Document:

Exhibit 10.28

 Exhibit 10.28 
 February 23, 2006 
 John H. Doe 
 111 Somewhere Street 
 Richmond, VA 23220 
 Dear
Mr. Doe: 
 You have been granted a nonqualified stock option to purchase 1,000 shares of Common Stock of the Company, subject to the terms and
conditions (i) in the Company’s 2000 Stock Incentive Plan, as amended from time to time (the “Plan”), and (ii) as set forth in Exhibit A, attached hereto and made a part hereof (together, with this letter, the
“Agreement”), as follows: 
  

			
	Date  of Agreement/Grant:	  	February 16, 2006
	  Exercise Price Per Share:	  	$39.25
	    Total Exercise Price:	  	$39,250.00
	        Expiration Date:	  	February 16, 2013
	      Vesting Schedule:	  	25% per year for 4 years
250 on February 16, 2007
250 on February 16, 2008
250 on February 16, 2009
250 on February 16, 2010

 Please indicate your acceptance by executing two (2) original copies of this Agreement and returning one
(1) copy by U.S. Mail to Gwynn Noble. 
 Very truly yours, 
  
 Martin L. Vaughan, III, 
 Chairman and Chief Executive Officer 
 By
my signature below, I hereby acknowledge my Consent to Electronic Delivery, receipt of this Option, pursuant to all terms and conditions of the Plan, and electronic receipt of the Plan and Prospectus. I agree to conform to all of the terms and
conditions of the Option and the Plan. 
  

									
	 Signature:
	 	                                     
	  	Date:	  	                                      
          
		 	John H. Doe	  		  		  	

 Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections
on this form. 

 EXHIBIT A 
 TERMS AND CONDITIONS 
 STOCK OPTION AGREEMENT 
 1. Exercise of Option. Except as provided in paragraphs 4, 5, 6, 11 and 12 of these Terms and Conditions, this Option shall be exercisable as set
forth in the Vesting Schedule for each full year, up to a total of four (4) full years, that Optionee continues to be employed by the Company after the date of this Agreement. Once this Option has become exercisable with respect to any portion
of the total number of shares in accordance with the preceding sentence, it shall continue to be exercisable with respect to such shares until the termination of Optionee’s rights hereunder pursuant to paragraphs 4, 5 or 6, or until the
Expiration Date. A partial exercise of this Option shall not affect Optionee’s right to exercise subsequently this Option with respect to the remaining shares that are exercisable, subject to the conditions of the Plan and this Agreement.

 2. Method of Exercising and Payment for Shares. This Option may be exercised only by written notice delivered to the attention of
the Company’s Secretary at the Company’s principal office. The written notice shall specify the number of shares being acquired pursuant to the exercise of the Option when such Option is being exercised in part in accordance with the
Vesting Schedule. The exercise date shall be the date such notice is received by the Company. Such notice shall be accompanied by payment of the Option price in full for each share (a) in cash (United States dollars) or by cash equivalent
acceptable to the Company, or (b) by a cashless exercise pursuant to Section IX(2) of the Plan. 
 3. Nontransferability. This
Option is nontransferable except, in the event of the Optionee’s death, by will or by the laws of descent and distribution subject to the terms hereof. During Optionee’s lifetime, this Option may be exercised only by Optionee. 

