70 W. Plumeria Drive
San Jose, CA 95134
December 22, 2005
Robert A. Gunst
Dear Mr. Gunst:
On behalf of PortalPlayer, Inc. (the “Company”), I am pleased to inform you that the Nominating and Corporate Governance Committee of the Board of Directors intends to nominate you to become a member of the Board of Directors of the Company (the “Board”). Upon your acceptance of this letter, and upon election by the Board, your initial term of election shall be until the 2006 Annual Meeting of Stockholders.
1. 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 an annual compensation retainer of $20,000, 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. Should you subsequently become a member of any committees of the Board, you will receive additional compensation for such participation in those committees.
2. Stock Options . Upon your election to the Board, you will be granted an option to purchase 27,916 shares of the Company’s Common Stock and 4,583 shares of restricted stock. The stock option exercise price per share will be equal to the closing fair market value per share on the date the option is granted. The option will