitled to a [Confidential Treatment
               Requested] discount from the undiscounted purchase price set
               forth in Schedule 3.2 for the units of such NC8 Headset model
               actually purchased for up to [Confidential Treatment Requested]
               of the Forecast Number of Units to be covered by Purchase Orders
               and the purchase price for the units of such NC8 Headset model
               in excess of [Confidential Treatment Requested] of the
               Forecast Number of Units shall be such undiscounted purchase
               price set forth in Schedule 3.2, and

          (ii) in the event that the Actual Number of Units covered by Purchase
               Orders is below [Confidential Treatment Requested] of the
               Forecast Number of Units to be covered by Purchase Orders, ANDREA
               shall be entitled to a [Confidential Treatment Requested]
               surcharge applied against the original purchase price for the
               units of such NC8 Headset model actually purchased.

     3.9  Upgrade Brochures. MICROSOFT shall specify to ANDREA at least
          [Confidential Treatment Requested] in advance the number of Upgrade
          Brochures that it intends to insert in Encarta Interactive English
          Learning SKUs during each month during the term of this Agreement.
          ANDREA shall be responsible for arranging for the printing and
          delivery of the Upgrade Brochures, and MICROSOFT, its subsidiaries
          and/or its appointed subcontractors shall be responsible for
          inserting the Upgrade Brochures in the Encarta Interactive English
          Learning SKUs, subject to the allocation of expenses set forth in
          Section 4.6.

     3.10 Upgrades Commission. In respect of each sale of an ANDREA Upgrade
          Product that ANDREA receives and that is tracked by or for ANDREA to
          an Upgrade Brochure inserted in an Encarta Interactive English
          Learning SKU, ANDREA shall pay to MICROSOFT a sales commission equal
          to [Confidential Treatment Requested] of the purchase price received
          by ANDREA from such sale, which such sales commission shall be paid to
          MICROSOFT [Confidential Treatment Requested] following the end of the
          quarter in which ANDREA receives payment for such Andrea Upgrade
          Product. ANDREA shall maintain effective procedures for the tracking
          of each Upgrade Product sale. ANDREA agrees to keep all proper records
          and books of account and all proper entries therein relating to the
          sale of such Upgrade Products. ANDREA further agrees to provide
          MICROSOFT and/or MICROSOFT's independent auditors at Microsoft's
          request and expense, copies of applicable records in order to verify
          commissions rendered hereunder. If an audit shows that ANDREA has
          underpaid commissions to MICROSOFT by an amount equal to or greater
          than [Confidential Treatment Requested] of the commissions owed,
          ANDREA shall bear all expenses reasonably incurred by MICROSOFT in
          connection with the audit, provided that the amount of such
          commissions owed is at least [Confidential Treatment Requested].

4.    PACKAGING, RETURNS, REPLACEMENTS, WARRANTY SERVICE

     4.1  Responsibility. MICROSOFT shall be responsible, at its expense, for
          packaging (i) into the Encarta Interactive English Learning SKUs, the
          NC8 Headsets (including the NC8 Headset Documentation) purchased by
          MICROSOFT hereunder and (ii) into the Encarta Interactive English
          Learning SKUs, the Upgrade Brochures obtained from ANDREA.

     4.2  Packaging Method. The method of packaging NC8 Headsets into the
          Encarta Interactive English Learning SKUs shall be reviewed by ANDREA
          prior to implementation of such method, and any change to such method
          shall be reviewed by ANDREA prior to implementation of such change.
          ANDREA shall have the right to prohibit the use of any element of
          such packaging or procedure comprising such method if ANDREA
          reasonably believes (i) such element or procedure could damage the
          NC8 Headsets, the image or customer appeal of ANDREA or the NC8
          Headsets', or ANDREA's rights in the technology comprising the NC8
          Headsets or the ANDREA Names, Marks and Materials, or (ii) such
          element is misleading about the capabilities, use or function of the
          NC8 Headsets. 

     4.3  Product Warranty. All Encarta Interactive English Learning SKUs
          containing NC8 Headsets distributed by MICROSOFT shall include all
          written documentation with which NC8 Headsets are individually
          packaged. It shall be ANDREA's responsibility to include a written
          copy of the Product Warranty in such documentation.

     4.4  Not A Sale. Subject to Section 2.4, none of the information or
          promotional materials concerning the NC8 Headsets or Andrea's other
          products created solely by MICROSOFT or Designated MICROSOFT
          Subsidiaries and Third Party Subcontractors shall state or imply that
          the intellectual property of ANDREA comprising the NC8 Headsets or
          Andrea's other products is being sold outright to or by MICROSOFT or
          any manufacturer, distributor, reseller or end-user, but shall in all
          cases refer to the grant of "a license to use" such intellectual
          property. 

     4.5  Intellectual Property Markings. MICROSOFT shall not alter, obscure or
          remove any copyright, trademark, service mark, patent, patent pending,
          or other proprietary rights or legal notice already contained on or in
          the NC8 Headset, any of the NC8 Headset Documentation or the Upgrade
          Brochures, any of which such notices may be revised or replaced from
          time to time.

     4.6  Expenses. 

     (a)  MICROSOFT shall be responsible for the payment of all the costs and
          expenses of [Confidential Treatment Requested].

