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As filed with the Securities and Exchange Commission on September 16, 1997.
REGISTRATION NO.333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ANDREA ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 11-0482020
(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
11-40 45th ROAD
LONG ISLAND CITY, NEW YORK 11101
(Address of principal executive offices)
1991 PERFORMANCE EQUITY PLAN
(Full title of the Plan)
FRANK A.D. ANDREA, JR., Chairman
Andrea Electronics Corporation
11-40 45th Road
Long Island City, New York 11101
(718) 729-8500
(Name, address and telephone number, including area code, of agent for
service)
with a copy to:
ALAN L. JAKIMO, Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
(212) 839-5300
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Securities Amount Offering Aggregate Amount of
to be Registered to be Price Offering Registration
Registered Per Unit (1) Price (2) Fee
- ------------------------------------------------------------------------------
Common Stock, $.01
par value (3) 500,000 shares $37.71875 $18,859,375 $5,715.00
- ------------------------------------------------------------------------------
(1) Reflects the maximum option exercise price per share under the
Registrant's Performance Equity Plan ("1991 Plan") for the shares
covered hereby, in accordance with Rule 457(h) promulgated under
the Securities Act of 1933.
(2) Reflects aggregate exercise price of the 500,000 shares of Common
Stock of the Registrant covered by this Registration Statement, of which
350,000 are subject to options granted under the 1991 Plan and
outstanding on September 12, 1997.
(3) In addition, pursuant to Rule 416, there are also being registered
additional shares of Common Stock as may become issuable pursuant
to the anti-dilution provisions of the 1991 Plan.
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PART I--INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
EXPLANATORY NOTE
This Registration Statement relates to the amendment of the 1991 Plan to
increase the number of shares available for issuance upon the exercise of
stock options under the 1991 Plan from 1,500,000 to 2,000,000 (an increase
of 500,000 shares). The content of the Registration Statements on Form S-8,
Registration Nos. 33-84092 and 333-14385 filed with the Securities and
Exchange Commission on September 15, 1994 and October 18, 1996, respectively,
is hereby incorporated by reference.
Item 1. Plan Information*
Item 2. Registrant Information and Plan Annual Information.*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933 and the Note to Part I of Form S-8.
PART II--INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are hereby incorporated by reference in this
Registration Statement and are deemed to be a part hereof from the date of
filing such documents by Andrea Electronics Corporation (the "Corporation"):
(a) The Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997.
(c) The description of the Registrant's common stock, par value $.50 per
share (the "Common Stock"), contained in (i) Registrant's
registration statement filed under the Exchange Act No. 1-4324,
as declared effective on February 28, 1967, (ii) Article Third of
the Registrant's Certificate of Incorporation filed as Exhibit 3.1 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992 and (iii) any subsequent, amendment(s) or report(s)
filed for the purpose of updating such description.
All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all
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securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document, all or a portion of which is incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 722 of the Business Corporation Law of the State of New York
empowers a New York corporation to indemnify any person made, or threatened
to be made, a party to any action or proceeding (other than an action by or
in the right of the corporation to procure a judgment in its favor), whether
civil or criminal, including an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any partnership,
joint venture, trust, employee benefit plan or other enterprise, which any
director or officer of the corporation served in any capacity at the request
of the corporation, by reason of the fact that such person, such person's
testator or such person's intestate is or was a director or officer of the
corporation, or was serving at the request of the corporation as a director
or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees actually and necessarily incurred as a result of
such action or proceeding or any appeal therein, if such person acted in
good faith, for a purpose which such person reasonably believed to be in,
or, in the case of services for any other corporation or other enterprise,
not opposed to, the best interests of the corporation, and with respect to
any criminal action or proceeding, had no reasonable cause to believe that
such person's conduct was unlawful. The termination of any action or
proceeding by judgment, settlement, conviction, or upon plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that
such person did not act in good faith, for a purpose which such person
reasonably believed to be in, or, in the case of services for any other
corporation or other enterprise not opposed to, the best interests of the
corporation, or had reasonable cause to believe that such person's conduct
was unlawful.
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In the case of an action by or in the right of the corporation, Section
722 empowers a corporation to indemnify any person made or threatened to be
made a party to any action in any of the capacities set forth above against
amounts paid in settlement and reasonable expenses, including attorneys'
fees, actually and necessarily incurred by such person in connection with
the defense or settlement of such action or an appeal therein, if such
person acted in good faith, for a purpose which such person reasonably
believed to be in, or, in the case of services for any other corporation or
other enterprise, not opposed to, the best interests of the corporation,
except that indemnification is not permitted in respect of (1) a threatened
action or pending action which is settled or otherwise disposed of or (2)
any claim, issue, or matter as to which such person is adjudged to be liable
to the corporation unless and only to the extent that the court in which
such action was brought, or if no action was brought, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such portion of the settlement amount and expenses as the
court deems proper.
