Document:

Exhibit 4.8 - 1998 Stock Option Plan

     

      
        

      

    

    Exhibit
      4.8

    
 

    CLEARONE
      COMMUNICATIONS, INC.

    

    1998
      STOCK OPTION PLAN

    
 

    ARTICLE
      1

    GENERAL
      PROVISIONS

    

    

    1.1 PURPOSE
      OF THE PLAN

    

    This
      1998
      Stock Option Plan (the "Plan") is intended to promote the interests of ClearOne
      Communications Inc., a Utah corporation, (the "Corporation") by providing
      eligible persons with the opportunity to acquire or increase their proprietary
      interest in the Corporation as an incentive for them to remain in the Service
      of
      the Corporation.

    

    Capitalized
      terms shall have the meanings assigned to such terms in the attached
      Appendix.

    

    1.2 ADMINISTRATION
      OF THE PLAN

    

    a. The
      Plan
      shall be administered by the Board or, to the extent required under applicable
      Stock Exchange requirements or if desired by the Board, a committee of the
      Board. If administered by committee, the Primary Committee shall have sole
      and
      exclusive authority to administer the Plan with respect to Section 16 Insiders;
      committee authority to administer the Plan with respect to all other persons
      may
      be vested in either the Primary Committee or a Secondary Committee, as
      determined by the Board. 

    

    b. Members
      of the Primary Committee or any Secondary Committee shall serve for such period
      of time as the Board may determine and may be removed by the Board at any time.
      The Board may terminate the functions of any Secondary Committee at any time
      and
      delegate all powers and authority previously delegated to such committee to
      the
      Primary Committee. To the extent committee administration is no longer required
      by applicable law, regulation or Stock Exchange requirement, the Board may
      also
      terminate the functions of any committee at any time and reassume all powers
      and
      authority previously delegated to such committee.

    

    c. Each
      Plan
      Administrator shall, within the scope of its administrative functions under
      the
      Plan, have full power and authority to establish such rules and regulations
      as
      it may deem appropriate for proper administration of the Plan and to make such
      determinations under, and issue such interpretations of, the provisions of
      the
      Plan and any outstanding options thereunder as it may deem necessary or
      advisable. Decisions of the Plan Administrator within the scope of its
      administrative functions under the Plan shall be final and binding on all
      parties who have an interest in the Plan under its jurisdiction or any option
      thereunder.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    d. Service
      on the Primary Committee or the Secondary Committee shall constitute service
      as
      a Board member, and members of each such committee shall accordingly be entitled
      to full indemnification and reimbursement as Board members for their service
      on
      such committee. No member of the Primary Committee or the Secondary Committee
      shall be liable for any act or omission made in good faith with respect to
      the
      Plan or any option grants under the Plan.

    

    e. Each
      Plan
      Administrator shall, within the scope of its administrative jurisdiction under
      the Plan, have full authority (subject to the provisions of the Plan) to
      determine which eligible persons are to receive option grants, the time or
      times
      when such option grants are to be made, the number of shares to be covered
      by
      each such grant, the status of the granted option as either an Incentive Option
      or a Non-Statutory Option, the time or times at which each option is to become
      exercisable, the vesting schedule (if any) applicable to the option shares,
      the
      acceleration of such vesting schedule, and all other terms and conditions of
      the
      option grants. 

    

    1.3 ELIGIBILITY

    

    The
      following persons shall be eligible to participate in the Plan: 

    

    a. Employees,

    

    b. non-employee
      members of the Board or the board of directors of any Parent or Subsidiary,
      and

    

    c. consultants
      and other independent advisors who provide Services to the Corporation or any
      Parent or Subsidiary.

    

    1.4. STOCK
      SUBJECT TO THE PLAN

    

    a. The
      stock
      issuable under the Plan shall be shares of authorized but unissued Common Stock,
      including shares repurchased by the Corporation on the open market. The maximum
      number of shares of Common Stock that may be issued over the term of the Plan
      shall not exceed 2,500,000 shares, which number of shares may be changed from
      time to time in accordance with Article 3.4 below.

    

    b. Shares
      of
      Common Stock subject to outstanding options shall be available for subsequent
      issuance under the Plan to the extent (i) the options expire or terminate for
      any reason prior to exercise in full or (ii) the options are cancelled in
      accordance with the cancellation-regrant provisions of Article 2.4. However,
      should the Exercise Price be paid with shares of Common Stock or should shares
      of Common Stock otherwise issuable under the Plan be withheld by the Corporation
      in satisfaction of the withholding taxes incurred in connection with the
      exercise of an option under the Plan, then the number of shares of Common Stock
      available for issuance under the Plan shall be reduced by the gross number
      of
      shares for which the option is exercised, and not by the net number of shares
      of
      Common Stock issued to the holder of such option. 

    
      
        
        

      

      
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    c. Should
      any change be made to the Common Stock by reason of any stock split, stock
      dividend, recapitalization, combination of shares, exchange of shares or other
      change affecting the outstanding Common Stock as a class without the
      Corporation's receipt of consideration, appropriate adjustments shall be made
      to
      (i) the maximum number and/or class of securities issuable under the Plan,
      (ii)
      the number and/or class of securities for which any one person may be granted
      options per calendar year, and (iii) the number and/or class of securities
      and
      the Exercise Price in effect under each outstanding option in order to prevent
      the dilution or enlargement of benefits thereunder. The adjustments determined
      by the Plan Administrator shall be final, binding and conclusive.

     

    ARTICLE
      2.

    OPTION
      GRANT PROGRAM

    

    2.1. OPTION
      TERMS

    

    Each
      option shall be evidenced by one or more documents in the form approved by
      the
      Plan Administrator; provided, however, that each such document shall comply
      with
      the terms specified below. Each document evidencing an Incentive Option shall,
      in addition, be subject to the provisions of Article 2.2 of the Plan,
      below.

    

    a. Exercise
      Price

    

    (1) The
      Exercise Price shall be fixed by the Plan Administrator but shall not be less
      than one hundred percent (100%) of the Fair Market Value per share of Common
      Stock on the Grant Date.

    

    (2) The
      Exercise Price shall become immediately due upon exercise of the option and
      shall, subject to the provisions of Article 3.1, and the documents evidencing
      the option, be payable in one or more of the forms specified below:

    

    (a) cash
      or
      check made payable to the Corporation,

    

    (b) a
      promissory note payable to the Corporation, but only to the extent authorized
      by
      the Administrator pursuant to Section 12 of the Plan,

    

    (c) shares
      of
      Common Stock held for the requisite period necessary to avoid a charge to the
      Corporation's earnings for financial reporting purposes and valued at Fair
      Market Value on the Exercise Date, but only upon prior written approval of
      the
      Plan Administrator, or

    

    
      
        
        

      

      
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    (d) upon
      the
      prior written approval of the Plan Administrator, and to the extent the option
      is exercised for vested shares, through a special sale and remittance procedure
      pursuant to which the Optionee shall concurrently provide irrevocable written
      instructions to (a) a Corporation-designated brokerage firm to effect the
      immediate sale of the Purchased Shares and remit to the Corporation, out of
      the
      sale proceeds available on the settlement date, sufficient funds to cover the
      aggregate Exercise Price payable for the Purchased Shares plus all applicable
      federal, state and local income and employment taxes required to be withheld
      by
      the Corporation by reason of such exercise and (b) the Corporation to deliver
      the certificates for the Purchased Shares directly to such brokerage firm in
      order to complete the sale.

    

    Except
      to
      the extent such sale and remittance procedure is utilized, payment of the
      Exercise Price for the Purchased Shares must be made on the Exercise
      Date.