     (b)  ANDREA shall be responsible for the costs and expenses of
          [Confidential Treatment Requested].

5.    COOPERATION

      The parties shall cooperate with each other to their mutual benefit as
      follows:

     5.1  Web Site Links. Each of MICROSOFT and ANDREA will incorporate in its
          own web site a hyperlink to the other's web site for the purpose of
          promoting Encarta Interactive English Learning SKUs, NC8 Headsets and
          the Andrea Upgrade Products. In furtherance hereof, each party may
          use the other party's logo(s) and/or logo link(s) identified in
          Schedule 5.1 hereto, provided such use is in compliance with such
          other's party's logo guidelines set forth in Schedule 5.1 or any
          other replacement guidelines that such other party may provide to the
          first party from time to time during the Term of this Agreement. The
          MICROSOFT logo link(s) shall link back directly to a MICROSOFT URL
          provided to ANDREA by MICROSOFT. The ANDREA logo link(s) shall link
          back directly to an ANDREA URL provided to MICROSOFT by ANDREA.

     5.2  Joint Promotion. MICROSOFT and ANDREA will promote their Joint
          relationship contemplated hereby and the complementarity of the NC8
          Headsets (and the Andrea Upgrade Products) and the Encarta
          Interactive English Learning SKUs through, by way of example only,
          press releases, trade shows agreed upon by the parties, and in
          relevant collateral material. Each party shall provide the other
          party with reasonably prior opportunity to review and comment on such
          press releases, trade show material and collateral material in
          furtherance of such promotional efforts. 

     5.3  Customer Service; Returns and Product Warranty Service. 

     (a)  MICROSOFT shall be responsible for and shall bear [Confidential
          Treatment Requested]. Each party agrees to make its personnel
          available to the other for reasonable consultation during normal
          business hours and at no charge to the other.

     (b)  ANDREA shall be responsible for and shall bear [Confidential Treatment
          Requested].

     (c)  Replacements for any damaged or malfunctioning NC8 Headsets
          delivered to ANDREA or destroyed in accordance with clause (iii)
          of subsection 5.3(b) shall be received at the locations
          designated by MICROSOFT, its subsidiaries or appointed
          subcontractors, as the case may be, as promptly as commercially
          reasonable but not later than the [Confidential Treatment
          Requested] after ANDREA receives the damaged or malfunctioning
          NC8 Headset in respect of which such replacement is being made
          or, in the case of any NC8 Headset that ANDREA requests to be
          destroyed, ANDREA receives notice that such NC8 Headset is
          damaged or malfunctioning.

     (d)  [Confidential Treatment Requested] shall, at its expense, during
          the term of this Agreement maintain a service and support
          organization for each of the markets set forth in Schedule 5.3(d)
          so that end users in any such market of the NC8 Headsets
          purchased hereunder may contact [Confidential Treatment
          Requested] or its representatives using a local or tollfree
          telephone number in that market for the purpose of obtaining
          service and support in respect of such NC8 Headsets from persons
          who speak the dominant language in that market as set forth in
          Schedule 5.3(d). 

     5.4  Customer Names, Demographics and related Customer Database
          Information. Each party agrees that it will include its own end user
          product registration cards for its respective products contained in
          Encarta Interactive English Learning SKU - NC8 Headset Bundles. Each
          party further agrees that it will share with each other its listing
          of registered end users from the purchase of such product bundles.
          Further, each party agrees that its will not contact any of the other
          party's registered end users without first obtaining the approval of
          the other party. With respect to each party's listing of registered
          end users referred to in the immediately preceding sentence, without
          requiring either party to alter the manner in which it collects
          information from its customers and end users and to the extent that
          it is commercially reasonable, each party shall include in such
          listing the names, demographics and related database information
          obtained and/or maintained by such party in respect of such
          registered end users.

6.   TERM AND TERMINATION

     6.1  Term. This Agreement shall become effective on the date first written
          above and expire January 31, 2000 unless sooner terminated as
          elsewhere provided in this Agreement ("Term of this Agreement");
          provided, however, that upon the mutual written agreement of the
          parties, this Agreement shall be extended automatically for successive
          twelve-month periods.

     6.2  Termination.

     (a)  Either party may terminate this Agreement upon written notice to
          the other party in the event of any default in the payment of any
          money due hereunder or any material breach of this Agreement by 
          either party hereto, if the party receiving such notice (i) fails
          to cure such breach within [Confidential Treatment Requested] after
          notice by the non-breaching party or (ii) in the case of breaches
          which require more than [Confidential Treatment Requested] to effect
          a cure, fails to commence and continue in good faith efforts to cure
          such breach, provided that such cure shall be effected no later than
          [Confidential Treatment Requested] after receipt of such notice of
          such breach. Any such termination shall be effective at the end of
          such [Confidential Treatment Requested] or [Confidential Treatment
          Requested], as the case may be. Waiver of any such default or
          material breach by either party hereto shall not be construed as
          limiting any right of termination for a subsequent default or
          material breach.

