EXHIBIT 10.18 LONGRUN2 TECHNOLOGY LICENSE AGREEMENT

1.   

DEFINITIONS

1.1  

“ Foundry Service ” means the service of manufacturing semiconductor wafers on behalf of third parties where the manufacturer provides the third parties with process information (such as design rules) and/or cell libraries, function block or macro (such as, by way of example, but not limitation, a digital or analog block or cell library) to be incorporated into the wafers.

1.2  

“ Fujitsu Improvements ” means any improvements, modifications, enhancements, extensions to, or derivative works based upon the Transmeta Technology, in whole or in part, developed by or for Fujitsu or a Fujitsu Subsidiary.

1.3  

“ Fujitsu-specific Licensed LongRun2 Products ” means any Licensed LongRun2 Products (as defined Section 2.1(a)) that are based on, manufactured utilizing, embody, implement, incorporate or practice the Transmeta Technology described in Section 13 of Exhibit B , but no other portion of the Transmeta Technology.

1.4  

“ Have Manufactured ” means for Fujitsu (or a sublicensed Fujitsu Subsidiary (as defined below)) to contract with a third party or parties to perform manufacturing functions for and on behalf of Fujitsu (or the sublicensed Fujitsu Subsidiary).

1.5  

“ Intellectual Property Rights ” means patent rights (including patent applications and disclosures), mask work rights, copyrights, rights in trade secrets and know-how, and any other intellectual property rights recognized in any country or jurisdiction in the world, exclusive of rights in and to trademarks, trade names, logos, service marks, other designations of source and design patents and design patent applications.

1.6  

“ LongRun2 Products ” means CMOS integrated circuit semiconductor devices that are based on, manufactured utilizing, embody, implement, incorporate or practice the Transmeta Technology, in whole or in part.

1.7  

“ Subsidiary ” means any entity that a party controls. For purpose of this definition, “controls” means having: (i) ownership of more than fifty percent (50%) of the equity securities 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 (ii) the right to vote for or appoint a majority of the board of directors or other governing body of such entity. Any entity will be deemed to be a “Subsidiary” only so long as such control exists. Subsidiary(ies) of Fujitsu will be referred to as “Fujitsu Subsidiary(ies)” and those of Transmeta will be referred to as “Transmeta Subsidiary(ies)”.

1.8  

“Patent” means any patent or patent application, worldwide, owned or controlled by a party at any time during the term of this Agreement, except for design patents and design patent applications.

1.9  

“ Transmeta Technology” means certain proprietary power management and related technologies, including technologies referenced as “LongRun2”, which are a collection of technical approaches which can be used to improve the characteristics of CMOS chips with respect to total chip power, active power, leakage power, performance, die size, yield and/or production costs and are a superset of, and therefore include, technologies referenced as “LongRun”, all as described in Exhibit A and Exhibit B attached hereto, and including any improvements, modifications, enhancements, extensions thereto or derivative works based thereon, in whole or in part, developed by or for Transmeta or Transmeta Subsidiaries, that Transmeta provides to Fujitsu pursuant to the terms of this Agreement.

1.10  

“Transmeta Technology Deliverables” means those items of Transmeta Technology specified in Exhibit B , attached hereto, that Transmeta will deliver to Fujitsu in accordance with the terms of this Agreement.

1.11  

“ Transmeta Documents ” means the documents included in the Transmeta Technology Deliverables specified in Exhibit B , attached hereto, that Transmeta will deliver to Fujitsu in accordance with the terms of this Agreement.

2.   

LICENSES, LICENSE ROYALTIES AND NON-ASSERTION RIGHTS

2.1  

License Grant . Subject to Fujitsu’s compliance with all of the terms and conditions of this Agreement (including, without limitation, timely payment of all applicable fees, royalties and any other amounts payable hereunder), Transmeta hereby grants to Fujitsu a worldwide, nonexclusive, nontransferable (except as specified in Section 12.1), non-sublicensable (except as specified in Section 2.2) and royalty-bearing license under all of Transmeta’s Intellectual Property Rights in and to Transmeta Technology to:

(a)  

use (and have used), reproduce (and have reproduced), modify (and have modified), extend (and have extended), improve (and have improved) and create Fujitsu Improvements (and have created Fujitsu Improvements) based upon the Transmeta Technology for Fujitsu and third party customers of Fujitsu solely for the purpose of designing (and having designed) and developing (and having developed) LongRun2 Products for * * * CMOS semiconductor technology generations (and any intermediate (i.e., internode) generations thereof) (“ Licensed LongRun2 Products ”), which include, without limitation, Fujitsu-specific Licensed LongRun2 Products;

(b)  

manufacture (and Have Manufactured), use (and have used), offer for sale, sell, import or Otherwise Dispose Of (as defined in Exhibit E ) Licensed LongRun2 Products; and

(c)  

use (and have used), reproduce (and have reproduced), modify (and have modified), translate (and have translated), summarize (and have summarized), and distribute (and have distributed) the Transmeta Documents, provided that Fujitsu will comply with the confidentiality obligations hereunder to the extent Transmeta Confidential Information (as defined below) is included.

It is acknowledged and agreed by the parties that the rights and license granted under this Section expressly include the right and license for Fujitsu to utilize any Transmeta Technology to provide Foundry Services to any third party customers of Fujitsu in order for such third party customers to design (and have designed) and develop (and have developed) Licensed LongRun2 Products for exclusive manufacture by Fujitsu solely for such third party customers, and to use (and have

used), offer for sale, sell, import or Otherwise Dispose Of (as defined in Exhibit E ) such Licensed LongRun2 Products.

2.2  

Fujitsu Subsidiaries . Fujitsu has the right to sublicense any (or all) of the license rights granted in Section 2.1 to any Fujitsu Subsidiary. Fujitsu, however, hereby guarantees the compliance by each and every such Fujitsu Subsidiary with the terms and conditions of this Agreement, and Fujitsu and such Fujitsu Subsidiaries shall be jointly and severally liable for any breach thereof by any such Fujitsu Subsidiary.

2.3  

License Restrictions.

(a)  

Restrictions on Have Manufactured Rights . Fujitsu acknowledges that in connection with any exercise of its “Have Manufactured” rights under Section 2.1 Fujitsu may enter into a written agreement with its contract manufacturer(s) for the manufacture of Licensed LongRun2 Products (a “ Contract Manufacturing Agreement ”). Each Contract Manufacturing Agreement that Fujitsu enters into shall contain provisions that protect Transmeta’s Intellectual Property Rights in and to the Transmeta Technology, Transmeta Technology Deliverables and Transmeta’s Confidential Information to at least the same extent as the terms and conditions of this Agreement. If, in connection with any exercise of its “Have Manufactured” rights under Section 2.1, any contract manufacturer breaches such provisions with respect to Transmeta’s Intellectual Property Rights or otherwise infringes, misappropriates or violates Transmeta’s Intellectual Property Rights in and to the Transmeta Technology, Transmeta Technology Deliverables or Transmeta Confidential Information, then Fujitsu will take appropriate action therefor and be liable for any and all losses or damages of any kind suffered or incurred by Transmeta arising out of or relating to any such infringement, misappropriation or violation.

(b)  

Specific Restrictions . Without limiting any restrictions or other limitations specified in Section 2.3(a) above, Fujitsu further acknowledges that, in no event shall Fujitsu or a sublicensed Fujitsu Subsidiary authorize or permit a Fujitsu contract manufacturer to manufacture, use, offer to sale, sell, import or Otherwise Dispose Of (as defined in Exhibit E ) a Licensed LongRun2 Product for or on behalf of any party other than Fujitsu or a sublicensed Fujitsu Subsidiary, as applicable.

(c)  

Limited Rights . Fujitsu’s rights in the Transmeta Technology, Transmeta Technology Deliverables and Transmeta’s Confidential Information will be limited to those expressly granted in this Agreement. Transmeta reserves all rights in and to the Transmeta Technology, Transmeta Technology Deliverables and Transmeta’s Confidential Information not expressly granted to Fujitsu hereunder. For the avoidance of doubt, Fujitsu acknowledges and agrees that it

may not use (or have used), reproduce (or have reproduced), modify (or have modified), extend (or have extended), improve (or have improved), create Fujitsu Improvements based upon (or have created Fujitsu Improvements based upon) the Transmeta Technology, Transmeta Technology Deliverables, or Transmeta Confidential Information, or manufacture (or Have Manufactured), offer for sale, sell, import or Otherwise Dispose Of (as defined in Exhibit E ) the Licensed LongRun2 Product, except as expressly authorized in this Agreement.

