Document:

<PAGE>
                                                                   EXHIBIT 10.46

                        TERMINATION AND RELEASE AGREEMENT

            THIS TERMINATION AND RELEASE AGREEMENT ("Termination Agreement") is
made and entered into as of the 27th day of February, 2003, by and between LEASE
PLAN NORTH AMERICA, INC., an Illinois corporation as Lessor ("LPNA"), ABN AMRO
BANK N.V. (f/k/a ABN AMRO BANK N.V., SAN FRANCISCO INTERNATIONAL BRANCH), as a
Participant ("ABN AMRO") and as Agent on behalf of all other Participants (in
such capacity, the "Agent"), and PEOPLESOFT, INC., a Delaware corporation, as
Lessee ("Peoplesoft"). Capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Participation Agreement (as defined below).

                                    RECITALS

            WHEREAS, (i) ABN AMRO, as a Participant and in its role as Agent for
the various Participants, CREDIT LYONNAIS LOS ANGELES BRANCH, as a Participant,
THE INDUSTRIAL BANK OF JAPAN, LIMITED SAN FRANCISCO AGENCY, as a Participant,
KEYBANK NATIONAL ASSOCIATION, as a Participant, FLEET BANK, N.A., as a
Participant, THE DAI-ICHI KANGYO BANK, LIMITED SAN FRANCISCO AGENCY, as a
Participant, GE CAPITAL CORPORATION, as a Participant, BANK OF NOVA SCOTIA, as a
Participant, BNP PARIBAS, as a Participant, THE FUJI BANK, LIMITED, as a
Participant, WELLS FARGO BANK, as a Participant (together with their permitted
successors and assigns, each a "Participant" and collectively the
"Participants"), LPNA and Peoplesoft, entered into that certain Participation
Agreement dated as of December 4, 1996 as amended by that certain First
Amendment to Participation Agreement, Master Lease, Lease Supplement and Deed of
Trust, dated as of December 4, 1996 (the "First Amendment") and that certain
Second Amendment to Participation Agreement, Master Lease, Lease Supplement and
Deed of Trust, dated as of September 28, 1998 (the "Second Amendment") (as
further amended from time to time, the "Participation Agreement"), (ii) LPNA and
Peoplesoft entered into that certain Master Lease dated as of December 4, 1996
(as amended, the "Lease") and (iii) Peoplesoft, Inc., a Delaware corporation
(the "Guarantor") and Agent entered into that certain Guarantee, dated as of
December 4, 1996, for the benefit of the Original Participants (the
"Guarantee");

            WHEREAS, pursuant to the Participation Agreement and the Lease, LPNA
and the Participants have provided certain credit facilities for the benefit of
Peoplesoft (collectively, the "Credit Facility");

            WHEREAS, below is the amount required to be paid to the Agent (for
distribution among the Agent and the Participants in accordance with the
provisions of the Participation Agreement), calculated as of February 27, 2003
(the "Payoff Calculation Date"), in order (i) to pay off and satisfy all
outstanding obligations of Peoplesoft (both in its capacity as Lessee and
Guarantor) and LPNA under the Lease, Credit Facility, all other Operative
Documents and the certificates, instruments, documents and agreements relating
thereto and (ii) to allow Peoplesoft to purchase the Project (defined below);

<PAGE>

            WHEREAS, the parties have previously entered into various agreements
more particularly described herein, in connection with certain real property
located in the County of Alameda, State of California and more particularly
described in the Operative Documents (the "Project"); and

            WHEREAS, Peoplesoft exercised the Purchase Option under Section 20.1
of the Lease pursuant to a Purchase Notice delivered to ABN AMRO on February 6,
2003 (the "Purchase Notice"). In connection with the closing of the purchase of
the Project pursuant to the Purchase Notice, the parties desire to terminate and
release certain agreements and LPNA desires to convey the Project to Peoplesoft
upon the satisfaction of the conditions set forth below.

            NOW, THEREFORE, for good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

                                   AGREEMENTS

1. Purchase Calculation. The following is the amount (the "Payoff Sum") required
to be paid by Peoplesoft to the Agent (for distribution among the Agent and the
Participants in accordance with the provisions of the Participation Agreement)
pursuant to Section 20.1 of the Lease, calculated as of the Payoff Calculation
Date, in order to pay off and satisfy all outstanding obligations of Peoplesoft
(both in its capacity as Lessee and Guarantor) and LPNA under the Lease, the
Credit Facility and all other Operative Documents and the certificates,
instruments, documents and agreements relating thereto:

<Table>

<S>                                                                                <C>
            Principal Balance:                                                     $70,000,000.00
            Interest through Payoff Calculation Date:                              $   229,361.81
            Total Through Payoff Calculation Date                                  $70,229,361.81

            Date:       February 27, 2003
</Table>

            If the payoff sum, is not received on the Payoff Calculation Date, a
per diem charge of $12,025.58 should be added each day thereafter for interest
accruing from the Payoff Calculation Date through the date that the Payoff Sum
is actually received by the Agent. Any payment received by the Agent other than
on a business day of the Agent (or after 12:00 pm CST on any business day) shall
be deemed not to have been received until the following business day. Wire
instructions for delivery of the Tranche A and B Payoff Amount are set forth
below:

<Table>
<S>                                                          <C>
                       Bank:                                 ABN AMRO Bank, N.V., New York
                       ABA Routing #:                        026009580
                       Account Name:                         ABN AMRO Bank N.V. Chicago CPU
                       Account #:                            650-001-178941
                       Reference:                            Peoplesoft
</Table>

                                       2
<PAGE>

If payment will not be received by the Payoff Calculation Date, a new
calculation of the payoff sum should be requested from the Agent.

2. Fees of Counsel to Agent. In addition to the payment described in Paragraph 1
above, the sum of $10,354.54 is the amount required to be paid by Peoplesoft to
counsel for the Agent, calculated as of the Payoff Calculation Date. The total
amount due under this Paragraph 2 is the sum of the following amounts:

<Table>

<S>                                                                                <C>
            Outstanding Invoices                                                   $3,379.82

            Fees Incurred in Connection with the
            Termination through February 27, 2003                                  $6,404.72

            Estimated Fees to be Incurred to Complete the
            Termination and any Post-Termination Work                              $   570.00
                                                                                   ----------
            Total                                                                  $10,354.54
</Table>

            Wire instructions for delivery of fees to Counsel for the Agent are
set forth below:

                BANK OF AMERICA - Eighth & Main Streets, Richmond, VA  23219
                ABA:  051000017
                Credit:  McGuireWoods Operating Account
                Account Number: 000003664964
                Reference: (W. Kirk Grimm  2027792/0020)
                McGuireWoods Accounting Contact: Julie N. Watkins (804)-775-7441
                Bank Contact: Patrick Comia (888)-841-8159, Opt. 2, Ext. 21600

3. Termination of Agreements. Upon Agent's receipt of the payment required in
Paragraph 1 above, each of the following agreements, as amended from time to
time, together with all other Operative Documents and any of the certificates,
instruments, documents and agreements relating thereto (each an "Agreement" and
collectively the "Agreements"), is hereby terminated and the parties thereto
released subject to the provisions of Paragraph 4 below, as of the date hereof:

         (a) PARTICIPATION AGREEMENT, dated as of December 4, 1996, between
Peoplesoft, LPNA, ABN AMRO and the other banks and financial institutions from
time to time party thereto; as amended by that certain First Amendment and
Second Amendment;

         (b) MASTER LEASE, between LPNA and Peoplesoft dated as of December 4,
1996, as amended by that certain First Amendment and the Second Amendment;

                                       3
<PAGE>

         (c) LEASE SUPPLEMENT NO. 1 (AND MEMORANDUM OF LEASE), dated as of
December 4, 1996, between LPNA and Peoplesoft as recorded on February 7, 1997 in
the real property records for Alameda County, California at Reception No.
97039047, as amended by the First Amendment and Second Amendment;

         (d) CASH COLLATERAL AGREEMENT, dated as of December 4, 1996, between
Peoplesoft, LPNA and Agent (the "Cash Collateral Agreement");

         (e) GUARANTEE, dated as of December 4, 1996, between Peoplesoft and
Agent for the Original Participants;

         (f) CONSTRUCTION DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT, dated as of December 4, 1996 made by LPNA, as Trustor, to
the Chicago Title Insurance Company, as Trustee for the benefit of the Agent as
recorded on February 7, 1997 in the real property records for Alameda County,
California at Reception No. 97039045, as amended by the First Amendment and
Second Amendment to Participation Agreement;

         (g) ASSIGNMENT OF LEASE, dated as of December 4, 1996 between LPNA and
Agent as recorded on February 7, 1997 in the real property records for Alameda
County, California at Reception No. 97039046, for the Original Participants;

         (h) SUPPLEMENT TO ASSIGNMENT OF LEASE, dated as of February 7, 1997,
between LPNA and Agent;

         (i) CONSENT OF CONSTRUCTION AGENT TO ASSIGNMENT OF CONSTRUCTION AGENCY,
dated as of December 4, 1996, by Peoplesoft;

