ANDREA ELECTRONICS CORP
EXHIBIT 10.17
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<TYPE>EX-10.17
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<FILENAME>dex1017.txt
<DESCRIPTION>EXHIBIT 10.17
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                                                                   EXHIBIT 10.17

                               LICENSING AGREEMENT
                               -------------------
                                     Between
                         Andrea Electronics Corporation
                                       And
                              Analog Devices, Inc.

This Licensing Agreement is entered into this December 19, 2001, by and between
Andrea Electronics Corporation, a New York corporation having its principal
place of business at 45 Melville Park Road, Melville, New York 11747, together
with its subsidiaries and affiliates ("Andrea"), and Analog Devices, Inc., a
Massachusetts corporation having its principal place of business at One
Technology Way, Norwood, MA 02062 ("ADI").

                                    RECITALS

      WHEREAS, Andrea, by itself and through its subsidiaries, has developed and
is the owner of all right, title and interest in, to and under certain patented
microphone enhancing software algorithms (together with enhancements and/or
modifications providing error corrections and minor improvements in features and
functionality, "the Algorithms") that can be used to enhance voice-driven
natural language computer interfaces and telephony applications, among other
things; and

      WHEREAS, ADI desires to offer one or more of the following Algorithms:
PureAudio(R); EchoStop(TM); and DSDA(R), (the "Licensed Algorithms") to ADI's
Coder/Decoder ("CODEC") chip customers for use on personal computers ("PC's");

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Andrea and ADI (together
the "Parties") hereby agree as follows:

1.    Grant of Licenses; Protection of Goodwill and Reputation; Patents,
      ------------------------------------------------------------------
Copyrights and Trademarks.
-------------------------

1.1   Andrea grants to ADI a worldwide, royalty-bearing license, including the
right to sublicense to ADI CODEC chip customers, Andrea's PureAudio algorithm
and updates for use on PC's, excluding handheld computing devices such as tablet
PCs and PDAs. In addition, Andrea grants to ADI a worldwide, royalty-free
license, including the right to sublicense to ADI CODEC chip customers and/or
end users, to load Andrea's EchoStop and DSDA algorithms and updates for use on
PC's, excluding handheld computing devices such as tablet PCs and PDAs, subject
to said chip customers and/or end users entering into a terms of use agreement
directly with Andrea to enable either or both Licensed Algorithms. Should ADI
desire to use the Licensed Algorithms for purposes or devices other than those
described above, the terms of such use shall be subject to one or more separate
license agreements between ADI and Andrea. Updates shall include minor
enhancements to performance, functionality and features. Except as the Parties
may otherwise agree, ADI may not, modify, translate, disassemble, decompile,
reverse engineer or create derivative works based on the Licensed Algorithms.
The Licensed Algorithms are protected by United States and international
copyright law and treaties, as well as other intellectual property law and
treaties, and ADI is granted no title or ownership rights, in or

<PAGE>

to the Licensed Algorithms, in whole or in part, and ADI acknowledges that title
to all copyrights, patents, know-how, trade secrets and/or any other
intellectual property rights to and in the Licensed Algorithms and associated
documentation are and shall remain the property of Andrea and its successors or
assigns. As such, ADI warrants that it will not sell or sub-license the Licensed
Algorithms except as provided herein.

1.2   Andrea will not market, license or sell the Licensed Algorithms to be
bundled with integrated motherboard and riser card PC configurations during the
term of this Agreement. Notwithstanding the preceding sentence, Andrea may
market, sell or license the Licensed Algorithms for use in electronic equipment,
including PC's, where the Licensed algorithms are not bundled with integrated
motherboards or riser cards. Specifically, Andrea may market, sell or license
the Licensed Algorithms for use with specific applications, and/or aftermarket
audio input devices.

1.3   In consideration for the exclusive arrangement described in Section 1.2,
ADI will represent to the marketplace, including PC original equipment and after
market customers, that Andrea is ADI's "Preferred Partner". As its Preferred
Partner, ADI, when engaging in marketing efforts, will highlight the benefits
and advantages to the customer of selecting products equipped with Andrea
hardware and/or software audio input technologies, and where ADI has been given
the discretion to select the audio input provider, ADI will select Andrea under
similar terms, conditions and circumstances.

1.4   It is expressly understood by each of the Parties that the goodwill and
superior reputation enjoyed by the other is of ultimate importance to the other.
Each of the Parties agrees to use its best efforts to protect the other and to
avoid any action or inaction that may adversely affect the other's goodwill,
reputation or image.

1.5   Each of the Parties will use its best efforts to protect the patents,
copyrights, trademarks or other intellectual property of the other. At no time,
either during the term of this Agreement or subsequent to its expiration or
other termination, may either party utilize any of the other's names, logos,
patents, copyrights or trademarks except as authorized elsewhere in this
Agreement or as otherwise agreed to in writing between the Parties.

1.6   In order to facilitate the integration of the Licensed Software and
updates thereto bundled with ADI's CODEC products, Andrea will provide
reasonably necessary support at no charge to ADI.