Section 723 provides that a New York corporation is required to
indemnify a person who has been successful, on the merits or otherwise, in
the defense of an action described in Section 722.
Section 721 provides that indemnification provided for by Section 722
shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled, whether contained in the certificate of incorporation
or the by-laws or, when authorized by such certificate of incorporation or
by-laws, (i) a resolution of shareholders, (ii) a resolution of directors,
or (iii) an agreement providing for such indemnification, provided that no
indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that such person's acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated.
The Registrant's Certificate of Incorporation provides that the
personal liability of the directors of the Registrant is eliminated to the
fullest extent permitted by Section 402(b) of the Business Corporation Law
of the State of New York. In addition, the By-Laws of the Registrant
provide in substance that, to the fullest extent permitted by New York law,
each director and officer shall be indemnified by the Registrant against
reasonable expenses, including attorneys' fees, and any liabilities which
such officer may incur in connection with any action to which such officer
may be made a party by reason of being or having been a director or officer
of the Registrant. The indemnification provided by the Registrant's By-Laws
is not deemed exclusive of or in any way to limit any other rights which any
person seeking indemnification may be entitled.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
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ITEM 8. EXHIBITS.
Exhibit
Number Description
- ------- ------------
4 1991 Performance Equity Plan of the Registrant, as amended
and restated
5 Opinion of Brown & Wood LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Raich Ende Malter Lerner & Co.
23.3 Consent of Counsel (contained in Exhibit 5)
24 Power of Attorney relating to subsequent amendment (included
on the signature page to this Registration Statement)
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on
the 12th day of September, 1997.
ANDREA ELECTRONICS CORPORATION
By: /s/ Frank A.D. Andrea, Jr.
-----------------------------------
(Frank A.D. Andrea, Jr.)
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below under "SIGNATURES" constitutes and appoints Frank A.D. Andrea,
Jr., John N. Andrea, Douglas J. Andrea, and Patrick D. Pilch, his true and
lawful attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting
alone, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Frank A.D. Andrea, Jr. Chairman of the Board September 12, 1997
- ---------------------------- and Chief Executive Officer
Frank A.D. Andrea, Jr.
/s/ Patrick D. Pilch Executive Vice President September 12, 1997
- ---------------------------- and Chief Financial Officer,
Patrick D. Pilch Director
/s/ John N. Andrea Co-President, Director September 12, 1997
- -----------------------------
John N. Andrea
/s/ Douglas J. Andrea Co-President, Director September 12, 1997
- -----------------------------
Douglas J. Andrea
/s/ Richard A. Maue Controller and Secretary September 12, 1997
- -----------------------------
Richard A. Maue
Christopher Dorney Director September 12, 1997
- -----------------------------
Christopher Dorney
Gary A. Jones Director September 12, 1997
- -----------------------------
Gary A. Jones
Scott Koondel Director September 12, 1997
- -----------------------------
Scott Koondel
Paul M. Morris Director September 12, 1997
- -----------------------------
Paul M. Morris
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EXHIBIT INDEX
Exhibit
Number Description
- -------- -----------
4 1991 Performance Equity Plan of the Registrant, as amended
and restated
5 Opinion of Brown & Wood LLP
23.1 Independent Auditors' Consent
23.2 Independent Auditors' Consent
23.3 Consent of Counsel (contained in Exhibit 5)
24 Power of Attorney relating to subsequent amendments (included
on the signature page to this Registration Statement)
<PAGE>
Exhibit 4
Amended by action of the Board of Directors
and restated as of September 12, 1997
ANDREA ELECTRONICS CORPORATION
1991 Performance Equity Plan
Section 1. Purpose; Definitions.
1.1. Purpose. The purpose of the Andrea Electronic Corporation
(the "Company") 1991 Performance Equity Plan (the "Plan") is to enable the
Company to offer to its key employees, officers, directors and consultants
whose past, present and/or potential contribution to the Company and its
Subsidiaries have been, are or will be important to the success of the Company,
an opportunity to acquire a proprietary interest in the Company. The various
types of long-term incentive awards which may be provided under the Plan will
enable the Company to respond to changes in compensation practices, tax laws,
accounting regulations and the size and diversity of its businesses.
