<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 13, 1998
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ANDREA ELECTRONICS CORPORATION
--------------------------------
(Exact Name of Registrant as Specified in Charter)
New York 1-4324 11-0482020
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
45 Melville Park Road, Melville, New York 11747
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 719-1800
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On November 24, 1998, Andrea Electronics Corporation (the "Company") issued
a press release announcing the appointment of Christopher P. Sauvigne to the
office of President and Chief Operating Officer of the Company and to the Board
of Directors of the Company. A copy of this press release is attached as Exhibit
99.1 to this Report.
At the annual meeting of shareholders of the Company on November 13, 1998,
the shareholders elected as directors of the Company the following individuals:
Frank A.D. Andrea Jr. (9,596,026 shares for, 674,963 shares withheld); Douglas
J. Andrea (9,620,818 shares for, 650,171 shares withheld); John N. Andrea
(9,599,121 shares for, 671,868 shares withheld); Christopher Dorney (9,736,670
shares for, 534,319 shares withheld); Gary Jones (9,739,070 shares for, 531,919
shares against); Scott Koondel (9,735,270 shares for, 535,719 shares withheld);
Paul Morris (9,730,170 shares for, 540,819 shares withheld); Patrick D. Pilch
(9,566,719 shares for, 704,270 shares withheld); and Jack Lahav (9,733,470
shares for, 537,519 shares or withheld). In addition, the shareholders
authorized the following: an amendment to the Restated Certificate of
Incorporation, as amended, of the Company to increase the authorized shares of
Common Stock to 25,000,000 shares from 15,000,000 shares (5,414,508 shares for,
1,109,896 shares against, 72,194 shares abstained, and 3,674,391 broker nonvoted
shares); an amendment to the Restated Certificate of Incorporation, as amended,
of the Company to permit the issuance of up to 5,000,000 shares of Preferred
Stock (5,143,466 shares for, 1,360,993 shares against, 92,139 shares abstained,
and 3,674,391 broker nonvoted shares); and the adoption of the Andrea
Electronics Corporation 1998 Stock Option Plan (5,262,714 shares for, 1,218,166
shares against, 115,718 shares abstained, and 3,674,391 broker nonvoted shares).
The shareholders also ratified the selection of Arthur Andersen LLP as the
Company's independent accountants for the year ending December 31, 1998
(9,990,777 shares for, 182,304 shares against, and 97,908 shares abstained).
In June 1998, the Company issued and sold in a private placement,
$10,753,000 aggregate principal amount of 6% Convertible Notes ("Notes") due
June 10, 2000. As of November 27, 1998, $9,253,000 of the Notes, together with
related accrued interest, had been converted into 2,097,000 shares of the
Company's common stock. The maximum number of shares of the Company's common
stock issuable upon conversion of the remaining $1,500,000 of the Notes
outstanding is 3,000 shares.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
Exhibit
Number Description
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3.1 Certificate of Amendment of the Certificate of Incorporation
of the Company.
3.2 By-Laws of the Company, as amended.
10.1 Employment Agreement, between the Company and Christopher P.
Sauvigne, dated as of November 20, 1998.
99.1 Press release dated November 24, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 30, 1998 ANDREA ELECTRONICS CORPORATION
--------------------------------
(Registrant)
/s/ John N. Andrea
--------------------------------
John N. Andrea
Co-Chairman, Co-Chief Executive Officer
As filed with the Secretary of State
of the State of New York on
November 25, 1998
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ANDREA ELECTRONICS CORPORATION
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
OF THE STATE OF NEW YORK
WE, THE UNDERSIGNED, John N. Andrea and Richard A. Maue, being the Co-Chief
Executive Officer and the Secretary, respectfully, of Andrea Electronics
Corporation, do hereby certify and set forth:
(1) The name of the corporation is Andrea Electronics Corporation
(hereinafter, the "Corporation").
(2) The Certificate of Incorporation of the Corporation was filed with the
Department of State on March 15, 1934, under the name "F. A. D. Andrea, Inc."
(3) Article Third of the Restated Certificate of Incorporation of the
Corporation is hereby amended for the purpose of increasing the number of
authorized shares of the Corporation's common stock, par value $.50 per share,
from 15,000,000 shares to 25,000,000 shares and for the purpose of authorizing
the issuance of up to 5,000,000 shares of preferred stock, par value $.01 per
share. The text of said Article Third is hereby amended to read as set forth
below in full:
"THIRD: The aggregate number of shares which the Corporation shall
have the authority to issue is thirty million (30,000,000) shares of capital
stock. Twenty-five million (25,000,000) shares shall be designated as common
stock, each having a par value of fifty cents ($.50) per share. Five million
(5,000,000) shares shall be designated as preferred stock, each having a par
value of one cent ($.01) per share.
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article THIRD, to provide for the
issuance of the shares of preferred stock in series, to establish from time to
time the number of shares to be included in such series and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(a) the number of shares constituting a series and the distinctive
designation of that series;
(b) the dividend rate on the shares of a series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
(c) whether a series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) whether a series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment of
the conversion rate in such events as the Board of Directors shall determine;
(e) whether or not the shares of a series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) whether a series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(g) the rights of the shares of a series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series;
(h) any other relative rights, preferences and limitations of a
series.
Dividends on outstanding shares of preferred stock shall be paid, or
declared and set apart for payment, before any dividends shall be paid, or
declared and set apart for payment, on the common shares with respect to the
same dividend period."
(4) This Amendment to Article Third of the Certificate of Incorporation of
the Corporation was authorized, pursuant to Section 803(a) of the Business
Corporation Law of the State of New York, by a resolution of the Board of
Directors of the Corporation duly adopted on April 3, 1998 and by a resolution
of the shareholders of the Corporation duly adopted on November 13, 1998.
(5) Article Fourth of the Restated Certificate of Incorporation of the
Corporation is hereby amended for the purpose of changing the office of the
Corporation and the address to which the Secretary of State shall mail a copy of
any process against the Corporation that is served upon him or her. The text of
said Article Fourth is hereby amended to read as set forth below in full:
"FOURTH: The Office of the Corporation shall be located in the County
of Suffolk, City and State of New York. The Secretary of State is designated the
agent of the Corporation upon whom process against the Corporation may be
served, and the address to which the Secretary of State shall mail a copy of any
process against the Corporation that is served upon him or her is: c/o Brown &
Wood LLP, One World Trade Center, New York, New York 10048; attention: Managing
Attorney."
(6) This Amendment to Article Fourth of the Certificate of Incorporation of
the Corporation was authorized, pursuant to Section 803(b) of the Business
Corporation Law of the State of New York, by a resolution of the Board of
Directors of the Corporation duly adopted on November 23, 1998.
IN WITNESS WHEREOF, the undersigned have executed and signed this
Certificate on the 24th day of November, 1998, and hereby affirm the statements
contained herein as true under the penalties of perjury.
ANDREA ELECTRONICS CORPORATION
/s/ John N. Andrea
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John N. Andrea
Co-Chairman, Co-Chief Executive Officer
/s/ Richard A. Maue
-------------------------------
Richard A. Maue
Vice President, Secretary
and Controller
Amended as of November 23, 1998
BY-LAWS OF
ANDREA ELECTRONICS CORPORATION
ARTICLE I
OFFICES
The principal office of the Corporation shall be at 45 Melville Park
Road, Melville, New York 11747, or at such other place as the Board of Directors
may from time to time direct. The Corporation may also establish and have such
other offices or places, within or outside the State of New York or any place in
the world, as may from time to time be designated by the Board of Directors.
