Document:

exv4w7

 

Exhibit 4.7

	 	 	 
	 

	 	State of Delaware
	 

	 	Secretary of State
	 

	 	Division of Corporations
	 

	 	Delivered 11:51 AM 01/18/2006
	 

	 	FILED 11:51 AM 01/18/2006
	 

	 	SRV 060046309 — 3961741 FILE

RESTATED

CERTIFICATE OF TRUST

OF

USB CAPITAL XI

     THIS
RESTATED CERTIFICATE OF TRUST of USB CAPITAL XI (the “Trust”) is being
duly executed and filed by the undersigned, as trustees, to amend and
restate under the Delaware Statutory Trust Act (12 Del. C (Section) 3801 et seq.) the Certificate of Trust of the
Trust which was originally filed on April 27, 2005.

     The Certificate of Trust is hereby amended and restated in its entirety to read as
follows:

     1. NAME.
The name of the statutory trust is USB Capital XI.

     2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust with a
principal place of business in the State of Delaware are Wilmington Trust Company, 1100
North Market Street, Wilmington, Delaware 19890.

     3. EFFECTIVE
DATE. This Restated Certificate of Trust shall be effective upon filing.

[Signature page follows]

 

 

     IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Restated Certificate of Trust as of the date first above written.

	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY, not in its individual capacity but
	 	 	solely as Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kristin L. Moore	 	 
	 

	 	 	 	 

Name: Kristin L. Moore
	 	 
	 

	 	 	 	Title: Financial Services Officer	 	 
	 
	 	 	 	 
	 
	 	/s/ David M. Moffett	 	 
	 	 	 	 	 
	 	 	David M. Moffett, not
in his individual capacity but solely	 	 
	 	 	   as Administrative Trustee	 	 
	 
	 	 	 	 
	 
	 	/s/ Daryl N. Bible	 	 
	 	 	 	 	 
	 	 	Daryl N. Bible, not in his individual capacity but solely	 	 
	 	 	   as Administrative Trustee	 	 
	 
	 	 	 	 
	 
	 	/s/ Lee R. Mitau	 	 
	 	 	 	 	 
	 	 	Lee R. Mitau, not in his individual capacity but solely	 	 
	 	 	   as Administrative Trusteeexv10w1

 

Exhibit 10.1

August 24, 2006

Richard F. Sommer

Dear Richard:

     On behalf of ZipRealty, Inc. (the “Company”), I am pleased to offer you the position
of Chief Executive Officer of the Company. The terms of your employment with the Company are as
set forth below:

     1.   Position.

          a.   Title. You will become the Chief Executive Officer of the Company, working out of
the Company’s headquarters office in Emeryville, California. As such you will report to the
Company’s Board of Directors (the “Board”). Upon commencement of employment, you will also be
appointed to serve as a member of the Board, and as long as you are a Company employee you agree to
serve in such capacity without additional compensation.

          b.   Duties. As Chief Executive Officer, you will have the duties, responsibilities
and authority customarily associated with such position as the Company’s most senior executive
officer, including responsibility for the overall management of the Company. You agree to the best
of your ability and experience that you will loyally and conscientiously perform all of your duties
and obligations to the Company. During your employment, you further agree that you (i) will devote
substantially all of your business time and attention to the business of the Company; (ii) will not
render commercial or professional services of any nature to any person or organization, whether or
not for compensation, without the prior written consent of the Board which (subject to the
Company’s Corporate Governance Guidelines as referred to below) will not be unreasonably withheld;
and (iii) will not directly or indirectly engage or participate in any business or activity that is
competitive in any manner with the business of the Company. Nothing in this letter agreement will
prevent you from: (A) serving on advisory boards or boards of charitable organizations, so long
as such service does not unduly interfere with the performance of your duties to the Company; or
(B) serving on the board of directors of a private company which you are currently a member of and
have disclosed to the Company. Note however that the Company’s Corporate Governance Guidelines
provide that no officer of the Company (including the Chief Executive Officer) will accept or
seriously discuss joining the board of any public or private for-profit company without first
seeking the permission of the Corporate Governance and Nominating Committee of the Company. While
you are an executive officer and director of the Company, the Company will assist you in satisfying
your reporting obligations under Section 16 of the Securities Exchange Act of 1934 (the “Exchange
Act”).

 

 

     2.   Start Date. Subject to fulfillment of any pre-conditions imposed by this letter
agreement, you will commence full-time employment with the Company on September 6, 2006 (the
“Start Date”).

     3.   Compensation and Benefits.

          a.   Base Salary. For all services rendered to the Company, you will receive a monthly
base salary of not less than $33,333.33 (which on an annualized basis equals $400,000), which will
be paid in accordance with the Company’s regular payroll practices (but no less frequently than
once per month). For purposes of this letter agreement, the term “Base Salary” means the annual
base salary set forth in this Section 3.a. or, to the extent the amount of such Base Salary is
adjusted from time to time in the future pursuant to the Company’s annual review process, your
annualized base salary as applicable on the relevant date. The Board’s Compensation Committee (the
“Committee”) will periodically review your Base Salary for possible increases and to ensure market
competitiveness.

          b.   Incentive Bonuses. Except as set forth below with respect to the period ending on
December 31, 2007, you will be eligible to earn an annual incentive bonus with an annual target
amount equivalent to 100% of your Base Salary (“Target Bonus”). Your right to be paid an annual
incentive bonus under this Section 3.b. will be based on your continued employment throughout each
applicable performance period (subject to Section 8) and the satisfaction of operating performance
metrics and other milestones established by the Committee in its sole discretion (but with input
from you) with respect to such period. Such performance metrics and milestones will be established
no later than 60 days after the start of the applicable performance period; provided that with
respect to 2006, such metrics and milestones will be established on or before October 15, 2006.
The actual amount of bonus paid, assuming certification by the Committee that the objectives have
been achieved and the level of such achievement, may be more or less than the Target Bonus amount.
Any bonus earned and payable under this Section 3.b. will be paid within 60 days following the end
of the applicable performance period (whether or not you remain employed on the payment date).
With respect to 2006 and subject to the next following paragraph in this Section 3.b., any bonus
amount earned and that becomes payable will be pro-rated from your Start Date through December 31,
2006.