4. Exercise in the Event of Death. This Option shall be exercisable in full in the event that Optionee dies while employed by the Company or an
Affiliate and prior to the Expiration Date of this Option. In that event, this Option may be exercised by Optionee’s estate, or the person or persons to whom his rights under this Option shall pass by will or the laws of descent and
distribution. Optionee’s estate or such persons must exercise this Option, if at all, within one year of the date of Optionee’s death or during the remainder of the period preceding the Expiration Date, whichever is shorter, but in no
event may the Option be exercised prior to the expiration of six (6) months from the date of the grant of the Option. 
 5. Exercise
in the Event of Permanent and Total Disability. This Option shall be exercisable in full if Optionee becomes Disabled while employed by the Company or an Affiliate and prior to the Expiration Date of this Option. In that event, Optionee must
exercise this Option, if at all, within one year of the date he becomes Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter, but in no event may the Option be exercised prior to the expiration of six
(6) months from the date of the grant of the Option. 
 6. Exercise After Termination of Employment. In the event that the
Optionee retires from employment with the Company after attaining age 62 and serving at least 10 consecutive years with the Company or an Affiliate or predecessor thereof, then this Option shall be exercisable in full but must be exercised by the
Optionee, if at all, within one year following his retirement date or during the remainder of the period preceding the Expiration Date, whichever is shorter, but in no event may the Option be exercised prior to the expiration of six (6) months
from the date of the grant of the Option. In all events other than those events addressed in paragraphs 4 or 5 or the foregoing sentence of this paragraph 6, in which Optionee ceases to be employed by the Company: (a) Optionee, subject to the
provisions of paragraph 12, may exercise the Option in whole or in part with respect to that number of shares which are exercisable by him under the Vesting Schedule on the date his employment terminated, and (b) this 

 
Option must be exercised by Optionee, if at all, within ninety (90) days following the date upon which he ceases to be employed by the Company or during
the remainder of the period preceding the Expiration Date, whichever is shorter, but in no event may the Option be exercised prior to the expiration of six (6) months from the date of the grant of the Option. 
 7. Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle Optionee to a fractional share
such fraction shall be disregarded. 
 8. No Right to Continued Employment. This Option does not confer upon Optionee any right with
respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate his employment at any time. 
 9. Investment Representation. Optionee agrees that, unless such shares previously have been registered under the Securities Act of 1933, as
amended (the “Securities Act”): (i) any shares purchased by him hereunder will be purchased for investment and not with a view to distribution or resale and (ii) until such registration, certificates representing such shares may
bear an appropriate legend to assure compliance with the Securities Act. This investment representation shall terminate when such shares have been registered under the Securities Act. 
 10. Change in Capital Structure. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered
by this Option, and the price per share thereof, shall be proportionately adjusted by the Company for any increase or decrease in the number of issued and outstanding shares of Common Stock of the Company resulting from any stock dividend (but only
on the Common Stock), stock split, combination, reclassification, recapitalization or general issuance to holders of Common Stock of rights to purchase Common Stock at substantially below its then fair market value, or any change in the number of
such shares outstanding effected without receipt of cash or property or labor or services by the Company, or any spin-off or other distribution of assets to shareholders. 
 In the event of a change in the Common Stock of the Company as presently constituted, which is limited to a change of all or a part of its authorized shares without par value into the same number of shares with a par
value, or any subsequent change into the same number of shares with a different par value, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan. 
 The grant of this 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 or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. 
 11. Change of Control. Notwithstanding any other provision of this Agreement to the contrary, in the event of a Change of Control, the provisions of Section XIII(3) of the Plan shall apply to this Option.

 12. Forfeiture of Certain Gains. 
 (a) Termination for Cause. If Optionee’s employment is terminated for “Cause” within one year of any exercise of this Option, in whole or in part, the Optionee shall pay to the Company an amount
equal to the gain realized by Optionee from such exercise represented by the excess of the Fair Market Value on the date of exercise over the Option price multiplied by the number of shares purchased, without regard to any subsequent market price
increase or decrease (“Option Gain”). For purposes of this paragraph, “Cause” shall have the meaning ascribed to it in any employment agreement between the Optionee and the Company that is in effect at the time of termination
and, if no such agreement exists, it shall mean: 
 (i) the willful and continued failure of the Optionee to perform
substantially the Optionee’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is 

