Document:

Form of 2004 Stock Incentive Plan

 Exhibit 10.3 
  
 ATHEROS COMMUNICATIONS, INC. 
  

2004 STOCK INCENTIVE PLAN 
  
 (Adopted by the Board on
                            , 2003) 

 Table of Contents 
  

	 	  	Page

	 SECTION 1. ESTABLISHMENT AND PURPOSE
	  	1
		
	 SECTION 2. DEFINITIONS
	  	1
			
	 (a)
	 	“Affiliate”	  	1
			
	 (b)
	 	“Award”	  	1
			
	 (c)
	 	“Board of Directors”	  	1
			
	 (d)
	 	“Change in Control”	  	1
			
	 (e)
	 	“Code”	  	2
			
	 (f)
	 	“Committee”	  	2
			
	 (g)
	 	“Company”	  	2
			
	 (h)
	 	“Consultant”	  	2
			
	 (i)
	 	“Employee”	  	3
			
	 (j)
	 	“Exchange Act”	  	3
			
	 (k)
	 	“Exercise Price”	  	3
			
	 (l)
	 	“Fair Market Value”	  	3
			
	 (m)
	 	“ISO”	  	3
			
	 (n)
	 	“Nonstatutory Option” or “NSO”	  	3
			
	 (o)
	 	“Offeree”	  	3
			
	 (p)
	 	“Option”	  	4
			
	 (q)
	 	“Optionee”	  	4
			
	 (r)
	 	“Outside Director”	  	4
			
	 (s)
	 	“Parent”	  	4
			
	 (t)
	 	“Participant”	  	4
			
	 (u)
	 	“Plan”	  	4
			
	 (v)
	 	“Purchase Price”	  	4
			
	 (w)
	 	“Restricted Share”	  	4
			
	 (x)
	 	“Restricted Share Agreement”	  	4
			
	 (y)
	 	“SAR”	  	4
			
	 (z)
	 	“SAR Agreement”	  	4
			
	 (aa)
	 	“Service”	  	4
			
	 (bb)
	 	“Share”	  	4
			
	 (cc)
	 	“Stock”	  	4
			
	 (dd)
	 	“Stock Option Agreement”	  	4
			
	 (ee)
	 	“Stock Unit”	  	5
			
	 (ff)
	 	“Stock Unit Agreement”	  	5
			
	 (gg)
	 	“Subsidiary”	  	5
			
	 (hh)
	 	“Total and Permanent Disability”	  	5
		
	 SECTION 3. ADMINISTRATION
	  	5
			
	 (a)
	 	Committee Composition	  	5
			
	 (b)
	 	Committee for Non-Officer Grants	  	5
			
	 (c)
	 	Committee Procedures	  	5

  
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	 (d)
	 	Committee Responsibilities	  	6
		
	 SECTION 4. ELIGIBILITY
	  	7
			
	 (a)
	 	General Rule	  	7
			
	 (b)
	 	Automatic Grants to Outside Directors	  	7
			
	 (c)
	 	Ten-Percent Stockholders	  	8
			
	 (d)
	 	Attribution Rules	  	8
			
	 (e)
	 	Outstanding Stock	  	8
		
	 SECTION 5. STOCK SUBJECT TO PLAN
	  	8
			
	 (a)
	 	Basic Limitation	  	8
			
	 (b)
	 	Option/SAR Limitation	  	9
			
	 (c)
	 	Additional Shares	  	9
		
	 SECTION 6. RESTRICTED SHARES
	  	9
			
	 (a)
	 	Restricted Stock Agreement	  	9
			
	 (b)
	 	Payment for Awards	  	9
			
	 (c)
	 	Vesting	  	9
			
	 (d)
	 	Voting and Dividend Rights	  	9
			
	 (e)
	 	Restrictions on Transfer of Shares	  	10
		
	 SECTION 7. TERMS AND CONDITIONS OF OPTIONS
	  	10
			
	 (a)
	 	Stock Option Agreement	  	10
			
	 (b)
	 	Number of Shares	  	10
			
	 (c)
	 	Exercise Price	  	10
			
	 (d)
	 	Withholding Taxes	  	10
			
	 (e)
	 	Exercisability and Term	  	10
			
	 (f)
	 	Exercise of Options	  	11
			
	 (g)
	 	Effect of Change in Control	  	11
			
	 (h)
	 	Leaves of Absence	  	11
			
	 (i)
	 	No Rights as a Stockholder	  	11
			
	 (j)
	 	Modification, Extension and Renewal of Options	  	11
			
	 (k)
	 	Restrictions on Transfer of Shares	  	12
			
	 (l)
	 	Buyout Provisions	  	12
		
	 SECTION 8. PAYMENT FOR SHARES
	  	12
			
	 (a)
	 	General Rule	  	12
			
	 (b)
	 	Surrender of Stock	  	12
			
	 (c)
	 	Services Rendered	  	12
			
	 (d)
	 	Cashless Exercise	  	12
			
	 (e)
	 	Exercise/Pledge	  	12
			
	 (f)
	 	Promissory Note	  	13
			
	 (g)
	 	Other Forms of Payment	  	13
			
	 (h)
	 	Limitations under Applicable Law	  	13
		
	 SECTION 9. STOCK APPRECIATION RIGHTS
	  	13

  
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	 (a)
	  	SAR Agreement	  	13
			
