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                                                                    Exhibit 10.1

                             CONFIDENTIAL AGREEMENT
                          AND GENERAL RELEASE OF CLAIMS

     THIS CONFIDENTIAL AGREEMENT AND GENERAL RELEASE OF CLAIMS (the "Agreement")
dated September 10, 2001 is between Ronald Bissinger ("Employee") and Lexar
Media, Inc., (the "Company"), a Delaware corporation. As used in this Agreement,
the Company refers to Lexar Media, Inc. and all parents, subsidiaries,
divisions, predecessors, and successors of Lexar Media, Inc.

THE PARTIES AGREE AS FOLLOWS:

     1.   Resignation as Vice President and Chief Financial Officer of the
Company. Employee's employment as Vice President and Chief Financial Officer of
the Company terminated effective as of July 13, 2001 (the "Separation Date") and
Employee will resign from such positions effective on the Separation Date.
Employee will also resign from any position on any Company committee or as
trustee of any Company benefit plan that he holds, effective on the Separation
Date.

     2.   Obligations of the Company.

          a.   In exchange for the release of claims and other promises set
forth in this Agreement and the attached Addendum A, the Company agrees to
provide Employee on the Effective Date with the following benefits:

               (1)  Employee will receive his current base salary and all other
unpaid compensation and benefits accrued through the Separation Date, less
applicable withholding. By executing this Agreement, Employee acknowledges the
receipt of all such payments.

               (2)  The Company will pay Employee a lump sum severance payment
in an amount equal to three hundred and eighty thousand dollars ($380,000), less
applicable withholding.

               (3)  Employee will continue to receive his base salary for a
period six (6) months following the Separation Date, payable pursuant to the
Company's regular payroll practices, less applicable withholding.

               (4)  Employee will be eligible to purchase healthcare insurance
coverage as required by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA").

               (5)  The Company will permit Employee to retain the laptop
computer issued to him by the Company, provided that Employee transfers all
Company materials to a secure drive for access by appropriate Company personnel.

          b. The Company agrees to indemnify Employee, in accordance with the
Company's articles of incorporation and bylaws and any applicable state law,
against all expense Employee may incur by reason of any action, suit or
proceeding arising from or relating to the



<PAGE>

performance of Employee's duties as an officer of the Company. Both parties
acknowledge that Employee has represented and warranted that he does not possess
any material insider information about the Company, and that the Company does
not believe that Employee has any such material nonpublic information. The
Company does not object to Employee's sale of his shares of Company stock.

          c. Employee understands and acknowledges that Employee will not be
entitled to any benefits or payments from the Company other than those expressly
set forth in this Section 2. Employee acknowledges and agrees that this
Agreement supersedes the terms set forth in his Employment Agreement dated March
24, 2000 (attached hereto as Exhibit A) or any other agreement, and the
Employee's and the Company's obligations under such Employment Agreement or any
other agreement are hereby terminated in their entirety, including, but not
limited to, the provisions of the Employment Agreement providing for any bonus
payment, COBRA payments and continued vesting of Employee's stock options or
restricted stock, effective as of the Separation Date. Employee will not be
entitled to any further severance payment, bonus payment, COBRA payments or
vesting of stock options or restricted stock following the Separation Date.

     3. Obligations of Employee. In exchange for the benefits described above in
Section 2, Employee agrees to the following:

          a. Employee will be bound by and comply with the terms of the Employee
Invention Assignment and Confidentiality Agreement (a copy of which is attached
to this Agreement as Exhibit B). Employee will return all Company property
(unless otherwise agreed in writing) and all confidential and proprietary
information in Employee's possession to the Company within five business days
from the Effective Date.

          b. Employee will not solicit, or initiate any solicitation of any
Company employee to leave his/her employment with the Company to commence a
relationship with Employee or any other employer for a period ending one (1)
year following the Effective Date.