2.    Royalty.
      -------

2.1   In consideration of the license granted under this Section 1.1, ADI shall
pay to Andrea a royalty equal to [*******] U.S. dollars ($[*******]) per year.
Payment for the initial Term of this Agreement shall be due and payable fifteen
(15) days after the execution of this Agreement. Payment for each subsequent
Term, if applicable, shall be payable and due on a quarterly basis in equal
installments of [*******] U.S. dollars ($[*******]) beginning on May 5, 2003,
and continuing on the fifth day of each successive August, November, February
and May for Term of this Agreement.

                                      -2-

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3.    Joint Promotion. During the term of this Agreement, ADI and Andrea shall
      ---------------
promote their relationship contemplated hereby and the complementarity of the
Licensed Algorithms and ADI's products through, by way of example only, press
releases, trade shows agreed upon by the Parties, and in relevant collateral
material. All press releases, trade show material and collateral material prior
to and in furtherance of such promotional efforts must be mutually agreed to by
the Parties. In furtherance of ADI's promotion of Andrea, ADI will introduce
Andrea to ADI's strategic partners and customers, including, but not limited to,
[*******]. Furthermore, it is expressly understood that all ADI products
incorporating the Licensed Algorithms will include Andrea's logo in a manner to
be reasonably agreed upon by the Parties. It is also understood that Andrea's
products that serve as companions to ADI products incorporating the Licensed
Algorithms will include ADI's SoundMAX logo in a manner to be reasonably agreed
upon by the Parties.

4.    Expenses.  Andrea and ADI will each bear its own costs and expenses
      --------
associated with the execution of, and performance of obligations under, this
Agreement, unless otherwise provided for within this Agreement.

5.    Term and Termination.
      --------------------

5.1   The term of this Agreement shall commence on May 1, 2002 hereof and shall
continue for a period of one (1) year and shall thereafter automatically renew
for additional one year periods unless ADI expresses its desire not to renew in
writing at least thirty (30) days prior to expiration of the initial or
successive period, or unless Andrea expresses its desire not to renew in writing
at least one (1) year prior to the expiration of any applicable successive
period commencing on May 1, 2004 or thereafter.

5.2   If either party shall breach any term, condition or provision of this
Agreement and (a) if the breaching party fails to cure for thirty (30) days
after notice of such breach, or (b) in the case of breaches which require more
than thirty (30) days to effect a cure, the breaching party fails to commence
and continue in good faith efforts to cure such breach, provided that such cure
shall be effected no later than sixty (60) days after receipt of such notice of
such breach, the non-breaching party may terminate this Agreement by written
notice to the other party.

5.3   The termination of this Agreement shall not affect any claim, right or
remedy that a party has against a breaching party.

5.4   In the event this Agreement is terminated pursuant to this Section 5
(except in the event of termination by Andrea pursuant to Section 5.2), ADI
shall have the right to use and distribute the CODEC chips with Licensed
Algorithms it has manufactured (or had manufactured) before the date of such
termination to PC customers and/or end users.

6.    Confidential Disclosure. The terms of the Non-Disclosure Agreement between
      -----------------------
ADI and Andrea effective as of June 15, 2001 (the "NDA") shall remain in full
force and effect and shall apply to this Agreement.

7.    WARRANTIES.
      ----------

7.1   ADI EXPRESSLY AGREES THAT THE LICENSED ALGORITHMS ARE PROVIDED ON AN "AS
IS" BASIS WITHOUT WARRANTIES OF ANY KIND, EXCEPT FOR THOSE

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SPECIFICALLY PROVIDED FOR IN SECTION 7.2. FURTHERMORE, ANDREA EXPRESSLY
DISCLAIMS ALL WARRANTIES AND CONDITIONS, EITHER EXPRESSED OR IMPLIED, INCLUDING
BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH REGARD TO THE SOFTWARE. IN NO EVENT WILL EITHER PARTY
BE LIABLE TO OR THROUGH ANY PARTY FOR INCIDENTAL, INDIRECT, SPECIAL,
CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND, INCLUDING LOST
PROFITS, LOSS OF BUSINESS OR BUSINESS INFORMATION, BUSINESS INTERRUPTION, OR
OTHER ECONOMIC DAMAGE, AND FURTHER INCLUDING INJURY TO PROPERTY, AS A RESULT OF
ANY PARTY'S USE OR INABILITY TO USE THE LICENSED ALGORITHMS OR BREACH OF ANY
WARRANTY OR OTHER TERM OF THIS CONTRACT, REGARDLESS OF WHETHER ANDREA WAS
ADVISED, HAD OTHER REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.

7.2   Andrea has full title and ownership of the Licensed Algorithms and has not
assigned, transferred, pledged or otherwise encumbered the Licensed Algorithms
or intellectual property rights with respect thereto or agreed to do so,
including in the performance of its obligations under this Agreement. The
Licensed Algorithms do not infringe or misappropriate any patent, trade secret,
copyright, mask work or other proprietary right of any third party, and Andrea
is not aware of any invention, product or prior act that would prevent or
interfere with the filing of an application for, or the issuance of, any patent
for the Licensed Algorithms or that would affect the validity or enforceability
of any patent that may issue showing Andrea as the inventor and covering any one
or more aspects of the Licensed Algorithms.