    

    b. Exercise
      and Term of Options.
      Each
      option shall be exercisable at such time or times, during such period and for
      such number of shares as shall be determined by the Plan Administrator and
      set
      forth in the documents evidencing the option. However, no option shall have
      a
      term in excess of ten (10) years measured from the Grant Date. 

    

    c. Effect
      of Termination of Service

    

    (1) The
      following provisions shall govern the exercise of any options held by the
      Optionee at the time of cessation of Service: 

    

    (a) Any
      option outstanding at the time of the Optionee's cessation of Service for any
      reason except death, Permanent Disability or Misconduct shall remain exercisable
      for a three (3) month period thereafter, provided no option shall be exercisable
      after the Expiration Date.

    

    (b) Any
      option outstanding at the time of the Optionee's cessation of Service due to
      death or Permanent Disability shall remain exercisable for a twelve (12) month
      period thereafter, provided no option shall be exercisable after the Expiration
      Date. Subject to the foregoing, any option exercisable in whole or in part
      by
      the Optionee at the time of death may be exercised subsequently by the personal
      representative of the Optionee's estate or by the person or persons to whom
      the
      option is transferred pursuant to the Optionee's will or in accordance with
      the
      laws of descent and distribution. 

    

    (c) Should
      the Optionee's Service be terminated for Misconduct, then all outstanding
      options held by the Optionee shall terminate immediately and cease to be
      outstanding.

    

    
      
        
        

      

      
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    (d) During
      the applicable post-Service exercise period, the option may not be exercised
      in
      the aggregate for more than the number of shares for which the option is
      exercisable on the date of the Optionee's cessation of Service; the option
      shall, immediately upon the Optionee's cessation of Service, terminate and
      cease
      to be outstanding to the extent the option is not otherwise at that time
      exercisable. Upon the expiration of the applicable exercise period or (if
      earlier) upon the Expiration Date, the option shall terminate and cease to
      be
      outstanding for any shares for which the option has not been exercised.

    

    (2) The
      Plan
      Administrator shall have the discretion, exercisable either at the time an
      option is granted or at any time while the option remains outstanding,
      to:

    

    (a) extend
      the period of time for which the option is to remain exercisable following
      the
      Optionee's cessation of Service from the period otherwise in effect for that
      option to such greater period of time as the Plan Administrator shall deem
      appropriate, but in no event beyond the Expiration Date, and/or

     

    (b) permit
      the option to be exercised, during the applicable post-Service exercise period,
      not only with respect to the number of shares of Common Stock for which such
      option is exercisable at the time of the Optionee's cessation of Service but
      also with respect to one or more additional shares that would have vested under
      the option had the Optionee continued in Service.

    

    d. Stockholder
      Rights.
      The
      holder of an option shall have no stockholder rights with respect to the shares
      subject to the option until such person shall have exercised the option, paid
      the Exercise Price, and become a holder of record of the Purchased
      Shares.

    

    e. Limited
      Transferability of Options.
      During
      the lifetime of the Optionee, Incentive Options may be exercised only by the
      Optionee, and shall not be assignable or transferable except by will or the
      laws
      of descent and distribution following the Optionee's death. Non-Statutory
      Options may be assigned or transferred in whole or in part only (i) during
      the
      Optionee's lifetime if in connection with the Optionee's estate plan to one
      or
      more members of the Optionee's immediate family (spouse and children) or to
      a
      trust established exclusively for the benefit of one or more such immediate
      family members, or (ii) by will or the laws of descent and distribution
      following the Optionee's death. The assigned portion may only be exercised
      by
      the person or persons who acquire a proprietary interest in the option pursuant
      to the assignment. The terms applicable to the assigned portion shall be the
      same as those in effect for the option immediately prior to such assignment
      and
      shall be set forth in such documents issued to the assignee as the Plan
      Administrator may deem appropriate.

    

    2.2. INCENTIVE
      OPTIONS

    

    The
      terms
      specified below shall apply to all Incentive Options. Except as modified by
      the
      provisions of this Article 2.2, all the provisions of this Plan shall apply
      to
      Incentive Options. Options specifically designated as Non-Statutory Options
      when
      issued under the Plan shall not
      be
      subject to the terms of this Article 2.2.

    
      
        
        

      

      
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    a. Eligibility.
      Incentive Options may only be granted to Employees. 

    

    b. Exercise
      Price.
      The
      Exercise Price shall not be less than one hundred percent (100%) of the Fair
      Market Value per share of Common Stock on the Grant Date.

    

    c. Dollar
      Limitation.
      The
      aggregate Fair Market Value of the shares of Common Stock (determined as of
      the
      respective date or dates of grant) for which one or more options granted to
      any
      Employee under the Plan (or any other option plan of the Corporation or any
      Parent or Subsidiary) may for the first time become exercisable as Incentive
      Options during any one (1) calendar year shall not exceed the sum of One Hundred
      Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more
      such options that become exercisable for the first time in the same calendar
      year, the foregoing limitation on the exercisability of such options as
      Incentive Options shall be applied in the order in which such options are
      granted.

    

    d. 10%
      Stockholder.
      If an
      Employee to whom an Incentive Option is granted is a 10% Stockholder, then
      the
      Exercise Price shall not be less than one hundred ten percent (110%) of the
      Fair
      Market Value per share of Common Stock on the Grant Date, and the option term
      shall not exceed five (5) years measured from the Grant Date.

    

    e. Holding
      Period.
      Shares
      purchased pursuant to an option shall cease to qualify for favorable tax
      treatment as Incentive Option Shares if and to the extent Optionee disposes
      of
      such shares within two (2) years of the Grant Date or within one (1) year of
      Optionee's purchase of said shares.

    

    2.3. CORPORATE
      TRANSACTION/CHANGE IN CONTROL

    

    a. In
      the
      event of any Corporate Transaction, and subject to the terms set forth in an
      Optionee’s Stock Option Grant, the Board of Directors shall have the sole
      authority to elect that each outstanding option shall automatically accelerate
      so that each such option shall, immediately prior to the effective date of
      the
      Corporate Transaction, shall become fully exercisable for all of the shares
      of
      Common Stock at the time subject to such option and may be exercised for any
      or
      all of those shares as fully-vested shares of Common Stock. The Board may
      exercise its discretion to accelerate the vesting of options whether or not
      (i)
      such option is, in connection with the Corporate Transaction, either to be
      assumed by the successor corporation or parent thereof or to be replaced with
      a
      comparable option to purchase shares of the capital stock of the successor
      corporation or parent thereof, (ii) such option is to be replaced with a cash
      incentive program of the successor corporation which preserves the spread
      existing on the unvested option shares at the time of the Corporate Transaction
      and provides for subsequent payout in accordance with the same vesting schedule
      applicable to such option, except to the extent that the acceleration of such
      option is subject to other limitations imposed by the Plan Administrator at
      the
      time of the option grant. 

    

    
      
        
        

      

      
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    b. The
      Plan
      Administrator's discretion under Article 2.3.a. above shall be exercisable
      either at the time the option is granted or at any time while the option remains
      outstanding, whether or not those options are to be assumed or replaced in
      the
      Corporate Transaction. The Plan Administrator shall also have the discretion
      to
      grant options that do not accelerate whether or not such options are assumed
      in
      connection with a Corporate Transaction.

    

    c. If
      the
      Board of Directors elects the automatic acceleration of some or all of the
      outstanding options upon the occurrence of a Corporate Transaction, all such
      outstanding options shall terminate and cease to be outstanding, except to
      the
      extent assumed by the successor corporation (or parent thereof) immediately
      following the consummation of the Corporate Transaction.