     (b)  Either party may terminate this Agreement immediately upon the
          other party's (i) becoming insolvent, (ii) commencing or having
          commenced against it (without dismissal within 60 days), any
          bankruptcy, insolvency, liquidation, reorganization or similar
          proceeding under any U.S. or foreign law, (iii) making an
          assignment for the benefit of its creditors, (iv) admitting in
          writing its inability to satisfy its debts in the ordinary
          course of business, or (v) taking an action resulting in or
          directed to ceasing, on a permanent basis, its business or
          relevant operations. 

     6.3  Effect of Termination. The expiration or termination of this
          Agreement shall in no event relieve Microsoft of its obligation to
          make any payments due and payable to ANDREA in respect of the
          purchase of NC8 Headsets, and shall in no event relieve ANDREA of its
          obligation to deliver NC8 Headset units for which MICROSOFT has
          rendered payment, in whole or in part. Upon the expiration or
          termination of this Agreement, MICROSOFT shall cease all marketing
          and distribution of the Encarta Interactive English Learning - NC8
          Headset Bundles except in such quantities as are sufficient or
          necessary to fill orders received by MICROSOFT for Encarta
          Interactive English Learning SKUs prior to such expiration or
          termination as set forth below in this Section 6.3. Upon the
          expiration or termination of this Agreement, MICROSOFT shall have the
          right for a period of [Confidential Treatment Requested] to continue
          to bundle in Encarta Interactive English Learning SKUs NC8 Headsets
          that are in MICROSOFT's inventory on the date of such termination or
          expiration and sell during such [Confidential Treatment Requested] 
          period such Encarta Interactive English Learning - NC8 Headset
          Bundles.

     6.4  Survival. Sections [Confidential Treatment Requested] shall survive
          any termination or expiration of this Agreement.

7.   CONFIDENTIAL INFORMATION

     7.1  Definition. In the course of the parties working together under this
          Agreement, each party will have occasion to acquire and/or receive
          from the other party and each party will have occasion to disclose to
          the other party information that is not public, that is of critical
          competitive and financial importance to the disclosing party and that
          the disclosing party wishes to maintain in confidence. All of such
          information however acquired by the receiving party, including,
          without limitation, trade secrets, customer lists, business plans,
          marketing plans, non-public financial data, product specifications
          and designs, the existence, nature, substance, progress and results
          of research and development projects, concepts, inventions,
          discoveries, formulations, processes, drawings, documents, records,
          software, correspondence between the parties relating to this
          Agreement, or any other information, whether similar to the specified
          information or not, that is identified as confidential to the
          disclosing party, to any parent, subsidiary or affiliate company
          thereof, or that under the circumstances surrounding the disclosure
          ought to be treated as confidential, is hereinafter referred to as
          such party's "Confidential Information".

     7.2  General Rule regarding Non-disclosure. Accordingly, each party in its
          capacity as a party receiving Confidential Information agrees on
          behalf of itself and its principals, partners, directors, officers,
          employees and advisors (collectively "Employees") that without the
          prior written approval of the disclosing party, it will not:

          (a)  use the disclosing party's Confidential Information for its own
               benefit, except in connection with the carrying out of its
               responsibilities and obligations under this Agreement;

          (b)  use the disclosing party's Confidential Information for anyone
               else's benefit for any reason; or

          (c)  disclose the disclosing party's Confidential Information to
               anyone other than to those Employees with a need to know the
               information in order to carry out the disclosing party's
               responsibilities and obligations under this Agreement;

     7.3  Exceptions. The obligations of confidentiality contained in Section
          7.2 will not apply to information disclosed by a party (the
          "disclosing party") to the other party (the "receiving party") to the
          extent that it can be established by the receiving party by competent
          proof that such information:

          (a)  was already known to the receiving party, other than under an
               obligation of confidentiality, at the time of disclosure;

          (b)  was generally available to the public or otherwise part of the
               public domain at the time of its disclosure to the receiving
               party (provided, however, that a combination of features
               individually in the public domain shall not fall within this
               exception unless the fact of such combination is also in the
               public domain);

          (c)  became generally available to the public or otherwise part of the
               public domain after its disclosure and other than through any act
               or omission of the receiving party in breach of this Agreement;

          (d)  was disclosed to the receiving party, other than under an
               obligation of confidentiality, by a third party who had no
               obligation to the disclosing party not to disclose such
               information to others;

          (e)  is authorized for release in writing by the disclosing party;

          (f)  is developed by such party completely independently of any such
               received confidential information; or

          (g)  that is required to be disclosed pursuant to applicable law, a
               court order, a judicial proceeding, or the enforcement hereof,
               provided that the disclosing party is provided with reasonable
               prior written notice so that such party may contest such
               disclosure.

     7.4  Return of Confidential Information. Upon the request of a party, the
          other party will return any of the requesting party's Confidential
          Information that is in tangible form and any physical manifestations
          of such Confidential Information, or will certify destruction of the
          same.

     7.5  Employees. The receiving party shall take all reasonable steps
          necessary to ensure that its Employees are bound by restrictions
          regarding the use and disclosure of the disclosing party's
          Confidential Information similar to those contained herein.

     7.6  Injunctive Relief. Each party understands, acknowledges and agrees
          that Confidential Information is of great competitive as well as
          monetary value and that, therefore, without waiving any other rights
          or remedies, each party shall have the right to bring an action to
          enjoin any unauthorized disclosure or use of its own Confidential
          Information by the other party, it being agreed that a suit for
          monetary damages alone would be an inadequate remedy. This section
          shall survive termination of this Agreement for a period of
          [Confidential Treatment Requested].

