Patent License Agreement, Dated March 23, 2002

PATENT LICENSE AGREEMENT


BETWEEN


LEXAR MEDIA AND SAMSUNG ELECTRONICS CO., LTD.


This Patent License Agreement ("Agreement") is made and entered into as of March 23, 2002 (the "Effective Date") between Lexar Media, Inc., a Delaware corporation (Lexar Media, Inc, its subsidiaries and affiliates are hereinafter referred to as "Lexar") and Samsung Electronics Co., Ltd., a corporation of South Korea ("Samsung").


RECITALS


A. Lexar Media, Inc. ("Lexar") is the owner and user of certain proprietary technology related to flash memory controllers, flash memory and system architecture.


B. Samsung designs, manufactures, and sells certain flash memory technology.


C. In 2001, Lexar and Samsung executed a Purchase Agreement ("Purchase Agreement") and Lexar and Samsung Semiconductor, Inc. executed a Consignment Contract ("Consignment Contract") pursuant to which Lexar will purchase from Samsung Semiconductor certain flash memory and Samsung will purchase from Lexar certain flash controller products. Given these relationships, the parties agree that their interests are aligned with one another.


D. Samsung desires to receive from Lexar a license to Lexar's proprietary technology to manufacture, market and sell certain flash memory products and components thereof on the terms and conditions of this Agreement.


NOW, THEREFORE, Lexar and Samsung hereby agree as follows:


1. DEFINITIONS


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


1.2 "Flash Controller" means a device within Flash Card Products (whether implemented in firmware, hardware and/or software) that controls the operation of a memory within such Flash Card Products.


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


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1.3 "Flash Card Products" means a Flash Memory System on a card having a connector that attaches it to a host system.


1.4 "Flash Memory System" means an integrated circuit memory system that contains: (a) one or more interconnected flash memory devices or flash memory integrated circuits, and (b) in-system control, I/O and other support circuit(s) that are: (i) interconnected with the flash memory devices or flash memory integrated circuits and (ii) necessary to the operation of the memory system.


1.5 "Global Market Share" means the percentage of Flash Card Products units sold worldwide by form factors in accordance with data as published by International Data Corporation ("IDC").


1.6 "Global Market Share Ceiling" means (i) * percent (*%) of the Global Market Share; or (ii) * percent (*%) of the Global Market Share, if Lexar fails to satisfy the minimum purchase requirements under Section 4.1 of the Purchase Agreement during the first six (6) quarters following the effective date of the Purchase Agreement. After the first twelve (12) quarters following the effective date of the Purchase Agreement, the Global Market Share Ceiling is * percent (*%) of the Global Market Share.


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


1.8 "High-Speed Memory Stick" means a memory data storage device that meets the High-Speed Memory Stick Specifications.


1.9 "High-Speed Memory Stick Specifications" means the specifications for a certain flash memory data storage device developed by Sony (as such specifications are from time to time modified or replaced by Sony in its sole discretion).


1.10 "Improvements Technology" means any improvements or enhancements to the Lexar Technology that are conceived or developed by Samsung and that would, absent the licenses granted hereunder, infringe or constitute a misappropriation of the Lexar Intellectual Property Rights.


1.11 "Intellectual Property Rights" means, with respect to a party, all rights of such party in and to all patents, patent applications, and patents issuing from such patent applications in any country or jurisdiction in the world.


1.12 "Lexar Intellectual Property Rights" means the Intellectual Property Rights owned by or licensed to Lexar (but, in either case, only Intellectual Property Rights owned by or licensed to Lexar wherein Lexar has the right to grant sublicenses without payment of compensation to any third party other than Lexar employees), anytime within the fifth anniversary of the Effective Date, in and to the Lexar Technology.


* Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


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1.13 "Lexar Technology" means the technology described in Lexar's patents and patent applications.


1.14 "Licensed Lexar Products" means, individually or collectively, Flash Controllers, Flash Card Products, Memory Sticks, High-Speed Memory Sticks and Smart Media.


1.15 "Memory Stick" means a flash memory data storage device that meets the Memory Stick Specifications. Memory Stick includes without limitation Sony's miniature Memory Stick known as the "Duo".


1.16 "Memory Stick Specifications" means the specifications for a certain flash memory data storage device developed by Sony (as such specifications are from time to time modified or replaced by Sony in its sole discretion).


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


1.18 "Samsung Intellectual Property Rights" means the Intellectual Property Rights owned by or licensed to Samsung or those rights in and to the Improvements Technology.


1.19 "Secure Digital Card" means a type of Flash Card Products having a flash memory storage device that meets the Secure Digital Specifications.


1.20 "Secure Digital Specifications" means the specifications for a certain flash memory data storage device developed by The Secure Digital Association (as such specifications are from time to time modified or replaced by The Secure Digital Association or, in the event of a merger of The Secure Digital Association with another entity, by the subsequent entity, in its sole discretion).


1.21 "Secure Multi-Media Card" means a type of Flash Card Products having a flash memory storage device that meets the Secure Multi-Media specifications.


1.22 "Smart Media" means a flash memory storage device that meets the Smart


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Media Specifications.


1.23 "Smart Media Specifications" means the specifications for a certain flash memory storage device developed by the Smart Media Association (as such specifications are from time to time modified or replaced by the Smart Media Association in its sole discretion).


1.24 "Flash Card Controller" means a device (whether implemented in firmware, hardware and/or software) that controls the operation of Flash Card Products.


1.25 "Flash Products" means flash storage or controller product including but not limited to flash memory, Flash Controller, Flash Card Product, Flash Memory System, and Flash Card Controller.


1.26 "* Period" means the period of time from the Effective Date of this Agreement until *, unless earlier terminated in accordance with Section 7.3(a) below.


