EXHIBIT 10.37

 

LEXAR MEDIA, INC.

 

2000 EQUITY INCENTIVE PLAN

 

As Adopted January 21, 2000

As Amended April 20, 2004

As Amended February 10, 2006

 

1.                                      PURPOSE. The purpose of this Plan is to
provide incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success of the Company,
its Parent and Subsidiaries, by offering them an opportunity to participate in
the Company’s future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in
Section 23.

 

2.                                      SHARES SUBJECT TO THE PLAN.

 

2.1                                 Number of Shares Available. Subject to
Sections 2.2 and 18, the total number of Shares reserved and available for grant
and issuance pursuant to this Plan will be 8,000,000 Shares plus Shares that are
subject to: (a) issuance upon exercise of an Option but cease to be subject to
such Option for any reason other than exercise of such Option; (b) an Award
granted hereunder but are forfeited or are repurchased by the Company at the
original issue price; and (c) an Award that otherwise terminates without Shares
being issued. In addition, any authorized shares not issued or subject to
outstanding grants under the Company’s 1996 Stock Option/Stock Issuance Plan
(the “Prior Plan”) on the Effective Date (as defined below) and any shares
issued under the Prior Plan that are forfeited or repurchased by the Company or
that are issuable upon exercise of options granted pursuant to the Prior Plan
that expire or become unexercisable for any reason without having been exercised
in full, will no longer be available for grant and issuance under the Prior
Plan, but will be available for grant and issuance under this Plan. In addition,
on each January 1, the aggregate number of Shares reserved and available for
grant and issuance pursuant to this Plan will be increased automatically by a
number of Shares equal to 5% of the total outstanding shares of the Company as
of the immediately preceding December 31, provided that no more than 50,000,000
shares shall be issued as ISOs (as defined in Section 5 below). At all times the
Company shall reserve and keep available a sufficient number of Shares as shall
be required to satisfy the requirements of all outstanding Options granted under
this Plan and all other outstanding but unvested Awards granted under this Plan.

 

2.2                                 Adjustment of Shares. In the event that the
number of outstanding shares is changed by a stock dividend, recapitalization,
stock split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
number of Shares that may be granted pursuant to Sections 3 and 9 below, (c) the
Exercise Prices of and number of Shares subject to outstanding Options, and
(d) the number of Shares subject to other outstanding Awards will be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share will not be issued but will either
be replaced by a cash payment equal to the Fair Market Value of such fraction of
a Share or will be rounded up to the nearest whole Share, as determined by the
Committee.

 

3.                                      ELIGIBILITY. ISOs (as defined in
Section 5 below) may be granted only to employees (including officers and
directors who are also employees) of the Company or of a Parent or Subsidiary of
the Company. All other Awards may be granted to employees, officers, directors,
consultants, independent contractors and advisors of the Company or any Parent
or Subsidiary of the Company; provided such consultants, contractors and
advisors render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. No person will be eligible to
receive more than 2,000,000 Shares in any calendar year under this Plan pursuant
to the grant of Awards hereunder, other than new employees of the Company or of
a Parent or Subsidiary of the Company (including new employees who are also
officers and directors of the Company or any Parent or Subsidiary of the
Company), who are eligible to receive up to a maximum of 3,000,000 Shares in the
calendar year in which they commence their employment. A person may be granted
more than one Award under this Plan.

 

4.                                      ADMINISTRATION.

 

4.1                                 Committee Authority. This Plan will be
administered by the Committee or by the Board acting as the Committee. Except
for automatic grants to Outside Directors pursuant to Section 9 hereof, and
subject to the general purposes, terms and conditions of this Plan, and to the
direction of the Board, the Committee will have full power to implement and
carry out this Plan. Except for automatic grants to Outside Directors pursuant
to Section 9 hereof, the Committee will have the authority to:

 

(a)                                  construe and interpret this Plan, any Award
Agreement and any other agreement or document executed pursuant to this Plan;

 

(b)                                 prescribe, amend and rescind rules and
regulations relating to this Plan or any Award;

