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EXHIBIT 10.22
CONFIDENTIAL TREATMENT REQUESTED
 
 MICROSOFT CORPORATION
  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.
 
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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
 
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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
 
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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.
 6.
    
    COMPANY Warranties. COMPANY warrants that:(a) COMPANY has full and exclusive right and power to enter into and perform according to the
terms of this Agreement;(b) The WORK as delivered to MICROSOFT does not infringe any copyright, patent, trade secret,
trademark, or other proprietary right held by any third party;(c) The WORK will meet the specifications listed in the applicable Schedule, will be complete
and accurate, and will comply with all applicable laws and regulations;(d) The WORK will be created by employees of COMPANY within the scope of their employment and
under written obligation to assign all right, title and interest in the WORK, including,
without limitation, the rights enumerated and assigned to MICROSOFT in Section 5 above to
COMPANY, or with MICROSOFTs prior written consent, by independent contractors under written
obligations to assign all right, title and interest in the WORK to COMPANY including, without
limitation, the rights enumerated and assigned to MICROSOFT in Section 5 above;(e) The WORK will either be originally created by COMPANY, or COMPANY will obtain all
necessary rights to the WORK to transfer ownership to MICROSOFT as required by Section 5
above. Further, COMPANY will not incorporate into the WORK any third party product, software,
or other materials for which the intellectual property rights are not owned solely by COMPANY
without the express written permission of MICROSOFT;(f) The services provided by COMPANY shall be performed in a professional manner and shall be
of a high grade, nature, and quality;(g) COMPANYs employees shall, while on MICROSOFT property or conducting any MICROSOFT related
business, comply with all MICROSOFT policies and applicable local, state and federal laws,
including specifically all laws prohibiting harassment of any kind in the workplace. COMPANY
assumes all responsibility for providing to its employees any training that may be required to
insure compliance with such laws. Further, COMPANY warrants that when COMPANYs employees
require cardkey access to MICROSOFT facilities and/or an account on MICROSOFTs email system,
that COMPANY and its employees assigned to MICROSOFT will execute all applicable agreement(s)
required by MICROSOFT and will comply with all vendor policies then in effect, and COMPANY
agrees to immediately remove upon MICROSOFTs request any of its employees who fail to comply
with such policies, laws, and regulations. If COMPANYs services are provided on MICROSOFT
property, COMPANY warrants that none of the individuals placed at MICROSOFT have been
convicted of a felony as an adult within the seven (7) years prior to their assignment at
MICROSOFT; and(h) COMPANY warrants that any software portion of the WORK is not, and when delivered to
MICROSOFT shall not be, in whole or in part, governed by an Excluded License. An Excluded
License is any license that requires, as a condition of use, modification and/or distribution
of software subject to the Excluded License, that such software and/or other software combined
and/or distributed with such software be (i) disclosed or distributed in source code form;
(ii) licensed for the purpose of making derivative works; or (iii) redistributable at no
charge.
 
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Indemnity
 THE PARTIES EXPRESSLY AGREE THAT THE FOLLOWING SECTION 7 INDEMNITY WAS READ AND REVIEWED BY EACH
AND SUBJECT TO NEGOTIATION:
 (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 7or 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
 
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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:
 (i)
    
    The parties shall use commercially reasonable efforts to identify other
project(s) (Replacement Project) within MICROSOFT which are at least equal in monetary
value to the Schedule terminated by MICROSOFT under Section 8(b) above. Should such a
project be identified, the parties will create a Schedule for the performance of such
WORK by COMPANY.(ii)
    
    To the extent that the parties are not able to identify any Replacement
Project(s), COMPANY shall invoice MICROSOFT and MICROSOFT agrees to pay the lesser of
either * * * or the amount remaining to be invoiced on the original Schedule.
 (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.
 
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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:
 Attention:
    
    General CounselTransmeta Corporation3990 Freedom CircleSanta Clara, CA 95054USANotices to MICROSOFT:
    
    MICROSOFT CORPORATIONOne Microsoft WayRedmond, WA 98052-6399Attention:Copy to:
    
    Law & Corporate AffairsFax:
    
    (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.
 
