The agreement provides for Intel to make an initial $150 million payment to Transmeta as well as to pay Transmeta an annual license fee of $20 million for each of the next five years.

Intel and Transmeta agreed to settle all claims on the legal front. Transmeta will license its patent portfolio to Intel for use in current and future Intel products.

The agreement will grant Intel a perpetual non-exclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta, now existing or as may be filed during the next ten years.

Transmeta will also transfer technology and grant to Intel a non-exclusive license to Transmeta's LongRun and LongRun2 technologies and future improvements.

Under the agreement, Intel will covenant not to sue Transmeta for the development and licensing to third parties of Transmeta's LongRun and LongRun2 technologies.

The agreement also provides for the parties to dismiss their pending patent litigation with prejudice and for a mutual general release of all claims of any type between the parties.

Despite bailing out of the x86-based microprocessor business last year, Transmeta recently filed a lawsuit against Intel. The suit, filed in the U.S. District Court for the District of Delaware, alleged that Intel infringed upon ten of Transmeta's patents. The patents cover computer architecture and power efficiency technologies, according to Transmeta (Santa Clara, Calif.).

Recently, Intel's rival, Advanced Micro Devices Inc., invested in Transmeta.

In 2004, Intel and Intergraph Corp. announced a settlement agreement that resolved all of the remaining issues in a patent infringement case over processor technology. Under the agreement, Intel paid $225 million to Intergraph.