         (j) CONSTRUCTION AGENCY AGREEMENT, dated as of December 4, 1996 between
LPNA and Peoplesoft, as Construction Agent;

         (k) ASSIGNMENT OF CONSTRUCTION DOCUMENTS, dated as of December 4, 1996
between Peoplesoft and LPNA;

         (l) ASSIGNMENT OF CONSTRUCTION AGENCY AGREEMENT, dated as of December
4, 1996 between LPNA and ABN AMRO as Agent;

         (m) CONSENT AND ACKNOWLEDGEMENT BY PEOPLESOFT, dated as of December 4,
1996 by Peoplesoft consenting to and acknowledging the assignment of
Construction Agency Agreement dated December 4, 1996; and

         (n) UCC FINANCING STATEMENTS, each of the UCC Financing Statements
listed on Exhibit A attached hereto.

4. No Release of Indemnities. Effective as of the Payoff Calculation Date, LPNA
and Agent do each hereby release Peoplesoft and its Affiliates and Subsidiaries
from each and all of their obligations and any claims and demands of every kind
and nature, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising out of or in connection with the Credit Facility, the
Operative Documents and any of the certificates, instruments, documents and

                                       4
<PAGE>

agreements relating thereto; provided, however, that neither LPNA nor Agent
waives or releases Peoplesoft and its Affiliates and Subsidiaries from any
obligations, claims or demands arising from indemnifications or liabilities or
obligations contained in the Operative Documents and any of the certificates,
instruments, documents and agreements relating thereto, which, by their
respective terms, expressly survive the termination of such agreements.

5. Waiver. Pursuant to the Purchase Notice, Peoplesoft advised Agent of its
exercise of the Purchase Option pursuant to Section 20.1 of the Lease. Pursuant
to the Purchase Notice, Peoplesoft has requested that the provisions of Section
20.1 of the Lease requiring delivery of a written notice not less than sixty
(60) days prior to the purchase of the Project pursuant to the Purchase Option
be waived. Agent, LPNA and the Participants hereby waive Peoplesoft's compliance
with the provisions of Section 20.1 of the Lease requiring delivery of a written
notice not less than sixty (60) days prior to the purchase of the Project
pursuant to the Purchase Option.

6. Execution of Additional Documents. LPNA and Agent each agree, at Peoplesoft's
sole cost and expense, to promptly execute such additional documents and
instruments as are necessary or desirable to evidence the releases and
terminations set forth in this Termination Agreement.

7. Counterparts. This Termination Agreement may be signed in two or more
counterparts. When at least one such counterpart has been signed by each party,
this Termination Agreement shall be deemed to have been fully executed, each
counterpart shall be deemed to be an original, and all counterparts shall be
deemed to be one and the same agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       5
<PAGE>

             IN WITNESS WHEREOF, the parties have caused this Termination
Agreement to be executed by their respective duly authorized officers as of the
day and year first above written.

                             PEOPLESOFT, INC.
                             as Lessee

                             By:         /s/ ROBIN L. WASHINGTON
                                         ---------------------------------------
                             Name:       Robin L.Washington
                             Title:      Vice President and Corporate Controller

                             LEASE PLAN NORTH AMERICA, INC.
                             as Lessor

                             By:         /s/ KEVIN K. KENNING
                                         ---------------------------------------
                             Name:       Kevin K. Kenning
                             Title:      Vice President

                             ABN AMRO BANK N.V., not in its individual capacity,
                             except as expressly stated herein, but solely as
                             Agent

                             By:         /s/ KEVIN K. KENNING
                                         ---------------------------------------
                             Name:       Kevin K. Kenning
                             Title:      Vice President

                             By:         /s/ RUBA ABOZIR
                                         ---------------------------------------
                             Name:       Ruba Abozir
                             Title:      Vice President

<PAGE>

                                    EXHIBIT A

                            UCC FINANCING STATEMENTS

<Table>
<Caption>

                            UCC-1                      FILING         UCC-3                  FILING
JURISDICTION                FILING NO.                 DATE           FILING  NO.            DATE       DOCUMENT
<S>                         <C>                        <C>            <C>                    <C>        <C>
Delaware                    20211296                   1/25/02

