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                                                                   EXHIBIT 10.17

                   OPTION AMENDMENT AND TERMINATION AGREEMENT

This Option Amendment and Termination Agreement (this "AGREEMENT") is made as of
November 16, 2001 between Transmeta Corporation, a Delaware corporation
("COMPANY"), and Merle McClendon ("OPTIONEE").

       WHEREAS, Company has granted to Optionee an option (the "2000 OPTION") to
purchase 1,100,000 shares (on a post 2-for-1 stock split basis) of Company's
Common Stock pursuant to that certain Non-Plan Stock Option Agreement, dated as
of July 21, 2000, between Company and Optionee (the "2000 OPTION AGREEMENT").

       WHEREAS, Optionee exercised the 2000 Option in full pursuant to that
certain Non-Plan Stock Option Exercise Agreement, dated as of August 3, 2000,
between Company and Optionee (the "EXERCISE AGREEMENT") and, as consideration
therefor, executed for the benefit of the Company that certain Secured Full
Recourse Promissory Note, dated as of August 3, 2000 (the "NOTE") and that
certain Stock Pledge Agreement, dated as of August 3, 2000, between Company and
Optionee (the "PLEDGE AGREEMENT"). The 2000 Option Agreement, the Exercise
Agreement, the Note and the Pledge Agreement are collectively referred to herein
as the "2000 OPTION DOCUMENTS".

       WHEREAS, Company has granted to Optionee an option (the "2001 OPTION") to
purchase 250,000 shares of Company's Common Stock at an exercise price of $3.11
per share pursuant to that certain Stock Option Agreement, dated as of July 26,
2001, between Company and Optionee (the "2001 OPTION AGREEMENT").

       WHEREAS, Company and Optionee wish to modify the 2000 Option Documents,
terminate the 2001 Option and take such other actions as are set forth below.

       NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:

1.     2000 OPTION DOCUMENTS.

       a. Company and Optionee hereby agree to amend the 2000 Option Documents
as set forth below in this Section 1.

              i. Section 1 of the Note is hereby amended and restated in full
effective as of the date of this Agreement to provide as follows:

                     "1. Obligation. In exchange for the issuance to the
                     undersigned ("Purchaser") of 550,000 shares (the "Shares")
                     of the Common Stock of Transmeta Corporation, a California
                     corporation (the "Company"), receipt of which is hereby
                     acknowledged, Purchaser hereby promises to pay to the order
                     of the Company on or before the earlier of (i) the date
                     which is nine (9) years after the date first set forth
                     above and (ii) the date which is three (3) years after the
                     date that Purchaser is Terminated (as defined in the Stock
                     Option Agreement, which in turn is defined in the Purchase
                     Agreement), at the Company's principal place of business at
                     3940


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                     Freedom Circle, Santa Clara, California 95054, or at such
                     other place as the Company may direct, the principal sum of
                     Six Million Six Hundred Thousand Dollars ($6,600,000.00)
                     together with interest compounded semi-annually on the
                     unpaid principal at the rate of 4.09%; provided, however,
                     that the rate at which interest will accrue on unpaid
                     principal under this Note will not exceed the highest rate
                     permitted by applicable law."

              ii. The parties agree that the interest which accrued prior to the
date of this Agreement under the Note shall remain due and payable thereunder
and shall not be affected by the amendment of the Note effected pursuant to
subsection i above.

              iii. Section 3 of the Note is hereby amended effective as of the
date of this Agreement to delete the provisions of subitem (b) therein, which
had stated "(b) in the event Purchaser is Terminated (as defined in the
Company's 1997 Equity Incentive Plan) for any reason;".

              iv. Section 4 of the Note is hereby amended and restated in full
effective as of the date of this Agreement to provide as follows:

                     "4. Non-Recourse Obligation. The principal and interest
                     payable by Purchaser under this Note are secured as
                     provided in Section 2 of this Note and the Pledge Agreement
                     and constitute a non-recourse obligation of Purchaser."

              v. Section 6.2 of the Exercise Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:

                     "6.2 Restriction on Transfer. Purchaser shall not sell,
                     transfer, assign, grant a lien or security interest in,
                     pledge, hypothecate, encumber or otherwise dispose of any
                     of the Shares which are subject to the Repurchase Option
                     set forth in this Exercise Agreement, except as permitted
                     by this Exercise Agreement. Notwithstanding anything to the
                     contrary set forth herein or in the Stock Option Agreement,
                     Purchaser shall be permitted to sell Vested Shares and/or
                     Unvested Shares subject to the Repurchase Option at any
                     time during an In-The-Money Period occurring during the
                     First Repurchase Period (as each such term is defined
                     below) subject to the following conditions: (i) the
                     Company, its successor in interest or the assignee of
                     either has not previously exercised the Repurchase Option
                     respecting the Shares to be so sold and (ii) until
                     Purchaser has paid all principal and accrued interest then
                     due under the promissory note issued by Purchaser under
                     this Exercise Agreement to purchase the Shares (the
                     "Note"), Purchaser shall pay to the Company or its
                     successor in interest all proceeds from such sale to be
                     applied as payment for principal and interest due under the
                     Note."