1.27 "Secure Media Card" means a type of Flash Card Products having a flash memory storage device that meets either the Secure Multi-Media specification or the Secure Digital Specification as defined herein. For purposes of this Agreement, the Secure Media Cards shall mean Secure Digital Cards and Secure Multi-Media Cards, or any variation or combination thereof.


1.28 "CompactFlash Cards" means a flash memory storage device that meets the CompactFlash Association Specifications.


1.29 "CompactFlash Association Specifications" means the specifications for a certain flash memory storage device developed by the CompactFlash Association (as such specifications are from time to time modified or replaced by the CompactFlash Association in its sole discretion).


2. GRANT OF LICENSE RIGHTS


2.1 Lexar License Grants.


(a) Until the last to expire of the Lexar Intellectual Property Rights, and subject to Samsung's compliance with the terms and conditions of this Agreement, Lexar hereby grants to Samsung a * license under all Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell Smart Media.


(b) Until the last to expire of the Lexar Intellectual Property Rights, and subject to Samsung's compliance with the terms and conditions of this Agreement, Lexar hereby grants to Samsung a * license under all Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell Memory Sticks. The license granted under this Section 2.1(b) does not include, and specifically excludes, the right to *.


* Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


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(c) Subject to Samsung's compliance with the terms and conditions of this Agreement, including but not limited to Sections 2.2, 2.4(d) and 2.5(a) below, Lexar hereby grants to Samsung a * license under all Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell High-Speed Memory Sticks. The * on this license expressly excludes any * including, but not limited to, *. Samsung shall have the right to terminate the grant of the license in this Section 2.1(c) at anytime during the term of this Agreement with a thirty-day (30) prior written notice. The license granted in this Section 2.1(c) shall * at the end of the * Period.


(d) Subject to Samsung's compliance with the terms and conditions of this Agreement, during the initial five (5) year term of the Purchase Agreement (the "Initial Purchase Agreement Term"), Lexar covenants not to sue: (i) Samsung or its Affiliates for the manufacture (including Having Manufactured), offer for sale, importation or sale of *; or (ii) any customer of Samsung or its Affiliates for the offer for sale, importation or sale of *.


(e) If Samsung elects to extend the Purchase Agreement after the Initial Purchase Agreement Term for a subsequent five (5) year term, on the same terms as originally set forth therein, then Lexar will grant to Samsung a * license under all Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell *. In the event that Samsung makes such an election, then the definition of "Lexar Intellectual Property Rights" shall be expanded to include the Intellectual Property Rights owned by or licensed to Lexar (but, in either case, only Intellectual Property Rights owned by or licensed to Lexar wherein Lexar has the right to grant sublicenses without payment of compensation to any third party other than Lexar employees), anytime within the tenth anniversary of the Effective Date, in and to the Lexar Technology.


(f) Subject to Samsung's compliance with the terms and conditions of this Agreement, including but not limited to Sections 2.2, 2.4(d) and 2.5(a) below, Lexar hereby grants to Samsung a * license under the Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell Secure Media Cards. The license granted in this Section 2.1(f) shall * at the end of the * Period.


(g) Subject to Samsung's compliance with the terms and conditions of this Agreement, including but not limited to Sections 2.2, 2.4(d) and 2.5(a) below, Lexar hereby grants to Samsung * license under the Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell CompactFlash Cards *. The * of this license specifically excludes * and also shall specifically exclude the *. For the avoidance of doubt, Lexar shall * and any licenses granted prior to the date of this Agreement *. The license granted in this Section 2.1(g) shall terminate at the end of the * Period.


(h) If Lexar fails to purchase * dollars ($*) in Samsung Products (as defined in the Purchase Agreement) during the first six quarters of the Purchase Agreement, or if Lexar fails to purchase * million ($*) in Samsung Products during the first twelve quarters of the Purchase Agreement, then with the exception of the * licenses set forth in Sections 2.1(b), 2.1(c), 2.1(f) and 2.1(g), which shall continue without modification, Lexar will grant to Samsung a *


* Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


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license through the term of this Agreement under all Lexar Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell * as of the first day of the quarter in which Lexar fails to make such purchases.


(i) If Samsung licenses any or all of the Samsung Intellectual Property Rights to any company, excluding Lexar and its Affiliates, that has more than *, or a comparable entity, the licenses granted under Sections 2.1(c), 2.1(f) and 2.1(g) shall immediately *.


2.2 Sublicense. Samsung shall be permitted to sublicense the rights granted in Sections 2.1(a) and (e) to any Samsung Affiliates; provided that Samsung shall promptly notify Lexar in writing of sublicenses granted to such Affiliates and Samsung will be responsible for each such Affiliate's compliance with the terms and conditions of this Agreement. Each such sublicense must expressly and automatically terminate if the entity no longer is an Affiliate of Samsung. The * licenses granted in Sections 2.1(c), 2.1(f) and 2.1(g) above do not include, and specifically exclude, the right to *.


2.3 Samsung Cross License and Covenant Not to Sue. Samsung hereby grants to Lexar a * license under all Samsung Intellectual Property Rights to manufacture, Have Manufactured, use, offer for sale, import and sell Licensed Lexar Products. Samsung covenants not to sue: (i) Lexar and its Affiliates for the manufacture (including Having Manufactured), offer for sale, importation or sale of Flash Card Products; or (ii) any customer of Lexar or its Affiliates for the offer for sale, importation or sale of Flash Card Products made or have made by Lexar. The rights and covenants granted hereunder shall not be assignable or transferable in any way, and Section 12.3 of this Agreement shall not be applicable hereto.


2.4 Restrictions.


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