 
delivered to the Optionee by the Company which specifically identifies the manner in which the Company believes that the Optionee has not substantially
performed the Optionee’s duties, or 
 (ii) the willful engaging by the Optionee in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company. 
 (b) Forfeiture if Optionee Engages in Certain
Activities. If Optionee, between the date hereof and one year after the date of termination of Optionee’s employment, engages in any activity in competition with any activity of the Company, or inimical, contrary or harmful to the interests
of the Company, including but not limited to (i) accepting employment with or serving as a consultant advisor or in any other capacity to an employer that is in competition with or acting against the interests of the Company,
(ii) disclosing or misusing any confidential information or material concerning the Company or (iii) participating in any hostile takeover attempt, then (1) this Option, including any vested but unexercised shares, shall terminate
effective the date on which Optionee enters into such activity, unless terminated sooner by operation of another term or condition of this Agreement or the Plan, and (2) the Optionee shall pay to the Company an amount equal to the Option Gain
realized by Optionee from any exercise of this Option, in whole or in part, within one year of the date such activity began. 
 (c) Right of Set-off. Optionee hereby consents to a deduction from any amounts owed by the Company to Optionee from time to time (including amounts owed as wages or other compensation, fringe benefits or vacation pay, to the extent
of any amounts Optionee owes the Company under paragraphs 12(a) and (b). Whether or not the Company elects to make any set-off in whole or in part, if Company does not recover by means of set-off the full amount owed by Optionee under paragraphs
12(a) and (b), Optionee agrees to immediately pay the unpaid balance to the Company. 
 13. Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the Commonwealth of Virginia, except to the extent that federal law shall be deemed to apply. 
 14. Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Agreement, the provisions of the Plan shall govern. All references
herein to the Plan shall mean the Plan as in effect on the date hereof. 
 15. Optionee Bound by Plan. Optionee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. 
 16. Binding Effect. Subject to the
limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributes, and personal representatives of Optionee and the successors of the Company. 
 17. Gender. All pronouns used herein shall be deemed to refer to either the male or female as appropriate. 
 18. Notice and Consent to Electronic Delivery. The Company expects to deliver notices and certain documents relating to its employee
benefit plans by posting the information on the Company’s web site, intranet or electronic bulletin board or transmitting the material to employees by e-mail. These documents include employee benefits plans and any amendments thereto,
election forms, prospectuses, supplements to prospectuses, annual reports to shareholders, informational brochures and similar information. The Company will provide you with e-mail notification of the posting of any of the foregoing
documents. This method of notification and access to documents relating to employee benefit plans will be in lieu of paper delivery of the same documents. To satisfy legal requirements, your signature is an affirmative election to accept
electronic notification and delivery of these documents in lieu of paper delivery, as well as all other terms of the award. 
 19. Defined
Terms. All terms used herein that are defined in the Plan shall have the meanings given to them in the Plan. 

 NONQUALIFIED STOCK OPTIONS 
 FOR NAMED EXECUTIVE OFFICERS 
  

					
	 	 	GRANT DATE	 	OPTIONS GRANTED
			
	Martin L. Vaughan, III	 	2/16/06	 	50,000
			
	F. Michael Crowley	 	2/16/06	 	24,000
			
	Timothy J. Korman	 	2/16/06	 	18,000
			
	John P. McGrath	 	2/16/06	 	14,500
			
	J. Thomas Stiles	 	2/16/06	 	14,500Amended and Restated 2004 Stock Incentive Plan and form of agreements thereunder

 Exhibit 10.3 
  
 PORTALPLAYER, INC. 
  
 AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN 
  
 (Adopted by the Board on July 29, 2004) 
  
 (Reflecting a One-for-Three (1:3) Reverse Stock Split Effected on November 12, 2004) 
 (Amended and Restated by the Board on July 22, 2005) 

 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”	  	3
	 (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”	  	4
	 (ff)
	  	“Stock Unit Agreement”	  	4
	 (gg)
	  	“Subsidiary”	  	5
		
	 SECTION 3. ADMINISTRATION
	  	5
	 (a)
	  	Committee Composition	  	5
	 (b)
	  	Committee for Non-Officer Grants	  	5
	 (c)
	  	Committee Procedures	  	5
	 (d)
	  	Committee Responsibilities	  	5

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -i- 

					
		
	 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)
	  	Award Limitation	  	8
	 (c)
	  	Additional Shares	  	8
		
	 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	  	9
		
	 SECTION 7. TERMS AND CONDITIONS OF OPTIONS
	  	9
	 (a)
	  	Stock Option Agreement	  	9
	 (b)
	  	Number of Shares	  	10
	 (c)
	  	Exercise Price	  	10
	 (d)
	  	Withholding Taxes	  	10
	 (e)
	  	Exercisability and Term	  	10
	 (f)
	  	Exercise of Options Upon Termination of Service	  	10
	 (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	  	11
	 (l)
	  	Buyout Provisions	  	11
		
