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  

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

1.3  

“ 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.

1.4  

“ 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.

1.5  

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

1.6  

“ Sony Improvements ” means any improvements, modifications, enhancements, extensions to or derivative works directly based upon the Transmeta Technology, in whole or in part, developed by or for Sony or a Sony Subsidiary by any employee, contractor, consultant or agent of Sony or a Subsidiary who has had access to Transmeta Technology pursuant to this Agreement or the Mutual NDA (defined in Section 3.1).

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 Sony will be referred to as “Sony Subsidiary(ies)” and those of Transmeta will be referred to as “Transmeta Subsidiary(ies)”.

1.8  

“ Transmeta Technology” means Transmeta’s proprietary power management and related technologies described in Exhibit A 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 Sony pursuant to the terms of this Agreement.

1.9  

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

1.10  

“ Transmeta Documents ” means the documents included in the Transmeta Technology Deliverables specified in Exhibit A , attached hereto, that Transmeta will deliver to Sony pursuant to the terms of this Agreement.

2.   

LICENSES, LICENSE ROYALTIES AND NON-ASSERTION RIGHTS

2.1  

License Grant . Subject to Sony’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 Sony 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, reproduce and create Sony Improvements based upon the Transmeta Technology for Sony and third-party customers of Sony, solely for the purpose of designing and developing LongRun2 Products for * * * CMOS semiconductor technology generations (and any intermediate (i.e., internode) generations thereof) (“ Licensed LongRun2 Products ”);

(b)  

manufacture (and Have Manufactured), use, offer for sale, sell, or import Licensed LongRun2 Products; and

(c)  

use, reproduce, modify, translate, summarize and distribute the Transmeta Documents, provided that Sony 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 Sony to utilize any Transmeta Technology to provide Foundry Services to any third-party customers of Sony in order for such third-party customers to design and develop Licensed LongRun2 Products for exclusive manufacture by Sony solely for such third-party customers, and to use, offer for sale, sell, or import such Licensed LongRun2 Products.

2.2  

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

2.3  

License Restrictions .

(a)  

Restrictions on Have Manufactured Rights . Sony acknowledges that any exercise of its “Have Manufactured” rights under Section 2.1 is expressly contingent upon Sony entering into a written agreement with its contract designer(s) or manufacturer(s) for the design or manufacture of Licensed LongRun2 Products (a “ Contract Manufacturing Agreement ”). Each Contract Manufacturing Agreement that Sony enters into shall contain provisions that protect

Transmeta’s Intellectual Property Rights in and to the Transmeta Technology, Transmeta Technology Deliverables and Transmeta Confidential Information to at least the same extent as the terms and conditions of this Agreement. Sony will use its commercially reasonable efforts to enforce each such Contract Manufacturing Agreement with at least the same degree of diligence used by Sony to enforce similar agreements for its own products. Sony will promptly notify Transmeta in writing of any breach of any such Contract Manufacturing Agreement by a Sony contract designer or manufacturer relating to the Transmeta Technology, Transmeta Technology Deliverables or Transmeta Confidential Information of which Sony becomes aware. Sony will 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 breach.

(b)  

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

(c)  

Limited Rights . Sony’s rights in the Transmeta Technology, Transmeta Technology Deliverables and Transmeta 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 Confidential Information not expressly granted to Sony hereunder. For the avoidance of doubt, Sony acknowledges and agrees that it may not use, reproduce, or create Sony Improvements based upon the Transmeta Technology, Transmeta Technology Deliverables or Transmeta Confidential Information, or manufacture (or Have Manufactured), offer for sale, sell, or import any products, except as expressly authorized in this Agreement.

2.4  

Royalties . For each Licensed LongRun2 Product manufactured by or for Sony or sublicensed Sony Subsidiaries, Sony will pay Transmeta the non-refundable royalties calculated in accordance with the royalty schedule set forth in Exhibit D . Royalties shall accrue upon the date of completion of sale 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, Sony shall submit to Transmeta the payment of royalties due as shown in the Royalty Report (as defined in Section 5.2 below).

2.5  

Non-Assertion by Sony of Patent Rights in Sony Improvements . Subject to Transmeta’s compliance with all of the terms and conditions of this Agreement, Sony, on behalf of itself and all sublicensed Sony Subsidiaries, hereby covenants not to sue for infringement of or otherwise assert rights in any of its Patents which are filed for the inventions generated from Sony Improvements against:

(a)  

Transmeta and Transmeta Subsidiaries on the grounds that they are making, using, selling, offering for sale, importing 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 Sony 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 using, selling, offering for sale, or importing LongRun2 Products manufactured by or for Transmeta or Transmeta Subsidiaries, but only with respect to those features, techniques or functionalities of a LongRun2 Product. and

(c)  

contract 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 Sony Improvement.

In the event that this Agreement is assigned by Transmeta to a third party, Sony’s or Sony Subsidiaries’ Patents which are subject matters of this Section 2.5 shall be limited to those implemented in the LongRun2 Products which have been manufactured by or for Transmeta or Transmeta Subsidiaries as of the date of such assignment.

