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Exhibit 10.4
SETTLEMENT AGREEMENT AND RELEASE
 
This Settlement Agreement and Release (this “Agreement") is made and entered
into as of the date it is executed by both parties, between Werner Pekarek
(“Employee”) and ClearOne Communications, Inc. (“ClearOne”), who shall be
referred to as the “Parties”, or individually as a “Party”.

DEFINITIONS

1.  The term “Employee” shall mean Employee and his or her heirs, assigns, and
legal representatives.

2.  The phrase "ClearOne Released Parties" shall mean ClearOne and any and all
business units, committees, groups, and their present, former or future parents,
affiliates, subsidiaries, employees, agents, directors, owners, officers,
attorneys, successors, predecessors, and assigns.

3.  The "Released Claims" shall mean any type or manner of suits, claims,
demands, allegations, charges, damages, or causes of action whatsoever in law or
in equity under federal, state, municipal or local statute, law, ordinance,
regulation, constitution, or common law, whether known or unknown, which
Employee has ever had or now has against the ClearOne Released Parties. This
includes but is not limited to any action for costs, interest or attorney's
fees, which arise in whole or in part from Employee's employment relationship
with ClearOne, from the ending of that relationship, and from any other conduct
by or dealings of any kind between Employee and the ClearOne Released Parties,
which occurred prior to the execution of this Agreement. This also includes but
is not limited to any and all claims, rights, demands, allegations and causes of
action for alleged wrongful discharge, breach of alleged employment contract,
breach of the covenant of good faith and fair dealing, termination in violation
of public policy, intentional or negligent infliction of emotional distress,
fraud, misrepresentation, defamation, interference with prospective economic
advantage, failure to pay wages due or other monies owed, failure to pay pension
benefits, conversion, breach of duty, interference with existing economic
relations, punitive damages, retaliation, discrimination on the basis of age in
violation of the Age Discrimination and Employment Act of 1967, as amended
("ADEA"), negligent employment, negligent supervision, Claims under Title VII of
the Civil Rights Act of 1964, claims under the Sarbanes-Oxley Act of 2002,
harassment or discrimination on the basis of sex, race, color, citizenship,
religion, age, national origin, or disability, or other protected classification
under the federal, state, municipal or local laws of employment, including those
arising under the common law, and any alleged violation of the Employee
Retirement Income Security Act of 1974 ("ERISA"), the Fair Labor Standards Act
("FLSA"), the Occupational Safety and Health Act ("OSHA"), and any other law.
Release Claims do not include any claims that arise in the future out of events
that occur after the date of this Agreement.

RECITALS

A. WHEREAS, the Parties desire to settle and compromise the Released Claims and
to enter into this Agreement.

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COVENANTS

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in consideration of the mutual covenants
set forth in this Agreement, the Parties agree as follows:

1.  Employee’s employment with ClearOne shall end effective August 11, 2006.

2.  Notwithstanding the provisions of section 1, above, after his or her
execution of this Agreement and upon the expiration of the revocation period
described in paragraph 22, ClearOne will make a one-time severance payment to
Employee in the net amount of $9,230.79.

3.  In addition, the Employee must elect from one of the following two options.
The election shall be made by circling either Option 1 or Option 2 and placing
the Employee’s initials next to the circle. The options are as follows:

A. Option 1. Employee retains Employee’s vested stock options and upon the
expiration of the presently existing employee, executive officer and director
trading blackout (which trading blackout will expire when ClearOne becomes
current in its periodic filings with the Securities and Exchange Commission),
Employee will have 90 days in which to exercise said vested options; or

B. Option 2. Employee will receive an additional net cash payment of $5,000.00
payable upon the expiration of the revocation period described in paragraph 22.
All unexercised stock options acquired by Employee during his employment with
ClearOne, whether vested or unvested, shall immediately be deemed cancelled.
Employee further agrees that all of his rights, entitlements, and benefits under
the 1998 ClearOne Stock Option Plan, including any agreements entered into in
relation to the foregoing plans, are hereby terminated and cancelled.