    

    d. Each
      option which is assumed in connection with a Corporate Transaction shall be
      appropriately adjusted, immediately after such Corporate Transaction, to apply
      to the number and class of securities that would have been issuable to the
      Optionee in consummation of such Corporate Transaction had the option been
      exercised immediately prior to such Corporate Transaction. Appropriate
      adjustments shall also be made to (i) the number and class of securities
      available for issuance under the Plan following the consummation of such
      Corporate Transaction, (ii) the exercise price payable per share under each
      outstanding option, provided the aggregate exercise price payable for such
      securities shall remain the same and (iii) the maximum number of securities
      and/or class of securities for which any one person may be granted stock
      options. 

    

    e. The
      Plan
      Administrator shall have the discretion, exercisable at the time the option
      is
      granted or at any time while the option remains outstanding, to provide for
      the
      automatic acceleration of any options assumed or replaced in a Corporate
      Transaction that do not otherwise accelerate at that time in the event the
      Optionee's Service should subsequently terminate by reason of an Involuntary
      Termination within eighteen (18) months following the effective date of such
      Corporate Transaction. Any options so accelerated shall remain exercisable
      for
      shares until the earlier of (i) the expiration of the option term or (ii) the
      expiration of the one (1)-year period measured from the effective date of the
      Involuntary Termination.

    

    f. The
      Plan
      Administrator shall have the discretion, exercisable either at the time the
      option is granted or at any time while the option remains outstanding, to (i)
      provide for the automatic acceleration of one or more outstanding options upon
      the occurrence of a Change in Control or (ii) condition any such option
      acceleration upon the subsequent Involuntary Termination of the Optionee's
      Service within a specified period (not to exceed eighteen (18) months) following
      the effective date of such Change in Control. Any options accelerated in
      connection with a Change in Control shall remain fully exercisable until the
      Expiration Date or sooner termination of the option term.

    

    
      
        
        

      

      
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    g. The
      portion of any Incentive Option accelerated in connection with a Corporate
      Transaction or Change in Control shall remain exercisable as an Incentive Option
      only to the extent the applicable One Hundred Thousand Dollar ($100,000)
      limitation is not exceeded. To the extent such dollar limitation is exceeded,
      the accelerated portion of such option shall be exercisable as a Non-Statutory
      Option under the federal tax laws.

    

    h. The
      grant
      of options under the Plan shall in no way affect the right of the Corporation
      to
      adjust, reclassify, reorganize or otherwise change its capital or business
      structure or to merge, consolidate, dissolve, liquidate or sell or transfer
      all
      or any part of its business or assets.

     

    ARTICLE
      3.

    MISCELLANEOUS

    

    3.1 FINANCING

    

    a. The
      Plan
      Administrator may permit any Optionee to pay the option Exercise Price by
      delivering a promissory note payable in one or more installments. The terms
      of
      any such promissory note (including the interest rate and the terms of
      repayment) shall be established by the Plan Administrator in its sole
      discretion. Promissory notes may be authorized with or without security or
      collateral. In all events, the maximum credit available to the Optionee may
      not
      exceed the sum of (i) the aggregate option Exercise Price payable for the
      Purchased Shares plus (ii) the amount of any federal, state and local income
      and
      employment tax liability incurred by the Optionee in connection with the option
      exercise.

    

    b. The
      Plan
      Administrator may, in its discretion, determine that one or more such promissory
      notes shall be subject to forgiveness by the Corporation in whole or in part
      upon such terms as the Plan Administrator may deem appropriate.

    

    3.2 TAX
      WITHHOLDING

    

    a. The
      Corporation's obligation to deliver shares of Common Stock upon the exercise
      of
      options under the Plan shall be subject to the satisfaction of all applicable
      federal, state and local income and employment tax withholding
      requirements.

    

    b. The
      Plan
      Administrator may, in its discretion, provide any or all holders of
      Non-Statutory Options under the Plan with the right to use shares of Common
      Stock in satisfaction of all or part of the Taxes incurred by such holders
      in
      connection with the exercise of their options. Such right may be provided to
      any
      such holder in either or both of the following formats:

    

    (1) Stock
      Withholding:
      The
      election to have the Corporation withhold, from the shares of Common Stock
      otherwise issuable upon the exercise of such Non-Statutory Option, a portion
      of
      those shares with an aggregate Fair Market Value equal to the percentage of
      the
      Taxes (not to exceed one hundred percent (100%)) designated by the
      holder.

    
      
        
        

      

      
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    (2) Stock
      Delivery:
      The
      election to deliver to the Corporation, at the time the Non-Statutory Option
      is
      exercised, one or more shares of Common Stock previously acquired by such holder
      (other than in connection with the option exercise triggering the Taxes) with
      an
      aggregate Fair Market Value equal to the percentage of the Taxes (not to exceed
      one hundred percent (100%)) designated by the holder.

    

    3.3 EFFECTIVE
      DATE AND TERM OF THE PLAN

    

    a. The
      Plan
      shall become effective on the Plan Effective Date. However, no shares shall
      be
      issued under the Plan pursuant to Incentive Options until the Plan is approved
      by the Corporation's stockholders. If such stockholder approval is not obtained
      within twelve (12) months after the Plan Effective Date, then all Incentive
      Options previously granted under this Plan shall automatically convert into
      Non-Statutory Options. 

    

    b. The
      Plan
      shall terminate upon the earliest of (i) June 10, 2008, (ii) the date on which
      all shares available for issuance under the Plan shall have been issued, or
      (iii) the termination of all outstanding options in connection with a Corporate
      Transaction. Upon such Plan termination, all outstanding options shall continue
      to have force and effect in accordance with the provisions of the documents
      evidencing such options. 

    

    3.4 AMENDMENT
      OF THE PLAN

    

    a. The
      Board
      shall have complete and exclusive power and authority to amend or modify the
      Plan in any or all respects, or to cancel any grants made thereunder; provided,
      however, that no such amendment, modification, or cancellation shall adversely
      affect any rights and obligations with respect to options at the time
      outstanding under the Plan unless each affected Optionee consents to such
      amendment, modification, or cancellation. In addition, amendments to the Plan
      shall be subject to approval of the Corporation's stockholders to the extent
      required by applicable laws, regulations, or applicable stock exchange
      requirements.

    

    b. Options
      to purchase shares of Common Stock may be granted under the Plan that are in
      each instance in excess of the number of shares then available for issuance
      under the Plan, provided any excess shares actually issued are held in escrow
      until there is obtained Board approval (and shareholder approval if required
      by
      applicable laws, regulations, or Stock Exchange requirements) of an amendment
      sufficiently increasing the number of shares of Common Stock available for
      issuance under the Plan. 

    

    3.5 USE
      OF PROCEEDS

    

    Any
      cash
      proceeds received by the Corporation from the sale of shares of Common Stock
      under the Plan shall be used for general corporate purposes.

    

    
      
        
        

      

      
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    3.6 REGULATORY
      APPROVALS

    

    a. The
      implementation of the Plan, the granting of any option under the Plan, and
      the
      issuance of any shares of Common Stock upon the exercise of any option shall
      be
      subject to the Corporation's obtaining all approvals and permits required by
      regulatory authorities having jurisdiction over the Plan and the options granted
      under it, and the shares of Common Stock issued pursuant to the
      Plan.

    

    b. No
      shares
      of Common Stock shall be issued or delivered under the Plan unless and until
      there shall have been compliance with all applicable requirements of federal
      and
      state securities laws and all applicable listing requirements of any stock
      exchange on which Common Stock is then listed for trading.

