MASTER SERVICES AGREEMENT AND INTELLECTUAL PROPERTY ASSIGNMENT

1.

Services.

(a) COMPANY shall perform as a “work for hire” the services for MICROSOFT that are described on the Schedules as may be attached hereto from time to time by mutual written agreement of the parties and such services shall include any materials, inventions, ideas, designs, concepts, techniques, discoveries, or improvements created by COMPANY by use of or exposure to Microsoft Confidential Information (the “WORK”) in accordance with the terms and conditions of this Agreement, and on the price, delivery dates and specifications described in the applicable Schedule for the WORK. The Schedules shall be in the form attached hereto and shall be signed by both parties, numbered with an individual Contract Number, and attached to this Agreement. COMPANY is not obligated to perform any WORK hereunder and MICROSOFT has not contracted for any WORK unless and until a Schedule is executed by both parties and attached hereto.

(b) Subcontracting. COMPANY shall not subcontract any part or all of the WORK to any third party (hereafter, “Subcontractor”) without MICROSOFT’s prior express written consent. If MICROSOFT consents to the use of a Subcontractor, COMPANY shall: (a) guarantee Subcontractor’s fulfillment of the applicable COMPANY obligations hereunder; (b) make all payments to Subcontractor for WORK performed; and (c) indemnify MICROSOFT for all damages and costs of any kind incurred by MICROSOFT or any third party that are caused by Subcontractor and arise out of Subcontractor’s performance of the WORK. MICROSOFT may in its sole discretion require that a Subcontractor execute a separate written agreement that includes the same or similar provisions as are contained in this Agreement.

2.

Delivery Schedule. COMPANY shall complete and deliver the WORK to MICROSOFT according to the delivery schedule and in conformance with the specifications described in the applicable Schedule for such WORK. MICROSOFT shall evaluate the WORK and shall submit a written or verbal notice of acceptance or rejection to COMPANY within * * * after MICROSOFT’s receipt of the WORK, or such other time as reasonable under the circumstances. Conformity to specifications and COMPANY’s warranties herein shall solely determine MICROSOFT’s right to accept or reject the WORK, and to the extent that the applicable specifications are not specific or definitive, then acceptance or rejection also may be based upon the fitness of the WORK for MICROSOFT’s intended purpose. If rejected, COMPANY shall promptly correct the WORK. If COMPANY fails to correct the WORK within * * * after notice of rejection or other reasonable period agreed to by the parties, MICROSOFT may terminate the applicable Schedule to this Agreement, or the applicable portion thereof, and receive a full refund of amounts paid under such Schedule for the rejected WORK. If the WORK is rejected as provided above, MICROSOFT may, at its option and upon written notice to COMPANY, terminate the applicable Schedule or the applicable portion thereof, for a full refund of amounts paid under such Schedule for such rejected WORK.

3.

Payment

(a) Payment Amount. MICROSOFT shall pay COMPANY for the WORK as described on the applicable Schedule for such WORK (“Service Fees”). Except as indicated by COMPANY, the Service Fees are inclusive of all taxes that COMPANY may be assessed in the performance of its obligations pursuant to this Agreement and COMPANY shall pay same and shall not pass same on to MICROSOFT. Under no circumstances may COMPANY include on its invoices charges arising out of or related to researching, reporting on or correcting tax, accounting or reconciling errors or shortfalls of which it has been notified.

(b) Payment Terms. Upon receipt of a correct and undisputed invoice from COMPANY, MICROSOFT shall pay such invoice * * * Notwithstanding the foregoing, all payments due hereunder are conditioned upon MICROSOFT’s written acceptance of the WORK. COMPANY shall bear sole responsibility for all expenses incurred in connection with the performance of the WORK, unless otherwise agreed to in advance and in writing by MICROSOFT.

(c) Microsoft Invoice. COMPANY shall invoice MICROSOFT for all amounts due under this Agreement via the MICROSOFT Invoice online tool, in accordance with the then-current requirements set forth at http://invoice.MICROSOFT.com. Without limitation, COMPANY’s invoices shall set forth all amounts due from MICROSOFT to COMPANY, and shall contain sufficient detail to allow MICROSOFT to determine the accuracy of the amount(s) billed. All invoices shall be expressed and payable in U.S. dollars.

(d) Payment Method. Payments by MICROSOFT shall be made according to MICROSOFT’s then-current payment policies, which may include payment via ACH electronic payment to COMPANY’s financial institution pursuant to instructions supplied to MICROSOFT by COMPANY in MICROSOFT’s ACH Electronic Payment form.

