**Exhibit10.4**

 

[***] Certain information on this page has been omittedand filed separately with the Securities and Exchange Commission. Confidentialtreatment has been requested with respect to the omitted portions.

 

**IKANOS COMMUNICATIONS, INC.****2006 “Stretch” Revenue Incentive****Vice President of Sales****Derek Obata**

 

**Objectives:**

 

Theobjective of the “Stretch” Revenue Incentive is for Ikanos Communications, Inc.(the Company) to provide a two-step incentive for the Vice President ofWorldwide Sales to exceed the following revenue goals between the close of theacquisition of the ADI Broadband Business Unit and December 31, 2006:

 

•                  Exceed 2006 Network Business (NB) “stretch” netrevenue goal of $[***] (20% higher than AOP) and a challenge to hit $[***] (45%higher than AOP)

 

**Description:**

 

The“Stretch” Revenue Incentive of $150,000 is broken out into:

 

•                  $50,000 to be paid when the Company ships $[***]of NB product net revenue

•                  $100,000 to be paid when the Company ships $[***]of NB product net revenue

 

**Eligibility:**

 

Mr.Derek Obata (the Executive) is eligible for this incentive while activelyemployed by Ikanos Communications (the Company).

 

Mr.Obata acknowledges that that this incentive applies only to 2006 and thisincentive shall not be in effect for 2007.

 

This“Stretch” Incentive is additional to Mr. Obata’s 2006 Vice President of SalesCompensation Plan which includes NB revenue and margin incentives. In no case,shall the “stretch” incentive described in this document detract fromcompensation earned under Mr. Obata’s 2006 Vice President of Sales CompensationPlan.

 

**EffectiveDates:**

 

Thisincentive is effective from the date of the close of the ADI BBU acquisition toDecember 31, 2006.

 

**Payment:**

 

Paymentshall be made within 30 days after quarter end close if the $[***] or $[***]net revenue target is achieved.

 

**Definitionsfor Calculations:**

 

NB– [***]

 

NBRevenue – net revenue from products acquired from ADI and from productsdeveloped by the Company for the Network Business.

 

**Calculationof Revenue Incentive**:

 

Atthe end of any quarter in 2006, should NB Revenue be greater than $[***], thenthe Company shall pay Mr. Obata the amount of $50,000.

 

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Atthe end of any quarter in 2006, should NB Annual Actual Revenue be greater than$[***], then the Company shall pay Mr. Obata additional amount of $100,000.

 

**Termination:**

 

IfMr. Obata is terminated for any reason, voluntary or involuntary, the Companyshall pay Mr. Obata this incentive on a pro-rated calculation if the purchaseorders and Volume Purchase Agreements and OEM agreements exceed $[***] orexceeds $[***] on the last day of employment with the Company.

 

Pro-ratedshall be calculated as (Days are calendar days):

 

•                  If sum of netrevenues shown on purchase orders, contracts, and OEM Agreements is greaterthan $[***] then:

•                  [***]

 

•                  If sum of netrevenues shown on purchase orders, contracts, and OEM Agreements is greaterthan $[***] then:

•                  [***]

 

**Changes to the Compensation Plan:**

 

TheCompany reserves the right to change this Incentive with 30 day written noticefrom the CEO to Mr. Obata.

 

**Approvals**

 

 
|                                           |   |   |   |
|------------------------------------------------|--------|--------|--------|
| Chris Smith, Vice President of Human Resources |   | Date   |   |
|                                           |   |   |   |
|                                           |   |   |   |
| Rajesh Vashist, President and CEO              |   | Date   |   |

 

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