Exhibit 10.1
TERMINATION AND RELEASE AGREEMENT
     This Termination and Release Agreement (the “Agreement”) is entered into
between ZipRealty, Inc. (the “Company”), on the one hand and Richard F. Sommer
(the “Executive”) on the other hand with reference to the following facts:
WHEREAS:
     A.   Executive was employed by the Company as Chief Executive Officer and
was appointed to Board of Directors on September 6, 2006.
     B.   On or about August 24, 2006, Executive and Company entered into an
Employment Agreement (the “Employment Agreement”).
     C.   On or about August 24, 2006, Executive and Company entered into an
Executive Proprietary Information Agreement (the “Confidentiality Agreement”).
     D.   Company and Executive entered into a stock option agreement dated
September 6, 2006 (the “Stock Option Agreement”), granting Executive the option
to purchase 1,250,000 shares of the Company’s common stock (the “Option”)
subject to the terms and conditions of the Stock Option Agreement.
     E.   On or about June 1, 2007, Company accepted Executive’s resignation as
Chief Executive Officer effective June 4, 2007 (the “Termination Date”), however
Executive would continue as a member of the Board of Directors of the Company
(but as a non-employee director) subject to the terms and conditions below.
COVENANTS
     It therefore is agreed by and between the undersigned as follows:
     1.   Effective June 4, 2007, Executive shall no longer be the Chief
Executive Officer of the Company or an employee thereof. At the request of the
Board and notwithstanding the provisions to the contrary in the Employment
Agreement, Executive will remain a member of the Board of Directors, however
Executive hereby agrees to tender his resignation from the Board of Directors at
such time and upon the request of the Corporate Governance and Nominating
Committee. Executive shall be entitled to compensation as a non-employee
director under the Company’s Director Compensation Policy commencing on
January 1, 2008 should he remain a director at such time.
     2.   Each of the undersigned executes and enters into this Agreement in
consideration of each and all of the agreements made and undertaken by each of
the undersigned as follows:

 

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          a.   The Company agrees to pay Executive his current base salary of
$33,333.33 per month, less applicable withholding and deduction, from June 1,
2007 through December 31, 2007 (the “Payment Period”). The first payment will be
made on the first regular payroll date following the Effective Date of this
Agreement (defined below) and payments will continue, thereafter, in accordance
with the Company’s regular payroll practices and pursuant to the Company’s
regular payroll schedule. During the Payment Period, Executive will not be
entitled to accrual of any Executive benefits. Executive agrees that during the
Payment Period, he will not solicit or recruit any Company Executive, employee,
consultant or independent contractor on behalf of himself or any other person or
entity. Executive also agrees that during the Payment Period, he will not act as
a consultant, Executive, independent contractor, or serve as a board member with
a Competitor of Company and shall make himself available to consult with the
Company at the Company’s request which services shall not exceed ten hours per
month. For purposes of this Agreement, “Competitor” is defined as any
corporation, partnership or entity that provides or that is actively exploring
the opportunity to provide real estate brokerage services. Competitors include,
but are not limited to those companies identified in writing between Company and
Executive.
          b.   On the Termination Date (or on such other date as required by
applicable law), Executive will be paid all accrued, unused vacation and all
vested benefits under any employee benefit plan subject to ERISA.
          c.   Executive’s health insurance benefits will cease on the
Termination Date, subject to Executive’s right to continue his health insurance
under COBRA. Assuming Executive makes a timely election to continue his health
insurance under COBRA, Company will reimburse Executive (or make direct payment
for) Executive’s percentage of the cost of medical insurance benefits
continuation under COBRA for him and his dependents that equals the percentage
of his medical insurance benefits covered at the Company’s expense prior to the
Termination Date for the six months following the Effective Date. Executive’s
participation in all other benefits and incidents of employment will cease on
the Termination Date. Executive will cease accruing Executive benefits,
including but not limited to, vacation time and paid time off, as of the
Termination Date. The Company further agrees that it will provide for the
payment of unreimbursed medical expenses (whether or not deductible under
Section 213 of the Internal Revenue Code) incurred by Executive in an amount not
to exceed $100,000, which arrangement is intended to comply with Section 409A of
the Internal Revenue Code, such terms to be set forth in a separate agreement no
later than July 1, 2007.
          d.   Executive shall continue to maintain the confidentiality of all
confidential and proprietary information of the Company and shall continue to
comply with the terms and conditions of the Confidentiality Agreement between
Executive and the Company. Executive shall return to Company all of the
Company’s property and confidential and proprietary information that Executive
knows to be in his possession. By signing this Agreement, Executive represents
and declares under penalty of perjury under the laws of the state of California
that he has returned all Company property (other than de minimus items) that
Executive knows to be in his possession.
          e.   As of the Effective Date, Executive shall vest and be eligible to
exercise 312,500 shares and no more, pursuant to the Stock Option Agreement. All
other terms of the Stock Option Agreement, including (but not limited to) any
post-termination exercise period, shall remain unchanged. For avoidance of
doubt, Executive shall have twelve months after he ceases to be a member of the
Board of Directors to exercise his Option for 312,500 shares.