1.2. Definitions. For purposes of the Plan, the following terms
shall be defined as set forth below:
(a) "Agreement" means the agreement between the Company
and the Holder setting forth the terms and conditions of an award under the
Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto and the regulations
promulgated thereunder.
(d) "Committee" means the Stock Option Committee of the
Board or any other committee of the Board which the Board may designate to
administer the Plan or any portion thereof. If no Committee is so designated,
then all references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the common stock of the Company,
par value $.50 per share.
(f) "Company" means Andrea Electronics Corporation, a
corporation organized under the laws of the State of New York.
(g) "Deferred Stock" means Common Stock to be received,
under an award made pursuant to Section 8 below, at the end of a specified
deferral period.
(h) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section
11.
(j) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means,
as of any given date: (i) if the Common Stock is listed on a national
securities exchange or quoted on the NASDAQ National Market System, the last
sale price of the Common Stock on the last preceding day on which the Common
Stock was traded, as reported an the composite tape or by NASDAQ/NMS System
Statistics, as the case may be; (ii) if the Common Stock is not listed on a
national securities exchange or quoted on the NASDAQ National Market System,
but is traded in the over-the-counter market the average of the high bid and
low asked prices for the Common Stock on the last preceding day for which such
quotations are reported by NASDAQ; and (iii) if the fair market value of the
Common Stock cannot be determined pursuant to clause (i) or (ii) above, such
value as the Committee shall determine, in good faith.
(k) "Family Group Member" shall mean the spouse, sibling
or lineal descendant of the Holder or a trust established for any such person.
(l) "Holder" means a person who has received an award
under the Plan.
(m) "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(n) "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
(o) "Normal Retirement" means retirement from active
employment with the Company or any Subsidiary on or after age 65.
(p) "Other Stock-Based Award" means an award under Section
9 below that is valued in whole or in part by reference to, or is otherwise
based upon, Stock.
(q) Parent means any present or future parent corporation
of the Company, as such term is defined in Section 424(e) of the Code.
(r) "Plan" means the Andrea Electronics Corporation 1991
Performance Equity Plan, as hereinafter amended from time to time.
(s) "Restricted Stock" means Stock, received under an
award made pursuant to Section 7 below, that is subject to restrictions under
said Section 7.
(t) "SAR Value" means the excess of the Fair Market Value
of one share of Common Stock over the exercise price per share specified in a
related Stock Option in the case of a Stock Appreciation Right granted in
tandem with a Stock Option and the Stock Appreciation Right price per share in
the case of a Stock Appreciation Right awarded on a free standing basis, in
each case multiplied by the number of shares in respect of which the Stock
Appreciation Right shall be exercised, on the date of exercise.
(u) "Stock" means the Common Stock of the Company, par
value $.50 per share.
(v) "Stock Appreciation Right" means the right, pursuant
to an award granted under Section 6 hereof, to recover an amount equal to the
SAR Value.
(w) "Stock Option" or "option" means any option to
purchase shares of Stock which is granted pursuant to the Plan.
(x) "Stock Reload Option" means any option granted under
Section 5.3 as a result of the payment of the exercise price of a Stock Option
and/or the withholding tax related thereto in the form of Stock owned by the
Holder or the withholding of Stock by the Company.
(y) "Subsidiary" mean any present or future subsidiary
corporation of the Company, as such term is defined in section 424(f) of the
Code.
Section 2. Administration.
2.1. Committee Membership. The Plan shall be administered by the
Board or by a Committee of the Board consisting solely of Non-Employee
Directors of the Company within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. To the extent that it is desirable to qualify
options granted hereunder as "performance-based compensation" within the
meaning of Section 162(m) of the Code, the Committee shall consist of two or
more "outside directors" within the meaning of Section 162(m) of the Code.
Committee members shall serve for such term as the Board may in each case
determine, and shall be subject to removal at any time by the Board.
2.2. Powers of Committee. The Committee shall have full authority,
subject to Section 4.2 hereof, to award, pursuant to the terms of the Plan: (i)
Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv)
Deferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based Awards.
For purposes of illustration and not of limitation, the Committee shall have
the authority (subject to the express provisions of this Plan):
(a) to select the officers, key employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Reload Stock Options
and/or Other Stock-Based Awards may from time to time be awarded hereunder;
(b) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, number of shares, share price, any restrictions
or limitations, and any vesting, exchange, surrender, cancellation,
acceleration, termination, exercise or forfeiture provisions, as the Committee
shall determine);
(c) to determine any specified performance goals or such
other factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to determine the terms and conditions under which
awards granted hereunder are to operate on a tandem basis and/or in conjunction
with or apart from other equity awards under this Plan and cash awards made by
the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under
the Plan under such rules and procedures as the Committee may establish,
including the crediting of interest on deferred amounts denominated in cash and
of dividend equivalents on deferred amounts denominated in stock;
(f) to determine the extent and circumstances under which
Stock and other amounts so payable with respect to an award hereunder shall be
deferred, which may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously
granted Stock Options, which previously granted Stock Options have higher
option exercise prices and/or contain other less favorable terms, and (ii) new
awards of any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.