 

(c)                                  select persons to receive Awards;

 

(d)                                 determine the form and terms of Awards;

 

(e)                                  determine the number of Shares or other
consideration subject to Awards;

 

(f)                                    determine whether Awards will be granted
singly, in combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of the Company;

 

(g)                                 grant waivers of Plan or Award conditions;

 

(h)                                 determine the vesting, exercisability and
payment of Awards;

 

(i)                                     correct any defect, supply any omission
or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

 

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(j)                                     determine whether an Award has been
earned; and

 

(k)                                  make all other determinations necessary or
advisable for the administration of this Plan.

 

4.2                                 Committee Discretion. Except for automatic
grants to Outside Directors pursuant to Section 9 hereof, any determination made
by the Committee with respect to any Award will be made in its sole discretion
at the time of grant of the Award or, unless in contravention of any express
term of this Plan or Award, at any later time, and such determination will be
final and binding on the Company and on all persons having an interest in any
Award under this Plan. The Committee may delegate to one or more officers of the
Company the authority to grant an Award under this Plan to Participants who are
not Insiders of the Company.

 

5.                                      OPTIONS. The Committee may grant Options
to eligible persons and will determine whether such Options will be Incentive
Stock Options within the meaning of the Code (“ISO”) or Nonqualified Stock
Options (“NQSOs”), the number of Shares subject to the Option, the Exercise
Price of the Option, the period during which the Option may be exercised, and
all other terms and conditions of the Option, subject to the following:

 

5.1                                 Form of Option Grant. Each Option granted
under this Plan will be evidenced by an Award Agreement which will expressly
identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and, except
as otherwise required by the terms of Section 9 hereof, will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

 

5.2                                 Date of Grant. The date of grant of an
Option will be the date on which the Committee makes the determination to grant
such Option, unless otherwise specified by the Committee. The Stock Option
Agreement and a copy of this Plan will be delivered to the Participant within a
reasonable time after the granting of the Option.

 

5.3                                 Exercise Period. Options may be exercisable
within the times or upon the events determined by the Committee as set forth in
the Stock Option Agreement governing such Option; provided, however, that no
Option will be exercisable after the expiration of ten (10) years from the date
the Option is granted; and provided further that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent or
Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after
the expiration of five (5) years from the date the ISO is granted. The Committee
also may provide for Options to become exercisable at one time or from time to
time, periodically or otherwise, in such number of Shares or percentage of
Shares as the Committee determines.

 

5.4                                 Exercise Price. The Exercise Price of an
Option will be determined by the Committee when the Option is granted and may be
not less than 85% of the Fair Market Value of the Shares on the date of grant;
provided that: (i) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Stockholder will not be less than 110%
of the Fair Market Value of the Shares on the date of grant. Payment for the
Shares purchased may be made in accordance with Section 8 of this Plan.

 

5.5                                 Method of Exercise. Options may be exercised
only by delivery to the Company of a written stock option exercise agreement
(the “Exercise Agreement”) in a form approved by the Committee (which need not
be the same for each Participant), stating the number of Shares being purchased,
the restrictions imposed on the Shares purchased under such Exercise Agreement,
if any, and such representations and agreements regarding Participant’s
investment intent and access to information and other matters, if any, as may be
required or desirable by the Company to comply with applicable securities laws,
together with payment in full of the Exercise Price for the number of Shares
being purchased.

 

5.6                                 Termination. Notwithstanding the exercise
periods set forth in the Stock Option Agreement, exercise of an Option will
always be subject to the following:

 

(a)                                  If the Participant is Terminated for any
reason except death or Disability, then the Participant may exercise such
Participant’s Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than three (3) months after the
Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any exercise beyond three
(3) months after the Termination Date deemed to be an NQSO), but in any event,
no later than the expiration date of the Options.

