exhibit10_64.htm


    
      
        
 

         

        
Exhibit
10.64

        LEXAR
MEDIA, INC.

        1996 STOCK OPTION/STOCK
ISSUANCE PLAN

        (As
Adopted December 18, 1996 and Amended May 9, 1997, October 30,
1998,

        September
15, 1999 and December 8, 1999)

        


        ARTICLE
ONE

        


        GENERAL
PROVISIONS

        


        


        I.        
    PURPOSE OF THE PLAN

        


        This 1996 Stock Option/Stock Issuance
Plan is intended to promote the interests of Lexar Media, Inc., a California
corporation, by providing eligible persons with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the
Corporation.

        


        Capitalized terms herein shall have the
meanings assigned to such terms in the attached Appendix.

        


        II.          
 STRUCTURE OF THE PLAN

        


        A.                 The
Plan shall be divided into two (2) separate equity programs:

        


        (i) the
Option Grant Program under which eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common Stock,
and

        


        (ii) the
Stock Issuance Program under which eligible persons may at the discretion of the
Plan Administrator, be issued shares of Common Stock directly, either through
the immediate purchase of such shares or as a bonus for services rendered the
Corporation (or any Parent or Subsidiary).

        


        B.                 The
provisions of Articles One and Four shall apply to both equity

        programs
under the Plan and shall accordingly govern the interests of all

        persons
under the Plan.

        


        III.           ADMINISTRATION
OF THE PLAN

        


        A.                 The
Plan shall be administered by the Board. However, any or all administrative
functions otherwise exercisable by the Board may be delegated to the Committee.
Members of the Committee shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time. The Board
may also at any time terminate the functions of the Committee and reassume all
powers and authority previously delegated to the Committee.

        


        B.                 The
Plan Administrator shall have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding options or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Pan Administrator shall be final and binding on all
parties who have an interest in the Plan or any option or stock issuance
thereunder.

        


        IV.           ELIGIBILITY

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        A.                 The
persons eligible to participate in the Plan are as follows:

        


        (i)
Employees,

        


        (ii)
non-employee members of the Board or the non-employee members of the board of
directors of any Parent or Subsidiary, and

        


        (iii)
consultants and other independent advisors who provide services to the
Corporation (or any Parent or Subsidiary).

        


        B.                 The
Plan Administrator shall have full authority to determine, (i) with respect to
the option grants under the Option Grant Program, which eligible persons are to
receive option grants the time or times when such option grants are to be made,
the number of shares to be covered by each such grant, the status of the granted
options as either an Incentive Option or a Non-Statutory Option, the time or
times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares and the maximum term for which the option
is to remain outstanding, and (ii) with respect to stock issuances under the
Stock Issuance Program, which eligible persons are to receive stock issuances,
the time or times when such issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid by the Participant for such
shares.

        


        C.                 The
Plan Administrator shall have the absolute discretion either to grant options in
accordance with the Option Grant Program or to effect stock  issuances
in accordance with the Stock Issuance Program.

        


        V.           STOCK
SUBJECT TO THE PLAN

        


        A.                 The
stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock.  The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed Thirteen Million
Thirty-Eight Thousand Eighty-Two (13,038,082) shares.

        


        B.                 Shares
of Common Stock subject to outstanding options shall be available for subsequent
issuance under the Plan to the extent (i) the options  expire or
terminate for any reasons prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions
of  Article Two.  Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the option exercise price paid
per share, pursuant to the  Corporation's repurchase rights under the
Plan shall be added back to the number of shares of Common Stock reserved for
issuance under the Pan and shall accordingly be available for reissuance through
one or more subsequent option grants or direct stock issuances under the
Plan.

        


        C.                 Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
(i) the maximum number and/or class securities issuable under the Plan and (ii)
the number and/or class of securities and the exercise price per share in effect
under each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments determined by the Plan Administrator shall
be final, binding and conclusive. In no event shall any such adjustments be made
in connection with the conversion of one of more outstanding shares of the
Corporation's preferred stock into shares of Common Stock.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        ARTICLE
TWO

        


        OPTION GRANT
PROGRAM

        


        


        I.           
 OPTION
TERMS

        


        Each option shall be evidenced by one
or more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified
below.  Each document evidencing an Incentive Option shall, in
addition, be subject to the provisions of the Plan applicable to such
options.