Delaware                    20432421                   2/19/02

Illinois                    4663527                    1/25/02

Illinois                    4794117                    2/19/02
</Table><PAGE>

                                                                    EXHIBIT 4.08

                              TRANSMETA CORPORATION

                           2000 EQUITY INCENTIVE PLAN

                         As Adopted September 11, 2000*

         1.       PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.

         2.       SHARES SUBJECT TO THE PLAN.

                  2.1      Number of Shares Available. Subject to Sections 2.2
and 18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 26,936,981 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price; and (c) an Award that otherwise terminates without Shares being
issued. In addition, any authorized shares not issued or subject to outstanding
grants under the Company's 1997 Equity Incentive Plan on the Effective Date (as
defined below) and any shares issued under the Company's 1995 Equity Incentive
Plan and 1997 Equity Incentive Plan (the "PRIOR PLANS") that are forfeited or
repurchased by the Company or that are issuable upon exercise of options granted
pursuant to the Prior Plans that expire or become unexercisable for any reason
without having been exercised in full, will no longer be available for grant and
issuance under the Prior Plans, but will be available for grant and issuance
under this Plan. In addition, on each January 1, the aggregate number of Shares
reserved and available for grant and issuance pursuant to this Plan will be
increased automatically by a number of Shares equal to 5% of the total
outstanding shares of the Company as of the immediately preceding December 31;
provided, that the Board may in its sole discretion reduce the amount of the
increase in any particular year; and, provided further, provided that no more
than 60,000,000 shares shall be issued as ISOs (as defined in Section 5 below).
At all times the Company shall reserve and keep available a sufficient number of
Shares as shall be required to satisfy the requirements of all outstanding
Options granted under this Plan and all other outstanding but unvested Awards
granted under this Plan.

                  2.2      Adjustment of Shares. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
number of Shares that may be granted pursuant to Sections 3 and 9 below, (c) the
Exercise Prices of and number of Shares subject to outstanding Options, and (d)
the number of Shares subject to other outstanding Awards may, upon approval of
the Board in its discretion, be proportionately adjusted in compliance with
applicable securities laws; provided, however, that fractions of a Share will
not be issued but will either be replaced by a cash payment equal to the Fair
Market Value of such fraction of a Share or will be rounded up to the nearest
whole Share, as determined by the Committee.

         3.       ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All other
Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent or Subsidiary
of the Company; provided such consultants, contractors

*The number of common stock shares reserved for issuance under this plan takes
into account a two for one stock split that occurred on October 30, 2000 and
includes automatic annual increases that occurred on January 1, 2001, January 1,
2002 and January 1, 2003.

<PAGE>

                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

and advisors render bona fide services not in connection with the offer and sale
of securities in a capital-raising transaction. No person will be eligible to
receive more than 4,000,000 Shares in any calendar year under this Plan pursuant
to the grant of Awards hereunder, other than new employees of the Company or of
a Parent or Subsidiary of the Company (including new employees who are also
officers and directors of the Company or any Parent or Subsidiary of the
Company), who are eligible to receive up to a maximum of 6,000,000 Shares in the
calendar year in which they commence their employment. A person may be granted
more than one Award under this Plan.

         4.       ADMINISTRATION.

                  4.1      Committee Authority. This Plan will be administered
by the Committee or by the Board acting as the Committee. Except for automatic
grants to Outside Directors pursuant to Section 9 hereof, and subject to the
general purposes, terms and conditions of this Plan, and to the direction of the
Board, the Committee will have full power to implement and carry out this Plan.
Except for automatic grants to Outside Directors pursuant to Section 9 hereof,
the Committee will have the authority to:

                  (a)      construe and interpret this Plan, any Award Agreement
                           and any other agreement or document executed pursuant
                           to this Plan;

                  (b)      prescribe, amend and rescind rules and regulations
                           relating to this Plan or any Award;

                  (c)      select persons to receive Awards;

                  (d)      determine the form and terms of Awards;

                  (e)      determine the number of Shares or other consideration
                           subject to Awards;

                  (f)      determine whether Awards will be granted singly, in
                           combination with, in tandem with, in replacement of,
                           or as alternatives to, other Awards under this Plan
                           or any other incentive or compensation plan of the
                           Company or any Parent or Subsidiary of the Company;

                  (g)      grant waivers of Plan or Award conditions;

                  (h)      determine the vesting, exercisability and payment of
                           Awards;

                  (i)      correct any defect, supply any omission or reconcile
                           any inconsistency in this Plan, any Award or any
                           Award Agreement;

                  (j)      determine whether an Award has been earned; and

                  (k)      make all other determinations necessary or advisable
                           for the administration of this Plan.

                  4.2      Committee Discretion. Except for automatic grants to
Outside Directors pursuant to Section 9 hereof, any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not Insiders
of the Company.

         5.       OPTIONS. The Committee may grant Options to eligible persons
and will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOs"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:

                                       2

<PAGE>

                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                  5.1      Form of Option Grant. Each Option granted under this
Plan will be evidenced by an Award Agreement which will expressly identify the
Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and, except as otherwise
required by the terms of Section 9 hereof, will be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the
terms and conditions of this Plan.