4.  Employee acknowledges that the above sums constitute consideration for
Employee’s execution and adherence to the provisions of this Agreement. Employee
understands and agrees that he or she would not receive the amounts specified
herein except for his or her execution of this Agreement and the fulfillment of
the promises contained herein. The ClearOne Released Parties make no
representations whatsoever to Employee concerning the taxable status of the
payment of the settlement amount. Employee assumes full and sole responsibility
for any tax consequences related to the settlement amount. Employee understands
and agrees to indemnify and hold harmless the ClearOne Released Parties from any
taxes, assessments, withholding obligations, penalties or interest payments that
they may incur at any time by reason of demand, suit or proceeding brought
against them for any taxes or assessments or withholdings arising out of the
payment of the settlement amount. Employee acknowledges he or she has been fully
compensated by the terms of this Agreement for releasing the Released Claims.

5.  Employee represents that he or she has not filed and there is not pending
with any governmental agency or any state or federal court, any other claims,
complaints, charges, or lawsuits of any kind against the ClearOne Released
Parties.

6.  Employee hereby waives and releases each and every one of the ClearOne
Released Parties from liability with respect to the Released Claims. Employee
acknowledges that he or she understands he or she is prohibited from any further
relief on the Released Claims. Specifically and without limitation, Employee
understands and agrees that he or she is waiving and forever discharging the
ClearOne Released Parties from any and all claims, causes of action or
complaints he or she may have or has ever had, which have or may have arisen
prior to the execution of this Agreement, and Employee understands that the
Release Claims specifically includes age discrimination claims under the Age
Discrimination in Employment Act (ADEA). However, employee understands that he
or she can bring a suit limited to challenging the enforceability of the waiver
and release of any age discrimination claims under the ADEA.

7.  Employee represents and warrants that he or she is the sole owner of the
Released Claims, that the Released Claims have not been assigned, transferred,
or disposed of in fact, by operation of law or in any manner whatsoever, and
that he or she has the full right and power to grant, execute and deliver the
full and complete releases, undertakings, and agreements herein contained.
 
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8.  Employee agrees that the existence and terms of this Agreement shall be and
remain confidential. Employee acknowledges that this confidentiality provision
is an essential element of the consideration he provides to ClearOne for
entering into this Agreement. Therefore, Employee agrees not to discuss or
describe any information concerning ClearOne, the circumstances of the ending of
Employee's employment with ClearOne or the existence of the terms of this
Agreement to anyone, except as required by law or permitted herein.

9.  Employee reaffirms and agrees to observe and abide by the terms of the
Confidentiality and Invention Assignment Agreement (“Confidentiality Agreement”)
he or she signed with ClearOne. Employee certifies and represents that he or she
has fully complied with all terms of the Confidentiality Agreement to date and
has returned to ClearOne all records or documents or other property of ClearOne
within his or her possession. Employee understands that his or her receipt of
the consideration provided under this Agreement is expressly conditioned on
Employee’s compliance with the obligations in this paragraph.

10.  Employee agrees not to disparage, orally or in writing, ClearOne, its
officers, employees, management, operations, products, designs, or any other
aspects of ClearOne’s affairs to any third person or entity.

11.  Employee agrees that for one year following Employee’s separation from
employment with ClearOne, Employee shall not, directly or indirectly, in any
capacity (including but not limited to, as an individual, a sole proprietor, a
member of a partnership, a stockholder, investor, officer, or director of a
corporation, an employee, agent, associate, or consultant of any person, firm or
corporation or other entity) hire any person from, attempt to hire any person
from, or solicit, induce, persuade, or otherwise cause any person to leave his
or her employment with ClearOne.

12.  Employee agrees that for one year following Employee’s separation from
employment with ClearOne, Employee shall not, directly or indirectly, in any
capacity, solicit the business of any customer of ClearOne except on behalf of
ClearOne, or attempt to induce any customer of ClearOne to cease or reduce its
business with ClearOne; provided that following Employee’s separation from
employment with Company he or she may solicit a customer of ClearOne to purchase
goods or services that do not compete directly or indirectly with those then
offered by ClearOne.

13.  Any breach of Employee’s obligations under this Agreement shall, in
addition to all other remedies available to ClearOne, result in the immediate
release of ClearOne from any obligations it has to provide further payments
under this Agreement. In addition, ClearOne may pursue such additional legal or
equitable remedies as may be available to it.

14.  This Agreement does not constitute and shall not be construed as an
admission by ClearOne of any breach of any alleged agreements or duties, or of
any wrongdoing toward Employee or any other person, including any alleged breach
of contract or violation of any federal, state, or local law, regulation, or
ordinance. ClearOne specifically disclaims any liability to Employee for
wrongdoing of any kind.

