Document:

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                                                                   EXHIBIT 10.15

                                    SUBLEASE

        THIS SUBLEASE (this "Sublease") is dated for reference purposes as of
June 15, 2000, and is made by and between Bitlocker, Inc., a California
corporation ("Sublandlord"), and Transmeta Corporation, a California corporation
("Subtenant"). Sublandlord and Subtenant hereby agree as follows:

        1.     RECITALS: This Sublease is made with reference to the fact that
     John Arrillaga, Trustee, and Richard T. Peery, Trustee, as landlord
     ("Master Landlord"), and Sublandlord, as tenant, are parties to that
     certain Lease dated April 4, 2000 (the " Master Lease"), with respect to
     those certain premises (the "Master Premises"), in that certain building
     (the "Building") located at 3930 Freedom Circle, Santa Clara, California,
     as set forth in the Master Lease. A copy of the Master Lease is attached
     hereto as Exhibit A. Capitalized terms used and not defined herein shall
     have the meaning ascribed to them in the Master Lease.

        2.     SUBLEASED PREMISES: Subject to the terms and conditions of this
Sublease, Sublandlord hereby subleases to Subtenant, and Subtenant hereby
subleases from Sublandlord, a portion of the Master Premises, conclusively
agreed to be 11,250 rentable square feet as more particularly described on
Exhibit B attached hereto and incorporated herein by reference (hereinafter, the
"Subleased Premises"). Subtenant shall have its pro rata share of the parking
rights set forth at Paragraph 6 of the Master Lease [?].

        3.     TERM:

               A.     TERM. The term (the "Term") of this Sublease shall be for
the period commencing on the date (the "Commencement Date") that is the later of
(i) July 1, 2000 (the "Scheduled Commencement Date"), (ii) the date by which
Master Landlord consents to this Sublease, and (iii) the date possession of the
Subleased Premises is tendered to Subtenant by Sublandlord and ending 365 days
after the Commencement Date, unless this Sublease is sooner terminated pursuant
to its terms or the Master Lease is sooner terminated pursuant to its terms (the
"Expiration Date"). If for any reason Sublandlord does not take possession of
the Premises on or before the Scheduled Commencement Date, Sublandlord will not
be subject to any liability for this failure, but the Termination Date will be
extended by the delay, and the validity of this Sublease will not be impaired.
Rent will be abated until tender of possession. However, if Sublandlord has not
tendered possession to Subtenant within ninety (90) days after the Scheduled
Commencement Date, at any time after that date and before Sublandlord takes
possession, Subtenant may give written notice to Sublandlord of Subtenant's
intention to cancel this Sublease. The notice will set forth an effective date
for the cancellation, which will be at least ten (10) days after delivery of
notice to Sublandlord. If Sublandlord takes possession of the Premises on or
before this effective date, this Sublease will remain in full force. If
Sublandlord fails to take possession on or before such effective date, this
Sublease will be canceled. Upon cancellation, all consideration previously paid
by Subtenant to Sublandlord on account of this Sublease will be returned to
Subtenant, this Sublease will have no further force or effect, and

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Sublandlord will have no further liability to Subtenant because of such delay or
cancellation. If Sublandlord permits Subtenant to take possession prior to the
Scheduled Commencement Date, the early possession will not advance the
Termination Date and will be subject to the provisions of this Sublease,
including, without limitation, the payment of Rent.

               B.     OPTION TO EXTEND. Subtenant shall have no options or
rights to extend the Term of this Sublease or expand the Subleased Premises.

        4.     RENT:

               A.     BASE RENT. Commencing on the Commencement Date and
continuing each month throughout the Term of this Sublease, Subtenant shall pay
to Sublandlord as base rent for the Subleased Premises equal monthly
installments of Fifty Thousand Seven Hundred Thirty Two Dollars and 00/100
($56,250)("Base Rent"). Base Rent shall be paid in advance on or before the
first (1st) day of each month. Rent for any period during the Term hereof which
is for less than one (1) month of the Term shall be a pro rata portion of the
monthly installment based on a thirty (30) day month. Rent shall be payable
without notice or demand and without any deduction, offset, or abatement, in
lawful money of the United States of America. Rent shall be paid directly to
Sublandlord at __________________________, Attention: _______________, or such
other address as may be designated in writing by Sublandlord.

               B.     SERVER ROOM; SYSTEM FURNITURE; POWER DISTRIBUTION;
VOICE/DATA Cabling. Subtenant shall pay Sublandlord $125,000.00 upon execution
of this Sublease ("Services Rent") as in consideration of Subtenant's use of the
server room on a primary basis for the Sublease Term, and use of the power
distribution, voice/data cabling and system furniture (exclusive of chairs that
Subtenant will provide) [Identify on Exhibit?]. At the end of the Term, the
system furniture shall be returned in the same condition as when received by
Subtenant, excluding ordinary wear and tear.

               C.     ADDITIONAL RENT. All monies other than Base Rent and
Services Rent required to be paid by Subtenant under this Sublease shall be
deemed additional rent ("Additional Rent"). Additional Rent shall be paid within
ten (10) business days after Subtenant receives a reasonably detailed written
statement from Sublandlord with respect to the item of Additional Rent in
question. Base Rent and Additional Rent are hereinafter collectively referred to
as "Rent".

               D.     PREPAYMENT OF RENT. Upon execution hereof by Subtenant,
Subtenant shall pay to Sublandlord in advance Base Rent for the month of July,
2000.

        5.     SECURITY DEPOSIT: Upon execution hereof, Subtenant shall deposit
with Sublandlord the sum of One Hundred Twenty Five Thousand Dollars and 00/100
($125,000.00) (the "Security Deposit"), in cash, as security for the performance
by Subtenant of the terms and conditions of this Sublease. If Subtenant fails to
pay Rent or other charges due under this Sublease or otherwise defaults with
respect to any provision of this Sublease, then Sublandlord may draw upon, use,
apply or retain all or any portion of the Security Deposit for the payment of
any Rent or other charge in default, for the payment of any other sum which
Sublandlord has

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become obligated to pay by reason of Subtenant's default, or to compensate
Sublandlord for any loss or damage which Sublandlord has suffered thereby. If
Sublandlord so uses or applies all or any portion of the Security Deposit, then
Subtenant, within ten (10) days after demand by Sublandlord therefor, shall
deposit cash with Sublandlord in the amount required to restore the Security
Deposit to the full amount stated above. Sublandlord may commingle the Security
Deposit with its own funds and Subtenant shall not be entitled to interest on
the Security Deposit. Upon the expiration of this Sublease and Subtenant's
vacation of the Subleased Premises, Sublandlord shall return to Subtenant so
much of the Security Deposit as has not been applied by Sublandlord pursuant to
this Paragraph, or which is not otherwise required to cure Subtenant's defaults.

