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.

<PAGE>

            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.

<PAGE>

            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
      -----------------------------------------------
          Kenneth Levy

Agreed to and Accepted by:
/s/ Glenn E. Pennisten
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Glenn E. Pennisten                                   Date