	 (b)
	  	Number of Shares	  	13
			
	 (c)
	  	Exercise Price	  	13
			
	 (d)
	  	Exercisability and Term	  	13
			
	 (e)
	  	Effect of Change in Control	  	13
			
	 (f)
	  	Exercise of SARs	  	14
			
	 (g)
	  	Modification or Assumption of SARs	  	14
		
	 SECTION 10. STOCK UNITS
	  	14
			
	 (a)
	  	Stock Unit Agreement	  	14
			
	 (b)
	  	Payment for Awards	  	14
			
	 (c)
	  	Vesting Conditions	  	14
			
	 (d)
	  	Voting and Dividend Rights	  	14
			
	 (e)
	  	Form and Time of Settlement of Stock Units	  	15
			
	 (f)
	  	Death of Recipient	  	15
			
	 (g)
	  	Creditors’ Rights	  	15
		
	 SECTION 11. ADJUSTMENT OF SHARES
	  	15
			
	 (a)
	  	Adjustments	  	15
			
	 (b)
	  	Dissolution or Liquidation	  	16
			
	 (c)
	  	Reorganizations	  	16
			
	 (d)
	  	Reservation of Rights	  	16
		
	 SECTION 12. DEFERRAL OF AWARDS
	  	16
		
	 SECTION 13. AWARDS UNDER OTHER PLANS
	  	17
		
	 SECTION 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES
	  	17
			
	 (a)
	  	Effective Date	  	17
			
	 (b)
	  	Elections to Receive NSOs, Restricted Shares or Stock Units	  	17
			
	 (c)
	  	Number and Terms of NSOs, Restricted Shares or Stock Units	  	17
		
	 SECTION 15. LEGAL AND REGULATORY REQUIREMENTS
	  	18
		
	 SECTION 16. WITHHOLDING TAXES
	  	18
			
	 (a)
	  	General	  	18
			
	 (b)
	  	Share Withholding	  	18
		
	 SECTION 17. LIMITATION ON PARACHUTE PAYMENTS
	  	18
			
	 (a)
	  	Scope of Limitation	  	18
			
	 (b)
	  	Basic Rule	  	18
			
	 (c)
	  	Reduction of Payments	  	19
			
	 (d)
	  	Related Corporations	  	19
		
	 SECTION 18. NO EMPLOYMENT RIGHTS
	  	19
		
	 SECTION 19. DURATION AND AMENDMENTS
	  	19

  
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	 (a)
	  	Term of the Plan	  	19
			
	 (b)
	  	Right to Amend or Terminate the Plan	  	19
			
	 (c)
	  	Effect of Amendment or Termination	  	19
		
	 SECTION 20. EXECUTION
	  	21

  
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 ATHEROS COMMUNICATIONS, INC. 
  
 2004 STOCK INCENTIVE PLAN 
  
 SECTION 1. ESTABLISHMENT AND PURPOSE. 
  
 The Plan was adopted by the Board of Directors on
                        , 2003, effective as of the date of the initial offering of Stock to the public pursuant to a
registration statement filed by the Company with the Securities and Exchange Commission. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors
and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants
directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory
stock options) or stock appreciation rights. 
  
 SECTION 2. DEFINITIONS.

  
 (a) “Affiliate” shall mean any
entity other than a Subsidiary, if the Company and/or one of more Subsidiaries own not less than 50% of such entity. 
  
 (b) “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan. 
  
 (c) “Board of Directors” shall mean the Board of
Directors of the Company, as constituted from time to time. 
  
 (d) “Change in Control” shall mean the occurrence of any of the following events: 
  
 (i) A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are
directors who either: 
  
 (A) Had been directors
of the Company on the “look-back date” (as defined below) (the “original directors”); or 
  
 (B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate
of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); or 
  
 (ii) Any “person” (as defined below) who by the
acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of
the Company’s then outstanding securities ordinarily (and apart from 
  
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INCENTIVE PLAN 
  

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rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change
in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of
securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or 
  
 (iii) The consummation of a merger or consolidation of the Company with or into another entity or any other
corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting
power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or 
  
 (iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets.

  
 For purposes of subsection (d)(i) above, the term
“look-back” date shall mean the later of (1)                         , 2003 or (2) the date 24 months prior to the date
of the event that may constitute a Change in Control. 
  
 For
purposes of subsection (d)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee
benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock. 
  
 Any other provision of this Section 2(d) notwithstanding, a transaction shall
not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the Securities and Exchange Commission for the initial offering of Stock to the public.

  
 (e) “Code” shall mean the Internal
Revenue Code of 1986, as amended. 
  
 (f)
“Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof. 
  
 (g) “Company” shall mean Atheros Communications, Inc.

  
 (h) “Consultant” shall mean a
consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor or a member of the board of directors of a Parent or a Subsidiary who is not an Employee. Service as a
Consultant shall be considered Service for all purposes of the Plan. 
  
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PLAN 
  

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 (i) “Employee” shall mean any individual who is a common-law employee of the Company, a
Parent or a Subsidiary. 
  
 (j) “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended. 
  
 (k) “Exercise Price” shall mean, in the case of an Option, the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise
Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR. 
  
 (l) “Fair Market Value” with respect to a Share,
shall mean the market price of one Share of Stock, determined by the Committee as follows: 
  
 (i) If the Stock was traded over-the-counter on the date in question but was not traded on The Nasdaq Stock Market, then the Fair Market
Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal
automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the “Pink Sheets” published by the National Quotation Bureau, Inc.; 
  
 (ii) If the Stock was traded on The Nasdaq Stock Market, then
the Fair Market Value shall be equal to the last reported sale price quoted for such date by The Nasdaq Stock Market; 
  
 (iii) If the Stock was traded on a United States stock exchange on the date in question, then the Fair Market Value shall be equal to the
closing price reported for such date by the applicable composite-transactions report; and 
  
 (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate. 
  
 In all cases, the determination of Fair
Market Value by the Committee shall be conclusive and binding on all persons. 
  
 (m) “ISO” shall mean an employee incentive stock option described in Section 422 of the Code. 
  
 (n) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO. 
  
 (o) “Offeree” shall mean an individual to whom the
Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option). 
  
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 (p) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and
entitling the holder to purchase Shares. 
  
 (q)
“Optionee” shall mean an individual or estate who holds an Option or SAR. 
  
 (r) “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary. Service as an Outside
Director shall be considered Service for all purposes of the Plan, except as provided in Section 4(a). 
  
 (s) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if
each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date
after the adoption of the Plan shall be a Parent commencing as of such date. 
  
 (t) “Participant” shall mean an individual or estate who holds an Award. 
  
 (u) “Plan” shall mean this 2004 Stock Incentive Plan of Atheros Communications, Inc., as amended from time to time. 
  
 (v) “Purchase Price” shall mean the consideration for
which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. 
  
 (w) “Restricted Share” shall mean a Share awarded under the Plan. 
  
 (x) “Restricted Share Agreement” shall mean the agreement between the Company and the recipient of a
Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Shares. 
  
 (y) “SAR” shall mean a stock appreciation right granted under the Plan. 
  
 (z) “SAR Agreement” shall mean the agreement between
the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR. 
  
 (aa) “Service” shall mean service as an Employee, Consultant or Outside Director. 
  
 (bb) “Share” shall mean one share of Stock, as
adjusted in accordance with Section 8 (if applicable). 
  
 (cc)
“Stock” shall mean the Common Stock of the Company. 
  
