Exhibit 10.23
May 15, 1996
Mr. Glenn E. Penisten
545 Middlefield Road
Suite 170
Menlo Park, California 94025
Re: Network Peripherals, Inc.
Dear Glenn:
On behalf of the Board of Directors of Network Peripherals, Inc. (the
"Company"), I am pleased to confirm our recent discussions regarding you joining
the company as an employee to assist the Board and management in helping us
develop a strategic process, subject to the terms and conditions contained in
this letter. Upon acceptance of this letter by your signature, the Compensation
Committee of the Board will call a special meeting to approve the Agreement and
take the actions required.
1. Term. The Agreement will become effective today and remain in effect
for three years from that date (hereinafter referred to as the "Term").
2. During the Term of this Agreement, you will be employed in such
position as you and the Board may agree, unless your employment is sooner
terminated voluntarily or pursuant to the terms of this Agreement. As you know,
it is our goal for you to be employed as Chairmen of the Board of Directors at
an appropriate time.
3. During the period of your employment with the Company, you will:
a. devote such time and attention to your position as you and the
Board may agree from time to time, but no less than four days per month unless
you and the Board otherwise agree; and
b. perform such services and assume such duties and responsibilities
as are described in the position description attached hereto as you and the
Board may agree on from time to time;
4. Compensation. In consideration of your services to the Company
during the Term of this Agreement, you will receive the following:
a. An initial salary of $70,000 per year, paid in equal installments
on the Company's regular pay days, subject to applicable withholding.
b. Such benefits as are appropriate and allowable for a person in
your position.
c. An option to acquire 400,000 shares of the Common Stock in the
Company (approximately 3% of the outstanding shares on a fully diluted basis) at
fair market value on the date that the options are granted by the Compensation
Committee of the Board of Directors pursuant to a Stock Option Agreement which
will provide among other things that:
(i) the option will vest one-third upon the
effectiveness of this Agreement and an additional one-third on the first and
second year anniversary of this Agreement.
(ii) the option will be presently exercisable with
the Company having the right to repurchase any unvested shares at the original
purchase price plus any interest you may pay in the event you exercise your
option with a note.
(iii) you will have the right to exercise the option
with cash for an amount equal to the par value of the stock acquired ($400) and
with a Promissory Note for the balance of the exercise price, having a maximum
term of five years and bearing interest at the minimum rate required to avoid
imputed interest (6.36% compounded annually if the loan is originated in May,
1996), such loan to be secured by the stock subject to the option and 20,000
shares of Company stock that you now own. The Promissory Note will have such
additional terms as are agreed upon between you and the Company after discussion
with the Company's advisors.
(iv) shares to be held in escrow to secure the note
and the Company's unvested share repurchase right.
(v) vesting on the option would accelerate and be
fully vested upon change of control if the option is not assumed by the
acquiring company or a substantially equivalent option is not substituted by the
acquiring company, or otherwise if, subsequent to a change of control, you are
assigned, without your written consent, any position, duties, responsibilities,
or status, substantially inconsistent with your position, duties
responsibilities or status with the Company.
d. NPI will reimburse you for travel and other out-of-pocket
expenses that you reasonably incurred in performance of your duties, including
travel from your home to NPI and intown expenses incurred while you are at NPI
and away from your home. Such expenses will be reimbursed shortly after your
presentation to the Company of appropriate documentation for such expenses.
5. Termination.
a. This Agreement will terminate automatically three years after its
effective date.
b. This Agreement will terminate upon your death.
c. This Agreement will terminate if you become permanently disabled.
You will be deemed permanently disabled for purposes of this Agreement if you
become physically or mentally incapable of performing your duties under this
Agreement for a continuous period of ninety days, and such incapacity will, in
the opinion of a qualified physician, be permanent and continuous during the
remaining term of this Agreement.
d. Notwithstanding paragraph 1 above, you agree that the Company may
terminate your employment at any time for any reason and remove you as Chairman
of the Board or ask you to resign from you role as Chairman in accordance with
the Company's by-laws at any time. In the event of your termination of
employment by the Company for any reason or as a result of your death, you will
be entitled to: (i) payment of your salary through your termination date; (ii)
vesting of your stock option on a pro-rated basis through the last day of the
month in which your termination occurs; and (iii) the Company will buy back any
unvested stock options as of the end of the month in which your termination
occurs at the original purchase price plus interest paid, to the extent
allowable by law and applicable accounting regulations without material adverse
effect to the Company.
Subject to the above, you will be entitled to no further compensation
for anything arising out of your termination of employment.
5. Proprietary Matters. You will execute the Company's Employment
Agreement with respect to Proprietary Matters as pertains to individuals who
consult with the Company.
Glenn, if you find this acceptable, please execute the enclosed copy of
this letter.
By: /s/ Kenneth Levy
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Kenneth Levy
Agreed to and Accepted by:
/s/ Glenn E. Pennisten
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Glenn E. Pennisten Date