2.4  

Royalties . For each Licensed LongRun2 Product sold or Otherwise Disposed Of (as defined in Exhibit E ) by or for Fujitsu or sublicensed Fujitsu Subsidiaries, Fujitsu will pay Transmeta the non-refundable royalties calculated in accordance with the applicable royalty schedule set forth in Exhibit E . Royalties shall accrue upon the shipment of each Licensed LongRun2 Product. Within * * * after: (i) the end of each calendar quarter during the term of this Agreement in which the royalty accrues and (ii) the termination of this Agreement, Fujitsu shall submit to Transmeta the payment of royalties due as shown in the Royalty Report (as defined below). No royalty shall accrue for any Licensed LongRun2 Products shipped as a replacement for any defective Licensed LongRun2 Products or shipped by Fujitsu and/or sublicensed Fujitsu Subsidiaries for sample shipments without any charge to their customers. Royalties already paid for any Licensed LongRun2 Products shipped but returned will be credited against future royalties to be paid by Fujitsu to Transmeta.

2.5  

Provision of Fujitsu Improvements . Fujitsu is under no obligation to provide Transmeta with Fujitsu Improvements; however, if Fujitsu provides Transmeta with any Fujitsu Improvements, such Fujitsu Improvements are (i) subject to Fujitsu’s warranty disclaimer as set forth Section 9.4; (ii) provided “AS IS”, and (iii) may include certain highly valuable trades secrets or other confidential information of Fujitsu and, as such, are subject to the provisions of Section 7 hereof.

2.6  

Non-Assertion by Fujitsu of Patent Rights in Fujitsu Improvements. Fujitsu, on behalf of itself and all sublicensed Fujitsu Subsidiaries, hereby covenants not to sue for infringement of or otherwise assert rights in any of its Patents in or to Fujitsu Improvements against:

(a)  

Transmeta and Transmeta Subsidiaries on the grounds that they are making, using, selling, offering for sale, importing or Otherwise Disposing Of (as defined in Exhibit E ) LongRun2 Products, but only with respect to those features, techniques or functionalities of a LongRun2 Product that implement, incorporate, embody or are based on a Fujitsu Improvement;

(b)  

distributors and customers (including but not limited to end-user customers) of Transmeta and Transmeta Subsidiaries on the grounds that such parties are making, using, selling, offering for sale, importing, or Otherwise Disposing Of (as defined in Exhibit E )

LongRun2 Products, but only with respect to those features, techniques or functionalities of a LongRun2 Product that implement, incorporate, embody or are based on a Fujitsu Improvement; and

(c)  

contract semiconductor device manufacturers of Transmeta and Transmeta Subsidiaries on the grounds that such manufacturers are manufacturing LongRun2 Products solely for Transmeta or Transmeta Subsidiaries, but only with respect to those features, techniques or functionalities of a LongRun2 Product that implement, incorporate, embody or are based on a Fujitsu Improvement.

2.7  

Non-Assertion of Patent Rights in Fujitsu Improvements. Transmeta, on behalf of itself and all Transmeta Subsidiaries, hereby covenants, not to sue for infringement of or otherwise assert rights in any of its Patents in or to Transmeta Technology against:

(a)  

Fujitsu and Fujitsu Subsidiaries on the grounds that they are making, using, selling, offering for sale, importing or Otherwise Disposing Of (as defined in Exhibit E) Licensed LongRun2 Products, which implement, incorporate, embody or are based on a Fujitsu Improvement;

(b)  

distributors and customers (including but not limited to end-user customers) of Fujitsu and Fujitsu Subsidiaries on the grounds that such parties are making, using, selling, offering for sale, importing, or Otherwise Disposing Of (as defined in Exhibit E) Licensed LongRun2 Products, but only with respect to those features, techniques or functionalities of a Fujitsu Improvement; and

(c)  

contract semiconductor device manufacturers of Fujitsu and Fujitsu Subsidiaries on the grounds that such manufacturers are manufacturing Licensed LongRun2 Products solely for Fujitsu or Fujitsu Subsidiaries, but only with respect to those features, techniques or functionalities of a Fujitsu Improvement.