 (dd) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his Option. 
  
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 (ee) “Stock Unit” shall mean a bookkeeping entry representing the equivalent of
one Share, as awarded under the Plan. 
  
 (ff)
“Stock Unit Agreement” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit. 
  
 (gg) “Subsidiary” shall mean any corporation, if the
Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the
Plan shall be considered a Subsidiary commencing as of such date. 
  
 (hh) “Total and Permanent Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to
result in death or that has lasted, or can be expected to last, for a continuous period of not less than 12 months. 
  
 SECTION 3. ADMINISTRATION. 
  
 (a) Committee Composition. The Plan shall be administered by the Committee. The Committee shall consist of two or more directors of the
Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of
the Code. 
  
 (b) Committee for Non-Officer Grants.
The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not
considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in
the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. The Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under
Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.

  
 (c) Committee Procedures. The Board of Directors
shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts
reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. 
  
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 (d) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall
have full authority and discretion to take the following actions: 
  
 (i) To interpret the Plan and to apply its provisions; 
  
 (ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan; 
  
 (iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan; 
  
 (iv) To determine when Shares are to be awarded or offered for sale and when Options are to be granted under the Plan; 
  
 (v) To select the Offerees and Optionees; 
  
 (vi) To determine the number of Shares to be offered to each Offeree or to be made subject to each Option; 
  
 (vii) To prescribe the terms and conditions of each award or
sale of Shares, including (without limitation) the Purchase Price, the vesting of the award (including accelerating the vesting of awards, either at the time of the award or sale or thereafter, without the consent of the Offeree or Optionee) and to
specify the provisions of the Restricted Stock Agreement relating to such award or sale; 
  
 (viii)    To prescribe the terms and conditions of each Option, including (without limitation) the Exercise Price, the
vesting or duration of the Option (including accelerating the vesting of the Option), to determine whether such Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the Stock Option Agreement relating to
such Option; 
  
 (ix) To amend any outstanding
Restricted Stock Agreement or Stock Option Agreement, subject to applicable legal restrictions and to the consent of the Offeree or Optionee who entered into such agreement if the Offeree’s or Optionee’s rights or obligations would be
adversely affected; 
  
 (x) To prescribe the
consideration for the grant of each Option or other right under the Plan and to determine the sufficiency of such consideration; 
  
 (xi) To determine the disposition of each Option or other right under the Plan in the event of an Optionee’s or Offeree’s
divorce or dissolution of marriage; 
  
 (xii) To
determine whether Options or other rights under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business; 
  
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 (xiii) To correct any defect, supply any omission, or reconcile any inconsistency in the
Plan, any Stock Option Agreement or any Restricted Stock Agreement; and 
  
 (xiv) To take any other actions deemed necessary or advisable for the administration of the Plan. 
  
 Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe
such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Options or other rights under the Plan to persons subject to
Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons deriving their rights from an Offeree or Optionee. No member of the
Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan. 
  
 SECTION 4. ELIGIBILITY. 
  
 (a) General Rule. Only Employees shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be
eligible for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs. 
  
 (b) Automatic Grants to Outside Directors. 
  
 (i) Each Outside Director who first joins the Board of Directors after the effective date of the Plan, and who was not previously an
Employee, shall receive a Nonstatutory Option, subject to approval of the Plan by the Company’s stockholders, to purchase 50,000 Shares (subject to adjustment under Section 11) on the first business day after his or her election to the Board of
Directors. Twenty-five percent (25%) of the Shares subject to each Option granted under this Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of grant. The balance of the Shares subject to such Option (i.e. the
remaining seventy-five percent (75%)) shall vest and become exercisable monthly over a three-year period beginning on the day which is one month after the first anniversary of the date of grant, at a monthly rate of 2.0833% of the total number of
Shares subject to such Options. Notwithstanding the foregoing, each such Option shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s Service. 
  
 (ii) On the first business day following the conclusion of
each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring after the adoption of the Plan, each Outside Director who was not elected to the Board for the first time at such meeting and who will
continue serving as a member of the Board of Directors thereafter shall receive an Option to purchase 10,000 Shares (subject to adjustment under Section 11), provided that such Outside Director has served on the Board of Directors for at least six
months. Each Option granted under the proceeding sentence of this Section 4(b)(ii) to a director first elected to the Board on or after November 1, 2003 shall vest and become exercisable ratably 
  
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over forty-eight months. Each Option granted under this Section 4(b)(ii) to a director who was first elected to the Board prior to November 1, 2003 shall
vest and become exercisable ratably over 12 months. Notwithstanding the foregoing, each Option granted under this Section 4(b)(ii) shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s Service.

  
 (iii) The Exercise Price of all Nonstatutory
Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b) or (d). 
  
 (iv) All Nonstatutory Options granted to an Outside Director
under this Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of such Outside Director’s Service for any reason;
provided, however, that any such Options that are not vested upon the termination of the Outside Director’s Service for any reason shall terminate immediately and may not be exercised. 
  
 (c) Ten-Percent Stockholders. An Employee who owns more than
10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

  
 (d) Attribution Rules. For purposes of Section
4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries. 
  
 (e) Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and
outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person. 
  
 SECTION 5. STOCK SUBJECT TO PLAN. 
  
 (a) Basic Limitation. Shares offered under the Plan shall be
authorized but unissued Shares or treasury Shares. The maximum aggregate number of Options, SARs, Stock Units and Restricted Shares awarded under the Plan shall not exceed             
Shares, plus an annual increases on each first day of the fiscal year during the term of the Plan, beginning January 1, 2005, in each case in an amount equal to the lesser of (i)
             Shares, (ii)             % of the outstanding Shares on the last day of the immediately preceding year, or (iii) an
amount determined by the board. The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 11. The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the
number of Shares which then remain 
  
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available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy
the requirements of the Plan. 
  
 (b) Option/SAR
Limitation. Subject to the provisions of Section 11, no Participant may receive Options or SARs under the Plan in any calendar year that relate to more than              Shares, except
that grants to a Participant in the calendar year in which his or her service first commences shall not relate to more than              Shares. 
  
 (c) Additional Shares. If Restricted Shares or Shares issued
upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any other reason before being exercised, then the corresponding
Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available under Section 5(a) and the balance
shall again become available for Awards under the Plan. If SARs are exercised, then only the number of Shares (if any) actually issued in settlement of such SARs shall reduce the number available in Section 5(a) and the balance shall again become
available for Awards under the Plan. 
  