        6.     HOLDOVER: Subtenant acknowledges that it is critical that
Subtenant surrender the Subleased Premises on or before the Expiration Date in
accordance with the terms of this Sublease. Accordingly, Subtenant shall
indemnify, defend and hold harmless Sublandlord from and against all losses,
costs, claims, liabilities and damages resulting from Subtenant's failure to
surrender the Subleased Premises on the Expiration Date in the condition
required under the terms of this Sublease (including, without limitation, any
liability or damages sustained by Sublandlord as a result of a holdover of the
Master Premises by Sublandlord occasioned by the holdover of the Subleased
Premises by Subtenant). In addition, Subtenant shall pay Sublandlord holdover
rent equal to one hundred fifty percent (150%) of Base Rent plus any Additional
Rent payable hereunder for any period from the Expiration Date through the date
Subtenant surrenders the Premises in the condition required hereunder.

        7.     REPAIRS: The parties acknowledge and agree that Subtenant is
subleasing the Subleased Premises on an "AS IS" basis, and that Sublandlord has
made no representations or warranties, express or implied, whatsoever, with
respect to the Subleased Premises, including, without limitation, any
representation or warranty as to the suitability of the Subleased Premises for
Subtenant's intended use. Sublandlord shall have no obligation whatsoever to
make or pay the cost of any alterations, improvements or repairs to the
Subleased Premises, including, without limitation, any improvement or repair
required to comply with any law, regulation, building code or ordinance
(including the Americans with Disabilities Act of 1990, as may be amended). In
addition, Sublandlord shall have no obligation to perform any repairs or any
other obligation of Master Landlord required to be performed by Master Landlord
under the terms of the Master Lease and Subtenant shall look solely to Master
Landlord for performance of said obligations. Sublandlord shall, however,
request performance of the same in writing from Master Landlord promptly after
being requested to do so by Subtenant, and shall use Sublandlord's reasonable
efforts (not including the payment of money, the incurring of any liabilities,
or the institution of legal proceedings) to obtain Master Landlord's
performance. Subtenant expressly waives the provisions of Section 1932,
subsection 1, and Sections 1941 and 1942 of the Civil Code of California and all
rights to make repairs at the expense of Sublandlord as provided in Section 1942
of said Civil Code.

        8.     RIGHT TO CURE DEFAULTS: If Subtenant fails to pay any sum of
money to Sublandlord, or fails to perform any other act on its part to be
performed hereunder, then Sublandlord may, but shall not be obligated to, make
such payment or perform such act. All such sums paid, and all reasonable costs
and expenses of performing any such act, shall be

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deemed Additional Rent payable by Subtenant to Sublandlord upon demand, together
with interest thereon at the lesser of (i) eighteen percent (18%) per annum or
(ii) the maximum rate allowable under law (the "Interest Rate") from the date of
the expenditure until repaid.

        9.     INDEMNITY: Except to the extent caused by the gross negligence or
willful misconduct of Sublandlord, its agents, employees or contractors,
Subtenant shall indemnify, defend with counsel reasonably acceptable to
Sublandlord, protect and hold harmless Sublandlord and its agents, employees,
directors, shareholders, contractors and representatives from and against any
and all losses, claims, liabilities, judgments, causes of action, damages, costs
and expenses (including, without limitation, reasonable attorneys' and experts'
fees), caused by or arising in connection with: (i) the use, occupancy,
operation or condition of the Subleased Premises; (ii) the negligence or willful
misconduct of Subtenant or its agents, employees, contractors or invitees; and
(iii) a breach of Subtenant's obligations under this Sublease or the provisions
of the Master Lease assumed by Subtenant hereunder. Subtenant's covenants under
this Paragraph shall survive termination of this Sublease.

        10.    ASSIGNMENT AND SUBLETTING: Subtenant's rights to assign, transfer
or hypothecate the leasehold estate under this Sublease, or any interest therein
shall be governed vis-a-vis Master Landlord by Articles 19 and 49 of the Master
Lease and vis-a-vis the Sublandlord by such Articles as incorporated into this
Sublease.

               Sublandlord shall not agree to terminate the Master Lease or to
amend the Master Lease to the detriment of Subtenant without Subtenant's prior
written consent. Neither Sublandlord nor Subtenant shall commit any act or be
responsible for any omission that breaches the Master Lease and in the event of
any such breach, the breaching party shall be liable to the non-breaching party
for all damages suffered by the non-breaching party as the result of such
breach.

        11.    USE:

               A.     Subtenant may use the Subleased Premises for the use
specified in the Master Lease only and for no other purpose whatsoever.

               B.     Subtenant shall not use, store, keep, handle, manufacture,
transport, release, discharge, emit or dispose of any Hazardous Materials in,
on, under, about, to or from the Subleased Premises. Subtenant shall indemnify,
defend with counsel reasonably acceptable to Sublandlord and hold harmless
Sublandlord and its agents, employees, directors, shareholders, contractors and
representatives from and against all claims, actions, suits, proceedings,
judgments, losses, costs, personal injuries, damages, liabilities, deficiencies,
fines, penalties, damages, attorneys' fees, consultants' fees, investigations,
detoxifications, remediations, removals, and expenses of every type and nature,
arising from or relating in any manner to the use, storage, handling,
manufacture, transportation, release, discharge, emission or disposal of
Hazardous Materials on or about the Subleased Premises or Building during the
Term of this Sublease by Subtenant or its agents, employees, contractors or
invitees.

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               C.     Subtenant shall not do or permit anything to be done in or
about the Subleased Premises which would (i) injure the Subleased Premises; or
(ii) vibrate, shake, overload, or impair the efficient operation of the
Subleased Premises or the sprinkler systems, heating, ventilating or air
conditioning equipment, or utilities systems located therein. Subtenant shall
not store any materials, supplies, finished or unfinished products or articles
of any nature outside of the Subleased Premises. Subtenant shall comply with all
reasonable rules and regulations promulgated from time to time by Sublandlord
and Master Landlord.

        12.    EFFECT OF CONVEYANCE: As used in this Sublease, the term
"Sublandlord" means the holder of the Tenant's interest under the Master Lease.
In the event of any assignment or transfer of the Tenant's interest under the
Master Lease, which assignment or transfer may occur at any time during the Term
hereof in Sublandlord's sole discretion, Sublandlord shall be and hereby is
entirely relieved of the future performance of all covenants and obligations of
Sublandlord hereunder if such future performance is assumed by the transferee in
a writing and a copy thereof is delivered to Subtenant. Sublandlord may transfer
and deliver any security of Subtenant to the transferee of the Tenant's interest
under the Master Lease, and thereupon Sublandlord shall be discharged from any
further liability with respect thereto if such transferee assumes Sublandlord's
obligations with regard to such security in a writing delivered to Subtenant.