          You will be paid a bonus of $100,000 on your Start Date; provided however that if at any time
during the first six months following your Start Date your employment terminates other than as a
result of an Involuntary Termination (as defined below), your death or your Disability (as defined
in the Company’s 2004 Equity Incentive Plan), you will be required to pay to the Company on the
date your employment terminates an amount equal to the net (after-tax) amount (applying the highest
marginal income tax rates effective in 2006) that you received under this sentence.
Notwithstanding anything to the contrary contained in this Section 3.b. (and in particular
notwithstanding the statement above that your Target Bonus will equal 100% of your Base Salary),
the aggregate amount of any annual incentive bonuses that the Company would, in the absence of this
sentence, be obligated to pay you under this Section 3.b. with respect to 2006 and 2007 (in the
aggregate) will be reduced by $100,000.

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          c.   Benefits. The Company will provide you with the opportunity to participate in
benefits plans and programs of the Company, if any, to the extent your position, tenure and other
qualifications make you eligible to participate, subject to any eligibility requirements imposed by
such plans. You will be entitled to paid time off based on the Company’s written policies as then
in effect. The Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.

          d.   Indemnification. Commencing as of the Start Date, you will be covered under the
Company’s insurance policies (the “Policies”) for directors’ and officers’ liability coverage and
will be provided indemnification to the maximum extent permitted by the Company’s Bylaws and
Certificate of Incorporation, including becoming a party to the Company’s standard indemnification
agreement (the “Indemnification Agreement”). Such coverage and indemnification will be on terms no
less favorable than provided to any other Company senior executive or director. The
indemnification and liability insurance shall cover events occurring at any time during the period
in which you are rendering services in any capacity to the Company, even if such claims are brought
after the end of such service period in accordance with the terms of the Policies and the
Indemnification Agreement. In the event of any claims covered by them, you will be entitled to
have your costs paid and fees advanced by the Company in accordance with the terms of the Policies
and the Indemnification Agreement. Provided it can do so on commercially reasonable terms (as
determined in the sole discretion of the Board), the Company agrees during your tenure as Chief
Executive Officer and, to the extent applicable to you, thereafter to maintain at least the level
of insurance coverage as is provided for under the Policies as of the date of this letter
agreement.

     4.   Equity Awards.

          a.   Initial Stock Option Grant. Subject to your acceptance of this letter and
effective upon your Start Date, the Compensation Committee will grant you on September 6, 2006 a
stock option (the “Option”) to purchase 1,250,000 shares of the Company’s Common Stock with
a per share exercise price equal to the closing price of a share of the Company’s common stock as
reported on the Nasdaq Global Market on your Start Date. The Option shares will vest and become
exercisable at the rate of 25% of the total number of Option shares on the first anniversary of
your Start Date and 1/48th of the total number of Option shares on the first day of each
month thereafter. Vesting will, of course, depend on your continued and continuous service
relationship with the Company. The Option will be a non-statutory stock option, will have a
ten-year term (subject to earlier termination in accordance with its terms), and will be subject to
the terms of the Stock Option Agreement between you and the Company (which will incorporate the
terms of Section 4. b. and Section 8.b. below). Except in the context of a termination of your
employment for Cause, you will be able to exercise those Option shares that were vested on your
last day of your service to the Company for 12 months following such last day. Provided you comply
with applicable law and the terms of any Company insider trading and disclosure policy and stock
ownership guidelines, as such may be in place from time to time, you may enter into an arrangement
under Exchange Act Rule 10b5-1(c) covering the exercise and/or sale of your Option shares and other
Company capital stock.

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          On or prior to September 30, 2006, the Company will file a Form S-8 registration statement,
which will be effective upon filing, with the Securities and Exchange Commission to register the
issuance of the Option shares to you.

          b.   Change of Control, Liquidation or Dissolution Acceleration. In the event (i) you
experience an Involuntary Termination in connection with a Change of Control (the Involuntary
Termination shall be deemed to be in connection with a Change of Control if the Involuntary
Termination occurs within 30 days prior to the Change of Control or is required by the merger
agreement or other instrument relating to such Change of Control or is made at the express request
of the other party to the transaction constituting such Change of Control) or within eighteen (18)
months following a Change of Control of the Company, (ii) the Option is terminating in a Change of
Control because the successor entity has not agreed to assume or substitute for the Option in
connection with the transaction, or (iii) the Option is terminating in connection with a
liquidation or dissolution of the Company, you will immediately vest in and have the right to
exercise the Option for 100% of the shares subject to the Option effective as of immediately prior
to the effective date of your Involuntary Termination or the date on which the Option is
terminating in connection with the transaction, as applicable.

          As used herein, a “Change of Control” means the occurrence of any of the following
events:

          (i) the consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or its parent) at least 50% of
the total voting power represented by the voting securities of the Company or such surviving entity
or its parent outstanding immediately after such merger or consolidation;

          (ii) the consummation of the sale or disposition of all or substantially all of the Company’s
assets to any other person or entity (other than to a wholly-owned subsidiary);

          (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner”(as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities representing 50% or more of the total voting power represented by the
Company’s then outstanding voting securities;

          (iv) the dissolution or liquidation of the Company; or

          (v) a change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are “Incumbent Directors.” An “Incumbent Director”
means a director who either (A) is a Director as of the date of this Agreement, or (B) is elected,
or nominated for election, to the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but not will not include any
individual whose election or nomination is in connection with an actual or threatened proxy context
relating to the election of directors to the Company).

