<PAGE> 8









EXHIBIT 10.18          LICENSING AGREEMENT, AMENDMENT # 1.,
                       DATED AS OF MARCH 13, 2002, BETWEEN
                       ANDREA ELECTRONICS CORPORATION AND
                              ANALOG DEVICES, INC.


<PAGE> 9



                               LICENSING AGREEMENT
                                     Between
                         Andrea Electronics Corporation
                                       And
                              Analog Devices, Inc.
                                  Amendment #1

This Amendment #1 ("the Amendment"), is entered into this March 13, 2002. When
duly executed by the Parties, this Amendment #1 will be an amendment to the
Licensing Agreement entered into on December 19, 2001 (the "Agreement"), by and
between Andrea Electronics Corporation ("Andrea"), and Analog Devices, Inc.
("ADI").

This Amendment hereby amends the Agreement as follows:

1.       GRANT  OF  LICENSES;  PROTECTION  OF  GOODWILL AND REPUTATION; PATENTS,
         -----------------------------------------------------------------------
         COPYRIGHTS AND TRADEMARKS.
         --------------------------

1.1      Andrea grants to ADI:

         a.       a  worldwide, perpetual, fully  paid  royalty-bearing license,
                  including the right to sublicense to ADI CODEC chip customers,
                  Andrea's  PureAudio  algorithm  and updates  for  use on PC's,
                  excluding  handheld  computing  devices such as tablet PCs and
                  PDAs; and

         b.       a worldwide,  royalty-free  license, including  the  right  to
                  sublicense  to  ADI  CODEC chip customers and/or end users, to
                  load Andrea's EchoStop and DSDA algorithms and updates for use
                  on PC's, excluding  handheld computing devices  such as tablet
                  PCs and PDAs, subject to said chip customers  and/or end users
                  entering into a terms of use agreement directly with Andrea to
                  enable either or both Licensed Algorithms.

         Should  ADI  desire  to  use  the Licensed  Algorithms  for purposes or
         devices other than those described above,  the terms of  such use shall
         be subject to one or more separate  license agreements between  ADI and
         Andrea.  Updates  shall  include  minor  enhancements  to  performance,
         functionality and features. Except as the Parties  may otherwise agree,
         ADI  may   not,  modify,  translate,  disassemble,  decompile,  reverse
         engineer or create  derivative  works based on the Licensed Algorithms.
         The  Licensed  Algorithms  are   protected   by   United   States   and
         international copyright law and treaties, as well as other intellectual
         property  law  and  treaties,  and ADI is granted no title or ownership
         rights, in or to  the Licensed Algorithms, in whole or in part, and ADI
         acknowledges  that title  to  all  copyrights, patents, know-how, trade
         secrets  and/or any  other  intellectual  property rights to and in the
         Licensed  Algorithms and associated  documentation are and shall remain
         the  property  of  Andrea and  its  successors or assigns. As such, ADI
         warrants that   it will not sell or sub-license the Licensed Algorithms
         except as provided herein.



<PAGE> 10



2.       ROYALTY.
         -------

2.1      In  consideration of  the license granted under this Section 1.1.a, ADI
shall pay to Andrea a one-time, lump-sum royalty equal to [*******] U.S. dollars
[*******]. Payment shall be due  and payable on May 5, 2002. Notwithstanding the
foregoing, any payments  previously made by ADI under the Agreement prior to the
execution of  this Amendment  shall  be credited to the payment of this royalty.

3.       JOINT PROMOTION.
         ---------------

         The  following  sentences are added to the end of this Section 3: It is
also understood that any profits derived from Andrea's  products  supporting the
Licensed  Algorithms,  excluding  two-channel  microphone arrays,  that serve as
companions  to ADI's  products  incorporating  the Licensed  Algorithms  will be
divided equally among the Parties. Profits shall be defined as the selling price
of the  product  less all costs  typically  associated  with  manufacturing  and
selling  the  products,  including,  but  not  limited  to,  sales  commissions,
marketing  and  advertising  expenses and warranty  costs.  Notwithstanding  the
forgoing,  Andrea  shall  be  entitled  to all  profits  derived  from  Andrea's
two-channel microphone array.

5.       TERM AND TERMINATION.
         --------------------

5.1      The  term  of  this  Agreement shall commence on May 1, 2002 hereof and
shall continue for a period of one (1) year and shall  thereafter  automatically
renew for  additional  one year periods  unless ADI  expresses its desire not to
renew in writing at least thirty (30) days prior to expiration of the initial or
successive period, or unless Andrea expresses its desire not to renew in writing
at least  one (1) year  prior to the  expiration  of any  applicable  successive
period commencing on May 5, 2004 or thereafter.  Notwithstanding  the foregoing,
the license  granted to ADI under Section  1.1.a of this  Agreement is perpetual
and therefore may not be terminated by Andrea for any reason other than those in
Section 5.2 of this Agreement.