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     3.   Other than the payments and other benefits set forth above, Executive
agrees that no other compensation, payments, wages, salary, benefits, equity, or
remuneration of any kind whatsoever are owing to him as a result of his
employment with Company, and that he has no entitlement to, or any right to make
any claim for, any other compensation, payments, wages, salary, benefits,
equity, or remuneration of any kind as a result of his employment with Company.
     4.   Executive and Company agree that the payment of benefits and other
covenants set forth in this Agreement represent settlement in full of all
outstanding obligations owed to Executive by the Company and its owners, related
entities, officers, directors, employees, agents, representatives and
shareholders (the “Releasees”). Executive, on his own behalf, and on behalf of
his respective heirs, family members, executors, agents and assigns, does hereby
fully and forever release and discharge the Releasees of and from, and agrees
not to sue concerning any claim, duty, obligation or cause of action relating to
any matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Executive may possess, or that Executive’s heirs, family
members, executors, agents and assigns have or might have through Executive,
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement, including without limitation:
          a.   any and all claims relating to or arising from Executive’s
employment relationship;
          b.   any and all claims relating to, or arising from, Executive’s
right to purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claims for fraud misrepresentation, breach of
fiduciary duty, breach of duty under applicable state corporate law, and
securities fraud under any state or federal law
          c.   any and all claims under the law of any jurisdiction including,
but not limited to, wrongful discharge of employment, constructive discharge
from employment, termination in violation of public policy, discrimination,
harassment, retaliation, breach of contract, both express and implied, breach of
the covenant of good faith and fair dealing, both express and implied;
promissory estoppel, negligent and intentional infliction of emotional distress,
negligent and intentional misrepresentation, negligent and intentional
interference with prospective economic advantage, unfair business practices,
defamation, libel, slander, negligence, personal injury, fraud,
misrepresentation, assault, battery invasion of privacy, false imprisonment and
conversion;
          d.   any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Executive Retirement Income Security Act of 1974, the Worker
Adjustment Retraining and Notification Act, the Older Workers Benefit Protection
Act; the California Fair Employment and Housing Act, the California Labor Code;
the Family and Medical Leave Act of 1993, and the California Family Rights Act
and any and all applicable laws, regulations or statutes;

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          e.   any and all claims for violation of the federal or any state
constitution;
          f.   any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination;
          g.   any claim for any loss, cost, damage, or expense arising out of
any dispute over the non-withholding or other tax treatment of the proceeds
received by Executive as a result of this Agreement; and
          h.   any and all claims for attorneys’ fees and costs.
          Executive and Company agree that in exchange for the promises
contained in this Agreement and to the extent permitted by law, Company does and
hereby fully and forever releases and discharges Executive of and from, and
agrees not to sue concerning, any claim, duty, obligation or cause of action
relating to any matters of any kind, whether presently known or unknown,
suspected or unsuspected, that Company may possess, arising from any omissions,
acts or facts that have occurred up until and including the Effective Date of
this Agreement, provided, however, that this release does not extend to any
claims that Company may have against Executive arising from or related to any
conduct of Executive in his capacity as Chief Executive Officer that is
fraudulent, dishonest, rises to the level of gross misconduct, or constitutes a
violation of the securities laws of the United States.
          The Company and Executive agree that the releases set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. This release does not extend to any
obligations incurred under this Agreement or any obligations with respect to
indemnification for any potential liability alleged against you in connection
with your role as an officer or director of the Company in accordance with
Section 3.d. of the Employment Agreement and with the Company’s certificate of
incorporation and bylaws, applicable law, any directors and officers liability
insurance policy maintained by the Company and/or any indemnification agreement
between you and the Company in effect immediately prior to the date of this
Agreement. In addition, this release does not extend to claims which as a matter
of law cannot be waived, such as a right to indemnification under California
Labor Code section 2802. Furthermore, Executive understands that while this
Agreement does not affect his right to file a charge with or participate as a
witness in an investigation or proceeding conducted by the EEOC or any similar
state agency, by accepting the terms provided herein and the consideration
provided to him as a result, he gives up any right to receive any relief
whatsoever, including but not limited to financial benefit or monetary recovery,
from any lawsuit or settlement related to such rights and claims as he now gives
up, whether the lawsuit is filed or the settlement reached by the EEOC, another
agency, or anyone else.
     5.   Executive and Company represent that they are not aware of any claims
by each of them other than the claims that are released by this Agreement.
Executive and Company acknowledge that they have been advised by legal counsel
and are familiar with the provisions of California Civil Code Section 1542,
which provides as follows:

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
          Executive and Company, being aware of said code section, agree to
expressly waive any rights each may have under the above principal or any
statute or common law principals of similar effect.
     6.   Executive acknowledges that he is waiving and releasing any rights he
may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and
that this waiver and release is knowing and voluntary. Executive and the Company
agree that this waiver and release does not apply to any rights or claims that
may arise under the ADEA after the Effective Date of this Agreement. Executive
acknowledges that the consideration given for this waiver and release agreement
is in addition to anything of value to which Executive was already entitled.
Executive further acknowledges that he has been advised in writing that:

  a.   he should consult with an attorney prior to executing this Agreement;    
b.   he has up to twenty-one (21) days within which to consider this Agreement;
    c.   he has seven (7) days following his execution of this Agreement to
revoke this Agreement;     d.   this Agreement shall not be effective until the
revocation period has expired (the “Effective Date”); and     e.   nothing in
this Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so, unless
specifically authorized by federal law.

     7.   Each of the undersigned agrees that none of the releases set forth
herein releases any claims arising out of obligations set forth in this
Agreement.
     8.   Executive and the Company agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein released, shall be subject to binding arbitration in Alameda County,
California before the American Arbitration Association under its National Rules
for the Resolution of Employment Disputes of California Code of Civil Procedure.
The parties agree that the prevailing party in any arbitration shall be entitled
to injunctive relief in any court of competent jurisdiction to enforce the
arbitration award. The parties hereby agree to waive their right to have any
dispute between them resolved in a court of law by a judge or jury. This
paragraph will not prevent either party from seeking injunctive relief (or any
other provisional remedy) from any court having jurisdiction over the parties
and the subject matter of their dispute relating to Executive’s obligations
under this Agreement.

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     9.    If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or application of the
Agreement which can be given effect without the invalid provisions or
application and to this end the provisions of this Agreement are declared to be
severable.
     10.   This Agreement contains the entire agreement of the undersigned with
respect to the matters covered by this Agreement and no promise made by any
party or by an officer, attorney, or agent of any party that is not expressly
contained in this Agreement shall be binding or valid. This Agreement supersedes
any prior agreement between the parties with the exception of the
Confidentiality Agreement the Stock Option Agreement (except as amended herein).
The Employment Agreement is terminated in its entirety other than with respect
to the obligations contained in Section 3.d. and Section 8.g. therein which
shall survive. Additionally, any modification of any provision of this
Agreement, to be effective, must be in writing and signed by Executive and the
Chair of the Board of Directors of the Company.
     11.   This Agreement shall be governed by and construed under the laws of
the State of California, without regard to its conflict of laws provisions.
     12.   In addition to all other confidentiality obligations to which
Executive and Company are subject, including without limitation, those
obligations set forth in the Confidentiality Agreement, from and after the
Effective Date, Executive and Company agree explicitly to keep strictly
confidential the existence, terms and circumstances surrounding this Agreement ,
except as otherwise required by law. Executive will not make any statement,
written or oral, that disparages the Company or any of its affiliates, or any of
the Company’s or its affiliates’ products, services, policies, business
practices, employees, executives, officers or directors. Similarly, the Company
agrees to instruct its executive officers and members of the Company’s Board of
Directors not to make any statement, written or oral, that disparages Executive.
The restrictions described in this paragraph shall not apply to any truthful
statements made in response to a subpoena or other compulsory legal process,
including any disclosure required in the judgment of the Company under
applicable securities or other laws.
     13.   Each party to this Agreement has consulted with, or had the
opportunity to consult with, legal and tax counsel concerning all paragraphs of
this Agreement. Each party has read the Agreement and has been fully advised by
legal counsel with respect to the rights and obligations under the Agreement, or
has had the opportunity to obtain such advice. Each party is fully aware of the
intent and legal effect of the Agreement, and has not been influenced to any
extent whatsoever by any representation or consideration other than as stated
herein. After consultation with and advice from, or the opportunity for
consultation with and advice from, legal counsel, each party voluntarily enters
into this Agreement.
     14.   This Agreement may be executed by facsimile and in counterparts, and
the counterparts, taken together, shall constitute the original.
     15.   Each of the undersigned executing this Agreement on behalf of a party
represents and warrants that he or she is a duly appointed agent or duly elected
officer of the party and is fully authorized to execute this Agreement on that
party’s behalf.

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     IN WITNESS WHEREOF, the parties hereto have executed this Termination and
Release Agreement as of the dates set forth below.

                DATED: June 2, 2007  /s/Richard F. Sommer        Richard F.
Sommer             

          DATED: June 2, 2007   ZipRealty, Inc.
        By:   /s/Donald F. Wood       Name:   Donald F. Wood      Title:  
Chairman of the Board of Directors, ZipRealty, Inc.     

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