        


        A.                 Exercise
Price.

        


        1.      The
exercise price per share shall be fixed by the Plan Administrator in accordance
with the following provisions:

        


        (i) The
exercise price per share shall not be less than one hundred percent (100%) of
the Fair Market Value per share of Common Stock on the option grant
date.

        


        (ii) If
the person to whom the option is granted is a 10% Shareholder, then the exercise
price per share shall not be less than one hundred ten percent (110%) of the
Fair Market Value per share of Common Stock on the option grant
date.

        


        2.      The
exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of Section I of Article Four and the documents
evidencing the option, be payable in cash or check made payable to the
Corporation. Should the Common Stock be registered under Section 12(g) of the
1934 Act at the time the option is exercised, then the exercise price may also
be paid as follows:

        


        (i) in
shares of Common Stock held for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date, or

        


        (ii) to
the extent the option is exercised for vested shares, through all special sale
and remittance procedure pursuant to which the Optionee shall concurrently
provide irrevocable written instructions (A) to the Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
shares plus all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise and (B) to
the Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.

        


        Except to
the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise
Date.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        B.                 Exercise and Term of
Options.  Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined
by the Plan Administrator and set forth in the documents evidencing the option
grant.  However, no option shall have a term in excess of ten (10)
years measured from the option grant due.

        


        C.                 Effect of Termination of
Services.

        


        1.      The
following provisions shall govern the exercise of any options held by the
Optionee at the time of cessation of Service or death:

        


        (i)  Should
the Optionee cease to remain in Service for any reason other than Disability or
death, then the Optionee shall have a period of three (3) months following the
date of such cessation of Service during which to exercise each outstanding
option held by such Optionee.

        


        (ii)  Should
Optionee's Service terminate by reason of Disability, then the Optionee shall
have a period of twelve (12) months following the date of such cessation of
Service during which to exercise each outstanding option held by such
Optionee.

        


        (iii) If
the Optionee dies while holding an outstanding option, then the personal
representative of his or her estate or the person or persons to whom the option
is transferred pursuant to the Optionee's will or the laws of inheritance shall
have a twelve (12)-month period following the date of the Optionee's death to
exercise such option.

        


        (iv)  Under
no circumstances, however, shall any such option be exercisable after the
specified expiration of the option term.

        


        (v)   During
the application post-Service exercise period, the option may not be exercised in
the aggregate for more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service.  Upon
the expiration of the applicable exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been
exercised.  However, the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to be outstanding with respect to any
and all option shares for which the option is not otherwise at the time
exercisable or in which the Optionee is not otherwise at the time
vested.

        


        2.      The Plan
Administrator shall have the discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding,
to:

        


        (i)  extend
the period of time for which the option is to remain exercisable following
Optionee's cessation of Service or death from the limited period otherwise in
effect for that option to such greater period of time as the Plan Administrator
shall deem appropriate, but in no event beyond the expiration of the option
term, and/or

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (ii)
permit the option to be exercised, during the applicable post-Service exercise
period, not only with respect to the number of vested shares of Common Stock for
which such option is exercisable at the time of the Optionee's cessation of
Service but also with respect to one or more additional installments in which
the Optionee would have vested under the option had the Optionee continued in
Service.

        


        D.                 Shareholder
Rights.  The holder of an option shall have no shareholder
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.

        


        E.                 Unvested
Shares.  The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common
Stock.  Should the Optionee cease Service while holding such unvested
shares, the Corporation shall have the right to repurchase, at the exercise
price paid per share, all or (at the discretion of the Corporation and with the
consent of the Optionee) any of those unvested shares.  The terms upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.  The Plan Administrator may
not impose a vesting schedule upon any option grant or any shares of Common
Stock subject to the option which is more restrictive than twenty percent (20%)
per year vesting, with the initial vesting to occur not later than one (1) year
after the option grant date. However, this minimum vesting requirement shall not
be applicable with respect to any options granted to an officer or Board
member.

        


        F.                 First Refusal
Rights.  Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the Optionee
(or any successor in interest) of any shares of Common Stock issued under the
Plan.  Such right of first refusal shall be exercisable in accordance
with the terms established by the Plan Administrator and set froth in the
document evidencing such right.

