Document:

================================================================================
                                                                    Exhibit 10.1
                            COLONIAL COMMERCIAL CORP.

                      NOTICE OF OFFER TO PURCHASE FOR CASH
                      SHARES OF CONVERTIBLE PREFERRED STOCK
                      THAT ON AUGUST 15, 2005 WERE OWNED BY
                          HOLDERS OF 99 SHARES OR LESS
                         OF CONVERTIBLE PREFERRED STOCK

August  16,  2005

Dear  Shareholder:

     Our  company  is  offering  to  purchase for cash all shares of Convertible
Preferred  Stock  that  on  August 15, 2005 were owned by holders of 99 or fewer
shares  of  Convertible  Preferred  Stock.

     A  purpose of the offer is to enable our Convertible Preferred shareholders
owning  odd  lots  to  receive cash for their shares without incurring brokerage
fees.  Another  purpose  of  the  offer  is  to  reduce  the cost of maintaining
shareholder  lists  for  persons  who  own  only  a  small number of Convertible
Preferred  shares.

     Please  note  the  following  information  carefully:

     1.   The  offer  is  being  made only to shareholders who owned 99 or fewer
          shares  of  Convertible  Preferred  Stock  on  August  15,  2005,  and
          only for the purchase of those shares.

     2.   This  offer  will  expire  on  September 30, 2005 at 5:00 p.m. Eastern
          Standard  Time.  The  attached  Letter  of  Transmittal,  along  with
          your  certificate(s),  must  be  received by the Depositary before the
          deadline.

     3.   If you hold your shares in a broker's account you will need to arrange
          for  your  broker  to  register  the  shares  in your name if you want
          to tender these shares.

     4.   We  will  pay  $2.00  for  each  Convertible  Preferred share that you
          properly  submit  for  purchase,  which  is  the highest closing price
          for  the  common  stock  during  the  period from July 1, 2005 through
          August  15,  2005.  The  highest  closing  price  of  the  Convertible
          Preferred Stock during this period was $1.80.

     5.   The  average  of  the  closing prices of our common stock from July 1,
          2005  though  August  15,  2005  was $1.73. The average of the closing
          prices  of  the  Convertible Preferred Stock from July 1, 2005 through
          August  15,  2005  was $1.64. The closing price of our common stock on
          August  15,  2005  was  $1.85.  The  closing  price of the Convertible
          Preferred Stock on August 15, 2005 was $1.70.

     6.   The  purchase  price  will  be  paid within 15 days after you properly
          submit your shares. No interest accrues on the purchase price.

     7.   Shares  of  Convertible Preferred Stock are convertible into shares of
          common stock on a share for share basis.

     8.   Shares of Convertible Preferred Stock have a preference in liquidation
          of $5.00 per share.

<PAGE>
     9.   The  last  date  on  which you may tender your shares is September 30,
          2005.

     10.  If  you  decide  to  tender  your shares, you should send the attached
          Letter  of  Transmittal,  along  with  your  properly  endorsed
          certificates for these shares, to the Company's Depositary as follows:

By Mail or Overnight Courier:            By Hand:
-----------------------------            --------
American Stock Transfer & Trust Company  American Stock Transfer & Trust Company
Operations Center                        Attn: Reorganization Department
Attn: Reorganization Department          59 Maiden Lane
6201 15th Avenue                         New York, NY 10038
Brooklyn, NY 11219

     A  reply  envelope  is  enclosed  for  your  convenience.

     11.  Once  you  submit  your  shares  you will not be permitted to withdraw
          them.

     12.  The  following  documents  contain  important information about us and
          about  the  rights  of  the  holders  of  Convertible  Preferred Stock
          and Common Stock.

               -    Our  Annual  Report on Form 10-K for the year ended December
                    31,  2004;

               -    Our Quarterly Report on Form 10-Q for the quarter ended June
                    30,  2005;

               -    Our Current Reports on Form 8-K dated May 16, 2005, June 20,
                    2005,  August  15,  2005  and  August  16,  2005.

          You  can  obtain  these  documents  from the SEC's internet website at
          http://www.sec.gov.  You  can  also  obtain  these  documents  (not
          including  exhibits)  from  us  without  charge  by requesting them in
          writing  or  by  telephone from us at 275 Wagaraw Road, Hawthorne, New
          Jersey  07506,  telephone  973-427-8224; Attention Investor Relations.
          Please  be  sure  to  include  your  complete name and address in your
          request.

If  you  have  any  questions  with  regard to the Tender Offer, please call the
Depositary's Shareholder Services unit at [toll-free] (877) 248-6417 or at (718)
921-8317.

                                        COLONIAL COMMERCIAL CORP.