	 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	  	12
	 (g)
	  	Other Forms of Payment	  	12
	 (h)
	  	Limitations under Applicable Law	  	12
		
	 SECTION 9. STOCK APPRECIATION RIGHTS
	  	13
	 (a)
	  	SAR Agreement	  	13
	 (b)
	  	Number of Shares	  	13

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -ii- 

					
	 (c)
	  	Exercise Price	  	13
	 (d)
	  	Exercisability and Term	  	13
	 (e)
	  	Effect of Change in Control	  	13
	 (f)
	  	Exercise of SARs	  	13
	 (g)
	  	Modification or Assumption of SARs	  	13
		
	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	  	14
	 (f)
	  	Death of Recipient	  	14
	 (g)
	  	Creditors’ Rights	  	15
		
	SECTION 11. ADJUSTMENT OF SHARES	  	15
	 (a)
	  	Adjustments	  	15
	 (b)
	  	Dissolution or Liquidation	  	15
	 (c)
	  	Reorganizations	  	15
	 (d)
	  	Reservation of Rights.	  	16
		
	SECTION 12. DEFERRAL OF AWARDS	  	16
	 (a)
	  	Committee Powers	  	16
	 (b)
	  	General Rules	  	17
		
	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	  	17
		
	SECTION 16. WITHHOLDING TAXES	  	18
	 (a)
	  	General	  	18
	 (b)
	  	Share Withholding	  	18
		
	SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS	  	18
	 (a)
	  	Transferability	  	18
	 (b)
	  	Qualifying Performance Criteria	  	18
		
	SECTION 18. NO EMPLOYMENT RIGHTS	  	19
		
	SECTION 19. DURATION AND AMENDMENTS	  	19
	 (a)
	  	Term of the Plan	  	19
	 (b)
	  	Right to Amend or Terminate the Plan	  	19

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -iii- 

					
	 (c)
	  	Effect of Termination	  	19
		
	SECTION 20. EXECUTION	  	20

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -iv- 

 PORTALPLAYER, INC. 
  
 AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN 
  
 SECTION 1. ESTABLISHMENT AND PURPOSE. 
  
 The Plan was adopted by the Board of Directors on July 29, 2004, 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 “Effective Date”), and amended and restated by the Board of Directors on July 22, 2005. All share numbers herein have been restated to reflect a
one-for-three (1:3) reverse stock split effected on November 12, 2004. 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 

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -1- 

 
combined voting power of the Company’s then outstanding securities ordinarily (and apart from 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) the Effective Date 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 PortalPlayer, 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. 
  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -2- 

 (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 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 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, 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 LLC; 
  
 (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). 
  
 (p)
“Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares. 
  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -3- 

 (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. 
  
 (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 PortalPlayer, 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. 
  
 (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. 
  

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 2004 STOCK INCENTIVE PLAN 
  
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 (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. 
  
 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. 
  
 (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; 
  

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 (iv) To determine when Awards are to be granted under the Plan; 
  
 (v) To select the Offerees and Optionees; 
  
 (vi) To determine the number of Shares to be made subject to
each Award; 
  
 (vii) To prescribe the terms and
conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the
consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award; 
  
 (viii) To amend any outstanding Award agreement, subject to
applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired; 
  
 (ix) To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such
consideration; 
  
 (x) To determine the
disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage; 
  
 (xi) To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation
plan of an acquired business; 
  
 (xii) To
correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement; 
  
 (xiii) To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance,
exercisability, vesting and/or ability to retain any Award; 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. 
  