8.    LIMITATION OF LIABILITY AND INDEMNITY FOR INFRINGEMENT

     8.1  Limited Warranty. ANDREA warrants the NC8 Headsets to end users as
          provided in the written Product Warranty accompanying the NCS
          Headsets. All replacement copies are delivered subject to the term(s)
          of said Product Warranty. SUCH WARRANTIES MAY BE ASSERTED BY END
          USERS ONLY, AND NOT BY MICROSOFT, ITS CUSTOMERS OR ANY OTHER PERSONS
          OR ENTITIES OTHER THAN END USERS. ANDREA further warrants to
          MICROSOFT that the NC8 Headsets furnished hereunder will, at the time
          of delivery, confirm to the written Product Warranty accompanying
          such NC8 Headsets. THIS WARRANTY MAY BE ASSERTED BY MICROSOFT ONLY,
          AND NOT BY MICROSOFT'S CUSTOMERS OR ANY OTHER THIRD PARTY.

     8.2  No Other Warranties. EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH PARTY
          HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND OR
          NATURE, WHETHER EXPRESS OR IMPLIED, RELATING TO THE ANDREA IP RIGHTS,
          THE NC8 HEADSETS, THE MICROSOFT IP RIGHTS, THE ENCARTA INTERACTIVE
          ENGLISH LEARNING SOFTWARE PRODUCTS AND THE ENCARTA INTERACTIVE
          ENGLISH LEARNING SKUS. EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH
          PARTY FURTHER HEREBY EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED
          WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR
          THAT THE PRACTICE OF THE ANDREA IP RIGHTS, THE MICROSOFT IP RIGHTS OR
          THE MANUFACTURE, USE OR SALE OF THE NC8 HEADSETS, THE ENCARTA
          INTERACTIVE ENGLISH LEARNING SOFTWARE PRODUCTS AND ENCARTA
          INTERACTIVE ENGLISH LEARNING SKUS WILL NOT INFRINGE ANY PATENT,
          COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OF THIRD PARTIES. Nothing
          contained in this Agreement shall be construed as either a warranty
          or representation by either party as to the validity or scope of the
          Andrea IP Rights or the Microsoft IP Rights. Neither party assumes
          any liability in respect of any infringement of any patent or other
          right of third parties due to the activities of the other party under
          this Agreement.

     8.3  ANDREA Indemnity.

          (a)  ANDREA agrees to indemnify and hold MICROSOFT harmless from, and
               defend MICROSOFT against, any loss, cost, damage, or expense and
               any claims therefor (including reasonable attorney's fees and
               expenses) (each a "Claim") suffered by MICROSOFT that arise from
               the infringement or the alleged infringement by ANDREA
               trademarks or by the NC8 Headsets of any patent rights,
               copyrights or other intellectual property rights of a third
               party, including any claim of misappropriation of trade secrets,
               in any country that is a signatory to the Berne Convention.

          (b)  ANDREA SHALL HAVE NO LIABILITY OR OBLIGATION HEREUNDER TO
               MICROSOFT WITH RESPECT TO ANY CLAIM THAT RESULTS FROM OR IS BASED
               ON (i) ANY IMPROVEMENTS, UPDATES, MODIFICATIONS OR OTHER CHANGES
               TO THE NC8 HEADSETS AFTER DELIVERY TO MICROSOFT THAT ARE NOT MADE
               BY ANDREA; (ii) IMPROPER USE OF THE NC8 HEADSET; OR (iii) END
               USER ERROR.

          (c)  ANDREA SHALL HAVE NO LIABILITY OR OBLIGATION TO MICROSOFT WHERE
               MICROSOFT'S USE OF THE NC8 HEADSETS IS INCIDENT TO AN
               INFRINGEMENT NOT RESULTING FROM THE NC8 HEADSETS.

          (d)  IF ANY NC8 HEADSETS BECOME, OR IN ANDREA'S OPINION IS LIKELY TO
               BECOME, THE SUBJECT OF A CLAIM, ANDREA AT ITS OWN OPTION AND
               EXPENSE SHALL EITHER (i) PROCURE FOR MICROSOFT AND/OR MICROSOFT
               CUSTOMERS THAT HAVE OBTAINED NC8 HEADSETS FROM MICROSOFT IN
               ENCARTA INTERACTIVE ENGLISH LEARNING SKUs THE RIGHT TO CONTINUE
               USING SUCH NC8 HEADSETS; (ii) REPLACE OR MODIFY THE NC8 HEADSETS
               SO THAT THEY BECOME NON-INFRINGING; OR (iii) REFUND TO MICROSOFT
               THE PURCHASE PRICE FOR THE NC8 HEADSETS PAID TO ANDREA TO DATE.