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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
 
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subcontract portions of the WORK which do not relate to the development of software without
the prior written consent of MICROSOFT provided that COMPANYs remains responsible for
performance of the WORK as described in this Agreement. MICROSOFT may assign this Agreement to
any of its affiliates, existing now or in the future, without COMPANYs prior consent. This
Agreement shall inure to and bind all successors, assigns, receivers and trustees of the
respective parties
 (d) Governing Law; Jurisdiction. This Agreement shall be construed and
controlled by the laws of the State of Washington, USA. COMPANY consents to the
exclusive jurisdiction and venue in the federal courts sitting in King County, Washington
unless no federal subject matter jurisdiction exists, in which case COMPANY consents to
the exclusive jurisdiction and venue in the Superior Court of King County, Washington.
COMPANY waives all defenses of lack of personal jurisdiction and forum non conveniens.
Process may be served on either party in the manner authorized by applicable law or court
rule. In any action to enforce any right or remedy under this Agreement, or to interpret
any provision of this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys fees, costs and other expenses.
 (e) Construction; No Waiver. If a court of competent jurisdiction finds any
provision of this Agreement or portion thereof, to be unenforceable, then this Agreement
shall immediately be deemed amended or modified to exclude such clause or provision and
the remainder of this Agreement shall continue in full force and effect. No failure by
either party to exercise a right under this Agreement or under law shall operate as a
waiver thereof. No waiver of any breach of this Agreement shall constitute a waiver of
any other breach. No waiver shall be effective unless in writing and signed by the
waiving party.
 (f) English Language. This Agreement is executed in the English language,
which shall be the sole and controlling language used in interpreting or construing its
meaning. Any translation of this Agreement into a language other than English shall be
for reference only and shall not affect the interpretation hereof.
 (g) Entire Agreement; Amendments. This Agreement contains the entire agreement
between the parties concerning its subject matter, and supersedes all oral
understandings, representations, prior discussions and preliminary agreements of any
nature. Any representations, warranties, promise or conditions not expressly contained
in this Agreement shall not be binding upon the parties. This Agreement does not
constitute an offer by Microsoft and it shall not be effective until signed by both
parties. This Agreement may be executed in counterparts, each of which when so executed
shall be deemed to be an original, and all of which taken together shall constitute one
and the same Agreement. Except as may be specifically allowed hereunder, this Agreement
may not be modified or amended except by a written amendment to this Agreement dated
after the Effective Date and signed by authorized representatives of both parties, except
that Microsoft reserves the right to unilaterally amend its facility, security, access
and website policies, procedures and guidelines as it deems necessary from time to time.
 (h) Diversity. COMPANY expressly acknowledges and agrees that MICROSOFT is an
equal opportunity employer and promotes a diverse work environment, and that any remarks,
gestures, or behaviors by COMPANY in connection with this Agreement that are
discriminatory toward or offensive to individuals on the basis of gender, race, color,
national origin, age, religion, or disability will be cause for MICROSOFT to immediately
terminate this Agreement or the subject Schedule.
 
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MICROSOFT
CORPORATION
    
    TRANSMETA CORPORATION(Company)
 /s/ Thomas L. Phillips
    
    /s/ Arthur L. SwiftBy (Sign)
    
    By (Sign)Thomas L. Phillips
    
    Arthur L. SwiftName (Print)
    
    Name (Print)GM
    
    President & CEOTitle
    
    Title4/01/05
    
    4/1/05Date
    
    Date77-0402448COMPANYs Federal Employer ID
 
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SCHEDULE A-1
  A. Description of Work and Specifications (the WORK):
   B. Payment:
   C. Delivery Schedule:
  
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MICROSOFT CORPORATION
    
    TRANSMETA CORPORATIONOne Microsoft Way
    
    3990 Freedom CircleRedmond, WA 98052
    
    Santa Clara, CA 95054/s/ Thomas L. Phillips
    
    /s/ Arthur L. SwiftBy (Sign)
    
    By (Sign)Thomas L. Phillips
    
    Arthur L. SwiftName (Print)
    
    Name (Print)4/01/05
    
    4/1/05Date
    
    Date
  
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EXHIBIT A
 Microsoft Travel Policy For Vendors
  Objectives
 
    
    Ensure all vendors have a clear and consistent understanding of policies and
procedures for business travel.
    