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 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 on or after July 22, 2005, and who was not previously an Employee, shall
receive a Nonstatutory Option to purchase twenty-seven thousand nine hundred sixteen (27,916) Shares (subject to adjustment under Section 11) and an award of four thousand five hundred eighty-three (4,583) Restricted Shares on the date of 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. Twenty-five percent (25%) of the
Restricted Shares awarded under this Section 4(b)(i) shall vest 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. The balance of the Restricted Shares (i.e. the
remaining seventy-five percent (75%)) shall vest monthly over a three-year period beginning on the day which is one month after the first anniversary of the date of award, at a monthly rate of 2.0833% of the total number of Restricted Shares.
Notwithstanding the foregoing, each such Option and Restricted Share shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s Service. No payment is required for the Restricted Shares awarded under
this Section 4(b)(i), and the terms for each such Restricted Share shall conform to the provisions of Section 6 of the Plan, except to the extent specifically modified by this Section 4(b)(i) or the terms of the Restricted Stock Agreement between
the recipient and the Company. 
  
 (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 in 2006, 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 eight thousand three hundred seventy-five (8,375) Shares (subject to adjustment under Section 11) and an award of one thousand
three hundred seventy-five (1,375) Restricted Shares, provided that such Outside Director has served on the Board of Directors for at least six months. Each Option granted and each Restricted Share awarded under this Section 4(b)(ii) shall vest and
become exercisable on the first anniversary of the date of grant or award; provided, however, that each such Option shall become exercisable in full and each such Restricted Share shall become fully vested immediately prior to the next regular
annual meeting of the Company’s stockholders following such date of grant in the event such meeting occurs prior to such first anniversary date. Notwithstanding the foregoing, each Option granted and each Restricted Share award 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. No payment is required for the Restricted Shares awarded under this Section 4(b)(ii), and the terms for each such
Restricted Share shall conform to the provisions of Section 6 of the Plan, except to the extent specifically modified by this Section 4(b)(ii) or the terms of the Restricted Stock Agreement between the recipient and the Company. 
  
 (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. 
  

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 2004 STOCK INCENTIVE PLAN 
  
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 (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 aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed one million three hundred thirty-seven thousand five hundred (1,337,500) Shares, plus (x) any Shares
subject to outstanding options under the Company’s 1999 Stock Option Plan on the effective date of this Plan that are subsequently forfeited or terminated for any other reason before being exercised and unvested shares that are forfeited
pursuant to such plan after the effective date of this Plan and (y) an annual increase on the first day of each fiscal year during the term of the Plan, beginning January 1, 2005, in each case in an amount equal to the lesser of (i) two million
three hundred thirty-three thousand three hundred thirty-three (2,333,333) Shares, (ii) 5% of the outstanding Shares on the last day of the immediately preceding year through 2009 and 3% of the outstanding Shares on the last day of the preceding
year from 2010 through 2014, 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 Awards outstanding at any
time under the Plan shall not exceed the number of Shares which then remain 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) Award Limitation. Subject to
the provisions of Section 11, no Participant may receive Options, SARs, Restricted Shares or Stock Units under the Plan in any calendar year that relate to more than three million three hundred thirty-three thousand three hundred thirty-three
(3,333,333) 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 

  

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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. 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 

  

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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 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 

  

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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 different number of Shares. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, materially impair 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. 
  

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 2004 STOCK INCENTIVE PLAN 
  
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 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. 
  
 (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. 
  

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 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. 
  
 (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, materially impair his or her rights or obligations under such SAR.

  

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 2004 STOCK INCENTIVE PLAN 
  
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 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. 
  
 (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 

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -14- 

 
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 
  
 (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: 
  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -15- 

 (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. 
  
 (a) Committee Powers. The Committee (in its sole discretion)
may permit or require a Participant to: 
  
 (i)
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; 
  
 (ii) 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 
  
 (iii) 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. 
  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -16- 

 (b) General Rules. 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 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. The Company shall not be liable to a Participant or
other persons as to: (a) the non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be 

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -17- 

 
necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other
person due to the receipt, exercise or settlement of any Award granted under the Plan. 
  
 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. OTHER PROVISIONS APPLICABLE TO
AWARDS. 
  
 (a) Transferability.
Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO
may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 17(a) shall be void and unenforceable against the Company. 
  