     8.4  MICROSOFT Indemnity.  MICROSOFT agrees to indemnify and hold ANDREA
          harmless from, and defend ANDREA against, any loss, cost, damage, or
          expense and any claims therefor (including reasonable attorney's fees
          and expenses) suffered by ANDREA that arise from the publication,
          marketing, distribution and/or sale by MICROSOFT of the Encarta
          Interactive English Learning Software Products or the stockkeeping
          units containing such Encarta Interactive English Learning Software
          Products that are based on (i) alleged infringement by the Encarta
          Interactive English Learning Software Products or the stockkeeping
          units containing such Encarta Interactive English Learning Software
          Products of any patent rights, copyrights or other intellectual
          property rights of a third party in any country that is a signatory
          to the Berne Convention; or (ii) arising out of the illegal
          exportation by MICROSOFT or any authorized agent of MICROSOFT of any
          Encarta Interactive English Learning Software Product, Encarta
          Interactive English Learning SKU or NC8 Headset.

9.   OTHER INDEMNITY MATTERS

     9.1  NEITHER PARTY SHALL BE LIABLE OR OBLIGATED IN ANY MANNER UNDER THIS
          AGREEMENT TO THE OTHER FOR ANY LOST PROFITS, SPECIAL, INCIDENTAL,
          CONSEQUENTIAL OR PUNITIVE DAMAGES EVEN IF INFORMED OF THE POSSIBILITY
          THEREOF IN ADVANCE.

     9.2  Each party shall give the other party prompt written notice of any
          threat, warning or notice of any Claim of which such party has
          knowledge or has reason to have such knowledge and for which indemnity
          is provided hereunder by a party.

     9.3  If any action shall be threatened or brought against either party
          (the "Claimant") in respect to which indemnity may be sought from the
          other party (the "Non-Claiming Party") pursuant to the provisions of
          this Agreement, in order to be entitled to the indemnity hereunder,
          the Claimant shall promptly notify the Non-Claiming Party in writing,
          specifying the nature of the action and the total monetary amount
          sought or other such relief as is sought therein. The Claimant shall
          cooperate with the Non-Claiming Party at the Non-Claiming Party's
          expense in all reasonable respects in connection with the defense of
          any such threatened or actual action. The Non-Claiming Party may,
          upon written notice thereof to Claimant, undertake to conduct all
          proceedings or negotiations in connection therewith, assume the
          defense thereof, and if it so undertakes, it shall also undertake all
          other required steps or proceedings to settle or defend any such
          action; including the employment of counsel which shall be reasonably
          satisfactory to Claimant, and payment of all expenses; provided,
          however, that the Non-Claiming Party shall not, without the
          Claimant's prior written consent, settle, compromise or consent to
          the entry of any Judgment in any such action (whether or not the
          Claimant is an actual or potential party to such action), unless such
          settlement, compromise or consent (i) includes an unconditional
          release of the Claimant from all liability arising out of such action
          and (ii) does not include a statement as to or an admission of fault,
          culpability or failure to act by or on behalf of the Claimant.
          Claimant, at its own expense, shall have the right to employ separate
          counsel and participate in the defense thereof. The Non-Claiming Party
          shall reimburse Claimant upon demand for any payments made or loss
          suffered by it at any time after the date hereof, based upon (i) the
          final judgment of any court of competent jurisdiction, or (ii)
          pursuant to a bona fide compromise or settlement of claims, demands,
          or actions as agreed to by the Non-Claiming Party, in respect to any
          damages to which the foregoing relates.

10.  NOTICES

     All notices and other communications hereunder will be in writing and will
be deemed given if delivered personally or by facsimile transmission (receipt
verified), telexed, or sent by express courier service, to the parties at the
following addresses (or at such other address for a party as will be specified
by like notice; provided, that notices of a change of address will be effective
only upon receipt thereof):

         IF TO MICROSOFT AT:

         Microsoft Corporation
         One Microsoft Way
         Redmond, Washington 98052-6399

     One copy marked "Attention: [Confidential Treatment Requested]; and a
second copy marked "Attention: [Confidential Treatment Requested] 

         IF TO ANDREA AT:

         Andrea Electronics Corporation
         45 Melville Park Road

         Melville, NY 11747

     One copy marked "Attention: [Confidential Treatment Requested]; and a
second copy marked "Attention: [Confidential Treatment Requested].

11.  MISCELLANEOUS

     11.1 Entire Agreement; Amendments; Counterparts. This Agreement together
          with the schedules attached hereto contains the entire understanding
          of the parties on the subject matter hereof and no representation,
          affirmation of fact, course of prior dealings, promise or condition in
          connection herewith or usage of the trade not expressly incorporated
          herein shall be binding on the parties. This Agreement together with
          the schedules attached hereto shall not be amended except by written
          agreement of the parties signed by each of them; shall be binding
          upon, and inure to the benefit of, the parties and their successors,
          representatives, administrators and permitted assigns; and may be
          executed in one or more counterparts each of which shall be deemed an
          original hereof, but all of which shall constitute but one and the
          same agreement.

     11.2 Nonassignment. Except as provided in this Section 11.2, the rights and
          licenses granted herein are nonassignable. Any attempted assignment of
          the rights or delegation of the obligations under this Agreement shall
          be void without the prior written consent of the nonassigning or
          nondelegating party (which may be withheld in the sole discretion of
          such party), except in connection with the sale of all or
          substantially all of a party's assets (by merger or otherwise). Each
          party may without such prior written consent assign or delegate to one
          or more of its wholly-owned subsidiaries any or all of its respective
          rights or obligations hereunder so long as such party remains
          primarily liable for the obligations to the other party set forth
          herein.