 SECTION 6. RESTRICTED SHARES.

  
 (a) Restricted Stock Agreement. Each grant
of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical. 
  
 (b) Payment for Awards. Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan for such consideration as
the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. To the extent that an Award consists of newly issued Restricted Shares, the Award recipient shall
furnish consideration with a value not less than the par value of such Restricted Shares in the form of cash, cash equivalents, or past services rendered to the Company (or a Parent or Subsidiary), as the Committee may determine. 
  
 (c) Vesting. Each Award of Restricted Shares may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of the
Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in
Control occurs with respect to the Company. 
  
 (d)
Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. 
  
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A Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares.
Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. 
  
 (e) Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other
restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 
  
 SECTION 7. TERMS AND CONDITIONS OF OPTIONS. 
  
 (a) Stock Option Agreement. Each grant of an Option under the
Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into
under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee’s other compensation. 
  
 (b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for
the adjustment of such number in accordance with Section 11. 
  
 (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided
in 4(c), and the Exercise Price of an NSO shall not be less 85% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, a Stock Option Agreement may specify that the exercise price of an NSO may vary in accordance
with a predetermined formula. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its sole discretion. The Exercise Price shall be payable in one of the forms described in
Section 8. 
  
 (d) Withholding Taxes. As a condition
to the exercise of an Option, the Optionee shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The
Optionee shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an
Option. 
  
 (e) Exercisability and Term. Each Stock
Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from
the date of grant (five years for Employees described in Section 4(c). A 
  
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Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and
may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless
the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire. 
  
 (f) Exercise of Options. Upon Termination of Service. Each
Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option of
any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not
be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 
  
 (g) Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become
exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company. 
  
 (h) Leaves of Absence. An Employee’s Service shall cease when such Employee ceases to be actively employed by, or a Consultant to, the
Company (or any subsidiary) as determined in the sole discretion of the Board of Directors. For purposes of Options, Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if
the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s Service will be
treated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee
immediately returns to active work. The Company determines which leaves count toward Service, and when Service terminates for all purposes under the Plan. 
  
 (i) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any
Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 11. 
  
 (j) Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may
modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number
of Shares and at the same or a different exercise price, or in return for the grant of the same or a 
  
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STOCK INCENTIVE PLAN 
  

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different number of Shares. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, adversely affect his or
her rights or obligations under such Option. 
  
 (k)
Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may
determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 
  
 (l) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash
equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish. 
  
 SECTION 8. PAYMENT FOR SHARES. 
  
 (a) General Rule. The entire Exercise Price or Purchase Price
of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below. 
  
 (b) Surrender of Stock. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative. Such Shares shall be valued at their Fair Market Value on the
date when the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional
compensation expense) with respect to the Option for financial reporting purposes. 
  
 (c) Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary prior to the award. If Shares are
awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of
Section 6(b). 
  
 (d) Cashless Exercise. To the
extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate Exercise Price. 
  
 (e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender
to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price. 
  
  
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 (f) Promissory Note. To the extent that a Stock Option Agreement or Restricted Stock
Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note. However, the par value of the Common Shares being purchased under the Plan, if newly issued, shall be paid
in cash or cash equivalents. 
  
 (g) Other Forms of
Payment. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules. 
  
 (h) Limitations under Applicable Law. Notwithstanding anything
herein or in a Stock Option Agreement or Restricted Stock Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion. 
  
 SECTION 9. STOCK APPRECIATION RIGHTS. 
  
 (a) SAR Agreement. Each grant of a SAR under the Plan shall be
evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation. 
  
 (b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment
of such number in accordance with Section 11. 
  
 (c)
Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding. 
  
 (d) Exercisability and Term. Each SAR Agreement shall specify
the date when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or
retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will
not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control. 
  
 (e)
Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs
with respect to the Company. 
  
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 (f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right
to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon
exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price. 
  
 (g) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend
or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different
exercise price. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, may alter or impair his or her rights or obligations under such SAR. 
  
 SECTION 10. STOCK UNITS. 
  
 (a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and
the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in the recipient’s other compensation. 
  
 (b) Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the
Award recipients. 
  
 (c) Vesting Conditions. Each
Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the
event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in
Control occurs with respect to the Company. 
  
 (d)
Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend
equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without
limitation, any forfeiture conditions) as the Stock Units to which they attach. 
  
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INCENTIVE PLAN 
  

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 (e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be
made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on
predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum
or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased
by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11. 
  
 (f) Death of Recipient. Any Stock Units Award that becomes payable after the recipient’s death shall be
distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary
designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award
that becomes payable after the recipient’s death shall be distributed to the recipient’s estate. 
  
 (g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement. 
  
 SECTION 11. ADJUSTMENT OF SHARES. 
  
 (a) Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a
dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of: 
  
 (i) The number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Section
5; 
  
 (ii) The limitations set forth in Sections
5(a) and (b); 
  
 (iii) The number of NSOs to be
granted to Outside Directors under Section 4(b); 
  
 (iv) The number of Shares covered by each outstanding Option and SAR; 
  
 (v) The Exercise Price under each outstanding Option and SAR; or 
  
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STOCK INCENTIVE PLAN 
  

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 (vi) The number of Stock Units included in any prior Award which has not yet been
settled. 
  
 Except as provided in this Section 11, a Participant shall have no
rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class. 
  
 (b)
Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 
  
 (c) Reorganizations. In the event that the Company is a party
to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement shall provide for: 
  
 (i) The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation; 
  
 (ii) The assumption of the outstanding Awards by the
surviving corporation or its parent or subsidiary; 
  
 (iii) The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards; 
  
 (iv) Full exercisability or vesting and accelerated expiration of the outstanding Awards; or 
  
 (v) Settlement of the full value of the outstanding Awards in
cash or cash equivalents followed by cancellation of such Awards. 
  
 (d) Reservation of Rights. Except as provided in this Section 11, an Optionee or Offeree shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any
other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 
  
 SECTION 12. DEFERRAL OF AWARDS. 
  
 The Committee (in its sole discretion) may permit or require a Participant to: 
  
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 Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the
settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books; 
  

Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of
Stock Units; or 
  
 Have Shares that otherwise would be delivered
to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the
Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant. 
  
 A deferred compensation account established under this Section 12 may be
credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall
represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required,
the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 12. 
  