2.8  

Additional Patent Licensing. At Transmeta’s request, at any time during the term of this Agreement, Fujitsu will negotiate with Transmeta in good faith the granting of a license under any Fujitsu Patent related to Transmeta’s LongRun2 Products. The terms of such license, including any applicable royalty, will be on a reasonable and non-discriminatory basis, and if agreed upon, will be documented in a separate agreement.

3.1  

Transmeta Obligations: Subject to Fujitsu’s payment of the technology transfer services fee in accordance with Section 3.5 below, during * * * period following the Effective Date (the “ Technology Transfer Services Period ”), Transmeta will deliver to Fujitsu: (i) the Transmeta Technology Deliverables as set forth in Exhibit B ; and

(ii) certain technology training as set forth in Exhibit B in accordance with the terms specified therein (“ Technology Transfer Training” ) as soon as can be mutually agreed. Transmeta will make delivery of the items identified in * * * of Exhibit B within * * * after the execution of this Agreement. Items identified in * * * of Exhibit B will be delivered as soon as * * *. The parties acknowledge that items identified in * * * of Exhibit B have been delivered by Transmeta to Fujitsu in accordance with that certain Mutual Non-Disclosure Agreement * * *. Unless otherwise agreed in writing between the parties, Transmeta will have no obligation to provide additional deliverables or training of any kind after the expiration of the Technology Transfer Services Period.

3.2  

Technical Support Services and Maintenance Services . At Fujitsu’s request, and subject to Transmeta’s mutual agreement, and subject to Fujitsu’s payment of the applicable fees in accordance with Section 3.6, during the term of this Agreement, Transmeta will provide or make available to Fujitsu the technical support services, as specified in Exhibit C (“ Technical Support Services ”), and the maintenance services as specified in Exhibit C (“ Maintenance Services ”). Notwithstanding the foregoing, Fujitsu may cancel Technical Support Services and Maintenance Services, at any time, upon at least * * * prior written notice.

3.3  

Provision of Transmeta Technology “AS IS” . The Transmeta Technology, Transmeta Technology Deliverables, Technology Transfer Training, Technical Support Services and Maintenance Services are provided “AS IS”.

3.4  

Acknowledgement of Confidential Information. Fujitsu acknowledges that the Transmeta Technology, Transmeta Technology Deliverables, Technology Transfer Training, Technical Support Services and Maintenance Services contain and will disclose to Fujitsu certain highly valuable trade secrets of Transmeta.

3.5  

Technology Transfer Services Fee . In consideration of Transmeta’s delivery of the Transmeta Technology Deliverables and Technology Transfer Training pursuant to Section 3.1 during the Technology Transfer Services Period, Fujitsu will pay Transmeta a one-time technology transfer fee of * * * in accordance with the payment schedule set forth in Exhibit D . The technology transfer fee payable by Fujitsu hereunder is non-refundable and non-recoupable, and is not creditable against the royalties which may become payable by Fujitsu under Section 2.4. This payment is in no way dependent upon Fujitsu successfully manufacturing a Licensed LongRun2 Product or “bringing up” a Licensed LongRun2 Product production process.

3.6  

Technical Support Services and Maintenance Services Fee . If agreed between the parties in accordance with Section 3.2, in consideration of Transmeta providing Technical Support Services and Maintenance Services pursuant to Section 3.2, Fujitsu will pay Transmeta a fee in accordance with the payment schedule set forth in Exhibit C . The fees for Technical Support Services and Maintenance Services payable by Fujitsu hereunder are non-refundable and non-recoupable, and are not creditable against the royalties which may become payable by Fujitsu under Section 2.4. If Fujitsu cancels Technical Support Services and Maintenance Services in accordance

with the provisions of Section 3.2, the fees payable by Fujitsu will be pro-rated based on the period for which Transmeta has performed (and continues to perform) such Technical Support Services or Maintenance Service until such scheduled cancellation date.

4.   

PAYMENT, INTEREST AND TAXES

4.1  

Payment Method. All payments by Fujitsu shall be made in U.S. dollars by wire transfer to the bank account to be separately designated in writing by Transmeta.

4.2  

Interest and Other Payment Terms . Any payments made after the applicable due date will incur interest at the rate of * * *. All amounts specified in this Agreement will be paid in U.S. dollars and will not be subject to setoff against any amounts of claims that Transmeta owes to Fujitsu under this Agreement or under any other agreement.