     11.3 Construction.

          (a)  The words "herein," "hereof," "hereunder," "hereby," "herewith"
               and words of similar import when used in this Agreement shall be
               construed to refer to this Agreement as a whole. The word
               "including" shall mean "including, but not limited to," any
               enumerated items.

          (b)  Each party and its counsel has reviewed this Agreement.
               Accordingly, the normal rule of construction that any ambiguities
               and uncertainties are to be resolved against the party preparing
               an agreement will not be employed in the interpretation of this
               Agreement; rather the Agreement shall be construed as if all
               parties had jointly prepared it.

     11.4 Waivers. A party's failure at any time to require the other party's
          performance of any obligation under this Agreement shall not affect
          such party's right to require subsequent performance of that
          obligation. Any waiver of any breach of any provision of this
          Agreement shall not be construed as a waiver of any continuing or
          succeeding breach of such provision, waiver or modification of the
          provision itself or a waiver or any modification of any right under
          this Agreement.

     11.5 Severability. Whenever possible, each provision of the Agreement will
          be interpreted in such manner as to be effective and valid under
          applicable law, but if any provision of the Agreement is held to be
          prohibited by or invalid under applicable law, such provision will be
          ineffective only to the extent of such prohibition or invalidity,
          without invalidating the remainder of the Agreement.

     11.6 Force Majeure. Neither ANDREA nor MICROSOFT shall be in default or
          liable for any delay or failure of compliance with this Agreement due
          to an act of nature, public enemy, government action, freight embargo,
          or strike beyond the control of the defaulting party and the
          defaulting party shall provide the non-defaulting party immediate
          notice of any such anticipated delay or failure of compliance;
          provided, however, that any such act shall not relieve the defaulting
          party's obligations hereunder and such party hereby agrees to perform
          its obligations as soon as practicable after the conditions causing
          such delay or failure have subsided. In the event that such condition
          persists for a period of [Confidential Treatment Requested], either
          party may terminate this Agreement without liability to the other
          except for such obligations as have already accrued under this
          Agreement prior to such termination.

     11.7 Headings. The headings to sections and subsections of this Agreement
          are to facilitate reference only and do not form a part of this
          Agreement, and shall not in any way affect the interpretation hereof.

     11.8 Governing Law; Jurisdiction. Any and all disputes, controversies or
          claims arising from or relating to the terms, conditions and/or
          provisions of this Agreement, including, without limitation, any and
          all such disputes, controversies or claims involving the
          interpretation and construction of this Agreement, shall be resolved
          by reference to and in accordance with the laws of the State of
          Washington as applied to contracts made and to be performed entirely
          within the State of Washington.

<PAGE>

     IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first above
written.

<TABLE>
<CAPTION>
MICROSOFT CORPORATION                        ANDREA ELECTRONICS CORPORATION

<S>                                          <C>
By: [Confidential Treatment Requested]       By: [Confidential Treatment Requested] 
   Name:[Confidential Treatment Requested]      Name:[Confidential Treatment Requested] 
   Title:[Confidential Treatment Requested]     Title:[Confidential Treatment Requested] 
</TABLE>

<PAGE>

SCHEDULE 2.1
                              ANDREA NC8 HEADSETS

   Model No.             Product Description                Encarta Interactive
                                                          English Learning SKU

     [Confidential Treatment Requested]

SCHEDULE 2.2

                       ANDREA NAMES, MARKS AND MATERIALS

     [Confidential Treatment Requested]

SCHEDULE 2.3

                FORM OF PRODUCT WARRANTY FOR ANDREA NC8 HEADSETS

                       (See attached Consumer Guarantee)

SCHEDULE 3.1
                             FORM OF PURCHASE ORDER

     The form of Purchase Order shall include the following items: 1) the
Purchase Order number, 2) the Purchase Order date, 3) the part
number/description, 4) the quantity and unit price, 5) the extended price of the
Purchase Order, 6) the "ship to" address, 7) the "bill to" address, 8) the
anticipated Delivery date, 9) whether MICROSOFT chooses to have ANDREA manage
shipping and handling services for the products covered by the Purchase Order,
and 10) the appropriate contact person.

<PAGE>

SCHEDULE 3.2
                                PRICING SCHEDULE

Product                Volume                Price per Unit       Leadtime
NC8 Headset            [Confidential Treatment Requested] 
NC8 Headset            [Confidential Treatment Requested] 

     In the event MICROSOFT chooses ANDREA to manage shipping and handling
services, the prices above will be increased to include actual freight,
applicable tariffs and handling charges currently estimated as follows: (such
estimates are subject to changes in actual freight and tariff costs and,
accordingly, these estimates may increase or decrease from time to time)

<TABLE>
<CAPTION>

Destination             Method                Cost per Unit          Shipping Leadtime

--------------------------------------------------------------------------------------
<S>                     <C>                   <C>                    <C>    

[Confidential Treatment Requested] 

</TABLE>

SCHEDULE 5.3(D)

LIST OF MARKETS IN WHICH LOCAL OR TOLLFREE SERVICE IN
DOMINANT LANGUAGE WILL BE PROVIDED

[Confidential Treatment Requested] 

<PAGE>

                                  SCHEDULE 5.1

                            USING MICROSOFT LOGO(S)

1.       MICROSOFT LOGO(S):

2.       USAGE GUIDELINES:

     The following guidelines apply whenever ANDREA places a copy of the
MICROSOFT Logo(s) on ANDREA's web site.