ARTICLE II
SHAREHOLDERS
2.1. Share Certificates. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall exhibit the holder's name and number of shares, set forth
any other information prescribed by the New York Business Corporation Law
("Business Corporation Law") and by any other applicable provision of law, and
shall be signed by the President or a Vice President and the Secretary or an
Assistant Secretary of the Corporation. Certificates may be sealed with the seal
of the Corporation or a facsimile thereof. The signatures of the President or a
Vice President and the Secretary or an Assistant Secretary upon a certificate
may be facsimiles if the certificate is manually signed on behalf of a transfer
agent or a registrar. In case any officer who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of its issuance. The
Board of Directors may appoint banks or trust companies as transfer agent and as
registrar of stock until otherwise ordered by the Board of Directors. After the
appointment of such transfer agent and registrar, no certificate issued to
represent the Corporation's stock shall be binding upon the Corporation or have
any validity unless signed by such transfer agent and by such registrar, or
their respective successors as may be appointed by the Board of Directors.
No certificate shall be issued for any share until such share is fully
paid, except as otherwise provided in the New York Business Corporation Law.
2.2. Fractional Share Interests or Scrip. The Corporation may, when
necessary or desirable in order to effect share transfers, share distributions
or reclassifications, mergers, consolidations or reorganizations, issue a
fraction of a share, make arrangements or provide reasonable opportunity for any
person entitled to a fractional interest in a share to sell such fractional
interest or to purchase such additional fractional interests as may be necessary
to acquire a full share, pay in cash the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined, or
issue scrip in registered or bearer form, over the manual or facsimile signature
of an officer of the Corporation or its agent, which shall entitle the holder to
receive a certificate for a full share upon the surrender of such scrip
aggregating a full share. A certificate for a fractional share shall, but scrip
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights, to receive dividends thereon and to participate in any of the
assets of the Corporation in the event of liquidation.
The Board of Directors may cause scrip to be issued subject to the
condition that it shall become void if not exchanged for certificates
representing full shares before a specified date, or subject to the condition
that the shares for which scrip is exchangeable may be sold by the Corporation
and the proceeds thereof distributed to the holders of scrip, or subject to any
other conditions which the Board of Directors may deem advisable. Such
conditions shall be stated or fairly summarized on the face of the certificate.
2.3. Share Transfers. Upon compliance with any provisions restricting
the transferability of shares that may be set forth in the Certificate of
Incorporation, these By-Laws, or any written agreement in respect thereof,
transfers of shares of the Corporation shall be made only on the books of the
Corporation by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, or with a transfer agent or a registrar and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon, if any. Except as may be otherwise provided by law, the
person in whose name shares stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation; provided
that whenever any transfer of shares shall be made for collateral security, and
not absolutely, such fact, if known to the Secretary of the Corporation, shall
be so expressed in the entry of transfer.
2.4. Record Date for Shareholders. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other purpose, the Board
of Directors of the Corporation may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
day next preceding the day which notice of the meeting is given or if no notice
is given, the day on which the meeting is held shall be the record date for
determination of shareholders. The record date for determining shareholders for
any other purpose shall be the date on which the resolution of the Board of
Directors relating thereto is adopted. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, the determination shall apply to any adjournment thereof, unless
the Board of Directors fixes a new record date under this section for the
adjourned meeting.
2.5. Meaning of Certain Terms. As used herein in respect of the right
to notice of a meeting of shareholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "shareholder" or "shareholders"
refers to an outstanding share or shares and to a holder or holders of record of
outstanding shares when the Corporation is authorized to issue only one class of
shares, and said reference is also intended to include any outstanding share or
shares and any holder or holders of record of outstanding shares of any class
upon which or upon whom the Certificate of Incorporation confer such rights
where there are two or more classes or series of shares or upon which or upon
whom the Business Corporation Law confers such rights notwithstanding that the
Certificate of Incorporation may provide for more than one class or series of
shares, one or more of which are limited or denied such rights thereunder.
ARTICLE III
MEETINGS OF SHAREHOLDERS
3.1. Annual Meetings.
3.1.1. Date. The annual meeting of the shareholders of the
Corporation for the election of the Board of Directors and for the
transaction of such other business as may properly come before such
meeting shall be held on such date and at such time as may be
determined by the Board of Directors.
3.1.2. Purpose. At each annual meeting, the shareholders shall
elect the members of the Board of Directors for the succeeding year. At
any such annual meeting any proper business properly brought before the
meeting may be transacted. To be properly brought before an annual
meeting, business must be (i) specified in the notice of the meeting
(or any supplement thereto) given by or at the direction of the Board
of Directors, (ii) otherwise properly brought before the meeting by or
at the direction of the Board of Directors or (iii) otherwise properly
brought before the meeting by a shareholder. For business to be
properly brought before an annual meeting by a shareholder, the
shareholder must have given written notice thereof, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of
the Corporation, not later than 90 days in advance of such meeting. Any
such notice shall set forth as to each matter the shareholder proposes
to bring before the annual meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons for
conducting such business at the meeting and, in the event that such
business includes a proposal-to amend either the Certificate of
Incorporation or By-Laws of the Corporation, the language of the
proposed amendment, (ii) the name and address of the shareholder
proposing such business, (iii) a representation that the shareholder is
a holder of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
propose such business, and (iv) any material interest of the
shareholder in such business. No business shall be conducted at an
annual meeting of shareholders except in accordance with this
paragraph, and the chairman of any annual meeting of shareholders may
refuse to permit any business to be brought before an annual meeting
without compliance with the foregoing procedures.
3.1.3. Nominations for Directors. Nominations for the election
of directors may be made by the Board of Directors or by any
shareholder entitled to vote for the election of directors. Any
shareholder entitled to vote for the election of directors at a meeting
may nominate a person or persons for election as directors only if
written notice of such shareholder's intent to make such nomination is
given, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation not later than (i) with
respect to an election to be held at an annual meeting of shareholders,
90 days in advance of such meeting, and (ii) with respect to an
election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day
following the date on which notice of such meeting is first given
shareholders. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination and the
person or persons to be nominated; (b) a representation that the
shareholder is a holder of record of stock of the Corporation entitled
to vote at the meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations
are to be made by the shareholder; (d) such other information regarding
each nominee proposed by the shareholder as would have been required to
be included in a proxy statement filing pursuant to the proxy rules of
the Securities and Exchange Commission had each nominee been nominated,
or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a Director of the Corporation if so
elected. The chairman of any meeting of shareholders to elect directors
and the Board of Directors may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
3.2. Special Meetings. A special meeting of the shareholders may be
called at any time by the President, any Vice President or the Board of
Directors, and shall be called by the President or a Vice President upon the
written request of shareholders of the Corporation pursuant to Section 603 of
the Business Corporation Law.
3.3. Place of Meetings. The meetings of the shareholders of the
Corporation shall be held at its principal office in the State of New York or at
such other place within or without the State of New York as shall be designated
by the Board of Directors.