        13.    DELIVERY AND ACCEPTANCE: Sublandlord shall deliver the Subleased
Premises in broom-clean condition. Subtenant has fully inspected the Subleased
Premises and is satisfied with the condition thereof. By taking possession of
the Subleased Premises, Subtenant conclusively shall be deemed to have accepted
the Subleased Premises in its then-existing, "AS IS" condition, without any
representation or warranty whatsoever from Sublandlord with respect thereto.

        14.    IMPROVEMENTS: Subtenant shall not make any alterations or
improvements to the Subleased Premises, except in accordance with the Master
Lease, and with the prior written consent of both Master Landlord and
Sublandlord. Subject to the consent of Master Landlord, and the review of
Sublandlord, Subtenant shall, at its sole cost and expense, separately demise
the Subleased Premises.

        15.    RELEASE AND WAIVER OF SUBROGATION: Notwithstanding anything to
the contrary in this Sublease, Sublandlord and Subtenant hereby release each
other from any damage to property or loss of any kind which is caused by or
results from any risk that normally would be insured against under any property
insurance policy required to be carried by either party. This release shall be
in effect only so long as the applicable insurance policy contains a clause to
the effect that this release shall not affect the right of the insured to
recover under the policy. Each party shall use its reasonable efforts to cause
each property insurance policy obtained by it to provide that the insurer waives
all right of recovery against the other party and its agents and employees in
connection with any damage or injury covered by the policy, and each party shall
notify the other party if it is unable to obtain a waiver of subrogation.
Sublandlord shall not be liable to Subtenant, nor shall Subtenant be entitled to
terminate this Sublease or to abate Rent for any reason, including, without
limitation, (i) failure or interruption of any utility system or service or (ii)
failure of Master Landlord to maintain the Subleased Premises as may be required

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under the Master Lease. The obligations of Sublandlord shall not constitute the
personal obligations of the officers, directors, trustees, partners, joint
venturers, members, owners, stockholders or other principals or representatives
of the business entity.

        16.    INSURANCE: Subtenant shall obtain and keep in full force and
effect, at Subtenant's sole cost and expense, during the Term the insurance
required to be carried by the "Tenant" under the Master Lease. Subtenant shall
include Sublandlord and Master Landlord as an additional insured in any policy
of insurance carried by Subtenant in connection with this Sublease and shall
provide Sublandlord with certificates of insurance upon Sublandlord's request.

        17.    DEFAULT: Subtenant shall be in material default of its
obligations under this Sublease if any of the following events occur:

               A.     Subtenant fails to pay any Rent within five (5) days after
Subtenant's receipt of Sublandlord's written notice that such item of Rent is
due; or

               B.     Subtenant fails to perform any term, covenant or condition
of this Sublease (except those requiring payment of Rent) and fails to cure such
breach within ten (10) days after delivery of a written notice to Subtenant
specifying the nature of the breach; provided, however, that if more than ten
(10) days are reasonably required to remedy the failure, then Subtenant shall
not be in default if Subtenant commences the cure within the ten (10) day period
and thereafter completes the cure within thirty (30) days after the date of the
notice; or

               C.     Subtenant makes a general assignment of its assets for the
benefit of its creditors, including attachment of, execution on, or the
appointment of a custodian or receiver with respect to a substantial part of
Subtenant's property or any property essential to the conduct of its business;
or

               D.     Subtenant abandons the Subleased Premises; or

               E.     Subtenant commits any other act or omission which
constitutes a default under the Master Lease, which has not been cured after
delivery of any written notice required and passage of one-half (1/2) of any
applicable grace period provided in the Master Lease as modified, if at all, by
the provisions of this Sublease.

        18.    REMEDIES: In the event of any default by Subtenant, Sublandlord
shall have all remedies provided to the "Landlord" in the Master Lease as if an
event of default had occurred thereunder and all other rights and remedies
otherwise available at law and in equity. Sublandlord may resort to its remedies
cumulatively or in the alternative.

        19.    SURRENDER: On or before the Expiration Date or any sooner
termination of this Sublease, Subtenant shall remove all of its trade fixtures,
personal property and all alterations constructed by Subtenant in the Subleased
Premises which are required to be removed under the terms of this Sublease and
shall surrender the Subleased Premises to Sublandlord in (a) good condition,
order and repair, reasonable wear and tear excepted and (b) free of Hazardous

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Materials used, stored, handled, manufactured, transported, released,
discharged, emitted or disposed of by Subtenant or it agents, employees,
contractors or invitees. Subtenant shall repair any damage to the Subleased
Premises caused by Subtenant's removal of its personal property, furnishings and
equipment. If the Subleased Premises are not so surrendered, then Subtenant
shall be liable to Sublandlord for all costs incurred by Sublandlord as a result
of such failure, plus interest thereon at the Interest Rate.

        20.    BROKER: Sublandlord and Subtenant each represent to the other
that they have dealt with no real estate brokers, finders, agents or salesmen in
connection with this transaction other than MacMillan, Moore and Buchanan, Inc.
representing Sublandlord and CPS, Inc. representing Subtenant. Subtenant shall
pay 100% of the commission payable to MacMillan, Moore and Buchanan, Inc. (which
party shall pay 50% of such commission to CPS, Inc.). Subtenant agrees to
indemnify and hold Sublandlord harmless from and against all claims for
brokerage commissions, finder's fees or other compensation made by any agent,
broker, salesman or finder as a consequence of Subtenant's actions or dealings
with such other agent, broker, salesman, or finder. Sublandlord agrees to
indemnify and hold Subtenant harmless from and against all claims for brokerage
commissions, finder's fees or other compensation made by any agent, broker,
salesman or finder as a consequence of Sublandlord's actions or dealings with
such other agent, broker, salesman, or finder.

        21.    NOTICES: Unless at least five (5) days' prior written notice is
given in the manner set forth in this Paragraph, the address of each party for
all purposes connected with this Sublease shall be that address set forth below
their signatures at the end of this Sublease. All notices, demands or
communications in connection with this Sublease shall be properly addressed and
delivered as follows: (a) personally delivered; or (b) submitted to an overnight
courier service, charges prepaid; or (c) deposited in the mail (certified,
return-receipt requested, and postage prepaid). Notices shall be deemed
delivered upon receipt, if personally delivered, one (1) business day after
being so submitted to an overnight courier service and three (3) business days
after deposit in the United States mail, if mailed as set forth above. All
notices given to Master Landlord under the Master Lease shall be considered
received only when delivered in accordance with the Master Lease.