                                        By:  Bernard Korn

                                             President

                                        2
                                        2
<PAGE>
<TABLE>
<CAPTION>
                          Questions and Answers About the Offer to Purchase
                          -------------------------------------------------
<S>                       <C>
What is the offer?        We are inviting shareholders who on August 15, 2005 owned 99 shares
                          or less of our Convertible Preferred Stock to sell those shares to the
                          Company for cash.

What is the Company       We will pay $2.00 for each Convertible Preferred share that you properly
offering to pay for the   submit for purchase.  The purchase price will be paid within 15 days
shares?                   after you properly submit your shares. No interest accrues on the
                          purchase price.

What is the purpose of    From the shareholders' standpoint, it is an opportunity to receive cash for
the Offer?                the shares without incurring brokerage fees associated with odd lot sales.
                          From the Company's standpoint, purchase of the shares reduces the cost
                          of maintaining shareholders lists and printing and mailing costs for
                          persons who own only a small amount of Convertible Preferred shares.

How do I sell my          Before September 30, 2005, you must send a properly endorsed stock
shares?                   certificate that is registered in your name, in the enclosed postage paid
                          envelope, together with a properly filled-out Letter of Transmittal and
                          your social security number or executed Form 9, to:

                                          American Stock Transfer & Trust Company
                                                      Operations Center
                                                Attn: Reorganization Department
                                                       6201 15th Avenue
                                                      Brooklyn, NY 11219

What must I do if I want  You must arrange with your broker to register your shares into your
to tender and I hold my   name.
shares in a broker's
account

When will I be paid for   The purchase price will be paid within 15 days after you properly submit
my shares?                your shares, except for certificates having incorrect endorsements or no
                          social security numbers, which will require additional correspondence.

Do I have to sell my      No. You are not required to sell any Convertible Preferred shares.
shares?

Is there any brokerage    No.  We will purchase shares directly from each Convertible Preferred
commission?               shareholder at the purchase price.  If you hold your shares in a broker's
                          account, you should request the broker to issue to you a certificate for
                          those shares so that you may submit those certificates.  However, if you
                          hold your shares through a broker or other nominee, you should check to
                          see if they will impose a charge for remitting shares on your behalf.

                                        3
<PAGE>
How has the Convertible   Our Convertible Preferred Stock now trades sporadically on the OTC
Preferred Stock traded    Bulletin Board under the symbol CCOMP. The quarterly high and low
recently?                 sales prices for our Convertible Preferred Stock and Common Stock as
                          reported by the Pink Sheets or the OTC Bulletin Board are set forth in
                          the table below.  Convertible Preferred Stock is convertible to Common
                          on a one for one basis.

                                           Convertible Preferred     Common Stock
                                                    Stock
                          ---------------------------------------------------------
                                2003          High         Low       High     Low
                          ---------------------------------------------------------
                          First Quarter   Not           Not         $  0.15  $ 0.00
                                          Available     Available
                          Second Quarter  Not           Not            0.15    0.10
                                          Available     Available
                          Third Quarter   $        .50  $      .35     0.98    0.50
                          Fourth Quarter           .60         .55     1.05    0.13

                                           Convertible Preferred     Common Stock
                                                    Stock
                          ---------------------------------------------------------
                                2004          High         Low       High     Low
                          ---------------------------------------------------------
                          First Quarter   $       1.05  $      .60  $  1.95  $ 0.50
                          Second Quarter          1.50         .95     1.85    1.20
                          Third Quarter           2.00        1.20     2.05    1.16
                          Fourth Quarter          1.80        1.30     1.78    1.35

                                           Convertible Preferred     Common Stock
                                                    Stock
                          ---------------------------------------------------------
                                2005          High         Low       High     Low
                          ---------------------------------------------------------
                          First Quarter   $       1.68  $     1.48  $  1.69  $ 1.30
                          Second Quarter          1.60        1.31     1.66    1.40

Will my sale of my        You will recognize gain or loss equal to the difference between the cash
Convertible Preferred     you receive for your Convertible Preferred shares and your tax basis
shares to the Company     (cost) of your Convertible Preferred shares.  We urge you to consult with
be taxable?               your own tax advisor regarding your gain or loss resulting from your sale
                          of Convertible Preferred shares to the Company.

Is Colonial Commercial    Neither Colonial Commercial Corp. nor our Board of Directors makes
making any                any recommendation to any shareholder as to whether to sell all or any
recommendation about      shares.  You must make your own decision as to whether to sell shares
whether I should sell my  and, if so, how many shares to sell.
shares?
</TABLE>

                                        4
<PAGE>
                              LETTER OF TRANSMITTAL
                   TO ACCOMPANY CONVERTIBLE PREFERRED STOCK OF
                            COLONIAL COMMERCIAL CORP.
                   TENDERED PURSUANT TO THE OFFER TO PURCHASE
                              DATED AUGUST 16, 2005