3.4. Notice of Meetings. Except as otherwise required by statute,
notice of each meeting of the shareholders, whether annual or special, shall be
in writing over the name of the President or the Secretary. Such notice shall
state the place, day and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. A copy of such
notice shall be served, either personally or by mail at the direction of the
President or the officer calling the meeting to each shareholder, upon each
shareholder of record entitled to vote at such meeting not less than ten days
(or not less than any such other minimum period of days as may be prescribed by
the Business Corporation Law) nor more than fifty days before such meeting. The
notice of any annual or special meeting shall also include, or be accompanied
by, any additional statements, information, or documents prescribed by statute.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears on
the stock transfer books of the Corporation, with postage thereon prepaid.
Attendance of a shareholder at a meeting shall constitute a waiver of notice of
the meeting, except where the shareholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting was not lawfully called or convened. Whenever any
notice is required to be given to any shareholder, a waiver thereof in writing
signed by him or his authorized attorney-in-fact, whether before or after such
meeting, shall be the equivalent to the giving of such notice. When a meeting is
adjourned to another time or place, it shall not be necessary to give any notice
of the adjourned meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been transacted
on the original date of the meeting. If, however, the Board of Directors shall
fix a new record date for the adjourned meeting, notice of the adjourned meeting
shall be given each shareholder of record of the new record date.
3.5. Quorum. At all meetings of the shareholders the presence in person
or by proxy of the holders of record of a majority of the shares then issued and
outstanding and entitled to vote shall be necessary and sufficient to constitute
a quorum for the transaction of business. After a quorum has been established at
a shareholders' meeting, the subsequent withdrawal of shareholders, so as to
reduce the number of shareholders at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting or any
adjournment thereof. In the absence of a quorum, a majority in interest of the
shareholders entitled to vote, present in person or by proxy, may adjourn the
meeting. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called.
3.6. Inspectors of Election. The Board of Directors shall appoint two
persons, who need not be shareholders, to act as Inspectors of Election at all
meetings of the shareholders until the close of the next annual meeting. No
candidate for the office of director shall act as an Inspector of Election. If
there be a failure to appoint Inspectors, or if any Inspector appointed be
absent or refuse to act, or if his office becomes vacant, the Board of Directors
present at the meeting may choose temporary Inspectors of the number required.
The Inspectors appointed to act at any meeting of the Board of Directors, before
entering upon the discharge of their duties, shall be sworn faithfully to
execute the duties of Inspectors at such meeting with strict impartiality, and
according to the best of their ability.
3.7. Voting. Each shareholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and in accordance with the provisions
of these By-Laws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such shareholder, but no proxy shall be
voted after eleven months from its date unless such proxy provides for a longer
period. Every proxy shall be signed by the shareholder or by his duly authorized
attorney-in-fact, and filed with the Secretary of the Corporation. Upon the
demand of any shareholder, the vote for directors and the vote upon any question
before the meeting, shall be by ballot. At all meetings of the shareholders, all
matters shall be decided by a vote of a majority of the number of shares of
stock present in person or represented by proxy at such meeting, except as
otherwise provided in these By-Laws or by the Certificate of Incorporation or
the laws of the State of New York.
3.8. Voting List. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make a complete list, in
alphabetical order, of the shareholders entitled to vote at such meeting or any
adjournment thereof, with the address of and the number and class and series, if
any, of the shares held by each. Such list shall be produced at the meeting upon
the request thereat or prior thereto of any shareholder. The original stock
transfer book shall be prima facie evidence as to who are the shareholders
entitled to examine such list or transfer books or to vote at any meeting of
shareholders.
3.9. Waiver of Irregularities. All informalities and irregularities in
calls, notices of meeting and in the manner of voting, form of proxy,
credentials, and methods of ascertaining those present, shall be deemed waived
if no objection is made thereto at the meeting.
ARTICLE IV
BOARD OF DIRECTORS
4.1. General Powers and Qualifications. The property, affairs and
business of the Corporation shall be managed by the Board of Directors. The
Board of Directors may exercise all of the powers of the Corporation, except
such as are by law or by the Certificate of Incorporation or by these By-Laws
expressly conferred upon or reserved to the shareholders.
4.2. Number, Election and Term of Office. Until changed as hereinafter
provided, the number of directors shall be not less than three (3) nor more than
ten (10) as may be from time to time fixed by resolution of the Board of
Directors, but no decrease in the number of directors shall have the effect of
shortening the term of an incumbent director. Subject to the provisions of
Section 4.4.2 of this Article IV, the directors shall be elected annually by the
shareholders entitled to vote at the annual meeting of shareholders, by a
plurality of the votes at such election. Each director (whether elected at an
annual meeting or to fill a vacancy or otherwise) shall continue in office until
the annual meeting of shareholders held next after his election and until his
successor shall have been elected and qualified or until his earlier death,
resignation or removal in the manner hereinafter provided.
4.3. Meetings.
4.3.1. Time. Meetings shall be held at such time as the Board
of Directors shall fix, except that the first meeting of a newly
elected Board of Directors shall be held as soon after its election as
the directors may conveniently assemble.
4.3.2. Place. Meetings shall be held at such place, (within or
without the State of New York) as shall be fixed by the Board of
Directors.
4.3.3. Call. Special meetings of the Board of Directors may
be called by the Chairman of the Board, if any, the President, any
Vice President, or any two directors.
4.3.4. Notice. No notice shall be required for regular
meetings for which the time and place have been fixed. Written, oral or
any other mode of notice of the time and place shall be given for
special meetings no less than two days before the day on which the
meeting is to be held. Unless otherwise provided herein, the notice or
a waiver of notice of any meeting need not specify the business to be
transacted or the purposes of the meeting. Attendance of a director at
a meeting shall constitute a waiver of notice of such meeting and a
waiver of any and all objections to the place of the meeting, the time
of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any
objection to the transaction of business because the meeting is not
lawfully called or convened. A director may waive notice of a meeting,
before or after such meeting, in writing or by telegraph, radio, cable
or telecopy.
4.3.5. Telephonic Participation. Members of the Board of
Directors may participate in a meeting of said Board by means of a
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at
the same time, and participation by such means shall be deemed to
constitute presence in person at a meeting.
4.3.6. Chairman of the Meeting. Meetings of the Board of
Directors shall be presided over by the following directors in the
order of seniority and if present and acting: Chairman of the Board, if
any, the President, or any other director chosen by the Board.
4.3.7. Quorum. The presence, at any meeting, of a majority of
the total number of directors constituting the entire Board of
Directors shall be necessary and sufficient to constitute a quorum of
the transaction of business; and except as otherwise required by
statute, the Certificate of Incorporation or these By--Laws, the act of
a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. In the absence of a
quorum, a majority of the directors present at the time and place of
any meeting may adjourn such meeting. Notice of any adjourned meeting
need not be given to the directors who were not present at the time of
the adjournment.
4.4. Resignations, Vacancies and Removal.
4.4.1. Resignation. Any director may resign at any time by
giving written notice of such resignation to either the Board of
Directors, the President, a Vice President, the Secretary, or an
Assistant Secretary of the Corporation. Unless otherwise specified
therein, such resignation shall take effect upon receipt thereof by the
Board of Directors or by any such officer.