        


        G.                 Limited Transferability by
Options.  During the lifetime of the Optionee, the option shall
be exercisable only by the Optionee and shall not be assignable or transferable
other than by will or by the laws of descent and distribution following the
Optionee's death.

        


        H.                 Withholding.  The
Corporation's obligation to deliver shares of Common Stock upon the exercise of
any options granted under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements.

        


        II.           
INCENTIVE OPTIONS

        


        The terms specified below shall be
applicable to all Incentive Options.  Except as modified by the
provisions of this Section II, all the provisions of the Plan shall be
applicable to Incentive Options.  Options which are specifically
designated as Non-Statutory Options shall not be subject to the
terms of this Section II.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        I.                 
Eligibility.  Incentive
Options may only be granted to Employees.

        


        J.                 
Exercise
Price.  The exercise price per share shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.

        


        K.                 Dollar
Limitation.  The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000).  To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

        


        D.                 10%
Shareholder.  If any Employee to whom an Incentive Option is
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.

        


        III. CORPORATE TRANSACTION

        


        A.                 The
shares subject to each option outstanding under the Plan at the time of a
Corporate Transaction shall automatically vest in full so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to that option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock.  However, the shares subject to
an outstanding option shall not vest on such an accelerated basis if and to the
extent:  (i) such option is assumed by the successor corporation (or
parent thereof) in the Corporate Transaction and the Corporation's repurchase
rights with respect to the unvested option shares are concurrently assigned to
such successor corporation (or parent thereof) or (ii) such option is to be
replaced with a cash incentive program of the successor corporation which
preserves the spread existing on the unvested option shares at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.

        


        B.                 All
outstanding repurchase rights shall also terminate automatically, and the shares
of Common Stock subject to those terminated rights shall immediately vest in
full, in the event of any Corporate Transaction, except to the
extent:  (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.

        


        C.                 Immediately
following the consummation of the Corporate Transaction, all outstanding options
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        D.                 Each
option which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
to the number and class of securities which would have been issuable to the
Optionee in consummation of such Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to (i) the number and class of securities
available for issuance under the Plan following the consummation of such
Corporate Transaction and (ii) the exercise price payable per share under each
outstanding option,
provided the aggregate exercise price payable for such securities shall
remain the same.

        


        E.                 The
Plan Administrator shall have the discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to
provide for the automatic acceleration (in whole or in part) of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights, with the immediate vesting of the shares of Common Stock
subject to those terminated rights) upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or replaced (or
those repurchase rights are to be assigned) in the Corporate
Transaction.

        


        F.                 The
Plan Administrator shall also have full power and authority, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to structure such option so that the shares subject to that option
will automatically vest on an accelerated basis should the Optionee's Service
terminate by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which the option is assumed and the repurchase rights
applicable to those shares do not otherwise terminate.  Any such
option shall remain exercisable for the fully-vested option shares until the
earlier of (i)
the expiration of the option term or (ii) the expiration of the one (1)-year
period measured from the effective date of the Involuntary
Termination.  In addition, the Plan Administrator may provide that one
or more of the outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately terminate
on an accelerated basis, and the shares subject to those terminated rights shall
accordingly vest.

        


        G.                 The
portion of any Incentive Option accelerated in connection with a Corporate
Transaction shall remain exercisable as an Incentive Option only to the extent
the applicable One Hundred Thousand Dollar limitation is not
exceeded.  To the extent such dollar limitation is exceeded, the
accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.

        


        H.                 The
grant of options under the Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

        


        IV.           CANCELLATION
AND REGRANT OF OPTIONS

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        The Plan Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected option holders, the cancellation of any or all outstanding options
under the Plan and to grant in substitution therefor new options covering the
same or different number of shares of Common Stock but with an exercise price
per share based on the Fair Market Value per share of Common Stock on the new
option grant date.

        


        ARTICLE
THREE

        


        STOCK ISSUANCE
PROGRAM

        


        I.            
STOCK ISSUANCE TERMS

        


        Shares of Common Stock maybe issued
under the Stock Issuance Program through direct and immediate issuances without
any intervening option grants. Each such stock issuance shall be evidenced by a
Stock Issuance Agreement which complies with the terms specified
below.

