<PAGE>

                                                                   EXHIBIT 10.18

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk to denote where omissions have been made. The
confidential material has been filed separately with the Commission.

                      LEXAR TECHNOLOGY LICENSE AGREEMENT

     This Lexar Technology License Agreement ("Agreement") is made and entered
into as of this 21st day of March, 2000 ("Effective Date") between Lexar Media,
Inc., a California corporation ("LEXAR") and Sony Corporation, a corporation of
Japan ("SONY").

                                    RECITALS

     A.   LEXAR is the owner and user of certain proprietary technology related
to flash memory controllers, flash memory and system architecture.

     B.   SONY designs, manufactures, markets and sells certain flash memory
products and associated devices under the trademark "Memory Stick".

     C.   SONY desires to receive from LEXAR a non-exclusive license to LEXAR's
proprietary technology to develop, manufacture, market and sell Memory Stick and
Improved Memory Stick products, Host Devices and components thereof on the terms
and conditions of this Agreement.

     NOW, THEREFORE, SONY and LEXAR hereby agree as follows:

     1.   DEFINITIONS

          1.1  "Affiliate" shall mean, with respect to any person or entity, any
                ---------
other person or entity which controls, is controlled by or is under common
control with such person or entity.  For purposes of this Agreement, a person or
entity shall be in "control" of an entity if it owns or controls at least fifty
percent (50%) of the equity securities of the subject entity entitled to vote in
the election of directors (or, in the case of an entity that is not a
corporation, for the election of the corresponding managing authority), or
otherwise has the power to control the management and policies of such other
entity.

          1.2  "Have Manufactured" means only that the licensee may contract
                -----------------
with a third party or parties to manufacture the licensed product for and on
behalf of the licensee.

          1.3  "Host Device" means any electronics product that utilizes a
                -----------
Memory Stick or an Improved Memory Stick for the purposes of data storage,
recording or retrieval.

          1.4  "Improved Memory Stick" means the Memory Stick improved by LEXAR
                ---------------------
or jointly by LEXAR and SONY which conforms to the Memory Stick Specifications.

          1.5  "Improved Memory Stick Interface" means the portion of the
                -------------------------------
Improved Memory Stick relating to the interface between flash memory and the
flash memory controller.

          1.6  "Improvements Technology" means any improvements or enhancements
                -----------------------
to the Pertinent LEXAR Technology that are conceived or developed solely by SONY
(except for implementation of MagicGate Memory Stick) and that would, absent the
license granted hereunder, infringe or constitute a misappropriation of the
LEXAR Intellectual Property Rights.

                                       1
<PAGE>

          1.7  "Intellectual Property Rights" means with respect to a party, all
                ----------------------------
rights of such party in and to (i) all patent applications and patents having a
priority date prior to * and (ii) all mask work rights, copyrights, moral
rights, trade secret rights and other know-how rights regarding subject matter
generated prior to *.

          1.8  "LEXAR Intellectual Property Rights" means the Intellectual
                ----------------------------------
Property Rights in and to the Pertinent LEXAR Technology, which Intellectual
Property Rights are owned by or licensed to LEXAR (with the right to grant
sublicenses without payment of compensation to any third party other than
employees of LEXAR).

          1.9  "Licensed Memory Stick" means a Memory Stick that incorporates or
                ---------------------
uses LEXAR Intellectual Property Rights.

          1.10 "MagicGate Memory Stick" means SONY's Memory Stick flash memory
                ----------------------
product with a copy protection feature.

          1.11 "Memory Stick" means a flash memory data storage device which
                ------------
meets the Memory Stick Specifications.  Memory Stick shall include, without
limitation, the Improved Memory Stick and the MagicGate Memory Stick.

          1.12 "Memory Stick Specifications" shall mean the specifications for
                ---------------------------
a certain flash memory data storage system, the outline of which is set forth in
Exhibit A (as such specifications are from time to time modified or replaced by
SONY in its sole discretion).

          1.13 "Net Selling Price" shall mean the gross sales price of a
                -----------------
product invoiced by SONY or its Affiliates to customers that are not Affiliates
for the sale or other distribution of a Licensed Memory Stick, less (a) credits,
allowances, discounts and rebates to, and chargebacks from the account of, such
customers for damaged and returned product; (b) freight and insurance costs
incurred in transporting such product to such customers; (c) cash, quantity and
trade discounts, rebates and other price reductions for such product given to
such customers under price reduction programs that are consistent with industry
practices and price reductions given for similar products by SONY or its
Affiliates; (d) sales, use, value-added and other direct taxes incurred on the
sale of such product to such customers; and (e) customs duties, surcharges and
other governmental charges incurred in exporting or importing such product to
such customers.  In the case of Licensed Memory Sticks distributed with other
products during any quarter, the Net Selling Price of such Licensed Memory
Sticks shall be the average Net Selling Price of the same or comparable model of
Licensed Memory Sticks sold separately to unaffiliated third parties in arm's
length transactions during such calendar quarter.

          1.14 "Pertinent LEXAR Technology" means the *.
                --------------------------

          1.15 "Royalty Term" shall mean * years from the Effective Date.
                ------------

          1.16 "SONY Intellectual Property Rights" means the Intellectual
                ---------------------------------
Property Rights owned by or licensed to SONY (with the right to grant
sublicenses without payment of compensation to any third party other than
employees of SONY) in and to the Improvements Technology.

* Material has been omitted and filed separately with the Commission.
<PAGE>

     2.   GRANT OF LICENSE RIGHTS

          2.1  LEXAR License Grants.
               --------------------

               (a)  Subject to SONY's compliance with the terms and conditions
of this Agreement and subject to Section 12.3 below, LEXAR hereby grants and
agrees to grant to SONY a * under all LEXAR Intellectual Property Rights to
manufacture, Have Manufactured, use, offer for sale, import and sell Licensed
Memory Sticks.

               (b)  Subject to SONY's compliance with the terms and conditions
of this Agreement and subject to Section 12.3 below, LEXAR hereby grants and
agrees to grant to SONY a * under all LEXAR Intellectual Property Rights to
manufacture, Have Manufactured, use, offer for sale, import and sell Host
Devices and any components of Licensed Memory Sticks or Host Devices, provided
that Sony shall only be licensed under LEXAR Intellectual Property * Licensed
Memory Stick. Further, the license to offer to sell and sell Improved Memory
Stick controllers apart from the Improved Memory Sticks is limited to sales and
offers to sell such controllers to parties that have a license from LEXAR to
manufacture Improved Memory Sticks from such controllers; provided, however,
SONY shall be permitted to offer for sell and sell controllers any party as
repair or replacement parts for Licensed Memory Stick.

          2.2  Sublicense.  SONY shall be permitted to sublicense the rights
               ----------
granted in Section 2.1 only to:

               (a)  wholly-owned subsidiaries of SONY; provided that SONY shall
promptly notify LEXAR in writing of sublicenses granted to subsidiaries and SONY
shall acknowledge responsibility for such subsidiary's compliance with the terms
of this Lexar Technology License Agreement; and

               (b)  any parties for the manufacture, use, offer for sale, import
and sale of Host Devices and any components of Host Devices, provided that such
third parties shall only be sublicensed under LEXAR Intellectual Property Rights
for that portion of a Host Device or of any component of a Host Device that
communicates directly with a Licensed Memory Stick.

               SONY's sublicense rights under this Section 2.2(b) shall be
contingent upon SONY entering into a written agreement with each sublicensee in
the form of Exhibit C. SONY will provide LEXAR with a copy of each such
            ---------
sublicense agreement immediately after execution thereof. Nothing in this
Agreement shall be construed as permitting SONY to reveal LEXAR Confidential
Information, as such term is defined in Section 6, to sublicensees under this
Section 2.2(b). In the event that SONY determines that the Memory Stick
Specification contains LEXAR Confidential Information, LEXAR and SONY agree to
negotiate in good faith additional specific provisions to the form sublicensee
agreement to sufficiently protect LEXAR's Confidential Information. LEXAR and
SONY acknowledge that in the course of these negotiations, the parties' mutual
interest in making the Host Device manufacturing license available as broadly as
possible should be weighed against the importance of protecting LEXAR's
Confidential Information.