4.3  

Taxes . Fujitsu will pay any and all national, state, prefecture, city, local and other excise, sales, use, value-added and other taxes and duties imposed by any and all applicable laws and regulations in Japan in respect of the payments made under this Agreement or otherwise arising out of this Agreement, other than taxes based upon Transmeta’s net income. If it is required under applicable law, Fujitsu may pay, on Transmeta’s behalf, any withholding taxes that are required to be paid under applicable law. In this event, Fujitsu will furnish Transmeta with written documentation of such payments, including but not limited to receipts, of any and all such taxes paid by Fujitsu.

5.   

RECORDS AND AUDIT REQUIREMENTS

5.1  

Records . For * * * after the completion of each calendar quarter, Fujitsu will maintain complete and accurate books, records and accounts as are reasonably necessary to verify the royalty payments made by Fujitsu hereunder.

5.2  

Reports . Within * * * after (i) the end of each calendar quarter during the term of this Agreement; and (ii) the termination of this Agreement, Fujitsu will furnish to Transmeta a written report specifying the royalties owed for the relevant period (“ Royalty Report ”). If no royalties are due, that fact will be shown on such Royalty Report. The content, form and format of such Royalty Reports will be as mutually agreed to by the parties, but will include, at a minimum, the quantity and, only for Licensed LongRun2 Products for which the royalty is calculated under royalty schedule (a) of Exhibit E, average sales price, of each royalty-bearing Licensed LongRun2 Product type upon which a royalty fee is due and whether royalty schedule (a) or (b) of Exhibit E was used to determine the royalty payment due.

5.3  

Audit . During the term of this Agreement and for a period of * * * thereafter, upon at least * * * prior written notice to Fujitsu, Transmeta will have the right, at its own cost and expense, to authorize a certified public accounting firm as agreed by Fujitsu, with Fujitsu’s prior consent which will not be unreasonably withheld or delayed, to audit Fujitsu’s books, records, and

accounts, and other relevant information for the purpose of verifying the accuracy of the amount of royalties reported by Fujitsu in Royalty Reports pursuant to Section 5.2, provided that such audit shall be conducted during the normal business hours of Fujitsu and no more frequently than once a year. If the accounting firm concludes that additional amounts were owed during the audited period, Fujitsu will pay such additional amounts plus interest calculated in accordance with Section 4.2, within * * * of the date Transmeta delivers the accounting firm’s written report to Fujitsu. Transmeta will pay the fees and expenses charged by the accounting firm; provided however , if the audit discloses that the royalties payable by Fujitsu for the audited period are more than * * * of the amounts actually paid for such period, then Fujitsu will pay the reasonable fees and expenses charged by the accounting firm.

6.   

TERM AND TERMINATION

6.1  

Term . This Agreement will begin on the Effective Date and will remain in force unless and until terminated in accordance with Section 6.2.

6.2  

Termination . Either party may terminate this Agreement: (i) if the other party breaches any material term or condition of this Agreement that is curable and fails to cure such breach within * * * following receipt of written notice from the non-breaching party; (ii) immediately upon written notice to the other party if such other party breaches any material term or condition of this Agreement that is not curable; or (iii) immediately upon written notice to the other party, upon or after: (a) the filing by such other party of a petition in bankruptcy or insolvency; (b) any adjudication that such other party is bankrupt or insolvent; (c) the filing by such other party of any legal action or document seeking reorganization, readjustment or arrangement of such other party’s business under applicable law relating to bankruptcy or insolvency; (d) the appointment of a receiver for all or substantially all of the property of such other party; (e) the making by such other party of any assignment for the benefit of creditors; (f) the institution of any proceedings for the liquidation or winding up of such other party’s business or for the termination of its corporate charter; (g) such other party becomes insolvent, ceases, or suspends all or substantially all of its business; (h) its direct competitor acquires, through merger, consolidation, acquisition, or otherwise, an interest in excess of fifty percent (50%) of the voting securities or assets of such other party; or (i) if such other party transfers all or substantially al of its business to a direct competitor of the other party.

6.3  

Effect of Termination. Upon the termination of this Agreement by either party pursuant to Section 6.2: (i) exce