 

(b)                                 If the Participant is Terminated because of
Participant’s death or Disability (or the Participant dies within three
(3) months after a Termination other than for Cause or because of Participant’s
Disability), then Participant’s Options may be exercised only to the extent that
such Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant’s legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (a) three (3) months
after the Termination Date when the Termination is for any reason other than the
Participant’s death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant’s death or Disability,
deemed to be an NQSO), but in any event no later than the expiration date of the
Options.

 

(c)                                  Notwithstanding the provisions in paragraph
5.6(a) above, if a Participant is terminated for Cause, neither the Participant,
the Participant’s estate nor such other person who may then hold the Option
shall be entitled to exercise any Option with respect to any Shares whatsoever,
after termination of service, whether or not after termination of service the
Participant may receive payment from the Company or Subsidiary for vacation pay,
for services rendered prior to termination, for services rendered for the day on
which termination occurs, for salary in lieu of notice, or for any other
benefits. In making such determination, the Board shall give the Participant an
opportunity to present to the Board evidence on his behalf. For the purpose of
this paragraph, termination of service shall be deemed to occur on the date when
the Company dispatches notice or advice to the Participant that his service is
terminated.

 

5.7                                 Limitations on Exercise. The Committee may
specify a reasonable minimum number of Shares that may be purchased on any
exercise of an Option, provided that such minimum number will not prevent
Participant from exercising the Option for the full number of Shares for which
it is then exercisable.

 

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5.8                                 Limitations on ISO. The aggregate Fair
Market Value (determined as of the date of grant) of Shares with respect to
which ISO are exercisable for the first time by a Participant during any
calendar year (under this Plan or under any other incentive stock option plan of
the Company, Parent or Subsidiary of the Company) will not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISO
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISO and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of this Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISO, such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.

 

5.9                                 Modification, Extension or Renewal. The
Committee may modify, extend or renew outstanding Options and authorize the
grant of new Options in substitution therefor, provided that any such action may
not, without the written consent of a Participant, impair any of such
Participant’s rights under any Option previously granted. Any outstanding ISO
that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise Price
may not be reduced below the minimum Exercise Price that would be permitted
under Section 5.4 of this Plan for Options granted on the date the action is
taken to reduce the Exercise Price.

 

5.10                           No Disqualification. Notwithstanding any other
provision in this Plan, no term of this Plan relating to ISO will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.

 

6.                                      RESTRICTED STOCK. A Restricted Stock
Award is an offer by the Company to sell to an eligible person Shares that are
subject to restrictions. The Committee will determine to whom an offer will be
made, the number of Shares the person may purchase, the price to be paid (the
“Purchase Price”), the restrictions to which the Shares will be subject, and all
other terms and conditions of the Restricted Stock Award, subject to the
following:

 

6.1                                 Form of Restricted Stock Award. All
purchases under a Restricted Stock Award made pursuant to this Plan will be
evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that
will be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. The offer of Restricted Stock will be
accepted by the Participant’s execution and delivery of the Restricted Stock
Purchase Agreement and full payment for the Shares to the Company within thirty
(30) days from the date the Restricted Stock Purchase Agreement is delivered to
the person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company within
thirty (30) days, then the offer will terminate, unless otherwise determined by
the Committee.

 

6.2                                 Purchase Price. The Purchase Price of Shares
sold pursuant to a Restricted Stock Award will be determined by the Committee on
the date the Restricted Stock Award is granted, except in the case of a sale to
a Ten Percent Stockholder, in which case the Purchase Price will be 100% of the
Fair Market Value. Payment of the Purchase Price may be made in accordance with
Section 8 of this Plan.

 

6.3                                 Terms of Restricted Stock Awards. Restricted
Stock Awards shall be subject to such restrictions as the Committee may impose.
These restrictions may be based upon completion of a specified number of years
of service with the Company or upon completion of the performance goals as set
out in advance in the Participant’s individual Restricted Stock Purchase
Agreement. Restricted Stock Awards may vary from Participant to Participant and
between groups of Participants. Prior to the grant of a Restricted Stock Award,
the Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and
having different performance goals and other criteria.