8.       GENERAL PROVISIONS.
         ------------------

8.11     Survival. The  terms of  Section 1.4, 1.5, 4, 5.4, 6, 7, 8.1, 8.3, 8.5,
         --------
8.6 and 8.8 shall survive  expiration  or termination of this Agreement, whether
pursuant to  Section 5 or otherwise.  The  terms  of Section 8.12 shall  survive
expiration  or termination of this Agreement unless such termination is pursuant
to Section 5.2 as a result of a breach by ADI.

8.12     Escrow Agreement.  Within a  commercially  reasonable  period  of  time
         ----------------
following  the execution of this  Amendment,  such period not to exceed 60 days,
Andrea and ADI shall enter into an escrow  agreement with an  independent  third
party escrow agent  consistent with the agreement  attached as Exhibit A to this
Amendment,  to hold the  Licensed  Technology  (as  defined  below)  under  this
Agreement  in escrow for ADI.  All fees due to the escrow agent are to be shared
equally by Andrea and ADI. Upon execution of the escrow agreement,  Andrea shall
deliver  the source code and copies of  sufficient  technical  documentation  to
escrow agent to permit ADI to  effectively  utilize  source code of the Licensed
Algorithms, including, but not limited to, all available source


<PAGE> 11



documentation  for  the licensed software and any updates thereof (the "Licensed
Technology"). ADI  shall be entitled to release of the Licensed Technology upon:
(a) the rejection or termination of this Agreement, as Amended, by Andrea or its
successors or  representatives in  breach  of the provisions of the Agreement or
this Agreement,  including  in  all  events  any rejection or termination of the
Agreement or any  proposal to do so under Title 11 of the United States Code, as
now  constituted  or  hereafter amended  (the "Bankruptcy Code"),  or  any other
federal  or state  bankruptcy, insolvency, receivership, or similar law; (b) the
failure   of   a  trustee,  including Andrea  as  debtor  in  possession, in any
bankruptcy  case filed by or  against Andrea  either to assume the Agreement and
this  Amendment  within  fifteen  (15)  days  after  the  filing  of the initial
bankruptcy  petition or  to perform the Agreement and this Amendment  within the
meaning  of Section 365(a)(4)(i) of  the Bankruptcy Code; (c) the termination of
substantially   all  of  Andrea's  ongoing  business  operations relating to the
subject  to  this  Agreement  as  Amended; (d) the liquidation of Andrea, or any
sale, assignment,  or  foreclosure  of or upon assets that are necessary for the
performance  by Andrea  of its responsibilities under this Agreement as Amended,
or (e) the transfer  of a majority of Andrea's stock or substantially all of its
assets to a competitor of ADI, including but not limited to [*******].

Except  as  modified  by  this  Amendment, all other terms and conditions of the
Agreement  shall remain unchanged and in full force and effect. Once signed, any
reproduction  by  reliable  means  (for  example, photocopy  or facsimile) is an
original unless prohibited by law.

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment #1 as of the
date first written above.

ANDREA ELECTRONICS CORPORATION                     ANALOG DEVICES, INC.


By:/s/ Christopher P. Sauvigne                     By: /s/ John Croteau
---------------------------------------------          -----------------------
Name:  Christopher P. Sauvigne                     Name: John Croteau
                                                         ----------------------
Title:  President and Chief Executive Officer      Title: Product Line Director
                                                          ---------------------



<PAGE> 12




                        MASTER PREFERRED ESCROW AGREEMENT

                              Master Number 0114100

This agreement "Agreement" is effective May 28, 2002 among DSI Technology Escrow
Services,  Inc. ("DSI"),  Andrea Electronics  Corporation  ("Depositor") and any
additional  party  signing  the  Acceptance  Form  attached  to  this  Agreement
("Preferred Beneficiary"), who collectively may be referred to in this Agreement
as the parties ("Parties").

A.   Depositor  and  Preferred  Beneficiary  have  entered  or will enter into a
license  agreement,  development  agreement,  and/or other  agreement  regarding
certain  proprietary  technology of Depositor  (referred to in this Agreement as
"the License Agreement").

B.   Depositor desires to avoid disclosure of its proprietary technology  except
under certain limited circumstances.

C.   The availability of  the proprietary technology of Depositor is critical to
Preferred  Beneficiary in the conduct of its business and, therefore,  Preferred
Beneficiary  needs access to the  proprietary  technology  under certain limited
circumstances.

D.   Depositor and  Preferred Beneficiary desire to establish an escrow with DSI
to provide for the retention,  administration  and controlled  access of certain
proprietary technology materials of Depositor.

E.   The  parties  desire  this  Agreement  to  be  supplementary to the License
Agreement pursuant to 11 United States [Bankruptcy] Code, Section 365(n).


ARTICLE 1  --  DEPOSITS

1.1  Obligation to Make Deposit. Upon  the  signing  of  this  Agreement  by the
     --------------------------
parties,  including the signing of the Acceptance Form, and Exhibit D naming the
Deposit Account,  Depositor shall deliver to DSI the proprietary  technology and
other materials  ("Deposit  Materials")  required to be deposited by the License
Agreement  or, if the License  Agreement  does not identify the  materials to be
deposited  with DSI,  then such  materials  will be  identified on Exhibit A. If
Exhibit A is  applicable,  it is to be  prepared  and  signed by  Depositor  and
Preferred  Beneficiary.  DSI  shall  have  no  obligation  with  respect  to the
preparation, signing or delivery of Exhibit A.

