HearMe Change of Control / Retention Agreement with Frank Chu
This agreement between HearMe and Frank Chu provides that if Mr. Chu remains employed in good standing through November 30, 2001, he will receive a $200,000 retention bonus and an extension of the exercise period for his vested stock options from 90 days to one year after his employment ends. The agreement is designed to encourage Mr. Chu to stay with the company during a period of potential change in control or dissolution. The agreement does not alter the at-will nature of his employment.
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EXHIBIT 10.33
[LETTERHEAD]
June 19, 2001
Frank Chu
EVP, HearMe Technology Products
HearMe
Dear Frank,
You are among a select group of executives who we believe are crucial to HearMe's transition over the next six months based on your relationships with customers, vendors and employees. The Compensation Committee of the Board of Directors has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of HearMe's executive team, including yourself, to their assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Company and/or the Company's dissolution.
If you remain employed with the Company and devote your full attention and time, during normal business hours, to the business and affairs of the Company, and use your best efforts to perform faithfully and efficiently such responsibilities for the next several months, the Company will do the following.
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- You will be eligible to receive a retention bonus in the amount of $200,000 (less applicable taxes). To earn this retention bonus you must remain an employee in good standing through November 30, 2001. The retention bonus will be paid on November 30, 2001, or earlier in the event HearMe is either acquired by another company (in which case payment will be on the close of the transaction) or, if HearMe terminates your employment without "cause," on the last day of your employment.
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- You will be eligible for an extension of your exercise period for all vested options from the 90 days provided in your option agreement(s) to one year following your termination of employment if you remain an employee in good standing through November 30, 2001.
The retention bonus and extension of your exercise period are based on the premise that you stay with HearMe and perform at or above the expectation level in your position.
This letter does not change the at-will nature of your employment relationship with HearMe. The specifics of the terms and conditions under which the benefits described above are being offered to you are described in more detail in the attached Exhibit A: HearMe, Change of Control/Retention Agreement. Please read and sign this Agreement.
Thank you for your continued support and hard work.
Sincerely,
/s/ Rob Csongor
Rob Csongor
Chief Executive Officer
Acknowledge receipt by signing below and returning original to John Alexander.
Signature: | /s/ Frank Chu | Date: | 7/23/01 | |||
Name: | Frank Chu |
EXHIBIT A
HEARME
CHANGE OF CONTROL / RETENTION AGREEMENT
This Change of Control / Retention Agreement (the "Agreement") is made and entered into by and between Frank Chu (the "Employee") and HearMe (the "Company"), effective as of the latest date set forth by the signatures of the parties hereto below (the "Effective Date").
RECITALS
A. It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control. Additionally, a number of activities will be required of the Employee that are outside the normal scope of his or her responsibility in the event that the Company elects to dissolve. The Board of Directors of the Company (the "Board") recognizes that such considerations can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders and creditors to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company and notwithstanding any increased duties required of him or her in the future.
B. The Board believes that it is in the best interests of the Company, its stockholders and its creditors to provide the Employee with an incentive to continue his/her employment and to motivate the Employee to maximize the value of the Company, for the benefit of its stockholders and/or creditors, despite the possibility of a Change of Control and/or dissolution.
C. The Board believes that it is necessary and appropriate to provide the Employee with certain benefits in order to provide the Employee with incentives and encouragement to remain with the Company notwithstanding the possibility of a Change of Control and/or dissolution.
D. Certain capitalized terms used in the Agreement are defined in Section 6 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate on the date that all obligations of the parties hereto with respect to this Agreement have been satisfied.
2. At-Will Employment. The Company and the Employee acknowledge that the Employee's employment is and shall continue to be at-will, as defined under applicable law. If the Employee's employment terminates for any reason, whether with or without Cause and with or without notice, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be available in accordance with the Company's established employee plans or pursuant to other written agreements with the Company.
3. Retention Bonus. In order to incent the Employee to remain employed with the Company for the next several months and provide added stockholder and creditor value during this difficult and uncertain business climate, Employee will be eligible to receive a cash bonus of $200,000, less applicable tax withholdings. To earn this retention bonus you, the Employee must remain an employee in good standing through November 30, 2001. This means that the Company shall not have terminated the Employee's employment for Cause (including a deemed termination under the definition below) prior to November 30, 2001. This retention bonus will be paid on November 30th, or earlier as follows: (a) in the event the Company undergoes a Change of Control that closes prior to November 30, 2001, on the closing date of the transaction, or (b) in the event the Company terminates the Employee's employment without Cause prior to November 30, 2001, on the last day of his or her employment. If the Employee's employment terminates prior to November 30, 2001 for any reason other than as a result of the Company's terminating his or her employment for Cause, the Employee shall not be entitled to payment of any portion of the retention bonus.
