CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into by and between ________________________ (the "Executive") and ZipRealty
Inc., a California
corporation (together with the successor entity resulting
from the reincorporation of ZipRealty
, Inc. in Delaware
, the "Company"),
effective as of ________________, 2004.
R E C I T A L S
A. It is expected that the Company from time to time will
consider the possibility of an acquisition by another company or other change of
control. The Board of Directors of the Company (the "Board") recognizes that
such consideration can be a distraction to the Executive and can cause the
Executive to consider alternative employment opportunities. The Board has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication and objectivity of
the Executive, notwithstanding the possibility, threat or occurrence of a Change
of Control of the Company.
B. The Board believes that it is in the best interests of the
Company and its shareholders to provide the Executive with an incentive to
continue his employment and to motivate the Executive to maximize the value of
the Company upon a Change of Control for the benefit of its shareholders.
C. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the
date that all obligations of the parties hereto with respect to this Agreement
have been satisfied.
2. At-Will Employment. The Company and the Executive acknowledge
that the Executive's employment is and shall continue to be at-will, as defined
under applicable law. If the Executive's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established Executive plans and
practices or pursuant to other agreements with the Company.
(a) Termination Following A Change of Control. In the
event that a Change of Control of the Company occurs and during the period
beginning on the closing date of the transaction giving rise to such Change of
Control and ending 12 months after such closing date, the Executive's employment
with the Company (or the successor entity in such Change of Control
transaction) is either (a) terminated by the Company (or its successor entity)
without Cause or (b) is Constructively Terminated by the Executive, then fifty
percent (50%) of all unvested Stock Rights as of such date shall become fully
vested on the date of such termination.
(b) Termination For Cause. If the Executive's employment
terminates by reason of the Executive's voluntary resignation (and is not a
Constructive Termination), or if the Executive is terminated for Cause, then the
Executive shall not be entitled to receive the accelerated vesting of Stock
Rights set forth in Section 3(a) above.
(c) Termination Apart from Change of Control. In the
event the Executive's employment is terminated for any reason, either prior to
the occurrence of a Change of Control or after the twelve (12)-month period
following a Change of Control, then the Executive will be entitled to receive
severance and any other benefits only as may then be established under the
Company's existing written severance and benefits plans and practices or
pursuant to other written agreements with the Company.
4. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" means (i) the Executive's failure to
perform (other than due to mental or physical disability or death) the duties of
Executive's position (as they may exist from time to time) to the reasonable
satisfaction of the Company (or the successor corporation) after receipt of a
written warning and failure to cure any such non-performance within ten business
days of receipt of such written warning; (ii) any act of dishonesty taken in
connection with the Executive's responsibilities as an Executive that is
intended to result in such Executive's personal enrichment; (iii) the
Executive's conviction or plea of no contest to a crime that negatively reflects
on the Executive's fitness to perform Executive's duties or harms the Company's
(or the successor corporation's) reputation or business; (iv) willful misconduct
by the Executive that is injurious to the Company's (or the successor
corporation's) reputation or business; or (v) the Executive's willful violation
of a material Company employment policy. For purposes of this definition, an act
or failure to act will be deemed "willful" if effected not in good faith or
without reasonable belief that such action or failure to act was in the best
interests of the Company (or the successor corporation).
(b) "Change in Control" means the occurrence of any of
the following events:
(i) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities; or
(ii) The approval by shareholders of the sale or
disposition by the Company of all or substantially all of the Company's assets;
(iii) 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.
"Incumbent Directors" means directors who either (A) are Directors as of the
effective date of the Plan, or (B) are 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 will not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company);
(iv) The approval by shareholders 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 fifty percent (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.
For purposes of clauses (i) and (iii) above, such Change of Control
shall be deemed to have occurred on the date on which the transaction closes;
for the purpose of clauses (ii) and (iv) above, such Change of Control shall be
deemed to have occurred on the date on which the Company's shareholders approve
a transaction described in that clause. Notwithstanding the foregoing, the
reincorporation of the Company in Delaware
(or any other jurisdiction) shall not
constitute a Change of Control for purposes of this Agreement.
(c) Constructive Termination. "Constructive Termination"
shall mean the occurrence of any of the following without the Executive's
express written consent (i) the assignment to the Executive of any duties or the
reduction of the Executive's duties, either of which results in a significant
diminution in the Executive's position or responsibilities in effect immediately
prior to such assignment, or the removal of the Executive from such position and
responsibilities, provided, however that changes in the circumstances of
employment which are solely the result of changes in corporate legal structure
resulting directly from the Change of Control shall not constitute a basis for
Constructive Termination; (ii) a substantial reduction, without good business
reasons, of the facilities and perquisites (including office space and location)
available to the Executive immediately prior to such reduction; (iii) a material
reduction by the Company in the cash compensation of the Executive as in effect
immediately prior to such reduction; (iv) a material reduction by the Company in
the kind or level of employee benefits to which the Executive is entitled
immediately prior to such reduction with the result that the Executive's overall
benefits package is significantly reduced; or (v) the relocation of Executive's
principal place of employment to a facility or a location more than 50 miles
from the Executive's then present location.
(d) Stock Rights. "Stock Rights" shall mean all options
or rights to acquire shares of Company Common Stock, or stock appreciation
rights, performance units or performance shares (whether such awards are payable
in cash, shares of Company Common Stock or otherwise), under plans, agreements
or arrangements which are compensatory in nature, including, without limitation,
the Company's 1999 Stock Plan and 2004 Equity Incentive Plan, and any restricted
stock purchase agreement between the Company and the Executive.
(a) Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
5(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Executive's Successors. The terms of this Agreement
and all rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(a) General. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Executive, mailed notices shall be addressed to the Executive at his or her home
address 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.
(b) Notice of Termination. Any termination by the Company
for Cause or by the Executive as a result of a voluntary resignation or a
Constructive Termination shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 6(a) of this Agreement. Such
notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
shall specify the termination date (which shall be not more than 30 days after
the giving of such notice). The failure by the Executive to include in the
notice any fact or circumstance which contributes to a showing of Constructive
Termination shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing Executive's
7. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive shall not be
required to mitigate the amount of any payment contemplated by this Agreement,
nor shall any such payment be reduced by any earnings that the Executive may
receive from any other source.
(b) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized officer of
the Company (other than the Executive). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by
the other party shall be considered a waiver of any other condition or provision
or of the same condition or provision at another time.
(c) Headings. All captions and section headings used in
this Agreement are for convenient reference only and do not form a part of this
(d) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
represents the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior arrangements and understandings
regarding the same. No future agreements between the Company and the Executive
may supersede this Agreement, unless they are in writing and specifically
mention this Section 7(d).
(e) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California
(with the exception of its conflict of laws provisions).
(f) Severability. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
* * *
IN WITNESS WHEREOF, each of the parties has executed this Change in
Control Agreement, in the case of the Company by its duly authorized officer, as
of the day and year set forth below.
[Signature Page to Change of Control Agreement]