    

    3.7 NO
      EMPLOYMENT/SERVICE RIGHTS

    

    Nothing
      in the Plan shall confer upon the Optionee any right to continue in Service
      for
      any period of specific duration or interfere with or otherwise restrict in
      any
      way the rights of the Corporation (or any Parent or Subsidiary employing or
      retaining such person) or of the Optionee, which rights are hereby expressly
      reserved by each, to terminate such person's Service at any time for any reason,
      with or without cause.

    

    

    
      
        
          

        

        
        

      

      
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    APPENDIX

    

    The
      following definitions shall be in effect under the Plan and the Plan
      Documents:

    

    1. Board
      shall
      mean the Corporation's Board of Directors.

     

    2. Change
      in Control
      shall
      mean a change in ownership or control of the Corporation effected through either
      of the following transactions:

    

    (i) the
      acquisition, directly or indirectly, by any person or related group of persons
      (other than the Corporation or a person that directly or indirectly controls,
      is
      controlled by, or is under common control with, the Corporation), of beneficial
      ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
      possessing more than fifty percent (50%) of the total combined voting power
      of
      the Corporation's outstanding securities pursuant to a tender or exchange offer
      made directly to the Corporation's stockholders, which the Board does not
      recommend such stockholders to accept, or

    

    (ii) a
      change
      in the composition of the Board over a period of thirty-six (36) consecutive
      months or less such that a majority of the Board members ceases, by reason
      of
      one or more contested elections for Board membership, to be comprised of
      individuals who either (A) have been Board members continuously since the
      beginning of such period or (B) have been elected or nominated for election
      as
      Board members during such period by at least a majority of the Board members
      described in clause (A) who were still in office at the time the Board approved
      such election or nomination.

    

    3. Code
      shall
      mean the Internal Revenue Code of 1986, as amended.

    

    4. Common
      Stock
      shall
      mean the Corporation's common stock.

    

    5. Corporate
      Transaction
      shall
      mean either of the following stockholder-approved transactions to which the
      Corporation is a party:

    

    (i) a
      merger
      or consolidation in which securities possessing more than fifty percent (50%)
      of
      the total combined voting power of the Corporation's outstanding securities
      are
      transferred to a person or persons different from the persons holding those
      securities immediately prior to such transaction; or 

    

    (ii) the
      sale,
      transfer or other disposition of all or substantially all of the Corporation's
      assets in complete liquidation or dissolution of the Corporation.

    

    6. Eligible
      Director
      shall
      mean a non-employee Board member eligible to participate in the
      Plan.

    

    
      
        
        

      

      
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    7. Employee
      shall
      mean an individual who is in the employ of the Corporation (or any Parent or
      Subsidiary), subject to the control and direction of the employer entity as
      to
      both the work to be performed and the manner and method of
      performance.

    

    8. Exercise
      Date
      shall
      mean the date on which the Corporation shall have received written notice of
      the
      option exercise.

    

    9. Exercise
      Price
      shall
      mean the exercise price per share as specified in the Stock Option
      Grant.

    

    10. Expiration
      Date
      shall
      mean the date on which the option expires as specified in the Stock Option
      Grant.

    

    11. Fair
      Market Value
      per
      share of Common Stock on any relevant date shall be determined in accordance
      with the following provisions:

    

    (i) If
      the
      Common Stock is traded at the time on the NASDAQ National Market, then the
      Fair
      Market Value shall be the closing selling price per share of Common Stock on
      the
      date in question, as such price is reported by the National Association of
      Securities Dealers on the NASDAQ National Market or any successor system. If
      there is no closing selling price for the Common Stock on the date in question,
      then the Fair Market Value shall be the closing selling price on the last
      preceding date for which such quotation exists.

    

    (ii) If
      the
      Common Stock is at the time listed on any Stock Exchange, then the Fair Market
      Value shall be the closing selling price per share of Common Stock on the date
      in question on the Stock Exchange determined by the Plan Administrator to be
      the
      primary market for the Common Stock, as such price is officially quoted in
      the
      composite tape of transactions on such exchange. If there is no closing selling
      price for the Common Stock on the date in question, then the Fair Market Value
      shall be the closing selling price on the last preceding date for which such
      quotation exists.

    

    (iii)
      If the
      Common Stock is not listed on any Stock Exchange nor traded on the NASDAQ
      National Market, then the Fair Market Value shall be determined by the Plan
      Administrator after taking into account such factors as the Plan Administrator
      shall deem appropriate.

    

    (iv) For
      purposes of any option grants made on the Underwriting Date, the Fair Market
      Value shall be deemed to be equal to the price per share at which the Common
      Stock is sold in the initial public offering pursuant to the Underwriting
      Agreement.

    

    12. Grant
      Date
      shall
      mean the date on which the option is granted to Optionee as specified in the
      Stock Option Grant.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    13. Incentive
      Option
      shall
      mean an option which satisfies the requirements of Code Section
      422.

    

    14. Involuntary
      Termination
      shall
      mean the termination of the Service of any individual which occurs by reason
      of:

    

    (i) such
      individual's involuntary dismissal or discharge by the Corporation for reasons
      other than Misconduct, or 

    

    (ii) such
      individual's voluntary resignation following (A) a change in his or her position
      with the Corporation which materially reduces his or her level of
      responsibility, (B) a reduction in his or her level of compensation (including
      base salary, fringe benefits and participation in corporate-performance based
      bonus or incentive programs) by more than fifteen percent (15%) or (C) a
      relocation of such individual's place of employment by more than fifty (50)
      miles, provided and only if such change, reduction or relocation is effected
      by
      the Corporation without the individual's consent.

    

    15. Market
      Stand Off
      shall
      mean the market stand off restriction on disposition of the Purchased Shares
      as
      identified under such title in the Stock Option Exercise Notice and Purchase
      Agreement.

    

    16. Misconduct
      shall
      mean the commission of any act of fraud, embezzlement or dishonesty by the
      Optionee, any unauthorized use or disclosure by such person of confidential
      information or trade secrets of the Corporation (or any Parent or Subsidiary),
      or any other intentional misconduct by such person adversely affecting the
      business or affairs of the Corporation (or any Parent or Subsidiary) in a
      material manner. The foregoing definition shall not be deemed to be inclusive
      of
      all the acts or omissions which the Corporation (or any Parent or Subsidiary)
      may consider as grounds for the dismissal or discharge of any Optionee or other
      person in the Service of the Corporation (or any Parent or
      Subsidiary).

    

    17. 1933
      Act
      shall
      mean the Securities Act of 1933, as amended.

    

    18. 1934
      Act
      shall
      mean the Securities Exchange Act of 1934, as amended.

    

    19. Non-Statutory
      Option
      shall
      mean an option not intended to satisfy the requirements of Code Section
      422.

    

    20. Optionee
      shall
      mean any person to whom an option is granted under Plan. 

    

    21. Option
      Shares
      shall
      mean the number of shares of Common Stock subject to the option as specified
      in
      the Stock Option Grant.

    

    22. Owner
      shall
      mean Optionee and all subsequent holders of the Purchased Shares who derive
      their claim of ownership through a Permitted Transfer from
      Optionee.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    23. Parent
      shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations ending with the Corporation, provided each corporation in the
      unbroken chain (other than the Corporation) owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one or the other corporations
      in such chain.

    

    24. Permanent
      Disability or Permanently Disabled
      shall
      mean the inability of the Optionee to engage in any substantial gainful activity
      by reason of any medically determinable physical or mental impairment expected
      to result in death or to be of continuous duration of twelve (12) months or
      more. 