                  5.2      Date of Grant. The date of grant of an Option will be
the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.

                  5.3      Exercise Period. Options may be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement governing such Option; provided, however, that no Option
will be exercisable after the expiration of ten (10) years from the date the
Option is granted; and provided further that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent or
Subsidiary of the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after
the expiration of five (5) years from the date the ISO is granted. The Committee
also may provide for Options to become exercisable at one time or from time to
time, periodically or otherwise, in such number of Shares or percentage of
Shares as the Committee determines.

                  5.4      Exercise Price. The Exercise Price of an Option will
be determined by the Committee when the Option is granted; provided that: (i)
the Exercise Price of an ISO will be not less than 100% of the Fair Market Value
of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.

                  5.5      Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.

                  5.6      Termination. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:

                  (a)      If the Participant is Terminated for any reason
                           except death or Disability, then the Participant may
                           exercise such Participant's Options only to the
                           extent that such Options would have been exercisable
                           upon the Termination Date no later than three (3)
                           months after the Termination Date (or such shorter or
                           longer time period not exceeding five (5) years as
                           may be determined by the Committee, with any exercise
                           beyond three (3) months after the Termination Date
                           deemed to be an NQSO), but in any event, no later
                           than the expiration date of the Options.

                  (b)      If the Participant is Terminated because of
                           Participant's death or Disability (or the Participant
                           dies within three (3) months after a Termination
                           other than for Cause or because of Participant's
                           Disability), then Participant's Options may be
                           exercised only to the extent that such Options would
                           have been exercisable by Participant on the
                           Termination Date and must be exercised by Participant
                           (or Participant's legal representative or authorized
                           assignee) no later than twelve (12) months after the
                           Termination Date (or such shorter or longer time
                           period not exceeding five (5) years as may be
                           determined by the Committee, with any such exercise
                           beyond (a) three (3) months after the Termination
                           Date when the

                                       3

<PAGE>

                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                           Termination is for any reason other than the
                           Participant's death or disability, within the meaning
                           of Section 22(e)(3) of the Code, or (ii) twelve (12)
                           months after the Termination Date when the
                           Termination is for Participant's disability, within
                           the meaning of Section 22(e)(3) of the Code, deemed
                           to be an NQSO), but in any event no later than the
                           expiration date of the Options.

                  (c)      If the Participant is terminated for Cause, then
                           Participant's Options shall expire on such
                           Participant's Termination Date, or at such later time
                           and on such conditions as are determined by the
                           Committee.

                  5.7      Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.

                  5.8      Limitations on ISO. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISO are exercisable for the
first time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISO and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISO, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.

                  5.9      Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.

                  5.10     No Disqualification. Notwithstanding any other
provision in this Plan, no term of this Plan relating to ISO will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.

         6.       RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:

                  6.1      Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.

                                       4

<PAGE>

                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                  6.2      Purchase Price. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award will be determined by the Committee on the
date the Restricted Stock Award is granted, except in the case of a sale to a
Ten Percent Stockholder, in which case the Purchase Price will be 100% of the
Fair Market Value. Payment of the Purchase Price may be made in accordance with
Section 8 of this Plan.

                  6.3      Terms of Restricted Stock Awards. Restricted Stock
Awards shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and
having different performance goals and other criteria.

                  6.4      Termination During Performance Period. If a
Participant is Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Shares, cash or otherwise)
with respect to the Restricted Stock Award only to the extent earned as of the
date of Termination in accordance with the Restricted Stock Purchase Agreement,
unless the Committee will determine otherwise.

         7.       STOCK BONUSES.

                  7.1      Awards of Stock Bonuses. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus may be awarded
for past services already rendered to the Company, or any Parent or Subsidiary
of the Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that
will be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.

                  7.2      Terms of Stock Bonuses. The Committee will determine
the number of Shares to be awarded to the Participant. If the Stock Bonus is
being earned upon the satisfaction of performance goals pursuant to a
Performance Stock Bonus Agreement, then the Committee will: (a) determine the
nature, length and starting date of any Performance Period for each Stock Bonus;
(b) select from among the Performance Factors to be used to measure the
performance, if any; and (c) determine the number of Shares that may be awarded
to the Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.

                  7.3      Form of Payment. The earned portion of a Stock Bonus
may be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

made in the form of cash or whole Shares or a combination thereof, either in a
lump sum payment or in installments, all as the Committee will determine.