7.3   Andrea shall indemnify and hold ADI harmless from and against any and all
claims, liabilities, losses, damages, costs and expenses incurred by ADI as a
result of any breach of any of the representations or warranties contained in
Section 7.2 above.

8.    General Provisions.
      ------------------

8.1   Independent Contractor. ADI and Andrea shall each act as independent
      ----------------------
contractors. ADI and Andrea shall each conduct all of its business in its own
name and as it deems fit, provided it is not in derogation of the other's
interests. Neither party shall engage in any conduct inconsistent with its
status as an independent contractor, have authority to bind the other with
respect to any agreement or other commitment with any third party, nor enter
into any commitment on behalf of the other.

8.2   Severability. All provisions of this Agreement are intended to be
      ------------
interpreted and construed in a manner to make such provisions valid and
enforceable. The invalidity or non-enforceability of any phrase or provision
hereof will in no way affect the validity or enforceability of any other portion
of this Agreement, which invalid or non-enforceable phrase or provision will be
deemed modified, restricted, and/or limited only to the extent necessary to make
such phrase or provision valid and enforceable.

8.3   Notice. Written notice required by this Agreement shall be sent certified
      ------
mail, return receipt requested, by telecopy (confirmed by mail) or by overnight
courier, to each party at their registered address or to such other address as
the party may in writing designate from time to

                                      -4-

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time. Such notices shall be deemed effective on the date of receipt. Notice
shall be sent to the address set forth in the first paragraph of this Agreement.

8.4   Force Majeure. Whenever performance by Andrea or ADI of any of their
      -------------
respective obligations hereunder, other than the obligation to make payment of
money due, is substantially prevented by reason of any act of God, strike,
lock-out, or other industrial or transportational disturbance, fire, lack of
materials, law, regulation or ordinance, war or war conditions, or by reason of
any other matter beyond such party's reasonable control, then such performance
shall be excused and this Agreement shall be deemed suspended during the
continuation of such prevention and for a reasonable time thereafter.

8.5   Waiver. The waiver by any party hereto of a breach of any provision of
      -------
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.

8.6   Assignment. This Agreement may neither be assigned by either party, nor
      ----------
may the rights and obligations contained herein be transferred by either party
in any way, either wholly or partially, whether by operation of law or
otherwise, without the prior written consent of the other. Subject to the
provisions hereof, this Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their legal successors and assigns.

8.7   Entire Agreement; Modifications; Authority.
      ------------------------------------------

(a)    This Agreement constitutes the entire agreement between the Parties
hereto and supersedes all prior agreements and understandings, oral and written,
between the Parties relating to the subject matter hereof, and no change,
addition to or waiver of any of the terms of this Agreement shall be binding as
to the Parties hereto unless approved in writing by the Parties hereto or their
authorized representations.

(b)    Each of the Parties warrants and represents that it is authorized to
enter into this Agreement and that the terms of this Agreement and the
performance thereof are not in violation of the terms and conditions of any
other contract, instrument, order or decree to which it is party or by which it
is bound.

8.8   Governing Law; Dispute Resolution. Any and all disputes, controversies or
      ---------------------------------
claims arising from the terms, conditions or provisions of this Agreement shall
be resolved by reference to and in accordance with the laws of the State of New
York as applied to contracts made and performed entirely within the State of New
York. The prevailing party in a claim or controversy arising out of or in
relation to this Agreement shall be entitled to recover all reasonable
attorney's fees, costs of arbitration, and court costs from the losing party.

8.9   Further Assurances. The Parties shall execute any and all additional
      ------------------
documents and instruments and shall take any and all other actions necessary or
desirable to carry out the intent and purposes of this Agreement.

8.10  Counterparts. This Agreement may be executed in one or more counterparts,
      ------------
each of which shall be deemed an original, but all of which together shall
constitute a single instrument. The Parties expressly authorize the use of
facsimile counterparts, as a valid method of execution; however, the Parties
agree to cooperate in good faith to provide each other with a fully executed
original of this Agreement within five (5) business days of any facsimile
counterpart execution.

                                      -5-

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8.11  Survival. The terms of Sections 1.4, 1.5, 4, 5.4, 6, 7, 8.1, 8.3, 8.5, 8.6
      --------
and 8.8 shall survive expiration or termination of this Agreement, whether
pursuant to Section 5 or otherwise.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement the day and
year first written above.

ANDREA ELECTRONICS CORPORATION                   ANALOG DEVICES, INC.


By:/s/ Christopher P. Sauvigne                   By: /s/ John Croteau
   ------------------------------------------       ----------------------------
Name: Christopher P. Sauvigne                    Name:   John Croteau
                                                      --------------------------

Title: President and Chief Executive Officer     Title:  Product Line Director
                                                       -------------------------

                                      -6-





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