2.3. Interpretation of Plan.
(a) Committee Authority. Subject to Section 10 hereof,
the Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and
substance of all Agreements relating thereto), and to otherwise supervise the
administration of the Plan. Subject to Section 10 hereof, all decisions made
by the Committee pursuant to the provision of the Plan shall be made in the
Committee's sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options (including but limited to Stock Reload Options or
Tandem Stock Appreciation rights granted in conjunction with an Incentive Stock
Option) or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Holder(s) affected, to disqualify
any Incentive Stock option under such Section 422.
Section 3. Stock Subject to Plan
3.1. Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 1,500,000
shares. Shares of Stock under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If any shares of Stock that
have been optioned cease to be subject to a Stock Option, or if any shares of
stock that are subject to any Stock Appreciation Right, Restricted Stock,
Deferred Stock award, Reload Stock Option or Other Stock-Based Award granted
hereunder are forfeited or any such award otherwise terminates without a
payment being made to the Holder in the form of Stock, such shares shall again
be available for distribution in connection with future grants and awards under
the Plan. Only net shares issued upon a stock-for-stock exercise (including
Stock used for withholding taxes) shall be counted against the number of shares
available under the Plan.
3.2. Adjustment Upon Changes in Capitalization, Etc.. In the event
of any merger, or organization, consolidation, recapitalization, dividend
(other than a cash dividend), stock split, reverse stock split, or other change
in corporate structure affecting the Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under the
Plan, in the number and exercise price of shares subject to outstanding
Options, in the number of shares and Stock Appreciation Right price relating to
Stock Appreciation Rights, and in the number of shares subject to, and in the
related terms of, other outstanding awards (including but not limited to awards
of Restricted Stock, Deferred Stock, Reload Stock Options and other Stock-Based
Awards) granted under the Plan as may be determined to be appropriate by the
Committee in order to prevent dilution or enlargement of rights, provided that
the number of shares subject to any award shall always be a whole number.
Section 4. Eligibility.
Awards may be made or granted to key employees, officers, directors
and consultants who are deemed to have rendered or to be able to render
significant services to the Company or its Subsidiaries and who are deemed to
have contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not
an employee of the Company or a Subsidiary at the time of grant.
Section 5. Stock Options.
5.1. Grant and Exercise. Stock Options granted under the Plan may
be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock
Options. Any Stock Option granted under the Plan shall contain such terms, not
inconsistent with this Plan, or, with respect to Incentive Stock Options, the
Code, as the Committee may from time to time approve. The Committee shall have
the authority to grant Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options which may be granted alone or in addition to other
awards granted under the Plan. To the extent that any Stock Option intended to
qualify an Incentive Stock Option does not so qualify, it shall constitute a
separate Non-Qualified Stock Option. An Incentive Stock Option may only be
granted within the ten year period commencing from the Effective Date and may
only be exercised within ten years of the date of grant (or five years in the
case of an Incentive Stock Option granted to an optionee (10% Stockholder")
who, at the time of grant, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or a Parent or
Subsidiary.
5.2. Terms and Conditions. Stock Options granted under the Plan
shall be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may be less than 100% of the Fair Market Value of the Stock
at the time of grant; provided, however, that the exercise price of an
Incentive Stock Option shall not be less than 100% of the Fair Market Value of
the Stock at the time of grant (110%, in the case of a 10% Stockholder).
(b) Option Term. Subject to the limitations contained in
Section 5.1, the term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides, in its discretion,
that any Stock Option is exercisable only in installments, i.e., that it vests
over time, the Committee may waive such installment exercise provisions at any
time at or after the time of grant in whole or in part, based upon such factors
as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the term
of the Option, by giving written notice of exercise to the Company specifying
the number of shares of Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in cash
or, unless otherwise provided in the Agreement, in shares of Stock (including
Restricted Stock and other contingent awards under this Plan) or, partly in
cash and partly in such Stock, or by such other means which the Committee
determines are consistent with the Plan's purpose and applicable law. Cash
payments shall be made by wire transfer, certified or bank check or personal
check, in each case payable to the order of the Company; provided, however,
that the Company shall not be required to deliver certificates for shares of
Stock with respect to which an Option is exercised until the Company has
confirmed the receipt of good and available funds in payment of the purchase
price thereof. Payments in the form of Stock shall be valued at the Fair
Market Value of a share of Stock on the date prior to the date of exercise.