    

    25. Permitted
      Transfer
      shall
      mean (i) a gratuitous transfer of the Purchased Shares, provided and only if
      Optionee obtains the Corporation's prior written consent to such transfer,
      (ii)
      a transfer of title to the Purchased Shares effected pursuant to Optionee's
      will
      or the laws of intestate succession following Optionee's death, or (iii) a
      transfer to the Corporation in pledge as security for any purchase-money
      indebtedness incurred by Optionee in connection with the acquisition of the
      Purchased Shares.

    

    26. Plan
      Administrator
      shall
      mean the particular entity, whether the Board or a committee of the Board,
      which
      is authorized to administer the Plan with respect to one or more classes of
      eligible persons, to the extent such entity is carrying out its administrative
      functions under the Plan with respect to the persons under its
      jurisdiction.

    

    27. Plan
      Documents
      shall
      mean the Plan, the Stock Option Grant, and Stock Option Exercise Notice and
      Purchase Agreement, collectively.

    

    28. Plan
      Effective Date
      shall
      mean June 10, 1998, the date on which the Plan was adopted by the
      Board.

    

    29. Primary
      Committee
      shall
      mean the committee of two (2) or more non-employee Board members (as defined
      in
      the regulations to Section 16 of the 1934 Act) appointed by the Board to
      administer the Plan with respect to Section 16 Insiders.

    

    30. Purchased
      Shares
      shall
      mean the shares purchased upon exercise of the Option.

    

    31. Recapitalization
      shall
      mean any stock split, stock dividend, recapitalization, combination of shares,
      exchange of shares or other charge affecting the Corporation's outstanding
      Common Stock as a class without the Corporation's receipt of
      consideration.

    

    32. Reorganization
      shall
      mean any of the following transactions:

    

    (i) a
      merger
      or consolidation in which the Corporation is not the surviving
      entity;

    

    (ii) a
      sale,
      transfer or other disposition of all or substantially all of the Corporation's
      assets;

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (iii) a
      reverse
      merger in which the Corporation is the surviving entity but in which the
      Corporation's outstanding voting securities are transferred in whole or in
      part
      to a person or persons different from the persons holding those securities
      immediately prior to the merger; or

    

    (iv) any
      transaction effected primarily to change the state in which the Corporation
      is
      incorporated or to create a holding company structure.

    

    33. SEC
      shall
      mean the Securities Exchange Commission.

    

    34. Secondary
      Committee
      shall
      mean a committee of two (2) or more Board members appointed by the Board to
      administer the Plan with respect to eligible persons other than Section 16
      Insiders.

    

    35. Section
      16 Insider
      shall
      mean an officer or director of the Corporation subject to the short-swing profit
      liabilities of Section 16 of the 1934 Act.

    

    36. Service
      shall
      mean the performance of services to the Corporation (or any Parent or
      Subsidiary) by a person in the capacity of an Employee, a non-employee member
      of
      the board of directors or a consultant or independent advisor, except to the
      extent otherwise specifically provided in the documents evidencing the option
      grant. 

    

    37. Stock
      Exchange
      shall
      mean either the American Stock Exchange, the New York Stock Exchange, another
      regional stock exchange, or the NASDAQ market as established by the National
      Association of Securities Dealers.

    

    38. Stock
      Option Exercise Notice and Purchase Agreement
      shall
      mean the agreement of said title in substantially the form of Exhibit A to
      the
      Stock Option Grant, pursuant to which Optionee gives notice of his intent to
      exercise the option and purchase Shares.

    

    39. Stock
      Option Grant
      shall
      mean the Stock Option Grant document, pursuant to which Optionee has been
      informed of the basic terms of the option granted under the Plan.

    

    40. Subsidiary
      shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations beginning with the Corporation, provided each corporation (other
      than the last corporation) in the unbroken chain owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other corporations
      in such chain. 

    

    41. Taxes
      shall
      mean the Federal, state and local income and employment tax liabilities incurred
      by the holder of Non-Statutory Options in connection with the exercise of those
      options.

    

    42. 10%
      Stockholder
      shall
      mean the owner of stock (as determined under Code Section 424(d)) possessing
      more than ten percent (10%) of the total combined voting power of all classes
      of
      stock of the Corporation (or any Parent or Subsidiary).

     

    5Exhibit 4.9 - 1997 Employee Stock Purchase Plan

     

      
        

      

    

    Exhibit
      4.9

    

CLEARONE
      COMMUNICATIONS, INC.

     

    1997
      EMPLOYEE STOCK PURCHASE PLAN

     

    ARTICLE
      I - PURPOSE

     

    The
      ClearOne Communications, Inc. (hereafter, the "Company") 1997 Employee Stock
      Purchase Plan (the "Plan") is intended to provide a method whereby employees
      of
      the Company will have an opportunity to acquire a proprietary interest in the
      Company through the purchase of shares of the Company's Common Stock at a
      discount.

     

    ARTICLE
      II - DEFINITIONS

     

    2.1
      -
      Base Pay. "Base Pay" shall mean regular straight-time earnings excluding
      payments for overtime, shift premium, bonuses and other special payments,
      commissions and other marketing incentive payments.

     

    2.2
      -
      Board. "Board" shall mean the Company's board of directors.

     

    2.3
      -
      Commencement Date. "Commencement Date" means the date on which shares of Common
      Stock become available for purchase under the Plan.

     

    2.4
      -
      Committee. "Committee" shall mean the committee described in Article
      IX.

     

    2.5
      -
      Common Stock. "Common Stock" means the Company's issued and/or outstanding
      Common Stock.

     

    2.6
      -
      Employee. "Employee" means any person who is customarily employed on a full-time
      or part-time basis by the Company and is regularly scheduled to work more than
      20 hours per week.

     

    2.7
      -
      Offering. "Offering" means the Company's offer of shares of its Common Stock
      for
      purchase under the Plan.

     

    2.8
      -
      Participant. "Participant" means any person who, being eligible under Article
      III herein, participates in the Plan.

     

    2.9
      -
      Purchase Date. "Purchase Date" means the date each quarter on which the Company,
      through the Participating Broker, purchases shares of Common Stock for the
      individual accounts of Plan Participants.

     

    2.10
      -
      Participating Broker. "Participating Broker" means the securities broker or
      brokers retained by the Company for purposes of executing orders to buy or
      sell
      shares of Common Stock on behalf of Plan Participants.

     

    ARTICLE
      III - ELIGIBILITY AND PARTICIPATION

     

    3.1
      -
      Initial Eligibility. Any Employee who has completed ninety (90) days' continuous
      employment and is currently employed by the Company on the date his
      participation in the Plan is to become effective shall be eligible to
      participate in the Plan on or after such ninety day period has
      concluded.

     

    3.2
      -
      Leave of Absence. For purposes of participation in the Plan, a person on leave
      of absence shall be deemed to be an Employee for the first 90 days of such
      leave
      of absence and such Employee's employment shall be deemed to have terminated
      at
      the close of business on the 90th day of such leave of absence unless such
      Employee shall have returned to regular full-time or part-time employment (as
      the case may be) prior to the close of business on such 90th day. Termination
      by
      the Company of any Employee's leave of absence, other than termination of such
      leave of absence on return to full time or part time employment, shall terminate
      an Employee's employment for all purposes of the Plan and shall terminate such
      Employee's participation in the Plan pursuant to Section 6.3
      herein.