        22.    OTHER SUBLEASE TERMS:

               A.     INCORPORATION BY REFERENCE. Except as set forth below and
except as otherwise provided in this Sublease, the terms and conditions of this
Sublease shall include all of the terms of the Master Lease and such terms are
incorporated into this Sublease as if fully set forth herein, except that: (i)
each reference in such incorporated sections to "Lease" shall be deemed a
reference to this "Sublease"; (ii) each reference to the "Premises" shall be
deemed a reference to the "Subleased Premises"; (iii) each reference to
"Landlord" and "Tenant" shall be deemed a reference to "Sublandlord" and
"Subtenant", respectively, except as otherwise expressly set forth herein; (iv)
with respect to work, services, utilities, electricity, repairs (or damage
caused by Master Landlord), restoration, insurance, indemnities, reimbursements,
representations, warranties or the performance of any other obligation of Master
Landlord under the Master Lease, whether or not incorporated herein, the sole
obligation of Sublandlord shall be to request the same in writing from Master
Landlord as and when requested to do so by

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Subtenant, and to use Sublandlord's reasonable efforts (not including the
payment of money, the incurring of any liabilities, or the institution of legal
proceedings) to obtain Master Landlord's performance; (v) with respect to any
obligation of Subtenant to be performed under this Sublease, wherever the Master
Lease grants to "Tenant" a specified number of days to perform its obligations
under the Master Lease, except as otherwise provided herein, Subtenant shall
have five (5) fewer days to perform the obligation, including, without
limitation, curing any defaults provided, however, that in no event shall
Subtenant have fewer than three (3) days to perform the obligation; (vi) with
respect to any approval required to be obtained from the "Landlord" under the
Master Lease, such approval must be obtained from both Master Landlord and
Sublandlord, and Sublandlord's withholding of approval shall in all events be
deemed reasonable if for any reason Master Landlord's approval is not obtained;
(vii) in any case where the "Landlord" reserves or is granted the right to
manage, supervise, control, repair, alter, regulate the use of, enter or use the
Premises or any areas beneath, above or adjacent thereto, such reservation or
grant of right of entry shall be deemed to be for the benefit of both Master
Landlord and Sublandlord; (viii) in any case where "Tenant" is to indemnify,
release or waive claims against "Landlord", such indemnity, release or waiver
shall be deemed to run from Subtenant to both Master Landlord and Sublandlord;
(ix) in any case where "Tenant" is to execute and deliver certain documents or
notices to "Landlord", such obligation shall be deemed to run from Subtenant to
both Master Landlord and Sublandlord; and (x) the following modifications shall
be made to the Master Lease as incorporated herein:

        (a)    the following provisions of the Master Lease are not incorporated
herein: Basic Lease Information, Paragraphs 2A, 4A, 4F, 4G, 41, 43, 44 (second
paragraph), 53, 54, 57, 58;

        (b)    references to "Landlord" in the following provisions shall mean
"Master Landlord" only (subject, however, to clauses (iv) through (ix) of the
introductory language to this Paragraph 22.A): 24, 25, 27;

        (c)    any right to abate rent provided to Subtenant through
incorporation of the provisions of the Master Lease shall not exceed the rent
actually abated under the Master Lease with respect to the Subleased Premises.

               B.     ASSUMPTION OF OBLIGATIONS. This Sublease is and at all
times shall be subject and subordinate to the Master Lease and the rights of
Master Landlord thereunder. Subtenant hereby expressly assumes and agrees: (i)
to comply with all provisions of the Master Lease which are assumed by Subtenant
hereunder; and (ii) to perform all the obligations on the part of the "Tenant"
to be performed under the terms of the Master Lease with respect to the
Subleased Premises during the term of this Sublease. In the event the Master
Lease is terminated for any reason whatsoever, this Sublease shall terminate
simultaneously with such termination without any liability of Sublandlord to
Subtenant. In the event of a conflict between the provisions of this Sublease
and the Master Lease, as between Sublandlord and Subtenant, the provisions of
this Sublease shall control.

        23.    DIRECTORY SIGNAGE: Subtenant, at its sole cost, shall be included
in the Building directories located in the building to the extent permitted by
Master Landlord.

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        24.    RIGHT TO CONTEST: If Sublandlord does not have the right to
contest any matter in the Master Lease due to expiration of any time limit that
may be set forth therein or for any other reason, then notwithstanding any
incorporation of any such provision from the Master Lease in this Sublease,
Subtenant shall also not have the right to contest any such matter.

        25.    COVENANT OF QUIET ENJOYMENT: Subtenant peacefully shall have,
hold and enjoy the Subleased Premises, subject to the terms and conditions of
this Sublease, provided that Subtenant pays all Rent imposed hereunder and
otherwise performs all of Subtenant's covenants and agreements contained herein.

        26.    CONDITIONS PRECEDENT: Notwithstanding anything to the contrary in
this Sublease, this Sublease and Sublandlord's and Subtenant's obligations
hereunder are conditioned upon Sublandlord's receipt of the written consent of
Master Landlord to this Sublease in form and substance satisfactory to
Sublandlord. If Sublandlord does not receive such consent within thirty (30)
days after execution of this Sublease by Sublandlord, then Sublandlord or
Subtenant may terminate this Sublease by giving written notice thereof, and upon
such termination, Sublandlord shall return to Subtenant its payment of the first
month's Base Rent paid by Subtenant pursuant to Paragraph 4 hereof and the
Security Deposit.

        27.    CHOICE OF LAW; SEVERABILITY: This Sublease shall in all respects
be governed by and construed in accordance with the laws of the State of
California. If any term of this Sublease is held to be invalid or unenforceable
by any court of competent jurisdiction, then the remainder of this Sublease
shall remain in full force and effect to the fullest extent possible under the
law, and shall not be affected or impaired.

        28.    AMENDMENT: This Sublease may not be amended except by the written
agreement of all parties hereto.

        29.    ATTORNEYS' FEES: If either party brings any action or legal
proceeding with respect to this Sublease, the prevailing party shall be entitled
to recover from the other party reasonable attorneys' fees, experts' fees, and
court costs. If either party becomes the subject of any bankruptcy or insolvency
proceeding, then the other party shall be entitled to recover all reasonable
attorneys' fees, experts' fees, and other costs incurred by that party in
protecting its rights hereunder and in obtaining any other relief as a
consequence of such proceeding.

        30.    WAIVER: If either Sublandlord or Subtenant waives the performance
of any term, covenant or condition contained in this Sublease, such waiver shall
not be deemed to be a waiver of any subsequent breach of the same or any other
term, covenant or condition contained herein, or constitute a course of dealing
contrary to the expressed terms of this Sublease. The acceptance of Rent by
Sublandlord shall not constitute a waiver of any preceding breach by Subtenant
of any term, covenant or condition of this Sublease regardless of Sublandlord's
knowledge of such preceding breach at the time Sublandlord accepted such Rent.
Failure by Sublandlord to enforce any of the terms, covenants or conditions of
the Sublease for any length of time shall not be deemed to waive or decrease the
right of Sublandlord to insist thereafter upon strict performance by Subtenant.
Waiver by Sublandlord of any term, covenant or

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condition contained in this Sublease may only be made by a written document
signed by Sublandlord, based upon full knowledge of the circumstances.