     4. Restricted Stock; Promissory Note. The Company will exercise its
Repurchase Right as defined in Section D of Employee's Stock Purchase Agreement
dated December 27, 1999 (the "Stock Purchase Agreement", attached hereto as
Exhibit C), pursuant to which the Company will repurchase all of Employee's
shares that are unvested as of the Separation Date (the "Repurchased Shares") at
a price equal to the price at which Employee purchased such shares. Employee
agrees that this Agreement constitutes the written notice required for the
Company to exercise its Repurchase Right with respect to such shares. Employee
agrees to repay to the Company a loan in the amount of eight hundred thousand
dollars ($800,000) plus all unpaid and accrued interest, pursuant to the terms
of a promissory noted between Employee and the Company dated December 27, 1999
(the "Note," a copy of which is attached hereto as Exhibit D); provided,
however, that the Note shall become due and payable as follows: (a) two-hundred
and twenty thousand dollars ($220,000) upon the Effective Date and (b) the
remainder upon the earlier of the date Employee sells the shares securing the
Note or January 13, 2002; and provided further, that the principal amount owed
by Employee under the Note will be reduced by the amount equal to the price that
the Company would otherwise be required to pay Employee to

                                       -2-


<PAGE>

repurchase the Repurchased Shares pursuant to this Section 4. Such reduction
will constitute consideration for the Company's exercise of its Repurchase
Right.

     5. Release.  In exchange for the benefits described in Section 2, Employee
agrees to execute the release (the "Release") attached to this Agreement as
"Addendum A" concurrently with the execution of this Agreement.

     6. Arbitration.  Any claim, dispute, or controversy arising out of or in
any way relating to this Agreement or the alleged breach of this Agreement will
be submitted by the parties to binding arbitration in Santa Clara County,
California by JAMS or by a judge to be mutually agreed upon. This Section 6 will
not prevent either party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the parties and the
subject matter of their dispute relating to Employee's obligations under
Employee's Confidentiality Agreement and Employee's obligations under Sections 3
hereof.

     7. Attorneys' Fees.  The prevailing party will be entitled to recover from
the losing party its attorneys' fees and costs (including expert witness fees)
incurred in any arbitration, lawsuit or other proceeding brought to enforce any
right arising out of this Agreement.

     8. Confidentiality.  Each party acknowledges that such party has not
disclosed any of the terms of this Agreement to anyone other than such party's
counsel, members of the Company's Board of Directors or committees of such Board
of Directors, including the Audit Committee, employees and former employees of
the Company and/or Employee's spouse/domestic partner. Each party agrees, on
behalf of itself and its agents, to the extent permitted by law, not to
disclose, or to take every reasonable precaution to prevent disclosure of, any
of the terms of this Agreement or consideration for this Agreement (the
"Settlement Information") to third parties, and agrees that there will be no
publicity, directly or indirectly, concerning any Settlement Information. Each
party agrees to take every reasonable precaution to disclose Settlement
Information only to such party's attorney, accountant, tax authorities, members
of the Company's Board of Director or committees of such Board of Directors,
including the Audit Committee, and Employee's spouse/domestic partner, if and
only if these individuals have a reasonable and justifiable need to know of such
Settlement Information, provided, however, that any person or entity to whom
such disclosure is made will, prior to disclosure and to the extent permitted by
law, acknowledge the confidentiality of such information and agree to keep such
information confidential. Each party acknowledges that the confidentiality of
the terms of this Agreement is a material inducement to such party in entering
into it. Any dispute concerning this confidentiality provision will be resolved
through arbitration pursuant to Section 6.

     9. Non-Disparagement.  Employee agrees to refrain from disparagement,
criticism, defamation or slander of the Company or any of its employees,
officers, directors, agents, products or services to anyone, including but not
limited to other employees and any past, present or prospective customers. The
Company agrees to maintain its neutral reference policy in regard to Employee
and refrain from disparagement, criticism, defamation and slander of Employee.

                                       -3-


<PAGE>

     10. No Admission of Liability.  The Company and Employee understand and
acknowledge that this Agreement constitutes a compromise and settlement. No
action taken by the parties hereto, or either of them, either previously or in
connection with this Agreement will be deemed or construed to be (a) an
admission of the truth or falsity of any claims or (b) an acknowledgment or
admission by a party of any fault or liability whatsoever to the other party or
to any third party.