    Provide vendor business travelers with a reasonable level of service and comfort at the
lowest possible cost.
    
    Maximize Microsofts ability to negotiate discounted rates with travel program
suppliers and reduce travel expenses.
 Scope
 
    
    This travel policy applies to vendor travel conducted in connection with
delivering Work for Microsoft and for which vendor will seek reimbursement from Microsoft.
    
    These are minimum policy standards. Specific Microsoft business units may impose
greater control, at their discretion.
  Vendor Responsibility
 
    
    The vendor is responsible for complying with the Microsoft travel policy.
    
    The vendor is responsible for obtaining Microsofts prior written approval for
incurring travel expenses for which reimbursement will be sought from Microsoft.
    
    Microsoft will reimburse vendors for all reasonable and necessary expenses while
traveling on authorized Microsoft business.
   Who to Contact on Travel Policy Issues
 prohelp@microsoft.com
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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Saturday Night Stay
 Spouse/Companion
Travel


Travel Arrangements



    
    Vendors should make reservations 7-21 days in advance of the date of travel to
take advantage of advance purchase discounts.



    
    Vendors utilizing MS Travel Program to fulfill travel requirements are required to use
program vendors whenever possible. MS Travel Management has negotiated rates for air,
hotel and car accommodations.


tvlgpcal@microsoft.com


Additional Travel Insurance Purchased by Vendors




Air Travel


Airline Class of Service   Business Class Eligibility
  Upgrades
for Domestic/International Air Travel
  Airline Frequent Flyer Programs
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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Airline Club Memberships
  Cancellations
  Lost or Excess Baggage
  
    
    When vendor is traveling with heavy or bulky materials or equipment necessary for
performing Work for Microsoft;
    
    Vendors excess baggage consists of Microsoft records or property; or
    
    Vendor is traveling on Microsoft business for more than 14 days
 Lodging
 Reservations
  
 Hotel Selection Guidelines for Vendors using MS Travel Program
  Hotel Upgrades
  Hotel Cancellation Procedures
  
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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Hotel
Frequent Guest Programs
  Car Rental
 Car
Rental Selection Guidelines for vendors using MS Travel
Program
  Class
of Service
  Rental
Car Refuel Provision
  Other Transportation
 Rail
Travel
  
    
    It is less expensive than air travel and adds no more than one and a half
hours to the total travel time
    
    It is more timely than driving
 Expense Reimbursement
  Reimbursable Expenses
 
    
    Airfare and surface transportation
    
    Car rental
    
    Gratuities/tips (within reason)
    
    Hotel/ lodging
    
    Meals
    
    Parking and tolls
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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
    
    Saturday night stay-over (Weekend hotel stays and expenses are reimbursable
if the airfare savings due to the Saturday night stay result in a lower overall cost for
the trip is at least $250 USD or equivalent currency and the additional expenses fall
within policy and do not exceed the airfare savings.)
 Non-Reimbursable Expenses
  
    
    Airline upgrade certificates
    
    American Express Membership Rewards
    
    Barber, hair stylist, manicurist, and other grooming costs
    
    Briefcases and luggage
    
    Business entertainment
    
    Charge card late fees and interest charges
    
    Clothing
    
    Family / partner accompanying traveler
    
    Foreign travel document requirements
    
    Free flight, hotel, or car rental coupons
    
    Hotel upgrades
    
    Laundry and dry cleaning
    
    Massage and other spa charges
    
    Personal aircraft or non-approved aircraft charter expenses
    
    Personal credit card fees
    
    Supplemental rental automobile insurance  CDW (Collision Damage Waiver), LDW
(Loss Damage Waiver), PAI (Personal Accident Insurance), PEC (Personal Effects Coverage),
LIS (Liability Insurance Coverage)
    
    Telephone calls (not Microsoft business related)
    
    Trip or flight insurance
    
    Use of frequent flyer award tickets for business travel
 Meals and Entertainment
 Personal
Meal Expenses
  Entertainment
  
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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EXHIBIT B
 Pre-Placement Policy
  prior
   1.
    