1.2  Identification of Tangible Media. Prior  to  the  delivery of  the  Deposit
     --------------------------------
Materials to DSI, Depositor shall  conspicuously  label for identification  each
document,  magnetic  tape,  disk, or other tangible media upon which the Deposit
Materials are written or stored. Additionally,  Depositor shall complete Exhibit
B to this  Agreement  by  listing  each such  tangible  media by the item  label
description,  the type of media and the  quantity.  Exhibit B shall be signed by
Depositor  and  delivered  to DSI with the Deposit  Materials.  Unless and until
Depositor makes the initial deposit with DSI,


<PAGE> 13



DSI  shall  have no  obligation  with  respect  to this  Agreement,  except  the
obligation to notify the parties regarding the status of the account as required
in Section 2.2 below.

1.3. Escrow Account Name  Identification.  Subject to this Article 1, and at the
     -----------------------------------
time Depositor makes the initial deposit with DSI in accordance with Section 1.2
above,  Depositor  shall complete and sign Exhibit D naming the initial  account
upon  which the  Deposit  Materials  are  written or  stored.  Any new  deposits
referencing  new account names made subsequent to the signing of this Agreement,
intended  by the  Depositor  to be held in a  separate  account  and  maintained
separately from the initial account, but made a part of this Agreement, shall be
provided for by the Depositor on Exhibit E, and Exhibit E shall be signed by the
Depositor and DSI.

1.4  Deposit  Inspection. When DSI receives the Deposit Materials and Exhibit B,
     -------------------
DSI will conduct a deposit  inspection by visually  matching the labeling of the
tangible media  containing the Deposit  Materials to the item  descriptions  and
quantity listed on Exhibit B. In addition to the deposit  inspection,  Preferred
Beneficiary  may  elect to cause a  verification  of the  Deposit  Materials  in
accordance with Section 1.7 below.

1.5  Acceptance  of Deposit.  At completion  of the deposit  inspection,  if DSI
     ----------------------
determines that the labeling of the tangible media matches the item descriptions
and  quantity  on  Exhibit  B, DSI will date and sign  Exhibit B and mail a copy
thereof to Depositor  and  Preferred  Beneficiary.  If DSI  determines  that the
labeling does not match the item descriptions or quantity on Exhibit B, DSI will
(a) note the  discrepancies in writing on Exhibit B; (b) date and sign Exhibit B
with the  exceptions  noted;  and (c) mail a copy of Exhibit B to Depositor  and
Preferred  Beneficiary.  DSI's acceptance of the deposit occurs upon the signing
of Exhibit B by DSI.  Delivery of the signed Exhibit B to Preferred  Beneficiary
is Preferred  Beneficiary's notice that the Deposit Materials have been received
and accepted by DSI.

1.6  Depositor's Representations.  Depositor represents as follows:
     ---------------------------

     a.    Depositor   lawfully  possesses  all  of  the  Deposit  Materials
           deposited with DSI;

     b.    With respect  to all of the Deposit Materials, Depositor has  the
           right and authority to grant to DSI and Preferred Beneficiary the
           rights as provided in this Agreement;

     c.    The  Deposit  Materials  are  not  subject  to any lien  or other
           encumbrance  that would  prohibit, limit, or alter the rights and
           obligations of DSI under this Agreement;

     d.    The  Deposit  Materials consist of the proprietary technology and
           other  materials  identified   either in the License Agreement or
           Exhibit A, as the case may be; and

     e.    The  Deposit  Materials are readable and useable in their current
           form  or, if any  portion of  the Deposit Materials is encrypted,
           the   decryption  tools  and   decryption  keys  have  also  been
           deposited.



<PAGE> 14



1.7  Verification.  Preferred  Beneficiary  shall have the right,  at  Preferred
     ------------
Beneficiary's  expense,  to cause a  verification  of any  Deposit
Materials.  Preferred  Beneficiary  shall notify  Depositor and DSI of Preferred
Beneficiary's  request for  verification.  Depositor  shall have the right to be
present at the verification.  A verification determines,  in different levels of
detail,  the  accuracy,  completeness,  sufficiency  and  quality of the Deposit
Materials.  If a verification  is elected after the Deposit  Materials have been
delivered to DSI, then only DSI, or at DSI's election an  independent  person or
company selected and supervised by DSI, may perform the verification.