 

6.4                                 Termination During Performance Period. If a
Participant is Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Shares, cash or otherwise)
with respect to the Restricted Stock Award only to the extent earned as of the
date of Termination in accordance with the Restricted Stock Purchase Agreement,
unless the Committee will determine otherwise.

 

7.                                      STOCK BONUSES.

 

7.1                                 Awards of Stock Bonuses. A Stock Bonus is an
award of Shares (which may consist of Restricted Stock) for services rendered to
the Company or any Parent or Subsidiary of the Company. A Stock Bonus may be
awarded for past services already rendered to the Company, or any Parent or
Subsidiary of the Company pursuant to an Award Agreement (the “Stock Bonus
Agreement”) that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. A Stock Bonus may
be awarded upon satisfaction of such performance goals as are set out in advance
in the Participant’s individual Award Agreement (the “Performance Stock Bonus
Agreement”) that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.

 

7.2                                 Terms of Stock Bonuses. The Committee will
determine the number of Shares to be awarded to the Participant. If the Stock
Bonus is being earned upon the satisfaction of performance goals pursuant to a
Performance Stock Bonus Agreement, then the Committee will: (a) determine the
nature, length and starting date of any Performance Period for each Stock Bonus;
(b) select from among the Performance Factors to be used to measure the
performance, if any; and (c) determine the number of Shares that may be awarded
to the Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.

 

7.3                                 Form of Payment. The earned portion of a
Stock Bonus may be paid currently or on a deferred basis with such interest or
dividend equivalent, if any, as the Committee may determine. Payment may be made
in the form of cash or whole Shares or a combination thereof, either in a lump
sum payment or in installments, all as the Committee will determine.

 

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8.                                      PAYMENT FOR SHARE PURCHASES.

 

8.1                                 Payment. Payment for Shares purchased
pursuant to this Plan may be made in cash (by check) or, where expressly
approved for the Participant by the Committee and where permitted by law:

 

(a)                                  by cancellation of indebtedness of the
Company to the Participant;

 

(b)                                 by surrender of shares that either: (1) have
been owned by Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been fully paid with respect
to such shares); or (2) were obtained by Participant in the public market;

 

(c)                                  by tender of a full recourse promissory
note having such terms as may be approved by the Committee and bearing interest
at a rate sufficient to avoid imputation of income under Sections 483 and 1274
of the Code; provided, however, that Participants who are not employees or
directors of the Company will not be entitled to purchase Shares with a
promissory note unless the note is adequately secured by collateral other than
the Shares;

 

(d)                                 by waiver of compensation due or accrued to
the Participant for services rendered;

 

(e)                                  with respect only to purchases upon
exercise of an Option, and provided that a public market for the Company’s stock
exists:

 

(1)                                  through a “same day sale” commitment from
the Participant and a broker-dealer that is a member of the National Association
of Securities Dealers (an “NASD Dealer”) whereby the Participant irrevocably
elects to exercise the Option and to sell a portion of the Shares so purchased
to pay for the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or

 

(2)                                  through a “margin” commitment from the
Participant and a NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company; or

 

(f)                                    by any combination of the foregoing.

 

8.2                                 Loan Guarantees. The Committee may help the
Participant pay for Shares purchased under this Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.

 

9.                                      AUTOMATIC GRANTS TO OUTSIDE DIRECTORS.

 

9.1                                 Types of Options and Shares. Options granted
under this Plan and subject to this Section 9 shall be NQSOs.

 

9.2                                 Eligibility. Options subject to this
Section 9 shall be granted only to Outside Directors.

 

9.3                                 Initial Grant. Each Outside Director who
first becomes a member of the Board on or after the Effective Date will
automatically be granted an Option for 50,000 Shares (an “Initial Grant”) on the
date such Outside Director first becomes a member of the Board. Each Outside
Director who became a member of the Board prior to the Effective Date will
automatically be granted an Option for 25,000 Shares immediately following the
Effective Date.