        


        A.                 Purchase
Price.

        


        1.      The
purchase price per share shall be fixed by the Plan Administrator but shall not
be less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the issue date.  However, the purchase price per share
of Common Stock issued to a 10% Shareholder shall not be less than one hundred
and ten percent (110%) of such Fair Market Value.

        


        2.      Subject
to the provisions of Section I of Article Four, shares of Common Stock may be
issued under the Stock Issuance Program for any of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:

        


        (i)  cash
or check made payable to the Corporation, or

        


        (ii) past
services rendered to the Corporation (or any Parent or Subsidiary).

        


        B.                 Vesting
Provisions.

        


        1.      Shares of
Common Stock issued under the Stock Issuance Program may, in the discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may
vest in one or more installments over the Participant's period of Service or
upon attainment of specified performance objectives.  However, the
Plan Administrator may not impose a vesting schedule upon any stock issuance
effected under the Stock Issuance Program which is more restrictive than twenty
percent (20%) per year vesting, with initial vesting to occur not later than one
(1) year after the issuance date. However, this minimum vesting requirement
shall not be applicable with respect to any stock issued to an officer or Board
member.

        


        2.      Any new,
substituted or additional securities or other property (including money paid
other than as a regular cash dividend) which the Participant may have the right
to receive with respect the Participant's unvested shares of Common Stock by
reason of any stock dividend, stock split, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration
shall  be issued subject to (i) the same vesting requirements
applicable to the Participant's unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem
appropriate.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        3.      The
Participant shall have full shareholder rights with respect to any shares of
Common Stock issued to the Participant under the Stock Issuance Program, whether
or not the Participant's interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares.

        


        4.      Should
the Participant cease to remain in Service while holding one or more unvested
shares of Common Stock issued under the Stock Issuance Program or should the
performance objectives not be attained with respect to one or more such unvested
shares of Common Stock, then those shares shall be immediately surrendered to
the Corporation for cancellation, and the Participant shall have no further
shareholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares.

        


        5.      The Plan
Administrator may in its discretion waive the surrender and cancellation of one
or more unvested shares of Common Stock (or other assets attributable thereto)
which would otherwise occur upon the non- completion of the vesting schedule
applicable to such shares. Such waiver shall result in the immediate vesting of
the Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.

        


        C.                 First Refusal
Rights.  Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program.  Such right of first refusal shall
be exercisable in accordance with the terms established by the Plan
Administrator and set forth in the document evidencing such right.

        


        II.        
   CORPORATE TRANSACTION

        


        A.                 Upon
the occurrence of a Corporate Transaction, all outstanding repurchase rights
under the Stock Issuance Program shall terminate automatically, and the shares
of Common Stock subject to those terminated rights shall immediately vest in
full, except to the extent:  (i) those repurchase rights are assigned
to the successor corporation (or parent thereof) in connection with such
Corporate Transaction or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase right
is issued.

        


        B.                 The
Plan Administrator shall have the discretionary authority, exercisable either at
the time the unvested shares are issued or any time while the Corporation's
repurchase rights with respect to those shares remain outstanding, to provide
that those rights shall automatically terminate on an accelerated basis, and the
shares of Common Stock subject to those terminated rights shall immediately
vest, in the event the Participant's Service should subsequently terminate by
reason of an Involuntary Termination within a designated period (not to exceed
eighteen (18) months) following the effective date of any Corporate Transaction
in which those repurchase rights are assigned to the successor corporation (or
parent thereof).

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        III.           SHARE
ESCROW/LEGENDS

        


        Unvested shares may, in the Plan
Administrator's discretion, be held in escrow by the Corporation until the
Participant's interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those
unvested shares.