4.4.2. Vacancies. If any vacancy shall occur among the
directors by reasons of death, resignation, disqualification, removal
with cause or by reason of an increase in the number of directors or
otherwise, such vacancy may be filled by a majority vote of the
remaining directors, though less than a quorum. Any such vacancy and a
vacancy resulting from a removal without cause may also be filled by a
majority of the shareholders present and entitled to vote at any
meeting held during the existence of such vacancy, provided that the
notice of such meeting shall have mentioned such vacancy or expected
vacancy.
4.4.3. Removal. Any or all of the directors may be removed
with cause, by the majority vote of the class of stock by which he
was elected.
4.5. Written Action. Any action required to be taken at a meeting of
directors, or any action which may be taken at a meeting of directors or a
committee thereof, if any, may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all of the
directors or all the members of the committee, as the case may be, and is filed
in the minutes of the proceedings of the Board or of the committee, as the case
may be.
4.6. Compensation. The directors shall receive such compensation for
their services as may be authorized by resolution of the Board of Directors,
which compensation may include an annual fee and reimbursement for actual
expenses incurred in connection with the attendance at regular or special
meetings of the Board or any committee thereof. Nothing herein contained shall
be construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
4.7. Committees. By resolutions adopted by a majority of the Board of
Directors then in office, the Board may designate an executive committee and one
or more other committees, each such committee to consist of three or more
directors of the Corporation. The executive committee shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation (except as otherwise expressly limited
by statute). Each such committee shall have such of the powers and authority of
the Board as may be provided from time to time in resolutions adopted by a
majority of the Board then in office.
4.8. Chairman of the Board. The Board of Directors may elect a Chairman
of the Board or Co-Chairmen of the Board who may be designated as an officer or
officers of the Corporation as provided in these By-Laws to perform such duties
and have such responsibilities as from time to time may be assigned to such
Chairman or Co-Chairmen by the Board of Directors.
ARTICLE V
OFFICERS
5.1. Titles. The officers of the Corporation shall include, if and when
designated by the Board of Directors, the Chairman or Co-Chairmen of the Board,
the Chief Executive Officer or Co-Chief Executive Officers, the President, the
Chief Operating Officer, one or more Vice Presidents, the Chief Financial
Officer, the Secretary, the Treasurer, one or more Assistant Secretaries and
Assistant Treasurers, and such other officers and agents as may be appointed
from time to time by the Board of Directors. Any such office may be held by two
or more persons as designated from time to time by the Board of Directors.
5.2. Election, Term of Office and Qualifications. Each officer
specifically designated in Section 5.1 of this Article V shall be chosen by the
Board of Directors and shall hold his office until his successor shall have been
duly chosen and qualified or until his death or until he shall resign or shall
have been removed.
5.3. Removal, Resignations and Vacancies.
5.3.1. Removal. Any officer may be removed either with or
without cause by vote of a majority of the Board of Directors then in
office.
5.3.2. Resignations. Subject to any employment agreement with
the Corporation to the contrary, any officer may resign at any time by
giving written notice of-such resignation to the Board of Directors or
to the President, a Vice President, the Secretary or an Assistant
Secretary. Unless otherwise specified therein, such resignation shall
take effect upon receipt thereof by the Board of Directors or by the
President, a Vice President, the Secretary or an Assistant Secretary.
5.3.3. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause may be filled
for the unexpired portion of the term by a majority of the directors
then in office, although less than a quorum.
5.4. The Chairman or Co-Chairmen of the Board. The Chairman or
Co-Chairmen, as the case may be, of the Board, when present, shall preside at
all meetings of the shareholders and the Board of Directors. The Chairman or
Co-Chairmen, as the case may be, of the Board, shall serve as the Chief
Executive Officer or Chief Executive Officers, as the case may be, of the
Corporation and perform such other duties and have such other powers as the
Board of Directors shall designate from time to time. If there is no President,
then the Chairman or the Co-Chairmen of the Board, as the case may be, shall
also serve as Chief Operating Officer of the Corporation and shall have the
powers and duties prescribed in Section 5.5 of this Article V.
5.5. The President. The President, unless otherwise determined by the
Board of Directors, shall be the Chief Operating Officer of the Corporation.
Subject to the supervision and direction of the Board of Directors, he shall be
responsible for managing the affairs of the Corporation. He shall have
supervision and direction of all of the other officers of the Corporation and
shall have the powers and duties usually and customarily associated with the
office of the President. He shall preside at meetings of the shareholders and
the Board of Directors, unless the Chairman or one or both of the Co-Chairmen,
as the case may be, of the Board has been appointed and is or are present.
5.6. The Chief Operating Officer. The Chief Operating Officer, when
present, shall be responsible for the day-to-day operations of the Corporation.
He shall perform other duties and have such other powers as the Chief Executive
Officer or Co-Chief Executive Officers, as the case may be, or the Board of
Directors shall designate from time to time.
5.7. The Vice Presidents. The Vice Presidents shall have such powers
and duties as may be delegated to them by the President or by the Board of
Directors.
5.8. The Chief Financial Officer, Treasurer and Assistant Treasurer.
5.8.1. The Chief Financial Officer. The Chief Financial
Officer shall have the custody of the corporate funds and securities,
and shall deposit or cause to be deposited under his direction all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors or pursuant to authority granted by it. He shall keep or
cause to be kept the books of account of the Corporation in a thorough
and proper manner and shall render statements of the financial affairs
of the Corporation in such form and as often as required by the
President or by the Board of Directors. The Chief Financial Officer
shall have such other powers and duties as may be delegated to him by
the President.
5.8.2. Treasurer. The Treasurer shall perform duties commonly
incident to his office and, in case of the absence of the Chief
Financial Officer, perform the duties and exercise the powers of the
Chief Financial Officer, and shall have such other powers and duties as
may be delegated to him by the President.
5.8.3. Assistant Treasurer. The Assistant Treasurer shall, in
case of the absence of the Treasurer, perform the duties and exercise
the powers of the Treasurer, and shall have such other powers and
duties as may be delegated to him by the President.
5.9. Secretary and Assistant Secretary.
5.9.1. Secretary. The Secretary shall attend all meetings of
the Board of Directors and of the shareholders, and shall record the
minutes of all proceedings in a book to be kept for that purpose. He
shall perform like duties for the committees of the Board when
required. The Secretary shall give, or cause to be given, notice of
meetings of the shareholders, of the Board of Directors and of the
committees of the Board. He shall keep in safe custody the seal of the
Corporation, and when authorized by the President, an Executive Vice
President or a Vice President, shall affix the same to any instrument
requiring it, and when so affixed it shall be attested by his signature
or by the signature of an Assistant Secretary. He shall have such other
powers and duties as may be delegated to him by the President.
5.9.2. Assistant Secretary. The Assistant Secretary shall, in
case of the absence of the Secretary, perform the duties and exercise
the powers of the Secretary, and shall have such other powers and
duties as may be delegated to him by the President.
5.10. Additional Officers. Each other officer (including, if designated
as such, the Chairman of the Board) appointed by the Board shall hold office for
such period, have such authority and perform such duties as directed by the
Board of Directors.