2.6  

Additional Patent Licensing. At Transmeta’s request, at any time during the term of this Agreement, Sony will negotiate with Transmeta in good faith (but not be obligated to agree to) the granting of a license under any Sony Patent related to Transmeta’s LongRun2 Products. The terms of such license, if agreed upon, will be documented in a separate agreement.

3.   

TECHNOLOGY TRANSFER SERVICES AND FEES

3.1  

Transmeta Obligations: Subject to Sony’s payment of the technology transfer services fee in accordance with Section 3.5 below, during the * * * period following the Effective Date (the “ Technology Transfer Services Period ”), Transmeta will deliver to Sony: (i) the Transmeta Technology Deliverables as set forth in Exhibit A ; and (ii) certain technology training as set forth in Exhibit A 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 A within * * * after the execution of this Agreement. Items identified in * * * of Exhibit A will be delivered as soon as * * *. The parties acknowledge that items identified in * * * of Exhibit A have been delivered by Transmeta to Sony in accordance with that certain Mutual Non-Disclosure Agreement * * *. (the “ Mutual NDA ”) 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 Sony’s request, and subject to Transmeta’s mutual agreement, and subject to Sony’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 Sony the technical support services, as specified in Exhibit B (“ Technical Support Services ”), and the maintenance services, as specified in Exhibit B (“ Maintenance Services ”). Notwithstanding the foregoing, Sony 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. Sony acknowledges that the Transmeta Technology, Transmeta Technology Deliverables, Technology Transfer Training, Technical Support Services and Maintenance Services contain and will disclose to Sony certain highly valuable trade secrets of Transmeta unless and until those falls into any of the exceptions as provided in Section 7.3 below.

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, Sony will pay Transmeta a one-time technology transfer fee of * * * in accordance with the payment schedule set forth in Exhibit C . The technology transfer fee payable by Sony hereunder is non-refundable and non-recoupable, and is not creditable against the royalties which may become payable by Sony under Section 2.4. This payment is in no way dependent upon Sony successfully manufacturing a Licensed LongRun2 Product or “bringing up” a Licensed LongRun2 Product production process.

3.6  

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

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 Sony 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 Sony under this Agreement or under any other agreement.

4.3  

Taxes . Sony 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, Sony may pay, on Transmeta’s behalf, any withholding taxes that are required to be paid under applicable law. In this event, Sony will furnish Transmeta with written documentation of such payments, including but not limited to receipts, of any and all such taxes paid by Sony.

5.   

RECORDS AND AUDIT REQUIREMENTS

5.1  

Records . For * * * after the completion of each calendar quarter, Sony will maintain complete and accurate books, records and accounts as are reasonably necessary to verify the royalty payments made by Sony 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, Sony 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 of each royalty-bearing Licensed LongRun2 Product.

5.3  

Audit . During the term of this Agreement and for a period of * * * thereafter, upon at least * * * prior written notice to Sony, Transmeta will have the right, at its own cost and expense, to authorize a certified public accounting firm as agreed by Sony, with Sony’s prior consent which will not be unreasonably withheld or delayed, to audit Sony’s books, records, and accounts, and other relevant information for the purpose of verifying the accuracy of the amount of royalties reported by Sony in Royalty Reports pursuant to Section 5.2, provided that such audit shall be conducted during the normal business hours of Sony and no more frequently than once a year. If the

accounting firm concludes that additional amounts were owed during the audited period, Sony 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 Sony. Transmeta will pay the fees and expenses charged by the accounting firm; provided however , if the audit discloses that the royalties payable by Sony for the audited period are more than * * * of the amounts actually paid for such period, then Sony 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. Notwithstanding the foregoing, this Agreement will automatically extend for additional * * * periods unless Sony notifies Transmeta in writing at least * * * prior to the then applicable expiration date that Sony does not want this Agreement to extend. At Sony’s request, at the time of any extension of this Agreement, Transmeta will negotiate with Sony in good faith revision of terms and conditions of this Agreement, including, but not limited to discount of the royalty.

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; or (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.

6.3  

Effect of Termination. Upon the termination of this Agreement by either party pursuant to Section 6.2: (i) except as otherwise expressly provided in this Agreement, all licenses and rights granted to Sony hereunder will immediately terminate; (ii) Sony shall promptly return to Transmeta or destroy all Transmeta Confidential Information and all Transmeta Technology Deliverables in its possession or control and provide Transmeta with an officer’s written certification, certifying to the return or destruction of all such Transmeta Confidential Information and Transmeta Technology Deliverables, provided that Sony (and sublicensed Sony Subsidiaries) may retain a reasonable number of copies thereof necessary for the provision of maintenance services to its then existing customers to which Sony and/or Sony Subsidiaries had already sold the Licensed LongRun2 Products; and (iii) Transmeta shall promptly return to Sony or destroy all of Sony Confidential Informati