 SECTION 13. AWARDS UNDER OTHER PLANS. 
  
 The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

  
 SECTION 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES. 

 
 (a) Effective Date. No provision of this Section 14 shall be
effective unless and until the Board has determined to implement such provision. 
  
 (b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash,
NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 14 shall be filed with the Company on the
prescribed form. 
  
 (c) Number and Terms of NSOs,
Restricted Shares or Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner

  
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 -17- 

 
determined by the Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the Board. 
  
 SECTION 15. LEGAL AND REGULATORY REQUIREMENTS. 
  
 Shares shall not be issued under the Plan unless the issuance and delivery of
such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the
regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable.

  
 SECTION 16. WITHHOLDING TAXES. 
  
 (a) General. To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required
to issue any Shares or make any cash payment under the Plan until such obligations are satisfied. 
  
 (b) Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on
the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the legally required minimum tax withholding.

  
 SECTION 17. LIMITATION ON PARACHUTE PAYMENTS. 
  
 (a) Scope of Limitation. This Section 17 shall apply to an
Award only if the independent auditors most recently selected by the Board (the “Auditors”) determine that the after-tax value of such Award to the Optionee or Offeree, taking into account the effect of all federal, state and local income
taxes, employment taxes and excise taxes applicable to the Optionee or Offeree (including the excise tax under section 4999 of the Code), will be greater after the application of this Section 17 than it was before application of this Section 17.

  
 (b) Basic Rule. In the event that the Auditors
determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a “Payment”) would be nondeductible by the Company for federal income tax purposes because of the provisions concerning
“excess parachute payments” in Section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of this Section 17, the “Reduced Amount” shall be
the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code. 
  
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 (c) Reduction of Payments. If the Auditors determine that any Payment would be
nondeductible by the Company because of Section 280G of the Code, then the Company shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Participant may then
elect, in his or her sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in writing of
his or her election within 10 days of receipt of notice. If no such election is made by the Participant within such 10-day period, then the Company may elect which and how much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Participant promptly of such election. For purposes of this Section 17, present value shall be determined in accordance with Section 280G(d)(4) of
the Code. All determinations made by the Auditors under this Section 17 shall be binding upon the Company and the Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall promptly pay or transfer to or for the benefit
of the Participant in the future such amounts as become due to him or her under the Plan. 
  
 (d) Related Corporations. For purposes of this Section 17, the term “Company” shall include affiliated corporations to the extent determined by the Auditors in accordance with Section
280G(d)(5) of the Code. 
  
 SECTION 18. NO EMPLOYMENT RIGHTS. 

 
 No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

  
 SECTION 19. DURATION AND AMENDMENTS. 
  
 (a) Term of the Plan. The Plan, as set forth herein, shall
terminate automatically on                         , 2013 and may be terminated on any earlier date pursuant to Subsection (b)
below. 
  
 (b) Right to Amend or Terminate the Plan.
The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Option granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the person to whom
the Option was granted. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. 
  
 (c) Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after the termination
thereof, except upon exercise of an Option granted prior to such 
  
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termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the
Plan. 
  
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 SECTION 20. EXECUTION. 
  
 To record the adoption of the Plan by the Board of Directors on
                        , 2003, the Company has caused its authorized officer to execute the same. 
  
 ATHEROS COMMUNICATIONS, INC. 
  
 By                                      
                                        
                                    
  
 Name                                      
                                        
                               
  
 Title
                                        
                                        
                              
  
 ATHEROS COMMUNICATIONS, INC. 
 2004 STOCK INCENTIVE PLAN 
  

 -21-Form of 2004 Employee Stock Purchase Plan

 Exhibit 10.4 
 ATHEROS COMMUNICATIONS, INC. 
  
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  
 (Adopted by
the Board on                         , 2003) 

 Table of Contents 
  

	 	  	Page

	 SECTION 1 Purpose Of The Plan
	  	1
		
	 SECTION 2 Definitions.
	  	1
			
	 (a) “Accumulation Period”
	  	 	  	1
		
	 (b) “Board”
	  	1
		
	 (c) “Code”
	  	1
		
	 (d) “Committee”
	  	1
		
	 (e) “Company”
	  	1
		
	 (f) “Compensation”
	  	1
		
	 (g) “Corporate Reorganization”
	  	1
		
	 (h) “Eligible Employee”
	  	2
		
	 (i) “Exchange Act”
	  	2
		
	 (j) “Fair Market Value”
	  	2
		
	 (k) “IPO”
	  	2
		
	 (l) “Offering Period”
	  	2
		
	 (m) “Participant”
	  	2
		
	 (n) “Participating Company”
	  	2
		
	 (o) “Plan”
	  	3
		
	 (p) “Plan Account”
	  	3
		
	 (q) “Purchase Price”
	  	3
		
	 (r) “Stock”
	  	3
		
	 (s) “Subsidiary”
	  	3
		
	 SECTION 3 Administration Of The Plan
	  	3
		
	 (a) Committee Composition
	  	3
		
	 (b) Committee Responsibilities
	  	3
		
	 SECTION 4 Enrollment And Participation
	  	3
		
	 (a) Offering Periods
	  	3
		
	 (b) Accumulation Periods
	  	3
		
	 (c) Enrollment
	  	3
		
	 (d) Duration of Participation
	  	4
		
	 (e) Applicable Offering Period
	  	4
		
	 SECTION 5 Employee Contributions
	  	4
		
	 (a) Frequency of Payroll Deductions
	  	4
		
	 (b) Amount of Payroll Deductions
	  	5
		
	 (c) Changing Withholding Rate
	  	5
		
	 (d) Discontinuing Payroll Deductions
	  	5
		
	 (e) Limit on Number of Elections
	  	5
		
	 SECTION 6 Withdrawal From The Plan
	  	5
		
	 (a) Withdrawal
	  	5
		
	 (b) Re-enrollment After Withdrawal
	  	5

  
 ATHEROS
COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK PURCHASE
PLAN 
  

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	 SECTION 7 Change In Employment Status
	  	6
		
