Sample Business Contracts


Non-Plan Stock Option Agreement - Transmeta Corp.


                             TRANSMETA CORPORATION

                         NON-PLAN STOCK OPTION AGREEMENT


        This Non-Plan Stock Option Agreement ("AGREEMENT") is made and entered
into as of the date of grant set forth below (the "DATE OF GRANT") by and
between Transmeta Corporation, a Delaware corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT").

PARTICIPANT:
                                        ----------------------------------------
SOCIAL SECURITY NUMBER:
                                        ----------------------------------------
ADDRESS:
                                        ----------------------------------------

                                        ----------------------------------------
TOTAL OPTION SHARES:
                                        ----------------------------------------
EXERCISE PRICE PER SHARE:
                                        ----------------------------------------
DATE OF GRANT:
                                        ----------------------------------------
FIRST VESTING DATE:
                                        ----------------------------------------
EXPIRATION DATE:
                                        ----------------------------------------
                                        (unless earlier terminated under
                                         Section 3 below)


        1. GRANT OF OPTION. The Company hereby grants to Participant a
nonqualified stock option (the "OPTION") to purchase the total number of shares
of Common Stock, $0.00001 par value per share, of the Company set forth above as
Total Option Shares (the "SHARES") at the Exercise Price Per Share set forth
above (the "EXERCISE PRICE"), subject to all of the terms and conditions of this
Agreement.

        2. EXERCISE PERIOD.

                2.1 Exercise Period of Option. Provided Participant continues to
provide services to the Company or any Subsidiary or Parent of the Company, the
Option will become vested and exercisable as to portions of the Shares as
follows: (i) this Option shall not vest nor be exercisable with respect to any
of the Shares until the First Vesting Date set forth on the first page of this
Agreement (the "FIRST VESTING DATE"); (ii) on the First Vesting Date the Option
will become vested and exercisable as to one-fourth of the Shares; and (iii)
thereafter at the end of each full succeeding month the Option will become
vested and exercisable as to 2.0833% of the Shares until the Shares are vested
with respect to one hundred percent (100%) of the Shares. If application of the
vesting percentage causes a fractional share, such share shall be rounded down
to the nearest whole share for each month except for the last month in such
vesting period, at the end of which last month this Option shall become
exercisable for the full remainder of the Shares.

                "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. "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.

                2.2 Vesting of Options. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are


<PAGE>   2


"UNVESTED SHARES." Unvested Shares may not be sold or otherwise transferred by
Participant without the Company's prior written consent.

                2.3 Expiration. The Option shall expire on the Expiration Date
set forth above or earlier as provided in Section 3 or Section 16.1 below.

        3. TERMINATION.

                3.1 Termination for Any Reason Except Death, Disability or
Cause. If Participant is Terminated for any reason, except death, Disability or
Cause, the Option, to the extent (and only to the extent) that it would have
been exercisable by Participant on the Termination Date, may be exercised by
Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date.

                3.2 Termination Because of Death or Disability. If Participant
is Terminated because of death or Disability of Participant (or Participant dies
within three (3) months of Termination other than for Cause or because of
Participant's death or Disability), the Option, to the extent that it is
exercisable by Participant on the Termination Date, may be exercised by
Participant (or Participant's legal representative) no later than twelve (12)
months after the Termination Date, but in any event no later than the Expiration
Date.

                3.3 Termination for Cause. If Participant is Terminated for
Cause, then the Option will expire on Participant's Termination Date, or at such
later time and on such conditions as determined by the Company's Board of
Directors.

                3.4 No Obligation to Employ. Nothing in this Agreement shall
confer on Participant any right to continue in the employ of, or 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.