    Prior to placement of an Individual at Microsoft, Company will obtain a signed release form
from the Individual Company is placing. In addition to allowing Company to conduct the
pre-placement background check and release the data to Microsoft when requested (Microsoft
agrees the data will remain confidential), the release form must include the following
questions with a box for the Individual to check:In the last ten years, have you been convicted of or pled guilty to any felony? YES ( ) NO ( )In the last ten years have you been released from prison on a felony conviction? YES ( ) NO ( )NOTE: A previous felony conviction or imprisonment on a felony conviction will not necessarily
eliminate you from consideration for employment / placement on assignment.
 2.
    
    In addition, the release form must include the following statement, which the Individual must
confirm is true prior to being placed by Company at Microsoft:I have answered truthfully in response to the questions on this form regarding my criminal
conviction history, and I understand that I will not be placed on assignment at Microsoft, or
that if placed I will be removed from assignment, in the event I have made any false statement
regarding my criminal conviction history or any other matter.
 3.
    
    Prior to placement by Company of an Individual on assignment at a Microsoft owned or leased
facility, a pre-placement background and social security verification check will be completed.
A social security verification check includes confirmation that the social security number is
assigned to the specific individual.
 4.
    
    Pre-placement background checks are also required when Individuals separate from their
current employer and are subsequently placed by another supplier at Microsoft or if more than
six months
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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have transpired between assignments at Microsoft. Microsoft reserves the right to
request an updated pre-placement background check from the Company on Individuals on
assignment at Microsoft.
 5.
    
    If a background check produces information which will make an Individual an unacceptable
placement, or if Microsoft learns that the Individual has falsified his/her statement,
Microsoft expects the Company to take complete responsibility for removal of the Individual
from Microsoft property. In addition, Microsoft expects Company to absorb all related costs.
 6.
    
    If Company becomes aware of criminal felony activity by an Individual while assigned to
Microsoft, Company must inform its Microsoft business contact immediately but in no event
later than 24 hours after becoming aware of the information.
 7.
    
    Compliance with the policy requirements will occur at least quarterly in the form of random
inquiries to Company by Microsoft Corporate. When requested, Company will need to be prepared
to respond to all inquiries from Microsoft regarding background checks within one business
day.
 8.
    
    When Company conducts felony screenings, Company will monitor any possible disparate impact
on a legally protected class. Data in this area are subject to review periodically by
Microsoft Legal and Security Departments to determine whether program modifications are
necessary.At a minimum, Company should use an established and reputable commercial background check
company.
 10.
    
    Notwithstanding the indemnification provisions of Section 8 of the Agreement, Company agrees
to indemnify Microsoft from any liability Microsoft may sustain as a result of Companys
failure to adhere to Microsofts background check requirement or Companys failure to comply
with all applicable laws in conducting a background check on Individuals.
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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EXHIBIT C
 VENDOR CODE OF CONDUCT
 Microsoft Vendor Code of Conduct
    msvpinfo@microsoft.com
 LEGAL AND REGULATORY COMPLIANCE PRACTICES
 buscond@microsoft.com
 
    
    Comply with the anti-corruption laws of the countries in which they do business and the
United States Foreign Corrupt Practices Act (FCPA). Microsoft Vendors may not make any
direct or indirect payments or promises of payment to foreign government officials for the
purpose of inducing the individual to use or misuse his/her position to obtain or retain
business.
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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
    
    Not participate in international boycotts that are not sanctioned by the U.S.
government or applicable laws.
    
    Comply with all applicable trade control and applicable laws as well as all export,
re-export and import requirements.
    
    Conduct their business in full compliance with antitrust and fair competition laws that
govern the jurisdictions in which they conduct business.
    
    Comply with all applicable environmental laws and regulations regarding the use and
preservation of land, air, and water.
    
    Be honest, direct, and truthful in discussions with regulatory agency representatives
and government officials.
 BUSINESS PRACTICES
  
    
    Honestly and accurately record and report all business information and comply with all
applicable laws regarding their completion and accuracy.
    
    Create, retain, and dispose of business records in full compliance with all applicable
legal and regulatory requirements.
    
    Protect and responsibly use both the physical and intellectual assets of Microsoft
including property, supplies, consumables, and equipment when authorized by Microsoft to
use such assets.
    