     11. No Knowledge of Wrongdoing.  Employee has no knowledge of any
wrongdoing involving improper or false claims against a federal or state
governmental or regulatory agency, including listing agencies or exchange or
other wrongdoing, that involves Employee or other present or former Company
employees.

     12. Successors.  The provisions of this Agreement will extend and inure to
the benefit of, and be binding upon the respective legal successors and assigns
of the Company and Employee in addition to the Company and Employee.

     13. Integration.  This Agreement constitutes the entire Agreement between
the parties with respect to the subject matter of this Agreement and supersedes
all prior negotiations and Agreements, whether written or oral, with the
exception of Employee's obligations under the Confidentiality Agreement, the
Promissory Note, and/or any surviving stock purchase or stock option agreements
with respect to such subject matter.

     14. No Oral Modification.  This Agreement may not be altered or amended
except by a written document executed by Employee and the Company.

     15. Governing Law.  This Agreement will in all respects be governed by the
laws of the State of California as applied to agreements entered into and to be
performed entirely within California between California residents.

     16. Effective Date.  This Agreement is effective as of July 15, 2001,
provided that the Release, and the Company's obligations pursuant to Section 2
above, shall become effective on the eighth day after the Release has been
signed by both parties (the "Effective Date"), unless sooner revoked by
Employee. If Employee desires to revoke the Release, Employee must deliver or
cause to be delivered a written statement of revocation from Employee prior to
the Effective Date to Eric Whitaker at the Company.

     17. No Representations.  Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

     18. Counterparts.  This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

     19.  Severability. In the event that any one or more of the provisions
contained herein will for any reason be held to be unenforceable in any respect
under any statute, rule or law of any state or of the United States of America,
such unenforceability will not affect any other

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provision of this Agreement, but, with respect only to the jurisdiction holding
the provision to be unenforceable, this Agreement will then be construed as if
such unenforceable provision or provisions had never been contained herein.


EMPLOYEE:                                  LEXAR MEDIA, INC.:


Ronald H. Bissinger                        /s/ Eric S. Whitaker
                                           ------------------------------
                                           By: Eric S. Whitaker
/s/ Ronald H. Bissinger                    Title: Vice President and
---------------------------------                 General Counsel
Signature



                                       -5-


<PAGE>

                                   ADDENDUM A

     THIS GENERAL RELEASE OF CLAIMS (the "Release") is between Ronald Bissinger
("Employee") and Lexar Media, Inc. (the "Company"), a Delaware corporation. As
used in this Release, the Company refers to Lexar Media, Inc. and all parents,
subsidiaries, divisions, predecessors, and successors of Lexar Media, Inc.

     1.   Payment of Separation Benefits.  The Company has agreed that if
Employee signs this Release, it will provide Employee the benefits (the
"Separation Benefits") set forth in the Confidential Agreement and General
Release of Claims entered into by the parties as of September 10, 2001 (the
"Separation Agreement"). Employee understands that he is not entitled to those
Separation Benefits unless he signs this Release. Employee understands that in
addition to the Separation Benefits the Company will pay him all of his accrued
salary and vacation, to which Employee is entitled by law.

     2.   Release.

          (a) Employee, on behalf of himself and his respective heirs,
executors, successors and assigns, hereby fully and forever releases the Company
and its respective heirs, executors, successors, agents, officers and directors,
from and agrees not to sue concerning, any and all claims, actions, obligations,
duties, causes of action, whether now known or unknown, suspected or
unsuspected, that Employee may possess based upon or arising out of any matter,
cause, fact, thing, act, or omission whatsoever occurring or existing at any
time prior to and including the date hereof (collectively, the "Released
Matters"), including without limitation,

               (1)  any and all claims relating to or arising from Employee's
employment or consulting relationship with the Company and the termination of
either such relationship;

               (2)  any and all claims relating to, or arising from, Employee's
right to purchase, or actual purchase of, shares of stock of the Company,
including, without limitation, any claims of fraud, misrepresentation, breach of
fiduciary duty, breach of duty under applicable state corporate law, and
securities fraud under any state or federal law;

               (3)  any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;



<PAGE>

               (4)  any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, the Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, and the California Labor
Code section 201, et. seq.;

               (5)  any and all claims for violation of the federal, or any
state, constitution;

               (6)  any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;

               (7)  any and all claims for attorneys' fees and costs; and

               (8)  any and all claims either Employee may have against the
Company for any acts occurring at any time prior to the execution of this
Release.