               Sublicensees under this Section 2.2 shall not have the right to
sublicense the rights granted under this agreement.

* Material has been omitted and filed separately with the Commission.
<PAGE>

          2.3  *.
               -

          2.4  LEXAR Acknowledgement.  SONY shall prominently mark the packaging
               ---------------------
of all Licensed Memory Sticks sold or distributed by SONY or its Affiliates,
with an acknowledgement that such Licensed Memory Sticks incorporate Pertinent
LEXAR Technology.  SONY shall duplicate and apply LEXAR's patent and other
proprietary rights notices, which LEXAR shall provide from time to time, to all
Licensed Memory Sticks, and related packaging and documentation, sold or
distributed by SONY and its Affiliates, to the same extent that LEXAR marks its
own products and documentation.

          2.5  Restrictions.
               ------------

               (a)  Except as expressly provided in Sections 2.1 and 2.2 above,
SONY will have no right or license to use, sublicense, transfer or otherwise
convey to any third party the LEXAR Intellectual Property Rights, or any
enhancement, improvement or derivative thereof.

               (b)  Except as otherwise provided in Section 2.4 above, SONY
shall have no right to use the LEXAR tradename or LEXAR trademarks.

               (c)  SONY's exercise of its "Have Manufactured" rights under
Section 2.1 are contingent upon SONY entering into a written agreement with each
manufacturer that protects the Confidential Information of LEXAR to the same
extent as provided for in this Agreement.

               (d)  SONY shall not permit any of its Host Device sublicensees or
Contractors (as defined in Section 8) to, reverse engineer any of the Pertinent
LEXAR Technology.

          2.6  Host Device License.  Upon the request of LEXAR, SONY shall grant
               -------------------
to LEXAR a * license to manufacture Host Devices on terms and conditions
mutually agreeable to LEXAR and SONY and substantially in the form of SONY's
standard form of Host Device license agreement, a copy of which is attached as
Exhibit D.
---------

          2.7  Reservation.  No license or right is granted, by implication or
               -----------
otherwise, to SONY hereunder under any patent rights, Confidential Information
or other intellectual property rights now or hereafter owned or controlled by
LEXAR, except for the licenses and rights expressly granted in this Agreement.
No license is granted to SONY with respect to other  LEXAR products or other
technologies.

     3.   TECHNOLOGY TRANSFER

          3.1  Delivery of Pertinent LEXAR Technology.  On or before *, upon the
               --------------------------------------
request of SONY, LEXAR shall deliver to SONY, no more often than quarterly, all
Pertinent Lexar Technology (if any) in the form of *.  Information contained in
such * shall be held strictly confidential on a "bona fide need to know" basis
under Section 6 below.

* Material has been omitted and filed separately with the Commission.
<PAGE>

          3.2   Delivery of Improvements Technology.  On or before *, upon the
                -----------------------------------
request of LEXAR, SONY shall deliver to LEXAR, no more often than quarterly, all
Improvements Technology (if any).

          4.    PAYMENTS, PAYMENT TERMS AND OTHER CONSIDERATION

          4.1   License Fee.  In partial consideration for the licenses granted
                -----------
in Section 2 above, SONY shall pay LEXAR *, due ten (10) calendar days after the
Effective Date.

          4.2   Royalties.  In addition, during the Royalty Term for each
                ---------
Licensed Memory Stick sold or distributed by SONY or its sublicensees, SONY
shall pay LEXAR a royalty equal to *.  Except as set forth in Section 4.4 below,
such royalties shall not be subject to a right of setoff against any other
amounts due and payable under this Agreement or any other agreement between the
parties.  Notwithstanding the foregoing, no royalty shall accrue on any Licensed
Memory Stick incorporating a controller supplied by LEXAR.

          4.3   Flash Manufacturers.  *, SONY shall use commercially reasonable
                -------------------
efforts to assist LEXAR in *.  LEXAR agrees *.  SONY agrees * flash manufacturer
from *.  In addition until *, SONY and LEXAR will use commercially reasonable
efforts to *.

          4.4   LEXAR Technology Limitations.
                ----------------------------

                (a)  LEXAR shall not license any third party under the LEXAR
Intellectual Property Rights to manufacture or Have Manufactured Licensed Memory
Sticks, unless such third party has also secured a license from SONY to
manufacture Memory Sticks.

                (b)  If LEXAR grants any third party a license under the LEXAR
Intellectual Property Rights, such third party shall not have the right to offer
for sale, sell or import Improved Memory Stick controllers to any party other
than LEXAR or SONY.

                (c)  If LEXAR grants to any third party a license under the
LEXAR Intellectual Property Rights for an *.

                (d)  If LEXAR grants to any third party a license under the
Pertinent LEXAR Technology, Improved Memory Stick Technology or LEXAR
Intellectual Property Rights *.

                (e)  LEXAR * cash consideration, and of the fair market value of
any non-cash consideration, *.

          4.5   Supply Agreement.  In the event that SONY desires to purchase
                ----------------
Improved Memory Stick controllers from LEXAR, LEXAR agrees to negotiate in good
faith a supply agreement under which LEXAR would supply Improved Memory Stick
controllers to SONY.  The prices for controllers will be approximately (subject
to change due to changes in costs):

          Prices of the Improved Memory Stick controller sold by LEXAR:

          *

* Material has been omitted and filed separately with the Commission.

<PAGE>

          In the event that SONY desires to purchase Improved Memory Stick
controllers directly from LEXAR's Contractors, LEXAR shall allow such
Contractors to sell Improved Memory Stick controllers directly to SONY;
provided, however, the parties acknowledge that if LEXAR support (if any) solely
for such controller purchases is required, the price for such support shall be
determined at the appropriate time.  *.

          4.6  Payment Terms.  Within sixty (60) calendar days after the end of
               -------------
each calendar quarter, each party shall pay to the other party any royalties due
and payable hereunder for such quarter.  On any overdue payments, the overdue
party shall pay a finance charge upon the unpaid balance of the lesser of one
and a half percent (1.5%) per month and the maximum amount permitted by law.
All amounts specified in this Agreement shall be paid in U.S. dollars and shall
not be subject to setoff against any other amounts due and payable under this
Agreement or any other agreement.

          4.7  Taxes.  The party owing such royalty (the "Payor") will pay all
               -----
sales, use and other taxes imposed by any applicable laws and regulations as a
result of the payments made under this Agreement, other than taxes based upon
the Payee's net income.  The Payor shall be entitled to deduct the amount of any
withholding taxes, value-added taxes or other taxes, levies or charges with
respect to such amounts, other than United States taxes, payable by the Payor,
or any taxes required to be withheld by the Payor, to the extent the Payor pays
to the appropriate governmental authority on behalf of the other party (the
"Payee") such taxes, levies or charges. The Payor shall use reasonable efforts
to minimize any such taxes, levies or charges required to be withheld on behalf
of the Payee by the Payor. The Payor promptly shall deliver to the Payee proof
of payment of all such taxes, levies and other charges, together with copies of
all communications from or with such governmental authority with respect
thereto.

          4.8  DSC Work Group.  *.
               --------------

     5.   RECORDS AND AUDIT REQUIREMENTS

          5.1  Records.  For a period of three (3) years after each royalty or
               -------
other payment is made under this Agreement, each party agrees to make and
maintain such books, records and accounts as are reasonably necessary to verify
such royalty and other payments.