 (b) Qualifying Performance Criteria. The number of Shares or
other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals for a specified period of time relating to one or more of the following performance criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an
absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award: (a) cash flow, (b) earnings per share, (c) earnings before
interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net
operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, or (p) market segment 

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -18- 

 
shares (“Qualifying Performance Criteria”). The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance
Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and
analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year. If applicable, the Committee shall determine the Qualifying Performance Criteria not later than the
90th day of the performance period, and shall determine and certify, for each Participant, the extent to which the
Qualifying Performance Criteria have been met. The Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of a Qualifying Performance Goal to a Participant who is a “covered employee”
within the meaning of Section 162(m) 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 July 28, 2014 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 Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. 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 Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan. 
  
 [Remainder of this page intentionally left blank] 
  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -19- 

 SECTION 20. EXECUTION. 
  
 To record the amendment and restatement of the Plan by the Board of Directors, the Company has caused its authorized officer
to execute the same. 
  

			
	PORTALPLAYER, INC.
		
	By	 	 
		
	Name	 	 
		
	Title	 	 

  

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 -20- 

 PORTALPLAYER, INC. 
  
 2004 STOCK INCENTIVE PLAN 
  
 NOTICE OF STOCK
OPTION GRANT 
  
 You have been
granted the following Option to purchase Common Stock of PORTALPLAYER, INC. (the “Company”) under the Company’s 2004 Stock Incentive Plan (the “Plan”): 
  

			
	 Name of Optionee:
	  	[Name of Optionee]
		
	 Total Number of Option Shares Granted:
	  	[Total Number of Shares]
		
	 Type of Option:
	  	 ̈ Incentive Stock Option
		
	 	  	 ̈ Nonstatutory Stock Option
		
	 Exercise Price Per Share:
	  	$                    
		
	 Grant Date:
	  	[Date of Grant]
		
	 Vesting Commencement Date:
	  	[Vesting Commencement Date]
		
	 Vesting Schedule:
	  	This Option becomes exercisable with respect to the first 1/4th of the shares subject to this Option when you complete 12 months of continuous “Service” (as defined in the Plan) from the Vesting Commencement Date. Thereafter, this Option becomes exercisable with respect to an
additional 1/48th of the shares subject to this Option when you complete each additional month of
Service.
		
	 Expiration Date:
	  	[Expiration Date] This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

  

 PORTALPLAYER, INC. 
 NOTICE OF STOCK OPTION GRANT 
  
 -1- 

 By your signature and the signature of the Company’s representative below, you and the Company agree
that this Option is granted under and governed by the term and conditions of the Plan and the Stock Option Agreement, both of which are attached to and made a part of this document. 
  

									
	OPTIONEE:	 	 	 	PORTALPLAYER, INC.
				
	 	 	 	 	By:	 	 
	 Optionee’s Signature
	 	 	 	 	 	 
				
	 	 	 	 	Title:	 	 
	 Optionee’s Printed Name
	 	 	 	 	 	 

  

 PORTALPLAYER, INC. 
 NOTICE OF STOCK OPTION GRANT 
  
 -2- 

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 STOCK OPTION AGREEMENT 
  

			
		
	 Tax Treatment
	  	This Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code or a nonstatutory option, as provided in the Notice of Stock Option Grant. Even if this
Option is designated as an incentive stock option, it shall be deemed to be a nonstatutory option to the extent required by the $100,000 annual limitation under Section 422(d) of the Internal Revenue Code.
		
	 Vesting
	  	This Option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. This Option will in no event become exercisable for additional shares after your Service has
terminated for any reason.
		
	 Term
	  	This Option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the Notice of Stock Option Grant (fifth
anniversary for a more than 10% stockholder as provided under the Plan if this is an incentive stock option). This Option may expire earlier if your Service terminates, as described below.
		
	 Regular
 Termination
	  	If your Service terminates for any reason except death or “Total and Permanent Disability” (as defined below), then this Option will expire at the close of business at Company
headquarters on the date three (3) months after the date your Service terminates (or, if earlier, the Expiration Date). The Company has discretion to determine when your Service terminates for all purposes of the Plan and its determinations are
conclusive and binding on all persons.
		
	 Death
	  	If your service terminates because of death, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if
earlier, the Expiration Date). During that period of up to 12 months, your estate or heirs may exercise the Option.
		
	 Disability
	  	If your Service terminates because of your Total and Permanent Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date
your Service terminates (or, if earlier, the Expiration Date). “Total and Permanent Disability” means that you are 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.