	 (a) Termination of Employment
	  	6
		
	 (b) Leave of Absence
	  	6
			
	 (c) Death
	  	 	  	6
		
	 SECTION 8 Plan Accounts And Purchase Of Shares
	  	6
		
	 (a) Plan Accounts
	  	6
		
	 (b) Purchase Price
	  	6
		
	 (c) Number of Shares Purchased
	  	6
		
	 (d) Available Shares Insufficient
	  	7
		
	 (e) Issuance of Stock
	  	7
		
	 (f) Unused Cash Balances
	  	7
		
	 (g) Stockholder Approval
	  	7
		
	 SECTION 9 Limitations On Stock Ownership
	  	7
		
	 (a) Five Percent Limit
	  	7
		
	 (b) Dollar Limit
	  	8
		
	 SECTION 10 Rights Not Transferable
	  	8
		
	 SECTION 11 No Rights As An Employee
	  	9
		
	 SECTION 12 No Rights As A Stockholder
	  	9
		
	 SECTION 13 Securities Law Requirements
	  	9
		
	 SECTION 14 Stock Offered Under The Plan
	  	9
		
	 (a) Authorized Shares
	  	9
		
	 (b) Antidilution Adjustments
	  	9
		
	 (c) Reorganizations
	  	10
		
	 SECTION 15 Amendment Or Discontinuance
	  	10
		
	 SECTION 16 Execution
	  	10

  
 ATHEROS
COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK PURCHASE
PLAN 
  

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 ATHEROS COMMUNICATIONS, INC. 
  
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  
 SECTION 1 Purpose Of The Plan. 
  
 The Plan was adopted by the Board on
                        , 2003, effective as of the date of the IPO. The purpose of the Plan is to provide Eligible Employees
with an opportunity to increase their proprietary interest in the success of the Company by purchasing Stock from the Company on favorable terms and to pay for such purchases through payroll deductions. The Plan is intended to qualify under section
423 of the Code. 
  
 SECTION 2 Definitions. 
  
 (a) “Accumulation Period” means an approximately six-month
period during which contributions may be made toward the purchase of Stock under the Plan, as determined pursuant to Section 4(b), or such other period as the Committee may determine in its sole discretion. 
  
 (b) “Board” means the Board of Directors of the Company, as
constituted from time to time. 
  
 (c) “Code”
means the Internal Revenue Code of 1986, as amended. 
  
 (d)
“Committee” means a the Compensation Committee of the Board, as described in Section 3. 
  
 (e) “Company” means Atheros Communications, Inc., a Delaware corporation. 
  
 (f) “Compensation” means (i) the compensation paid in cash to a Participant by a Participating Company,
including salaries, wages, incentive compensation, bonuses, overtime pay and shift premiums, plus (ii) any pre-tax contributions made by the Participant under section 401(k) or 125 of the Code. “Compensation” shall exclude all non-cash
items, commissions, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits
received under employee benefit plans, income attributable to the exercise of stock options, and similar items. The Committee shall determine whether a particular item is included in Compensation. 
  
 (g) “Corporate Reorganization” means: 
  
 (i) The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization in which the Company’s stockholders immediately prior thereto own less than 50% of the voting securities of the Company (or its successor or parent) immediately
thereafter; or 
  
 ATHEROS
COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK PURCHASE
PLAN 
  

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 (ii) The sale, transfer or other disposition of all or substantially all of the
Company’s assets or the complete liquidation or dissolution of the Company. 
  
 (h) “Eligible Employee” means any employee of a Participating Company whose customary employment is for more than five months per calendar year and for more than 20 hours per week. 
  
 The foregoing notwithstanding, an individual shall not be considered an
Eligible Employee if his or her participation in the Plan is prohibited by the law of any country which has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the
Plan. 
  
 (i) “Exchange Act” means the Securities
Exchange Act of 1934, as amended. 
  
 (j) “Fair Market
Value” means the market price of Stock, determined by the Committee as follows: 
  
 (i) If Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; 
  
 (ii) If Stock was traded on The Nasdaq National Market on the date in question, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by The Nasdaq National Market; or

  
 (iii) If none of the foregoing provisions is
applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. 
  
 Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Wall Street Journal or as
reported directly to the Company by a stock exchange or Nasdaq. Such determination shall be conclusive and binding on all persons. 
  
 (k) “IPO” means the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities
and Exchange Commission. 
  
 (l) “Offering
Period” means an approximately 24-month period with respect to which the right to purchase Stock may be granted under the Plan, as determined pursuant to Section 4(a), or such other period as the Committee may determine in its sole
discretion. 
  
 (m) “Participant” means an
Eligible Employee who elects to participate in the Plan, as provided in Section 4(c). 
  
 (n) “Participating Company” means (i) the Company and (ii) each present or future Subsidiary designated by the Committee as a Participating Company. 
  
 ATHEROS COMMUNICATIONS, INC.

 2004 EMPLOYEE STOCK PURCHASE PLAN 
  

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 (o) “Plan” means this Atheros Communications, Inc. 2004 Employee Stock Purchase Plan, as
it may be amended from time to time. 
  
 (p) “Plan
Account” means the account established for each Participant pursuant to Section 8(a). 
  
 (q) “Purchase Price” means the price at which Participants may purchase Stock under the Plan, as determined pursuant to Section 8(b). 
  
 (r) “Stock” means the Common Stock of the Company. 
  
 (s) “Subsidiary” means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. 
  
 SECTION 3
Administration Of The Plan. 
  
 (a) Committee
Composition. The Plan shall be administered by the Committee. The Committee shall consist exclusively of one or more directors of the Company, who shall be appointed by the Board. 
  
 (b) Committee Responsibilities. The Committee shall interpret the Plan and make all other policy decisions relating
to the operation of the Plan. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons. 
  
 SECTION 4 Enrollment And Participation. 
  
 (a) Offering Periods. While the Plan is in effect, two Offering
Periods shall commence in each calendar year. The Offering Periods shall consist of 24-month periods, unless otherwise determined by the Committee, commencing on May 5 and November 5 of each year, except that the first Offering Period shall commence
on the date of the IPO and end on November 4, 2005, unless otherwise determined by the Committee. The next Offering Period shall commence on May 5, 2004 and will end on May 4, 2006. Employees may participate in only one Offering Period at a time.

  
 (b) Accumulation Periods. While the Plan is in effect,
two Accumulation Periods shall commence in each calendar year. The Accumulation Periods shall consist of the six-month periods commencing on May 5 and November 5, except that the first Accumulation Period shall commence on the date of the IPO and
end on May 4, 2004, unless otherwise determined by the Committee. 
  