          5.2  Reports.  Within sixty (60) calendar days after the end of each
               -------
calendar quarter, until all royalties and other payments payable hereunder shall
have been reported and paid, the Payor shall furnish to the Payee a statement
specifying the royalties owed for such quarter.  If no royalties are due, that
fact shall be shown on such statement.

          5.3  Audit.  Upon at least thirty (30) calendar days  prior written
               -----
notice to the Payor, no more than once a year, the Payee shall have the right,
at its own cost and expense, to authorize a certified public accounting firm of
internationally recognized standing selected by the Payee and approved by the
Payor, which approval will not be unreasonably withheld, to audit the Payor's
books, records, and accounts for the sole purpose of verifying royalties and
other payments reported under Section 5.2.  The accounting firm shall disclose
to the Payee only whether the reports are correct or not and the specific
details concerning any discrepancies.  No other information shall be shared.  If
such accounting firm concludes that additional amounts were

* Material has been omitted and filed separately with the Commission.
<PAGE>

owed during the audited period, the Payor shall pay such additional amounts
within thirty (30) calendar days of the date the Payee delivers to the Payor
such accounting firm's written report so concluding. The fees charged by such
accounting firm shall be paid by the Payee; provided, however, if the audit
discloses that the royalties payable by the Payor for such period are more than
one hundred five percent (105%) of the amounts actually paid for such period,
then the Payor shall pay the reasonable fees and expenses charged by such
accounting firm.

     6.   CONFIDENTIAL INFORMATION

          6.1  Definition of Confidential Information.  LEXAR and SONY
               --------------------------------------
acknowledge that, in the course of performing their respective obligations
hereunder, each may obtain information relating to the other and the other's
products that is of a confidential and proprietary nature to such other party.
"Confidential Information" means confidential or proprietary information of
either party which is (i) designated with the legend "Confidential" or
comparable legend in case of disclosure thereof in written, graphic, machine
readable or other tangible form or (ii) designated "Confidential" at the
disclosure thereof in other form and within thirty (30) calendar days  after
such disclosure set forth in writing designated "Confidential" and forwarded to
the receiving party.  Confidential Information further includes without
limitation the existence and terms of this Agreement unless otherwise agreed in
writing.

          6.2  Exclusions.  Confidential Information does not include
               ----------
information which (i) is or becomes public knowledge or is received by the other
party without the fault or action of the other party or any breach of any
confidentiality obligation; (ii) the other party can document was independently
developed by it without use or access to the Confidential Information; or (iii)
the other party can document was previously known to it prior to receipt of the
Confidential Information.

          6.3  Obligation.  Each of SONY and LEXAR agrees that, for a period of
               ----------
ten (10) years after receipt of such Confidential Information, it will (i) use
the other party's Confidential Information only in connection with fulfilling
its rights and obligations under this Agreement; (ii) hold the other party's
Confidential Information in strict confidence and exercise due care with respect
to its handling and protection, consistent with its own policies concerning
protection of its own Confidential Information of like importance but in no
instance less than reasonable care, such due care including without limitation
requiring its employees to execute non-disclosure agreements which provide
protection of the other party's Confidential Information which is at least as
protective as the terms and conditions of this Agreement; (iii) not disclose,
divulge or publish the other party's Confidential Information except to such of
its responsible directors, employees and consultants and legal and financial
advisors who have a bona fide need to know to the extent necessary to fulfill
such party's obligations under this Agreement or except to the extent such
Confidential Information is required to be disclosed pursuant to applicable law,
regulation or court order provided the other party uses reasonable efforts to
give the party owning the Confidential Information sufficient notice of such
required disclosure to allow the party owning the Confidential Information
reasonable opportunity to object to and to take legal action to prevent such
disclosure (or to request confidential treatment thereof); (iv) instruct all
such employees not to disclose the other party's Confidential Information to
third parties, without the prior written permission of the other party.  SONY
acknowledges and agrees that the "bona fide need to know" standard set forth in
the foregoing subsection (iii) above as applied to dissemination of LEXAR
<PAGE>

Technology requires that authorized SONY employees must have actual need to use
the LEXAR Technology to design or develop a specific Licensed Memory Stick. SONY
further acknowledges and agrees that theoretical analysis and investigation of
(a) the features and functionality of the LEXAR Technology or (b) potential
application of the LEXAR Technology for an unidentified project will not satisfy
the "bona fide need to know" standard.  Each party may disclose Confidential
Information of the other party to its legal and financial advisors, as necessary
to obtain tax, legal and accounting advice.

     7.   INTELLECTUAL PROPERTY RIGHTS

          7.1  LEXAR Technology.  All right, title, and interest in and to the
               ----------------
Pertinent LEXAR Technology and all LEXAR Intellectual Property Rights are the
sole and exclusive property of LEXAR.

          7.2  SONY Technology.  All right, title, and interest in and to any of
               ---------------
the Improvements Technology or SONY Intellectual Property Rights (exclusive of
the underlying Pertinent LEXAR Technology and LEXAR Intellectual Property
Rights) are the sole and exclusive property of SONY.

     8.   USE OF CONTRACTORS

     Each party may retain third parties ("Contractors") to furnish services to
it in connection with the performance of this Agreement and permit such
Contractors to have access to the other party's Confidential Information, but
only to the extent and insofar as reasonably required in connection with such
party's performance under this Agreement; provided that all such Contractors
shall be required to execute a written agreement sufficient to secure compliance
by the Contractors with the contracting party's obligations of confidentiality
concerning Confidential Information set forth in this Agreement.

     9.   WARRANTY

          9.1  Disclaimer of Warranty.  PERTINENT LEXAR TECHNOLOGY, LEXAR
               ----------------------
TECHNOLOGY DELIVERABLES AND LEXAR INTELLECTUAL PROPERTY RIGHTS ARE PROVIDED "AS-
IS".  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LEXAR MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NONINFRINGEMENT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
LEXAR DOES NOT WARRANT THAT THE LEXAR TECHNOLOGY WILL OPERATE WITHIN LICENSED
MEMORY STICKS OR HOST DEVICES OR WILL BE COMPATIBLE WITH LICENSED MEMORY STICKS
OR HOST DEVICES.

     10.  TERM AND TERMINATION

          10.1  Term.  This Agreement will commence on the Effective Date and
                ----
continue indefinitely, unless sooner terminated as provided in this Section 10.

          10.2  Termination due to Material Breach.  If SONY materially breaches
                ----------------------------------
any
<PAGE>

term or condition of this Agreement and fails to cure that breach within thirty
(30) calendar days after receiving written notice of the breach, LEXAR shall
have the right to terminate this Agreement at any time after the end of such
thirty (30) calendar day period.

          10.3  Termination upon Voluntary Bankruptcy.  If SONY (a) seeks the
                -------------------------------------
liquidation, reorganization, dissolution or winding up of itself (other than
dissolution or winding up for the purposes of reconstruction or amalgamation) or
the composition or readjustment of all or substantially all of its debts, (b)
applies for or consents to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or substantially
all of its assets, (c) makes a general assignment for the benefit of its
creditors, (d) commences a voluntary case under the bankruptcy code, or (e)
files a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
readjustment of debts, then LEXAR shall have the right to immediately terminate
this Agreement upon written notice to SONY.

          10.4  Termination upon Involuntary Bankruptcy.  If a proceeding or
                ---------------------------------------
case is commenced without the application or consent of SONY and such proceeding
or case continues undismissed, or an order, judgment or decree approving or
ordering any of the following is entered and continues unstayed in effect, for a
period of ninety (90) calendar days  from and after the date service of process
is effected upon such party, seeking (a) its liquidation, reorganization,
dissolution or winding up, or the composition or readjustment of all or
substantially all of its debts, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of itself or of all or substantially all of
its assets, or (c) similar relief under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or readjustment of debts,
then LEXAR shall have the right to immediately terminate this Agreement any time
after the end of such ninety (90) calendar day period.