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          d.   Subsequent Equity Awards. Subject to the discretion of the Company’s Board of
Directors and the Committee, you may be eligible to receive additional grants of stock options or
other equity awards from time to time in the future, on such terms and subject to such conditions
as the Board of Directors shall determine as of the date of any such award.

     5.   Pre-employment Conditions.

          a.   Confidentiality Agreement. Your acceptance of this offer and commencement of
employment with the Company is contingent upon the execution, and delivery to an officer of the
Company, of the Company’s Employee Proprietary Information Agreement a copy of which is attached as
Exhibit A for your review and execution (the “Confidentiality Agreement”), prior to
or on your Start Date.

          b.   Background and Reference Check. Your acceptance of this offer and commencement of
employment with the Company is contingent upon the Company’s satisfactory completion of a
background and reference check.

          c.   Right to Work. For purposes of federal immigration law, you will be required to
provide to the Company documentary evidence of your identity and eligibility for employment in the
United States. Such documentation must be provided to us within three (3) business days of your
Start Date, or our employment relationship with you may be terminated.

     6.   No Conflicting Obligations. You understand and agree that by accepting this offer
of employment, you represent to the Company that your performance will not breach any other
agreement to which you are a party and that you have not, and will not during the term of your
employment with the Company, enter into any oral or written agreement in conflict with any of the
material provisions of this letter or the Company’s policies. You are not to bring with you to the
Company, or use or disclose to any person associated with the Company, any confidential or
proprietary information belonging to any former employer or other person or entity with respect to
which you owe an obligation of confidentiality under any agreement or otherwise. The Company does
not need and will not use such information and we will assist you in any way possible to preserve
and protect the confidentiality of proprietary information belonging to third parties. Also, we
expect you to abide by any obligations to refrain from soliciting any person employed by or
otherwise associated with any former employer and suggest that you refrain from having any contact
with such persons until such time as any non-solicitation obligation expires.

     7.   At-Will Employment. Subject only to the Company’s obligations described in Section
3.d., 8, 9, 10.a. and 10.c. below, your employment with the Company will be on an “at will” basis,
meaning that either you or the Company may terminate your employment at any time for any reason or
no reason, without further obligation.

     8.   Severance Benefits. In no way limiting the Company’s policy of employment at-will,
if your employment terminates in a manner that constitutes an Involuntary Termination (as defined
below), the Company will offer certain severance benefits to you. As a condition to your receipt
of such benefits, you are required to comply with your continuing obligations to the Company (including the return of any Company property), resign from all positions you hold
with the Company (unless otherwise requested by the Board), and execute the Company’s standard form
of release agreement, as attached hereto as Exhibit B, releasing any claims you may have
against the Company, its agents and successors.

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     Upon termination of your employment for any reason (the last day of your employment is
referred to as your “Termination Date”), you will receive the following payments as of the
Termination Date: (i) all unpaid salary and unpaid vacation accrued through the Termination Date,
(ii) any bonuses earned prior to but unpaid as of the Termination Date (including any such bonuses
covered by Section 3.b.), and (iii) any unreimbursed business expenses substantiated in accordance
with Company policy. The amounts under clauses (i) through (iii) shall be paid to you without the
condition of your providing the Company with any release of claims.

          a.   Payment Upon Involuntary Termination . In the event that you experience an
Involuntary Termination, then you will be entitled to receive: (1) cash severance equal to the sum
of (i) an amount equal to six months’ of your then-current Base Salary; plus (ii) 50% of the
average of the annual incentive bonuses that you were paid with respect to the two years
immediately preceding the year in which occurs your Involuntary Termination; provided however that
with respect to an Involuntary Termination that occurs on or prior to December 31, 2007, the amount
covered by this clause (ii) shall be $100,000; and provided further that with respect to an
Involuntary Termination that occurs during calendar year 2008, the amount covered by this clause
(ii) shall be calculated as follows: 50% of the quotient of (A) the sum of ($100,000, plus any
additional amount of bonus paid with respect to 2006, which additional amount shall be annualized
to assume you had worked for all of 2006) plus (actual 2007 bonus paid) divided by (B) two; and (2)
for the six months following the effective date of the release of claims referred to above,
assuming you timely elect such coverage, reimbursement (or direct payment) by the Company of the
percentage of the cost of medical insurance benefits continuation under COBRA for you and your
dependents that equals the percentage of your medical insurance benefits covered at the Company’s
expense prior to the Termination Date. Subject to any delay required under Section 10.c. below,
the cash severance amount set forth in this Section 8.a.(1) shall be paid out in equal installments
over the Company’s regular payroll schedule for six months following the effective date of your
release of claims referred to above.

          b.   Vesting Acceleration on Involuntary Termination occurring prior to a Change of
Control. In addition to the benefits provided in Section 8.a. above, but only with respect to
an Involuntary Termination not covered by Section 4.b. above, you will be entitled to additional
vesting of the Option effective as of your Termination Date such that as of the effective date of
your Involuntary Termination you will be treated as vested in and able to exercise a number of
Option shares equal to 12.5% of the total number of Option shares in addition to the number of
Option shares in which you would otherwise be vested in on the date of your Involuntary Termination
(but in no event a number greater than 100% of the total number of Option shares).