 (c) Enrollment. Any individual who, on the day preceding the first day of an Offering Period (other than the initial Offering Period), qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering
Period by executing the enrollment form prescribed for 
  
 ATHEROS COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK
PURCHASE PLAN 
  

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this purpose by the Committee. The enrollment form shall be filed with the Company at the prescribed location not later than 15 days prior to the
commencement of such Offering Period. All Eligible Employees shall be automatically enrolled in the initial Offering Period under the Plan. 
  
 (d) Duration of Participation. Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws from the Plan under Section 6(a) or reaches the end of the Offering Period in which his or her employee contributions were discontinued under Section 5(d) or Section 9(b). A Participant who discontinued employee
contributions under Section 5(d) or withdrew from the Plan under Section 6(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (c) above. A Participant whose employee
contributions were discontinued automatically under Section 9(b) shall automatically resume participation at the beginning of the earliest Offering Period ending in the next calendar year, if he or she then is an Eligible Employee. 
  
 (e) Applicable Offering Period. For purposes of calculating the
purchase price under Section 8(b), the applicable Offering Period shall be determined as follows: 
  
 (i) Once a Participant is enrolled in the Plan for an Offering Period, such Offering Period shall continue to apply to him or her until
the earliest of: (A) the end of such Offering Period; (B) the end of his or her participation under Subsection (d) above; and (C) re-enrollment in a subsequent Offering Period under Paragraph (ii) below. 
  
 (ii) In the event that the Fair Market Value of Stock on the
last trading day on or before the commencement of the Offering Period in which the Participant is enrolled is higher than on the last trading day on or before the commencement of any subsequent Offering Period, the Participant shall automatically be
re-enrolled for such subsequent Offering Period. 
  
 (iii) When a Participant reaches the end of an Offering Period but his or her participation is to continue, then such Participant shall automatically be re-enrolled for the Offering Period that commences immediately after the end of the
prior Offering Period. 
  
 SECTION 5 Employee Contributions.

  
 (a) Frequency of Payroll Deductions. A Participant may
purchase shares of Stock under the Plan solely by means of payroll deductions; provided, however, that in the initial Accumulation Period, Participants may also purchase shares of Stock by making a lump sum cash payment at the end of the
Accumulation Period. Payroll deductions, as designated by the Participant pursuant to Subsection (b) below, shall occur on each payday during participation in the Plan. 
  
 ATHEROS COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  

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 (b) Amount of Payroll Deductions. An Eligible Employee shall designate on the enrollment form the
portion of his or her Compensation that he or she elects to have withheld for the purchase of Stock. Such portion shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 15%. During the initial
Accumulation Period, no payroll deduction will be made unless a Participant timely files the proper form with the Company after a registration statement covering the Stock is filed and effective under the Securities Act of 1933, as amended.

  
 (c) Changing Withholding Rate. If a Participant wishes
to change the rate of payroll withholding, he or she may do so by filing a new enrollment form with the Company at the prescribed location at any time. The new withholding rate shall be effective as soon as reasonably practicable after such form has
been received by the Company. The new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 15%. 
  
 (d) Discontinuing Payroll Deductions. If a Participant wishes to discontinue employee contributions entirely, he or
she may do so by filing a new enrollment form with the Company at the prescribed location at any time. Payroll withholding shall cease as soon as reasonably practicable after such form has been received by the Company. In addition, employee
contributions may be discontinued automatically pursuant to Section 9(b). A Participant who has discontinued employee contributions may resume such contributions by filing a new enrollment form with the Company at the prescribed location. Payroll
withholding shall resume as soon as reasonably practicable after such form has been received by the Company. 
  
 (e) Limit on Number of Elections. The Committee may limit the number of elections that a Participant may make under Subsection (c) or (d) above
during any Accumulation Period. 
  
 SECTION 6 Withdrawal From The
Plan. 
  
 (a) Withdrawal. A Participant may elect to
withdraw from the Plan by filing the prescribed form with the Company at the prescribed location at any time before the last day of an Accumulation Period. In addition, in the initial Accumulation Period, Participants may be deemed to withdraw from
the Plan by declining or failing to remit timely payment to the Company for the shares of Stock. As soon as reasonably practicable thereafter, payroll deductions shall cease and the entire amount credited to the Participant’s Plan Account shall
be refunded to him or her in cash, without interest. No partial withdrawals shall be permitted. 
  
 (b) Re-enrollment After Withdrawal. A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in
the Plan under Section 4(c). Re-enrollment may be effective only at the commencement of an Offering Period. 
  
 ATHEROS COMMUNICATIONS, INC. 
 2004
EMPLOYEE STOCK PURCHASE PLAN 
  

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 SECTION 7 Change In Employment Status. 
  
 (a) Termination of Employment. Termination of employment as an Eligible Employee for any reason, including death,
shall be treated as an automatic withdrawal from the Plan under Section 6(a). A transfer from one Participating Company to another shall not be treated as a termination of employment. 
  
 (b) Leave of Absence. For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes
on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing. Employment, however, shall be deemed to terminate 90 days after the Participant goes on a leave, unless a contract or
statute guarantees his or her right to return to work. Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work. 
  
 (c) Death. In the event of the Participant’s death, the amount
credited to his or her Plan Account shall be paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant’s estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant’s death. 
  
 SECTION 8
Plan Accounts And Purchase Of Shares. 
  
 (a) Plan
Accounts. The Company shall maintain a Plan Account on its books in the name of each Participant. Whenever an amount is deducted from the Participant’s Compensation under the Plan, such amount shall be credited to the Participant’s
Plan Account. Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Company’s general assets and applied to general corporate purposes. No interest shall be credited to Plan Accounts. 
  
 (b) Purchase Price. The Purchase Price for each share of Stock
purchased at the close of an Accumulation Period shall be the lower of: 
  
 (i) 85% of the Fair Market Value of such share on the last trading day in such Accumulation Period; or 
  
 (ii) 85% of the Fair Market Value of such share on the first trading day of the applicable Offering Period (as determined under Section
4(e)) or, in the case of the first Offering Period under the Plan, 85% of the price at which one share of Stock is offered to the public in the IPO. 
  
 (c) Number of Shares Purchased. As of the last day of each Accumulation Period, each Participant shall be deemed to have elected to purchase the
number of shares of Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Plan in accordance with Section 6(a). The amount then in the Participant’s Plan Account shall be
divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Plan Account. The foregoing 
  
 ATHEROS COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  

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notwithstanding, no Participant shall purchase more than              shares of Stock with
respect to any Accumulation Period nor more than the amounts of Stock set forth in Section 9(b) and Section 14(a). Any fractional share, as calculated under this Subsection (c), shall be rounded down to the next lower whole share. For each
Accumulation Period, the Committee shall have the authority to establish additional limits on the number of shares purchasable by each Participant or by all Participants in the aggregate. 
  