Such payments shall be made by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Subject to the terms of the
Agreement, the Committee may, in its sole discretion, at the request of the
Holder, deliver upon the exercise of a Non-Qualified Stock Option a combination
of shares of Deferred Stock and Common Stock; provided that, notwithstanding
the provisions of Section 8 of the Plan, such Deferred Stock shall be fully
vested and not subject to forfeiture. A Holder shall have none of the rights
of a stockholder with respect to the shares subject to the Option until such
shares shall be transferred to the Holder upon the exercise of the Option.
(e) Transferability. No Stock Option shall be
transferable by the Holder, otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
Holder's lifetime, only by the Holder; provided however that, notwithstanding
anything to the contrary contained herein, the Committee may in its sole
discretion allow a Non-Incentive Stock Option to be transferred to a Family
Group Member.
(f) Termination by Reason of Death. If a Holder's
employment by the Company or a Subsidiary terminates by reason of death, any
Stock Option held by such Holder, unless otherwise determined by the Committee
at the time of grant and set forth in the Agreement, shall be fully vested and
may thereafter be exercised by the legal representative of the estate or by the
legatee of the Holder under the will of the Holder, for a period of one year
(or such other greater or lesser period as the Committee may specify at grant)
from the date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's
employment by the Company or any subsidiary terminates by reason of Disability,
any Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the Holder for a period of one year
(or such other lesser period as the Committee may specify at the time of grant)
from the date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of
Section 12.3 below and unless otherwise determined by the Committee at the time
of grant and set forth in the Agreement, if a Holder is an employee of the
Company or a Subsidiary at the time of grant and if such Holder's employment by
the Company or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically terminate, except
that if the Holder's employment is terminated by the Company or a Subsidiary
without cause or due to Normal Retirement, then the portion of such Stock
Option which has vested on the date of the termination of employment may be
exercised for the lesser of three months after termination of employment or the
balance of such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the
case of an Incentive Stock Option, the amount of aggregate Fair Market Value of
Stock (determined at the time of grant of the Option) with respect to which
Incentive Stock Options are exercisable for the first time by a Holder during
any calendar year (under all such plans of the Company and its Parent and
Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may
at any time offer to buy out a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish and communicate to the
Holder at the time that such offer is made.
(k) Stock Option Agreement. Each grant of a Stock Option
shall be confirmed by, and shall be subject to the terms of, the Agreement
executed by the Company and the Holder.
5.3. Stock Reload Option. The Committee may also grant to the
Holder (concurrently with the grant of an Incentive Stock Option and at or
after the time of grant in the case of a Non-Qualified Stock Option) a Stock
Reload Option up to the amount of shares of Stock held by the Holder for at
least six (6) months and used to pay all or part of the exercise price of an
Option, and, if any, withheld by the Company as payment for withholding taxes.
Such Stock Reload Option shall have an exercise price of the Fair Market Value
as of the date of the Stock Reload Option grant. Unless the Committee
determines otherwise, a Stock Reload Option may be exercised commencing one
year after it is granted and shall expire on the date of expiration of the
Option to which the Reload Option is related.
Section 6. Stock Appreciation Rights.
6.1. Grant and Exercise. Stock Appreciation Rights may be granted
in tandem with (a "Tandem Stock Appreciation Right") all or part of any Stock
Option granted under the Plan or may be granted on a free-standing basis. In
the case of a Non-Qualified Stock Option, a Tandem Stock Appreciation Right may
be granted either at or after the time of the grant of such Non-Qualified Stock
Option. In the case of an Incentive Stock Option, a Tandem Stock Appreciation
Right may be granted only at the time of the grant of such Incentive Stock
Option.
6.2. Terms and Conditions. Stock Appreciation Rights shall be
subject to the following terms and conditions:
(a) Exercisability. Tandem Stock Appreciation Rights
shall be exercisable only at such time or times and to the extent that the
Stock Options to which they relate shall be exercisable in accordance with the
provisions of Section 5 hereof and this Section 6 and may be subject to the
Code with respect to related Incentive Stock Options and such additional
limitations on exercisability as shall be determined by the Committee and set
forth in the Agreement. Other Stock Appreciation Rights shall be exercisable
at such time or times and subject to such terms and conditions as shall be
determined by the Committee and set forth in the Agreement.