        31.    NO DRAFTING PRESUMPTION: The parties acknowledge that this
Sublease has been agreed to by both the parties, that both Sublandlord and
Subtenant have consulted with attorneys with respect to the terms of this
Sublease and that no presumption shall be created against Sublandlord because
Sublandlord drafted this Sublease. Except as otherwise specifically set forth in
this Sublease, with respect to any consent, determination or estimation of
Sublandlord required or allowed in this Sublease or requested of Sublandlord,
Sublandlord's consent, determination or estimation shall be given or made solely
by Sublandlord in Sublandlord's good faith opinion, whether or not objectively
reasonable. If Sublandlord fails to respond to any request for its consent
within the time period, if any, specified in this Sublease, Sublandlord shall be
deemed to have disapproved such request.

        32.    AUTHORITY TO EXECUTE: Subtenant and Sublandlord each represent
and warrant to the other that each person executing this Sublease on behalf of
each party is duly authorized to execute and deliver this Sublease on behalf of
that party.

        33.    COUNTERPARTS: This Sublease may be executed in one (1) or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one (1) and the same instrument. Signature copies may be
detached from the counterparts and attached to a single copy of this Sublease
physically to form one (1) document.

        IN WITNESS WHEREOF, the parties have executed this Sublease as of the
day and year first above written.

SUBLANDLORD:                            SUBTENANT:

BITLOCKER, INC.                         TRANSMETA CORPORATION

By:                                     By:
   --------------------------------         -------------------------------

Print Name:                             Print Name:
            -----------------------                 -----------------------

Title: President                        Title: President
       ----------------------------            ----------------------------

By:                                     By:
   --------------------------------         -------------------------------

Print Name:                             Print Name:
            -----------------------                 -----------------------

Title: Secretary                        Title: Secretary
       ----------------------------            ----------------------------

Address:                                Address:

<PAGE>   11

June 30, 2000

Bitlocker, Incorporated
425 Sherman Avenue, Suite 210
Palo Alto, CA 94306

Re:     CONSENT TO SUBLEASE TO TRANSMETA CORPORATION, A CALIFORNIA CORPORATION
        FOR A PERIOD OF TWELVE MONTHS, COMMENCING ON THE LATER OF (i) JULY 1,
        2000 OR (ii) THE DATE POSSESSION OF THE SUBLEASED PREMISES IS TENDERED
        TO SUBLANDLORD BY MASTER LANDLORD AND TERMINATING 365 DAYS THEREAFTER.

Gentlemen:

This letter is written with regard to your proposed sublease of approximately
11,250 square feet of space (as shown on Exhibit A attached hereto) (the "Sublet
Premises") of the 22,500 square feet of space leased by Tenant at 3930 Freedom
Circle, Santa Clara, California, under Lease Agreement dated April 4, 2000
("Master Lease"), by and between John Arrillaga Separate Property Trust and
Richard T. Peery Separate Property Trust ("Master Landlord"), and BITLOCKER
INCORPORATED, a California corporation ("Tenant"), which Tenant is proposing to
sublease to TRANSMETA CORPORATION, a California corporation ("Subtenant") on the
terms and conditions set forth in the proposed Sublease dated June 15, 2000,
submitted by Tenant to Master Landlord on June 26, 2000 (the "Sublease").

Pursuant to Master Lease Paragraph 19 ("Assignment and Subletting") Master
Landlord hereby approves Tenant's subleasing said space to Subtenant, under the
Sublease, subject to the following terms and conditions:

1.      MASTER LANDLORD IS NOT CONSENTING TO ANY EXPANSION OPTION AND/OR
        EXTENSION OF TERM OPTION SUBTENANT MAY HAVE IN SAID SUBLEASE. In the
        event any such option(s) exist in said Sublease and said Subtenant
        desires to exercise such option(s), Tenant will be required to obtain
        Landlord's consent to such option(s) (as though Tenant was requesting
        Landlord's consent to a new sublease) at the time exercised by Subtenant
        and the parties hereto understand and agree that Landlord may withhold
        its consent of either or both of said option(s) in its sole and absolute
        discretion.

2.      Master Landlord's Consent shall in no way void or alter any of the terms
        of the Lease by and between Master Landlord and Tenant, nor shall this
        Consent alter or diminish in any way Tenant's obligations to Master
        Landlord.

3.      Tenant shall not give Subtenant any rights or privileges in excess of
        those given Tenant

<PAGE>   12

        under the terms of the Master Lease.

4.      Subtenant shall not have a separate address from the address of the
        Premises. Therefore, Tenant shall provide Subtenant with internal mail
        delivery. Tenant and Subtenant shall share (the prorata shares to be
        determined in a separate agreement between Tenant and Subtenant) the
        existing signage allocated to Tenant for the Premises.

5.      Master Landlord has not reviewed the terms of any agreement between
        Tenant and Subtenant, and in approving said Sublease, Master Landlord is
        in no way approving any term, covenant or condition therein contained,
        and said Sublease is subject and subordinate to all terms, covenants and
        conditions of the Master Lease. Master Landlord shall not be bound by
        any agreement other than the terms of the Master Lease between Master
        Landlord and Tenant. In the event of conflict in the terms, covenants
        and conditions between the Sublease and the Master Lease, the terms,
        covenants and conditions of the Master Lease shall prevail and take
        precedence over said Sublease. Master Landlord does not make any
        warranties or representations as to the condition of the Leased Premises
        or the terms of the Lease between Master Landlord and Tenant. THIS
        CONSENT TO SUBLEASE SHALL IN NO EVENT BE CONSTRUED AS CONSENT TO ANY
        FUTURE SUBLEASE AGREEMENT (INCLUDING ANY EXTENSIONS AND/OR AMENDMENTS TO
        THE CURRENT SUBLEASE) BETWEEN TENANT AND SUBTENANT, or any other party;
        and any future sublease agreement (including any extensions and/or
        amendments to the current Sublease) between Tenant and Subtenant, or any
        other party shall require the prior written consent of Master Landlord.
        Under no circumstances will Master Landlord consent to a sub-sublease or
        assignment under the Sublease.