 

9.4                                 Succeeding Grant. Immediately following each
Annual Meeting of stockholders, each Outside Director will automatically be
granted an Option for 20,000 Shares (a “Succeeding Grant”), provided the Outside
Director is a member of the Board on such date and has served continuously as a
member of the Board for a period of at least one year since the date of such
Outside Director’s Initial Grant. Notwithstanding anything in this Section 9.4
to the contrary, the Board may make discretionary supplemental grants to an
Outside Director who has served for less than one year from the date of such
Outside Director’s Initial Grant, provided that no Outside Director may receive
more than 70,000 Shares in any calendar year pursuant to this Section 9.

 

9.5                                 Vesting. The date an Outside Director
receives an Initial Grant or a Succeeding Grant is referred to in this Plan as
the “Start Date” for such Option.

 

(a)                                  Initial Grants.  Each Initial Grant will
vest (i) as to twenty-five percent (25%) of the Shares on the earlier of (A) the
one (1) year anniversary of the Start Date or (B) the next succeeding Annual
Meeting where such Outside Director is not serving as an Outside Director
following such Annual Meeting but such person is an Outside Director on the day
immediately preceding such Annual Meeting and (ii) as to 2.08333% of the Shares
on each subsequent monthly anniversary thereafter, so long as the Outside
Director continuously remains a director or consultant of the Company.

 

(b)                                 Succeeding Grants.  Each Succeeding Grant
will vest (i) as to twenty-five percent (25%) of the Shares on the earlier of
(A) the one (1) year anniversary of the Start Date or (B) the next succeeding
Annual Meeting where such Outside Director is not serving as an Outside Director
following such Annual Meeting but such person is an Outside Director on the day
immediately preceding such Annual Meeting and (ii) as to 2.08333% of the Shares
on each subsequent monthly anniversary thereafter, so long as the Outside
Director continuously remains a director or consultant of the Company.

 

Notwithstanding any provision to the contrary, in the event of a Corporate
Transaction described in Section 18.1, the vesting of all options granted to
Outside Directors pursuant to this Section 9 will accelerate and such options
will become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines, and must be exercised,
if at all, within three months of the consummation of said event. Any options
not exercised within such three-month period shall expire.

 

9.6                                 Exercise Price. The exercise price of an
Option pursuant to an Initial Grant and Succeeding Grant shall be the Fair
Market Value of the Shares, at the time that the Option is granted.

 

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10.                               WITHHOLDING TAXES.

 

10.1                           Withholding Generally. Whenever Shares are to be
issued in satisfaction of Awards granted under this Plan, the Company may
require the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.

 

10.2                           Stock Withholding. When, under applicable tax
laws, a Participant incurs tax liability in connection with the exercise or
vesting of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the Committee
may in its sole discretion allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld, determined on the date that the
amount of tax to be withheld is to be determined. All elections by a Participant
to have Shares withheld for this purpose will be made in accordance with the
requirements established by the Committee and be in writing in a form acceptable
to the Committee.

 

11.                               TRANSFERABILITY.

 

11.1                           Except as otherwise provided in this Section 11,
Awards granted under this Plan, and any interest therein, will not be
transferable or assignable by Participant, and may not be made subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution or as determined by the Committee and set forth in
the Award Agreement with respect to Awards that are not ISOs.

 

11.2                           All Awards other than NQSO’s. All Awards other
than NQSO’s shall be exercisable: (i) during the Participant’s lifetime, only by
(A) the Participant, or (B) the Participant’s guardian or legal representative;
and (ii) after Participant’s death, by the legal representative of the
Participant’s heirs or legatees.

 

11.3                           NQSOs. Unless otherwise restricted by the
Committee, an NQSO shall be exercisable: (i) during the Participant’s lifetime
only by (A) the Participant, (B) the Participant’s guardian or legal
representative, (C) a Family Member of the Participant who has acquired the NQSO
by “permitted transfer;” and (ii) after Participant’s death, by the legal
representative of the Participant’s heirs or legatees. “Permitted transfer”
means, as authorized by this Plan and the Committee in an NQSO, any transfer
effected by the Participant during the Participant’s lifetime of an interest in
such NQSO but only such transfers which are by gift or domestic relations order.
A permitted transfer does not include any transfer for value and neither of the
following are transfers for value: (a) a transfer of under a domestic relations
order in settlement of marital property rights or (b) a transfer to an entity in
which more than fifty percent of the voting interests are owned by Family
Members or the Participant in exchange for an interest in that entity.

