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Sample Business Contracts

Employment Agreement - Computer Literacy Inc. and Donald P. Alvarez

Employment Forms

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                             COMPUTER LITERACY, INC.


                                 August 26, 1997


Donald P. Alvarez


Dear Don:

         Computer Literacy, Inc. (the "Company") is pleased to offer you
employment on the following terms:

         1. POSITION. You will serve in a full-time capacity as Vice President
of Finance and Chief Financial Officer of the Company, reporting to myself. By
signing this letter agreement, you represent and warrant to the Company that you
are under no contractual commitments inconsistent with your obligations to the
Company.

         2. SALARY. You will be paid a salary at the annual rate of $125,000,
payable in semi-monthly installments in accordance with the Company's standard
payroll practices for salaried employees. This salary will be subject to
adjustment pursuant to the Company's employee compensation policies in effect
from time to time.

         3. BONUS. For your first year of employment, the Company will guarantee
to you a bonus in the amount of $15,000.

         4. STOCK OPTIONS. Subject to the approval of the Company's Board of
Directors, you will be granted an option to purchase 100,000 shares of the
Company's Common Stock. The exercise price per share will be equal to the fair
market value per share on the date the option is granted or on your first day of
employment, whichever is later. The option will be subject to the terms and
conditions applicable to options granted under the Company's 1996 Stock Plan, as
described in that Plan and the applicable stock option agreement. The option
will be immediately exercisable, but the purchased shares will be subject to
repurchase by the Company at the exercise price in the event that your service
terminates before you vest in the shares. You will vest in 25% of the option
shares after 12 months of service, and the balance will vest in monthly
installments over the next 36 months of service, as described in the applicable
stock option agreement. In the event of a Change in Control (as defined in the
Plan), the vesting of your option will be accelerated, and an additional number
of option shares will become vested that is equal to the greater of: (i) 50% of
any unvested option shares; or (ii) a number of shares equal to the number you
would become vested in had you provided 12 months of additional service
following the Change in Control.

         5. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Like all Company
employees, you will be required, as a condition to your employment with the
Company, to sign the Company's standard Proprietary Information and Inventions
Agreement, a copy of which is attached hereto as Exhibit A.
<PAGE>   2
Donald P. Alvarez                                                         Page 2



         6. PERIOD OF EMPLOYMENT. Your employment with the Company will be "at
will," meaning that either you or the Company will be entitled to terminate your
employment at any time and for any reason, with or without cause. Any contrary
representations which may have been made to you are superseded by this offer.
This is the full and complete agreement between you and the Company on this
term. Although your job duties, title, compensation and benefits, as well as the
Company's personnel policies and procedures, may change from time to time, the
"at will" nature of your employment may only be changed in an express written
agreement signed by you and a duly authorized officer of the Company.

         7. OUTSIDE ACTIVITIES. While you render services to the Company, you
will not engage in any other gainful employment, business or activity without
the written consent of the Company. While you render services to the Company,
you also will not assist any person or organization in competing with the
Company, in preparing to compete with the Company or in hiring any employees of
the Company.

         8. WITHHOLDING TAXES. All forms of compensation referred to in this
letter are subject to reduction to reflect applicable withholding and payroll
taxes.

         9. ENTIRE AGREEMENT. This letter and the Exhibit attached hereto
contain all of the terms of your employment with the Company and supersede any
prior understandings or agreements, whether oral or written, between you and the
Company.

         10. AMENDMENT AND GOVERNING LAW. This letter agreement may not be
amended or modified except by an express written agreement signed by you and a
duly authorized officer of the Company. The terms of this letter agreement and
the resolution of any disputes will be governed by California law.

         We hope that you find the foregoing terms acceptable. You may indicate
your agreement with these terms and accept this offer by signing and dating both
the enclosed duplicate original of this letter and the enclosed Proprietary
Information and Inventions Agreement and returning them to me. As required by
law, your employment with the Company is also contingent upon your providing
legal proof of your identity and authorization to work in the United States. We
look forward to having you join us as soon as possible.

         If you have any questions, please call me.

                                           Very truly yours,

                                           COMPUTER LITERACY, INC.


                                       By: /s/ Chris MacAskill
                                           -----------------------------------
                                           Chief Executive Officer

                                          Chris MacAskill

<PAGE>   3
Donald P. Alvarez                                                         Page 3



I have read and accept this employment offer:

/s/ Donald P. Alvarez
------------------------------
Signature of Donald P. Alvarez

Dated:  August 26, 1997


Attachment
Exhibit A:  Proprietary Information and Inventions Agreement