(b) Termination. A Tandem Stock Appreciation Right shall
terminate and shall no longer be exercisable upon the termination or exercise
of the related Stock Option, except that, unless otherwise determined by the
Committee at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by a related Stock
Option shall not be reduced until after the number of shares remaining under
the related Stock Option equals the number of shares covered by the Tandem
Stock Appreciation Right.
(c) Method of Exercise. A Tandem Stock Appreciation Right
may be exercised by a Holder by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the Holder shall be
entitled to receive such amount in the form determined pursuant to Section
6.2(d) below. Stock Options which have been so surrendered, in whole or in
part, shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.
(d) Receipt of SAR Value. Upon the exercise of a Stock
Appreciation Right, a Holder shall be entitled to receive up to, but not more
than, an amount in cash and/or shares of Stock equal to the SAR Value, with the
Committee having the right to determine the form of payment.
(e) Shares Affected Upon Plan. Upon the exercise of a
Tandem Stock Appreciation Right, the Stock Option or part thereof to which such
Tandem Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in section 3 hereof on
the number of shares of Common Stock to be issued under the Plan, but only to
the extent of the number of shares, if any, issued under the Tandem Stock
Appreciation Right at the time of exercise based upon the SAR Value.
Section 7. Restricted Stock.
7.1. Grant. Shares of Restricted Stock may be awarded either alone
or in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom, and the time or times at which, grants
of Restricted Stock will be awarded, the number of shares to be awarded, the
price (if any) to be paid by the Holder, the time or times within which such
awards may be subject to forfeiture (the "Restriction Period"), the vesting
schedule and rights to acceleration thereof, and all other terms and conditions
of the awards.
7.2. Terms and Conditions. Each Restricted Stock award shall be
subject to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of
the Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock and any
securities constituting Retained Distributions (as defined below) shall bear a
legend to the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are
subject to the restrictions, terms and conditions, provided in the Plan and the
Agreement. Such certificate shall be deposited by the Holder with the
Company, together with stock powers or other instruments of assignment, each
endorsed in blank, which will permit transfer to the Company of all or any
portion of the Restricted Stock and any securities constituting Retained
Distributions that shall be forfeited or that shall not become vested in
accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute
issued and outstanding shares of Common Stock for all corporate purposes. The
Holder will have the right to vote such Restricted Stock, to receive and retain
all regular cash dividends and other cash equivalent distributions as the Board
may, in its sole discretion, designate, pay or distribute on such Restricted
Stock and to exercise all other rights, powers and privileges of a holder of
Common Stock with respect to such Restricted Stock, with the exceptions that
(i) the Holder will not be entitled to delivery of the stock certificate or
certificates representing such Restricted Stock until the Restriction Period
shall have expired and unless all other vesting requirements with respect
thereto shall have been fulfilled; (ii) the Company will retain custody of the
stock certificate or certificates representing the Restricted Stock during the
Restriction Period; (iii) other than regular cash dividends and other cash
equivalent distributions as the Board may, in its sole discretion, designate,
pay or distribute, the Company will retain custody of all distributions
("Retained Distributions") made or declared with respect to the Restricted
Stock (and such Retained Distributions will be subject to the same
restrictions, terms and conditions as are applicable to the Restricted Stock)
until such time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall have become
vested and with respect to which the Restriction Period shall have expired;
(iv) a breach of any of the restrictions, terms or conditions contained in this
Plan or the Agreement or otherwise established by the Committee with respect
to any Restricted Stock or Retained Distributions will cause a forfeiture of
such Restricted Stock and any Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the
Restriction Period with respect to each award of Restricted Stock and the
satisfaction of any other applicable restrictions, terms and conditions, (i)
all or part of such Restricted Stock shall become vested in accordance with the
terms of the Agreement, and (ii) any Retained Distributions with respect to
such Restricted Stock shall become vested to the extent that the Restricted
Stock related thereto shall have become vested. Any such Restricted Stock and
Retained Distributions that do not vest shall be forfeited to the Company and
the Holder shall not thereafter have any rights with respect to such Restricted
Stock and Retained Distributions that shall have been so forfeited.
Section 8. Deferred Stock.
8.1. Grant. Shares of Deferred Stock may be awarded either alone
or in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which grants of
Deferred Stock shall be awarded, the number of shares of Deferred Stock to be
awarded to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the shares will be
deferred and all the other term and conditions of the awards.
8.2. Terms and Conditions. Each Deferred Stock award shall be
subject to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral
Period (or the Additional Deferral Period referred to in Section 8.2(c) below,
where applicable), share certificates shall be delivered to the Holder, or his
legal representative, representing the number equal to the shares covered by
the Deferred Stock award.