          10.5  Obligations Upon Termination.  Upon any termination of this
                ----------------------------
Agreement: (i) each party shall promptly pay the other party any unpaid amount
payable under this agreement ; and (ii) within thirty (30) days after the
termination and at the request of the other party, LEXAR and SONY shall return
or destroy all copies of the Confidential Information of the other party and
shall have an officer certify in writing that the party has complied with this
obligation, provided, however, that each party shall have the right to retain a
reasonable number of copies of the Confidential Information for purposes of
verifying its legal rights and obligations hereunder and for the support and
maintenance of Licensed Memory Sticks with respect to which all applicable
royalties have been paid.

          10.6  Survival of Obligations. The following provisions shall survive
                -----------------------
termination or expiration of this Agreement:  Sections 2.3, 5, 6, 8, 9, 10.5,
10.6 and 11.

     11.  LIMITATION OF LIABILITY

          11.1  General Limitation of Damages.  IN NO EVENT SHALL EITHER PARTY
                -----------------------------
BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, LOSS OF USE,
DATA OR PROFITS, INTERRUPTION OF BUSINESS OR ANY SPECIAL, INCIDENTAL, INDIRECT,
EXEMPLARY, OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, HOWEVER CAUSED,
<PAGE>

ON ANY THEORY OF LIABILITY, WHETHER IN AN ACTION FOR CONTRACT, STRICT LIABILITY,
TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, AND WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

          11.2  Severability.  EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH
                ------------
PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTY OR EXCLUSION OF
DAMAGES IS INTENDED BY THE PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER
SUCH PROVISION.  FURTHER, IN THE EVENT THAT ANY REMEDY HEREUNDER IS DETERMINED
TO HAVE FAILED OF ITS ESSENTIAL PURPOSE, ALL LIMITATIONS OF LIABILITY AND
EXCLUSIONS OF DAMAGES SHALL REMAIN IN EFFECT.

     12.  GENERAL

          12.1  Governing Law. This Agreement shall be governed by and construed
                -------------
in accordance with the laws of Japan without reference to the conflicts of law
principles thereof.

          12.2  Injunctive Relief.  Each of the parties acknowledges that
                -----------------
unauthorized disclosure or use of the other party's Confidential Information or
infringement or misappropriation of the other party's intellectual property
rights could cause irreparable harm and significant injury that would be
difficult to ascertain and may not be compensable by damages alone.
Accordingly, the parties agree that, in addition to any and all legal remedies,
each party shall be entitled to seek specific performance, injunction or other
appropriate equitable relief for claims regarding intellectual property rights
or Confidential Information.

          12.3  Assignment.  Neither party may assign or transfer this Agreement
                ----------
without the prior written consent of the other, except that each party may
assign or transfer this Agreement, including all of its rights and obligations
under this Agreement, in the course of a merger, reorganization or acquisition
of substantially all of such party's assets without consent of the other party.
Any assignment permitted hereunder will be subject to the written assent of the
assignee to all of the terms and provisions of this Agreement.  Any attempted
assignment in derogation of this section will be null and void.

          12.4  Modification and Waiver.  No modification to this Agreement, nor
                -----------------------
any waiver of any rights, will be effective unless assented to in writing by the
party to be charged, and the waiver of any breach or default shall not
constitute a waiver of any other right hereunder or any subsequent breach or
default.

          12.5  Notices.  Any required or permitted notices hereunder must be
                -------
given in writing at the address of each party set forth below, or to such other
address as either party may substitute by written notice to the other in the
manner contemplated herein.  Notices will be effective upon receipt.

          To LEXAR:                           To SONY:
          Lexar Media, Inc.                   Sony Corporation
          47421 Bayside Parkway               1-11-1 Osaki Shinigawa-ku
          Fremont, CA 94538                   Tokyo, 141-0032 Japan
          Attention:  John Reimer             Attention: Masaharu Yanaga
<PAGE>

          Phone:  1-510-413-1228              Phone:  81-3-5435-3602
          Fax:  1-510-440-3499                Fax:  81-3-5435-3802


          Copy to:                            Copy to:
          Fenwick & West LLP                  Intellectual Property Department
          Two Palo Alto Square                Sony Corporation
          Palo Alto, CA 94306                 6-7-35 Kitashinigawa, Shinigawa-ku
          Attn.:  Larry Granatelli            Tokyo 141-0001, Japan
          Phone: 1-650-494-0600               Attn.:  General Manager
          Fax:  1-650-494-1417                Phone: 81-3-5448-2615
                                              Fax:  81-3-5448-7835

          12.6  Compliance with Law, including U.S. Export Laws.  Each party
                -----------------------------------------------
agrees to comply with all applicable international, national, state, regional
and local laws and regulations in performing its duties hereunder and in any of
its dealings with respect to the technical information disclosed hereunder or
direct products thereof.  Neither party shall export or re-export, directly or
indirectly, any technical information disclosed hereunder or direct products
thereof to any destination prohibited or restricted by the export control laws
and regulations of the United States, including the U.S. Export Administration
Regulations, without the prior authorization from the appropriate governmental
authorities.

          12.7  Force Majeure.  Neither party shall be responsible for delay or
                -------------
failure in performance to the extent caused by any government act, law,
regulation, order or decree, by communication line or power failures beyond its
control, or by fire, flood or other natural disasters or by other causes beyond
its reasonable control, nor shall any such delay or failure be considered to be
a breach of this Agreement, provided that such party shall use commercially
reasonable efforts to resume performance as soon as reasonably practicable
thereafter.

          12.8  Headings.  The headings of the Sections of this Agreement are
                --------
for convenience only and will not be of any effect in construing the meanings of
the Sections.

          12.9  Counterparts.  This Agreement may be executed in multiple
                ------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

          12.10 Independent Contractors.  In performing their respective duties
                -----------------------
under this Agreement, each of the parties will be operating as an independent
contractor.  Nothing contained herein will in any way constitute any
association, partnership, or joint venture between the parties hereto, or be
construed to evidence the intention of the parties to establish any such
relationship.  Neither party will have the power to bind the other party or
incur obligations on the other party's behalf without the other party's prior
written consent.

          12.11 Severability.  In the event that it is determined by a court of
                ------------
competent jurisdiction that any provision of this Agreement is invalid, illegal,
or otherwise unenforceable, such provision will be enforced as nearly as
possible in accordance with the stated intention of the parties, while the
remainder of this Agreement will remain in full force and effect and bind the
parties according to its terms.  To the extent any provision cannot be enforced
in accordance with
<PAGE>

the stated intentions of the parties, such provisions will be deemed not to be a
part of this Agreement.

          12.12  Entire Agreement.  This Agreement and the exhibits attached
                 ----------------
hereto constitute the entire and exclusive agreement between the parties hereto
with respect to the subject matter hereof and supersede any prior
representations, understandings and agreements between the parties with respect
to such subject matter.

     IN WITNESS WHEREOF, LEXAR and SONY have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date.