1.8  Deposit Updates.  Unless  otherwise  provided  by  the  License  Agreement,
     ---------------
Depositor shall update the Deposit Materials within 60 days of each release of a
new  version of the  product  which is subject to the  License  Agreement.  Such
updates  will be added to the existing  deposit.  All deposit  updates  shall be
listed on a new  Exhibit B and the new  Exhibit B shall be signed by  Depositor.
Each Exhibit B will be held and maintained separately within the escrow account.
An independent  record will be created which will document the activity for each
Exhibit B. The  processing of all deposit  updates  shall be in accordance  with
Sections 1.2 through 1.6 above.  All references in this Agreement to the Deposit
Materials shall include the initial Deposit Materials and any updates.

1.9  Removal of Deposit Materials.  The  Deposit Materials may be removed and/or
     ----------------------------
exchanged  only on  written  instructions  signed  by  Depositor  and  Preferred
Beneficiary,  or as otherwise  provided in this Agreement.  Notwithstanding  the
forgoing,   Depositor  may  remove  the  Deposit   Materials   without   written
instructions signed by the Preferred Beneficiary in the event of the termination
of the  License  Agreement  by  reason of a  material  breach on the part of the
Preferred  Beneficiary,  upon DSI's receipt of written instructions  referencing
this  section and  specifying  the License  Agreement  has  terminated  due to a
material breach on the part of the Preferred Beneficiary.

ARTICLE 2  -- CONFIDENTIALITY AND RECORD KEEPING

2.1  Confidentiality. DSI  shall maintain  the  Deposit  Materials  in a secure,
     ---------------
environmentally  safe,  locked  facility which is accessible  only to authorized
representatives  of DSI. DSI shall have the obligation to reasonably protect the
confidentiality of the Deposit Materials.  Except as provided in this Agreement,
DSI shall not disclose,  transfer, make available, or use the Deposit Materials.
DSI shall not disclose the content of this Agreement to any third party.  If DSI
receives a subpoena or any other order from a court or other  judicial  tribunal
pertaining  to the  disclosure  or release of the  Deposit  Materials,  DSI will
immediately  notify the parties to this Agreement  unless  prohibited by law. It
shall  be the  responsibility  of  Depositor  and/or  Preferred  Beneficiary  to
challenge any such order; however, that DSI does not waive its rights to present
its position with respect to any such order. DSI will not be required to disobey
any order from a court or other  judicial  tribunal.  (See Section 7.5 below for
notices of requested orders.)

2.2  Status Reports. DSI  will  issue to  Depositor  and Preferred Beneficiary a
     --------------
report  profiling the account  history at least  semi-annually.  DSI may provide
copies of the account  history  pertaining to this Agreement upon the request of
any party to this Agreement.


<PAGE> 15



2.3  Audit Rights. During  the  term  of this Agreement, Depositor and Preferred
     ------------
Beneficiary  shall  each  have  the  right to inspect the written records of DSI
pertaining to this Agreement.   Any   inspection  shall  be  held  during normal
business hours and following reasonable prior notice.


ARTICLE 3  --  GRANT OF RIGHTS TO DSI

3.1  Title to Media. Depositor  hereby  transfers  to DSI the title to the media
     --------------
upon which the  proprietary  technology  and  materials  are  written or stored.
However,  this  transfer  does not  include  the  ownership  of the  proprietary
technology  and materials  contained on the media such as any  copyright,  trade
secret, patent or other intellectual property rights.

3.2  Right to Make Copies. DSI  shall  have  the  right to  make  copies  of the
     --------------------
Deposit materials as reasonably  necessary to perform this Agreement.  DSI shall
copy all  copyright,  nondisclosure,  and other  proprietary  notices and titles
contained on the Deposit Materials onto any copies made by DSI. With all Deposit
Materials  submitted to DSI, Depositor shall provide any and all instructions as
may be necessary to duplicate the Deposit Materials including but not limited to
the hardware and/or software needed.

3.3  Right to Transfer Upon Release. Depositor hereby grants to DSI the right to
     ------------------------------
transfer  Deposit  Materials  to Preferred  Beneficiary  upon any release of the
Deposit  Materials for use by Preferred  Beneficiary in accordance  with Section
4.5. Except upon such a release or as otherwise provided in this Agreement,  DSI
shall not transfer the Deposit Materials.

ARTICLE 4  -- RELEASE OF DEPOSIT

4.1  Release Conditions.  As used  in this Agreement, "Release  Condition" shall
     ------------------
mean any of the conditions for release set forth in the License Agreement.

4.2  Filing For Release. If Preferred  Beneficiary believes in good faith that a
     ------------------
Release Condition has occurred, Preferred Beneficiary may provide to DSI written
notice of the occurrence of the Release  Condition and a request for the release
of the Deposit Materials.  Upon receipt of such notice, DSI shall provide a copy
of the notice to Depositor by commercial express mail.