                3.5 Definitions. The following terms used in this Agreement will
have the meanings set forth in this Section. "TERMINATION" or "TERMINATED"
means, for purposes of this Agreement with respect to Participant, that the
Participant has for any reason ceased to provide services as an employee,
officer, director or consultant 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 Company's Board of Directors, 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 in writing. In the case of Participant on (i) sick leave, (ii)
military leave or (iii) an approved leave of absence, the Company's Board of
Directors may make such provisions respecting suspension of vesting of the
Option while on leave from the employ of the Company or a Subsidiary as it may
deem appropriate, except that in no event may the Option be exercised after the
expiration of the term set forth herein. The Company's Board of Directors will
have sole discretion to determine whether Participant has ceased to provided
services and the effective date on which Participant ceased to provided services
(the "TERMINATION DATE"). "DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Company's Board of Directors.
"CAUSE" means Termination because of (i) any willful material violation by the
Participant of any law or regulation applicable to the business of the Company
or a Parent or Subsidiary of the Company, the Participant's conviction for, or
guilty plea to, a felony or a crime involving moral turpitude, any willful
perpetration by the Participant of a common law fraud or any unlawful use by the
Participant of drugs or other controlled substances, (ii) the Participant's
commission of an act of personal dishonesty which involves personal profit in
connection with the Company or any other entity having a business relationship
with the Company, (iii) any material breach by the Participant of any provision
of any agreement or understanding between the Company and the Participant
regarding the terms of the Participant's service as an employee, director or
consultant to the Company or a Parent or Subsidiary of the Company, including
without limitation, the willful and continued failure or refusal of the
Participant to perform the material duties required of such Participant as an
employee, director or consultant of the Company or a Parent or Subsidiary of the
Company, other than as a result of having a Disability, or a breach of any
applicable invention


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<PAGE>   3

assignment and confidentiality agreement or similar agreement between the
Company and the Participant, (iv) Participant's disregard of the policies of the
Company so as to cause loss, damage or injury to the property, reputation or
employees of the Company or a Parent or Subsidiary of the Company, or (v) any
other misconduct by the Participant which is materially injurious to the
financial condition or business reputation of, or is otherwise materially
injurious to, the Company or a Parent or Subsidiary of the Company.

        4. MANNER OF EXERCISE.

                4.1 Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Company's Board of Directors from time to time (the "EXERCISE AGREEMENT"), which
shall set forth, inter alia, Participant's election to exercise the Option, the
number of Shares being purchased, any restrictions imposed on the Shares and any
representations, warranties and agreements regarding Participant's investment
intent and access to information as may be required by the Company to comply
with applicable securities laws. If someone other than Participant exercises the
Option, then such person must submit documentation reasonably acceptable to the
Company verifying that such person has the legal right to exercise the Option
and such person shall be subject to all of the restrictions contained herein as
if such person were the Participant.

                4.2 Limitations on Exercise. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option may
not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.

                4.3 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by check),
or where permitted by law:

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

        (b) at the discretion of the Company's Board of Directors, by surrender
            of shares of the Company's Common Stock 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 open public market; and (3) are clear
            of all liens, claims, encumbrances or security interests;

        (c) at the discretion of the Company's Board of Directors, by tender of
            a full recourse promissory note having such terms as may be approved
            by the Company's Board of Directors and bearing interest at a rate
            sufficient to avoid imputation of income under Sections 483 and 1274
            of the Code; provided, however, that Participant who is not an
            employee or director of the Company shall not be entitled to
            purchase Shares with a promissory note unless the note is adequately
            secured by collateral other than the Shares; provided further, that
            the portion of the Exercise Price equal to the par value of the
            Shares must be paid in cash or other legal consideration permitted
            by the Delaware General Corporation Law;

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

        (e) provided that a public market for the Company's stock exists, (1)
            through a "same day sale" commitment from Participant and a
            broker-dealer that is a member of the National Association of
            Securities Dealers (an "NASD DEALER") whereby Participant
            irrevocably elects to exercise the Option and to sell a portion of
            the Shares so purchased to pay for


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<PAGE>   4

            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
            Participant and an NASD Dealer whereby 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.

                4.4 Tax Withholding. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Company's Board of Directors permits, Participant may provide for payment of
withholding taxes upon exercise of the Option by requesting that the Company
retain Shares with a fair market value (as determined in good faith by the
Company's Board of Directors) equal to the minimum amount of taxes required to
be withheld. In such case, the Company shall issue the net number of Shares to
the Participant by deducting the Shares retained from the Shares issuable upon
exercise.

                4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.

        5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.

        6. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Participant only by Participant. The terms
of the Option shall be binding upon the executors, administrators, successors
and assigns of Participant.

        7. INTENTIONALLY LEFT BLANK.

        8. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
hereof of some of the federal and California tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

                8.1 Exercise of Option. There may be a regular federal and
California income tax liability upon the exercise of the Option. Participant
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the fair market value of the
Shares on the date of exercise over the Exercise Price. If Participant is or was
an employee of the Company, the Company will be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

                8.2 Disposition of Shares. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of the Option for Vested Shares, any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and California
income tax purposes.


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<PAGE>   5

        9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Participant.