    Use Microsoft provided information technology and systems (including e-mail) only for
authorized Microsoft business-related purposes. Microsoft strictly prohibits Vendors and
Representatives from using Microsoft technology and systems to create, access, store,
print, solicit, or send any material that is intimidating, harassing, threatening,
abusive, sexually explicit or otherwise offensive or inappropriate and/or send any false,
derogatory, or malicious communications using Microsoft provided information assets and
systems.
    
    Comply with all Microsoft requirements for maintenance of passwords, confidentiality,
security, and privacy procedures as a condition of receiving access to Microsofts
internal corporate network, all systems and buildings. All data stored or transmitted on
Microsoft owned or leased equipment is not to be considered private and is the property of
Microsoft. Microsoft may monitor all use of the corporate networks and all systems
(including e-mail) and/or access all data stored or transmitted using the Microsoft
network.
    
    Comply with the intellectual property ownership rights of Microsoft and others
including but not limited to copyrights, trademarks, and trade secrets. Use software,
hardware and content only in accordance with their associated license or terms of use.
    
    Not distribute or cause to be distributed, any form of literature, materials or other
information on Microsoft owned or leased property (such as brochures, publications,
advertisements, surveys, announcements, or flyers) unrelated to Microsoft business in
Microsoft work areas (such as offices, cubicles, copy rooms, and/or conference rooms) at
any time. Distribution of such materials using the Microsoft network or e-mail system is
also strictly prohibited.
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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
    
    Speak to the press on Microsofts behalf only if Vendor and/or Representative(s) is
expressly authorized in writing to do so by Microsoft.
    
    Use good judgment, discretion, and moderation when offering gifts or entertainment to
Microsoft employees. In doing so, the Vendor and/or its Representatives will refrain from
giving Microsoft employees an individual gift or a combination of gifts with a value
greater than $200.00 and never offer a bribe, kickback, bartering arrangement for goods or
services, and/or any other incentive to a Microsoft employee in order to obtain or retain
Microsoft business.
    
    Avoid the appearance of or actual improprieties and/or conflicts of interests. Vendors
and/or their Representatives shall not deal directly with any Microsoft employee whose
spouse, domestic partner, or other family member or relative holds a significant financial
interest in the Vendor. Dealing directly in the course of negotiating the Vendor
agreement or performing the Vendors obligations with a spouse, domestic partner, or other
family member or relative who is employed by Microsoft is also prohibited.
    
    Avoid insider trading by buying or selling Microsofts or another companys stock when
in possession of information about Microsoft or another company that is not available to
the investing public and that could influence an investors decision to buy or sell stock.
 EMPLOYMENT PRACTICES
  
    
    Cooperate with Microsofts commitment to a workforce free of harassment and unlawful
discrimination.
    
    Provide a safe and healthy work environment and fully comply with all applicable safety
and health regulations and practices.
    
    Prohibit the use, possession, distribution, and/or sale of alcohol and/or illegal drugs
while on Microsoft owned or leased property.
    
    Use only voluntary labor. The use of forced labor whether in the form of indentured
labor, bonded labor, or prison labor by a Microsoft Vendor and/or its subcontractors is
prohibited.
    
    Comply with all minimum age laws and requirements and not employ child labor.
    
    Comply with all applicable laws governing compensation and working hours. In those
countries where there is no applicable standard, overtime shall be paid, at a minimum, at
the rate equal to the employees regular wages.
    
    In those instances where housing is provided by Vendors, assure Representatives
housing meets all applicable laws and regulations.
 COMPLIANCE WITH THE MICROSOFT VENDOR CODE OF CONDUCT
  
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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ENFORCEMENT OF AND COMPLIANCE VERIFICATION WITH THE MICROSOFT VENDOR CODE OF CONDUCT
   COMPLIANCE ACKNOWLEDGEMENT
  REPORTING OF QUESTIONABLE BEHAVIOR AND/OR POSSIBLE VIOLATIONS
  1.
    
    The Microsoft Business Conduct Line at 1-877-320-MSFT (6738).2.
    
    If you are calling from outside the United States, you may make a collect call to the
Business Conduct Line by accessing an international operator and asking to place a collect
call to 1-704-540-0139.3.
    
