ZipRealty Announces Stock Option Exchange Program

ZipRealty, Inc. announced today that the company is commencing a stock option exchange program for stock options held by its current employees and officers. The company believes the stock option exchange program will have a positive effect on the retention and motivation of participating employees. The tender offer will commence today and will expire, unless otherwise extended by the company, in its sole discretion, at 9:00 p.m. (Pacific Time) on July 24, 2009.

Under the terms of the exchange offer, participants will be able to tender options which have significantly higher exercise prices than the current market value in exchange for a lesser number of newly granted options. The exercise price of the new options will be the closing price of ZipRealty’s common stock on The NASDAQ Stock Market on the exchange date, which is expected to be the day the tender offer expires (July 24, 2009). The stock options eligible for tender are those with an exercise price at or above $4.59 per share, the 52 week closing high at the time the Board of Directors approved the program. As of June 23, 2009, there were 3,584,710 stock options eligible for tender.

As a result of the tender offer, the company will recognize the incremental non-cash compensation cost of the new stock options granted in the exchange offer. The incremental compensation cost will be measured as the excess, if any, of the fair value of the new options granted in the exchange over the fair value of the eligible options surrendered in exchange for the new options. The incremental cost will be recognized as compensation expense ratably over the three year vesting period of the new options in addition to the remaining unamortized compensation expense associated with the eligible options surrendered in the exchange. The amount of the incremental cost will depend on a number of factors which will not be known until the expiration date of the tender offer, and, therefore, the Company cannot predict the exact amount of the incremental compensation cost that will result from the exchange offer. However, the Company expects the incremental compensation cost will be between approximately $550,000 and $900,000.

The exchange offer is not contingent on any minimum number of options being tendered. The exchange offer is, however, subject to a number of other terms and conditions as set forth in the offering documents. Neither the Company’s management nor its Board of Directors makes any recommendation in connection with the exchange offer.

This press release is for informational purposes only, and does not constitute an offer to exchange or the solicitation of an offer to exchange any stock options. The full details of the tender offer, including instructions on how to tender options, along with the related materials, are expected to be delivered promptly to each holder of eligible options. Each holder of eligible options should carefully read the exchange offer materials, as they contain important information, including various terms and conditions of the tender offer. A tender offer statement on Schedule TO has been filed with the Securities and Exchange Commission (the “SEC”) and is available along with other filed documents for free on the website of the SEC at www.sec.gov. Copies of the tender offer statement may also be obtained on the Company’s website, www.ziprealty.com. Eligible holders of eligible options are urged to carefully read the tender offer statement prior to making any decision with respect to the exchange offer.