          c.   Definition of Cause. For purposes of this letter agreement, “Cause” shall
refer to any of the following that are materially injurious to the Company and shall mean your (i)
willful failure to substantially perform your duties and responsibilities hereunder (other than a

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failure resulting from your complete or partial incapacity due to physical or mental illness
or impairment or Disability as defined in the Company’s 2004 Equity Incentive Plan); (ii) willful
act that constitutes gross misconduct, (iii) willful breach of a material provision of this letter
(including the Confidentiality Agreement), or (iv) material or willful violation of a federal or
state law or regulation applicable to the business of the Company. No act or omission by you will
be considered “willful” unless it is determined that it was committed without good faith or without
a reasonable belief that the act or omission was in the best interests of the Company. The
foregoing is an exclusive list of the acts or omissions that shall be considered “Cause.” To
effect a termination for Cause, the Board will provide you with a written notice of its intent to
effect such a termination and the reason therefore and will give you 10 business days from your
receipt of such notice in which to cure any act or omission giving rise to Cause.

          d.   Definition of Good Reason. For purposes of this letter agreement, you will have
“Good Reason” to terminate your employment upon the occurrence of any of the following without your
express written consent: (i) a material reduction in your position, responsibilities or duties
including without limitation that you are no longer the sole chief executive officer of the
Company, provided that a reduction or other change in your position, responsibilities or duties
solely by virtue of the Company’s being acquired and made part of a larger entity (as, for example,
if you are not made chief executive officer of the combined entity) shall not per se give rise to
Good Reason, whereas Good Reason could exist if, following a Change of Control, the size and scope
of the Company’s business is reduced from its pre-Change of Control size and scope as a result of
decisions made by the successor entity or a parent entity thereof (but not as a result of decisions
made by the Company prior to the Change of Control or as a result of market or competitive forces
occurring at any time); (ii) a reduction of your Base Salary or Target Bonus (other than a
reduction contemplated under the second paragraph of Section 3.b. above or a reduction (or series
of reductions) of your Base Salary that in the aggregate does not exceed 10% of your Base Salary
and where such reduction is also concurrently and proportionately applied to all Company executive
officers); (iii) a material reduction in the level or kind of employee benefits to which you were
entitled immediately prior to such reduction with the result that your overall benefits package is
significantly reduced; (iv) a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to you immediately prior
to such reduction; (v) relocation of your primary place of business for the performance of your
duties to the Company to a location that is more than 50 miles from the location specified in
Section 1.a.; (vi) any material breach of a material provision of this letter agreement by the
Company (including without limitation the failure to timely provide you the cash compensation,
equity compensation and/or employee benefits owed you under this letter agreement); or (vii) any
failure or refusal of a successor company to the Company’s business to expressly agree in writing
to assume the Company’s obligations hereunder.

          e.   Definition of Involuntary Termination. For purposes of this letter agreement, an
Involuntary Termination is any termination of your employment with the Company or its acquiror or
successor, as the case may be, which is either (i) by the Company (or its acquiror or successor)
without Cause, or (ii) by you for Good Reason.

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          f.   Noncompete Covenant. As a condition to the benefits extended to you hereunder, you
agree that, if (i) your employment is terminating at the time of or within 12 months following a
Change of Control for any reason and (ii) immediately prior to the Change of Control you hold
Common Stock and/or vested in-the-money options to purchase Common Stock in the aggregate equal to
more than 3% of the Company’s outstanding capital stock immediately prior to the Change of Control,
then you will refrain from competing with the Company or its acquiror (but only with respect to the
Company’s business) for a period of six months following the Termination Date.

          g.   No Duty to Mitigate. No payment or benefit made to you or to be made to you
pursuant to this letter agreement shall be subject to offset except as provided above in the second
paragraph of Section 3.b. and in the final sentence of this Section 8.g. You shall not be required
to mitigate the amount of any cash payment or the value of any benefit provided for in this letter
agreement by seeking other employment, by seeking benefits from another employer or other source,
or by pursuing any other type of mitigation. Notwithstanding the foregoing, if, during the period
the Company is providing you COBRA coverage, you become eligible for or begin to receive group
health benefits from another employer that substantially duplicate health benefits being provided
by the Company pursuant to Section 8(a), then you shall promptly notify the Company of the
duplicate benefits and the Company may discontinue the duplicate benefits being provided pursuant
to Section 8(a).

     9.   Legal Fees. Subject to your accepting this offer and commencing employment with
the Company on the terms set forth herein, the Company will pay Orrick, Herrington & Sutcliffe LLP
promptly upon receipt of the invoice(s) for up to $12,500 in legal fees you incur with them in
connection with negotiation of this letter agreement.

     10.   Tax Matters.

          a.   Parachute Matters. In the event that the severance benefits provided for in this
letter (or otherwise by the Company and/or its acquiror or successor) to you (i) constitute
“parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) and (ii) but for this Section 10.a., would be subject to the excise
tax imposed by Section 4999 of the Code, then your benefits under this letter shall be payable
either: (i) in full, or (ii) as to such lesser amount which would result in no portion of such
severance benefits being subject to the excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local income taxes and the
excise tax imposed by Section 4999, results in the receipt by you on an after-tax basis, of the
greatest amount of benefits under this letter, notwithstanding that all or some portion of such
benefits may be taxable under Section 4999 of the Code. Unless the Company and you otherwise agree
in writing, any determination required under this Section 10 shall be made in writing by the
Company’s independent public accountants (the “Accountants”), whose determination shall be
conclusive and binding upon you and the Company for all purposes (subject to correction in the
event of any contrary determinations by the Internal Revenue Service). For purposes of making the
calculations required by this Section 10, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good faith