        10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Company's
Board of Directors for review. The resolution of such a dispute by the Company's
Board of Directors shall be final and binding on the Company and Participant.

        11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior undertakings and agreements with respect to
the subject matter hereof.

        12. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.

        13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.

        14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.

        15. TAX CONSEQUENCES. Participant acknowledges that there may be adverse
tax consequences upon exercise of the Option or disposition of the Shares and
that Participant should consult a tax adviser prior to such exercise or
disposition.

        16. CORPORATE TRANSACTIONS.

                16.1 Assumption or Replacement of Option by Successor. 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 Option is assumed, converted or replaced by the successor
corporation, which assumption will be binding on Participant), (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
which merges, or which owns or controls another corporation which merges, with
the Company in such merger) cease to own their shares or other equity interests
in the Company, or (d) the sale of substantially all of the assets of the
Company, the Option may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement will be
binding on Participant. In the alternative, the successor corporation may
substitute an equivalent Option or provide substantially similar consideration
to Participant as was provided to stockholders (after taking into account the
existing provisions of the Option). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions and other provisions no less favorable to the Participant than
those which applied to such outstanding Shares immediately prior to such
transaction described in this Subsection 16.1. In the event such successor
corporation (if any) refuses to assume or substitute the Option, as provided
above, pursuant to a transaction described in this Subsection 16.1, then
notwithstanding any other


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provision in this Agreement to the contrary, the Option will expire on such
transaction at such time and on such conditions as the Company's Board of
Directors will determine.

                16.2 Other Treatment of Option or Shares. Subject to any greater
rights granted to Participant under the foregoing provisions of this Section 16,
in the event of the occurrence of any transaction described in Section 16.1, the
Option and the Shares will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation or sale of assets.

        17. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF PARTICIPANT.
Participant hereby represents and warrants to, and agrees with, the Company
that:

                17.1 AUTHORIZATION. This Agreement constitutes Participant's
valid and legally binding obligation, enforceable in accordance with its terms
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies.

                17.2 PURCHASE FOR OWN ACCOUNT. The Option will be acquired for
investment for Participant's own account, not as a nominee or agent, and not
with a view to the public resale or distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and Participant
has no present intention of selling, granting any participation in, or otherwise
distributing the same.

                17.3 DISCLOSURE OF INFORMATION. Participant has received or has
had full access to all the information Participant considers necessary or
appropriate to make an informed investment decision with respect to the Option.
Participant further has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Option and to obtain additional information (to the extent the Company possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Participant or to which
Participant had access.

                17.4 INVESTMENT EXPERIENCE. Participant understands that the
Option involves substantial risk. Participant: (i) has experience as an investor
in securities of companies in the development stage and acknowledges that
Participant is able to fend for itself, can bear the economic risk of
Participant's investment in the Option and has such knowledge and experience in
financial or business matters that Participant is capable of evaluating the
merits and risks of this investment in the Option and protecting Participant's
own interests in connection with this investment and/or (ii) has a preexisting
personal or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables
Participant to be aware of the character, business acumen and financial
circumstances of such persons.

                17.5 RESTRICTED SECURITIES. Participant understands that the
Option is characterized as "restricted securities" under the Securities Act
inasmuch as it is being acquired from the Company in a transaction not involving
a public offering and that under the Securities Act and applicable regulations
thereunder such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection,
Participant represents that Participant is familiar with Rule 144 of the U.S.
Securities and Exchange Commission (the "SEC"), as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Participant understands that the Company is under no obligation to register any
of the securities sold hereunder. Participant understands that no public market
now exists for the Option or the Shares and that it is uncertain whether a
public market will ever exist for the Options or the Shares.

        18. ADJUSTMENT OF SHARES. In the event that the number of outstanding
shares of the Company's Common Stock 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 the Exercise Price of and number of Shares subject
to the Option will be proportionately adjusted, subject to any required action
by the Company's Board of Directors or stockholders and compliance with
applicable securities laws; provided, however, that fractions of a Share will
not be issued but will either be paid in


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<PAGE>   7
cash at fair market value of such fraction of a Share or will be rounded down to
the nearest whole Share, as determined by the Company's Board of Directors.

        19. VOTING AND DIVIDENDS. Participant will not 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.






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<PAGE>   8
        IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Participant has executed
this Agreement in duplicate as of the Date of Grant.

TRANSMETA CORPORATION                       PARTICIPANT

By:
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                                            (Signature)


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(Please print name)                         (Please print name)


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(Please print title)









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