Lexar Media, Inc.                          Sony Corporation:

By: /s/ John Reimer                         By: /s/ Masaharu Yanaga
   -----------------------------               ---------------------------

Title: PRESIDENT & CEO                      Title: Senior General Manager,
       -------------------------                  ------------------------
                                                  M.S. Division


<PAGE>

CONFIDENTIAL TREATMENT REQUESTED


                                   Exhibits

     Exhibit A:    Memory Stick Specifications

     Exhibit B:    Exceptions to Pertinent LEXAR Technology

     Exhibit C:    Sublicense Agreement

     Exhibit D:    Host Device License
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED


                                   EXHIBIT A

                          MEMORY STICK SPECIFICATIONS
<PAGE>

    Exhibit A: Outlines of the Memory Stick Standard Specifications ver.1.2

                                   Contents

1.   Introduction........................................................   1-1
     1.1.   Overview.....................................................   1-1
     1.2.   Scope........................................................   1-1
     1.3.   Architecture.................................................   1-2
     1.4.   References...................................................   1-3
     1.5.   Definitions..................................................   1-3

2.   Physical Specifications.............................................   2-1
     2.1.   Outline......................................................   2-1
     2.2.   Connector....................................................   2-2
     2.3.   Option.......................................................   2-6

3.   Reliability Test Standards..........................................   3-1
     3.1.   Test Condition...............................................   3-1
     3.2.   Test and Performance Standards...............................   3-1

4.   Electrical Specifications...........................................   4-1
     4.1.   Overview.....................................................   4-1
     4.2.   Pin Assignment...............................................   4-3
     4.3.   Signal Description...........................................   4-4
     4.4.   Electrical Characteristics...................................   4-5
     4.5.   Insertion Detect.............................................   4-10
     4.6.   Termination..................................................   4-11
     4.7.   Power Supply ON/OFF Procedure................................   4-12
     4.8.   Attribute Information........................................   4-13
     4.9.   Write-protect Switch.........................................   4-14

5.   Serial Interface....................................................   5-1
     5.1.   System Configuration.........................................   5-1
     5.2.   Serial I/F Overview..........................................   5-3
     5.3.   Protocol.....................................................   5-5
     5.4.   Protocol Error...............................................   5-7
     5.5.   Signal Timing................................................   5-9
     5.6.   Bus State....................................................   5-11
     5.7.   Transfer Protocol Command (TPC)..............................   5-18
     5.8.   Registers....................................................   5-22
     5.9.   Acceptable TPC...............................................   5-35
<PAGE>

6.   Command Control.....................................................   6-1
     6.1.   Command Overview.............................................   6-1
     6.2.   Flash CMD....................................................   6-5
     6.3.   Function CMD.................................................   6-17
     6.4.   Access to Attribute ROM......................................   6-19
     6.5.   Acceptable CMD...............................................   6-20
     6.6.   Command Control..............................................   6-21

7.   Physical Format.....................................................   7-1
     7.1.   Memory Stick Capacity........................................   7-1
     7.2.   Physical Structure...........................................   7-3
     7.3.   ExtraDataArea................................................   7-4
     7.4.   Boot Block...................................................   7-7
     7.5.   User Block...................................................   7-16
     7.6.   Information Block............................................   7-16
     7.7.   Logical/Physical Translation Table Block.....................   7-17
     7.8.   Factory Default..............................................   7-19
     7.9.   Example of Boot Block Retrieval..............................   7-20
     7.10.  Example of Sector Data Updating..............................   7-21
     7.11.  Example of Sector Data Readout...............................   7-22
     7.12.  Example of Logical/Physical Translation Table Generation.....   7-23

8.   Logical Format......................................................   8-1
     8.1.   Overview.....................................................   8-1
     8.2.   Parameter Setting by Capacity................................   8-5
     8.3.   Digital Read Protect Bit.....................................   8-23
     8.4.   Special File.................................................   8-24
     8.5.   Relation between Logical Sector and Logical Address..........   8-25
     8.6.   Notes on Format Processing...................................   8-26

9.   Directory Regulation................................................   9-1
     9.1.   Overview.....................................................   9-1
     9.2.   Directory Structure..........................................   9-2
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                                   EXHIBIT B

                    EXCEPTIONS TO PERTINENT LEXAR TECHNOLOGY

       *

* Material has been omitted and filed separately with the Commission.
<PAGE>

                                   EXHIBIT C

                              SUBLICENSE AGREEMENT
<PAGE>

                                   EXHIBIT C
                    (to Lexar Technology License Agreement)

                         FORM OF SUB-LICENSE AGREEMENT

     Any sub-license Agreement made and entered into between SONY and a sub-
licensee ("SUBLICENSEE"), as permitted under Section 2.2 (b) of the Agreement,
shall be entered into only with SUBLICENSEES that have also executed SONY's form
Memory Stick - Player/Recorder Agreement, shall not include any terms
inconsistent with the Agreement and shall include the following terms:

     1.   DEFINITIONS

          1.1  "Affiliate" shall mean, with respect to any person or entity, any
                ---------
other person or entity that controls, is controlled by or is under common
control with such person or entity.  For purposes of this Agreement, a person or
entity shall be in "control" of an entity if it owns or controls at least fifty
percent (50%) of the equity securities of the subject entity entitled to vote in
the election of directors (or, in the case of an entity that is not a
corporation, for the election of the corresponding managing authority), or
otherwise has the power to control the management and policies of such other
entity.

          1.2  "Have Manufactured" means only that the relevant entity may
                -----------------
contract with a third party or parties to manufacture the licensed product for
and on behalf of itself.

          1.3  "Host Device" means any electronics product that utilizes a
                -----------
Memory Stick or an Improved Memory Stick for the purposes of data storage,
recording or retrieval.

          1.4  "Improved Memory Stick" means the Memory Stick improved by LEXAR
                ---------------------
or jointly by LEXAR and SONY, which conforms to the Memory Stick Specifications.

          1.5  "Intellectual Property Rights" means all rights of SUBLICENSEE or
                ----------------------------
LEXAR in and to (i) all patent applications and patents having a priority date
prior to * and (ii) all mask work rights, copyrights, moral rights, trade secret
rights and other know-how rights regarding subject matter generated prior to *.

          1.6  "LEXAR Intellectual Property Rights" means the Intellectual
                ----------------------------------
Property Rights that LEXAR licensed to SONY in and to the Pertinent LEXAR
Technology, which Intellectual Property Rights are owned by or licensed to LEXAR
(with the right to grant sublicenses without payment of compensation to any
third party other than employees of LEXAR).

          1.7  "Licensed Memory Stick" means a Memory Stick that incorporates or
                ---------------------
uses LEXAR Intellectual Property Rights.

* Material has been omitted and filed separately with the Commission.
<PAGE>

          1.8  "MagicGate Memory Stick" means SONY's Memory Stick flash memory
                ----------------------
product with a copy protection feature.

          1.9  "Memory Stick" means a flash memory data storage device, which
                ------------
meets the Memory Stick Specifications.  Memory Stick shall include, without
limitation, the Improved Memory Stick and the MagicGate Memory Stick.

          1.10 "Memory Stick Specifications" means the specifications for a
                ---------------------------
certain flash memory data storage system, the outline of which is set forth in
an attached Exhibit (as such specifications are from time to time modified or
replaced by SONY in its sole discretion).

          1.11 "Pertinent LEXAR Technology" means *.
                --------------------------

     2.   GRANT OF LICENSE RIGHTS

          2.1  License Grants.  Subject to SUBLICENSEE's  and its Affiliate's
               --------------
compliance with the terms and conditions of this Agreement, SONY hereby grants
and agrees to grant to SUBLICENSEE and its Affiliates a worldwide, nonexclusive,
non-transferable, non-assignable license, under all LEXAR Intellectual Property
Rights, to manufacture, Have Manufactured, use, offer for sale, import and sell
Host Devices and any components of Host Devices, provided that SUBLICENSEE and
its Affiliates shall only be sublicensed under LEXAR Intellectual Property
Rights for that portion of a Host Device or of any component of a Host Device
that communicates directly with a Licensed Memory Stick.

          2.2  No Further Sublicensing.  SUBLICENSEE and its Affiliates shall
               -----------------------
have no right to and shall not further sublicense the rights granted in Section
2.1.

          2.3  Restrictions.
               ------------

               (a)  SUBLICENSEE and its Affiliates will have no right or license
to use, sublicense, transfer or otherwise convey to any third party the LEXAR
Intellectual Property Rights, or any enhancement, improvement or derivative
thereof.

               (b)  SUBLICENSEE and its Affiliates shall have no right to use
the LEXAR trade name or LEXAR trademarks.