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              vi. Section 8 of the Exercise Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:

                     "8. Repurchase Option for Unvested Shares and Vested
                     Shares. The Company, its successor in interest or the
                     assignee of either, shall have the option to repurchase
                     Purchaser's Unvested Shares and/or Vested Shares (as each
                     term is defined in Section 2.2 of the Stock Option
                     Agreement), whether or not Purchaser has been Terminated,
                     on the terms and conditions set forth in this Section (the
                     "Repurchase Option").

                            8.1 Termination and Termination Date. In case of any
                     dispute as to whether Purchaser is Terminated, the
                     Company's Board of Directors shall have discretion to
                     determine whether Purchaser has been Terminated and the
                     effective date of such Termination (the "Termination
                     Date").

                            8.2 Exercise of Repurchase Option. At any time
                     during the period beginning upon November 16, 2001 and
                     ending on the date which is three years after the
                     Purchaser's Termination Date (the "First Repurchase
                     Period") when the then current Fair Market Value (as
                     defined below) multiplied by the number of all then
                     outstanding Unvested Shares and Vested Shares equals or
                     exceeds the total amount of all principal and accrued
                     interest then due under the Note (an "In-The-Money
                     Period"), the Company, its successor in interest or the
                     assignee of either, may elect (but shall not have the
                     obligation) to repurchase all or any portion of the
                     Purchaser's Unvested Shares and/or Vested Shares by giving
                     Purchaser written notice of exercise of the Repurchase
                     Option (each such notice, a "Repurchase Notice") and
                     setting forth in each such Repurchase Notice the effective
                     date of the relevant repurchase, which date must be within
                     an In-The-Money Period. Notwithstanding the foregoing,
                     however, the First Repurchase Period shall terminate upon
                     the consummation of a merger, recapitalization,
                     reorganization or similar corporate transaction in which
                     the Shares outstanding immediately prior thereto are
                     converted completely into cash. At any time during the
                     period beginning on the termination of the First Repurchase
                     Period and ending 90 days thereafter, the Company, its
                     successor in interest or the assignee of either, may elect
                     (but shall not have the obligation) to repurchase all or
                     any portion of the Purchaser's Unvested Shares by giving
                     Purchaser a Repurchase Notice and setting forth in each
                     such Repurchase Notice the effective date of the relevant
                     repurchase. The Repurchase Option may be exercised more
                     than once during the periods provided above until all
                     Unvested Shares and, as applicable, Vested Shares have been
                     repurchased. The effective date of each such repurchase
                     shall be conclusively determined to be such date set forth
                     by the Company, successor in interest or assignee in the
                     relevant Repurchase Notice. The "Fair Market Value", as
                     used in this Section 8.2, shall mean: (i) if sales prices
                     of securities of the same class, series and issuer as those
                     of the Shares are quoted on the Nasdaq


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                     National Market, then the sales price per share of such
                     securities as quoted on the Nasdaq National Market or (ii)
                     in all other cases, as determined in good faith by the
                     Board of Directors of the Company or its successor in
                     interest.

                            8.3 Calculation of Repurchase Price for Unvested
                     Shares and Vested Shares. Upon each exercise of the
                     Repurchase Option, the Company, its successor in interest
                     or the assignee of either shall have the option to
                     repurchase from Purchaser (or from Purchaser's personal
                     representative as the case may be) Unvested Shares and
                     Vested Shares at a repurchase price equal to or, at the
                     option of the Company, successor in interest or assignee,
                     greater than the Purchaser's Exercise Price,
                     proportionately adjusted for any stock dividend,
                     recapitalization, stock split, reverse stock split,
                     subdivision, combination, reclassification or similar
                     change in the capital structure of the Company or successor
                     in interest without consideration. Notwithstanding the
                     foregoing, however, the repurchase price per share for each
                     exercise of the Repurchase Option during the First
                     Repurchase Period shall be equal to the then current Fair
                     Market Value. The repurchase price for each exercise of the
                     Repurchase Option shall be set forth by the Company,
                     successor in interest or assignee in the relevant
                     Repurchase Notice.

                            8.4 Payment of Repurchase Price. The repurchase
                     price shall be payable, at the option of the Company, its
                     successor in interest or the assignee of either, by check
                     or by cancellation of all or a portion of any outstanding
                     indebtedness (including principal and/or interest) of
                     Purchaser to the Company, successor in interest or
                     assignee, or by any combination thereof. The repurchase
                     price shall be paid without interest within sixty (60) days
                     after exercise of the Repurchase Option.