4.3  Contrary Instructions. From  the  date   DSI mails  the  notice  requesting
     ---------------------
release of the Deposit  Materials,  Depositor  shall have ten  business  days to
deliver  to  DSI  contrary  instructions  ("Contrary  Instructions").   Contrary
Instructions  shall mean the written  representation by Depositor that a Release
Condition  has  not  occurred  or has  been  cured.  Upon  receipt  of  Contrary
Instructions,  DSI shall  send a copy to  Preferred  Beneficiary  by  commercial
express  mail.  Additionally,  DSI shall  notify both  Depositor  and  Preferred
Beneficiary that there is a dispute to be resolved  pursuant to the Section 7.3.
Subject to Section 5.2 of this Agreement, DSI will continue to store the Deposit
Materials  without  release  pending (a) joint  instructions  from Depositor and
Preferred  Beneficiary;  (b) dispute resolution  pursuant to Section 7.3; or (c)
order of a court.

<PAGE> 16


4.4  Release of Deposit. If DSI  does not receive Contrary Instructions from the
     ------------------
Depositor,  DSI is authorized to release the Deposit  Materials to the Preferred
Beneficiary  or, if more than one  beneficiary is registered to the deposit,  to
release a copy of the Deposit Materials to the Preferred  Beneficiary.  However,
DSI is  entitled  to receive  any fees due DSI before  making the  release.  Any
copying  expense in excess of $300 will be chargeable to Preferred  Beneficiary.
Upon any such release,  the escrow  arrangement  will terminate as it relates to
the Depositor and Preferred Beneficiary involved in the release.

4.5  Right to Use Following Release. Unless otherwise  provided  in  the License
     ------------------------------
Agreement, upon release of the Deposit Materials in accordance with this Article
4, Preferred  Beneficiary  shall have the right to use the Deposit Materials for
the sole purpose of continuing the benefits afforded to Preferred Beneficiary by
the License Agreement.  Preferred Beneficiary shall be obligated to maintain the
confidentiality of the released Deposit Materials.

ARTICLE 5  --  TERM AND TERMINATION

5.1  Term of Agreement. The initial term  of this  Agreement is  for a period of
     -----------------
one year. Thereafter, this Agreement shall automatically renew from year-to-year
unless (a) Depositor and Preferred  Beneficiary  jointly instruct DSI in writing
that the Agreement is  terminated;  (b) Preferred  Beneficiary  instructs DSI in
writing that the Agreement is terminated as it relates to Preferred Beneficiary;
or (c) DSI instructs  Depositor and  Preferred  Beneficiary  in writing that the
Agreement is terminated  for  nonpayment  in  accordance  with Section 5.2 or by
resignation  in  accordance  with Section 5.3. If the  Acceptance  Form has been
signed at a date later than this  Agreement,  the initial term of the Acceptance
Form  will be for one year with  subsequent  terms to be  adjusted  to match the
anniversary  date of this  Agreement.  If the deposit  materials  are subject to
another escrow agreement with DSI, DSI reserves the right, after the initial one
year term, to adjust the  anniversary  date of this  Agreement to match the then
prevailing anniversary date of such other escrow arrangements.

5.2  Termination for Nonpayment. In  the event of the nonpayment of fees owed to
     --------------------------
DSI, DSI shall  provide  written  notice of  delinquency  to the parties to this
Agreement  affected by such delinquency.  Any such party shall have the right to
make the  payment  to DSI to cure the  default.  If the past due  payment is not
received in full by DSI within one month of the date of such notice, then at any
time  thereafter  DSI shall have the right to  terminate  this  Agreement to the
extent  it  relates  to the  delinquent  party  by  sending  written  notice  of
termination to such affected  parties.  DSI shall have no obligation to take any
action under this Agreement so long as any payment due to DSI remains unpaid.

5.3  Termination by Resignation. DSI reserves the right to terminate this
     --------------------------
Agreement, for any reason, by providing Depositor and Preferred Beneficiary with
60-days'  written notice of its intent to terminate this  Agreement.  Within the
60-day  period,  the Depositor and  Preferred  Beneficiary  may provide DSI with
joint written  instructions  authorizing DSI to forward the Deposit Materials to
another escrow company and/or agent or other designated  recipient.  If DSI does
not receive said


<PAGE> 17



joint  written  instructions  within  60  days  of the  date  of  DSI's  written
termination  notice,  then DSI shall  destroy,  return or otherwise  deliver the
Deposit Materials in accordance with Section 5.4.

5.4  Disposition of Deposit Materials Upon Termination. Subject to the foregoing
     -------------------------------------------------
termination provisions, and upon termination of this Agreement, DSI shall
destroy,  return,  or otherwise deliver the Deposit Materials in accordance with
Depositor's  instructions.  If there are no  instructions,  DSI may, at its sole
discretion, destroy the Deposit Materials or return them to Depositor. DSI shall
have no  obligation  to destroy or return the Deposit  Materials  if the Deposit
Materials are subject to another escrow agreement with DSI or have been released
to the Preferred Beneficiary in accordance with Section 4.4.

5.5      Survival  of  Terms Following Termination.  Upon  termination  of  this
         ------------------------------------------
Agreement, the following provisions of this Agreement shall survive:

         a.       Depositor's Representations (Section 1.5);

         b.       The obligations of confidentiality with respect to the Deposit
                  Materials;

         c.       The rights granted in the sections entitled Right to  Transfer
                  Upon  Release (Section 3.3) and Right to Use Following Release
                  (Section 4.5), if  a  release  of  the  Deposit  Materials has
                  occurred prior to termination;

         d.       The obligation to pay DSI any fees and expenses due;

         e.       The provisions of Article 7; and

         f.       Any provisions in this Agreement which specifically state they
                  survive the termination of this Agreement.