     

    ARTICLE
      IV - OPERATION OF THE PLAN

     

    4.1
      -
      Subscription. An eligible Employee may become a Participant by completing an
      authorization for payroll deductions in the form of Exhibit "A" attached hereto
      (the "Enrollment Form"), in the amount specified by such Participant. The
      Enrollment Form executed by the Participant together with this Plan constitutes
      a subscription for shares of Common Stock. The
      Enrollment Form shall be filed with the Company’s Human Resources Department at
      least five (5) business days prior to issuance of the first paycheck on which
      payroll deductions are to be made, unless a later time for filing the Enrollment
      Form is set by the Committee.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    4.2
      -
      Right to Purchase. Once payroll deductions have been made from a Participants
      paycheck pursuant to Article V herein, such Participant shall be deemed to
      have
      been granted a right to purchase shares of Common Stock. Each Participant will
      be deemed to have exercised his right to purchase Common Stock on the Purchase
      Date, unless such Participant notifies the Committee pursuant to Section 6.1
      herein.

     

    4.3
      -
      Purchases; Purchase Price. On the Purchase Date, the Company shall deliver
      the
      amounts withheld from each Participant's compensation pursuant to Article V
      and
      direct the Participating Broker to conduct open market purchases of shares
      of
      Common Stock

     

    4.4
      -
      Company Contributions. The Company shall contribute to the account of each
      Participant, for no consideration, one (1) share of its Common Stock for every
      nine (9) shares purchased by such Participant under the Plan. Fractional shares
      will not be contributed.

     

    4.5
      -
      Transaction Fees and Commissions. The Company shall be responsible for all
      transaction fees and commissions incurred in connection with the purchase of
      shares of Common Stock for purposes of the Plan. Each Participant shall be
      responsible for all transaction fees and commissions incurred in connection
      with
      any subsequent sales or transfers of Common Stock from the Participant's
      account.

     

    4.6
      -
      Holding Period. Subject to death, disability, or a medical condition of the
      Participant or the Participant's immediate family that will incur significant
      costs to the Participant, each Participant shall be obligated to hold shares
      of
      Common Stock, both purchased under the Plan and contributed by the Company
      under
      Section 4.4, in such Participant's account for not less than one (1) year from
      the Purchase Date applicable to the purchase of such shares.

     

    4.7
      -
      Termination Date. The Plan shall terminate on June 30, 2010 unless sooner
      terminated under Section 10.5 or by the Company pursuant to Section 10.6 (the
      "Termination Date").

     

    ARTICLE
      V - PAYROLL DEDUCTIONS

     

    5.1
      -
      Amount of Deduction. Each Participant shall file an Enrollment Form as specified
      in Section 4.1 and shall elect to have deductions made from
      each
      paycheck at the rate of not less than twenty-five dollars ($25.00), nor more
      than ten percent (10%) of the Participant's Base Pay for the period covered
      by
      the paycheck. In the case of a part-time hourly Employee, such Employee's Base
      Pay shall be determined by multiplying such Employee's hourly rate by the number
      of regularly scheduled hours of work for such Employee. Payroll deductions
      for a
      Participant shall commence on the Offering Commencement Date or when such
      Participant's Enrollment Form become effective, whichever is later, and shall
      end on the Termination Date (as defined in Section 4.7) unless sooner terminated
      by the Participant as provided in Article VI.

     

    5.2
      -
      Participant's Account. All payroll deductions made for a Participant shall
      be
      credited to such Participant's account under the Plan. A Participant may not
      make any separate cash payment into such account except when on leave of absence
      and then only as provided in Section 5.4.

     

    5.3
      -
      Changes in Payroll Deductions. A Participant may change the amounts withheld
      from the Participants future paychecks by filing a new Enrollment Form with
      the
      Human Resources Department, and specifying the amounts to be withheld from
      such
      future paychecks. Any changes in the amount withheld from such Participants
      future paychecks under this Section shall only be permitted if not less than
      six
      (6) months has elapsed since the Participant last made changes to the amounts
      withheld under this Section.

     

    5.4
      -
      Leave of Absence. If a Participant goes on a leave of absence, such Participant
      shall have the right to elect: (a) to withdraw the balance in his or her account
      pursuant to Section 6.1, (b) to discontinue contributions to the Plan but remain
      a Participant in the Plan, or remain a Participant in the Plan during such
      leave
      of absence, authorizing deductions to be made from payments by the Company
      to
      the Participant during such leave of absence and undertaking to make cash
      payments to the Plan at the end of each payroll period to the extent that
      amounts payable by the Company to such Participant are insufficient to meet
      such
      Participant's authorized Plan deductions.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    ARTICLE
      VI - WITHDRAWAL

     

    6.1
      - In
      General. A Participant may withdraw from the Plan by electing to withdraw all
      accumulated payroll deductions credited to such Participants account under
      the
      Plan at any time by giving written notice to the Companys Human Resources
      Department within five (5) business days before the paycheck is issued on which
      payroll deductions have been terminated. With the exception of any payroll
      deductions of such Participant used to purchase Common Stock prior to the giving
      of such written notice, all of the Participant's payroll deductions credited
      to
      his account will be paid to him promptly after receipt of his notice of
      withdrawal, and no further payroll
      deductions will be made from his pay. Any Common Stock purchased on behalf
      of
      the Participant pursuant to the Plan shall be returned to him pursuant to
Section
      6.6 herein. The Company may, at its option, treat any attempt to borrow by
      an
      Employee on the security of his accumulated payroll deductions as an election,
      under Section 3.2, to withdraw such deductions.

     

    6.2
      -
      Effect on Subsequent Participation. A Participant's withdrawal from the Plan
      will not have any effect upon his eligibility to participate in any succeeding
      Offering or in any similar plan which may hereafter be adopted by the
      Company.

     

    6.3
      -
      Termination of Employment. Upon termination of the Participant's employment
      for
      any reason, including retirement (but excluding death while in the employ of
      the
      Company or continuation of a leave of absence for a period beyond 90 days),
      any
      payroll deductions credited to his account and not used to purchase Common
      Stock
      will be returned to him. Any Common Stock purchased for the Participants account
      shall be returned to the Participant pursuant to Section 6.6 herein. In the
      case
      of the Participants death subsequent to the termination of his employment,
      such
      accumulated payroll deductions and/or Common Stock purchased for his account
      shall be returned to the person or persons entitled thereto under Section
      10.1.

     

    6.4
      -
      Termination of Employment Due to Death. Upon termination of the Participant's
      employment because of his death, his beneficiary (as defined in Section 10.1)
      shall have the right to elect, by written notice given to the Company Secretary
      prior to the earlier of the Termination Date or the expiration of a period
      of
      sixty (60) days commencing with the date of the death of the Participant,
      either:

     

    a)
      to
      withdraw all of the payroll deductions credited to the Participant's account
      under the Plan, or

     

    b)
      to
      purchase the number of full shares of stock which the accumulated payroll
      deductions in the Participant's account at the date of the Participant's death
      will purchase at the applicable purchase price (as defined in Section 4.3),
      together with any applicable contributions by the Company under Section 4.4,
      and
      any excess in such account will be returned to said beneficiary, with interest
      as specified in Article VII.

     

    In
      the
      event that no such written notice of election shall be duly received by the
      office of the Secretary of the Company, the beneficiary shall automatically
      be
      deemed to have elected, pursuant to paragraph (b), to purchase the applicable
      number of shares under the Plan on the next Purchase Date.