 

12.                               PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON
SHARES..

 

12.1                           Voting and Dividends. No Participant will have
any of the rights of a stockholder with respect to any Shares until the Shares
are issued to the Participant. After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant’s Purchase Price or
Exercise Price pursuant to Section 12.

 

12.2                           Financial Statements. The Company will provide
financial statements to each Participant prior to such Participant’s purchase of
Shares under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.

 

12.3                           Restrictions on Shares. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the Award
Agreement a right to repurchase a portion of or all Unvested Shares held by a
Participant following such Participant’s Termination at any time within ninety
(90) days after the later of Participant’s Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at the Participant’s Exercise Price or Purchase
Price, as the case may be.

 

13.                               CERTIFICATES. All certificates for Shares or
other securities delivered under this Plan will be subject to such stock
transfer orders, legends and other restrictions as the Committee may deem
necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other
requirements of the SEC or any stock exchange or automated quotation system upon
which the Shares may be listed or quoted.

 

14.                               ESCROW; PLEDGE OF SHARES. To enforce any
restrictions on a Participant’s Shares, the Committee may require the
Participant to deposit all certificates representing Shares, together with stock
powers or other instruments of transfer approved by the Committee, appropriately
endorsed in blank, with the Company or an agent designated by the Company to
hold in escrow until such restrictions have lapsed or terminated, and the
Committee may cause a legend or legends referencing such restrictions to be
placed on the certificates. Any Participant who is permitted to execute a
promissory note as partial or full consideration for the purchase of Shares
under this Plan will be required to pledge and deposit with the Company all or
part of the Shares so purchased as collateral to secure the payment of
Participant’s obligation to the Company under the promissory note; provided,
however, that the Committee may require or accept other or additional forms of
collateral to secure the payment of such obligation and, in any event, the
Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant’s Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.

 

15.                         EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at
any time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time buy
from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.

 

16.                         SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An
Award will not be effective unless such Award is in compliance with all
applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are
in effect on the date of grant of the Award and also on the date of

 

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exercise or other issuance. Notwithstanding any other provision in this Plan,
the Company will have no obligation to issue or deliver certificates for Shares
under this Plan prior to: (a) obtaining any approvals from governmental agencies
that the Company determines are necessary or advisable; and/or (b) completion of
any registration or other qualification of such Shares under any state or
federal law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the registration, qualification
or listing requirements of any state securities laws, stock exchange or
automated quotation system, and the Company will have no liability for any
inability or failure to do so.

 

17.                         NO OBLIGATION TO EMPLOY. Nothing in this Plan or any
Award granted under this Plan will confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Parent or Subsidiary of the Company or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant’s employment or other relationship at any time,
with or without cause.

 

18.                         CORPORATE TRANSACTIONS.

 

18.1                           Assumption or Replacement of Awards by Successor.
Except for automatic grants to Outside Directors pursuant to Section 9 hereof,
in the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction (each, a “Corporate Transaction”), (i) the vesting of all
outstanding Awards will accelerate as to an additional 25% of the Shares that
are unvested on the date of the Corporate Transaction and, (ii) thereafter,
unless otherwise set forth below, all unvested shares subject to outstanding
Awards will continue to vest in equal monthly installments over the remaining
original vesting term as set forth in the Award Agreement. Upon a Corporate
Transaction, all outstanding Awards shall be assumed by the successor or
acquiring corporation (if any), which assumption will be binding on all
Participants. In the alternative, the successor or acquiring corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to shareholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding unvested Shares of the Company held by the Participants,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant. In the event such successor
corporation (if any) refuses to assume or substitute Awards, as provided above,
pursuant to a Corporate Transaction described in this Subsection 18.1, such
Awards will expire on such Corporate Transaction at such time and on such
conditions as the Committee will determine. Notwithstanding anything in this
Plan to the contrary, the Committee may, in its sole discretion, provide that
the vesting of any or all Awards granted pursuant to this Plan will accelerate
upon a Corporate Transaction described in this Section 18. If the Committee
exercises such discretion with respect to Options, such Options will become
exercisable in full prior to the consummation of such event at such time and on
such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the Corporate Transaction, they shall
terminate at such time as determined by the Committee.