   THIS OFFER EXPIRES ON SEPTEMBER 30, 2005 AT 5:00 P.M. EASTERN STANDARD TIME

IMPORTANT: THIS LETTER OF TRANSMITTAL, OR A MANUALLY SIGNED COPY OF THIS LETTER
            OF TRANSMITTAL, TOGETHER WITH CERTIFICATES AND ALL OTHER
    REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
                                EXPIRATION DATE.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                        DESCRIPTION OF SHARES SURRENDERED
--------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)    CERTIFICATE(S) SURRENDERED
       (PLEASE FILL IN EXACTLY AS NAME(S)      (ATTACH ADDITIONAL SIGNED LIST IF
          APPEAR(S) ON CERTIFICATE(S))                     NECESSARY)
--------------------------------------------------------------------------------
                                                  CERTIFICATE   TOTAL NUMBER OF
                                                   NUMBER(S)        SHARES
                                                 -------------------------------
<S>                                              <C>            <C>
                                                 -------------------------------

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

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

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

                                                 -------------------------------
                                                 TOTAL SHARES
--------------------------------------------------------------------------------
</TABLE>

                                DELIVERY ADDRESS:
                     American Stock Transfer & Trust Company

      By Mail or Overnight Courier:                      By Hand:

American Stock Transfer & Trust Company  American Stock Transfer & Trust Company
           Operations Center                 Attn: Reorganization Department
     Attn: Reorganization Department                 59 Maiden Lane
           6201 15th Avenue                        New York, NY 10038
          Brooklyn, NY 11219

To  Colonial  Commercial  Corp.:

The  undersigned certifies that as of August 15, 2005 he or she owned fewer than
100  shares  of  Convertible  Preferred  Stock  of  Colonial  Commercial.  The
undersigned  hereby tenders to Colonial Commercial Corp., a New York corporation
("COLONIAL  COMMERCIAL"),  all  of  its  above-described  shares  of Convertible
Preferred  Stock,  $.01  par  value  (collectively, the "SHARES"), at a purchase
price  of  $2.00  per  Share.

The  tender  is  made  pursuant to Colonial Commercial's Offer to Purchase dated
August  16,  2005  (the  "OFFER").

The  undersigned  hereby  sells,  assigns  and  transfers the Shares to Colonial
Commercial, and irrevocably constitutes and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to the Shares,
with full power of substitution. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Depositary or Colonial Commercial
to  be  necessary  or desirable to complete the sale, assignment and transfer of
the  Shares  tendered  hereby.

Please  mail the check for the purchase price of any Shares purchased and/or any
certificates  for  Shares  not  purchased,  and  accompanying  documents,  as
appropriate,  to  the  undersigned  at the address shown above, unless otherwise
indicated  in  the  "Special  Delivery  Instructions"  box.

  SIGNATURE(S):                                   PLACE MEDALLION SIGNATURE
               -----------------------------           GUARANTEE HERE
  SOCIAL SECURITY NUMBER (S):                      (Required when either
                             ---------------    "Special Payment Instructions"
  DATE:                                             or "Special Delivery
       -------------------------------------      Instructions" is filled in)
  (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)

<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                 "A" SPECIAL PAYMENT INSTRUCTIONS                                  "B" SPECIAL DELIVERY INSTRUCTIONS
----------------------------------------------------------------  -----------------------------------------------------------------
<S>                                                               <C>
TO BE COMPLETED ONLY IF A CHECK IS TO BE ISSUED IN A NAME OTHER   TO BE COMPLETED ONLY IF A CHECK IS TO BE MAILED TO AN ADDRESS
THAN THE NAME OF THE REGISTERED HOLDER LISTED ABOVE               OTHER THAN THE ADDRESS LISTED ABOVE OR IN "SPECIAL PAYMENT
                                                                  INSTRUCTIONS"
----------------------------------------------------------------  -----------------------------------------------------------------
NAME                                                              NAME
----------------------------------------------------------------  -----------------------------------------------------------------

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

----------------------------------------------------------------  -----------------------------------------------------------------
ADDRESS                                                           ADDRESS
----------------------------------------------------------------  -----------------------------------------------------------------

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

----------------------------------------------------------------  -----------------------------------------------------------------
ZIP CODE                                                          ZIP CODE
----------------------------------------------------------------  -----------------------------------------------------------------

----------------------------------------------------------------  -----------------------------------------------------------------
TIN OR SSN                                                        TIN OR SSN
(Also complete substitute Form W-9 included herein)               (Also complete substitute Form W-9 included herein)
----------------------------------------------------------------  -----------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
<S>                   <C>                                                           <C>
                      PART 1 PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION            SOCIAL SECURITY NUMBER OR
SUBSTITUTE            NUMBER IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND          EMPLOYER IDENTIFICATION
FORM W-9              DATING BELOW                                                            NUMBER
                      ____________________________________________________________  _______________________________
                      SIGNATURE: ______________________________Date: _____________  SS# OR EMPLOYER ID