ARTICLE 6  --  DSI'S FEES

6.1  Fee Schedule. DSI  is  entitled  to  be paid its standard fees and expenses
     ------------
applicable to the services provided.  DSI shall notify the party responsible for
payment of DSI's fees at least 60 days prior to any  increase  in fees.  For any
service not listed on DSI's  standard  fee  schedule,  DSI will  provide a quote
prior to rendering the service, if requested.

6.2  Payment Terms. DSI shall not be required to perform any  service unless the
     -------------
payment for such service and any  outstanding  balances  owed to DSI are paid in
full.  Fees are due upon receipt of a signed  contract or receipt of the Deposit
Materials  whichever  is  earliest.  If  invoiced  fees  are not  paid,  DSI may
terminate this Agreement in accordance with Section 5.2.




<PAGE> 18



ARTICLE 7  --  LIABILITY AND DISPUTES

7.1  Right  to   Rely on   Instructions. DSI  may   act  in  reliance  upon  any
     ----------------------------------
instruction,  instrument, or signature reasonably believed by DSI to be genuine.
DSI may assume  that any  employee  of a party to this  Agreement  who gives any
written notice, request, or instruction has the authority to do so. DSI will not
be required to inquire into the truth or evaluate the merit of any  statement or
representation contained in any notice or document. DSI shall not be responsible
for failure to act as a result of causes beyond the reasonable control of DSI.

7.2  Indemnification.  Depositor  and   Preferred  Beneficiary  each  agree   to
     ---------------
indemnify,  defend  and hold  harmless  DSI from  any and all  claims,  actions,
damages,  arbitration  fees and  expenses,  costs,  attorney's  fees  and  other
liabilities  ("Liabilities")  incurred by DSI relating in any way to this escrow
arrangement  unless such  Liabilities  were caused  solely by the  negligence or
willful misconduct of DSI.

7.3  Dispute Resolution.  Any dispute relating to or arising from this Agreement
     ------------------
shall be resolved by  arbitration  under the  Commercial  Rules of the  American
Arbitration Association.  Three arbitrators shall be selected. The Depositor and
Preferred  Beneficiary  shall  each  select  one  arbitrator  and the two chosen
arbitrators  shall  select the third  arbitrator,  or failing  agreement  on the
selection of the third arbitrator,  the American  Arbitration  Association shall
select the third arbitrator.  However, if DSI is a party to the arbitration, DSI
shall select the third  arbitrator.  Unless  otherwise  agreed by Depositor  and
Preferred  Beneficiary,  arbitration will take place in New York, New York, USA.
Any court having jurisdiction over the matter may enter judgment on the award of
the arbitrator(s). Service of a petition to confirm the arbitration award may be
made by First Class mail or by commercial  express mail, to the attorney for the
party or, if unrepresented, to the party at the last known business address.

7.4  Controlling  Law.   This   Agreement  is  to  be  governed and construed in
     ----------------
accordance  with  the laws of the  State  of New  York,  without  regard  to its
conflict of law provisions.

7.5  Notice of Requested Order. If any party intends to obtain an order from the
     -------------------------
arbitrator or any court of competent  jurisdiction which may direct DSI to take,
or refrain from taking any action, that party shall:

         a.    Give DSI at least two business days' prior notice of the hearing;

         b.    Include  in   any  such order that,  as  a  precondition to DSI's
               obligation,  DSI  be  paid in  full  for any past due fees and be
               paid  for  the  reasonable  value  of the services to be rendered
               pursuant to such order; and

         c.    Ensure  that  DSI not  be  required  to  deliver the original (as
               opposed to a copy) of the  Deposit  Materials if  DSI may need to
               retain  the  original in  its  possession to  fulfill  any of its
               other escrow duties.




<PAGE> 19



ARTICLE 8  --  GENERAL PROVISIONS

8.1  Entire Agreement. This  Agreement, which  includes the  Acceptance Form and
     ----------------
Exhibits A, B, C, D and E described  herein,  embodies the entire  understanding
among all of the parties with respect to its subject  matter and  supersedes all
previous  communications,  representations  or  understandings,  either  oral or
written.  DSI is not a party to the  License  Agreement  between  Depositor  and
Preferred  Beneficiary and has no knowledge of any of the terms or provisions of
any such License  Agreement.  DSI's only  obligations  to Depositor or Preferred
Beneficiary are as set forth in this Agreement.  No amendment or modification of
this  Agreement  shall be valid or  binding  unless  signed  by all the  parties
hereto,  except that Exhibit A need not be signed by DSI,  Exhibit B need not be
signed by  Preferred  Beneficiary,  Exhibit  C need not be signed by any  party,
Exhibit D need not be signed by Preferred  Beneficiary or DSI and the Acceptance
Form need only be signed by the parties identified therein.