               (c)  SUBLICENSEE and its Affiliates shall not, and shall not
permit any of its manufacturers to, reverse engineer any of the Pertinent LEXAR
Technology.

          2.4  SUBLICENSEE agrees to grant to LEXAR on reasonable and non-
discriminating conditions, a non-exclusive, non-transferable license to
manufacture and sell Licensed Products under any and all Licensee Patents (as
such terms are defined the Memory Stick - Player/Recorder Agreement).

* Material has been omitted and filed separately with the Commission.

<PAGE>

          2.5  Reservation.  No license or right is granted, by implication or
               -----------
otherwise, to any patent rights, Confidential Information or other intellectual
property rights now or hereafter owned or controlled by LEXAR, except for the
licenses and rights expressly granted in this Agreement.  No license is granted
to SUBLICENSEE or its Affiliates with respect to other LEXAR products or other
technologies.

     3.   INTELLECTUAL PROPERTY RIGHTS

          3.1  LEXAR Technology.  All right, title, and interest in and to the
               ----------------
Pertinent LEXAR Technology and all LEXAR Intellectual Property Rights are the
sole and exclusive property of LEXAR.

     4.   DISCLAIMER OF WARRANTY

          PERTINENT LEXAR TECHNOLOGY AND LEXAR INTELLECTUAL PROPERTY RIGHTS ARE
PROVIDED "AS-IS".  LEXAR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT.  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, LEXAR DOES NOT WARRANT THAT THE LEXAR
TECHNOLOGY WILL OPERATE WITHIN LICENSED MEMORY STICKS OR HOST DEVICES OR WILL BE
COMPATIBLE WITH LICENSED MEMORY STICKS OR HOST DEVICES.

     5.   TERM AND TERMINATION

          5.1  Survival of Obligations. The following provisions shall survive
               -----------------------
termination or expiration of this Agreement:  Sections 2.4, 4 and 5.
<PAGE>

                                   EXHIBIT D

                              HOST DEVICE LICENSE
<PAGE>

                        Memory Stick - Player/Recorder
                        ------------------------------
                               A G R E E M E N T
                               -----------------

Agreement made as of............................................. by and between
Sony Corporation, having an office at 6-7-35 Kitashinagawa, Shinagawa-ku, Tokyo
141-0001 Japan (hereinafter referred to as "Sony") and .........................
 ............... (hereinafter referred to as "Licensee").

WHEREAS, Sony has been engaged in the research and development of systems, which
record digitally encoded signals, such as still picture images, on IC recording
media and/or reproduce such signals, and has obtained valuable know-how and
experience thereby;

WHEREAS, Sony, as a result of such research and development efforts, has
presented a new data recording, storage and reproduction system under the name
"Memory Stick" (hereinafter referred to as "Memory Stick System");

WHEREAS, Licensee desires the right to manufacture and sell certain
players/recorders for Memory Stick System;

WHEREAS, Licensee has requested to be licensed by Sony under certain
intellectual property rights pertinent to Memory Stick System which Sony owns
and has requested Sony to disclose and make available certain technical
information on Memory Stick System; and

WHEREAS, Sony is willing to grant such license and to provide such information
on terms and conditions more specifically set forth hereunder;

NOW, THEREFORE, in mutual consideration of the premises and the faithful
performance of the mutual covenants hereinafter set forth, the parties hereto
have agreed as follows:


     Article I - Definitions


As used in this Agreement the following terms shall have the following meanings,
unless the context clearly requires otherwise:

1.01 Memory Stick Standard Specifications - the technical specifications which
are made by Sony and titled as "Memory Stick Standard Format Specifications ver.
1.2".  (The Memory Stick Standard Specifications shall include the updated
versions of them as represented by the change in the version number only at the
right side of the decimal point, such as "Memory Stick Standard Format
Specifications ver. 1.X", but shall not include major revision of them as
represented by the change of the first digit of the version number, such as
"Memory Stick Standard Format Specifications ver. X.1".)  Outlines of the
current Memory Stick Standard Specifications shall be described in Exhibit A.

<PAGE>

The Memory Stick Standard Specifications shall not include specifications for
application formats or copyright protection features which Sony is developing.

1.02 IC Recording Media - an IC recording media which conforms to the Memory
Stick Standard Specifications.

1.03 Licensed Product - any device which records data on an IC Recording Media
and/or retrieves data recorded on an IC Recording Media and which conforms to
the Memory Stick Standard Specifications.

1.04 Trademark - the trademark "Memory Stick" owned by Sony, of which logotype
shall be designated in Exhibit B.

1.05 Patent Rights - any patents and any applications therefor, which a party
owns or controls or may hereafter own or control during the term of this
Agreement and as to which and to the extent to which such party has the right to
grant licenses without payment of compensation to any third parties other than
employees of such party.

1.06 Associated Company - any corporation or other legal entity, in which Sony
or Licensee, as the case may be, now or hereafter controls, directly or
indirectly, more than fifty percent (50%) of the shares entitled to vote for the
election of directors or persons performing similar functions.

1.07 Licensed Patents - Patent Rights of Sony or any one of its Associated
Companies,  necessary to manufacture, use, sell and/or otherwise dispose of
products conforming to the Memory Stick Standard Specifications, including,
without limitation, Patent Rights listed in Exhibit C.

1.08 Licensee Patents - Patent Rights of Licensee or any one of its Associated
Companies  necessary to manufacture, use, sell and/or otherwise dispose of
products conforming to the Memory Stick Standard Specifications.


     Article II - Licenses


Subject to the terms and conditions of this Agreement:

2.01 During the term of this Agreement, Sony hereby grants to Licensee and its
Associated Companies *.

2.02 *.

2.03 Licensee agrees to grant to other third parties who shall have entered into
a license agreement with Sony or any of its Associated Companies concerning
Licensed Products and who shall have accepted a similar undertaking as contained
in this paragraph 2.03, on reasonable and
                                      ---

<PAGE>

non-discriminating conditions, a non-exclusive, non-transferable license to
manufacture and sell Licensed Products under any and all Licensee Patents.

IT IS EXPRESSLY UNDERSTOOD THAT THE LICENSES UNDER THIS ARTICLE II DO NOT
INCLUDE ANY RIGHTS TO SELL COMPONENTS OF THE LICENSED PRODUCTS, SUCH AS BUT NOT
LIMITED TO SEMICONDUCTOR DEVICES, AND INTEGRATED CIRCUITS.


                     Article III - Standard Specifications
                     -------------------------------------
                          And Compatibility Assurance
                          ---------------------------

3.01 Sony shall immediately make available to Licensee for use by Licensee and
its Associated Companies, solely in connection with the exercise of the rights
granted in paragraphs 2.01 of Article II, a copy of the then current version of
the Memory Stick Standard Specifications, and the instructions regarding the use
of logo (hereinafter referred to as the "Logotype and How to Use It").  Licensee
shall not modify, reproduce or distribute the Memory Stick Standard
Specifications without Sony's prior written consent.  Licensee may obtain an
extra copy of the Memory Stick Standard Specifications from Sony with an
additional payment to Sony which is not higher than the amount for such extra
copy Sony charges to other third parties who have entered into a license
agreement with Sony concerning Licensed Products.

3.02 In case Sony, in the exercise of its reasonable business judgement,
determines that an addition or modification to any of the Memory Stick Standard
Specifications should be made, Licensee shall be so notified in writing and be
furnished with information to assist Licensee in the interpretation of such
addition and/or modification.

3.03 Licensee and its Associated Companies will not sell or offer for sale
Licensed Products unless such Licensed Products meet the Memory Stick Standard
Specifications and are fully compatible with IC Recording Media.

3.04 Licensee and its Associated Companies agree to deliver to Sony, upon the
request of Sony at reasonable intervals, a reasonable number of random samples
of Licensed Products manufactured by or for Licensee and its Associated
Companies in order to permit Sony to verify that the Licensed Products meet the
Memory Stick Standard Specifications and are fully compatible with IC Recording
Media.