4. Extension of Exercise Period. As further incentive for the Employee's continuing employment, the Company will allow him or her to receive an extension of the period in which he or she has to exercise all vested (as of the date the Employee's employment terminates) options held by him or her from the 90 days provided for in the applicable option agreements to one year following the termination of employment. The extension of the option exercise period shall be extended if the Employee remains employed until the earlier to occur of (a) November 30, 2001, (b) the closing date of the Company, or (c) the date the Company terminates the Employee's employment without Cause. Except as provided in the prior sentence, this extension shall not be available in the event the Employee's employment terminates prior to November 30, 2001 for any reason other than a termination without Cause by the Company.
5. Other Terminations. Other than as specified above in this Agreement, the Employee shall not be entitled to any benefits or payments in connection with termination of his or her employment with the Company (other than those benefits to which he or she is entitled under then-applicable Company policies or applicable law). If the Employee's employment is terminated for Cause (including a deemed termination under the definition below), he or she shall not be entitled to any benefits provided for under this Agreement. In the event of the Employee's death or termination of his or her employment as a result of a Disability, in either case occurring before the date on which this Agreement provides that a benefit is to be provided, then the Employee (or his or her heirs) shall be entitled to any such benefit.
6. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:
(a) Cause. "Cause" for termination of the Employee's employment with the Company shall exist in the event of (i) an act of personal dishonesty taken by the Employee in connection with his or her responsibilities as an employee and intended to result in substantial personal enrichment of the Employee, (ii) Employee's being convicted of, or entering a plea of nolo contendre to, a felony, or (iii) a willful act by the Employee which constitutes misconduct and which is injurious to the Company; or material violations of this Agreement, any other agreement between the Employee and the Company (including without limitation any confidentiality, proprietary information and inventions assignment agreement(s)) or of Employer's written policies as set forth in Employer's employee handbook. In addition, "Cause" for termination of the Employee's employment shall exist, whether or not the Company chooses to terminate his or her employment, such that the Employee's employment shall be deemed to have terminated for Cause, for purposes of this Agreement only, in the event of the Employee's failure to devote his or her full time and attention, during normal business hours, to the business and affairs of the Company in a manner that meets or exceeds the Board's performance expectations with respect to an officer holding the Employee's position, provided that in the event the Employee's performance falls below this level, the Company shall provide notice to the Employee of such performance shortfall and, if the shortfall is curable, the Employee shall have five (5) business days in which to cure the shortfall.
(b) Change of Control. "Change of Control" means the occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) Section 13(d) of the Securities Exchange Act of 1934, as amended is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities without the approval of the Board of Directors of the Company; or
(ii) A merger or consolidation of the Company, whether or not approved by the Board of Directors of the Company, other than a merger or consolidation which would result in holders of more than fifty percent (50%) of the voting power represented by the voting securities of the Company outstanding immediately prior thereto continuing to hold (either by the voting securities remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company, or such surviving entity outstanding immediately after such merger or consolidation, or the Company sells all or substantially all of the Company's assets.
(c) Disability. "Disability" shall mean that the Employee has been unable to perform his or her Company duties as the result of his or her incapacity due to physical or mental illness, and such inability, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the Employee's legal representative (such Agreement as to acceptability not to be unreasonably withheld). Termination resulting from Disability may be effected only after at least 30 days' written notice by the Company of its intention to terminate the Employee's employment as a result of the Disability. In the event that the Employee resumes the performance of substantially all of his or her duties hereunder before the termination of his or her employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.
7. Successors.
(a) Company's Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Section 7(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
8. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. This Agreement represents the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements and understandings regarding same matter. This Agreement supercedes any arrangements in any offer letters, addendums to offer letters or any other agreements.
(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, with the exception of its conflict of laws provisions.
(d) Severabiliy. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.
(e) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.
HEARME | ||||
By: | /s/ Rob Csongor | |||
Title: | Chief Executive Officer | |||
Date: | 8/3, 2001 | |||
Frank Chu | ||||
/s/ Frank Chu | ||||
Date: | 7/23, 2001 |
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