 

18.2                           Other Treatment of Awards. Subject to any greater
rights granted to Participants under the foregoing provisions of this
Section 18, in the event of the occurrence of any Corporate Transaction
described in Section 18.1, any outstanding Awards will be treated as provided in
the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, or sale of assets.

 

18.3                           Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company’s award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.

 

19.                               ADOPTION AND STOCKHOLDER APPROVAL. This Plan
will become effective on the date on which the registration statement filed by
the Company with the SEC under the Securities Act registering the initial public
offering of the Company’s Common Stock is declared effective by the SEC (the
“Effective Date”). This Plan shall be approved by the stockholders of the
Company (excluding Shares issued pursuant to this Plan), consistent with
applicable laws, within twelve (12) months before or after the date this Plan is
adopted by the Board. Upon the Effective Date, the Committee may grant Awards
pursuant to this Plan; provided, however, that: (a) no Option may be exercised
prior to initial stockholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares subject to this Plan approved by
the Board will be exercised prior to the time such increase has been approved by
the stockholders of the Company; (c) in the event that initial stockholder
approval is not obtained within the time period provided herein, all Awards
granted hereunder shall be cancelled, any Shares issued pursuant to any Awards
shall be cancelled and any purchase of Shares issued hereunder shall be
rescinded; and (d) in the event that stockholder approval of such increase is
not obtained within the time period provided herein, all Awards granted pursuant
to such increase will be cancelled, any Shares issued pursuant to any Award
granted pursuant to such increase will be cancelled, and any purchase of Shares
pursuant to such increase will be rescinded.

 

20.                               TERM OF PLAN/GOVERNING LAW. Unless earlier
terminated as provided herein, this Plan will terminate ten (10) years from the
date this Plan is adopted by the Board or, if earlier, the date of stockholder
approval. This Plan and all agreements thereunder shall be governed by and
construed in accordance with the laws of the State of California.

 

21.                               AMENDMENT OR TERMINATION OF PLAN. The Board
may at any time terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval.

 

22.                               NONEXCLUSIVITY OF THE PLAN. Neither the
adoption of this Plan by the Board, the submission of this Plan to the
stockholders of the Company for approval, nor any provision of this Plan will be
construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including,
without limitation, the granting of stock options and bonuses otherwise than
under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

23.                               DEFINITIONS. As used in this Plan, the
following terms will have the following meanings:

 

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“Award” means any award under this Plan, including any Option, Restricted Stock
or Stock Bonus.

 

“Award Agreement” means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

 

“Board” means the Board of Directors of the Company.

 

“Cause” means the commission of an act of theft, embezzlement, fraud, dishonesty
or a breach of fiduciary duty to the Company or a Parent or Subsidiary of the
Company.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee of the Board.

 

“Company” means Lexar Media, Inc. or any successor corporation.

 

“Disability” means a disability, whether temporary or permanent, partial or
total, as determined by the Committee.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exercise Price” means the price at which a holder of an Option may purchase the
Shares issuable upon exercise of the Option.