15.  The Parties agree that this Agreement may be used in evidence in a
subsequent proceeding in which any of the Parties alleges a breach of this
Agreement.

16.  The parties shall attempt in good faith to resolve any dispute arising out
of or relating to this Agreement by negotiation. The parties recognize that
irreparable injury to ClearOne will result from a material breach of this
Agreement, and that monetary damages will be inadequate to rectify such injury.
Accordingly, notwithstanding anything to the contrary, ClearOne shall be
entitled to one or more preliminary or permanent orders: (i) restraining or
enjoining any act which would constitute a material breach of this Agreement,
and (ii) compelling the performance of any obligation which, if not performed,
would constitute a material breach of this Agreement, and to attorney’s fees in
connection with any such action

17.  Employee affirms he or she is not relying on any representations or
statements made by the ClearOne Released Parties which are not specifically
included in this Agreement. Employee acknowledges he or she has been informed in
writing by this Agreement that he or she has the right to consult with legal
counsel regarding this release, that he or she has been advised by this
Agreement that he or she should consult with legal counsel and confirms Employee
has consulted with counsel to the extent desired concerning the meaning and
consequences of this Agreement.
 
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18.  This Agreement constitutes the entire agreement between the Parties with
relation to the subject matter hereof. Any prior negotiations or correspondence
relating to the subject matter hereof shall be deemed to have merged into this
Agreement and to the extent inconsistent herewith shall be deemed to be of no
force or effect.

19.  This Agreement may be executed in any number of counterparts, each of which
when executed and delivered shall be an original, but all of such counterparts
shall constitute one and the same instrument.

20.  This Agreement shall be interpreted and enforced in accordance with the
laws of the State of Utah, and/or when applicable, of the United States. By
entering into this Agreement, the Parties submit themselves and their principals
individually to personal jurisdiction in the courts in the State of Utah and
agree that Utah is the only appropriate venue for any action brought to
interpret or enforce any provision of this Agreement, or which may otherwise
arise under or relate to the subject matter of this Agreement.

21.  The provisions of this Agreement are severable, and if any part of it is
found to be unenforceable, the other parts and/or paragraphs shall remain fully
valid and enforceable. Should any provisions of this Agreement be determined by
any court or administrative body to be invalid, the validity of the remaining
provisions is not affected thereby and the invalidated part shall be deemed not
a part of this Agreement. Any court or administrative body shall construe and
interpret this Agreement as enforceable to the full extent available under
applicable law. This Agreement shall survive the termination of any arrangements
contained in it.

22.  Employee acknowledges and understands this is a legal contract and that he
or she signs this Agreement knowingly, freely and voluntarily and has not been
threatened, coerced or intimidated into making the same. Employee acknowledges
that he or she has had ample and reasonable time to consider this Agreement and
the effects and import of it and that he or she has fully dwelt on it in his or
her mind and has had such counsel and advice, legal or otherwise, as Employee
desires in order to make this Agreement. EMPLOYEE, BY SIGNING THIS AGREEMENT,
ACKNOWLEDGES IT CONTAINS A RELEASE OF KNOWN AND UNKNOWN CLAIMS. Employee has
read and fully considered this Agreement and understands and desires to enter
into it. The terms of this agreement were derived through mutual compromise and
are fully understood. Employee acknowledges that he or she has been offered at
least twenty one (21) days to consider the impact of this Agreement and its
release of his or her rights to bring suit against the ClearOne Released Parties
and after due consideration has decided to enter into this Agreement at this
time. Employee further understands that he or she may revoke this Agreement for
a period of up to seven (7) days following signature and execution of the same.
This Agreement shall not become effective or enforceable until the revocation
period has expired. Any revocation within this period must be signed and
submitted in writing to the undersigned representative of ClearOne and must
state, "I hereby revoke my acceptance of the Agreement." Employee understands
that if he or she revokes this Agreement, he or she is not entitled to receive
the consideration provided by this Agreement. 

If Employee does not accept such terms and conditions within 21 days, this offer
shall expire at that time.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates set
forth below.

 
EMPLOYEE
 
/s/ Werner Pekarek
Werner Pekarek
Date: August 24, 2006
 
 
CLEARONE COMMUNICATIONS, INC.
 
/s/ Zee Hakimoglu
Zee Hakimoglu
President and Chief Executive Officer
Date: August 31, 2006

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