8

 

interpretations concerning the application of Section 280G and 4999 of the Code. The Company
and you shall furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations contemplated by this
Section 10.

          b.   Responsibility for Tax Obligations. You agree that you are responsible for any
applicable taxes of any nature (including any penalties or interest that may apply to such taxes)
that the Company reasonably determines apply to any payment or equity award made to you hereunder
(or any arrangement contemplated hereunder), that your receipt of any benefit hereunder is
conditioned on your satisfaction of any applicable withholding or similar obligations that apply to
such benefit, and that any cash payment owed to you hereunder will be reduced to satisfy any such
withholding or similar obligations that may apply thereto.

          c.   Code Section 409A Matters. It is the parties’ intent that no payment or benefit
made or to be made hereunder shall be subject to the provisions of Section 409A(a)(1)(B) of the
Internal Revenue Code. Accordingly, notwithstanding any payment date or schedule specified above,
the parties agree to work expeditiously to amend this letter agreement to conform to their intent
as set forth in this Section 10(c). Notwithstanding anything in this Section 10 to the contrary,
to the extent that the Company in good faith determines that any payment or benefit provided for
under this Agreement constitutes a “deferral of compensation” under Code Section 409A and that you
are a “specified employee” (as defined under Code Section 409A) as of the relevant date, no amounts
shall be paid to you prior to (and will be paid within 10 business days following) the earlier of
(i) the date that is six months following the date of your “separation from service” with the
Company (within the meaning of Code Section 409A), or (ii) the 30th day following the
date on which the Company receives notice of your death, provided that your death occurs after your
separation from service date.

          d.   Notice. Notices and all other communications contemplated by this letter agreement
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed by overnight courier, U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of yourself, mailed notices shall be addressed to you at the home
address that you most recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed
to the attention of its Secretary.

          e.   Assignment. This letter agreement shall not be assignable by either party and
shall be binding upon, and shall inure to the benefit of, the heirs, executors, administrators,
legal representatives, successors and assigns of the parties. In the event that all or
substantially all of the business, assets and/or stock of the Company is sold or transferred, then
this letter agreement shall be binding on the transferee of the business, assets and/or stock.

[rest of page intentionally left blank]

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     We are all delighted to be able to extend you this offer and look forward to working with you.
To indicate your acceptance of the Company’s offer, please sign and date this letter in the space
provided below and return it to me on or before August 24, 2006, along with a signed and dated
original copy of the Confidentiality Agreement. This letter, together with the Confidentiality
Agreement and the agreements expressly referenced herein, set forth the terms of your employment
with the Company and supersede any prior representations or agreements, whether written or oral.
This letter will be governed by the laws of California, without regard to its conflict of laws
provisions. In the event of any conflict in terms between this letter agreement and any other
agreement between you and the Company (including without limitation the two Attachments and the
other agreements referenced herein), the terms of this letter agreement shall prevail. This letter
agreement may not be modified or amended except by a written agreement, signed by the Chairman of
the Board and yourself. No waiver by either party of any breach of, or of compliance with, any
condition or provision of this letter 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.

	 	 	 	 	 
	 	Very truly yours,

ZIPREALTY, INC.

 	 
	 	By:  	 /s/ Donald
F. Wood	 
	 	 	Don Wood, Chairman of the Board 	 
	 	 	 	 
	 

ACCEPTED AND AGREED:

Richard F. Sommer

	 	 	 
	 /s/ Richard
F. Sommer

	Signature

	 

	 08-24-06

	Date

Exhibit A: Employee Proprietary Information Agreement

Exhibit B: Form of Release of Claims

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Exhibit A

Employee Proprietary Information Agreement

ZipRealty Inc.

Employee Proprietary Information Agreement

 

 

 

ZipRealty, Inc.

EMPLOYEE PROPRIETARY INFORMATION AGREEMENT

As a condition of my employment with zipRealty, Inc., its subsidiaries, affiliates, successors or
assigns (together the “Company”), and in consideration of my employment with the Company and my
receipt of the compensation now and hereafter paid to me by Company, I agree to the following:

1. At-Will Employment. I understand and acknowledge that my employment with the Company is
for an unspecified duration and constitutes “at-will” employment as set forth in my offer letter
with the Company dated August 24, 2006 (the “Letter”). I acknowledge that this employment
relationship may be terminated at any time, with or without good cause or for any or no cause, at
the option either of the Company or myself, with or without notice, subject to the Letter. I also
understand that any representation to the contrary is unauthorized and not valid unless in writing
and signed by the President of the Company.

2. Confidential Information.

(a) Company Information. I agree at all times during the term of my employment and
thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company,
or to disclose to any person, firm or corporation without written authorization of the Board of
Directors of the Company, any Confidential Information of the Company. I understand that
“Confidential Information” means any non-public information that relates to the actual or
anticipated business, research or development of the Company including, technical data, trade
secrets or know-how, including, but not limited to, research, product plans, products, services,
databases, customer lists and customers (including, but not limited to, customers of the Company on
whom I called or with whom I became acquainted during the term of my employment), markets,
anticipated new markets, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information, marketing, finance or other
business information disclosed to me by the Company either directly or indirectly, in writing,
orally, by drawings, or by observation of parts or equipment. I further understand that
Confidential Information does not include any of the foregoing items which has become publicly
known and made generally available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved.

(b) Former Employer Information. I agree that I will not, during my employment with the
Company, improperly use or disclose any proprietary information or trade secrets of any former or
concurrent employer or other person or entity and that I will not bring onto the premises of the
Company any unpublished document or proprietary information belonging to any such employer, person
or entity unless consented to in writing

by such employer, person or entity.

