Exhibit 10.1

 

PortalPlayer, Inc.

3255 Scott Boulevard, Bldg. 1

Santa Clara, CA 95054

February 15, 2005

 

Mr. Henry Denero

1255 Hillcrest Avenue

Pasadena, CA 91106

 

Dear Henry:

 

On behalf of PortalPlayer, Inc. (the “Company”), I am pleased to inform you that
you have been elected to the Board of Directors (the “Board”) of the Company.
Your initial term of election shall be until the 2005 Annual Meeting of
Stockholders.

 

1. Committees. Upon your acceptance of this offer, you will become a member of
the Audit Committee. The Board currently intends to consider a resolution
electing you Chairman of the Audit Committee at the next Board meeting. You may
be asked to serve on additional committees.

 

2. Compensation. The Company will reimburse you for reasonable expenses in
connection with attendance at Board and committee meetings. In connection with
your service as a director, you will receive annual compensation of $10,000 and
if elected as the Audit Committee chairman, you will receive additional annual
compensation of $40,000, to be paid in quarterly installments. All annual
compensation will be pro rated for the portion of the year during which you are
a director and chairman of the Audit Committee. In addition, you will receive
compensation of $2,000 for each full Board meeting attended in person, $1,000
for each full Board meeting attended via teleconference and such committee
compensation as applicable. You will not receive any additional compensation for
committee meetings if you are elected chairman of the committee.

 

3. Stock Options. Upon your acceptance of this offer, you will be granted an
option to purchase 41,666 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. The option will be subject to the terms and conditions
applicable to options granted under the Company’s 2004 Stock Incentive Plan (the
“Plan”), as described in the Plan and the applicable Stock Option Agreement. You
will vest in 25% of the option shares after 12 months of continuous service, and
the balance will vest in equal monthly installments over the next 36 months of
continuous service, as described in the applicable Stock Option Agreement. In
addition, immediately after each of our regularly scheduled annual meetings of
stockholders, you will be granted an option to purchase 9,166 shares of the
Company’s Common Stock, provided you are still a director and that you have
served on the Board for at least six months. These option shares will vest and
become exercisable on the first anniversary of the date of grant or immediately
prior to our next annual meeting of stockholders, if earlier.

 

4. Indemnification. The Company carries Directors and Officers Insurance and has
Indemnification Agreements with directors on the Board. It is your
responsibility to familiarize yourself with the insurance and indemnification
agreement.

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Mr. Henry Denero

February 15, 2005

Page 2

 

5. Entire Agreement. This letter supersedes and replaces any prior
representations, understandings or agreements, whether oral, written or implied,
between you and the Company.

 

I hope that you will accept our offer to join the Board of Directors of the
Company and I look forward to working with you. You may indicate your agreement
with these terms and accept this offer by signing and dating both the enclosed
duplicate originals of this letter agreement and returning it to me. This offer,
if not accepted, will expire at the close of business on February 16, 2005.

 

If you have any questions, please call me at 408 857 3750.

 

Very truly yours, PORTALPLAYER, INC.

/s/ Richard Sanquini

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Richard Sanquini Chairman of the Board

 

I have read and accept this offer:

 

/s/ Henry DeNero

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Signature of Henry Denero

Dated: February 15, 2005