 (d) Available Shares Insufficient. In the event that the aggregate number of shares that all Participants elect to
purchase during an Accumulation Period exceeds the maximum number of shares remaining available for issuance under Section 14(a), then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares
available for issuance by a fraction, the numerator of which is the number of shares that such Participant has elected to purchase and the denominator of which is the number of shares that all Participants have elected to purchase. 
  
 (e) Issuance of Stock. Certificates representing the shares of Stock
purchased by a Participant under the Plan shall be issued to him or her as soon as reasonably practicable after the close of the applicable Accumulation Period, except that the Committee may determine that such shares shall be held for each
Participant’s benefit by a broker designated by the Committee (unless the Participant has elected that certificates be issued to him or her). Shares may be registered in the name of the Participant or jointly in the name of the Participant and
his or her spouse as joint tenants with right of survivorship or as community property. 
  
 (f) Unused Cash Balances. An amount remaining in the Participant’s Plan Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Plan Account to
the next Accumulation Period. Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 9(b) or Section 14(a) shall be
refunded to the Participant in cash, without interest. 
  
 (g)
Stockholder Approval. Any other provision of the Plan notwithstanding, no shares of Stock shall be purchased under the Plan unless and until the Company’s stockholders have approved the adoption of the Plan. 
  
 SECTION 9 Limitations On Stock Ownership. 
  
 (a) Five Percent Limit. Any other provision of the Plan
notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or any parent or Subsidiary of the Company. For purposes of this Subsection (a), the following rules shall apply: 
  

(i) Ownership of stock shall be determined after applying the attribution rules of section 424(d) of the Code; 
  
 ATHEROS COMMUNICATIONS, INC.

 2004 EMPLOYEE STOCK PURCHASE PLAN 
  

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 (ii) Each Participant shall be deemed to own any stock that he or she has a right or
option to purchase under this or any other plan; and 
  
 (iii) Each Participant shall be deemed to have the right to purchase up to the maximum number of shares of Stock that may be purchased by a Participant under this Plan under the individual limit specified in Section 8(c) with respect to
each Accumulation Period. 
  
 (b) Dollar Limit. Any other
provision of the Plan notwithstanding, no Participant shall purchase Stock with a Fair Market Value in excess of the following limit: 
  
 (i) In the case of Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A)
$25,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased in the current calendar year (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the Company).

  
 (ii) In the case of Stock purchased during an
Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased (under this Plan and all other employee stock
purchase plans of the Company or any parent or Subsidiary of the Company) in the current calendar year and in the immediately preceding calendar year. 
  
 (iii) In the case of Stock purchased during an Offering Period that commenced in the second preceding calendar year, the limit shall be
equal to (A) $75,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the Company) in the current
calendar year and in the two preceding calendar years. 
  
 For
purposes of this Subsection (b), the Fair Market Value of Stock shall be determined in each case as of the beginning of the Offering Period in which such Stock is purchased. Employee stock purchase plans not described in section 423 of the Code
shall be disregarded. If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall resume at the beginning of the earliest
Accumulation Period ending in the next calendar year (if he or she then is an Eligible Employee). 
  
 SECTION 10 Rights Not Transferable. 
  
 The rights of any Participant under the Plan, or any Participant’s interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary
assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution. If a Participant in any manner 
  
 ATHEROS COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  

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attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws of descent
and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 6(a). 
  
 SECTION 11 No Rights As An Employee. 
  
 Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at
any time and for any reason, with or without cause. 
  
 SECTION 12 No
Rights As A Stockholder. 
  
 A Participant shall have no
rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the last day of the applicable Offering Period. 
  
 SECTION 13 Securities Law Requirements. 
  
 Shares of Stock shall not be issued under the Plan unless the issuance and
delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. 
  
 SECTION 14 Stock Offered Under The Plan. 
  
 (a) Authorized Shares. The maximum aggregate number of shares of Stock available for purchase under the Plan is
             shares, plus an annual increase to be added on the first day of each fiscal year during the term of the Plan, beginning January 1, 2005, in an amount equal to the lesser of (i)
             shares, (ii)             % of the outstanding shares of stock on the last day of the immediately preceding fiscal
year, or (iii) an amount determined by the Board. The aggregate number of shares available for purchase under the Plan shall at all times be subject to adjustment pursuant to Section 14. 
  
 (b) Antidilution Adjustments. The aggregate number of shares of Stock offered under the Plan, the individual
Participant share limitation described in Section 8(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately by the Committee for any increase or decrease in the number of outstanding shares of Stock
resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Company, the distribution of the shares of a
Subsidiary to the Company’s stockholders or a similar event. 
  
 ATHEROS COMMUNICATIONS, INC. 
 2004 EMPLOYEE STOCK
PURCHASE PLAN 
  

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 (c) Reorganizations. Any other provision of the Plan notwithstanding, immediately prior to the effective
time of a Corporate Reorganization, the Offering Period then in progress shall terminate and shares shall be purchased pursuant to Section 8, unless the Plan is assumed by the surviving corporation or its parent corporation pursuant to the plan of
merger or consolidation. The Plan shall in no event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization. 
  
 SECTION 15 Amendment Or Discontinuance. 
  
 The Board shall have the right to amend, suspend or terminate the Plan at any
time and without notice. Unless earlier terminated by the Board, the Plan shall terminate on                 , 2013. Except as provided in Section 14, any increase in
the aggregate number of shares of Stock to be issued under the Plan shall be subject to approval by a vote of the stockholders of the Company. In addition, any other amendment of the Plan shall be subject to approval by a vote of the stockholders of
the Company to the extent required by an applicable law or regulation. 
  

	SECTION	16 Execution 

  
 To record the adoption of the Plan by the Board on                 , 2003,
the Company has caused its authorized officer to execute the same. 
  
 ATHEROS COMMUNICATIONS, INC. 
  
 By                                      
                                        
                                        
                    
  
 Name                                      
                                        
                                        
              
  
 Title                                     
                                        
                                        
                  
  
 ATHEROS COMMUNICATIONS, INC. 
 2004
EMPLOYEE STOCK PURCHASE PLAN 
  

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