6.      A. It is agreed by all parties hereto that in the event the Master Lease
        is rejected by Tenant under a Chapter 11 or 7 proceeding and/or Master
        Landlord terminates the Master Lease, pursuant to any right therein
        contained, said Sublease shall automatically terminate simultaneously
        with the Master Lease. Notwithstanding anything to the contrary set
        forth above, Master Landlord, at Master Landlord's sole option and
        election, may choose to allow Subtenant to remain in possession of the
        Sublet Premises leased under said Sublease subject to all terms,
        covenants and conditions of said Master Lease by giving Subtenant
        written notice prior to the effective date of termination of said Master
        Lease, of Master Landlord's election to allow Subtenant to remain in
        possession of the Sublet Premises in which event Subtenant shall be
        entitled and obligated to remain in possession of the Sublet Premises
        under the terms of said Sublease, subject to all terms, covenants and
        conditions of the Master Lease, including, without limitation to,
        payment of Basic Rent at the greater of: (i) the rate provided for in
        the Master Lease, or (ii) the rate provided for in the Sublease. Such
        election by Master Landlord shall not operate as a waiver of any claims
        Master Landlord may have against Tenant. Following such written notice
        by Master Landlord Subtenant shall then, as of the effective date of
        said termination of said Master Lease, be liable to and shall attorn in
        writing directly to Master Landlord as though said Sublease were
        executed directly between Master Landlord and Subtenant; provided,
        however, it is specifically agreed between the parties hereto, that
        whether Master Landlord elects to allow

<PAGE>   13

        Subtenant to remain in possession of the Sublet Premises under the terms
        of the Sublease, subject to the Master Lease, or allow said Sublease to
        automatically terminate simultaneously with the Master Lease, Master
        Landlord shall not, in any event, nor under any circumstances be
        responsible or liable to Subtenant for (i) the return of any security
        deposit paid by Subtenant to Tenant, nor shall Subtenant be given credit
        for any prepaid rental or other monetary consideration paid by Subtenant
        to Tenant under said Sublease; (ii) any other claim or damage of any
        kind or nature whatsoever by reason of or in connection with Master
        Landlord's termination of said Master Lease and/or Sublease; and (iii)
        any default of Tenant under the Sublease.

        B. In the event Master Landlord has terminated the Master Lease, and has
        not elected, in writing prior to the effective date of termination of
        said Master Lease, to allow Subtenant to remain in the Sublet Premises
        as set forth above, said Sublease shall terminate co-terminously with
        the effective termination of the Master Lease automatically, without
        notice, and Subtenant and/or Tenant, jointly and severally, shall
        surrender the Sublet Premises to Master Landlord in good condition and
        repair as of the effective termination of the Master Lease, with Master
        Landlord having no obligation or liability whatsoever to Subtenant by
        reason of or in connection with such early termination of the Master
        Lease. In the event Subtenant and/or Tenant fails to timely surrender
        the Sublet Premises to Master Landlord in good condition and repair as
        of the date the Master Lease terminates, Subtenant and/or Tenant,
        jointly and severally, shall be liable to Master Landlord in such event
        for all damages, costs, claims, losses, liabilities, fees or expenses
        sustained by Master Landlord, including, but not limited to, loss of
        rental income, attorney's fees and court costs resulting from or in
        connection with Subtenant's failure to timely vacate the Sublet Premises
        and surrender the Sublet Premises to Master Landlord as of the effective
        termination date of said Master Lease.

        C. As a condition to Landlord's consent to the Sublease, by execution of
        this Consent to Sublease, Subtenant hereby agrees to be bound by the
        following provision in relation to both Tenant and Master Landlord:

             If Master Landlord and Tenant jointly and voluntarily elect, for
             any reason whatsoever, to terminate the Master Lease prior to the
             scheduled Master Lease Termination Date, then this Sublease (if
             then still in effect) shall terminate concurrently with the
             termination of the Master Lease. Subtenant expressly acknowledges
             and agrees that (1) the voluntary termination of the Master Lease
             by Master Landlord and Tenant and the resulting termination of this
             Sublease shall not give Subtenant any right or power to make any
             legal or equitable claim against Master Landlord or Tenant,
             including without limitation any claim for interference with
             contract or interference with prospective economic advantage, and
             (2) Subtenant hereby waives any and all rights it may have under
             law or at equity to challenge such an early termination of the
             Sublease, and unconditionally releases and relieves Master Landlord
             and Tenant, and their officers, directors, employees and agents,
             from any and all claims, demands, and/or causes of action
             whatsoever

<PAGE>   14

             (collectively, "Claims"), whether such matters are known or
             unknown, latent or apparent, suspected or unsuspected, foreseeable
             or unforeseeable, which Subtenant may have arising out of or in
             connection with any such early termination of this Sublease.
             Subtenant knowingly and intentionally waives any and all protection
             which is or may be given by Section 1542 of the California Civil
             Code which provides as follows: "A general release does not extend
             to claims which the creditor does not know or suspect to exist in
             his favor at the time of executing the release, which if known by
             him must have materially affected his settlement with debtor."

             The term of this Sublease is therefore subject to early
             termination. Subtenant's initials here below evidence (a)
             Subtenant's consideration of and agreement to this early
             termination provision, (b) Subtenant's acknowledgment that, in
             determining the net benefits to be derived by Subtenant under the
             terms of this Sublease, Subtenant has anticipated the potential for
             early termination, and (c) Subtenant's agreement to the general
             waiver and release of Claims above.

               Initials: /s/ RS                 Initials: /s/ EAK
                        -----------                      ----------
                        Subtenant                        Tenant

7.      In consideration of Master Landlord's consent to the Sublease, Tenant
        irrevocably assigns to Master Landlord, as security for Tenant's
        obligations under this Lease, all rent and income payable to Tenant
        under the Sublease. Therefore Master Landlord may collect all rent due
        under the Sublease and apply it towards Tenant's obligations under the
        Master Lease. Tenant and Subtenant agree to pay same to Master Landlord
        upon demand without further consent of Tenant and Subtenant required;
        provided, however, that until the occurrence of a default by Tenant
        under the Master Lease, Tenant shall have the right to collect such
        rent. Tenant hereby irrevocably authorizes and directs Subtenant, upon
        receipt of a written notice from Master Landlord stating that a default
        exists in the performance of Tenant's obligations under the Master
        Lease, to pay to Master Landlord the rents due and to become due under
        the Sublease. Tenant agrees that Subtenant shall have the right to rely
        on any such statement and request from Master Landlord, and that
        Subtenant shall pay such rents to Master Landlord without any obligation
        or right to inquire as to whether such default exists and
        notwithstanding any notice or claim from Tenant to the contrary. Tenant
        shall have no right or claim against Subtenant or Master Landlord for
        any such rents so paid by Subtenant to Master Landlord. It is further
        agreed between the parties hereto that neither Tenant's assignment of
        such rent and income, nor Master Landlord's acceptance of any payment of
        rental or other sum due by Subtenant to Tenant under said sublease,
        whether payable directly to Master Landlord or endorsed to Master
        Landlord by Tenant, shall in any way nor in any event be construed as
        creating a direct contractual relationship between Master Landlord and
        Subtenant, unless the Parties expressly so agree in writing and such
        acceptance shall be deemed to be an accommodation by Master Landlord to,
        and for the convenience of, Tenant and Subtenant. Any direct contractual
        agreement between Master Landlord and Subtenant must be in writing.