PAYER'S REQUEST FOR   CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY      PART 3 -
TAXPAYER              THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,           Awaiting TIN  [_]
IDENTIFICATION        CORRECT AND COMPLETE
NUMBER (TIN)          Signature: ______________________________Date: _____________
<FN>

DEPARTMENT OF THE     PART 2 -Check this box if you are NOT subject to backup withholding under the provisions
TREASURY              of Section 3406(a)(1)(C) of the Internal Revenue Code because (1) you have not been notified
INTERNAL REVENUE      that you are subject to backup withholding as a result of failure to report all interest or
SERVICE               dividends or (2) the Internal Revenue Service has notified you that you are no longer subject
                      to backup withholding:  [_]

NOTE:     FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP U.S. FEDERAL INCOME TAX WITHHOLDING
          OF 28% OF ANY PAYMENTS MADE TO YOU. SEE INSTRUCTIONS FOR ADDITIONAL DETAILS AND THE ABOVE IMPORTANT
          TAX INFORMATION.
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER

I  certify  under penalties of perjury that a taxpayer identification number has
not  been issued to me, and either (a) I have mailed or delivered an application
to  receive a taxpayer identification number to the appropriate Internal Revenue
Service center or Social Security Administration Office, or (b) I intend to mail
or  deliver  an  application  in  the near future. I understand that if I do not
provide  a  taxpayer  identification  number within thirty (30) days, 28% of all
reportable  payments  made  to  me thereafter will be withheld until I provide a
number.

Signature: ______________________________  Date: ______________________

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

                PLEASE FILL OUT YOUR PERSONAL INFORMATION BELOW.

NAME:
--------------------------------------------------------------------------------
                                 (Please Print)

CAPACITY (IF SIGNING AS FIDUCIARY, TRUSTEE, ETC.)
--------------------------------------------------------------------------------
                                 (Please Print)

ADDRESS (INCLUDING ZIP CODE):
--------------------------------------------------------------------------------
                                 (Please Print)

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

AREA CODE AND TELEPHONE NUMBER:  (   )
--------------------------------------------------------------------------------

<PAGE>
                     INSTRUCTIONS FOR LETTER OF TRANSMITTAL

1.   Delivery of Letter of Transmittal and Certificates.  This Letter of
Transmittal should be properly filled in, dated and signed by the owner(s) of
the shares which are delivered or mailed, together with the stock certificate(s)
for said shares, to American Stock American Stock Transfer & Trust Company (the
"Depositary") at the address on the face hereof.  The method of delivery is at
your option and risk, but if sent by mail, we suggest registered or certified
mail, properly insured with return receipt requested.

2.   Check for Purchase Price Issued in The Same Name.  Unless otherwise
indicated under "Special Payment Instructions", the check(s) for Shares redeemed
shall be issued in the same name as the registered holder(s) and no endorsement
or transfer tax stamps shall be required on the certificate(s).

3.   Special Payment and Delivery Instructions.  If the check(s) for Shares
redeemed is (are) to be issued in a name other than that of the registered
holder of the Shares surrendered, the surrendered certificate(s) must be
endorsed or accompanied by an endorsed stock power and the signature thereon
guaranteed by an eligible guarantor institution such as a commercial bank, trust
company, securities broker/dealer, credit union or saving institution
participating in the Security Transfer Agents Medallion Program or by any other
"eligible guarantor institution," as such term is defined in Rule 17Ad-15 under
the Exchange Act (each, an  "Eligible Institution").  A verification by a Notary
Public is not acceptable.  Further, if the check(s) for Shares redeemed is (are)
to be issued in a name other than the signer of this Letter of Transmittal or if
the check(s) for Shares redeemed is (are) to be returned to any person(s) other
than the person(s) signing this Letter of Transmittal, the appropriate boxes on
this Letter of Transmittal must be completed.

4.   Endorsements.  If this Letter of Transmittal is signed by the registered
holder(s) of the Shares surrendered hereby, the signature(s) must correspond
with the name(s) as written on the face of the Share Certificate(s) without
alteration, enlargement or any change whatsoever.

     If any of the Shares surrendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.

     If any of the surrendered Shares are registered in different names on
several Share Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations.

     If this Letter of Transmittal or any Share Certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of the authority of such person so to act must be
submitted.

     If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made or Share
Certificate(s) not surrendered or not accepted for payment are to be issued in
the name of any person(s) other than the registered holder(s). Signatures on any
such Share Certificates or stock powers must be guaranteed by an Eligible
Institution.

     If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Share Certificate(s) listed and transmitted hereby,
the Share Certificate(s) must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on the Share Certificate(s). Signature(s) on any such Share
Certificates or stock powers must be guaranteed by an Eligible Institution.