5.11. Compensation. The salaries or other compensation of the officers
shall be fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director of the Corporation.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation and shall be in such form and contain such other words and/or
figures as the Board of Directors shall determine or the law require.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be as determined from time to
time by resolution duly adopted by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION
Each director or officer who the Corporation is empowered to indemnify
pursuant to the provisions of Section 722 of the Business Corporation Law (or
any similar provision or provisions of applicable law at the time in effect)
shall be indemnified by the Corporation to the full extent permitted thereby.
The foregoing right of indemnification shall not be deemed to be exclusive of
any other such rights to which those directors and officers seeking
indemnification from the Corporation may be entitled, including, but not limited
to, any rights of indemnification to which they may be entitled pursuant to any
agreement, insurance policy, other by-law or charter provision, vote of
shareholders or directors, or otherwise. No repeal or amendment of this Article
VIII shall adversely affect any rights of any person pursuant to this Article
VIII which existed at the time of such repeal or amendment with respect to acts
or omissions occurring prior to such repeal or amendment.
ARTICLE IX
AMENDMENTS
9.1. Shareholders. These By-Laws may be altered or amended by a
majority of the holders of the outstanding voting stock of the Corporation
present in person or by proxy at any annual or special meeting of the
shareholders.
9.2. Board of Directors. These By-Laws may be altered or amended by a
majority of the Board of Directors then in office to the full extent permitted
by law or regulation. If any By-Law resulting in impending election of directors
is adopted, amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors the By-Law so adopted, amended or repealed, together with a concise
statement of the changes made.
ANDREA ELECTRONICS CORPORATION
EMPLOYMENT AGREEMENT
This AGREEMENT is made effective as of November 20, 1998 (the "Effective Date")
by and between Andrea Electronics Corporation (the "Company"), a New York
corporation and Christopher P. Sauvigne (the "Executive").
WHEREAS, the Company wishes to assure itself of the services of the Executive
for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Company on a
full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. DUTIES AND RESPONSIBILITIES
The Executive shall serve as President and Chief Operating Officer of
the Company. Subject to the supervision and direction of the Board of Directors
of the Company (the "Board") and the Chief Executive Officer or Co-Chief
Executive Officers, as the case may be, of the Company and unless otherwise
determined by the Board or such Chief Executive Officer or the Co-Chief
Executive Officers, as the case may be, the Executive in such capacity shall: be
responsible for managing the affairs of the Corporation; have supervision and
direction of all of the other officers of the Corporation other than such Chief
Executive Officer or Co-Chief Executive Officers, as the case may be; have the
powers and duties usually and customarily associated with the office of the
President and Chief Operating Officer; and have such commensurate
responsibilities, duties and authority as may from time to time be assigned to
the Executive by the Board or such Chief Executive Officer or Co-Chief Executive
Officers, as the case may be. The Executive shall be appointed to the Company's
Board reasonably promptly following the effective date of this Agreement. The
Executive shall devote substantially all his time, energy and skill during
reasonable business hours to the service of the Company. The Executive's office
shall be located at the Company's headquarters, which shall be located at 45
Melville Park Rd., Melville, New York, 11747.
2. TERM OF AGREEMENT
The Company shall employ the Executive and the Executive shall serve as a
full-time employee of the Company for the term beginning on the effective date
of this Agreement and ending on December 31, 2001 (such period, as may be
extended in accordance herewith, being the "Employment Period"). The Employment
Period and this Agreement shall be automatically extended for successive one (1)
year terms following the expiration date of the Employment Period in effect
immediately prior to each such extension, unless either the Company or the
Executive notifies the other in writing at least twelve months prior to such
expiration that the Employment Period and this Agreement shall not be so
extended. Further, if employment is terminated for any reason other than death,
such termination will not result in the expiration of the term of this
Agreement.
3. COMPENSATION DURING TERM OF AGREEMENT
(a) Base Salary
The Company shall pay the Executive a salary (the "Base Salary") of not less
than the greater of (i) $200,000 per annum and (ii) the base salary of the Chief
Executive Officer of the Company or the higher of the base salaries of the
Co-Chief Executive Officers of the Company, as the case may be. Base Salary
shall include any amounts of compensation deferred by the Executive under any
employee benefit plan maintained by the Company. Such Base Salary shall be
payable weekly. The Executive's Base Salary shall be reviewed annually. Such
review shall be conducted by a Compensation Committee designated by the Board,
and the Board shall increase the Executive's Base Salary by a Cost of Living
Allowance ("COLA") percentage and a 7% merit increase based on performance as
determined by the Board. The increased Base Salary shall become the "Base
Salary" for purposes of this Agreement. In addition to the Base Salary provided
in this Section 3(a), the Company shall also provide the Executive, at no cost
to the Executive, with all such other benefits as are provided uniformly to
permanent full-time employees of the Company.
(b) Short-Term Incentive Compensation Program
The Executive shall participate in the Company's Short-Term Incentive
Compensation Program. Annual cash awards ("Short-Term Awards") under this
program will be based on the achievement of performance goals, both corporate
(80%) and individual (20%), expressed as a percentage of the Executive's Base
Salary or dollar amount adopted on or after the date of this Agreement.
Performance measures will include sales from new sources and operating income.
Performance goals, measures and annual awards will be determined by the
Compensation Committee and approved by the Board. The Company will pay the
Short-Term Award to the Executive within 60 days following the last day of the
Company's fiscal year. Notwithstanding whether any such performance goals are
achieved, the Short-Term Awards payable to the Executive shall be not less than
$150,000 per annum in respect of each year or fraction thereof of employment
under this Agreement. In the event that such performance goals are achieved or
the Chief Executive Officer or either or both Co-Chief Executive Officers, as
the case may be, of the Company receives Short-Term Awards in respect of any
year or fraction thereof during the Executive's employment under this Agreement,
then the Short-Term Award in respect of such year or fraction thereof payable to
the Executive shall be not less than $150,000 per annum plus not less than 75%
of any amount in excess of $150,000 per annum awarded to such Chief Executive
Officer or Co-Chief Executive Officer, as the case may be, provided, that for
purposes of calculating any such excess amount in the event that both Co-Chief
Executive Officers are awarded any such Short-Term Award in excess of $150,000,
the amount that shall be used for calculating the amount of such excess shall be
the higher of the Short-Term Awards to the Co-Chief Executive Officers.
(c) Long-Term Incentive Compensation Program
In addition to the Base Salary and Short-Term Award, the Executive shall be
entitled to participate, during the Employment Period, in the Company's
Long-Term Incentive Compensation Program. Long-term cash or equity-based awards
("Long-Term Awards") may include (i) stock options, (ii) stock appreciation
rights, (iii) restricted stock, (iv) deferred stock, (v) stock reload options
and/or (vi) other stock-based awards. The Executive shall receive an initial
stock option award under the Company's 1998 Stock Plan (the "Plan") covering
250,000 shares of the Common Stock, par value $.50 per share (each a "Share"),
of the Company at an exercise price of $8.875 per share, the market price as of
the date of this agreement. Each equity-based, Long-Term Award granted to the
Executive shall vest as follows: 25% shall vest on the first anniversary of such
award; an additional 25% shall vest on the second anniversary of such award; and
the remaining 50% shall vest on the third anniversary of such award.