<PAGE>   15

8.      Pursuant to the provisions of Paragraph 19 entitled "Assignment and
        Subletting" of the Master Lease, Master Landlord hereby requires Tenant
        to pay to Master Landlord, as Additional Rent, all rents and/or
        additional consideration received by Tenant from said Sublease in excess
        of the Basic Rent payable to Master Landlord in said Lease (hereinafter
        referred to as "Excess Rent"). Tenant and Subtenant acknowledge that any
        Excess Rent is owed to Master Landlord and Tenant hereby agrees to pay
        any Excess Rent to Master Landlord as due under said Sublease. Tenant
        and Subtenant represent and warrant to Master Landlord that: (1) the
        information to be completed and provided by Tenant and Subtenant on the
        attached Exhibit B "Summary of Amounts/Consideration to be Paid by
        Subtenant" accurately represents amounts to be paid by Subtenant under
        said Sublease; (2) no additional consideration is due Tenant under said
        Sublease, other than the additional consideration (if any) identified on
        Exhibit B; and (3) no changes in the terms and/or conditions of said
        Sublease shall be made without Master Landlord's prior written approval.

9.      This Consent is conditional upon Master Landlord's receipt of Master
        Landlord's reasonable costs and attorney's fees, to which Master
        Landlord is entitled under Paragraph 19 of the Master Lease. Tenant
        shall pay such fees and costs to Landlord, pursuant to the invoice
        provided to Tenant by Landlord with this Consent, upon execution of this
        Consent by Tenant and Subtenant.

10.     This Consent to Sublease shall only be considered effective, and Master
        Landlord's consent to the Sublease given, when (i) Landlord receives
        payment from Tenant of Landlord's costs, and (ii) this Letter Agreement
        is executed by Master Landlord, Tenant, and Subtenant, and Guarantors
        (if any) under the Master Lease.

Please execute this letter in the space provided below, obtain the signature of
Subtenant, and return all copies to our office no later than July 14, 2000. IN
THE EVENT TENANT FAILS TO RETURN THE FULLY EXECUTED DOCUMENTS, WITH THE FULL
PAYMENT OF $1,000.00 PURSUANT TO THE INVOICE ATTACHED HERETO, TO LANDLORD BY
JULY 14, 2000, THIS CONSENT SHALL BE AUTOMATICALLY RESCINDED, IN WHICH EVENT,
TENANT SHALL BE REQUIRED TO RESUBMIT ITS REQUEST IN THE EVENT TENANT DESIRES TO
GO FORWARD WITH SAID SUBLEASE. A fully executed copy will be returned to you
after execution by the Master Landlord.

                                       Very truly yours,

                                       PEERY/ARRILLAGA

                                       By /s/ JOHN ARRILLAGA
                                         ------------------------------------
                                         John Arrillaga

(SIGNATURES CONTINUED ON FOLLOWING PAGE)

<PAGE>   16

THE UNDERSIGNED Tenant and Subtenant do hereby jointly and severally agree to
the terms and conditions of this Consent to Sublease.

TENANT:                                SUBTENANT:

BITLOCKER, INCORPORATED                TRANSMETA CORPORATION
a California corporation               a California corporation

By /s/ E. KRUGLER                      By /s/ R. STILLER
  ------------------------------         ------------------------------

Print Name     Eric Krugler            Print Name   Richard Stiller
          ----------------------                 ----------------------

Title   CEO                            Title    VP
     ---------------------------            ---------------------------<PAGE>   1
                                                                   EXHIBIT 10.16

              RIGHT OF FIRST OFFER AND OBSERVATION RIGHTS AGREEMENT

     This Right of First Offer and Observation Rights Agreement (this
"Agreement") is made and entered into as of June 17, 1998 by and between
Transmeta Corporation, a California corporation (the "Company"), and Van Wagoner
Capital Management, a Delaware corporation ("Investor").

                                 R E C I T A L S

     A.   Investor has agreed to purchase from the Company shares of the
Company's Series E Preferred Stock (the "Series E Stock") pursuant to that
certain Series E Preferred Stock Purchase Agreement, dated of even date
herewith, by and among the Company, Investor and certain other parties.

     B.   In connection with the purchase by Investor of shares of Series E
Stock, the Company will provide to Investor a right of first offer in the
Company's first public offering of its Common Stock, pursuant to the terms and
conditions set forth below.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:

     1.   RIGHT OF FIRST OFFER.

          1.1  Right of First Offer. If the Company proposes to offer any shares
of its Common Stock ("Offered Securities") other than Excluded Securities (as
defined below) in a public offering pursuant to an effective registration
statement (the "Registration Statement") filed under the U.S. Securities Act of
1933, as amended (the "Public Offering"), the Company will concurrently
therewith make an offering of a portion of such Offered Securities to Investor
in accordance with the following provisions:

               (a)  Delivery of Right of First Offer Notice. The Company will
deliver by fax or hand delivery a notice ("Right of First Offer Notice") to
Investor no less than one day prior to the anticipated effective date of the
Registration Statement covering such Public Offering stating (i) the Company's
bona fide intention to offer such Offered Securities in a Public Offering, (ii)
the number of such Offered Securities to be offered and (iii) the Terms upon
which it proposes to offer such Offered Securities. For purposes hereof, "Terms"
shall mean the terms set forth in the preliminary prospectus for the Public
Offering and the draft of the proposed underwriting agreement to be entered into
between the Company and the underwriter of such Public Offering, if any,
provided to Investor as part of the Right of First Offer Notice.

