JOINT PROSECUTION AND DEFENSE AGREEMENT

Exhibit 10.7

JOINT PROSECUTION AND DEFENSE AGREEMENT

This Joint Prosecution and Defense Agreement (the "Agreement") is made effective as of April 1, 2004, by and between ClearOne Communications, Inc. (“ClearOne”), Parsons Behle & Latimer (“PB&L”), Edward Dallin Bagley (“Bagley”) and Burbidge & Mitchell (“B&M”). Each of the foregoing are individually referred to as a "Party" and sometimes collectively referred to as the "Parties" throughout this Agreement.

RECITALS

A.  Bagley is a director and shareholder of ClearOne.

B.  On or about February 6, 2004, Lumbermens Mutual Casualty Company (“Lumbermens”) filed a Complaint for Declaratory Judgment in the United States District Court for the District of Utah against ClearOne, Bagley and certain other current and former directors of ClearOne entitled Lumbermens Mutual Casualty Company v. ClearOne Communications, Inc., Case No. 2:04CV0119TC (the “Insurance Litigation”).

C.  On or about February 9, 2004, ClearOne and Bagley filed a complaint against National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”) and Lumbermens in the United States District Court for the District of Utah entitled ClearOne Communications, Inc., et al. v. National Union Fire Insurance Company, et al., Case No. 2:04CV0145TS (the “Second Insurance Lawsuit”).

D.  PB&L has entered an appearance for, and is representing, all defendants in the Insurance Litigation other than Bagley and Michael A. Pierce. PB&L is representing ClearOne in the Second Insurance Lawsuit. B&M has entered an appearance for and is representing Bagley in the Insurance Litigation and the Second Insurance Lawsuit.

E.  In the Insurance Litigation, ClearOne and Bagley have asserted counterclaims against National Union and Lumbermens. In addition, the Second Insurance Lawsuit has been consolidated with the Insurance Litigation for all purposes. (For further reference in this Agreement, the “Insurance Litigation” refers to all claims and defenses therein, together with the Second Insurance Lawsuit unless otherwise stated.)

F.  In the Insurance Litigation (with the consolidated claims from the Second Insurance Lawsuit), ClearOne is pursuing claims, inter alia, to recover the policy limits of ceratin policies for directors and officers insurance issued by National Union and Lumbermens (the “Insurance Policies”) and Bagley is pursuing related claims, inter alia, to recover losses which he incurred due to National Union’s and Lumbermens’s refusal to pay the policy limits under the Insurance Policies to ClearOne which refusals caused ClearOne to enter into a settlement agreement which diluted his shareholdings in ClearOne. On the other hand, National Union and

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Lumbermens allege in the Insurance Litigation, inter alia, that they have properly rescinded the Insurance Policies due to alleged fraud in procuring the Insurance Policies.

G.  The joint prosecution of the Company’s claims and Bagley’s claims in the Insurance Litigation, and defense of National Union’s and Lumbermens’ claims in the Insurance Litigation, is in the best interests of ClearOne and Bagley and will likely lead to an economy of litigation expenses in the Insurance Litigation.

H.  Due to their prior and current representation of ClearOne and Bagley in litigation concerning matters which are also the subject of the Insurance Litigation, PB&L and B&M are familiar with the underlying facts in the Insurance Litigation and are able to work as co-counsel in the Insurance Litigation.

I.  Through March 30, 2004, Bagley has paid the attorney’s fees and costs of B&M in connection with Insurance Litigation. On the other hand, ClearOne has paid the attorney’s fees and costs of PB&L in connection with the Insurance Litigation.

J.  ClearOne, Bagley, PB&L and B&M now wish (1) to reach certain agreements concerning the joint prosecution of ClearOne’s and Bagley’s claims in the Insurance Litigation and joint defense of claims made by National Union and Lumbermens in the Insurance Litigation, (2) to allocate certain responsibilities in the Insurance Litigation, (3) to make certain agreements in order to protect all applicable privileges, including the attorney/client privilege and work product doctrine, and (4) to reach certain agreements concerning the payment of litigation expenses, including attorney’s fees, in the Insurance Litigation.

THEREFORE, upon the foregoing premises, which are incorporated herein by reference, and in consideration of the mutual covenants herein, the Parties agree as follows:

1. Joint Prosecution and Representation. For purposes of the Insurance Litigation, PB&L and B&M shall jointly prosecute ClearOne’s and Bagley’s claims in the Insurance Litigation and shall jointly defend ClearOne and Bagley with respect to claims made by National Union and Lumbermens in such litigation. PB&L and B&M shall divide and allocate duties and responsibilities for pre-trial activities (including discovery), as well as for trial in a cost efficient manner (but in a manner which will not impede the effective representation of ClearOne and Bagley). In connection with such joint representation, B&M may make formal appearances for ClearOne and PB&L may make formal appearances for Bagley.

2. Conflicts of Interest. There is a potential for a conflict of interest arising from PB&L’s and B&M’s joint and concurrent representation of ClearOne and Bagley. In particular, and among various potential conflicts, ClearOne and Bagley may have or may develop adverse positions with respect to the division of any proceeds received by settlement, or otherwise, from the Insurance Litigation. When any conflicts of interests arise between ClearOne and Bagley in connection with the Insurance Litigation, PB&L and B&M shall undertake to notify ClearOne

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and Bagley of the existence of such conflict(s) of interest. In the event of any such conflicts, PB&L shall represent ClearOne solely with respect to any conflict and B&M shall represent Bagley solely with respect to such conflict. Accordingly, ClearOne and Bagley waive any actual or potential conflict of interest by virtue of the joint representation set forth in Section 1, above.

3. Payment of Litigation Expenses. Unless and until this Agreement is terminated by any of the Parties hereto in accordance with Section 9, below, ClearOne shall pay all litigation expenses, including attorney’s fees, of PB&L a