         8.       PAYMENT FOR SHARE PURCHASES.

                  8.1      Payment. Payment for Shares purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:

                  (a)      by cancellation of indebtedness of the Company to the
                           Participant;

                  (b)      by surrender of shares that either: (1) have been
                           owned by Participant for more than six (6) months and
                           have been paid for within the meaning of SEC Rule 144
                           (and, if such shares were purchased from the Company
                           by use of a promissory note, such note has been fully
                           paid with respect to such shares); or (2) were
                           obtained by Participant in the public market;

                  (c)      by tender of a full recourse promissory note having
                           such terms as may be approved by the Committee and
                           bearing interest at a rate sufficient to avoid
                           imputation of income under Sections 483 and 1274 of
                           the Code; provided, however, that Participants who
                           are not employees or directors of the Company will
                           not be entitled to purchase Shares with a promissory
                           note unless the note is adequately secured by
                           collateral other than the Shares;

                  (d)      by waiver of compensation due or accrued to the
                           Participant for services rendered;

                  (e)      with respect only to purchases upon exercise of an
                           Option, and provided that a public market for the
                           Company's stock exists:

                           (1)      through a "same day sale" commitment from
                                    the Participant and a broker-dealer that is
                                    a member of the National Association of
                                    Securities Dealers (an "NASD DEALER")
                                    whereby the Participant irrevocably elects
                                    to exercise the Option and to sell a portion
                                    of the Shares so purchased to pay for the
                                    Exercise Price, and whereby the NASD Dealer
                                    irrevocably commits upon receipt of such
                                    Shares to forward the Exercise Price
                                    directly to the Company; or

                           (2)      through a "margin" commitment from the
                                    Participant and a NASD Dealer whereby the
                                    Participant irrevocably elects to exercise
                                    the Option and to pledge the Shares so
                                    purchased to the NASD Dealer in a margin
                                    account as security for a loan from the NASD
                                    Dealer in the amount of the Exercise Price,
                                    and whereby the NASD Dealer irrevocably
                                    commits upon receipt of such Shares to
                                    forward the Exercise Price directly to the
                                    Company; or

                  (f)      by any combination of the foregoing.

                  8.2      Loan Guarantees. The Committee may help the
Participant pay for Shares purchased under this Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.

         9.       AUTOMATIC GRANTS TO OUTSIDE DIRECTORS.

                  9.1      Types of Options and Shares. Options granted under
this Plan and subject to this Section 9 shall be NQSOs.

                  9.2      Eligibility. Options subject to this Section 9 shall
be granted only to Outside Directors.

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                  9.3      Initial Grant. Each Outside Director who first
becomes a member of the Board after the Effective Date will automatically be
granted an option for 30,000 Shares (an "INITIAL GRANT") on the date such
Outside Director first becomes a member of the Board. Each Outside Director who
became a member of the Board on or prior to the Effective Date and who did not
receive a prior option grant (under this Plan or otherwise and from the Company
or any of its corporate predecessors) will receive an Initial Grant on the
Effective Date.

                  9.4      Succeeding Grant. Immediately following each Annual
Meeting of stockholders, each Outside Director will automatically be granted an
option for 15,000 Shares (a "SUCCEEDING GRANT"), provided, that the Outside
Director is a member of the Board on such date and has served continuously as a
member of the Board for a period of at least twelve (12) months since the last
option grant (whether an Initial Grant or a Succeeding Grant) to such Outside
Director. If less than twelve (12) months has passed, then the number of shares
subject to the Succeeding Grant will be pro-rated based on the number of days
passed since the last option grant to such Outside Director, divided by 365
days.

                  9.5      Vesting and Exercisability. The date an Outside
Director receives an Initial Grant or a Succeeding Grant is referred to in this
Plan as the "START DATE" for such option.

                  (a)      Initial Grant. Each Initial Grant will vest and be
                           exercisable as to 33 1/3% of the Shares on the first
                           one year anniversary of the Start Date for such
                           Initial Grant, and thereafter as to 2.77778% of the
                           Shares at the end of each full succeeding month, so
                           long as the Outside Director continuously remains a
                           director or a consultant of the Company.

                  (b)      Succeeding Grant. Each Succeeding Grant will vest and
                           be exercisable as to 33 1/3% of the Shares on the
                           first one year anniversary of the Start Date for such
                           Succeeding Grant, and thereafter as to 2.77778% of
                           the Shares at the end of each full succeeding month,
                           so long as the Outside Director continuously remains
                           a director or a consultant of the Company.

Notwithstanding any provision to the contrary, in the event of a Corporate
Transaction described in Section 18.1, the vesting of all options granted to
Outside Directors pursuant to this Section 9 will accelerate and such options
will become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines, and must be exercised,
if at all, within three (3) months of the consummation of said event. Any
options not exercised within such three-month period shall expire.