                            8.5 Right of Termination Unaffected. Nothing in this
                     Exercise Agreement shall be construed to limit or otherwise
                     affect in any manner whatsoever the right or power of the
                     Company (or any Parent or Subsidiary of the Company) to
                     terminate Purchaser's employment or other relationship with
                     Company (or the Parent or Subsidiary of the Company) at any
                     time, for any reason or no reason, with or without cause."

              vii. Section 7 of the 2000 Option Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:

                     "7. Company's Repurchase Option for Unvested Shares and
                     Vested Shares. The Company, its successor in interest or
                     the assignee of either, shall have the option to repurchase
                     Participant's Unvested Shares and Vested Shares (as each is
                     defined in Section 2.2 of this Agreement), whether or not
                     Participant has been Terminated, on the terms and
                     conditions set forth in the Exercise Agreement (the
                     "Repurchase Option")."


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              viii. Section 19 of the 2000 Option Agreement is hereby amended
and restated in full effective as of the date of this Agreement to provide as
follows:

                     "19. Voting and Dividends. Participant will not have any of
                     the rights of a shareholder 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 shareholder and have all the rights of a shareholder
                     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 the
                     Participant will have no right to retain any new,
                     additional or different securities the Participant may
                     become entitled to receive with respect to any Unvested
                     Shares or Vested Shares by virtue of a stock dividend,
                     stock split or any other change in the corporate or capital
                     structure of the Company with respect to Unvested Shares or
                     Vested Shares that are repurchased pursuant to Section 7."

              ix. Section 2 of the Pledge Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:

                     "2. Representations and Warranties. Pledgor hereby
                     represents and warrants to the Company that Pledgor has
                     good title (both record and beneficial) to the Collateral,
                     free and clear of all claims, pledges, security interests,
                     liens or encumbrances of every nature whatsoever, and that
                     Pledgor has the right to pledge and grant the Company the
                     security interest in the Collateral granted under this
                     Agreement. Pledgor further agrees that, until the entire
                     principal sum and all accrued interest due under the Note
                     has been paid in full, Purchaser will not, without the
                     Company's prior written consent, except as permitted by
                     Section 6.2 of the Purchase Agreement, (i) sell, assign or
                     transfer, or attempt to sell, assign or transfer, any of
                     the Collateral, or (ii) grant or create, or attempt to
                     grant or create, any security interest, lien, pledge, claim
                     or other encumbrance with respect to any of the
                     Collateral."

       b. OPTIONEE ACKNOWLEDGES AND AGREES THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF THE AMENDMENTS TO THE 2000 OPTION DOCUMENTS SET
FORTH ABOVE AND COMPANY'S EXERCISE OF ITS RIGHTS UNDER THE 2000 OPTION
DOCUMENTS, AS AMENDED. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY
TAX ADVISER OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH ENTERING INTO THIS
AGREEMENT AND THAT OPTIONEE IS NOT RELYING ON COMPANY FOR ANY TAX ADVICE.

       2. 2001 OPTION. Optionee and Company hereby agree that the 2001 Option
and the 2001 Option Agreement each is hereby canceled and terminated in full,
and of no further force or effect, effective as of the date of this Agreement.
Optionee acknowledges and agrees that she has not exercised or purported to
exercise the 2001 Option to purchase any shares of Company's common stock and
that, effective as of the date of this Agreement, she shall have no surviving
right, title or interest in the 2001 Option or any shares purchasable
thereunder.


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       3. MISCELLANEOUS. This Agreement and all obligations of Optionee
hereunder shall be binding on the successors and assigns of Optionee and inure
to the benefit of Company and its successors and assigns. This Agreement will be
governed and construed in accordance with the laws of the State of California,
without regard to or application of choice of law rules or principles. This
Agreement may be executed in multiple counterparts, each of which will be
considered an original and all of which together constitute one agreement. If
any paragraph or provision in this Agreement shall be deemed void or invalid as
a matter of law, the remaining paragraphs or provisions of this Agreement shall
nevertheless remain in force. This Agreement represents the full and complete
agreement and understanding of the parties hereto with respect to the subject
matter hereof. Any amendment or waiver of the terms and provisions of this
Agreement must be in writing and executed by the parties hereto.

IN WITNESS WHEREOF, Company and Optionee have executed this Agreement as of the
date first set forth above.

TRANSMETA CORPORATION                         OPTIONEE

By: /s/ R. Hugh Barnes                        /s/ Merle McClendon
    ----------------------------------        ----------------------------------
                                              Merle McClendon

R. Hugh Barnes
President & Chief Operating Officer


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