(c) Third Party Information. I recognize that the Company has received and in the future
will receive from third parties their confidential or proprietary information subject to a duty on
the Company’s part to maintain the confidentiality of such information and to use it only for
certain limited purposes. I agree to hold all such confidential or proprietary information in the
strictest confidence and not to disclose it to any person, firm or corporation or to use it except
as necessary in carrying out my work for the Company consistent with the Company’s agreement with
such third party.

3. Inventions.

(a) Inventions Retained and Licensed. I have attached hereto, as Exhibit A, a list
describing all inventions, original works of authorship, developments, improvements, and trade
secrets which were made by me prior to my employment with the Company, which belong to me, which
relate to the Company’s proposed business, products or research and development, and which are not
assigned to the Company hereunder (collectively referred to as “Prior Inventions”); or, if no such
list is attached, I represent that there are no such Prior Inventions. If in the course of my
employment with the Company, I incorporate into any invention, improvement, development, product,
copyrightable material or trade secret any invention, improvement, development, concept, discovery
or other proprietary information owned by me or in which I have an interest, the Company is hereby
granted and shall have a

 

 

nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify,
use and sell such item as part of or in connection with such product, process or machine.

(b) Assignment of Inventions. I agree that I will promptly make full written disclosure to
the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to
the Company, or its designee, all my right, title, and interest in and to any and all inventions,
original works of authorship, developments, concepts, improvements or trade secrets, whether or not
patentable or registrable under copyright or similar laws, which I may solely or jointly conceive
or develop or reduce to practice, or cause to be conceived or developed or reduced to practice,
during the period of time I am in the employ of the Company (collectively referred to as
“Inventions"), except as provided in Section 3(f) below. I further acknowledge that all original
works of authorship which are made by me (solely or jointly with others) within the scope of and
during the period of my employment with the Company and which are protectible by copyright are
“works made for hire,” as that term is defined in the United States Copyright Act.

(c) Inventions Assigned to the United States. I agree to assign to the United States
government all my right, title, and interest in and to any and all Inventions whenever such full
title is required to be in the United States by a contract between the Company and the United
States or any of its agencies.

(d) Maintenance of Records. I agree to keep and maintain adequate and current written
records of all Inventions made by me (solely or jointly with others) during the term of my
employment with the Company. The records will be in the form of notes, sketches, drawings, and any
other format that may be specified by the Company. The records will be available to and remain the
sole property of the Company at all times.

(e) Patent and Copyright Registrations. I agree to assist the Company, or its designee, at
the Company’s expense, in every reasonable way to secure the Company’s rights in the Inventions and
any copyrights, patents, mask work rights or other intellectual property rights relating thereto in
any and all countries, including the disclosure to the Company of all pertinent information and
data with respect thereto, the execution of all applications, specifications, oaths, assignments
and all other instruments which the Company shall deem necessary in order to apply for and obtain
such rights and in order to assign and convey to the Company, its successors, assigns and nominees
the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights,
patents, mask work rights or other intellectual property rights relating thereto. I further agree
that my obligation to execute or cause to be executed, when it is in my power to do so, any such
instrument or papers shall continue after the termination of this Agreement. If the Company is
unable because of my mental or physical incapacity or for any other reason to secure my signature
to apply for or to pursue any application for any United States or foreign patents or copyright
registrations covering Inventions or original works of authorship assigned to the Company as above,
then I hereby irrevocably designate and appoint the Company and its duly authorized officers and
agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file
any such applications and to do all other lawfully permitted acts to further the prosecution and
issuance of letters patent or copyright registrations thereon with the same legal force and effect
as if executed by me.

(f) Exception to Assignments. I understand that the provisions of this Agreement requiring
assignment of Inventions to the Company do not apply to any invention which qualifies fully under
the provisions of California Labor Code Section 2870 (attached hereto as Exhibit B). I will
advise the Company promptly in writing of any inventions that I believe meet the criteria in
California Labor Code Section 2870 and not otherwise disclosed on Exhibit A.

4. Conflicting Employment. I agree that, during the term of my employment with the Company,
I will comply with the provisions of Section 1.b. of the Letter.

5. Prior Relationships. Without limiting paragraph 4, I represent that I have no other
agreements, relationships or commitments to any other person or entity that conflict with my
obligations to the Company under this Agreement or my ability to become employed and perform the
services for which I am being hired by the Company. I further agree that if I have signed a
confidentiality agreement or similar type of agreement with any former employer or other entity, I
will comply with the terms of any such agreement to the extent that its terms are lawful under
applicable law. I represent and warrant that after undertaking a careful search (including
searches of my computers, cell phones, electronic devices and documents), I have returned all
property and confidential information belonging to all prior employers. Moreover, in the event
that the Company or any of its directors, officers, agents, employees, investors,

 

 

shareholders, administrators, affiliates, divisions, subsidiaries, predecessor or successor
corporations, or assigns is sued based on any obligation or agreement to which I am a party or am
bound, I agree to fully indemnify the Company, its directors, officers, agents, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and
successor corporations, and assigns for all verdicts, judgments, settlements, and other losses
incurred by the Company (the indemnitee) in the event that it is the subject of any legal action
resulting from any breach of my obligations under this Agreement, as well as any reasonable
attorneys’ fees and costs if the plaintiff is the prevailing party in such an action.

6. Returning Company Documents. I agree that, at the time of leaving the employ of the
Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to
anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other documents or property,
or reproductions of any aforementioned items developed by me pursuant to my employment with the
Company or otherwise belonging to the Company, its successors or assigns. In the event of the
termination of my employment, I agree to sign and deliver the “Termination Certification” attached
hereto as Exhibit C.