                  9.6      Exercise Price. The exercise price of an option
pursuant to an Initial Grant and Succeeding Grant shall be the Fair Market Value
of the Shares, at the time that the option is granted.

         10.      WITHHOLDING TAXES.

                  10.1     Withholding Generally. Whenever Shares are to be
issued in satisfaction of Awards granted under this Plan, the Company may
require the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.

                  10.2     Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.

                                       7

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

         11.      TRANSFERABILITY.

                  11.1     Except as otherwise provided in this Section 11,
Awards granted under this Plan, and any interest therein, will not be
transferable or assignable by Participant, and may not be made subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution or as determined by the Committee and set forth in
the Award Agreement with respect to Awards that are not ISOs.

                  11.2     All Awards other than NQSO's. All Awards other than
NQSO's shall be exercisable: (i) during the Participant's lifetime, only by (A)
the Participant, or (B) the Participant's guardian or legal representative; and
(ii) after Participant's death, by the legal representative of the Participant's
heirs or legatees.

                  11.3     NQSOs. Unless otherwise restricted by the Committee,
an NQSO shall be exercisable: (i) during the Participant's lifetime only by (A)
the Participant, (B) the Participant's guardian or legal representative, (C) a
Family Member of the Participant who has acquired the NQSO by "permitted
transfer;" and (ii) after Participant's death, by the legal representative of
the Participant's heirs or legatees. "Permitted transfer" means, as authorized
by this Plan and the Committee in an NQSO, any transfer effected by the
Participant during the Participant's lifetime of an interest in such NQSO but
only such transfers which are by gift or domestic relations order. A permitted
transfer does not include any transfer for value and neither of the following
are transfers for value: (a) a transfer of under a domestic relations order in
settlement of marital property rights or (b) a transfer to an entity in which
more than fifty percent of the voting interests are owned by Family Members or
the Participant in exchange for an interest in that entity.

         12.      PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

                  12.1     Voting and Dividends. No Participant will have any of
the rights of a stockholder 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 stockholder and have all the rights of a stockholder 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 if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's Purchase Price or
Exercise Price pursuant to Section 12.

                  12.2     Financial Statements. The Company will provide
financial statements to each Participant prior to such Participant's purchase of
Shares under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.

                  12.3     Restrictions on Shares. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the Award
Agreement a right to repurchase a portion of or all Unvested Shares held by a
Participant following such Participant's Termination at any time within ninety
(90) days after the later of Participant's Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at the Participant's Exercise Price or Purchase
Price, as the case may be.

         13.      CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

                                       8

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

         14.      ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.

         15.      EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time
or from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.

         16.      SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will
not be effective unless such Award is in compliance with all applicable federal
and state securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed or quoted, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.

         17.      NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any way
the right of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.

         18.      CORPORATE TRANSACTIONS.

                  18.1     Assumption or Replacement of Awards by Successor.
Except for automatic grants to Outside Directors pursuant to Section 9 hereof,
in the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar

                                       9

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

transaction (each, a "CORPORATE TRANSACTION"), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participants, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Awards will expire on such transaction at such time and on
such conditions as the Committee will determine. Notwithstanding anything in
this Plan to the contrary, the Committee may, in its sole discretion, provide
that the vesting of any or all Awards granted pursuant to this Plan will
accelerate upon a transaction described in this Section 18. If the Committee
exercises such discretion with respect to Options, such Options will become
exercisable in full prior to the consummation of such event at such time and on
such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.

                  18.2     Other Treatment of Awards. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
18, in the event of the occurrence of any Corporate Transaction described in
Section 18.1, any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
or sale of assets.

                  18.3     Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.

         19.      ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become
effective on the date on which the registration statement filed by the Company
with the SEC under the Securities Act registering the initial public offering of
the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"). This Plan shall be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve (12) months before or after the date this Plan is adopted by
the Board. Upon the Effective Date, the Committee may grant Awards pursuant to
this Plan; provided, however, that: (a) no Option may be exercised prior to
initial stockholder approval of this Plan; (b) no Option granted pursuant to an
increase in the number of Shares subject to this Plan approved by the Board will
be exercised prior to the time such increase has been approved by the
stockholders of the Company; (c) in the event that initial stockholder approval
is not obtained within the time period provided herein, all Awards granted
hereunder shall be cancelled, any Shares issued pursuant to any Awards shall be
cancelled and any purchase of Shares issued hereunder shall be rescinded; and
(d) in the event that stockholder approval of such increase is not obtained
within the time period provided herein, all Awards granted pursuant to such
increase will be cancelled, any Shares issued pursuant to any Award granted
pursuant to such increase will be cancelled, and any purchase of Shares pursuant
to such increase will be rescinded.