Employee agrees that the foregoing enumeration of claims released is
illustrative, and the claims hereby released are in no way limited by the above
recitation of specific claims, it being Employee's intent to fully and
completely release all claims whatsoever in any way relating to Employee's
employment with the Company and to the termination of such employment.

          (b)  Employee represents that Employee has no lawsuits, claims or
actions pending in Employee's name, or on behalf of any other person or entity,
against the Company or any other person or entity referred to herein. Employee
also represents that Employee does not intend to bring any claims on Employee's
own behalf against the Company or any other person or entity referred to herein.

          (c)  Employee acknowledges that he has been advised by legal counsel
and is familiar with Section 1542 of the Civil Code of the State of California,
which states:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR.

Employee expressly waives any right or benefit which he has or may have under
Section 1542 of the California Civil Code or any similar provision of the
statutory or non-statutory law of any other jurisdiction, including Delaware.
Employee acknowledges that in the future he may discover claims or facts in
addition to or different from those that he now knows or believes to exist with
respect to the subject matter of this Release, and that

                                       -2-


<PAGE>

Employee intends to fully, finally, and forever settle all of the Released
Matters in exchange for the Separation Benefits. This Release will remain in
effect as a full and complete release notwithstanding the discovery or existence
of any additional claims or facts.

     3. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges
that Employee is waiving and releasing any rights Employee may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee further acknowledges that Employee
has been advised by this writing that:

          (a)  Employee should consult with an attorney prior to executing this
Release;

          (b)  Employee has had at least twenty-one (21) days within which to
consider this Release, although Employee may accept the terms of this Release at
any time within those 21 days;

          (c)  Employee has seven (7) days following the execution of this
Release by the parties to revoke this Release; and

          (d)  This Release will not be effective until the revocation period
has expired.

     4. No Waiver of Claim of Violation of Attached Confidential Agreement. The
parties acknowledge and agree that this Release does not constitute a release or
waiver of claims by either party that the other has breached any terms of the
Confidential Agreement between the parties, dated September 10, 2001, to which
this Release is attached as Addendum A.

     5. Voluntary Execution of Release. This Release is executed voluntarily and
without any duress or undue influence on the part or behalf of the parties
hereto, with the full intent of releasing all claims. Employee acknowledges
that:

          (a)  Employee has read this Release;

          (b)  Employee has been represented in the preparation, negotiation,
and execution of this Release by legal counsel of his own choice or that he has
voluntarily declined to seek such counsel;

          (c)  Employee understands the terms and consequences of this Release
and of the releases it contains;

          (d)  Employee is fully aware of the legal and binding effect of this
Release.

EMPLOYEE HAS CONSULTED WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE AND
UNDERSTANDS THAT, BY SIGNING THIS RELEASE, EMPLOYEE IS GIVING UP ANY LEGAL
CLAIMS EMPLOYEE HAS AGAINST

                                       -3-


<PAGE>

THE COMPANY. EMPLOYEE FURTHER ACKNOWLEDGES THAT EMPLOYEE DOES SO KNOWINGLY,
WILLINGLY, AND VOLUNTARILY IN EXCHANGE FOR THE BENEFITS DESCRIBED IN THE
SEPARATION AGREEMENT.


EMPLOYEE                                 LEXAR MEDIA, INC.


/s/ Ronald H. Bissinger                  By:
-----------------------------                -----------------------------
Signature
                                         Title:
                                                --------------------------
Date:
     ------------------------
                                         Date:
                                               ---------------------------



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