Furthermore, the Executive will receive no less than 75% of all subsequent
Long-Term Awards given to the Chief Executive Officer or Co-Chief Executive
Officers, as the case may be, provided, that for purposes of calculating the
Long-Term Award, the number of shares used for calculating the amount shall be
the higher of the Long-Term Awards granted to the Co-Chief Executive Officers.
(d) The Company will provide the Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which the
Co-Presidents of the Company were participating or otherwise deriving benefit
from immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provision of this Section 3(d), the Executive will be entitled
to (i) participate in or receive benefits under any employee benefit plans
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plans, medical coverage
or any other employee benefit plan or arrangement made available by the Company
in the future to its senior executives and key management employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements, (ii) a car to be leased and appropriately
maintained and insured by the Company, (iii) annual fixed costs (including dues,
capital assessments and the like) not to exceed $6,500 per annum related to
membership in a club of the Executive's choice, (iv) four weeks of vacation per
year, with the right to carry vacation time not used in any year (excluding
vacation time so carried over) to the immediately subsequent year, and (v)
reimbursement for attendance and related reasonable travel expenses, if any, at
training sessions for the purpose of maintaining the Executive's Certified
Public Accountant's license.
(e) In addition to the Base Salary provided for by Section 3(a) and other
compensation provided for by Sections 3(b), (c) and (d) hereof, the Company
shall pay or reimburse the Executive for all reasonable travel and other
reasonable expenses incurred by the Executive performing his obligations under
this Agreement and may provide such additional compensation in such form and
such amounts as the Board may from time to time determine.
4. TERMINATION OF EMPLOYMENT
(a) Death or Disability:
This Agreement shall terminate automatically upon the Executive's death. The
Company may terminate this Agreement, after having established the Executive's
Disability (pursuant to the definition of "Disability" set forth below), by
giving to the Executive written notice of its intention to terminate the
Executive's employment. In such a case, this Agreement (but not the Executive's
employment with the Company) shall terminate effective on the 90th day after
receipt of such notice (the "Disability Effective Date"), provided that, within
90 days after such receipt, the Executive shall fail to return to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" means disability which, after the expiration of more than 52 weeks
after its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement upon acceptability not to be
withheld unreasonably).
(b) Cause:
The Company may terminate the Executive's employment for Cause (as defined
below). For purposes of this Agreement, "Cause" means:
(i) an act or acts of dishonesty (other than insubstantial or
inadvertent acts that do not materially affect the business, results of
operations or financial condition of the Company) taken by the Executive at the
expense of the Company;
(ii) repeated material violations by the Executive of the
Executive's obligations under Section 1 of this Agreement; or
(iii) the conviction of the Executive of a felony.
(c) Good Reason:
The Executive's employment may be terminated by the Executive for Good Reason
(as defined below). For purposes of this Agreement, "Good Reason" means:
(i) (A) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles, and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 1 of this Agreement or (B) any other action by the Company which
results in a diminishment in such position, authority, duties or
responsibilities, other than an insubstantial and inadvertent action which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the provisions of Section
3 of this Agreement, other than an insubstantial and inadvertent failure which
is remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any office or
location more than 50 miles from the location of the Company's headquarters set
forth in Section 1, except for travel reasonably required in the performance of
the Executive's responsibilities;
(iv) any purported termination by the Company of the Executive's employment
other than as permitted by this Agreement, it being understood that any such
purported termination shall not be effective for any purpose of this Agreement;
(v) any failure by the Company to comply with and satisfy Section 15(a) of this
Agreement; or
(vi) failure of the Executive to be nominated for election to the Board at each
meeting of the shareholders of the Company during the term of this Agreement
called for the purpose of, in addition to any other matters, electing the
members of the Board, unless either the Company or the Executive in accordance
with Section 2 notifies the other in writing at least twelve months prior to
such expiration that the Employment Period and this Agreement shall not be
extended.
(d) Effect of Termination:
Termination shall not affect any rights that the Executive may have under any
other program or arrangement.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Death
If the Executive's employment is terminated by reason of the Executive's death,
this Agreement shall terminate without further obligations to the Executive's
legal representatives under this Agreement other than those obligations accrued
hereunder at the date of the Executive's death. Anything in this Agreement to
the contrary notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to those provided by the Company to surviving
families of executives of the Company under such plans, programs and policies
relating to family death benefits, if any, as in effect at any time during the
90-day period immediately preceding the date of the Executive's death, or if
more favorable to the Executive and/or the Executive's family, as in effect at
any time thereafter with respect to other key executives and their families. The
unvested portion of such stock options shall immediately become vested upon the
Executive's death.
(b) Disability
If this Agreement is terminated by reason of the Executive's Disability, the
Executive shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to those provided by the Company to
disabled employees and/or their families in accordance with such plans, programs
and policies relating to disability, if any, as in effect during the 90-day
period immediately preceding the Disability Effective Date or, if more favorable
to the Executive and/or the Executive's family, as in effect at any time
thereafter with respect to other key executives and their families. The unvested
portion of such stock options shall immediately become vested upon the
Executive's Disability.
(c) Cause
If the Executive's employment shall be terminated for Cause pursuant to Section
4(b), the Company shall pay the Executive his full Base Salary through the Date
of Termination (as defined below) at the rate in effect at the time Notice of
Termination (as defined below) is given and provide to the Executive all then
vested benefits, deferred compensation and the like due to the Executive under
this Agreement, and the Company shall have no further obligations to the
Executive under this Agreement. In addition, the Executive shall be afforded the
opportunity to convert any term policies insuring the Executive's health or life
that are owned by the Company to individual policies, where permitted by the
terms of such policies.
(d) Good Reason; Other Than for Cause
If, during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, or the employment of the Executive shall be
terminated by the Executive for Good Reason, the Company shall pay to the
Executive a sum equal to (i) the amount of the remaining Base Salary payments
that the Executive would have earned if he continued his employment with the
Company during the remaining unexpired term of this Agreement at the Executive's
Base Salary at the Date of Termination; (ii) an amount equal to the product of
the highest annual amount of bonus and any other compensation paid to the
Executive during the term of this Agreement multiplied by the remaining number
of years of this Agreement and any fraction thereof; and (iii) an amount equal
to the product of the highest annual amount of contributions that were made on
the Executive's behalf to any employee benefit plans of the Company during the
term of this Agreement times the remaining number of years of this Agreement and
any fraction thereof. At the election of the Executive, which election is to be
made within thirty (30) days of the Date of Termination, such payments shall be
paid monthly during the remaining term of this Agreement following the
Executive's termination. Such payments shall not be reduced in the event the
Executive obtains other employment following termination of employment.
The Company will continue life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Company for the
Executive prior to his termination, except to the extent such coverage may be
changed in its application to all Company employees on a nondiscriminatory
basis. Such coverage shall cease upon the expiration of the remaining term of
this Agreement.
The Executive will be entitled to receive benefits due him under or contributed
by the Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Company on the Executive's behalf to the extent such benefits
are not otherwise paid to the Executive under a separate provision of this
Agreement.