1.   Except as Microsoft may authorize elsewhere, ANDREA may use only the
     MICROSOFT Logo(s) in accordance with the Agreement and guidelines set forth
     below. By signing the Agreement, ANDREA agrees to be bound by these
     Guidelines.

2.   ANDREA may only use the Microsoft Logo on ANDREA's web site located at
     http://________________, and not in any other manner. It must always be an
     active link to MICROSOFT's web site located at http://________________ or
     other URL(S) as directed by MICROSOFT.

3.   The MICROSOFT Logo(s) may be used only on ANDREA's web site as set forth in
     the Agreement. ANDREA's web site title must appear at least as prominent as
     the MICROSOFT Logo(s). ANDREA may not display the MICROSOFT Logo(s) in any
     manner that implies sponsorship, endorsement, or license by MICROSOFT.

4.   The MICROSOFT Logo(s) must appear by Itself, with a minimum spacing (the
     height of the MICROSOFT Logo) between each side of the MICROSOFT Logo and
     other graphic or textual elements on ANDREA's web site. The MICROSOFT
     Logo(s) may not be used as a feature or design element of any other logo.

5.   ANDREA may not alter the MICROSOFT Logo(s) in any manner, including size,
     proportions, colors, elements, etc., or animate, morph or otherwise distort
     its perspective or two-dimensional appearance.

6.   ANDREA may not use the MICROSOFT Logos on any site that disparages
     MICROSOFT or its products or, services, infringes any MICROSOFT
     intellectual property or other rights, or violates any state, federal or
     international law.

7.   These Guidelines do not grant a license or any other right in MICROSOFT's
     logos or trademarks. MICROSOFT reserves the right in its sole discretion to
     terminate or modify permission to use the MICROSOFT Logo(s) at any time.
     MICROSOFT reserves the right to take action against any use that does not
     conform to these policies, infringes any MICROSOFT intellectual property or
     other right, or violates other applicable law.

8.   MICROSOFT DISCLAIMS ANY WARRANTIES THAT MAT BE EXPRESS OR IMPLIED BY LAW
     REGARDING THE LOGO, INCLUDING WARRANTIES AGAINST INFRINGEMENT.

<PAGE>

                                  SCHEDULE 5.2

                              USING ANDREA LOGO(S)

1.   ANDREA LOGO(S):

2.   USAGE GUIDELINES:

     The following guidelines apply whenever MICROSOFT places a copy of the
     ANDREA Logo(s) on MICROSOFT's web site.

1.   Except as Andrea may authorize elsewhere, MICROSOFT may use only the ANDREA
     Logo(s) in accordance with the Agreement and guidelines set forth below. By
     signing the Agreement, MICROSOFT agrees to be bound by these Guidelines.

2.   MICROSOFT may only use the ANDREA Logo on MICROSOFT's web site located at
     http://________________, and not in any other manner. It must always be an
     active link to ANDREA's web site located at http://________________ or
     other URL(S) as directed by ANDREA.

3.   The ANDREA Logo(s) may be used only on MICROSOFT's web site as set forth in
     the Agreement. MICROSOFT's web site title must appear at least as prominent
     as the ANDREA Logo(s). MICROSOFT may not display the ANDREA Logo(s) in any
     manner that implies sponsorship, endorsement, or license by ANDREA.

4.   The ANDREA Logo(s) must appear by itself, with a minimum spacing (the
     height of the ANDREA Logo) between each side of the ANDREA Logo and other
     graphic or textual elements on MICROSOFT's web site. The ANDREA Logo(s) may
     not be used as a feature or design element of any other logo.

5.   MICROSOFT may not alter the ANDREA Logo(s) in any manner, including size,
     proportions, colors, elements, etc., or animate, morph or otherwise distort
     its perspective or two-dimensional appearance.

6.   MICROSOFT may not use the ANDREA Logos on any site that disparages ANDREA
     or its products or, services, infringes any ANDREA intellectual property or
     other rights, or violates any state, federal or international law.

7.   These Guidelines do not grant a license or any other right in ANDREA's
     logos or trademarks. ANDREA reserves the right in its sole discretion to
     terminate or modify permission to use the ANDREA Logo(s) at any time.
     ANDREA reserves the right to take action against any use that does not
     conform to these policies, infringes any ANDREA intellectual property or
     other right, or violates other applicable law.

8.   ANDREA DISCLAIMS ANY WARRANTIES THAT MAT BE EXPRESS OR IMPLIED BY LAW
     REGARDING THE LOGO, INCLUDING WARRANTIES AGAINST INFRINGEMENT.