     

    6.5
      -
      Leave of Absence. A Participant on leave of absence shall, subject to the
      election made by such Participant pursuant to Section 5.4, continue to be a
      Participant in the Plan so long as such Participant is on continuous leave
      of
      absence. A Participant who has been on leave of absence for more than
      90
      days and who therefore is not an Employee for the purpose of the Plan shall
      not
      be entitled to participate in the Offering if the Offering Commencement Date
      is
      after the 90th day of such leave of absence. Notwithstanding any other
      provisions of the Plan, unless a Participant on leave of absence returns to
      regular full time or part time employment with the Company at the earlier of:
      (a) the termination of such leave of absence or (b) three months from the 90th
      day of such leave of absence, such Participant's participation in the Plan
      shall
      terminate on whichever of such dates first occurs.

     

    6.6
      -
      Closing of Account. If a Participants participation under the Plan is terminated
      pursuant to this Article or Sections 3.2, 10.5, or 10.6 herein, then the Company
      shall return any accumulated amounts withheld from the Participant's account
      not
      used to purchase Common Stock, and shall direct the Participating Broker to
      close such Participant's account with the Participating Broker, and remit to
      the
      Participant or his beneficiary pursuant to Section 10.1, any Common Stock
      purchased on his behalf. Any Common Stock remitted under this Section shall
      retain the holding period restrictions as defined in Section 4.6
      herein.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII - INTEREST

     

    7.1
      -
      Payment of Interest. No interest will be paid or allowed on any money paid
      into
      the Plan or credited to the account of any Participant Employee; provided,
      however, that interest shall be paid on any and all money which is distributed
      to an Employee or his beneficiary pursuant to the provisions of Sections 6.1,
      6.3, 6.4, 6.6, and 8.1. Such distributions shall bear simple interest during
      the
      period from the date of withholding to the date of return at the regular
      passbook savings account rates per annum in effect at the regular passbook
      savings account rates per annum in effect during such period at a major
      commercial bank in Salt Lake City, Utah selected by the Committee. Where the
      amount returned represents an excess amount in an Employee's account after
      such
      account has been applied to the purchase of stock, the Employee's withholding
      account shall be deemed to have been applied first toward purchase of stock
      under the Plan, so that interest shall be paid on the last withholdings during
      the period which results in the excess amount.

     

    ARTICLE
      VIII - STOCK

     

    8.1
      -
      Maximum Shares. The maximum number of shares of Common Stock which shall be
      issued under the Plan shall be five hundred thousand (500,000) shares. If the
      total number of shares of Common Stock for which payroll deductions have been
      made under Article V herein exceeds the maximum number of
      shares
      for the Offering, the Company, on the applicable Purchase Date, shall make
      a pro
      rata allocation of the shares available for delivery and distribution in an
      nearly a uniform manner as shall be practicable and as it shall determine to
      be
      equitable, and the balance of payroll deductions credited to the account of
      each
      Participant under the Plan shall be returned to him as promptly as
      possible.

     

    8.2
      -
      Participant's Interest in Common Stock. The Participant shall not have an
      interest in any Common Stock until purchases of such Common Stock have been
      made
      for the Participants account.

     

    8.3
      -
      Registration of Stock. Stock to be delivered to a Participant under the Plan
      will be registered in the name of the Participant, or, if the Participant so
      directs by written notice to the Company's Human Resources Department prior
      to
      the Termination Date, in the names of the Participant and one such other person
      as may be designate by the Participant, as joint tenants with rights of
      survivorship or as tenants by the entireties, to the extent permitted by
      applicable law.

     

    ARTICLE
      IX - ADMINISTRATION

     

    9.1
      -
      Appointment of Committee. The Board shall appoint a compensation committee
      (the
      "Committee") to administer the Plan. The Committee shall consist of no fewer
      than three members of the Board. No member of the Committee shall be eligible
      to
      purchase stock under the Plan.

     

    9.2
      -
      Authority of Committee. Subject to the express provisions of the Plan, the
      Committee shall have plenary authority in its discretion to interpret and
      construe any and all provisions of the Plan, to adopt rules and regulations
      for
      administering the Plan, and to make all other determinations deemed necessary
      or
      advisable for administering the Plan. The Committee's determination on the
      foregoing matters shall be conclusive.

     

    9.3
      -
      Rules Governing the Administration of the Committee. The Board may from time
      to
      time appoint members of the Committee in substitution for or in addition to
      members previously appointed and may fill vacancies, however caused, in the
      Committee. The Committee may select one of its members as its Chairman and
      shall
      hold its meetings at such times and places as it shall deem advisable and may
      hold telephonic meetings. A majority of its members hall constitute a quorum.
      All determinations of the Committee shall be made by a majority of its members.
      The Committee may correct any defect or omission or reconcile any inconsistency
      in the Plan, in the manner and to the extent it shall deem desirable. Any
      decision or determination reduced to writing and signed by a majority of the
      members of the Committee shall be as fully effective as if it had been made
      by a
      majority vote at a meeting duly called and held. The Committee may appoint
      a
      secretary and shall make such rules and regulations for the conduct of its
      business as it shall deem advisable.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    9.4
      -
      Administration and Record Keeping. The Committee or its representatives shall
      be
      responsible for the following functions of the Plan:

     

    (i)
      maintaining individual accounts and transaction records of Plan Participants,
      (ii) receiving and processing Enrollment Forms, (iii) receiving and holding
      payroll deductions from the paychecks of Plan Participants, (iv) delivering
      payroll deductions under the Plan to the Participating Broker at quarterly
      intervals for purchase of Common Stock, (v) elections and changes in elections
      made by Plan Participants, (vi) delivery of certificates representing the shares
      of Common Stock purchased by Plan Participants, (vii) keeping minutes of its
      actions under the Plan, and (viii) any and all procedures and functions of
      the
      Plan not otherwise specified herein or assigned to another party in accordance
      with the terms of the Plan or by authority of the Committee.

     

    9.5
      -
      Reports. The Company shall provide to each Participant, on at least an annual
      basis, statements setting forth the amounts of payroll deductions, the purchase
      price for each Purchase Date, the number of shares purchased on each Purchase
      Date, the total number of shares purchased, and the remaining cash balance,
      if
      any, for such Participant's account.

     

    9.6
      -
      Professional Assistance. The Committee may employ such legal counsel, including,
      without limitation, independent legal counsel regularly employed by the Company,
      consultants and agents as the Committee may deem appropriate for the
      administration of the Plan and may rely upon any opinion received from any
      such
      counsel or consultant and any computations received from any such consultant
      or
      agent. All expenses incurred by the Committee in interpreting and administering
      the Plan, including, without limitation, meeting fees and expenses and
      professional fees, shall be paid by the company.

     

    9.7
      -
      Participating Broker. The Committee shall designate a Participating Broker
      to
      act as the Company's agent pursuant to the operation of the Plan. Functions
      of
      the Participating Broker may include, without limitation, the execution of
      orders to purchase Common Stock with the proceeds obtained pursuant to Article
      V
      herein and the closing of a Participant's brokerage account with the
      Participating Broker pursuant to Section 6.6 herein.