5.   Taxpayer Identification Number Certification.  Under federal income tax
law, a stockholder who is a U.S. person (as defined for U.S. federal income tax
purposes) surrendering Shares must, unless an exemption applies, provide the
Depositary with the stockholder's correct TIN on IRS Form W-9 or on the
Substitute Form W-9 included in this Letter of Transmittal. If the stockholder
is an individual, the stockholder's TIN is such stockholder's social security
number. If the correct TIN is not provided, the stockholder may be subject to a
$50 penalty imposed by the IRS and payments of cash to the stockholder (or other
payee) pursuant to the Offer may be subject to backup withholding of 28%.

     To avoid backup withholding, a surrendering stockholder is required to
provide the Depositary with a correct taxpayer identification number ("TIN") on
the Substitute Form W-9 attached hereto, and to certify, under penalties of
perjury, that such number is correct, that such stockholder is not subject to
backup withholding of federal income tax and that such stockholder is a U.S.
person (as defined for U.S. federal income tax purposes). If a surrendering
stockholder has been notified by the Internal Revenue Service ("IRS") that such
stockholder is subject to backup withholding, such stockholder must cross out
Item (2) of the Certification box of the Substitute Form W-9 unless such
stockholder has since been notified by the IRS that such stockholder is no
longer subject to backup withholding.  If the surrendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9 and sign and date the
Substitute Form W-9, including the Certificate of Awaiting Taxpayer
Identification Number at the bottom of the form. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold a portion of all payments of the Merger Consideration
to such stockholder until a TIN is provided to the Depositary.

     Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) may not be subject to backup withholding.
Foreign stockholders should submit an appropriate and properly completed IRS
Form W-8, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. Such stockholders should consult a tax advisor to determine
which Form W-8 is appropriate. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number (TIN) on Substitute Form W-9" for more
instructions.

6.   Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify American Stock Transfer and Trust Company, in its capacity as transfer
agent for the Shares (telephone number: 1-800-937-5449). The stockholder will
then be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.

7.   Questions and Additional Information. Questions and requests for assistance
or additional copies of this Letter of Transmittal and IRS Form W-9 may be
directed to the Depositary.

                                 THE DEPOSITARY:
                     American Stock Transfer & Trust Company

                           (877) 248-6417 OR (718) 921-8317
              EMAIL: INFO@AMSTOCK.COM         WEB: WWW.AMSTOCK.COM
                     ----------------              ---------------Exhibit 10.1

    Exhibit
      10.1

    EMPLOYMENT
      SEPARATION AGREEMENT

     

    This
      Employment Separation Agreement (“Agreement”) is entered into by and between
      ClearOne Communications, Inc. (“ClearOne” or the “Company”) and Frances M. Flood
      (“Flood”) (ClearOne and Flood shall sometimes be hereinafter referred to
      collectively as the “Parties”).

     

    RECITALS

     

    A.  Flood
      has
      been employed by ClearOne in a variety of positions, most recently as the
      Company’s Chief Executive Officer, President, and Chairman of the
      Board.

     

    B.  Flood
      has
      a written Employment Agreement with the Company, effective as of August 1,
      2002 (“Employment Agreement”). The Employment Agreement, which is for a
      three-year term expiring July 31, 2005, specifies the compensation and
      benefits to which Flood is entitled to receive over the term of the contract.
      The Employment Agreement also provides that the Company may terminate Flood’s
      employment for cause only if Flood commits “willful misconduct,” with the term
“willful” expressly defined as an act “done, or omitted to be done, by [Flood]
      not in good faith and without reasonable belief that [her] action or omission
      was in the best interest of the Company.”

     

    C.  On
      January 15, 2003, the United States Securities and Exchange Commission
      filed a civil action against ClearOne, Flood, and Susie S. Strohm, who was
      then
      serving as the Company’s Chief Financial Officer, alleging various improprieties
      and misstatements in connection with the Company’s financial statements (the
“SEC Action”).

     

    D.  The
      filing of the SEC Action has spawned, and may continue to spawn, multiple
      related proceedings, including, but not limited to, multiple shareholder
      securities class actions, multiple shareholder derivative actions, a grand
      jury
      investigation being conducted by the United States Department of Justice, a
      dispute and potential litigation between the Company and its directors and
      officers liability insurers, and potential litigation between the Company and
      its former auditor, Ernst & Young (collectively, “Related
      Proceedings”).

     

    E.  Soon
      after the filing of the SEC Action, the Company placed Flood on a paid
      administrative leave of absence, and this paid administrative leave has
      continued in effect at all times up to the execution of this
      Agreement.

     

    F.  Flood
      has
      employed separate counsel, Max D. Wheeler, Richard A. Van Wagoner, and the
      law
      firm of Snow Christensen & Martineau (collectively, “SC&M”), to defend
      her in the SEC Action and the Related Proceedings. SC&M has also represented
      Flood in connection with the negotiation and drafting of this
      Agreement.