         20.      TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Plan will terminate ten (10) years from the date this Plan
is adopted by the Board or, if earlier, the date of stockholder approval. This
Plan and all agreements thereunder shall be governed by and construed in
accordance with the laws of the State of California.

                                       10

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

         21.      AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval.

         22.      NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan
by the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.

         23.      DEFINITIONS. As used in this Plan, the following terms will
have the following meanings:

                  "AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.

                  "AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.

                  "BOARD" means the Board of Directors of the Company.

                  "CAUSE" means (i) the commission of an act of theft,
embezzlement, fraud, dishonesty, (b) a breach of fiduciary duty to the Company
or a Parent or Subsidiary of the Company or (c) a failure to materially perform
the customary duties of employee's employment.

                  "CODE" means the Internal Revenue Code of 1986, as amended.

                  "COMMITTEE" means the Compensation Committee of the Board.

                  "COMPANY" means Transmeta Corporation or any successor
corporation.

                  "DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

                  "EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.

                  "FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:

                  (a)      if such Common Stock is then quoted on the Nasdaq
                           National Market, its closing price on the Nasdaq
                           National Market on the date of determination as
                           reported in The Wall Street Journal;

                  (b)      if such Common Stock is publicly traded and is then
                           listed on a national securities exchange, its closing
                           price on the date of determination on the principal
                           national securities exchange on which the Common
                           Stock is listed or admitted to trading as reported in
                           The Wall Street Journal;

                  (c)      if such Common Stock is publicly traded but is not
                           quoted on the Nasdaq National Market nor listed or
                           admitted to trading on a national securities
                           exchange, the average of the

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                           closing bid and asked prices on the date of
                           determination as reported in The Wall Street Journal;

                  (d)      in the case of an Award made on the Effective Date,
                           the price per share at which shares of the Company's
                           Common Stock are initially offered for sale to the
                           public by the Company's underwriters in the initial
                           public offering of the Company's Common Stock
                           pursuant to a registration statement filed with the
                           SEC under the Securities Act; or

                  (e)      if none of the foregoing is applicable, by the
                           Committee in good faith.

                  "FAMILY MEMBER" includes any of the following:

                  (a)      child, stepchild, grandchild, parent, stepparent,
                           grandparent, spouse, former spouse, sibling, niece,
                           nephew, mother-in-law, father-in-law, son-in-law,
                           daughter-in-law, brother-in-law, or sister-in-law of
                           the Participant, including any such person with such
                           relationship to the Participant by adoption;

                  (b)      any person (other than a tenant or employee) sharing
                           the Participant's household;

                  (c)      a trust in which the persons in (a) and (b) have more
                           than fifty percent of the beneficial interest;

                  (d)      a foundation in which the persons in (a) and (b) or
                           the Participant control the management of assets; or

                  (e)      any other entity in which the persons in (a) and (b)
                           or the Participant own more than fifty percent of the
                           voting interest.

                  "INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.

                  "OPTION" means an award of an option to purchase Shares
pursuant to Section 5.

                  "OUTSIDE DIRECTOR" means a member of the Board who is not an
employee of the Company or any Parent or Subsidiary.

                  "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

                  "PARTICIPANT" means a person who receives an Award under this
Plan.

                  "PERFORMANCE FACTORS" means the factors selected by the
Committee from among the following measures to determine whether the performance
goals established by the Committee and applicable to Awards have been satisfied:

                  (a)      Net revenue and/or net revenue growth;

                  (b)      Earnings before income taxes and amortization and/or
                           earnings before income taxes and amortization growth;

                  (c)      Operating income and/or operating income growth;

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                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                  (d)      Net income and/or net income growth;

                  (e)      Earnings per share and/or earnings per share growth;

                  (f)      Total stockholder return and/or total stockholder
                           return growth;

                  (g)      Return on equity;

                  (h)      Operating cash flow return on income;

                  (i)      Adjusted operating cash flow return on income;

                  (j)      Economic value added; and

                  (k)      Individual confidential business objectives.

                  "PERFORMANCE PERIOD" means the period of service determined by
the Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.

                  "PLAN" means this Transmeta Corporation 2000 Equity Incentive
Plan, as amended from time to time.

                  "RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.

                  "SEC" means the Securities and Exchange Commission.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.

                  "STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.

                  "SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

                  "TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").

                                       13

<PAGE>

                                                           Transmeta Corporation
                                                      2000 Equity Incentive Plan

                  "UNVESTED SHARES" means "Unvested Shares" as defined in the
Award Agreement.

                  "VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.

                                       14

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