7. Notification to New Employer. In the event that I leave the employ of the Company, I
hereby grant consent to notification by the Company to my new employer about my rights and
obligations under this Agreement.

8. Solicitation of Employees. I agree that for a period of twelve (12) months immediately
following the termination of my service relationship with the Company for any reason, whether with
or without cause, I shall not either directly or indirectly solicit any of the Company’s employees
to leave their employment, or attempt to solicit employees of the Company, either for myself or for
any other person or entity.

9. Representations. I agree to execute any proper oath or verify any proper document
required to carry out the terms of this Agreement. I represent that my performance of all the terms
of this Agreement will not breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in conflict herewith.

10. Arbitration and Equitable Relief.

     A. Arbitration. In consideration of my employment with the Company, its promise to arbitrate
all employment-related disputes, and my receipt of the compensation, pay raises and other benefits
paid to me by the Company, at present and in the future, I agree that any and all controversies,
claims, or disputes with anyone (including the Company and any employee, officer, director,
shareholder or benefit plan of the Company in their capacity as such or otherwise), whether brought
on an individual, group, or class basis, arising out of, relating to, or resulting from my
employment with the Company, including any breach of this Agreement, shall be subject to binding
arbitration under the arbitration rules set forth in California Code of Civil Procedure Section
1280 through 1294.2, including section 1283.05 (the “Rules”) and pursuant to California law.
Disputes which I agree to arbitrate, and thereby agree to waive any right to a trial by jury,
include any statutory claims under Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Sarbanes-Oxley Act, the Worker Adjustment and Retraining Notification
Act, the California Fair Employment and Housing Act, the Family Medical Leave Act, the California
Family Rights Act, the California Labor Code, Claims of Harassment, Discrimination and Wrongful
Termination and any statutory claims. I further understand that this Agreement to Arbitrate also
applies to any dispute that the Company may have with me.

     B. Procedure. I agree that any arbitration will be administered by the American Arbitration
Association (“AAA”) and that the neutral arbitrator will be selected in a manner consistent with
AAA’s national rules for the resolution of employment disputes. I agree that the arbitrator shall
have the power to decide any motions brought by any party to the arbitration, including motions for
summary judgment and/or adjudication, motions to dismiss and demurrers, and motions for class
certification, prior to any arbitration hearing. I also agree that the arbitrator shall have the
power to award any remedies available under applicable law, and that the arbitrator shall award
attorneys’ fees and costs to the prevailing party except as prohibited by law. I understand that
the Company will pay for any administrative or hearing fees charged by the Arbitrator or AAA. I
agree that the arbitrator shall administer and

 

 

     conduct any arbitration in a manner consistent with the rules and that to the extent that the
AAA’s national rules for the resolution of employment disputes conflict with the rules, the rules
shall take precedence. I agree that the decision of the arbitrator shall be in writing.

     C. Remedy. Except as provided by the rules and this agreement, arbitration shall be the sole
exclusive and final remedy for any dispute between me and the Company. Accordingly, except as
provided for by the rules and this Agreement, neither I nor the Company will be permitted to pursue
court action regarding claims that are subject to arbitration. Notwithstanding, the arbitrator
will not have the authority to disregard or refuse to enforce any lawful company policy, and the
arbitrator shall not order or require the Company to adopt a policy not otherwise required by law.

     D. Availiability of Injunctive Relief. Both parties agree that any party may petition a
court for provisional relief, including injunctive relief, as permitted by the Rules including, but
not limited to, where either party alleges or claims a violation of this Agreement between me and
the Company or any other Agreement regarding Trade Secrets, confidential information,
nonsolicitation or Labor Code §2870. Both parties understand that any breach or threatened breach
of such and agreement will cause irreparable injury and that money damages will not provide an
adequate remedy therefore and both parties hereby consent to the issuance of an injunction. In the
even either party seeks injunctive relief, the prevailing party shall be entitled to recover
reasonable costs and attorneys’ fees.

     E. Administrative Relief. I understand that this Agreement does not prohibit me form
pursuing an administrative claim with a local, state or federal administrative body such as the
Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the
worker’s compensation board. This Agreement does however, preclude me from pursuing court action
regarding any such claim.

     F. Voluntary Nature of Agreement. I acknowledge and agree that I am executing this Agreement
voluntarily and without any duress or undue influence by the Company or anyone else. I further
acknowledge and agree that I have carefully read this agreement and that I have asked any questions
needed for me to understand the terms, consequences and binding effect of this Agreement and fully
understand it, including that I am waiving my right to a jury trial. Finally, I agree that I have
been provided an opportunity to seek the advice of an attorney of my choice before signing this
agreement.

11. General Provisions

(a) Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by the
laws of the State of California. I hereby expressly consent to the personal jurisdiction of the
state and federal courts located in California for any lawsuit filed there against me by the
Company arising from or relating to this Agreement.

(b) Entire Agreement. This Agreement, as well as the Letter, set forth the entire agreement
and understanding between the Company and me relating to the subject matter herein and merges all
prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of
any rights under this Agreement, will be effective unless in writing signed by the party to be
charged. Any subsequent change or changes in my duties, salary or compensation will not affect the
validity or scope of this Agreement.

(c) Severability. If one or more of the provisions in this Agreement are deemed void by
law, then the remaining provisions will continue in full force and effect.

(d) Successors and Assigns. This Agreement may not be assigned without the prior written
consent of the Company. Subject to the foregoing sentence, this Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for the benefit of the
Company, its successors, and its assigns.

(e) Survivorship. The rights and obligations of the parties to this Agreement will survive
termination of my employment with the Company.

 

 

(f) Signatures. This Agreement may be signed in two counterparts, each of which shall be
deemed an original, with the same force and effectiveness as though executed in a single document.