     

    G.  Flood
      has
      made various demands on the Company for indemnification and for advancement
      of
      the attorneys’ fees and costs she has incurred to date, as well as the
      attorneys’ fees and costs she may subsequently incur, in connection with the SEC
      Action and the Related Proceedings and has provided the Company with a written
      undertaking, dated August 27, 2003, in conformity with the requirements of
      Utah Code Ann. § 16-10a-904.

     

    H.  ClearOne
      referred Flood’s demand for indemnification to its Special Litigation Committee
      (“SLC”) comprised of two independent directors. The SLC reviewed those demands,
      as well as similar demands for indemnification made by other present or former
      officers and directors of the Company, in conjunction with its investigation
      of
      the various claims asserted in the multiple shareholder derivative actions
      filed
      against certain of the Company’s present and former officers and directors,
      including Flood. On October 13, 2003, the SLC completed its investigation
      concerning the derivative actions and the indemnification demands and issued
      its
      reports to the Company wherein it concluded, inter alia,
      that
      pursuing the derivative actions was not in the best interest of the Company
      and
      that the Company should attempt to negotiate a settlement of Flood’s
      indemnification demand in the context of negotiating a global settlement of
      all
      potential claims and counterclaims between the Company and Flood. In reliance
      on
      the SLC’s conclusions and recommendations, the Company has moved to dismiss the
      derivative actions pursuant to Utah Code Ann. § 16-10a-740(4)(a) and has
      negotiated this Agreement with Flood.

     

    I.  Flood
      and
      ClearOne desire to resolve any and all disputes that may exist between them,
      whether known or unknown, including, but not limited to, disputes regarding
      Flood’s demand for indemnification, disputes relating to Flood’s employment with
      ClearOne, and disputes relating to the dissolution of that employment
      relationship.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the mutual promises, covenants, warranties,
      and
      agreements set forth herein, the Parties mutually agree as follows:

     

    1.  Effective
      Date.
      This
      Agreement is effective on the eighth day following Flood’s signing of this
      Agreement, provided that Flood does not revoke her execution of this Agreement
      as provided in Paragraph 19 below.

     

    2.  Receipt
      of this Agreement.
      Flood
      acknowledges that she received a copy of this Agreement on December 2,
      2003, and that she has 21 days from the receipt of this Agreement in which
      to
      consider and consult with an attorney regarding this Agreement. Flood further
      acknowledges that she has had an adequate amount of time in which to consult
      with SC&M, her counsel of choice, with respect to the contents of this
      Agreement prior to signing.

     

    3.  Payment
      to Flood.
      Upon
      the expiration of the revocation period described in Paragraph 19 below and
      the unrevoked signing of this Agreement by Flood, ClearOne shall pay Flood
      the
      sum of $350,000. The Parties acknowledge and agree that this payment is being
      made in consideration of, inter alia,
      the
      Company’s purchase of Flood’s shares of the Company’s common stock, the
      Company’s cancellation of Flood’s options to purchase additional shares of the
      Company’s common stock, and the release of all claims that Flood may have
      against the Company, all as more fully stated in Paragraphs 5, 6, and 9
      below. The Parties also acknowledge and agree that the Company is not
      responsible for the withholding of any federal or state taxes from said payment
      and that Flood is responsible for paying any taxes that may become due and
      owing
      as a result of her receipt of said payment.

     

    4.  Separation
      of Employment and Dissolution of Employment Agreement.
      Flood
      hereby resigns her employment with ClearOne, as well as her membership on the
      Company’s board of directors, effective December 5, 2003. Flood’s
      Employment Agreement is dissolved and cancelled as of the effective date of
      this
      Agreement, except that Flood’s post-termination obligations under Sections 8 and
      9 of the Employment Agreement shall remain in effect to the full extent provided
      in the Employment Agreement.

     

    5.  Cancellation
      of Stock Options.
      As
      partial consideration for the payment specified in Paragraph 3 above, upon
      the expiration of the revocation period described in Paragraph 19 below and
      the unrevoked signing of this Agreement by Flood, all unexercised stock options
      acquired by Flood during her employment with the Company, whether vested or
      unvested, shall immediately be deemed cancelled. Flood represents and warrants
      that, immediately prior to the effective date of this Agreement, she holds
      vested and unvested stock options entitling her to purchase up to a total of
      706,434 shares of the Company’s common stock and that 461,433 of these options
      are vested. Flood further agrees that all of her rights, entitlements, and
      benefits under the 1990 Gentner Stock Option Plan and the 1998 ClearOne Stock
      Option Plan, including any agreements entered into in relation to the foregoing
      plans, are hereby terminated and cancelled.