        


        ARTICLE
FOUR

        


        MISCELLANEOUS

        


        I.          
  FINANCING

        


        The Plan Administrator may permit any
Optionee or Participant to pay the option exercise price or the purchase price
for shares issued to such person under the Plan by delivering a full-recourse,
interest-bearing promissory note payable in one or more installments and secured
by the purchased shares. However, any promissory note delivered by a consultant
must be secured by property in addition to the purchased shares of Common
Stock.  In no event shall the maximum credit available to the Optionee
or Participant exceed the sum of (i) the
aggregate option exercise price or purchase price payable for the purchased
shares plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

        


        II.        
   EFFECTIVE DATA AND TERM OF PLAN

        


        A.                 The
Plan shall become effective when adopted by the Board, but not option granted
under the Plan may be exercised, and no shares shall be issued under the Plan,
until the Plan is approved by the Corporation's shareholders. If such
shareholder approval is not obtained within twelve (12) months after the date of
the Board's adoption of the Plan, then all options previously granted under the
Plan shall terminate and cease to be outstanding, and no further options shall
be granted and no shares shall be issued under the Plan.  Subject to
such limitation, the Plan Administrator may grant options and issue shares under
the Plan at any time after the effective date of the Plan and before the date
fixed herein for termination of the Plan.

        


        B.                 The
Plan shall terminate upon the earliest of (i) the
expiration of the ten (10)-year period measured from the date the Plan is
adopted by the Board, (ii) the date on which all shares available for issuance
under the Plan shall have been issued or (iii) the termination of all
outstanding options in connection with a Corporate Transaction.  All
options and unvested stock issuances outstanding at the time under the Plan
shall continue to have full force and effect in accordance with the provisions
of the documents evidencing such options or issuances.

        


        III.           AMENDMENT
OF THE PLAN

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        A.                 The
Board shall have complete and exclusive power and authority to amend or modify
the Plan in any or all respects. However, no such amendment or modification
shall adversely affect the rights and obligations with respect to options or
unvested stock issuances at the time outstanding under the Plan unless the
Optionee or the Participant consents to such amendment or modification. In
addition, certain amendments may require shareholder approval pursuant to
applicable laws and regulations.

        


        B.                 Options
may be granted under the Option Grant Program and shares may be issued under the
Stock Issuance Program which are in each instance in excess of the number of
shares of Common Stock then available for issuance under the Plan, provided any
excess shares actually issued under those programs shall be held in escrow until
there is obtained shareholder approval of an amendment sufficiently increasing
the number of shares of Common Stock available for issuance under the
Plan.  If such shareholder approval is not obtained within twelve (12)
months after the date first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees and the Participants the exercise or purchase price paid for any
excess share issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and cease
to be outstanding.

        


        C.                 Compliance
Amendments.  Notwithstanding anything in the Plan or in any notice of
grant, option agreement or other applicable agreement to the contrary, the
Committee may amend the Plan or any notice of grant, option agreement or other
applicable agreement, to take effect retroactively or otherwise, as deemed
necessary or advisable for the purpose of conforming the Plan, notice of grant,
option agreement or other applicable agreement to any present or future law
relating to plans of this or similar nature (including, but not limited to,
Section 409A of the Code), and to the administrative regulations and rulings
promulgated thereunder.  By accepting an option under this Plan, a
Optionee agrees to any amendment made pursuant to this Section to any Option
granted under the Plan without further consideration or action.

        


        


        IV.           USE
OF PROCEEDS

        


        Any cash proceeds received by the
Corporation from the sale of shares of Common Stock under the Plan shall be used
for general corporate purposes.

        


        V.          
 WITHHOLDING

        


        The Corporation's obligation to deliver
shares of Common Stock upon the exercise of any options or upon the issuance or
vesting of any shares issued under the Plan shall be subject to the satisfaction
of all applicable Federal, state and local income and employment tax withholding
requirements.

        


        VI.           REGULATORY
APPROVALS

        


        The implementation of the Plan, the
granting of any options under the Plan and the issuance of any shares of Common
Stock (i) upon the exercise of any option or (ii) under the Stock Issuance
Program shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the shares of Common Stock issued pursuant to
it.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        VII.          NO
EMPLOYMENT OR SERVICE RIGHTS

        


        Nothing in the Plan shall confer upon
the Optionee or the Participant any right to continue in Service for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary employing or retaining
such person) or of the Optionee or the Participant, which rights are hereby
expressly reserved by each, to terminate such person's Service at any time for
any reason, with or without cause.

        


        VIII.         FINANCIAL
REPORTS

        


        The Corporation shall deliver a balance
sheet and an income statement at least annually to each individual holding an
outstanding option under the Plan, unless such individual is a key Employee
whose duties in connection with the Corporation (or any Parent or Subsidiary)
assure such individual access to equivalent information.

