Document:

EXHIBIT 10.36

 

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.

 

SECOND EXTENSION OF LEXAR / UMC FOUNDRY CAPACITY
AGREEMENT  

 

This Extension of Lexar /
UMC Foundry Capacity Agreement (“Extension”) is entered into as of January 1,
2006 (“the Effective Date”) by and between Lexar Media, Inc. (“Lexar” or “Buyer”)
incorporated in Delaware, with offices at 47421 Bayside Parkway, Fremont,
California 94538; and UMC Group (USA) (“UMC” or “Seller”), with offices at 488
DeGuigne Drive, Sunnyvale, CA 94085.

 

WHEREAS the parties
previously entered a Foundry Capacity Agreement with an effective date of August 12,
2003 (the “Agreement”) which was to remain in effect until December 31,
2004, and previously extended that agreement to December 31, 2005 by
entering the SECOND EXTENSION OF LEXAR / UMC FOUNDRY CAPACITY AGREEMENT, with
an effective date of December 28, 2004;

 

WHEREAS the Agreement
stated by its terms that the parties could by mutual written agreement extend
the term of the Agreement for successive one year periods; and

 

WHEREAS the parties to
the Agreement now desire to extend the Agreement for the second such one year
period;

 

THEREFORE, the parties
agree:

 

1.                                       Pursuant to section 5.1 of the Agreement,
the Agreement is extended for a one year period to terminate, unless further
extended, on December 31, 2006.

 

2.                                       The materials attached hereto as Exhibits A
and B shall be appended to, and considered to be a part of, Exhibits A and B,
respectively, of the Agreement.

 

3.                                       This Extension
shall in all respects be interpreted, enforced and governed by and under the
laws of the State of California, without regard to its conflict of laws
rules.  The language of this Extension
shall be construed as a whole according to its fair meaning, and not strictly
for or against either of the parties. 
Except for requests for injunctive or other equitable relief, which may
be heard in any court of competent jurisdiction, any disputes hereunder shall
be adjudicated only by courts located in San Jose, California, or the Northern
District of California, as appropriate, to whose exclusive jurisdiction the
parties hereby consent.

 

4.                                       Effective
concurrently with the Effective Date of this Extension, Section 11 of the
Agreement is amended to read as follows:

 

11.       MISCELLANEOUS.  This Agreement may not be assigned by either
party without the express written consent of the other party, which may be
given or withheld at the sole discretion of the other party, except that either
party may assign or transfer this Agreement, including its rights and
obligations under this Agreement, without consent from the other party in the
course of a merger, reorganization or acquisition of such party or all or
substantially all of such party’s assets, provided however that Lexar’s rights
and obligations may not be assigned to, or acquired by any entity that (a) is,
or is owned or controlled directly or indirectly by, any company engaged in the
business of providing semiconductor wafer foundry services; (b) has a
history of multiple, material defaults in its contractual obligations to Seller
or Seller’s corporate parent (unless arrangements can be made to reasonably
assure future performance);  (c) has
a demonstrable reputation in the industry for failure to observe obligations of
confidentiality related to proprietary information; (d) is adverse to
Seller or Seller’s corporate parent in litigation related to intellectual
property rights; or (e)  is located in Country Groups D:1 or E:2 as
specified in Part 740.6 and Supplement 1 to Part 740 of the Export
Administration Regulations.  This
Agreement shall be binding upon and for the benefits of the undersigned parties
and any permitted successors or assigns. 
Failure to enforce any provision of this Agreement shall not constitute
a waiver of any term hereof.  This Agreement
may be executed in counterparts and delivered by facsimile.

 

ACCORDINGLY,
each Party to this Agreement represents and warrants that the representatives
signing on their respective behalf is authorized to enter into this Agreement
and to bind that Party to its terms.

 

	
  LEXAR
  MEDIA, Inc.

  
	
   

  
	
   

  
	
  By: 

  	
  /s/
  Eric Stang

  	
   

  
	
   

  
	
  Name: Eric Stang

  
	
   

  
	
   Title: Chairman, CEO and President

  
	
   

  
	
  UMC GROUP (USA)

  
	
   

  
	
   

  
	
  By:

  	
   /s/
  Tony Yu

  	
   

  
	
   

  
	
   Name:
  Tony Yu

  
	
   

  	
   

  
	
   Title: VP

  
						

 

 

Exhibit A

 

Lexar’s
Wafer Forecast for Y2006

 

(Monthly 8” equivalent
wafer-outs)

 

The following Forecast Table for Y2006 to be added under Exhibit A:

 

Y2006

 

Wafer
Forecast:

	
   

  	
   

  	
  Jan

  	
   

  	
  Feb

  	
   

  	
  Mar

  	
   

  	
  Apr

  	
   

  	
  May

  	
   

  	
  Jun

  	
   

  	
  Jul

  	
   

  	
  Aug

  	
   

  	
  Sep

  	
   

  	
  Oct

  	
   

  	
  Nov

  	
   

  	
  Dec

  	
   

  
	
  0.45um

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  0.25um

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  0.18um

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  

 

Exhibit B

 

Y2006 Production Wafer Pricing

8-inch wafer

 

The following wafer pricing for Y2006 to be added under Exhibit B:

 

	
  Process Technology:

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0.45um *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  * 

  	
   

  	
  $

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0.25um *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0.18um *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  	
  $

  	
  *

  	
   

  

 

Note: (+) Pricing does not include *.

 

* Confidential treatment requested.EXHIBIT 10.37

 

LEXAR MEDIA, INC.

 

2000 EQUITY INCENTIVE PLAN

 

As Adopted January 21, 2000

As Amended April 20, 2004

As Amended February 10, 2006

 

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

 

2.                                      SHARES SUBJECT TO THE PLAN.

 

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

 

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

 

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

 

4.                                      ADMINISTRATION.

 

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

 

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

 

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

 

(c)                                  select persons to receive Awards;

 

(d)                                 determine the form and terms of Awards;

 

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

 

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

 

(g)                                 grant waivers of Plan or Award conditions;

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.                                      STOCK BONUSES.

 

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

 

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

 

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

 

3

 

8.                                      PAYMENT FOR SHARE PURCHASES.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)                                    by any combination of the foregoing.

 

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

 

9.                                      AUTOMATIC GRANTS TO OUTSIDE
DIRECTORS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

10.                               WITHHOLDING TAXES.

 

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

 

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

 

11.                               TRANSFERABILITY.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

18.                         CORPORATE TRANSACTIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

“Committee” means the Compensation
Committee of the Board.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Family Member”
includes any of the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                 Return on equity;

 

(h)                                 Operating cash flow return on income;

 

(i)                                     Adjusted operating cash flow return on income;

 

(j)                                     Economic value added; and

 

(k)                                  Individual confidential business objectives.

 

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

 

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

 

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

 

“SEC” means the Securities and
Exchange Commission.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

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