     

    6.  Transfer
      of Stock.
      As
      partial consideration for the payment specified in Paragraph 3 above, upon
      the expiration of the revocation period described in Paragraph 19 below and
      the unrevoked signing of this Agreement by Flood, Flood shall transfer, assign,
      and sell to the Company 35,000 shares of the Company’s common
      stock.

     

    7.  Cooperation
      in Related Proceedings.
      Flood
      shall cooperate with the Company and its counsel in the defense and/or
      prosecution of the SEC Action and the Related Proceedings. Flood’s cooperation
      shall include, but shall not be limited to, voluntarily providing deposition
      and
      trial testimony, meeting with the Company and its counsel for the purpose of
      preparing for depositions or trial proceedings, and providing information and
      documents to the Company or its counsel in connection with the defense and/or
      prosecution of the SEC Action and the Related Proceedings. With respect to
      any
      request by the Company and/or its counsel for deposition or trial testimony,
      meetings, information, or documents, the Company shall give reasonable notice
      to
      Flood of its request, including the time and place of the deposition, trial,
      or
      meeting, and shall reimburse Flood for all reasonable expenses incurred by
      her,
      including reasonable attorneys’ fees and costs, in providing the requested
      cooperation. Despite the foregoing, this Agreement does not require Flood to
      forego any constitutional rights.

     

    8.  Indemnification.
      Subject
      to the limitations imposed by Utah Code Ann. § 16-10a-902 and the Company’s
      articles of incorporation and bylaws, and also subject to the undertaking
      referred to in Recital G above, ClearOne shall indemnify Flood for any liability
      and for all reasonable attorneys’ fees and costs incurred by her in connection
      with the SEC Action or any Related Proceedings, whether incurred before or
      after
      the effective date of this Agreement. The Company’s duty to indemnify Flood is
      further conditioned upon Flood’s fulfillment of her duty under Paragraph 7 above
      to cooperate with the Company and its counsel in connection with the SEC Action
      and Related Proceedings. Subject to the foregoing limitation, ClearOne will
      continue to pay for the reasonable defense costs incurred by Flood in defending
      matters or future matters, if any, which may arise from or relate to her tenure
      as an officer or director of ClearOne.

     

    9.  Release
      of Claims by Flood.
      Flood,
      on behalf of herself and her heirs and assigns, hereby completely releases
      and
      discharges ClearOne and all of ClearOne’s predecessors, successors, parents,
      subsidiaries, and affiliates, and all of their respective present and former
      directors, officers, employees, attorneys and agents (hereinafter collectively
      referred to as “Releasees”) from any and all existing claims and causes of
      action of every kind and nature, whether presently known or unknown by the
      Parties, including but not limited to any claims or causes of action for breach
      of implied or express contract (including the Employment Agreement), libel,
      slander, wrongful discharge or termination, discrimination claims under the
      Age
      Discrimination in Employment Act and/or Older Workers Benefit Protection Act,
      Title VII of the Civil Rights Act of 1964, as amended, the Utah
      Antidiscrimination Act, local laws prohibiting age, race, religion, sex,
      national origin, disability and other forms of discrimination, or any other
      federal or state law that may be applicable thereto, claims growing out of
      any
      legal restrictions on ClearOne’s right to terminate its employees, any tort
      claim or other claim arising in any way out of the employment relationship
      between Flood and ClearOne or the termination of that relationship. Flood
      specifically waives any and all claims for back pay, front pay, or any other
      form of compensation for services, except as set forth herein.

     

    Except
      as
      expressly stated in Paragraph 8 above, Flood hereby waives any right to
      recover damages, costs, attorneys’ fees, and any other relief in any proceeding
      or action brought against ClearOne by any other party, including without
      limitation the Equal Employment Opportunity Commission and the Utah
      Antidiscrimination and Labor Division, on Flood’s behalf asserting any claim,
      charge, demand, grievance, or cause of action released by Flood as stated
      above.

     

    Notwithstanding
      the foregoing, Flood does not waive rights, if any, Flood may have to
      unemployment insurance benefits or workers’ compensation benefits. Nothing in
      this Paragraph 9 prohibits Flood from paying COBRA premiums to maintain
      Flood’s participation, if any, in ClearOne’s group health plan to the extent
      allowed by law and by the terms, conditions, and limitations of the health
      plan.

     

    10.  Release
      of Claims by ClearOne.
      Except
      for any claim as to which indemnification is not allowed by Utah Code Ann.
      § 16-10a-902 and any claim that may accrue under the undertaking referenced
      in Recital G above, ClearOne, on behalf of itself and its successors and
      assigns, hereby completely releases and discharges Flood from all existing
      claims and causes of action of any kind and nature, whether presently known
      or
      unknown by the Parties, including but not limited to any claims or causes of
      action arising out of or relating to Flood’s Employment Agreement or her
      employment with ClearOne.