 

“Fair Market Value” means, as of any date, the value of a share of the Company’s
Common Stock determined as follows:

 

(a)                                  if such Common Stock is then quoted on the
Nasdaq National Market, its closing price on the Nasdaq National Market on the
date of determination as reported in The Wall Street Journal;

 

(b)                                 if such Common Stock is publicly traded and
is then listed on a national securities exchange, its closing price on the date
of determination on the principal national securities exchange on which the
Common Stock is listed or admitted to trading as reported in The Wall Street
Journal;

 

(c)                                  if such Common Stock is publicly traded but
is not quoted on the Nasdaq National Market nor listed or admitted to trading on
a national securities exchange, the average of the closing bid and asked prices
on the date of determination as reported in The Wall Street Journal;

 

(d)                                 in the case of an Award made on the
Effective Date, the price per share at which shares of the Company’s Common
Stock are initially offered for sale to the public by the Company’s underwriters
in the initial public offering of the Company’s Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act; or

 

(e)                                  if none of the foregoing is applicable, by
the Committee in good faith.

 

“Family Member” includes any of the following:

 

(a)                                  child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law of the Participant, including any such person with such
relationship to the Participant by adoption;

 

(b)                                 any person (other than a tenant or employee)
sharing the Participant’s household;

 

(c)                                  a trust in which the persons in (a) and
(b) have more than fifty percent of the beneficial interest;

 

(d)                                 a foundation in which the persons in (a) and
(b) or the Participant control the management of assets; or

 

(e)                                  any other entity in which the persons in
(a) and (b) or the Participant own more than fifty percent of the voting
interest.

 

“Insider” means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the
Exchange Act.

 

“Option” means an award of an option to purchase Shares pursuant to Section 5.

 

“Outside Director” means a member of the Board who is not an employee of the
Company or any Parent, Subsidiary or Affiliate of the Company.

 

“Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such 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.

 

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“Participant” means a person who receives an Award under this Plan.

 

“Performance Factors” means the factors selected by the Committee from among the
following measures to determine whether the performance goals established by the
Committee and applicable to Awards have been satisfied:

 

(a)                                  Net revenue and/or net revenue growth;

 

(b)                                 Earnings before income taxes and
amortization and/or earnings before income taxes and amortization growth;

 

(c)                                  Operating income and/or operating income
growth;

 

(d)                                 Net income and/or net income growth;

 

(e)                                  Earnings per share and/or earnings per
share growth;

 

(f)                                    Total stockholder return and/or total
stockholder return growth;

 

(g)                                 Return on equity;

 

(h)                                 Operating cash flow return on income;

 

(i)                                     Adjusted operating cash flow return on
income;

 

(j)                                     Economic value added; and

 

(k)                                  Individual confidential business
objectives.

 

“Performance Period” means the period of service determined by the Committee,
not to exceed five years, during which years of service or performance is to be
measured for Restricted Stock Awards or Stock Bonuses.

 

“Plan” means this Lexar Media, Inc. 2000 Equity Incentive Plan, as amended from
time to time.

 

“Restricted Stock Award” means an award of Shares pursuant to Section 6.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” means shares of the Company’s Common Stock reserved for issuance under
this Plan, as adjusted pursuant to Sections 2 and 18, and any successor
security.

 

“Stock Bonus” means an award of Shares, or cash in lieu of Shares, pursuant to
Section 7.

 

“Subsidiary” means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

 

“Termination” or “Terminated” means, for purposes of this Plan with respect to a
Participant, that the Participant has for any reason ceased to provide services
as an employee, officer, director, consultant, independent contractor, or
advisor to the Company or a Parent or Subsidiary of the Company. An employee
will not be deemed to have ceased to provide services in the case of (i) sick
leave, (ii) military leave, or (iii) any other leave of absence approved by the
Committee, provided, that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute or unless provided otherwise pursuant to formal policy adopted from
time to time by the Company and issued and promulgated to employees in writing.
In the case of any employee on an approved leave of absence, the Committee may
make such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Subsidiary as it may deem appropriate,
except that in no event may an Option be exercised after the expiration of the
term set forth in the Option agreement. The Committee will have sole discretion
to determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the
“Termination Date”).

 

“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement.

 

“Vested Shares” means “Vested Shares” as defined in the Award Agreement.

 

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