        


        IX.           409A
COMPLIANCE

        


        A.           
    Notwithstanding anything herein to the contrary, any
discretionary authority available pursuant to this Plan shall only be exercised
in a manner believed in good faith to comply with Section 409A of the Code and
to maintain the exemption from Section 409A for the options and stock issued
hereunder.

        
 

        B.             
  Notwithstanding anything herein to the contrary, nothing herein
shall provide for any feature for the deferral of compensation other than the
deferral of recognition of income until the exercise or disposition of an
option.

        


        C.                 Special
Provisions Related To Section 409A of the Code.

        


        1.      Notwithstanding
anything in the Plan or in any Notice of Grant, Option Agreement or other
applicable agreement to the contrary, to the extent that any amount or benefit
that would constitute non-exempt “deferred compensation” for purposes of
Section 409A of the Code would otherwise be payable or distributable under
the Plan or any notice of grant, option agreement or other applicable agreement
by reason of the occurrence of a Change in Control, or the Optionee’s Disability
or separation from service, such amount or benefit will not be payable or
distributable to the Optionee by reason of such circumstance unless (i) the
circumstances giving rise to such Change in Control, Disability or separation
from service meet any description or definition of “change in control event”,
“disability” or “separation from service”, as the case may be, in
Section 409A of the Code and applicable regulations (without giving effect
to any elective provisions that may be available under such definition), or
(ii) the payment or distribution of such amount or benefit would be exempt
from the application of Section 409A of the Code by reason of the
short-term deferral exemption or otherwise.  This provision does not
prohibit the vesting of any option upon a Change in Control, Disability or
separation from service, however defined.  If this provision prevents
the payment or distribution of any amount or benefit, such payment or
distribution shall be made on the next earliest payment or distribution date or
event specified in the notice of grant, option agreement or other applicable
agreement that is permissible under Section 409A.

        


        2.      If any
one or more options granted under the Plan to a Optionee could qualify for any
separation pay exemption described in Treas. Reg. Section 1.409A-1(b)(9), but
such options in the aggregate exceed the dollar limit permitted for the
separation pay exemptions, the Corporation (acting through the Committee or the
Head of Human Resources) shall determine which options or portions thereof will
be subject to such exemptions.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        3.      Notwithstanding
anything in the Plan or in any notice of grant, option agreement or other
applicable agreement to the contrary, if any amount or benefit that would
constitute non-exempt “deferred compensation” for purposes of Section 409A of
the Code would otherwise be payable or distributable under this Plan or in any
notice of grant, option agreement or other applicable agreement by reason of a
Optionee’s separation from service during a period in which the Optionee is a
Specified Employee (as defined below), then, subject to any permissible
acceleration of payment by the Committee under Treas. Reg. Section
1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of
interest), or (j)(4)(vi) (payment of employment taxes):

        


        (i) if
the payment or distribution is payable in a lump sum, the Optionee’s right to
receive payment or distribution of such non-exempt deferred compensation will be
delayed until the earlier of the Optionee’s death or the first day of the
seventh month following the Optionee’s separation from service; and

        


        (ii) if
the payment or distribution is payable over time, the amount of such non-exempt
deferred compensation that would otherwise be payable during the six-month
period immediately following the Optionee’s separation from service will be
accumulated and the Optionee’s right to receive payment or distribution of such
accumulated amount will be delayed until the earlier of the Optionee’s death or
the first day of the seventh month following the Optionee’s separation from
service, whereupon the accumulated amount will be paid or distributed to the
Optionee and the normal payment or distribution schedule for any remaining
payments or distributions will resume.

        


        For
purposes of this Plan, the term “Specified Employee” has the meaning given such
term in Code Section 409A and the final regulations thereunder, provided,
however, that, as permitted in such final regulations, the Corporation’s
Specified Employees and its application of the six-month delay rule of Code
Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by
the Board or any committee of the Board, which shall be applied consistently
with respect to all nonqualified deferred compensation arrangements of the
Corporation, including this Plan.

        


        


        APPENDIX

        


        The following definitions shall be in
effect under the Plan:

        


        A.                 Board shall mean the
Corporation's Board of Directors.

        


        B.                 Code shall mean the
Internal Revenue Code of 1986, as amended.  Reference to a specific
Section of the Code or regulation thereunder shall include such Section or
regulation, any valid regulation promulgated under such Section, and any
comparable provision of any future law, legislation or regulation amending,
supplementing or superseding such Section or regulation.