     

    11.  No
      Assignment of Claims.
      Flood
      represents and warrants that she has not previously assigned or transferred,
      or
      attempted to assign or transfer, to any third party, any of the claims waived
      and released herein.

     

    12.  No
      Claim Filed.
      Flood
      represents that she has not filed any claim, complaint, charge, or lawsuit
      against ClearOne or any other Releasee with any governmental agency or any
      state
      or federal court, and covenants not to file any lawsuit at any time hereafter
      for any matter, claim, or incident known or unknown which occurred or arose
      out
      of occurrences prior to the date hereof.

     

    13.  No
      Admission of Liability.
      This
      Agreement does not constitute an admission of any fault, liability, or
      wrongdoing by any Releasee, nor an admission that Flood has any claim whatsoever
      against ClearOne or any other Releasee. ClearOne and all other Releasees
      specifically deny having any liability to Flood or having committed any wrongful
      acts against Flood. This Agreement does not constitute an admission of any
      fault, liability, or wrongdoing by Flood, nor an admission that ClearOne has
      any
      claim against Flood. Flood specifically denies having any liability to ClearOne
      or having committed any wrongful acts against ClearOne.

     

    14.  Additional
      Consideration.
      Flood
      acknowledges and agrees that as of the date she signs this Agreement, ClearOne
      has paid to Flood (a) all compensation for wages earned, less normal
      payroll deductions, (b) all amounts due for earned vacation pay less normal
      payroll deductions, and (c) all other amounts due and owing to Flood by
      ClearOne. Notwithstanding the foregoing, ClearOne will pay Flood her normal
      paycheck on December 12, 2003, which covers Flood’s compensation through
      December 5, 2003, the effective date of her resignation. Flood agrees and
      acknowledges that the sums paid pursuant to this Agreement are in addition
      to
      any sums or payments to which Flood would be entitled but for the signing of
      this Agreement.

     

    15.  Conditions
      Subsequent.
      This
      Agreement is conditioned upon Flood signing settlement documents in the SEC
      Action by December 5, 2003, and upon the final approval of the settlement
      of the SEC Action, as it applies to Flood, by January 31, 2004. If for any
      reason Flood fails to satisfy either of these conditions, this Agreement will
      automatically become null and void, and the Parties shall forthwith return
      to
      each other any and all consideration received by them pursuant to this
      Agreement.

     

    16.  Integration
      Clause.
      This
      Agreement contains the entire agreement and understanding of ClearOne and Flood
      concerning the subject matter hereof, and except as expressly noted herein,
      this
      Agreement supersedes and replaces all prior negotiations, proposed agreements,
      agreements or representations whether written or oral concerning the subject
      matter hereof, including Flood’s Employment Agreement. ClearOne and Flood agree
      and acknowledge that neither ClearOne or Flood, nor any agent or attorney of
      either, has made any representation, warranty, promise or covenant whatsoever,
      express or implied, not contained in this Agreement, to induce the other to
      execute this Agreement. No amendment, alteration, or modification of this
      Agreement shall be effective unless made in writing and signed by both
      Parties.

     

    17.  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Utah, without giving effect to Utah’s choice of law rules.

     

    18.  Voluntary
      and Knowing Signing.
      Flood
      acknowledges that she has read this Agreement carefully and fully understands
      this Agreement and that she has consulted with her counsel, SC&M, prior to
      signing this Agreement. Flood acknowledges that she has executed this Agreement
      voluntarily and of her own free will and that she is knowingly and voluntarily
      releasing and waiving all claims she may have against Releasees, including
      ClearOne.

     

    19.  Revocation
      Period.
      Flood
      has seven (7) days from the date on which she signs this Agreement to revoke
      this Agreement by providing written notice, by mail, hand delivery, or
      facsimile, of her revocation to:

     

    Raymond
      J. Etcheverry

    Parsons
      Behle & Latimer

    Counsel
      for ClearOne

    201
      South
      Main Street

    Suite
      1800

    Salt
      Lake
      City, Utah 84111

    Facsimile:
      (801) 536-6111

     

    Flood’s
      revocation, to be effective, must be received by the above-named person by
      the
      end of the seventh day after Flood signs this Agreement. This Agreement becomes
      effective on the eighth day after Flood signs this Agreement, providing that
      Flood has not revoked this Agreement as provided above.

     

    IN
      WITNESS WHEREOF, the Parties have executed this Agreement on the dates indicated
      below.

     

    
      	
               

               

               

              Dated:
                December 5, 2003

            	
              CLEARONE
                COMMUNICATIONS, INC.

               

              /s/
                Mike Keough

               

              By:
                Mike Keough

               

              Its:
                CEO

            
	
               

               

               

              Dated:
                December 5, 2003

            	
               

              /s/
                Frances M. Flood

               

              Frances
                M. Flood

              FRANCES
                M. FLOOD

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}]]