	 	 	 	 	 
	 	 	 
	 Date:  08-24-06  	/s/ Richard F. Sommer
 	 
	 	Richard F. Sommer 	 
	 	 	 
	 

	 	 	 	 	 
	 	ZipRealty, Inc.

 	 
	 Date:  Aug. 24, 2006 	By:  	/s/ Donald F. Wood
 	 
	 	 	Name:  	Donald F. Wood 	 
	 	 	Title:  	Chairman of the Board 	 

 

 

	 	 	 	 	 

EXHIBIT A

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP

Identifying Number or

	 	 	 	 	 
	Title
	 	Date
	 	Brief Description
	 	 	 	 	 

__ No inventions or improvements

__ Additional Sheets Attached

Signature of Employee: ____________________________________

By:

Date: ___________________________

 

 

EXHIBIT B

CALIFORNIA LABOR CODE SECTION 2870

EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS

"(a) Any provision in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her employer shall not apply to
an invention that the employee developed entirely on his or her own time without using the
employer’s equipment, supplies, facilities, or trade secret information except for those inventions
that either:

	 	(1)	 	Relate at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or development of the
employer.
	 
	 	(2)	 	Result from any work performed by the employee for the employer.

(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be assigned
under subdivision (a), the provision is against the public policy of this state and is
unenforceable.”

 

 

EXHIBIT B

FORM OF RELEASE OF CLAIMS

     This Release (this “Release”) is entered into between ZipRealty, Inc. [or its successor
entity, if applicable] (the “Company”), on the one hand, and Richard F. Sommer (the “Executive”),
on the other hand.

     1.   Each of the undersigned executes and enters into this Release in consideration of each and
all of the agreements made and undertaken by each of the undersigned as follows:

     (a)   Executive’s health insurance benefits will cease on the Termination Date (as defined in
the Offer Letter as defined below), subject to Executive’s right to continue his health insurance
under COBRA (including any applicable reimbursement for COBRA expenses as set forth in the Offer
Letter). Executive’s participation in all other benefits and incidents of employment will cease on
the Termination Date. Executive will cease accruing all other benefits, including but not limited
to, vacation time and paid time off, as of the Termination Date.

     (b)   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 Employee Proprietary Information Agreement dated August 24, 2006 between Executive and the
Company (the “Confidentiality Agreement”). Executive shall return all of the Company’s property
and confidential and proprietary information in his possession to the Company. By signing this
Release, Executive represents and declares under penalty of perjury under the laws of the state of
California that he has returned all Company property.

     2.   Executive and the Company agree that the payment of benefits that Executive has received
under the Offer Letter dated August 24, 2006 between the Company and the Executive (the “Offer
Letter”) and the treatment of stock options under the Stock Option Award Agreement between the
Company and the Executive with respect to stock options granted on September 6, 2006 (the “Stock
Option 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
Release, 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;

11

 

	 	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; and any and all applicable California laws,
regulations or statutes;
	 
	 	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 Release; and
	 
	 	h)	 	any and all claims for attorneys’ fees and costs.

The Company and Executive agree that the release 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 Release 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 Offer Letter 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 Release.

12

 

     3.   Executive represents that he is not aware of any claim by him other than the claims that
are released by this Release. Executive acknowledges that he has been advised by legal counsel and
is familiar with the provisions of California Civil Code Section 1542, which provides as follows

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS/HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.

     Executive, being aware of said code section, agrees to expressly waive any rights he may have
under the above principal or any statute or common law principals of similar effect.

     4.   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 Release. 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 Release;
	 
	 	b)	 	he has up to twenty-one (21) days within which to
consider this Release;
	 
	 	c)	 	he has seven (7) days following his execution of this
Release to revoke this Release;
	 
	 	d)	 	this Release shall not be effective until the revocation
period has expired; and
	 
	 	e)	 	nothing in this Release 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.

     5.   Each of the undersigned agrees that none of the releases set forth herein releases any
claims arising out of obligations set forth in this Release.

     6.   This Release is effective after it has been signed by both parties and after (8) days have
passed since Executive signed the Release (the “Effective Date”).

     7.   Executive and the Company agree that any and all disputes arising out of the terms of this
Release, their interpretation, and any of the matters herein released, shall be subject to binding
arbitration in Alameda County, California before the American Arbitration Association

13

 

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 Release.

     8.   If any provision of this Release or the application thereof is held invalid, the invalidity
shall not affect other provisions or application of the Release which can be given effect without
the invalid provisions or application and to this end the provisions of this Release are declared
to be severable.

     9.   This Release contains the entire agreement of the undersigned with respect to the matters
covered by this Release and no promise made by any party or by an officer, attorney, or agent of
any party that is not expressly contained in this Release shall be binding or valid. This Release
supersedes any prior agreement between the parties with the exception of the Confidentiality
Agreement, the Offer Letter and the Stock Option Agreement. Additionally, any modification of any
provision of this Release, to be effective, must be in writing and signed by both parties.

     10.   This Release shall be governed by and construed under the laws of the State of California,
without regard to its conflict of laws provisions.

     11.   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.

     12.   Each party to this Release has consulted with, or had the opportunity to consult with,
legal and tax counsel concerning all paragraphs of this Release. Each party has read the Release
and has been fully advised by legal counsel with respect to the rights and obligations under the
Release, or has had the opportunity to obtain such advice. Each party is fully aware of the intent
and legal effect of the Release, 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 Release.

	 	 	 	 	 
	 	 	 
	DATED:                     	 	

 	 
	 	 	Richard F. Sommer 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	ZipRealty, Inc.

 	 
	DATED:                     	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

14

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