<PAGE>

CONSUMER GUARANTEE               Dear Customer:

                                 Thank you for buying this product from Andrea

                  ANDREA         PURCHASER  ________________________________
ELECTRONICS CORPORATION

                                 MODEL NO.  ________________________________

A LIST OF AUTHORIZED SERVICE     PRODUCT NO.  ________________________________
PROVIDERS IS AVAILABLE FROM:                 

                                 DATE OF PURCHASE  ____________________________

Andrea Electronics Corporation
11-40 45th Road                  PURCHASED FROM  ______________________________
Long Island City, NY  11101                  

                                 ADDRESS  ________________________________

STATEMENT OF LIMITED WARRANTY

     The warranties provided by Andrea Electronics Corporation in this Statement
of Limited Warranty apply only to products you originally purchase for your use,
and not for resale, from Andrea Electronics or an Andrea Electronics authorized
reseller. The term "product" means an Andrea Electronics Corporation product,
its features, conversions, upgrades, elements, or accessories, or any
combination of them. Products are subject to these terms only if purchased in
the United States or Puerto Rico, or Canada, and located in the country of
purchase. If you have any questions, contact Andrea Electronics Corporation or
your reseller.

     Les conditions de la garantie qui s'appliquent dans le pays ou le produit a
ete achete sont disponibles aupres d'Andrea Electronics ou votre detaillant.

     Die Garantiebedingungen, die in dem Land gelten, in welchem das Gerat
gekauft wird. Sind von Andrea Electronics oder lhrem Handler erhaltlich.

     Le condizioni di garanzia in vigore nel paese ove e stato acquistato il
prodotto sono disposibili presso l'Andrea Electronics o il rivenditore.

     Podra obtener los terminos y las condiciones sobre las garantia aplicable
en el pais de compara de Andrea Electronics o de su concessionario local.

     IN THE EVENT THAT GUARANTEE SERVICE IS REQUIRED FOR THE ANDREA ELECTRONICS
PRODUCT COVERED BY THIS GUARANTEE, PLEASE RETURN IT TO THE RETAILER AUTHORIZED
SERVICE STATION.

YOUR GUARANTEE

     By this Consumer Guarantee, Andrea Electronics Corporation guarantees this
product to be free of defects in materials and workmanship for a period of one
(1) year (the "Guarantee Period") from and after the time of its original
purchase or the time it was taken on hire purchase terms by the consumer from
the retailer.

     Subject to the conditions explained below, if during the Guarantee Period
the product proves to be defective due to improper materials or workmanship,
Andrea Electronics' Retailer Authorized Service Stations or Authorized Servicing
Dealers will without charge for labor or parts repair or, at the discretion of
the distributor, replace this product or its defective parts. To contact an
Andrea Electronics customer service representative from 8:00 a.m. to 8:00 p.m.
EST, call (800) 707-5779 or your local Andrea Electronics reseller.

CONDITIONS

     1. The guarantee will be honored only if this Consumer Guarantee is
     presented together with the original invoice/cash ticket issued to the
     consumer by the retailer and if this Consumer Guarantee Card states the
     following information: (a) the purchaser's name, (b) the retailer's name
     and address, (c) the model name and product number of the purchased
     product, and (d) the date or purchase of the product. If this information
     has been removed or changed after the original purchase of the product by
     the consumer from the retailer, Andrea Electronics reserves the right to
     refuse guarantee service.

     2. In the event that this product needs to be adapted, change, or adjusted
     in order to conform to the national or local technical or safety standards
     in force in any country or locality other than the one for which the
     product was originally designed and manufactured, any such adaptation,
     change, or adjustment shall not be considered to be a defect in materials
     or workmanship for purposes of this Consumer Guarantee. No reimbursements
     shall be made under this Consumer Guarantee for the following: (a) any
     adaptation, changes, or adjustments to the product, or attempts to make the
     same, whether properly made or not, in order to conform to such standards,
     (b) any adaptation, changes, or adjustments to upgrade the product from its
     normal purpose as described in the Instruction Manual, or (c) any damage
     resulting from any adaptations, changes, or adjustments to the product or
     attempts to make the same.

     3. The Consumer Guarantee shall not cover any of the following:

         (a)  periodic check-ups, maintenance and repair or replacement of
         parts due to normal wear and tear;

         (b) home service transport costs and other costs and risks of transport
         relating directly or indirectly to this Consumer Guarantee; and

         (c) damage to this product resulting from:

                  (i)      abuse and misuse, including, without limitation, (a)
                           the  failure  to use  this  product  for its  normal
                           purposes or in accordance  with Andrea  Electronics'
                           instructions  on the proper use and  maintenance  of
                           this product and (b) the  installation or the use of
                           this  product  in a  manner  inconsistent  with  the
                           technical  or  safety  standards  in  force  in  the
                           country where the product is used;

                  (ii)     repairs done by non-Authorized Service Stations; and

                  (iii)    accidents, acts of God, or any cause beyond the
                           control of Andrea Electronics, including, without
                           limitation, electrical storms, water, fire, public
                           disturbances, and improper ventilation.

     4. This Consumer Guarantee does not affect the consumer's statutory rights
     under applicable national legislation in force, nor the consumer's rights
     against the retailer arising from any sales/purchase contracts between the
     retailer and the consumer, in the absence of applicable national
     legislation, this Consumer Guarantee will be the consumer's sole and
     exclusive remedy, and neither Andrea Electronics Corporation nor any of its
     subsidiaries or distributors shall be liable for any incidental or
     consequential damages for breach of any expressed or implied guarantee of
     this product.