(b) Vesting; Forfeiture. Upon the expiration of the
Deferral Period (or the Additional Deferral Period, where applicable) with
respect to each award of Deferred Stock and the satisfaction of any other
applicable limitations, terms or conditions, such Deferred Stock shall become
vested in accordance with the terms of the Agreement. Any Deferred Stock that
does not vest shall be forfeited to the Company and the Holder shall not
thereafter have any rights with respect to such Deferred Stock that has been so
forfeited
(c) Additional Deferral Period. A Holder may request to,
and the Committee may at any time, defer the receipt of an award (or an
installment of an award) for an additional specified period or until a
specified event (the "Additional Deferral Period"). Subject to any exceptions
adopted by the Committee, such request must generally be made at least one year
prior to expiration of the Deferral Period for such Deferred stock award (or
such installment).
Section 9. Other Stock-Based Awards.
9.1. Grant and Exercise. Other Stock-Based Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be consistent
with the purposes of the Plan, including, without limitation, purchase rights,
shares of Common Stock awarded which are not subject to any restrictions or
conditions, convertible or exchangeable debentures, or other rights convertible
into shares of Common Stock, and awards valued by reference to the value of
securities of or the performance of specified Subsidiaries. Other Stock-Based
Awards may be awarded either alone or in addition to or in tandem with any
other awards under this Plan or any other plan of the Company.
9.2. Eligibility. The Committee shall determine the eligible
persons to whom and the time or times at which grants of such awards shall be
made, the number of shares of Common Stock to be awarded pursuant to such
awards, and all other terms and conditions of the awards.
9.3. Terms and Conditions. Each Other Stock-Based Award shall be
subject to such terms and conditions, as may be determined by the Committee.
Section 10. Amendments and Termination.
The Board (but not the Committee) may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuance shall be made which would impair the rights of a Holder under
any Agreement theretofore entered into hereunder, without such Holder's
consent.
Section 11. Term of Plan.
11.1. Effective Date. The Plan shall be effective as of December
31, 1991 ("Effective Date"), subject to the approval of the Plan by the
stockholders of the Company within one year after the Effective Date. Any
awards granted under the Plan prior to such approval shall be effective when
made (unless otherwise specified by the Committee at the time of grant), but
shall be conditioned upon, and subject to, such approval of the Plan by the
Company's stockholders. If the Plan shall not be so approved, all awards
granted thereunder shall be of no effect and any Stock received by a Holder
upon the exercise of an award shall be deemed forfeited and the Holder shall
return the Stock to the Company.
11.2. Termination Date. Unless terminated by the Board, thin Plan
shall continue to remain effective until such time no further awards may be
granted and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may only be
made during the ten (10) year period following the Effective Date.
Section 12. General Provisions.
12.1. Written Agreements. Each award granted under the Plan shall
be confirmed by, and shall be subject to the terms of, the Agreement executed
by the Company and the Holder. The Committee may terminate any award made
under the Plan if the Agreement relating thereto is not executed and returned
to the Company within 60 days after the Agreement has been delivered to the
Holder for his or her execution.
12.2. Unfunded Status of Plan. The Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. With respect to
any payments not yet made to a Holder by the Company, nothing contained herein
shall give any such Holder any rights that are greater than those of a general
creditor of the Company.
12.3. Employees.
(a) Engaging in Competition With the Company. In the
event an employee Holder terminates his employment with the Company or a
Subsidiary for any reason whatsoever, and within eighteen (18) months after the
date thereof accepts employment with any competitor of, or otherwise engages in
competition with, the Company, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained (measured at the date of exercise, vesting or
payment) by such Holder at any time during the period beginning on that date
which is six (6) months prior to the date of such Holder's termination of
employment with the Company.
(b) Termination for Cause. The Committee may, in the
event an employee is terminated for cause, annul any award granted under the
Plan to such employee and in such event the Committee, in its sole discretion,
may require such Holder to return to the Company the economic value of any
award which was realized or obtained (measured at the date of exercise, vesting
or payment) by such Holder at any time during the period beginning on that date
which is six (6) months prior to the date of such Holder's termination of
employment with the Company.
(c) No Right of Employment. Nothing contained in the Plan
or in any award hereunder shall be deemed to confer upon any employee of the
Company or any Subsidiary any right to continued employment with the Company or
any Subsidiary, nor shall it interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of any of its employees at any
time.
12.4. Investment Representations. The Committee may require each
person acquiring shares of Stock pursuant to a Stock Option or other award
under the Plan to represent to and agree with the Company in writing that the
Holder is acquiring the shares for investment without a view to distribution
thereof.