3.05 After examining any Licensed Product submitted to Sony by Licensee or any
of its Associated Companies pursuant to paragraph 3.04 or any Licensed Product
sold by Licensee or any of its Associated Companies and purchased by Sony in the
market, Sony may notify Licensee of any failure by Licensee and/or any of its
Associated Companies to maintain the quality level for the Licensed Products set
forth in paragraph 3.03.


                            Article IV - Have made
                            ----------------------

<PAGE>

The licenses and rights granted to Sony, Licensee and their respective
Associated Companies pursuant to Article II and the right of Licensee and its
Associated Companies to use technical information pursuant to Article III,
include the right for Sony, Licensee and their respective Associated Companies
to have third parties manufacture for their use and account, such Licensed
Products and components thereof as required in and for their manufacture of
Licensed Products, provided that such third parties agree in writing to use the
licenses, rights and information only for the manufacture of Licensed Products
and components thereof ordered by Sony, Licensee and/or their respective
Associated Companies and also agree in writing to observe the secrecy
obligations accepted hereunder and provided further that any manufacturing of
Licensed Products and components of Licensed Products covered by the Licensed
Patents shall only be pursuant to designs developed by or for Sony or Licensee.


     Article V - Patent Markings and Trademark License


5.01 Licensee shall place appropriate patent markings on an exposed surface of
the Licensed Products made and/or sold or otherwise disposed of hereunder,
unless otherwise indicated by Sony in writing.  The content, form, location and
language used in such markings shall be in accordance with the laws and
practices of the country where the Licensed Products are manufactured or sold.

5.02 Sony grants Licensee and its Associated Companies a non-exclusive, non-
transferable, indivisible right to use the Trademark set forth in Exhibit B on
and with respect to Licensed Products manufactured by or for Licensee and/or its
Associated Companies in accordance with the instructions laid down in the
Logotype and How to Use It.  In advertisements and sales literature with respect
to Licensed Products sold by Licensee and/or its Associated Companies, the
Trademark may also be used in accordance with the instructions laid down in the
Logotype and How to Use It.  Such license shall be royalty free.

5.03 If Licensee fails to meet or fails to cause any of its Associated Companies
to meet the quality level for the Licensed Products set forth in paragraph 3.03
within sixty (60) days after such notice from Sony as set forth in paragraph
3.05, Sony shall have the right to terminate this Agreement in its entirety.
The obligation to cure any deficiency following notice thereof shall apply only
to Licensed Products manufactured following notice thereof, and shall not
require Licensee or its Associated Companies to recall or to remanufacture
Licensed Products in inventory, in distribution channels or in the possession of
end users.

5.04 Licensee agrees that every Licensed Product sold or otherwise disposed
under this Agreement shall have permanently affixed thereto an identifying mark
or insignia acceptable to Sony which mark or insignia shall serve as an indicia
of origin of the Licensed Product.


                            Article VI - Disclaimer
                            -----------------------

<PAGE>

     Sony warrants that it shall furnish the information to be supplied by it to
the best of its ability, but it makes no representation or warranty as to the
value of the information transmitted or the ability of Licensee and its
Associated Companies to make use thereof to secure interchangeability.  Sony
makes no warranty whatsoever that the use of information supplied by Sony does
not infringe or may not cause infringement of intellectual property rights owned
or controlled by third parties, or of intellectual property rights owned or
controlled by Sony or its Associated Company not licensed pursuant to Article
II.  Sony makes no warranty whatsoever as to the validity of the Trademark or
Licensed Patents.  Licensee and its Associated Companies make no warranty
whatsoever as to the validity of the Licensed Patents.


Licensee acknowledges that third parties may own intellectual property rights in
the field of Licensed Products and Licensee accepts that Sony makes no warranty
whatsoever that any manufacture, use, sale or other disposition of Licensed
Products will be free from infringement of any intellectual property rights
other than those as expressly licensed hereunder.  Product liability with
respect to the Licensed Products shall be the sole responsibility of Licensee
and its Associated Companies.


                             Article VII - Secrecy
                             ---------------------

Licensee agrees that, subject to what has been provided for in Article IV of
this Agreement, Licensee and its Associated Companies shall not disclose to any
third party information acquired from Sony relative to the Licensed Products.
This obligation, which shall run in perpetuity, shall not apply to the extent
information so acquired:

     (a)  was known to Licensee or its Associated Companies prior to the date
          said information was acquired from Sony, as shown by records of
          Licensee or any of its Associated Companies or otherwise demonstrated
          to Sony's satisfaction;
     (b)  is or has become available to the public in general through no fault
          of Licensee or its Associated Companies;
     (c)  was or is independently developed by officers or employees of the
          receiving party who have not had access to the information acquired
          from Sony relative to the Licensed Products.

In protecting information acquired from Sony, Licensee agrees that Licensee and
its Associated Companies will take all necessary measures and precautions,
including, but not limited to, measures requiring their present and future
employees to give suitable undertakings of secrecy both for the period of their
employment and thereafter, and that such information will be treated in the same
manner and with the same degree of care as Licensee applies and has applied to
its own information of a sensitive or confidential nature.

<PAGE>

     Article VIII - Assignment


Neither party may assign or transfer this Agreement without the prior written
consent of the other, except that each party may assign or transfer this
Agreement, and all rights and obligations hereunder, in the course of a merger,
reorganization or acquisition of all or substantially all of such party's
remaining assets without the consent of of the other party.  Any assignment or
transfer permitted hereunder will be subject to the written assent of the
assignee or transferee to assume all of the rights and obligations associated
with this Agreement.  Any attempted assignment in derogation of this section
will be null and void

Notwithstanding LEXAR's right to assign or transfer this Agreement and all
rights and obligations hereunder, in the course of a merger, reorganization or
acquisition of all or substantially all of LEXAR's remaining assets related to
the Licensed Memory Stick without the consent of SONY, LEXAR agrees *.


                       Article IX - Term and Termination
                       ---------------------------------

9.01 This Agreement shall be effective from the date first written above.
Unless otherwise terminated, the term of this Agreement shall be ten (10) years
from the effective date of this Agreement.  Before expiration of this Agreement,
either party may request to have negotiation regarding the extension of this
Agreement.

9.02 Either party may terminate this Agreement following thirty (30) days
written notice to the other party of a material breach by the other party in the
event that the latter shall fail to remedy the breach within the thirty (30) day
period.  The notice must specify the nature of the breach.  Such right of
termination shall not be exclusive of any other remedies or means of redress to
which the non-breaching party may be lawfully entitled, it being intended that
all such remedies shall be cumulative.

9.03 If Sony or its Associated Companies should institute any suit or action
which challenges or concerns the validity of the Licensee Patents, Licensee may
give written notice to Sony terminating this Agreement and this Agreement shall
be terminated in accordance with the notice.

9.04 If Licensee or its Associated Companies should institute any suit or action
which challenges or concerns the validity of the Licensed Patents, Sony may give
written notice to Licensee terminating this Agreement and this Agreement shall
be terminated in accordance with the notice.

9.05 If Sony or Licensee should be dissolved or file a voluntary petition in
bankruptcy or seek any court or governmental protection from creditors or make
any assignment for creditors, or should an







*Material has been omitted and filed separately with the Commission.
<PAGE>

order be entered pursuant to any law relating to bankruptcy or insolvency
appointing a receiver or trustee for Sony or Licensee, and if any such
receivership is not terminated within sixty (60) days, then, in any of the
events specified in this paragraph 9.04, Sony or Licensee may give written
notice to Licensee or Sony, respectively, terminating this Agreement and this
Agreement shall be terminated in accordance with the notice.

9.06 Paragraphs 2.02, 2.03 of Article II, Article IV and Article VII shall
survive any termination or expiration of this Agreement.