6. CHANGE IN CONTROL
(a) For purposes hereof, a "change in control" shall be defined as:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13D-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of Directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) below; or
(ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Incumbent Board, provided, however, that
any individual becoming a director subsequent to the date hereof whose election
or nomination for election by the Company's shareholders was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board,
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Incumbent Board; or
(iii) Consummation of a reorganization, merger, consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively, immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 60% of
the then outstanding shares of common stock and the combined voting power,
respectively, of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Incumbent Board, providing for
such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(b) Upon the occurrence of a Change in Control, the Company shall pay the
Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, a sum equal to the greater of
(i) the payments and benefits due for the remaining term of this Agreement and
(ii) five (5) times the Executive's average annual compensation from the Company
for the five (5) preceding taxable years, or if the Executive's employment by
the Company is then less than five (5) years, the Executive's average annual
compensation from the Company during the Executive's employment by the Company,
provided, that if such period of employment includes a short taxable year or
less than all of a taxable year, compensation for such short or incomplete
taxable year must be annualized before determining the average annual
compensation for the period of employment. In annualizing compensation, the
frequency with which payments are expected to be made over an annual period must
be taken into account, such that any amount of compensation for such a short or
incomplete taxable year that represents a payment that will not be made more
often than once per year is not annualized. Such annual compensation shall
include any commissions, bonuses, pension and profit sharing plan benefits,
severance payments, retirement benefits, director or committee fees and fringe
benefits paid or to be paid to the Executive during such years. At the election
of the Executive, which election is to be made within thirty (30) days of the
Change in Control, such payment may be made in a lump sum or paid in equal
monthly installments during the thirty-six (36) months following the Executive's
termination. In the event that no election is made, payment to the Executive
will be made on a monthly basis during the thirty-six (36) months following the
Executive's termination.
(c) All restrictions on the restricted stock then held by the Executive will
lapse immediately, all stock options and stock appreciation rights then held by
the Executive will become immediately exercisable, and any performance shares or
units then held by the Executive will vest immediately, in full, in the event of
a Change in Control.
(d) Upon the occurrence of a Change in Control, the Executive will be entitled
to receive benefits due him under or contributed by the Company on his behalf
pursuant to any retirement, incentive, profit sharing, bonus, performance,
disability or other employee benefit plan maintained by the Company on the
Executive's behalf to the extent such benefits are not otherwise paid to the
Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Company will cause to be continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Company for the Executive prior to his severance, except to
the extent that such coverage may be changed in its application for all Company
employees on a nondiscriminatory basis. Such coverage and payments shall cease
upon the expiration of thirty-six (36) full calendar months following the Date
of Termination.
(f) In the event that the Executive is receiving monthly payments pursuant to
Section 6(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, the Executive shall elect whether the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis pursuant to such section. Such election shall
be irrevocable for the year for which such election is made.
(g) Any and all payments to be made to the Executive under this Agreement or
otherwise as a result of a Change in Control whether in the nature of severance
payments, liquidated damage payments, compensation or other payments (all of the
foregoing being hereinafter referred to as "Change in Control Payments"), shall
be made free and clear of, and without deduction or withholding for or on
account of, any tax which may be payable under Section 4999 of the Internal
Revenue Code of 1986 (the "Code"), now or hereafter imposed, levied, withheld or
assessed (such amounts being hereinafter referred to as the "Excise Taxes"). If,
notwithstanding the foregoing provision, any Excise Taxes are withheld from any
Change in Control Payments made or to be made to the Executive, the amounts so
payable to the Executive shall be increased to the extent necessary to yield to
the Executive (after payment of any tax which may be payable under Section 4999
of the Code) the full amount which he is entitled to receive pursuant to the
terms of this Agreement or otherwise without regard to liability for any Excise
Taxes and any other Federal income taxes, State income taxes, FICA/Medicare and
unemployment taxes thereon. In the event any Excise Taxes are now or hereafter
imposed, levied, assessed, paid or collected with respect to the Change of
Control Payments made or to be made to the Executive, Excise Taxes and any other
Federal, State, FICA/Medicare and unemployment taxes thereon shall be paid by
the Company or, if paid by the Executive, shall be reimbursed to the Executive
by the Company upon its receipt of satisfactory evidence of such payment having
been made.
7. NOTICE
(a) Any purported termination by the Company or by the Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given, the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected) and provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay the Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
8. POST-TERMINATION OBLIGATIONS
(a) All payments and benefits to the Executive under this Agreement shall be
subject to the Executive's compliance with Section 8(b), hereof during the term
of this Agreement and for one (1) full year after the expiration or termination
hereof.
(b) Following the expiration or termination of this Agreement, the Executive
shall, upon reasonable notice, furnish such information and assistance to the
Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party; provided, that, if the Executive's assistance is so required by
the Company subsequent to the expiration or termination of this Agreement, then
the Company shall pay to the Executive for such assistance a fee of $300 per
hour plus reasonable and necessary travel costs related to the provision of such
assistance; and provided, however, that Executive would not be required to
furnish such information and assistance to the Company in connection with any
litigation between the Executive and the Company or any of its subsidiaries or
affiliates.
9. NON-COMPETITION
(a) Upon any termination of the Executive's employment hereunder pursuant to
Section 6 hereof, the Executive agrees not to compete with the Company for a
period of one (1) year following such termination in any city, town or county in
which the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. The Executive agrees that during such period and within said cities,
towns and counties, the Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the business activities of the Company. The parties
hereto, recognizing that irreparable injury will result to the Company, its
business and property in the event of the Executive's breach of this Section
9(a) agree that in the event of any such breach, as judicially determined, by
the Executive, the Company will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by the
Executive, the Executive's partners, agents, servants, employers, employees and
all persons acting for or with the Executive. The Executive represents and
admits that in the event of the termination of his employment pursuant to
Section 6 hereof, the Executive's experience and capabilities are such that the
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Company, and that the enforcement of a remedy by way
of injunction will not prevent the Executive from earning a livelihood. Nothing
herein will be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach or threatened breach,
including the recovery of damages from the Executive.
(b) The Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Company is a valuable,
special and unique asset of the business of the Company. The Executive will not,
during or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Company or affiliates
thereof to any person, firm, corporation, or other entity for any reason or
purpose whatsoever. Notwithstanding the foregoing, the Executive may disclose
any concepts or ideas that are not solely and exclusively derived from the
business plans and activities of the Company. In the event of a breach or
threatened breach by the Executive of the provisions of this Section 9(b), the
Company will be entitled to an injunction restraining the Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Company, or from rendering any services to
any person, firm, corporation or other entity to whom such knowledge, in whole
or in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting the Company from pursuing any other remedies
available to the Company for such breach or threatened breach, including the
recovery of damages from the Executive.
10. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy
or similar process or assignment by operation of law, and any attempt, voluntary
or involuntary, to affect any such action shall be null, void and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of, the
Executive and the Company and their respective successors and assigns.
11. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been waived,
nor shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future as to any act other than that specifically waived.
12. SEVERABILITY
If, for any reason, any provision of this Agreement or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not so held invalid, and each
such other provision and part thereof shall, to the full extent consistent with
law, continue in full force and effect.
13. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
14. ARBITRATION
Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by the Executive within fifty (50)
miles from the location of the Company's headquarters set forth in Section 1, in
accordance with the rules of the American Arbitration Association then in
effect. One arbitrator shall be selected by the Company; one arbitrator shall be
selected by the Executive; and one arbitrator shall be selected by the two
arbitrators respectively selected by the Company and the Executive. Judgment may
be entered on the arbitrators' award in any court having jurisdiction, provided,
however, that the Executive shall be entitled to seek specific performance of
his right to be paid and receive benefits until the Date of Termination during
the pendency of any dispute or controversy arising under or in connection with
this Agreement.
In the event any dispute or controversy arising under or in connection with the
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, the Executive shall be entitled to the
payment of all back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due the
Executive under this Agreement.
15. PAYMENT OF LEGAL FEES; DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
(a) All reasonable legal fees and other expenses paid or incurred by the
Executive pursuant to any dispute or question of interpretation relating to this
Agreement shall be paid or reimbursed by the Company if the Executive is
successful pursuant to a legal judgment, arbitration or settlement.
(b) The Company shall maintain a directors' and officers' liability insurance
policy containing such provisions and amounts of coverage that are usual and
customary for companies of size similar to the Company and subject to risks
similar to those to which the Company is subject, provided that such coverage
can be obtained at commercially reasonable rates.
16. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assignee, whether direct or indirect,
by purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Company, expressly and unconditionally, to assume and
agree to perform the Company's obligations under this Agreement, in the same
manner and to the same extent that the Company would be required to perform if
no such succession or assignment had taken place.
17. UNFUNDED AGREEMENT SUBJECT TO CLAIMS OF COMPANY CREDITORS
The Company's obligation under this Agreement will be unfunded and the Executive
will not have any claims or rights superior to those of any general creditor of
the Company.
18. GOVERNING LAW; JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to any choice of law or conflict
of law provision or rule whether of the State of New York or any other
jurisdiction that would cause the application hereto of the laws of any
jurisdiction other than the State of New York. Each party agrees to that any
action arising under this Agreement may be brought in the federal or state
courts in the County of New York, State of New York, and each party agrees to
submit to the personal jurisdiction of such courts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has signed this
Agreement, on the day first above written.
ANDREA ELECTRONICS CORPORATION
By: /s/ John N. Andrea
Name: John N. Andrea
Title: Co-Chief Executive Officer
By: /s/ Christopher P. Sauvigne
Name: Christopher P. Sauvigne
<PAGE>
Exhibit 99.1
Andrea Electronics Corporation Announces New President
and Chief Operating Officer
MELVILLE, N.Y., Nov. 24 -- Andrea Electronics Corporation announced today
the appointment of Christopher P. Sauvigne to the position of President and
Chief Operating Officer. Mr. Sauvigne, a Partner at Andersen Worldwide, brings
more than 16 years of industry expertise in tax and business advisory consulting
for numerous international companies within the high technology, financial
services, consumer products, telecommunications and defense contracting
industries. As President and Chief Operating Officer, Mr. Sauvigne will be
responsible for worldwide operations and corporate development. In addition,
Chris Sauvigne will join the Company's Board of Directors.
"We are pleased to announce a very positive step in the growth of our
executive management team at Andrea Electronics. We are especially proud to
welcome Christopher and believe that he will be a key element in a team fully
committed to our long term global success," said John N. Andrea, Co-chairman and
Co-chief Executive Officer at Andrea Electronics Corporation. "Christopher is a
client-driven decision maker and brings to Andrea Electronics a strong record of
success."
Mr. Sauvigne has been with Arthur Andersen LLP since 1982, where he was a
Partner. He was the head of the Northeast Strategic Tax Consulting Services
group and was a designated leader of an international consulting team in the
firm's metropolitan New York region. In addition to the extensive advisory
engagements that Mr. Sauvigne was responsible for, he has given frequent
strategic and international advisory presentations to a broad range of audiences
that have included both internal and external tax professionals, prospective and
existing Arthur Andersen LLP clients and other general industry-specific groups.
"I am eager to accept the challenge as President and Chief Operating Officer
and I am committed to management's collective focus on developing a strong
market for our family of products and technologies," said Christopher Sauvigne,
President and Chief Operating Officer. "Andrea's commitment to creating
technologies for the advancement of the natural language, speech-centric markets
is creating new opportunities for growth into larger markets each day, and I
look forward to leading the Company into these emerging market opportunities."
Andrea Electronics Corporation designs, develops and manufactures audio
technologies and equipment for applications incorporating natural language
interfaces. The Company's patented Active Noise Reduction (ANR) earphone, Active
Noise Cancellation (ANC) near-field microphone and patented Digital Super
Directional Array (DSDA(TM)) and patent-pending Directional Finding and Tracking
Array (DFTA(TM)) far-field microphone technologies continue to be incorporated
into a wide range of audio products to eliminate background noise and ensure the
optimum performance of voice applications. Applications for the Company's
technologies include: speech recognition programs, Internet telephony,
video/audio conferencing, automobile PCs, home automation systems, hand-held
devices and multiplayer online games, among others. OEM and software publisher
customers and strategic partners of Andrea Electronics' include: Intel
Corporation, Microsoft Corporation, IBM Corporation, Lernout & Hauspie Speech
Products, Dragon Systems, Lotus Development Corporation, NEC, Mpath, Multitude,
IDT, HyperGraphics, ILINC, ViA Inc., Conversational Computing Corporation and
iSight, among others.
This press release may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The words
"anticipates," "believes," "estimates," "expects," "intends," "plans," "seeks,"
variations of such words, and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and involve matters that are subject to certain risks, uncertainties
and assumptions that are difficult to predict, including economic, competitive,
governmental, technological and other factors, that may affect the business and
prospects of Andrea Electronics Corporation (the "Company"). The Company
cautions investors about the following significant factors, which, among others,
have in some cases affected the Company's actual results and are in the future
likely to affect the Company's actual results and could cause them to differ
materially from those expressed in any forward-looking statements: the rate at
which Andrea Anti-Noise, DSDA, DFTA and other Andrea technologies are accepted
in the marketplace; the competitiveness of Andrea Anti-Noise, DSDA, DFTA and
other Andrea products in terms of technical specifications, quality, price,
reliability and service; the sufficiency of the Company's funds for research and
development, marketing and general and administrative expenses; infringement and
other disputes relating to patents and other intellectual property rights held
or licensed by the Company or third parties; and the Company's continuing
ability to enter and maintain collaborative relationships with other
manufacturers, software authoring and publishing companies, and distributors.
These and other similar factors are discussed under the heading "Certain Factors
that May Affect Future Results" included in the Management's Discussion and
Analysis of Financial Condition and Results of Operations in the Company's
Annual Report on Form 10-K and in the Company's Annual Report to stockholders,
and in documents subsequently filed by the Company with the Securities and
Exchange Commission.
"Andrea Anti-Noise", "DSDA" and "DFTA" are trademarks of Andrea Electronics
Corporation or an Andrea Electronics Corporation subsidiary.
To receive Andrea Electronics' latest news release and other corporate
documents via FAX -- no cost -- please dial 1-800-PRO-INFO and input the
Company's symbol AND, or visit Andrea Electronics' website at
http://www.andreaelectronics.com.