  

 PORTALPLAYER, INC. 
 STOCK OPTION AGREEMENT 
  
 -3- 

			
		
	 Leaves of Absence
	  	 For purposes of this Option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of
absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to
active work.
  
 If you go on a leave of absence, then the vesting schedule
specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice
of Stock Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

		
	 Restrictions on
 Exercise
	  	The Company will not permit you to exercise this Option if the issuance of shares at that time would violate any law or regulation. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of the Company stock pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Company
stock as to which such approval shall not have been obtained. However, the Company shall use its best efforts to obtain such approval.
		
	 Notice of Exercise
	  	When you wish to exercise this Option you must notify the Company by completing the attached “Notice of Exercise of Stock Option” form and filing it with the Human Resources
Department of the Company. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when it is received by the Company. If someone else wants to
exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.
		
	 Form of Payment
	  	When you submit your notice of exercise, you must include payment of the Option exercise price for the shares you are purchasing. Payment may be made in the following
form(s):
		
	 	  	 •      Your personal check, a cashier’s check or a money order.

  

 PORTALPLAYER, INC. 
 STOCK OPTION AGREEMENT 
  
 -4- 

			
		
	 	  	 •      Certificates for shares of Company stock that you own, along with any forms needed to effect a
transfer of those shares to the Company. The value of the shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering shares of Company stock, you may attest to the
ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to you. However, you may not surrender, or attest to the ownership of shares of Company stock in payment of the
exercise price if your action would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes.

		
	 	  	 •      By delivery on a form approved by the Committee of an irrevocable direction to a securities
broker approved by the Company to sell all or part of your Option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The balance of the sale proceeds, if any,
will be delivered to you. The directions must be given by signing a special “Notice of Exercise” form provided by the Company.

		
	 	  	 •      By delivery on a form approved by the Committee of an irrevocable direction to a securities
broker or lender approved by the Company to pledge Option shares as security for a loan and to deliver to the Company from the loan proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The directions must be
given by signing a special “Notice of Exercise” form provided by the Company.

		
	 	  	 •      Any other form permitted by the Committee in its sole discretion.

		
	 	  	Notwithstanding the foregoing, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.
		
	 Withholding Taxes
 and Stock
 Withholding
	  	You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the Option exercise. These
arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this Option. The value of these shares, determined as of the effective date of the Option exercise, will be applied to the
withholding taxes.

  

 PORTALPLAYER, INC. 
 STOCK OPTION AGREEMENT 
  
 -5- 

			
	 Restrictions on
 Resale
	  	By signing this Agreement, you agree not to sell any Option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale
(e.g., a lock-up period after the Company goes public). This restriction will apply as long as you are an employee, consultant or director of the Company or a subsidiary of the Company.
		
	 Transfer of Option
	  	 In general, only you can exercise this Option prior to your death. You cannot transfer or assign this Option, other than as designated by you by
will or by the laws of descent and distribution, except as provided below. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may in
any event dispose of this Option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former
spouse’s interest in your Option in any other way.
  
 However, if this Option
is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this Option as a gift to one or more family members. For purposes of this Agreement, “family
member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law or sister-in-law (including adoptive relationships), any individual sharing your
household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity
in which you or one or more of these persons own more than 50% of the voting interest.
  
 In addition, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this option to your spouse or former spouse pursuant to a
domestic relations order in settlement of marital property rights.
  
 The
Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement.

  

 PORTALPLAYER, INC. 
 STOCK OPTION AGREEMENT 
  
 -6- 

			
	 Retention Rights
	  	Neither your Option nor this Agreement gives you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to
terminate your Service at any time, with or without cause.
		
	 Stockholder
 Rights
	  	You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this Option by giving the required notice to the Company and paying the exercise price.
No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this Option, except as described in the Plan.
		
	 Adjustments
	  	In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this Option and the exercise price per share may be adjusted pursuant to
the Plan.
		
	 Applicable Law
	  	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions).
		