        


        C.                 Committee shall mean
a committee of two (2) or more Board members appointed by the Board to exercise
one or more administrative functions under the Plan.

        


        D.            
   Common Stock shall
mean the Corporation's common stock.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        E.                 Corporate Transaction
shall mean either of the following shareholder- approved transactions to which
the Corporation is a party:

        


        (i)  a
merger or consolidation in which securities possessing more than fifth percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction, or

        


        (ii) the
sale, transfer or other disposition of all or substantially all of the
Corporation's assets in complete liquidation or dissolution of the
Corporation.

        


        F.                 Corporation shall
mean Lexar Media, Inc., a California corporation.

        


        G.                 Disability shall mean
the inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment and shall be determined by the Plan Administrator on the basis of
such medical evidence as the Plan Administrator deems warranted under the
circumstances. Notwithstanding the foregoing, for any Options that constitute a
nonqualified deferred compensation plan within the meaning of Section 409A(d) of
the Code, “Disability” has the meaning given such term in Section 409A of the
Code.

        


        H.                 Employee shall mean
an individual who is in the employ of the

        Corporation
(or any Parent or Subsidiary), subject to the control and direction

        of the
employer entity as to both the work to be performed and the manner
and

        method of
performance.

        


        I.                 
Exercise Date
shall mean the date on which the Corporation shall have

        received
written notice of the option exercise.

        


        J.                
 Fair Market
Value per share of Common Stock on any relevant date shall

        be
determined in accordance with the following provisions:

        


        (i) If
the Common Stock is at the time traded on the Nasdaq National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question, as such price is reported by the National Association
of Securities Dealers on the Nasdaq National Market or any successor
system.  If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.

        


        (ii)  If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange.  If there is
no closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (iii) If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the Nasdaq National Market, then the Fair Market Value shall be determined by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.

        


        K.                 Incentive Option
shall mean an option which satisfies the requirements of Code Section
422.

        


        L.                 Involuntary
Termination shall mean the termination of the Service of

        any
individual which occurs by reason of:

        


        (i)  such
individual's involuntary dismissal or discharge by the Corporation for reasons
other than Misconduct, or

        


        (ii)  such
individual's voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including
base salary, fringe benefits and target bonuses under any corporate-performance
based bonus or incentive programs) by more than fifteen percent (15%) of (C) a
relocation of such individual's place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is effected
without the individual's consent.

        


        M.                 Misconduct shall mean
the commission of any act of fraud, embezzlement or dishonesty by the Optionee
or Participant, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner.  The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee, Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary).

        


        N.                 1934 Act shall mean
the Securities Exchange Act of 1934, as amended.

        


        O.                 Non-Statutory Option
shall mean an option not intended to satisfy the requirements of Code Section
422.

        


        P.                 Option Grant Program
shall mean the option grant program in effect under the Plan.

        


        Q.                 Optionee shall mean
any person to whom an option is granted under the Plan.

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        R.                 Parent shall mean any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

        


        S.                 Participant shall
mean any person who is issued shares of Common Stock under the Stock Issuance
Program.

        


        T.                 Plan shall mean the
Corporation's 1996 Stock Option/Stock Issuance Plan, as set forth in this
document.

        


        U.                 Plan Administrator
shall mean either the Board or the Committee acting in its capacity as
administrator of the Plan.

        


        V.                 Service shall mean
the provision of services to the Corporation (or any Parent or Subsidiary) by a
person in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise
specifically provided in the documents evidencing the option grant.

        


        W.                 Stock Exchange shall
mean either the American Stock Exchange or the New York Stock
Exchange.

        


        X.                 Stock Issuance
Agreement shall mean the agreement entered into by the Corporation and
the Participant at the time of issuance of shares of Common Stock under the
Stock Issuance Program.

        


        Y.                 Stock Issuance
Program shall mean the stock issuance program in effect under the
Plan.

        


        Z.                 Subsidiary shall mean
any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

        


        AA.              10% Shareholder shall
mean the owner of stock (as determined under Code Section 424(d)) possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation (or any Parent or Subsidiary).