8.2  Notices.  All notices, invoices, payments, deposits and other documents and
     -------
communications  shall be given to the parties at the addresses  specified in the
attached  Exhibit C and Acceptance Form. It shall be the  responsibility  of the
parties  to notify  each  other as  provided  in this  Section in the event of a
change of address.  The  parties  shall have the right to rely on the last known
address of the other parties.  Unless otherwise provided in this Agreement,  all
documents and communications may be delivered by First Class mail.

8.3  Severability. In  the  event any provision of this Agreement is found to be
     ------------
invalid, voidable or unenforceable,  the parties agree that unless it materially
affects  the entire  intent  and  purpose of this  Agreement,  such  invalidity,
voidability  or  unenforceability  shall  affect  neither  the  validity of this
Agreement nor the  remaining  provisions  herein,  and the provision in question
shall be  deemed to be  replaced  with a valid and  enforceable  provision  most
closely reflecting the intent and purpose of the original provision.

8.4  Successors. This Agreement shall  be  binding upon  and shall  inure to the
     ----------
benefit of the successors and assigns of the parties. However, DSI shall have no
obligation in performing  this Agreement to recognize any successor or assign of
Depositor or Preferred Beneficiary unless DSI receives clear,  authoritative and
conclusive written evidence of the change of parties.

8.5  Regulations. Depositor  and  Preferred  Beneficiary are responsible for and
     -----------
warrant  compliance with all applicable laws,  rules and regulations,  including
but not  limited  to  customs  laws,  import,  export,  and  re-export  laws and
government regulations of any country from or to which the Deposit Materials may
be delivered in accordance with the provisions of this Agreement.




<PAGE> 20




Andrea Electronics Corporation              DSI Technology Escrow Services, Inc.
------------------------------
Depositor

By: /s/ Christopher P. Sauvigne             By: /s/ Jerry Limbery
    ---------------------------                 -----------------

Name: Christopher P. Sauvigne               Name: Jerry Limbery

Title: President and Chief Financial        Title: Sr. Contract Administrator
       Officer

Date: May 7, 2002                           Date: May 28, 2002


<PAGE> 21



                                                                      EXHIBIT A


                            MATERIALS TO BE DEPOSITED

                              Account Number 011410


Depositor represents to Preferred Beneficiary that Deposit Materials delivered
to DSI shall consist of the following:







-----------------------------------        -------------------------------------
Depositor                                  Preferred Beneficiary

By:                                        By:
   ---------------------------------          ----------------------------------

Name:                                      Name:
     -------------------------------            --------------------------------

Title:                                     Title:
      ------------------------------             -------------------------------

Date:                                      Date:
     -------------------------------            --------------------------------


<PAGE> 22



                                                                     EXHIBIT B

                        DESCRIPTION OF DEPOSIT MATERIALS

Depositor Company Name
                       ---------------------------------------------------------

Account Number
               -----------------------------------------------------------------
Product Name                                           Version
             -----------------------------------------         -----------------
(PRODUCT NAME WILL APPEAR AS EXHIBIT B NAME ON ACCOUNT HISTORY REPORT)

DEPOSIT MATERIAL DESCRIPTION:

QUANTITY      MEDIA TYPE & SIZE         LABEL DESCRIPTION OF EACH SEPARATE ITEM

              Disk 3.5" or
------                     ----
              DAT tape     mm
------                 ----
              CD-ROM
------
              Data cartridge tape
------                            ----
              TK 70 or      tape
------                 ----
              Magnetic tape
------                      ----
              Documentation
------
              Other
------              ----------------------

PRODUCT DESCRIPTION:
Environment
            --------------------------------------------------------------------

DEPOSIT MATERIAL INFORMATION:
Is the media or are any of the files encrypted? Yes / No If yes, please include
any passwords and the decryption tools.

Encryption tool name                                     Version
                     -----------------------------------        ----------------
Hardware required
                  --------------------------------------------------------------
Software required
                  --------------------------------------------------------------
Other required information
                          ------------------------------------------------------

I certify for DEPOSITOR that the above    DSI has inspected and accepted the
described Deposit Materials have been     above materials (ANY EXCEPTIONS ARE
transmitted to DSI:                       NOTED ABOVE):

Signature                                 Signature
          ------------------------                  ----------------------------
Print Name                                Print Name
           -----------------------                   ---------------------------
Date                                      Date Accepted
     -----------------------------                      ------------------------
                                          Exhibit B#
                                                    ----------------------------

  Send materials to:  DSI, 9265 Sky Park Court, Suite 202, San Diego, CA 92123
                                 (858) 499-1600


<PAGE> 23



                                                                     EXHIBIT C

                               DESIGNATED CONTACT

                              Master Number 0114100
<TABLE>
<CAPTION>

<S>                                                 <C>
Notices and communications
should be addressed to:                             Invoices should be addressed to:

Company Name: Andrea Electronics Corporation        Andrea Electronics Corporation
Address: 45 Melville Park Road                      45 Melville Park Road
         Melville, New York 11747                   Melville, New York 11747

Designated Contact: Thomas W. McClay                Contact: Ms. Vicki Tursi
Telephone: (631) 719-1898                           ________________________________
Facsimile: (631) 719-1824                           ________________________________
E-Mail: tmcclay@andreaelectronics.com               P.O.#, if required: ____________

Verification Contact: Richard A. Maue

</TABLE>

Requests to change the designated contact should be given in writing by the
designated contact or an authorized employee.
<TABLE>
<CAPTION>


<S>                                                 <C>
Contracts, Deposit Materials and notices            Invoice inquiries and fee remittances
to DSI should be addressed to:                      to DSI should be addressed to:

DSI Technology Escrow Services, Inc.                DSI Technology Escrow Services, Inc.
Contract Administration                             PO Box 45156
9265 Sky Park Court, Suite 202                      San Francisco, CA  94145-0156
San Diego, CA 92123


Telephone:  (858) 499-1600                          (858) 499-1636
Facsimile:  (858) 694-1919                          (858) 449-1637
E-Mail:     ca@dsiescrow.com
            ----------------

Date: May 7, 2002

</TABLE>





<PAGE> 24



                                                                      EXHIBIT D

                             NAME OF INITIAL ACCOUNT

                             Account Number 0114100


                               ("Depositor") has entered into a Master Preferred
-------------------------------
Escrow Agreement with DSI Technology Escrow Services, Inc. ("DSI").  Pursuant to
that Agreement, Depositor may deposit certain Deposit Materials with DSI.





The initial account will be referenced by the following name:

                                                 .
-------------------------------------------------








-----------------------------------
Depositor

By:
   ---------------------------------

Name:
     -------------------------------

Title:
      ------------------------------

Date:
     -------------------------------


<PAGE> 25



                                                                     EXHIBIT E

                            ADDITIONAL ESCROW ACCOUNT
                      TO MASTER PREFERRED ESCROW AGREEMENT


                              Master Number 0114100


                    New Account Number ______________________



                                ("Depositor") has entered into a Master
-------------------------------
Preferred Escrow Agreement with DSI Technology Escrow Services, Inc. ("DSI").
Pursuant to that Agreement, Depositor may deposit certain Deposit Materials with
DSI.

Depositor desires that new Deposit Materials be held in a separate account and
be maintained separately from the initial account. By execution of this Exhibit
E, DSI will establish a separate account for the new Deposit Materials. The new
account will be referenced by the following name:
                                     .
-------------------------------------

Depositor hereby agrees that all terms and conditions of the existing Master
Preferred Escrow Agreement previously entered into by Depositor and DSI will
govern this account. The termination or expiration of any other account of
Depositor will not affect this account.












                                        DSI Technology Escrow Services, Inc.
------------------------------------
Depositor

By:                                     By:
   ---------------------------------        ------------------------------------

Name:                                   Name:
     -------------------------------          ----------------------------------

Title:                                  Title:
      ------------------------------           ---------------------------------

Date:                                   Date:
     -------------------------------         -----------------------------------


<PAGE> 26


                              PREFERRED BENEFICIARY
                                 ACCEPTANCE FORM

                             Account Number 0114100

Depositor, Preferred Beneficiary and DSI Technology Escrow Services, Inc.
("DSI"), hereby acknowledge that                                    is the
                                 ----------------------------------
Preferred Beneficiary referred to in the Master Preferred Escrow Agreement
effective           , 20      with DSI as the escrow agent and
          ----------    -----
                            as the Depositor. Preferred Beneficiary hereby
---------------------------
agrees to be bound by all provisions of such Agreement.

Depositor hereby enrolls Preferred Beneficiary to the following account(s):
<TABLE>
<CAPTION>

Account Name                                             Account Number
------------                                             --------------

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

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

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



Notices  and   communications  to  Preferred
Beneficiary  should  be  addressed  to:                  Invoices should be addressed to:


Company Name:
             ----------------------------------------    -------------------------------------------
Address:
        ---------------------------------------------    -------------------------------------------

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

Designated Contact:                                      Contact:
                   ----------------------------------             ----------------------------------
Telephone:
          -------------------------------------------    -------------------------------------------
Facsimile:                                               P.O.#, if required:
          -------------------------------------------                       -----------------------
E-Mail:
        ---------------------------------------------


-----------------------------------------------------    -------------------------------------------
Preferred Beneficiary                                    Depositor



By:                                                      By:
    -------------------------------------------------       ----------------------------------------

Name:                                                    Name
     ------------------------------------------------        ---------------------------------------

Title:                                                   Title
      -----------------------------------------------         --------------------------------------

Date:                                                    Date:
     ------------------------------------------------         --------------------------------------


DSI Technology Escrow Services, Inc.
------------------------------------

By:
   ------------------------------------

Name:
     ----------------------------------

Title:
      ---------------------------------

Date:
     ----------------------------------

</TABLE>