     

    9.8
      -
      Liability. No member or former member of the Committee or the Board shall be
      liable for any action or determination made in good faith with respect to the
      Plan or any deduction or withholding made under the Plan. Each member or former
      member of the Committee or the Board shall be indemnified and held harmless
      by
      the Company against all costs or expenses (including counsel fees) or liability
      (including any sum paid in settlement of a claim with the approval of the Board)
      arising out of any act or omission to act in connection with the Plan to the
      extent allowed by law.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    ARTICLE
      X - MISCELLANEOUS

     

    10.1
      -
      Designation of Beneficiary. A Participant may file a written designation of
      a
      beneficiary who is to receive any Common Stock and/or cash. Such designation
      of
      beneficiary may be changed by the Participant at any time by written notice
      to
      the Secretary of the Company. Upon the death of a Participant and upon receipt
      by the Company of proof of identity and existence at the Participant's death
      of
      a beneficiary validly designated by him under the Plan, the Company shall
      deliver such Common Stock and/or cash to such beneficiary. In the event of
      the
      death of a Participant and in the absence of a beneficiary validly designated
      under the Plan who is living at the time of such Participant's death, the
      company shall deliver such Common Stock and/or cash to the executor or
      administrator of the estate of the Participant, or if no such executor or
      administrator has been appointed (to the knowledge of the Company), the Company,
      in its discretion, may deliver such Common Stock and/or cash to the spouse
      or to
      any one or more dependents of the Participant as the Company may designate.
      No
      beneficiary shall, prior to the death of the Participant by whom he has been
      designated, acquire any interest in the Common Stock or cash credited to the
      Participant under the Plan.

     

    10.2
      -
      Transferability. Neither payroll deductions credited to a Participant's account
      nor any rights to receive Common Stock under the Plan may be assigned,
      transferred, pledged, or otherwise disposed of in any way by the Participant
      other than by will or the laws of descent and distribution. Any such attempted
      assignment, transfer, pledge or other disposition of such rights shall be
      without effect, except that the Company may treat such act as an election to
      withdraw from the plan under Section 6.1.

     

    10.3
      -
      Use of Funds. All payroll deductions received or held by the Company under
      the
      Plan may be used by the Company for any corporate purpose and the Company shall
      not be obligated to segregate such payroll deductions.

     

    10.4
      - No
      Adjustment Upon Changes in Capitalization. No adjustment shall be made to a
      Participant's account due to stock splits, reverse stock splits, changes in
      the
      Company's capitalization, or similar transaction. No adjustments shall be made
      for stock dividends.

     

    10.5
      -
      Dissolution or Liquidation. In the event of a proposed dissolution or
      liquidation of the Company, a sale of all or substantially all of the assets
      of
      the Company, or the merger of the Company with or into another corporation,
      the
      Plan will terminate immediately prior to the consummation of such proposed
      action, unless otherwise provided by the Committee, and the Company shall return
      to each Participant, with interest, the accumulated withholdings in such
      Participant's account, as well as any Common Stock purchased for such
      Participant's account, with such Participant subject to the one-year holding
      period restriction described in Section 4.6.

     

    10.6
      -
      Amendment and Termination. The Board shall have complete power and authority
      to
      terminate or amend the Plan at any time and for any reason. No termination,
      modification, or amendment of the Plan may, without the consent of an Employee
      then having a right to purchase Common Stock under the Plan, adversely affect
      the rights of such Employee to purchase Common Stock.

     

    10.7
      -
      Effective Date. The Plan shall become effective as of January 1,
      1997.

     

    10.8
      - No
      Employment Rights. The Plan does not, directly or indirectly, create any right
      for the benefit of any Employee or class of Employees to purchase any shares
      under the Plan, or create in any Employee or class of Employees any right with
      respect to continuation of employment by the Company, and it shall not be deemed
      to interfere in any way with the Company's right to terminate, or otherwise
      modify, an Employee's employment at any time.

     

    10.9
      -
      Effect of Plan. The provisions of the Plan shall, in accordance with its terms,
      be binding upon, and inure to the benefit of, all successors of each
      Participant, including, without limitation, such Participant's estate and the
      executors, administrators or trustees thereof, heirs and legatees, and any
      receiver, trustee in bankruptcy or representative of creditors of such
      Participant.

     

    10.10
      -
      Governing Law. The provisions of the Plan and all matters relating thereto
      shall
      be governed by the laws of the State of Utah, except to the extent such laws
      are
      superseded by the laws of the United States.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      

        ClearOne
          Communications, Inc.

        

        Employee
          Stock Purchase Plan Enrollment Form

        

        AUTHORIZATION

      

       

      
        Participant
          Name (Last, First, M.I.)   
Social
          Security Number   Hire
          Date 
Birth
          Date

        

        __________________________________  _________
          - _______ - _________  __________        
          ___________

        

          [ 
          ] Initial
          Election                                                        
[  ] Married

          [ 
          ] Change
          Election                                                     
[  ] Single

        

        I
          hereby
          authorize and direct that my employer, ClearOne Communications Inc. (the
          “Company”), withhold from each pay period the indicated amount from my gross
          compensation for monthly purchases of shares of the Company’s common stock for
          my account, pursuant to the 1997 Employee Stock Purchase Plan (the” Plan”). I
          intend to complete all applications required by Morgan Stanley to open
          a special
“EMSIP” (Employee Stock Investment Plan) account, and understand that all shares
          of stock purchased under the terms hereby authorized will be deposited
          into this
          account. I understand that under the Plan I may authorize no less than
          $25.00
          and no more the 10% of my gross compensation to be withheld from each
          paycheck.

         
          [  ] 3%   
          [  ] 5%     [ 
]10%   %______________  $______________

        

        I
          understand that I may change, suspend, and resume contributions at such
          times as
          outlined in the terms of the Plan, and that my salary reduction and
          participation in the Plan is completely voluntary. I also understand that
          the
          amounts withdrawn from my compensation, along with shares purchased for
          my
          account, are subject to the withdrawal and/or sale restrictions set forth
          in the
          Plan summary, a copy of which I have received. I understand the Morgan
          Stanley
          may discontinue my EMSIP account at any time by notifying me and the Company
          in
          writing. 
          I also understand that I am subject to an Annual Account Service Charge
          of
          $30.00 to offset costs incurred by Morgan Stanley Dean Witter for the effective
          administration and maintenance of my account.

         
          I do not wish to contribute to the Employee Stock Investment Plan at this
          time.

         
          I hereby authorize the above payroll deduction.

        

        Signature
          _____________________________________________________________ Date
          _________________________________

      

       

       

      
        JOINT
          ACCOUNT DESIGNATION

      

       

      
        In
          connection with our Morgan Stanley EMSIP account, with rights of survivorship,
          we confirm that:

        

        	1.  	
                In
                  all matters pertaining to the joint account maintained pursuant
                  to the
                  terms of the Plan, Morgan Stanley may act upon instructions from
                  either of
                  us.

              

        	2.  	
                If
                  both of us reside in a state other than Louisiana or Texas, upon
                  the death
                  of either of us, all securities, funds, and property in the joint
                  EMSIP
                  account shall be the sole property of the
                  survivor.

              

        	3.  	
                If
                  either of us resides in the state of Louisiana or Texas, upon death
                  of
                  either of us all securities, funds, and property in the joint EMSIP
                  account shall be divided, with one half belonging to the survivor,
                  and one
                  half belonging to the estate of the
                  deceased.

              

        

        Signature
          ______________________________________________________________ Date
          _________________________________

        

        Signature
          ______________________________________________________________ Date
          _________________________________

      

       

       

      
        BENEFICIARY
          DESIGNATION

      

       

      
        Designate
          the following beneficiaries for any interest due from the Plan upon the
          event of
          death:

        

        Beneficiary
          (Primary)______________________________________________ Relationship________________________________

        

        Beneficiary
          (Secondary)____________________________________________ Relationship________________________________

        

        Signature
          _______________________________________________________ Date
          ______________________________________

        We
          suggest that you consult your tax or legal advisor regarding the consequences
          of
          the designation of the beneficiary you have made. You may change your
          designation by properly completing a new Beneficiary Designation section
          of this
          form.

         

        7

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