    If you are a Vendor with access to Microsofts intranet, you may send an e-mail to
the Director of Compliance by e-mailing the Business Conduct and Compliance alias,
buscond@microsoft.com.4.
    
    Send a letter to the Director of Compliance at Microsoft Corporation, Law and
Corporate Affairs, One Microsoft Way, Redmond, WA 98052 or send a confidential fax to
1-425-705-2985.
  
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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EXHIBIT D
 Vendor Subcontractor Requirements
  1.
    
    Minority Owned and Operated Businesses. Companys obligation shall include at
least five percent (5%) of the total amount paid by Company to suppliers of Third Party
Products and/or Services attributable to Third Party Products and/or Services obtained from
Minority Owned and Operated Businesses. For purposes of this section, Minority-Owned and
Operated Businesses shall mean businesses (a) which are at least fifty-one percent (51%)
owned by a Minority Person or Persons or, in the case of any publicly owned business, at least
fifty-one percent (51%) of the stock of which is owned by a Minority Person or Persons and (b)
whose management and daily business operations are controlled by one or more of the same
Minority Person or Persons having such ownership interest. For purposes of this section,
Minority Person or Persons shall mean one or more individuals who is/are US citizens,
residing in the United States, and who is/are (a) African-American/Black, (b) Hispanic, (c)
Asian-American/Pacific Islander (including native Hawaiians), (d) Asian Indian, and/or (e)
Native American/American Indian (enrolled in a federally recognized tribe); and
 2.
    
    Women Owned and Operated Businesses. Companys obligation shall include at least
five percent (5%) of the total amount paid by Company to suppliers of Third Party Products
and/or Services attributable to Third Party Products and/or Services obtained from Women Owned
and Operated Businesses. For purposes of this section, Women-Owned and Operated Businesses
shall mean businesses (a) which are at least fifty-one percent (51%) owned by one or more
women residing in the United States, or, in the case of any publicly owned business, at least
fifty-one percent (51%) of the stock of which is owned by one or more women residing in the
United States and (b) whose management and daily business operations are controlled by one or
more of the same women having such ownership interest.
  MSVPinfo@microsoft.com
 
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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1.
    
    Meet with the Microsoft Vendor Account Manager (VAM) and Supplier Diversity Program
Manager to discuss Companys efforts to comply with this section. If the VAM and Supplier
Diversity Program Manager determine that Company has made best, but unsuccessful, efforts to
be in compliance with this section, then, at Microsofts sole reasonable discretion, (a)
Microsoft shall not enforce Companys obligations under this section for a period not to
exceed the timeframe required by Company to comply with the provisions of subsection 2, below,
(b) Microsoft shall confirm the same in writing, and (c) Microsoft shall not consider Company
to be in breach of its obligations under this section, and
 2.
    
    Develop, in conjunction with the VAM and Supplier Diversity Program Manager, a mutually
agreeable plan (including, but not limited to, a compliance timeline, quarterly compliance
milestones, and quarterly reporting requirements) by which Company shall come into compliance
with its obligations under this section.
   
 * * *
    
    Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidential request.
Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential




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Company Name
    
    
    
    Vendor NumberStreet AddressStreet AddressCity
    
    State
    
    ZipReporting Period
 CurrentMSVP
    
    
    Percent
    
    
    Actual YTDSubcontract Awards
    
    Requirement
    
    
    Goal
    
    
    US Dollers
    
    
    PercentTotal billed to Microsoft
    
    
    
    
    
    
    
    
    
    $Total amount billed to Microsoft
that was subcontracted
    
    
    
    
    
    
    
    
    
    $1 Minority owned and operated
businesses
    
    
    5
    %
    
    
    0
    %
    
    $
    
    
    
    
    
    %2. Women owned and operated
businesses
    
    
    5
    %
    
    
    0
    %
    
    $
    
    
    
    
    
    %3. Total of 1 and 2
    
    
    10
    %
    
    
    0
    %
    
    $
    
    
    
    
    
    %
  
 
 
 
 * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith
omits the information subject to the confidential request. Omissions are designated as * * *. A
complete version of this exhibit has been filed separately with the Securities and Exchange Commission. Microsoft Confidential