                           Article X - Miscellaneous
                           -------------------------

10.01 This Agreement sets forth the entire agreement and understanding between
the parties as to the subject matter hereof and merges all prior discussions
between them.  Neither of the parties shall be bound by any conditions,
definitions, warranties, waivers, releases or representations (either expressed
or implied) with respect to the subject matter of this Agreement, other than
expressly provided for herein, or as duly set forth on or subsequent to the date
hereof in writing and signed by a duly authorized representative of the party to
be bound thereby.

10.02 Nothing contained in this Agreement shall be construed

     (a)  as imposing on either party any obligation not to institute any suit
     or action which challenges or concerns the validity of the Patent Rights.

     (b)  as imposing on Sony or Licensee any obligation to institute any suit
     or action for infringement of any of the Licensed Patents or Licensee
     Patents, respectively, licensed or referred to hereunder, or to defend any
     suit or action brought by a third party which challenges or concerns the
     validity of any of such Licensed Patents or Licensee Patents, it being
     expressly understood that Sony and Licensee shall have no right to
     institute any such suit or action for infringement of any of the Licensed
     Patents licensed by Sony hereunder or any of the Licensee Patents licensed
     hereunder, nor the right to defend any such suit or action which challenges
     or concerns the validity of any such Licensed Patents or Licensee Patents;

     (c)  as imposing any obligation to file any patent application or to secure
     any patent or to maintain any patent in force;

     (d)  as conferring any license or right to copy or to simulate the
     appearance and/or design of any product of the other party or its
     Associated Companies, except as expressly provided herein;

     (e)  as conferring any license under the Licensed Patents or the Licensee
     Patents licensed or referred to hereunder to manufacture, use, sell or
     otherwise dispose of any product or device other than a Licensed Product.

     (f)  as conferring any license to Licensee or its Associated Companies
     under any intellectual

<PAGE>

     property rights of Sony or its Associated Companies, other than Memory
     Stick Standard Specifications, Licensed Patents and Trademark.

     (g)  as conferring any license to Sony or its Associated Companies under
     any intellectual property rights of Licensee or its Associated Companies,
     other than Licensee Patents.

     (h)  as a warranty, assurance or representation by Sony to Licensee as to
     quality level, no-defect, compatibility and completeness for any of the
     Licensed Products manufactured by Licensee and its Associated Companies
     notwithstanding the quality control procedure pursuant to Article III.

10.03 If at any time a party shall elect not to assert its rights under any
provision of this Agreement, such action or lack of action in that respect shall
not be construed as a waiver of its rights under said provision or of any other
provision of this Agreement.

10.04 Any notice or request required by this Agreement to be sent by any party
hereto to the other shall be given in writing by letter, facsimile, cable or
radiogram directed, in respect of Licensee, to:

                               John Reimer, President & CEO
                               Lexar Media, Inc.
                               47421 Bayside Parkway
                               Fremont, CA 94358
                               Fax: +1-510-413-1228  Phone: +1-510-440-3499

and, in respect of Sony, to:   General Manager
                               Contracts and Licensing Department
                               Sony Corporation
                               6-7-35 Kitashinagawa, Shinagawa-ku,
                               Tokyo 141-0001, Japan
                               Fax: +81-3-5448-7835  Phone: +81-3-5448-2615

or to such other addresses as may have been previously specified in writing by
either party to the other.

10.05 This Agreement, its validity, its interpretation and performance shall be
governed by the laws of Japan as if this Agreement were wholly executed and
wholly to be performed in Japan.  If any provision of this Agreement shall be
held by a court of competent jurisdiction to be contrary to law, the remaining
provisions of the Agreement shall remain in full force and effect.

10.06 All disputes between the parties hereto arising out of or in connection
with the interpretation or execution of this Agreement during its life or
thereafter shall be finally settled by the Tokyo District Court.

IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be signed
on the date

<PAGE>

first above written.


SONY CORPORATION                          LICENSEE


By:                                       By:
   -----------------------------------       -----------------------------------

Name:  Ken-ichiro Yonezawa                Name:
     ---------------------------------         ---------------------------------

Title: Corporate Senior Vice President    Title:
      --------------------------------          --------------------------------

Date:                                     Date:
     ---------------------------------         ---------------------------------

<PAGE>

Exhibit A: Outlines of the Memory Stick Standard Specifications ver.1.2

                                   Contents

1.   Introduction......................................................    1-1
     1.1.   Overview...................................................    1-1
     1.2.   Scope......................................................    1-1
     1.3.   Architecture...............................................    1-2
     1.4.   References.................................................    1-3
     1.5.   Definitions................................................    1-3

2.   Physical Specifications...........................................    2-1
     2.1.   Outline....................................................    2-1
     2.2.   Connector..................................................    2-2
     2.3.   Option.....................................................    2-6

3.   Reliability Test Standards........................................    3-1
     3.1.   Test Condition.............................................    3-1
     3.2.   Test and Performance Standards.............................    3-1

4.   Electrical Specifications.........................................    4-1
     4.1.   Overview...................................................    4-1
     4.2.   Pin Assignment.............................................    4-3
     4.3.   Signal Description.........................................    4-4
     4.4.   Electrical Characteristics.................................    4-5
     4.5.   Insertion Detect...........................................    4-10
     4.6.   Termination................................................    4-11
     4.7.   Power Supply ON/OFF Procedure..............................    4-12
     4.8.   Attribute Information......................................    4-13
     4.9.   Write-protect Switch.......................................    4-14

5.   Serial Interface..................................................    5-1
     5.1.   System Configuration.......................................    5-1
     5.2.   Serial I/F Overview........................................    5-3
     5.3.   Protocol...................................................    5-5
     5.4.   Protocol Error.............................................    5-7
     5.5.   Signal Timing..............................................    5-9
     5.6.   Bus State..................................................    5-11
     5.7.   Transfer Protocol Command (TPC)............................    5-18
     5.8.   Registers..................................................    5-22


<PAGE>

     5.9.   Acceptable TPC.............................................    5-35

<PAGE>

6.   Command Control...................................................    6-1
     6.1.   Command Overview...........................................    6-1
     6.2.   Flash CMD..................................................    6-5
     6.3.   Function CMD...............................................    6-17
     6.4.   Access to Attribute ROM....................................    6-19
     6.5.   Acceptable CMD.............................................    6-20
     6.6.   Command Control............................................    6-21

7.   Physical Format...................................................    7-1
     7.1.   Memory Stick Capacity......................................    7-1
     7.2.   Physical Structure.........................................    7-3
     7.3.   ExtraDataArea..............................................    7-4
     7.4.   Boot Block.................................................    7-7
     7.5.   User Block.................................................    7-16
     7.6.   Information Block..........................................    7-16
     7.7.   Logical/Physical Translation Table Block...................    7-17
     7.8.   Factory Default............................................    7-19
     7.9.   Example of Boot Block Retrieval............................    7-20
     7.10.  Example of Sector Data Updating............................    7-21
     7.11.  Example of Sector Data Readout.............................    7-22
     7.12.  Example of Logical/Physical Translation Table Generation...    7-23

8.   Logical Format....................................................    8-1
     8.1.   Overview...................................................    8-1
     8.2.   Parameter Setting by Capacity..............................    8-5
     8.3.   Digital Read Protect Bit...................................    8-23
     8.4.   Special File...............................................    8-24
     8.5.   Relation between Logical Sector and Logical Address........    8-25
     8.6.   Notes on Format Processing.................................    8-26

9.   Directory Regulation..............................................    9-1
     9.1.   Overview...................................................    9-1
     9.2.   Directory Structure........................................    9-2

<PAGE>

Exhibit B: Trademark


<PAGE>

Exhibit C: Licensed Patents
 Japanese Patent Application Number

*

* Material has been omitted and filed separately with the Commission.