12.5. Additional Incentive Arrangements. Nothing contained in the
Plan shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
12.6. Withholding Taxes. Not later than the date as of which an
amount first becomes includible in the gross income of the Holder for Federal
income tax purposes with respect to any Stock Option or other award under the
Plan, the Holder shall pay to the Company, or make arrangements satisfactory to
the Committee regarding the payment of, any Federal, state and local taxes of
any kind required by law to be withheld or paid with respect to such amount.
If permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional upon such payment or arrangements and the
Company or the Holder's employer (if not the Company) shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Holder from the Company or any Subsidiary.
12.7. Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of New York (without regard to choice of law provisions).
12.8. Other Benefit Plans. Any award granted under the Plan shall
not be deemed compensation for purpose of computing benefits under any
retirement plan of the Company or any Subsidiary and shall not affect any
benefits under any other benefit plan now or subsequently in effect under which
the availability or amount of benefit is related to the level of compensation
(unless required by specific reference in any such other plan to awards under
this Plan).
12.9. Non-Transferability. Except as otherwise expressly provided
in the applicable Agreement, no right or benefit under the Plan may be
alienated, sold, assigned, hypothecated, pledged, exchanged, transferred,
encumbranced or charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void.
12.10. Applicable Laws. The obligations of the Company with respect
to all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness
of a registration statement under the Securities Act of 1933, as amended, and
(ii) the rules and regulations of any securities exchange on which the Stock
may be listed.
12.11. Conflicts. If any of the terms or provisions of the Plan
conflict with the requirements with respect to Incentive Stock Options of
Section 422A of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of said
Section 422A of the Code. Additionally, if this Plan does not contain any
provision required to be included herein under Section 422A of the Code, such
provision shall be deemed to be incorporated herein with the same force and
effect as if such provision had been set out at length herein.
12.12. Non-Registered Stock. The shares of Stock being distributed
under this Plan have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or any applicable state or foreign securities laws
and the Company has no obligation to any Holder to register the Stock or to
assist the Holder in obtaining an exemption from the various registration
requirements, or to list the Stock on a national securities exchange.
EXHIBIT 5
(LETTERHEAD)
September 16, 1997
Andrea Electronics Corporation
11-40 45th Road
Long Island City, New York 11101
Re: Andrea Electronics Corporation
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to Andrea Electronics Corporation, a New
York corporation (the "Company"), in connection with the registration of
500,000 shares of common stock, $.01 par value (the "Shares"), with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "1933 Act") pursuant to a registration
statement on Form S-8 (the "Registration Statement"). The Shares are
registered on behalf of the Company and will be issued pursuant to the
Company's 1991 Performance Equity Plan (the "Plan").
This opinion is being delivered in accordance with the requirements
of Item 601(b)(5)(i) of Regulation S-K under the 1933 Act.
As counsel to the Company, we have examined such documents and
records as we deemed appropriate.
In rendering this opinion, we have relied, as to matters of fact,
upon representations and certificates of officers and employees of the
Company, and communications from, government authorities and public
officials; and we have assumed the genuineness of signatures of all persons
signing any documents, the authority of all persons signing any document,
the authority of all governmental authorities and public officials, the
truth and accuracy of all matters of fact set forth in all certificates
furnished to us, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares
issuable upon exercise of options issued under the Plan, when issued and
delivered upon exercise of such options in accordance with the terms of the
Plan, will be validly issued, fully paid and non-assessable.
We are not admitted to practice in any jurisdiction other than the
State of New York. We do not purport to be expert on, and we are not
expressing an opinion with respect to, laws other than the laws of the
United States and the State of New York.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is
required under Section 7 of the 1933 Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
Brown & Wood LLP
EXHIBIT 23.1
Consent of Independent Public Accountants
----------------------
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-8 registration statement of our report dated
February 21,1997 included in Andrea Electronics Corporation Form 10-K for the
year ended December 31, 1996 and to all references to our Firm included in
this Form S-8 registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Melville, New York
September 15, 1997
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Shareholders
Andrea Electronics Corporation
11-40 45th Road
Long Island City, New York
We consent to the incorporation by reference in this registration statement
on Form S-8 of Andrea Electronics Corporation of our report dated February
2, 1995, appearing in the Annual Report on Form 10-K of Andrea Electronics
Corporation for the year ended December 31, 1996 and to all references to
our Firm included in this registration statement.
/s/ Raich Ende Malter Lerner & Co.
RAICH ENDE MALTER LERNER & CO.
Certified Public Accountants
East Meadow, New York
September 12, 1997