(e) Disputed Amounts. MICROSOFT may dispute any payable amount by notice to COMPANY orally or in writing within * * * of MICROSOFT’s receipt of the invoice, which claim of dispute may concern not only the accuracy of the charge itself, but also any claim of deficient services or performance, or any other claim of breach of this Agreement that relates to the specific charges in the invoice. Any partial payment of an invoice shall be deemed notice by MICROSOFT of the disputed amount. All disputed amounts that MICROSOFT subsequently agrees in writing to pay, or that are required to be paid pursuant to a proper court order or award from any mutually submitted arbitration, shall be paid on the payment terms set forth in subsection (2.b) above. Payment of an invoice without asserting a dispute is not a waiver of any claim or right. Failure by MICROSOFT to dispute any invoiced amount within the periods set forth above shall not be deemed a waiver of any claims that were unknown to MICROSOFT at the time.

4.

Non-Disclosure. COMPANY agrees that at all times during the term of this Agreement, and for five (5) years thereafter, COMPANY will hold in strictest confidence, and will not use or disclose to any third party, any confidential information of MICROSOFT. The term “MICROSOFT Confidential Information” shall mean all non-public information that MICROSOFT designates as being confidential, or which, under the circumstances of disclosure ought to be treated as confidential. “MICROSOFT Confidential Information” includes, without limitation, the terms and conditions of this Agreement, information relating to released or unreleased MICROSOFT software or hardware products, marketing or promotion of any MICROSOFT product, business policies or practices of MICROSOFT, customers or suppliers of MICROSOFT, or information received from others that MICROSOFT is obligated to treat as confidential. If COMPANY has any questions as to what comprises such confidential information, COMPANY agrees to consult with MICROSOFT. “MICROSOFT Confidential Information” shall not include information that was known to

COMPANY prior to MICROSOFT’s disclosure to COMPANY, or information that becomes publicly available through no fault of COMPANY.

5.

Ownership of WORK; Assignment of Rights to MICROSOFT.

(a) The WORK has been specially ordered and commissioned by MICROSOFT and may be incorporated in existing MICROSOFT works as a compilation or collective work. COMPANY agrees that all copyrights in the WORK shall be owned by MICROSOFT and the WORK shall be a “work made for hire” for copyright purposes.

(b) COMPANY hereby assigns to MICROSOFT, its successors and assigns, all rights, title and interest in and to the WORK including, without limitation, the following:

(c) At MICROSOFT’s expense, COMPANY shall execute and deliver such instruments and take such other action as may be requested by MICROSOFT to perfect or protect MICROSOFT’s rights in the WORK and to carry out the assignments contemplated in subparagraph (b) of this Section. In this regard, COMPANY agrees to cooperate with MICROSOFT in the filing and prosecution of any copyright or patent applications that MICROSOFT may elect to file on the WORK or inventions and designs relating to the WORK. MICROSOFT acknowledges that COMPANY has taken no action to assist in the registration of the copyrights or the WORK and will do so only as and when requested by MICROSOFT.

(d) To the maximum extent permitted by law, COMPANY waives all moral rights in the WORK.

(e) COMPANY has developed the WORK based on its Background Technology (defined as any knowledge, patents or copyrights developed prior the date of signing this Agreement). The Transmeta Code Morphing Software shall be considered COMPANY Background Technology. The parties agree that the Background Technology is not “work for hire” as that term is defined under U.S. copyright law, and that as a result COMPANY shall retain all rights, including copyrights, patents, trade secrets and any other proprietary rights to the Background Material. COMPANY hereby grants to MICROSOFT a worldwide, irrevocable, non-exclusive, fully paid up, license to use and distribute and otherwise exploit any Background Technology which is included in the WORK. By means of example and not by limitation, if the WORK could not, in a commercially reasonable way, be utilized by MICROSOFT without specific rights to the Background Technology, COMPANY would provide MICROSOFT with the rights described above. Continuing with another example, if

the COMPANY provides to MICROSOFT the WORK and includes with the WORK the Background Technology, the act of providing these components together would not result in a license from COMPANY to MICROSOFT in the Background Technology.

(a) COMPANY shall indemnify, defend, and hold harmless MICROSOFT and its successors, officers, directors, employees, agents, contractors, and assigns (collectively, “Indemnified Party”) from all causes of action, claims, demands, costs, expenses, losses, suits, proceedings, damages, and liabilities of any kind (including without limitation reasonable attorneys’ fees incurred) that are threatened, asserted or filed against any Indemnified Party (collectively, “Claims”) to the extent such Claims arise out of or relate to the WORK or this Agreement or any Schedule hereunder (except to the comparative extent that such Claims result from the negligent or willful acts of any Indemnified Party), and include without limitation the following: (i) bodily injury or death to any person (including without limitation bodily injury or death to COMPANY, or COMPANY’s employee or agent); (ii) damage, loss or disappearance of any property; (iii) any allegation that, if true, would constitute a breach of COMPANY’s representations and warranties set forth herein or that arise by operation of law; and/or (iv) any act or omission of COMPANY or COMPANY’s employees or agents.

