The Incentive Amounts will be as follows:Eligible Persons may earn incentives based on the Company’s achievement of “**Minimum-Target**”,“**Target**” and “**Profitability**” Targets, determined pursuant to a “Linear Calculation” described belowtaking into account annual revenue and corresponding adjusted pro forma income (or loss). (Allrevenue, income and target amounts are determined with reference to Fiscal Year 2008). TheCommittee shall set forth the Targets, in its sole discretion, in consultation with the ChiefExecutive Officer. The Committee may also, in its sole discretion set forth any conditions that itdeems appropriate, required for an incentive to be earned at each Target. Further, the Committeemay, at any time, in its sole discretion modify any Target(s) taking into account various factors,including but not limited to, general business and market conditions.The Incentive Amounts for Company revenue falling between Minimum and Profitability Targets, willbe determined pursuant to a “Linear Calculation”, which refers to a calculation based on MinimumRevenue and corresponding Maximum Adjusted Pro Forma Loss or Minimum Adjusted Pro Forma Income, asset forth by the Committee.In order for Eligible Persons to earn incentives that correspond with achievement of 112.5% ofTarget annual revenue or above, Company must achieve an annual rate of increase in closedtransactions for Existing Markets at a rate that is at least twenty-five (25) percentage pointshigher than the market for fiscal year 2008.Incentive Amounts will be calculated, subject to the provisions of this Plan, as follows:             **Position** **Minimum-Target** **Target** **Profitability**CEO  50%  100%  150%Officer Vice President  22.5%  45%  67.5%Non-Officer Vice President  15%  30%  45%Profitability Incentive: Additionally, in the event that the Company exceedsProfitability, the Administrator shall, at the end of the applicable calendar year, establish abonus pool equal to 20% of all pro forma earnings above profitability to be distributed to EligiblePersons under this Incentive Plan or Eligible Persons or Participants under other ZipRealty 2008Incentive Plans as incentive payments in amounts determined by the CEO, or the CEO in consultationwith the Committee as necessary.Agent Productivity Multiplier: Eligible Persons may earn an additional incentive in theform of a “Productivity Multiplier” of 1.25% if the Company achieves annual revenue of at least112.5% of Target revenue and M12 agents achieve average productivity of 1 deal per month for thecalendar year. In such case, the Incentive Amount otherwise calculated above (including theProfitability Incentive) for the Eligible Person shall be multiplied by a factor of 1.25 incalculating the Actual Incentive. This multiplier shall be calculated based on full yearperformance at the end of the fiscal year.
 

 
Payment:Earned incentives under this Plan (except the Profitability Incentive and Agent ProductivityMultiplier, which shall be calculated and paid at year end only) may be paid in two installments asset forth below:**Mid-Year Installment:**The Committee, in consultation with the Chief Executive Officer shall, inits discretion, establish “Mid-Year Targets” to correspond with the Minimum, Target, andProfitability Targets set forth above, based on Company performance through June 30, 2008. If theMinimum Mid-Year Target or greater is achieved, Eligible Persons may earn 1/3 (33.3%) of the totalincentive payment associated with corresponding annual Target. The Mid-Year Incentive Amounts forCompany revenue and income falling between Mid-Year Targeted points will be determined on a linearbasis between points. Payment of the Mid-Year Installment is subject to all provisions andconditions in this Plan.The Company will pay any Mid-Year installment of the Incentive through an award of restrictedcommon stock of the Company (“Restricted Stock”) under the Company’s 2004 Equity Incentive Plan(the “Plan); provided that if the applicable share limits of the Plan have been exceeded theCompany may settle Mid-Year installments in cash. The number of shares of Restricted Stock subjectto a particular Eligible Person’s Restricted Stock award will equal that Eligible Person’s Mid-Yearinstallment (expressed as a cash amount) divided by the Fair Market Value (as such term is definedin the Plan) of a share of the Company’s common stock as of the date the Committee meets todetermine the extent (if any) to which the Mid-Year Targets have been achieved and grant anycorresponding awards of Restricted Stock, rounded down to the nearest whole share. The RestrictedStock will be granted no later than September 30, 2008. Of the total number of shares subject to aparticular Eligible Person’s award, fifty percent 50% of the Restricted Stock will vest on January1, 2009, subject to the Eligible Person’s continued employment by the Company or one of itsSubsidiaries (as such term is defined in the Plan) through that date, and the remainder ofRestricted Stock will vest on July 1, 2009, subject to the Eligible Person’s continued employmentby the Company or one of its Subsidiaries (as such term is defined in the Plan) through that date.In the event the Eligible Person’s employment with the Company or one of its Subsidiariesterminates (regardless of the reason) before that vesting date, the Eligible Person’s RestrictedStock shall automatically be forfeited to the Company and the Company will have no obligation tomake any payment to the Eligible Person in respect thereof or with respect thereto. At or promptlyfollowing the grant of shares of Restricted Stock in accordance with the foregoing, the Companywill deliver an award agreement to each recipient of such a grant. The award agreement will setforth the number of shares awarded to the recipient and the detailed terms and conditions of theaward. The grant will be subject to the terms and conditions of the Plan (including, withoutlimitation, the transfer limitations of Sections 7(c) and 12 of the Plan, as applicable, theadjustment provisions of Section 13 of the Plan, and the withholding provisions of Section 14 ofthe Plan) and the applicable award agreement. The Company’s obligation to pay (in the form of astock award or otherwise) any portion of a Mid-Year installment otherwise due to an Eligible Personis subject to the condition precedent that the Eligible Person agree to be bound by, execute andreturn to the Company (promptly after the Company delivers the applicable award agreement to theEligible Person) the award agreement relating to the award of Company common stock to the EligiblePerson and such escrow agreement or escrow instructions (in the form provided by the Company) thatmay relate to the Restricted Stock (each in substantially the customary form used by the Company inconnection with its award of Restricted Stock under the Plan). In addition, and notwithstanding
 

 
any other provision of this Plan to the contrary, if the Company pays any Mid-Year Installment inthe form of Restricted Stock, in no event shall any portion of the related incentive under thisPlan be considered to have been “earned” unless and until the vesting conditions applicable to suchRestricted Stock have been satisfied.End of Year Installment: If the Minimum Target or greater is achieved, Eligible Persons may earnthe Incentive Amount as calculated above, less any amount paid as a Mid-Year Installment (whichMid-Year installment will equal, for this purpose, the dollar amount used to determine the numberof shares of Restricted Stock granted to the Eligible Person).Performance Adjustment: The Administrator shall have discretion to adjust any EligiblePerson’s Incentive Amount based on his or her job performance for Fiscal Year 2008 (the “AdjustedIncentive Amount”) by reducing or increasing the Incentive Amount as the Administrator, in it’ssole discretion deems appropriate, including elimination of the Incentive Award.Calculation and Approval. An Eligible Person’s Incentive Amount or Adjusted IncentiveAmount, as determined in the manner set forth above, is that Eligible Person’s “Actual Incentive”with respect to Fiscal Year 2008. All calculations of each participant’s Actual Incentive must beapproved by the Administrator with respect to such participant and the total amount of theaggregate incentive pool to be paid hereunder to all Eligible Persons must be approved by theCommittee after such consultation with the Board as it deems appropriate.Payouts: All amounts, if any, to be paid out hereunder shall be paid within a reasonableamount of time following determination by the Committee that there shall be a pool from which tomake such payments with respect to Fiscal Year 2008.