	 The Plan and
 Other Agreements
	  	The text of the Plan is incorporated in this Agreement by reference. All capitalized terms in the Stock Option Agreement shall have the meanings assigned to them in the Plan. This Agreement
and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. This Agreement may be amended only by another written
agreement, signed by both parties.

  
 BY SIGNING THE COVER
SHEET OF THIS AGREEMENT, 
 YOU AGREE TO ALL OF THE TERMS AND CONDITIONS 
 DESCRIBED ABOVE AND IN THE PLAN. 
  

 PORTALPLAYER, INC. 
 STOCK OPTION AGREEMENT 
  
 -7- 

 PORTALPLAYER, INC. 
 2004 STOCK INCENTIVE PLAN 
  
 NOTICE OF EXERCISE OF STOCK OPTION 
  
 You
must sign this Notice on the last page before submitting 
 it to the Company 
  

			
	OPTIONEE INFORMATION:	 	 
		
	 Name:        __________________________________________
	 	 Social Security Number:

		
	 	 	 
		
	 Address:   __________________________________________
	 	 Employee Number:

		
	 	 	 

  

			
	OPTION INFORMATION:	  	 
	 Date of Grant:     ______________________, 200_
	  	Type of Stock Option:
	 Exercise Price per Share:
$                                
	  	 ̈ Nonstatutory (NSO)
	 Total number of shares of Common Stock of PORTALPLAYER, INC. (the “Company”) covered
by
 option:    _________________________________
	  	 ̈ Incentive (ISO)

  
 EXERCISE INFORMATION:

  
 Number of shares of Common Stock of the Company for which option is being
exercised now:                                     . (These
shares are referred to below as the “Purchased Shares.”) 
  
 Total
exercise price for the Purchased Shares: $                             
  
 Form of payment enclosed [check all that apply]:

  

	 ̈	Check for $                    , payable to
“PORTALPLAYER, INC.” 

	 ̈	Certificate(s) for ______________ shares of Common Stock of the Company that I have owned for at least six months or have purchased in the open market. (These shares will be valued
as of the date when the Company receives this notice.) 

	 ̈	Attestation Form covering                      shares of Common Stock of
the Company. (These shares will be valued as of the date when the Company receives this notice.) 

  

 -1- 

 Name(s) in which the Purchased Shares should be registered  
 [please check one box]: 
  

			
	  ̈        In my name only
	  	 
	  ̈        In the names of my spouse and myself as community property
	  	My spouse’s name (if applicable):
		
	 	  	 
	  ̈        In the names of my spouse and myself as joint tenants with the right of survivorship
	  	 
		
	  ̈        In the name of an eligible revocable trust
	  	Full legal name of revocable trust:
	 	  	 
	 	  	 
	 	  	 
		
	The certificate for the Purchased Shares should be sent to the	  	 
	following address:	  	 
	 	  	 
	 	  	 
	 	  	 
	 	  	 
	 	  	 
	 	  	 

  
 ACKNOWLEDGMENTS: 
  

	1.	I understand that all sales of Purchased Shares are subject to compliance with the Company’s policy on securities trades. 

  

	2.	I hereby acknowledge that I received and read a copy of the prospectus describing the Company’s 2004 Stock Incentive Plan and the tax consequences of an exercise.

  

	3.	In the case of a nonstatutory option, I understand that I must recognize ordinary income equal to the spread between the fair market value of the Purchased Shares on the date of
exercise and the exercise price. I further understand that I am required to pay withholding taxes at the time of exercising a nonstatutory option. 

  

	4.	In the case of an incentive stock option, I agree to notify the Company if I dispose of the Purchased Shares before I have met both of the tax holding periods applicable to
incentive stock options (that is, if I make a disqualifying disposition). 

  

	5.	 I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me. In the event that I choose
to 

  

 -2- 

	 	 
transfer my Purchased Shares to a trust that does not satisfy the requirements of the Internal Revenue Service (i.e., a trust that is not an eligible
revocable trust), I also acknowledge that the transfer will be treated as a “disposition” for incentive stock option tax purposes. As a result, the favorable incentive stock option tax treatment will be unavailable and other unfavorable
tax consequences may occur. 

  
 SIGNATURE AND DATE:

  
 _______________________________________________    ______________     , 200   
  

 -3-

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