(b) Additional Remedy. If any WORK or portion thereof is held to constitute an infringement of a third party proprietary right and use of it as contemplated by this Agreement and any Schedule hereunder is enjoined or threatened to be enjoined, COMPANY shall notify MICROSOFT and immediately, at COMPANY’s expense: (i) procure for MICROSOFT the right to continue the use, sale, and/or marketing of the WORK (or portion thereof), or (ii) replace or modify the WORK (or portion thereof) so that it is non-infringing and meets the requirements of the Schedule A and this Agreement to MICROSOFT’s satisfaction. If (i) or (ii) are not available or are otherwise not fulfilled, then in addition to any damages or expenses reimbursed under this Section 7 or otherwise available to MICROSOFT, COMPANY shall refund to MICROSOFT all amounts paid by MICROSOFT under this Agreement.

(c) Claims. If MICROSOFT seeks indemnification for a Claim, MICROSOFT shall provide COMPANY with: (a) reasonably prompt written notice of the Claim and permit COMPANY, through mutually acceptable legal counsel, to answer and defend the Claim, and (b) at COMPANY’s expense, information and reasonable assistance to help defend the Claim. COMPANY may, upon prior written notice to MICROSOFT, undertake to conduct all proceedings or negotiations for a Claim and to assume its defense, and COMPANY shall also undertake all other required steps to settle or defend the Claim, including without limitation the employment of legal counsel satisfactory to MICROSOFT and payment of all expenses. MICROSOFT shall have the right to employ separate legal counsel and participate in the defense of any Claim. COMPANY shall reimburse MICROSOFT upon demand for all payments made or loss suffered by it based on the judgment of any court of competent jurisdiction or pursuant to a bona fide compromise or settlement of the Claim. COMPANY may not settle any Claim on MICROSOFT’s behalf, or publicize the settlement of any Claim, without first obtaining MICROSOFT’s express written permission.

(d) Bodily Injury or Death Claims. Except to the extent prohibited by law and solely with respect to bodily injury or death claims by or on behalf of individuals who fall within the scope of the foregoing indemnity, COMPANY expressly waives immunity under industrial insurance laws, including but not limited to Title 51 of the Revised Code of the State of Washington, if applicable.

(e) Indemnification for Other Damages. COMPANY shall fully compensate, reimburse at estimated retail price, and indemnify MICROSOFT for loss or damage caused by COMPANY (or by any COMPANY employee or agent) through unlawfully, improperly, or without prior authorization

from MICROSOFT removing, retaining, possessing, misappropriating, or failing to return, any Confidential Information, and/or MICROSOFT property.

8.

Termination.

(a) This Agreement shall commence as of the Effective Date and shall terminate upon * * * prior written notice by either party, provided COMPANY must complete all WORK described in any Schedule executed and attached hereto unless otherwise agreed by MICROSOFT.

(b) MICROSOFT shall have the right to cancel any Schedule with or without cause. In the event MICROSOFT cancels the Schedule, MICROSOFT will provide COMPANY written notice of such cancellation. Upon receipt of such notice, COMPANY will discontinue all work thereunder. Except in cases of cancellation for cause as specified elsewhere in this Agreement, MICROSOFT will pay for all work performed by COMPANY up until the date of receipt of the cancellation notice. Further for such termination of a Schedule without cause the parties agree as follows:

(c) Following completion of or cancellation of each Schedule, or in the event of termination of a Schedule or this Agreement, COMPANY agrees to deliver to MICROSOFT all drawings, blueprints, notes, memoranda, specifications, designs, devices, documents and any other material containing or disclosing any confidential or proprietary information of MICROSOFT. COMPANY will not retain any such materials, or copies thereof, without MICROSOFT’s written approval.

(d) In the event of cancellation of a Schedule or termination of this Agreement and upon request by MICROSOFT, COMPANY agrees to turn over to MICROSOFT all work in progress applicable to such Schedule within * * *.

(e) In the event of termination or expiration of this Agreement for any reason, Sections 4, 5, 6, 7, 8(c), (d) and (e), 9, and 11 shall survive termination.

9.

Notices.

All notices, authorizations, and requests sent to either party in connection with this Agreement shall be deemed given on the day they are either (a) deposited in the U.S. mail, postage prepaid, certified or registered, return receipt requested or (b) sent by air express courier with charges prepaid, and addressed as follows (or to such other address as the party to receive the notice or request so designates by written notice to the other party):

Notices to COMPANY:

General Counsel

Transmeta Corporation

3990 Freedom Circle

Santa Clara, CA 95054

USA

MICROSOFT CORPORATION

One Microsoft Way

Redmond, WA 98052-6399

Law & Corporate Affairs

(425) 936-7329

or to such other address as the party to receive the notice or request so designates by written notice to the other.