               (b)  Exercise of Right of First Offer. By written notification
received by the Company, within 24 hours after the Company gives the Right of
First Offer Notice, Investor may elect, which election shall be irrevocable as
to Investor, to purchase, at the price the Offered Securities are actually sold
in the Public Offering pursuant to the Registration Statement and on the Terms
specified in the Right of First Offer Notice, up to the lesser of (i) that
portion of such Offered Securities which equals Investor's Percentage Share (as
defined below) or (ii)

<PAGE>   2

3% of the total number of shares of Common Stock offered and sold by the Company
in such Public Offering (exclusive of any shares offered and sold pursuant to
any underwriter's over-allotment option); provided, however, that the
underwriter of such Public Offering, if any, shall be entitled to reduce the
number of shares of Offered Securities which Investor shall be entitled to
purchase under this Section 1 to the extent deemed necessary in the
underwriter's reasonable judgment (x) to the success of such Public Offering for
reasons set forth in writing no less than two weeks prior to the anticipated
effective date of the Registration Statement covering such Public Offering, or
(y) to comply with the rules or regulations of the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc., the Nasdaq
Stock Market, Inc., or other regulatory body for reasons set forth in writing
and given to Investor by fax or hand delivery no less than one day prior to the
anticipated effective date of the Registration Statement covering such Public
Offering. For the purpose of this Section 1.1(b), "Investor's Percentage Share"
will be equal to that proportion that the number of shares of Common Stock of
the Company then issued upon conversion of the Series E Stock, or issuable upon
conversion of the Series E Stock then issued, and then held by Investor bears to
(i) the total number of shares of Common Stock of the Company then outstanding,
plus (ii) the total number of shares of Common Stock of the Company into which
all then outstanding shares of Preferred Stock of the Company are then
convertible, plus (iii) the total number of shares of Common Stock of the
Company then issuable by the Company under all then outstanding options and/or
warrants or then issuable upon conversion of all shares of Preferred Stock of
the Company issuable by the Company under such options and/or warrants. If all
Offered Securities that Investor is entitled to obtain pursuant to this Section
1.1 are not elected to be purchased by Investor as provided in this Section 1.1,
the Company may, during the thirty (30) day period following the expiration of
the 24 hour period provided in the first sentence of this Section 1.1(b), offer
the remaining unsubscribed portion of such Offered Securities to any person or
persons upon Terms no more materially favorable than specified in the Right of
First Offer Notice. If the Company does not, within such thirty (30) day period,
consummate the sale of the Offered Securities in the Public Offering upon Terms
no more materially favorable than specified in the Right of First Offer Notice,
then the right of first offer provided hereunder will be deemed to be revived
and such Offered Securities will not be offered in a Public Offering unless a
portion thereof are concurrently reoffered to Investor in accordance herewith.

          1.2  Excluded Securities. The right of first offer in this Section 1
will not be applicable to securities (the "Excluded Securities") issued pursuant
to the acquisition of another corporation or entity by the Company by
consolidation, merger, purchase of all or substantially all of the assets, or
other reorganization in which the Company acquires, in a single transaction or
series of related transactions, all or substantially all of the assets of such
other corporation or entity or fifty percent (50%) or more of the voting power
of such other corporation or entity or fifty percent (50%) or more of the equity
ownership of such other entity.

          1.3  Termination. This right of first offer will terminate (a)
immediately following the first closing of the first Public Offering, or (b)
upon the acquisition of all or substantially all the assets of the Company, or
(c) upon an acquisition of the Company by another corporation or entity by
consolidation, merger or other reorganization in which the holders of the
Company's outstanding voting stock immediately prior to such transaction own,
immediately

                                        2

<PAGE>   3

after such transaction, securities representing less than fifty percent (50%) or
more of the voting power of the corporation or other entity surviving such
transaction.

     2.   OBSERVATION RIGHTS. Commencing on the date of this Agreement, for so
long as Van Wagoner Capital Management ("Van Wagoner") holds at least 200,000
shares of Series E Stock or the equivalent number (on an as-converted to Common
Stock basis) of shares of Common Stock issued upon conversion of such shares of
Series E Stock, it shall be entitled to have one representative of it attend all
meetings of the Board of Directors of the Company in a nonvoting observer
capacity and to receive notice of all meetings of the Company's Board of
Directors; provided, that Van Wagoner shall, and shall cause each of its
representatives who may have access to any of the information made available at
any meeting of the Company's Board of Directors or provided by the Company to
its Board of Directors, hold in confidence and not disclose or use, directly or
indirectly, any such information, other than in connection with Van Wagoner's
investment in the Company; provided further, that the Company reserves the right
not to provide information to Van Wagoner or its representatives and to exclude
them from any meeting or portion thereof if attendance at such meeting by them
would adversely affect the attorney-client privilege between the Company and its
counsel or if any of Van Wagoner or its representatives is or becomes a
competitor, or affiliated in any manner with a competitor, of the Company.

     3.   GENERAL PROVISIONS.

          3.1  Notices. Unless otherwise provided, any notice required or
permitted under this Agreement will be given in writing and will be deemed
effectively given upon personal delivery to the party to be notified, or three
(3) days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid, or by deposit with a nationally recognized
courier service such as FedEx, or by facsimile with confirmed receipt and
addressed to the party to be notified at the address indicated for the Company
and Investor on the signature page hereof, or at such other address as any party
may designate by giving at least ten (10) days advance written notice to all
other parties pursuant to this Section 3.1.

          3.2  Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings duties or obligations between the parties with respect to the
subject matter hereof.

          3.3  Amendment and Waiver. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and Investor. Any amendment or waiver effected in
accordance with this Section 3.3 will be binding upon Investor, the Company, and
each permitted successor or assignee of Investor or the Company.

          3.4  Governing Law. This Agreement will be governed by and construed
under the internal laws of the State of California as applied to agreements
among California

                                       3

<PAGE>   4

residents entered into and to be performed entirely within California, without
reference to principles of conflict of laws or choice of laws.

          3.5  Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.

          3.6  Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.

          3.7  Successors And Assigns. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors and assigns of the parties.

          3.8  Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.

          3.9  Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

          3.10 Costs And Attorneys' Fees. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party will recover all of
such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.

          3.11 No Finder's Fees. Each party represents that it neither is nor
will be obligated for any finder's or broker's fee or commission in connection
with this transaction. Investor will indemnify and hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' or broker's fee (and any asserted liability) for which Investor or any
of its officers, partners, employees, or representatives is responsible. The
Company will indemnify and hold Investor harmless from any liability for any
commission or compensation in the nature of a finder's or broker's fee (and any
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.

          3.12 Further Assurances. From and after the date of this Agreement,
upon the request of Investor or the Company, the Company and Investor will
execute and deliver such instruments, documents or other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

                                       4

<PAGE>   5

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

TRANSMETA CORPORATION:                 VAN WAGONER CAPITAL MANAGEMENT:

By: /s/ David R. Ditzel                By: /s/ Audrey Lam
   --------------------------------       ---------------------------------
Name: David R. Ditzel                  Name: Audrey Lam
     ------------------------------         -------------------------------
Title: President & CEO                 Title: Research Analyst
      -----------------------------          ------------------------------
Date signed:   6/16/98                 Date signed:  6/16/98
            -----------------------                ------------------------
Address:                               Address:
3940 Freedom Circle                    345 California Street, Suite 2450
Santa Clara, CA 95054                  San Francisco, CA  94104
Attention: President                   Attention: ____________________
Facsimile:  408-327-9840               Facsimile:  415-835-5050

                    [SIGNATURE PAGE TO TRANSMETA CORPORATION
             RIGHT OF FIRST OFFER AND OBSERVATION RIGHTS AGREEMENT]

                                       5

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