10.

Insurance.

(a) COMPANY warrants that it shall maintain sufficient insurance coverage to enable it to meet its obligations created by this Agreement and by law. Without limiting the foregoing, COMPANY warrants that such insurance shall include the following* * *.

(b) In addition, if:

then COMPANY shall maintain * * *. Such insurance shall include coverage for * * *. * * *.

(c)

Upon request, COMPANY shall deliver to MICROSOFT proof of such coverage. In the event that COMPANY’s proof evidences coverage which MICROSOFT reasonably determines to be less than that required to meet COMPANY’s obligations created by this Agreement, then COMPANY agrees that it shall promptly acquire such coverage and notify MICROSOFT in writing thereof.

11.

Miscellaneous.

(a) Independent Contractor Status; Taxes.

(i) Independent Contractor Status This Agreement is not intended to create any relationship other than that of COMPANY acting as an independent contractor performing WORK for MICROSOFT. Neither party is a partner of the other for any purpose whatsoever. Nothing herein shall be construed as: (1) creating an employer-employee relationship, (2) creating an exclusive relationship between the parties, (3) preventing either party from entering into the same or similar relationship with others, or (4) creating a minimum commitment for business from MICROSOFT to COMPANY. Under no circumstance shall COMPANY or COMPANY’s employees be construed as employees of MICROSOFT, or entitled to participate in the profit sharing, pension or other plans established for the benefit of MICROSOFT employees. COMPANY shall provide MICROSOFT with satisfactory proof of independent contractor status upon request.

(ii) Employment-Related Taxes, Insurance and Benefits. COMPANY shall be responsible for all of COMPANY’s federal and state taxes, withholding, social security, insurance and other benefits on behalf of COMPANY and COMPANY’s employees. Notwithstanding the foregoing, COMPANY warrants that if the Internal Revenue Service or any state or local agency determines that COMPANY is a common law employee of MICROSOFT and therefore subject to withholding and payroll taxes (e.g. federal income tax, FICA, FUTA, etc.), COMPANY shall fully indemnify, defend and hold MICROSOFT harmless from all such withholding and payroll taxes, and associated interest and penalties, if any, assessed against MICROSOFT in connection with such determination.

(iii) Other Taxes. The amounts to be paid by MICROSOFT to COMPANY hereunder do not include any foreign, U.S. federal, state, local, municipal or other governmental taxes, duties, levies, fees, excises or tariffs of any kind that may arise as a result of or in connection with this Agreement (“Taxes”). MICROSOFT is not and shall not be liable for any Taxes, which are and shall be COMPANY’s financial responsibility. COMPANY shall fully indemnify, defend and hold MICROSOFT harmless from all Taxes, and all claims, causes of action, costs (including without limitation reasonable attorneys’ fees) and any other liabilities of any nature whatsoever related to Taxes. If any Taxes are withheld on any amounts otherwise to be paid by MICROSOFT to COMPANY, MICROSOFT will deduct such Taxes from the amount otherwise owed to COMPANY and pay them to the appropriate taxing authority. At COMPANY’s written request and expense, MICROSOFT will use reasonable efforts to assist COMPANY in obtaining tax certificates or other appropriate documentation evidencing such payment, but the responsibility for such documentation shall remain with COMPANY.

(b) Remove/Replace Employees or Subcontractors. MICROSOFT may request the immediate removal of COMPANY or any COMPANY employee or Subcontractor who behaves in a manner that is unlawful or inconsistent with any MICROSOFT policy, or that is otherwise deemed unacceptable to MICROSOFT. If as a result of complying with a valid court order or for any business reason MICROSOFT asks COMPANY to promptly remove and/or replace any COMPANY employee or Subcontractor assigned to perform any WORK, COMPANY will do so promptly. .

(c) Assignment. The WORK is personal and unique, and MICROSOFT relies upon the qualifications, reputation and expertise of COMPANY to perform all of COMPANY’s obligations under this Agreement, as well as upon COMPANY’s affirmative representation that COMPANY has the resources and expertise to perform all WORK. Accordingly, COMPANY acknowledges and agrees that COMPANY will not sell, assign, transfer, pledge or encumber any of COMPANY’s rights or delegate any of its duties or obligations under this Agreement (by actual assignment or by operation of law, including without limitation through a merger, acquisition, consolidation, exchange of shares, or sale or other disposition of assets, including disposition on dissolution), without the prior written consent of MICROSOFT. Notwithstanding the foregoing however, COMPANY may